C2
NOVEMBER 2-8, 2016
Charlene Crowell
Commentary
Credit reports for mortgage loans get an update by Sarah Skidmore Sell AP Personal Finance Writer
Racial gap in student loan debt grows as for-profit college enrollment climbs With 44 million consumers owing about $1.4 trillion in student loans, a new report by the Consumer Financial Protection Bureau finds that student loan servicing and debt collection together will boost borrower costs even higher over the next two years. The Bureau’s recently-released Student Loan Ombudsman Report termed the nation’s current system as “flawed” and further calls for an “overhaul” to improve conditions for an approximate 8 million distressed and defaulted borrowers. Its findings and conclusions are based on 5,500 private student loan complaints and approximately 2,300 debt collection complaints filed between October 1, 2015 and May 31, 2016. Since February 2016, 3,900 student loan complaints made concerned loan servicing. “This report offers further evidence that industry practices and needless red tape can turn a student loan into an unbearable burden,” said CFPB Director Richard Cordray. “Policymakers should work to reform the programs that are failing those borrowers that need help most.” Complaints filed with CFPB during this reporting period cite: § Delays and dead ends when applying for incomedriven plans that include interest subsidies and loan forgiveness; § Problems with debt collectors verifying incomes and in turn assigning incorrect monthly payment amounts; § Loan servicers billing borrowers hundreds of dollars more per month than was arranged with the debt collector; and § Conflicting information as to where loan payments should be sent and how those payments would be applied to loan balances. A few days later, a Brookings’ Economic Studies report found severe racial debt disparities for both Black undergrads and those completing graduate college studies. “The moment they earn their bachelor’s degrees, Black college graduates owe $7,400 more on average than their White peers ($23,400 versus $16,000, including non-borrowers),” wrote Judith Scott-Clayton and Jing Li for Brookings. As an increasing number of Black students enroll at for-profit colleges for either undergraduate or graduate studies, those who borrow loans are also the most likely to incur heavier debt, carry it longer, and default more often. Not a favorable scenario when time and studies were meant to bring financial security and a higher quality of life. “While previous work has documented racial disparities in student borrowing, delinquencies and defaults, in this report we provide new evidence that racial gaps in total debt are far larger than even recent reports have recognized,” the authors continued, “far larger now than in the past, and correlated with troubling trends in the economy and in the for-profit sector.” Between 2004 and 2008, Brookings noted that Black enrollment at for-profit institutions increased dramatically. During much of these same years, for-profit colleges have faced regulatory scrutiny and quality of education challenges that led to large institutional closings such as Corinthian Colleges and more recently, ITT Technical College that also lost its accreditation. “[T]he for-profit sector is by far the fastest-growing sector and the only sector that has seen enrollments grow differentially by race,” states the Brookings report. Further, both undergrad and graduate students enrolled at for-profits are more likely to suffer from loan interest accumulating faster than loan payments received, also known as negative amortization. Earlier this year the Center for Responsible Lending joined with the National Consumer Law Center in calling for the Department of Justice to take actions to ensure racial justice in student loan lending. “For nearly a decade, the Department of Education has known that student debt impacts borrowers of color differently from white borrowers. Yet in that decade, the Department has failed to take sufficient steps to ameliorate the disproportionately negative impact on borrowers of color, or even to conduct further research to discover the causes or the extent of disparities,” wrote the advocates.” “We call on the Department to collect and release the data necessary to learn the true extent of the impact of student debt on communities of color,” the coalition continued, “and to work with borrower and consumer advocates to ensure that student loans are a tool for economic advancement and not economic devastation for borrowers of color.” Four years after graduating, nearly half of Black graduates—48 percent—owe more on their federal undergraduate loans than they did at graduation, says Brookings. By comparison, only 17 percent of White undergrads owed more debt. Federal law, however, provides some recourse. Borrowers who have defaulted on their student loans are federally guaranteed the right to be given a chance to get out of default and back on track. The process, includes making a series of income-based payments that take into account income and family size. Secondly, student loan borrowers who have encountered problems with their servicers or related debt collectors can and should bring their concerns to the attention of the CFPB. Complaints may be mailed, faxed or filed online, including all supporting documentation. An advantage to the online filing is that a complaint number will be assigned that enables consumers to check on the status of their complaint at any time. Beyond the portal to file a student loan complaint, CFPB accepts consumers’ questions weekdays from 8am until 8pm Eastern Time at its toll-free number: (855) 411-CFPB | (855) 411-2372. “Federal financial aid policy alone cannot solve these problems,” concludes the Brookings report, “but neither can it ignore the challenges facing students of color who disproportionately bear the burden of student debt.” (Charlene Crowell is the communications deputy director with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.)
