Archives for April 10, 2019

On Sept. 28, 2018, President Donald Trump signed into law a bill allowing people with cancer to put their student loan payments on hold. The rollout of the new program has been rocky.

The Education Department, in a notice in the Federal Register, writes: “The law was immediately effective, meaning that borrowers can immediately request and, if eligible, should receive the deferment.”

That’s not happening. Cancer patients with student debt hoping to get this new break from their monthly bills are running into a wall.

At issue seems to be this: The Education Department hasn’t provided the companies that administer its federal student loan programs with an official application for borrowers to apply for the deferment, even though the law has been in effect for more than six months now.

“From talking to a couple of loan servicers about this, they have been frustrated by the lack of direction that they’ve gotten from the Department of Education,” said Colleen Campbell, associate director of postsecondary education at the Center for American Progress.

The Education Department is taking steps to create and issue an application for the deferment. Still, the delay is frustrating to sick borrowers like Peter Tanner, who was diagnosed with stage 4 bowel cancer last year and owes more than $15,000.

Up to 1 million borrowers could be eligible for the new deferment, according to estimates by Mark Kantrowitz, an expert on student debt. The requirements are: a person needs to owe money on federal student loans and be in active treatment for cancer. Once approved, borrowers can pause their bills throughout their medical care and then for six months afterward.

“It sounds like Congress wanted to do a good thing – and I feel like I’m not even getting half of what they intended in the law,” Tanner, 40, said.

Throughout the last year, Tanner has spent weeks in the hospital, had three abdominal surgeries and lost more than 70 pounds.

He said he was grateful and relieved to learn that Congress was offering a reprieve for borrowers with cancer. His medical costs have already forced him to take out a home equity loan on his house and lean on his credit cards.

Tanner called Mohela, his student loan servicer, in February. He was put on hold multiple times, he said, and then was delivered the bad news: “The bottom line they gave me was, ‘We don’t have an official application from the U.S. government,’” Tanner said. ”‘Until we get that, we can’t enroll you in this program.’”

In the meantime, he said he was told the servicer would put his loans into a temporary forbearance, during which his payments would be paused but interest would continue to collect on his debt. (Under the new cancer deferment, interest is suspended.)

“They were very clear, ‘The interest will continue,’” he said, “They weren’t going to do anything in line of trying to get me into a full deferment via the program.”

A spokesperson for Mohela said that implementing a new deferment is complicated and that this timeline was not unusual. He said the form would be released soon and eligible borrowers would have any interest that accumulated on their loans waived.

The bumps in the road are due to the fact that the law was effective at time of enactment, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade association that represents student loan servicers.

“When Congress makes changes, historically they have provided a window of time for implementation,” Buchanan said. “That was not the case with the cancer deferment, which poses real challenges.”

Yet there was likely a reason the provision didn’t come with a lag time, Kantrowitz said, “Cancer patients can’t wait.”

At the end of January, the Education Department asked the Office of Management and Budget to conduct an emergency review and approval of its cancer deferment application.

However, the law had been in effect for four months by then.

The Education Department also required a 60-day comment period on the form, a seemingly longer timeline than necessary, Kantrowitz said. (Only three people have commented.)

“The department could have required only a 30-day comment period, or even a 15-day comment period,” Kantrowitz said.

It might be unreasonable to expect the new program to be smoothly rolled out the day after the law passed, said Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities. However, he said, “it could have been expedited if the department had resources and sufficient focus on it.”

Liz Hill, press secretary at the Education Department, said the agency has established an interim process that allows borrowers to stop making payments on their loans as it works to implement the law passed by Congress. She also asked for borrowers running into issues to contact them at StudentAid.gov/feedback.

“The department is committed to supporting students who are undergoing cancer treatments and are struggling to repay their student loans,” Hill said.

However, the complications have already caused Julie Roberts, who owes $50,000 in student debt and has stage 4 breast cancer, to all but give up on the new cancer deferment.

When she called her servicer, American Education Services, the staff didn’t even seem to understand the program.

Over multiple phone conversations with the company this year, she said employees told her that the bill had not yet passed and that she didn’t qualify for it — both of which are not true.

CNBC asked Keith New, director of media relations at American Education Services, why Roberts was being denied the deferment. New identified her account and said there had been a communications error. “She is eligible for the new cancer treatment deferment,” New wrote in an email. “We have taken corrective action to ensure that this error remains an isolated case.”

Since the servicer doesn’t yet have an official application from the Education Department, it put Roberts’ loans on pause and New said it will eventually cancel any interest that accrued once it has that form.

Roberts said she hopes to follow up when the paperwork is available, but worries she won’t have the energy to do so. She had a mastectomy this week and is scheduled for more surgeries and rounds of radiation.