NEW PITTSBURGH COURIER
BUSINESS
Applying for a home loan? You may want to consider paying off your credit card bill first. Thanks to a recent change by major credit rating agencies, mortgage lenders can now look at whether you pay off your bill every month or keep a balance. That means home buyers who pay off their credit cards may earn an advantage when looking for a mortgage. Historically lenders reviewed basic information such as your total debt and whether you were on-time with your payments when deciding whether to make a home loan. But they didn’t know whether you were paying off your credit card or other revolving debts in full or carrying a balance month-to-month. That changed in September, when two of the major credit rating agencies, Equifax and Transunion, began offering what’s known as “trending data.” Lenders now have access to a more comprehensive view of a borrower’s debt management habits, specifically how much someone paid off each month on those accounts over the past two years. And they may reward those who regularly pay more than the minimum on revolving debts or pay them off in full. The remaining credit reporting agency, Experian, is also expected to begin offering trending data soon. It is the first time in 30 years that the standard information provided to lenders on credit reports has been updated, according to Equifax. The change was driven by Fannie Mae, the mortgage giant that guarantees many of the loans in the U.S. It found that all other things being equal, borrowers who paid off
their credit card every month were 60 percent less likely to become delinquent than borrowers who make only the monthly minimum payment. As a result, Fannie Mae will now regularly review this information to help improve its risk assessment. The final decision on who gets the loan still remains with the bank or lender, who can decide whether or not they want to consider this factor. Experts say that while it’s still early in adoption, Fannie Mae’s influence over the
industry means they expect it to become part of the regular mortgage review process. Fannie Mae, credit bureaus and other industry experts say they intend to use the additional information to expand the number of loans available, not to penalize those who do carry a balance. “It’s going to benefit someone who is on the border today,” said Mindy Armstrong at Fannie Mae. Consider two people with otherwise equal credit profiles: Jack and Jill. Jack makes the minimum payments each month, while Jill pays her cards off in full. They may both have been “maybes” in the loan officer’s mind, but this factor could tip Jill into the approved pile.
Rivera joins ESMDC team Brittany Rivera has joined the EMSDC tively engage with our MBE community to team as Business Certification and MBE ensure that we deliver the programs, serServices Manager. She stepped into the vices and relationship-building opportuniposition on Oct. 3 and hit the ground run- ties needed for the health and growth of ning. Brittany has traveled to Pittsburgh their businesses. to begin training with colHaving held previous posileague Jan Fleishner, Directions at Distinguished tor of Business CertificaCleaning, Inc.; Community tion; tag teamed with Jan to Eye Care Center; Primerica do site visits on the Financial Services; and LA Philadelphia side of the Fitness, Brittany’s customer state, began processing reservice/administrative certifications and reviewing background serves her well new certifications, and atin this customer-focused potended several outreach sition at the Council. events to promote the beneBrittany is a graduate of fits of NMSDC certification. Arcadia University in GlenIn addition to fulfilling her side, PA, and holds a Bacherole as the certification lor of Arts Degree in BusiBRITTANY RIVERA manager, Brittany will acness Administration.
Financial institution salutes successes CONTINUED FROM C1
cent minority contractor participation to conduct interior renovations. Ma’at Construction Group, a nonprofit affiliate of the Homewood based Community Empowerment Association was the general contractor for the interior modifications of the third and fourth floors of
the five story 150,000 square foot building. Over 400 of Bridgeway’s supporters attended the annual event, what they classified as more than a celebration. “It’s a time for our clients, partners, and investors to network and initiate collaborations which produce exciting new op-
portunities for future impact.” Peterson said it was exciting to hold this year’s event at the August Wilson Center, the region’s leading venue for the celebration of African-American culture. “It was a model setting for us to share our clients’ stories of opportunity and renewal.”