“I’m just too tired to get on the phone and pursue five people before someone even knows what I’m talking about,” she said.

Single, financially savvy, unattached and with plenty of money to spare.

It sounds like an enviable position, but according to a recent Reddit thread, it can actually pose some challenges in the dating world.

A writer on Reddit by the name of “minimalistmillennial,” who described herself as a 24-year-old woman with a $50,000 net worth, said she has concerns about dating while she pursues financial independence and early retirement.

That concept, which typically means someone is trying to live completely off savings and investments without having to rely on a paycheck, is often abbreviated to “FIRE.”

She is now finishing her master’s degree, she wrote, and expects to make about $100,000 when she graduates.

Her goal: to retire between the ages of 35 and 40, with $1.5 million to $2 million saved.

To do that, she plans to move to an area with a low cost of living, where a “safe withdrawal rate” of $35,000 to $40,000 will give her a high quality of life.

“I’d like to buy a small house, get a cat, teach Pilates classes 2-3x a week, travel a few times a year, and maybe get a social work or education certificate at a community college to do some really rewarding part-time work,” she said. “My biggest concern is that I am going to have to do this alone.”

To be sure, this is a risky strategy, and several other commenters on Reddit pointed out that $2 million may not be enough to support the rest of her life, if unexpected circumstances like health scares or market downturns happen.

She doesn’t want children, she said, nor luxury items like nice cars or big houses.

“I fear that I am so odd and particular with my dreams that finding a partner will be impossible,” she said.

Soon, her post had hundreds of comments.

One commenter, “EJK1199,” said she is a 33-year-old woman and could relate. She also had no interest in children or big houses, she said.

“It took a long time but I found someone who wants the same things, isn’t a huge spender, and also isn’t intimidated by a woman who makes good money,” she said. “They’re out there. Go into any dating or relationship with pure honesty about what you want.”

Another commenter asked EJK1199 how she finally met her partner.

“Online dating actually,” she said. “I’ve had my share of horrible/hilarious dates but I definitely got lucky.”

After that, another commenter, “throwaway-notthrown,” said she met her “financially savvy” husband while traveling.

“I’ve never specifically talked with him about FIRE but our goals are to save as much money as possible at all times, we are frugal, we don’t want children, and we both are minimalists,” she said.

“You’ll find someone who’s into FIRE,” another commenter said. “Just be yourself … but if you meet someone you realize, ‘This person seems to live below their means and has similar thoughts/dreams … they might be the one.’”

Others reminded the original poster she is young and has time.

“Don’t try to plan your entire life,” one said. “Some things just happen in the right moment.”

Plus, it’s not impossible to teach someone about FIRE after meeting them, if that’s what you want, another said.

A commenter “Sabshier” said she and her husband have been married for eight years, after meeting on eHarmony. MTCH, +1.52%

“At the time neither of us knew about FIRE. However, we are both extremely frugal, tended to invest heavily and apparently have cheap hobbies,” she wrote. “I honestly believe we were both truthful with the questions that were posed and therefore became a perfect ‘firey’ match.”

The original poster isn’t alone in wanting to find a partner who aligns with her financial values.

Some 56% of Americans say they want a partner who provides financial security more than “head over heels” love (44%), according to a survey released by Merrill Edge, an online discount brokerage and division of Bank of America Merrill Lynch.

And some 59% of couples cite financial problems as playing “somewhat” of a role in their divorce, a 2017 study from Experian EXPN, +0.91% found. Another 20% said financial problems played a “big” role in the divorce, and 26% said their spouse’s credit score specifically was a source of stress in the marriage.

If you are waiting to discuss finances until after you’re married, you have waited too long, experts say.

As for the original poster, she may have inadvertently started a business idea.

“A FIRE dating app would be a great idea,” one commenter said. “Except no FIRE people would ever pay for it.”

Whether you want to put money aside for emergencies, college or retirement –  saving is one of the most basic pieces of financial advice. Despite the importance of saving, some of us are falling short. Bankrate.com surveyed more than a thousand working Americans and found that 21 percent are not saving any money for retirement, emergencies or other financial goals. 

“In general, there’s a lot of anxiety around money,” says Nicholas Holeman, a certified financial planner at Betterment for Business. “Most of that anxiety stems from people not having a clear understanding of where they are currently and where they are trying to get to. Don’t get analysis paralysis and try to debate between this or that fund, Roth IRA versus 401(k), paying down debt versus investing.  The most important thing is to start saving as early and as often as you can.”