Meet Kristen Brown CONTINUED FROM C1
a lot of brands and eventually they’ll purchase from a select few. It was still a success for Gold Label Cosmetics to be recognized by a bigger retailer even though they didn’t place an order, they liked what they saw. I’m proud of the fact that Gold Label now has placement in Vivrant Beauty which is black owned boutique in Harlem where the owner carries a lot of multi-ethnic beauty brands. It’s my first brick and mortar location in New York and its great to be amongst the beauty brands of that caliber so that’s a win for me. Tip #3: Figure out necessary expenses versus optional expenses: Kristen Brown: I was really excited when I got a publicist because I thought it was the right thing to do. I was spending a lot of money but I didn’t really have a lot for them to promote. So a year later, I had to revisit that expense because I didn’t have the financial flow to afford it. I was working with a great company so when I’m in a financial position to hire a PR firm again, I want to work with them, they did a great job; however, it was premature and I wasn’t taking it as seriously as I should have. What was a necessary expense for me was packaging and formulation. Formulation [of the lipsticks and matte pens] took time. It wasn’t as expensive as I thought it was going to be but it did take time and time is money. I had product shoot with a photographer I loved but I wanted to see what else was out there so I did another shoot that was thousands of dollars more. It was great, it was worth the money, but as far as expenses are concerned, I probably wouldn’t work with that photographer again unless I was ready i.e. doing a larger campaign for a store. I wished that I had invested more into the product and less into what surrounds the
product because the photos were fine the first time around, the photos were fine every time I took them. So I wish I had stopped trying to upgrade before I was ready. Bonus Tip: It’s okay to be multi-passionate, use one business to invest in the next: Kristen Brown: At 25, I had already started Gold Label Cosmetics but I didn’t take it seriously, I wasn’t taking myself seriously because I thought there were other things that I needed to be doing. I thought I needed to be out at events and having all of these luxury experiences like traveling abroad even though I couldn’t afford it, that’s where my head was at. I had a longing for something that didn’t have as much value as starting my own business. Before I moved to New York, I started meditating on what I wanted. I wrote down that I wanted my cosmetics line to flourish and I started envisioning myself telling my friends that my brand is in Sephora. I began envisioning myself at a banquet getting an award for my cosmetics line. I’ve known since I was in my early 20s that I wanted to be in the beauty industry, I also want to own a karaoke bar amongst several other things. And now I know that I have more than enough time to do it all. When my cosmetics line starts to take care of itself, I can start the karaoke bar and while I’m doing that I can also start to expand my line to other continents. If have a bunch of goals on your list, you just have to be decisive about which one you’re going to do right now. You don’t have to have to limit yourself, just invest all your time and energy into one thing until that does well then move on to the next thing. When you’re ready to move on to the next goal, you’ll have money to fund your transition and everything will flow as it should. I believe in the law of attraction and if i want something, it’s inevitable that I’m going to have it. (Roz Edward is Michigan Chronicle Managing Editor)
BUSINESS BUSINESS CALENDAR CALENDAR
Training Event
NOV. 2—The Duquesne University Small Business Center presents Getting Publicity for your Business, 9 a.m. to 12 p.m. at Rockwell Hall, Rm 108, 600 Forbes Ave. Topics covered include Message Development, Media Outreach Strategy and Media Relations. Cost is $49. For more information, call 412-396-6233.
Training Event NOV. 11—Duquesne University’s Small Business Center will host a Meet the Lenders event for Lawrence County business owners, 11 a.m. to 1 p.m., Lawrence County Economic Development Corporation, 100 E Reynolds St. New Castle, PA 16101. The event includes lunch and to opportunity to learn more about the programs offered by Bridgeway Capital, Lawrence County Economic Development Corporation, Northwest Commission, Catalyst Connection, and Liquid Capital. The event is free but attendees must register in advance at www.sbdc.duq.edu.
Black Economic Summit NOV. 13—Stop the Violence Pittsburgh will host a Black Economic Empowerment Summit, 5-8:30 p.m. at the Kelly Strayhorn Theater, 5941 Penn Ave. in East Liberty. The program will feature presentations by Boyce Watkins and Jay Morrison examining issues such as Starting a Business, Investing, Making money on the Internet, Marketing for Success, and Real Estate Investing. Tickets are $30, $40 for VIP package. For more information call 724-2059376 or visit stoptheviolencepittsburgh@yahoo.com
Training Event NOV. 16—The Duquesne University Small Business Center presents Business Startup Essentials, 9:30 a.m. to 12:30 p.m. at Rockwell Hall, Rm 108, 600 Forbes Ave. Topics include: Business structure and Formation, Ficticious Name Registration, Insurance, Financing Options, Taxation Requirements, and more. Cost is $25. For more information, call 312-396-6233.
Business Luncheon NOV. 30—The African American Chamber of Commerce of Western Pennsylvania will host its Annual Business Luncheon, 12:00 p.m. in the Omni William Penn Hotel Grand Ballroom 17th Floor, 530 William Penn Place, Downtown. Speaker: Loretta J. Mester, President and CEO Federal Reserve Bank of Cleveland. Please R.S.V.P. by Wednesday, November 26, 2016 at 412-392-0610
Business Energy Efficiency Grants THROUGH APRIL 15—The Pennsylvania Department of Environmental Protection has to $1,000,000 of grant funding available in the 13th year of the Commonwealth’s Small Business Advantage Grant Program for small businesses that adopt or acquire equipment or processes that promote pollution prevention and/or energy efficiency projects. Applicants must be a for-profit corporation, limited liability corporation, partnership, sole proprietorship or other legal entity with 100 or fewer full-time employees. Businesses can apply for 50 percent matching funds of up to $9,500 to adopt or acquire energy-efficient or pollution-prevention equipment or procedures. Funding is eligible for those costs incurred between July 25, 2016 and June 30, 2017. For more information, contact the Small Business Ombudsman’s Office at 717772-5160.