He recommends starting with these five tips:

Use goal-based investing

Do you know what goal-based investing is? Holeman compares it to a doctor’s visit. You wouldn’t ask the doctor what medicine is best for you without first telling him or her what is wrong with you. Do you have the flu? Do you have a broken bone? Only after the doctor determines what is wrong with you can he or she diagnose the right course of action.

Holeman says your first step should be defining your goals. He says that is often more difficult than it sounds. When Holeman asks new clients to state their goals, he says they often say they have a desire to be rich or to have a million dollars. Holeman says those are milestones, not goals. Are you saving for a down payment on a house in three years? Do you want to retire at age 60 and live on $75,000 a year? He says those are better examples of goals.

“Those goals might change, so you need to build flexibility into the plan. But setting specific goals for yourself makes them feel more tangible and real.”

401(k) automatic enrollment and automatic increase

We all are busy. Holeman says 401(k) auto-enrollment can help you make better financial decisions by making them a little easier.

“When you start a new job, you will be auto-enrolled in your 401(k), meaning that it’s defaulted that you are going to save a certain percentage of your paycheck,” he says. “You can certainly opt out if you don’t want to. But it’s changing the default from 0 to 3 or 4 percent. If you do nothing, you are still saving for retirement.”

Automatic nudges and reminders

Are you saving for an emergency fund or your child’s college education? Is it your goal to rebalance your portfolio once a year? Holeman recommends setting up automatic nudges and reminders to keep your savings on track.

“Any time you can make those things easier, you are reducing the mental load that it takes to make good decisions,” he says. “There are things that technology does a lot better than us. Automatic savings, automatic rebalancing and adjusting risk level over time – those are all examples of things that if you can automate. We strongly encourage you to do so.”

Save half of your raise or bonus

When you get a raise or a bonus, what do you do with the extra money? Holeman says it is very easy for many of us to get used to the additional income and inflate our lifestyle. 

“Consciously tell yourself – whenever you get a raise, promotion or bonus – that you are going to save a certain percentage of that,” he says. “There is a two-sided benefit. One, you are saving more. And two, you are preventing your expenses from going up. When you do retire, you don’t need as much to continue your lifestyle. That’s why it’s a really powerful strategy.”

Talk to friends and family about money

Money and politics are topics often avoided at the dinner table. Holeman says healthy money habits are contagious. He recommends talking with friends and family about money often.

“You don’t need to give explicit details, like sharing your paystub or checking account balance,” Holeman says. “But when you talk to other people about those things, it makes it feel less scary. You realize that everyone else is feeling the same thing that you are feeling about credit card or student loan debt. That can build a sense of bonding and a sense of encouragement.”

If you’re a Florida resident looking for cheap car insurance, the odds might already be against you.

According to personal finance website WalletHub, Florida came in as the second-most expensive state for car insurance, out of 47 states ranked.

The website compiled the ranking by collecting quotes from major auto insurers in at least six cities in 47 states. WalletHub spokeswoman Diana Polk said researchers didn’t get enough quotes from Alaska, Hawaii or Michigan to include them in the rankings.

WalletHub used a 30-year-old man with a clean driving record who drives a 2010 Toyota Corolla and has good credit for its rubric. Coverages were set to base levels.

In the rank of cheapest states, Florida came in at 46. Iowa, it seems, has the cheapest insurance. Only New York was more expensive, per the study.

According to Jeffrey Grady, CEO of the Florida Association of Insurance Agents, uninsured drivers and newer, more expensive vehicles lead to higher rates in Florida.

“Florida is estimated to have 26% of the vehicles on the road with no insurance, so those with insurance pay more,” he said. “More expensive cars, more expensive repairs, and more accidents leads to higher insurance costs.”

WalletHub’s survey found that Progressive has the cheapest insurance in Florida, with Geico, Liberty Mutual, State Farm and Travelers coming in after. Progressive, Geico and State Farm were the top-three cheapest insurers nationwide.

WalletHub also found that 22 percent of adults in the U.S. don’t understand the coverage they get and 26 percent said they consider price over protection.

Car insurance rates are regulated state-by-state with a host of factors determining costs. Credit score, job title, driving history, gender, crime rates, traffic density and road conditions and health care costs, among other factors, can impact how much insurance can cost in a given state. State regulations, like Florida’s no-fault law, also impact rates.

Douglas Heller, an insurance expert with the Consumer Federation of America, said he’d like to see states do more to base insurance rates on how people drive, not who’s doing the driving.

“States can and should eliminate the insurance industry practice of varying drivers’ auto insurance premiums based on personal and socioeconomic characteristics, such as one’s job title, level of education, gender, or marital status,” he said. “These factors push rates up for some drivers despite their excellent driving records and this should be prohibited. We should all be rated on how we drive, not who we are.”