Student Loans Are A Drag On The Economy And Society

Dont Let the Lenders Get You Down Interestingly enough, Nelnet receives pretty decent customer service reviews. In the most recent review of the largest student loan servicers conducted by the CFPB, Nelnet was the second-highest borrower-rated servicer (Great Lakes was first, FedLoan Servicing third and Sallie Mae fourth). When someone doesnt have the experience that we hope to live up to, were disappointed, said Ben Kiser, a spokesman for http://www.obamastudentloanforgiveness.net Nelnet, which serves more than 6 million borrowers. Were very happy that it was resolved. Boehms success story speaks to some of the most common complaints borrowers have with student loan servicers payment problems and poor customer service. Luckily for Boehm, she was able to clearly state her case and said that even though it took time and effort to get the error fixed, she dealt with some nice representatives later in the process.
Source: http://finance.yahoo.com/news/stand-student-loan-servicer-130035421.html

“That is some 16bn to 18bn on the current debt of 46bn, and 70bn to 80bn on the estimated value of student loans by 2042. “But we don’t have confidence in those figures. We think that the value of student loans never to be repaid could be even higher.” The report recommends that the department should publish “clear and easily understood annual forecasts of what it expects to collect in the year ahead, and explain any subsequent variances between forecasts and the amounts actually collected.” The committee also believes the approach to collecting repayments “is not tough enough”. “The Student Loans Company has not put enough energy into identifying those borrowers who should be making repayments but have slipped out of contact,” Ms Hodge said. “It knows very little about British graduates who live abroad or about graduates from the EU who have since left the country.
Source: http://www.bbc.co.uk/news/education-26171742

Federal rules that took effect last month grant mortgage lenders broad legal protections as long as they do not approve loans for prospective buyers whose total monthly debt exceeds 43 percent of their monthly gross income. The overarching goal is to protect borrowers against lender abuses. But the rules could also make it difficult for some buyers with student loans to obtain a mortgage. Take someone seeking a $626,000 loan with a 4.5 percent interest rate to buy an $800,000 house. If that person earned $125,000 a year and had a $450-a-month car payment, he or she would fall within the limit, said Phil Denfeld, a vice president at First Heritage Mortgage in Fairfax, Va.
Source: http://www.chicagotribune.com/classified/realestate/sns-wp-washpost-bc-loans17-20140217,0,3736662.story

Private Student Lenders Respond to Government Pressure, Expand Refinance Options

While there is not enough data to make a conclusive statement based on this single study alone, this conclusion fits with broader evidence that high private debt levels are a drag on economic growth. In the wake of the financial crash, households have been trying to deleverage, or pay down their debt so they can have a healthier financial outlook, reduce the amount of their income that they use to service their debt, and begin investing and consuming again. During the deleveraging process, household spending is constrained, serving as an impediment to a healthy economy. Numerous studies have shown that the debt overhang of households from the mortgage crash in 2007-08 has been an enormous drag on the economic recovery. Additionally, high levels of household debt leave the economy more vulnerable to overall shocks like a financial crisis.
Source: http://www.forbes.com/sites/joshfreedman/2014/02/11/student-loans-are-a-big-drag-on-the-economy-and-society/

Too often I hear from borrowers who say, ‘But I was only late with one payment,'” Kantrowitz says. “Well, one payment is enough to ruin an otherwise good credit score.” Still, there hasn’t been much activity in the private student loan refinancing area because capital markets those where debt is bought and sold are still in recovery following the credit crisis that began in 2008, Kantrowitz says, and lenders lack the capital they need to make new loans. But pressure from government agencies such as the CFPB which last May called for an expanded refinancing market after analyzing 28,000 public comments and officials from the Obama administration may be partially prompting more banks to get in the game. Ideally, refinancing private student loans should be a “win-win proposition” for lenders and borrowers, Kantrowitz says. But lenders are sometimes hesitant to offer refinancing options to responsible borrowers who consistently make on-time payments, for fear of losing interest revenue. “The only reason why you would do it is as a defensive posture because if you don’t do it, someone else will,” Kantrowitz says.
Source: http://www.usnews.com/news/articles/2014/02/18/private-student-lenders-respond-to-government-pressure-expand-refinance-options

Stock Market Skeptics Struggle To Time Next Correction

Chicago Fed Sees Risk From High-Speed Trading in Stock Market

The re-emergence of the scary Dow 1929 stock chart meme, which overlays stocks before 1929 with the recent market, reflected some of those worries. While the same chart of the Dow Jones Industrial Average /quotes/zigman/627449/realtime DJIA +0.79% adjusted for http://www.todayhotstocks.com percent returns filters out a lot of the scary aspects , making it look less likely another 1929 crash is the works, the chart has become a poster child for doomsayers noting the next big drop is around the corner. So many people have talked about expecting a correction and havent had one, their position is increasingly untenable and they turn to a position that gives them validation, said Mark Luschini, chief investment strategist at Janney Montgomery Scott. The last time stocks across the board fell more than 10% was back in the summer of 2011 during the debt-ceiling debacle and subsequent S&P downgrade of U.S.
Source: http://www.marketwatch.com/story/correction-anxiety-boosts-talk-of-next-10-stock-drop-2014-02-13

Experts said on the macro front, market participants will closely watch the FY’15 fiscal deficit target, which will determine the size of market borrowing for the next fiscal. “Overall, the near-term trend is showing sell on rallies, and till Nifty closes decisively above 6,100, investors may book profit in rallies. In coming week, 6,100 shall be crucial deciding level in near-term, and the index is likely to witness further buying above this level,” said Rakesh Goyal, senior vice president of Bonanza Portfolio Ltd. Over the last week, the Sensex lost 9.74 points – the third straight weekly drop.
Source: http://profit.ndtv.com/news/market/article-interim-budget-key-for-stock-markets-in-near-term-experts-380757

Oddly, Stock Market Returns And GDP Per Capita Are Inversely Correlated

In a document posted on the Chicago Fed website, senior policy adviser Carol Clark highlighted five questions for policy makers and regulators to consider, including how to oversee trading thats spread across different asset classes around the world and whether rulemakers have adequate technology and systems in place to oversee markets. The factors that have contributed to the adoption of high-speed trading and affected market structure in recent years include competition, technology and regulation, Clark wrote. The unexpected ways in which these dynamic forces are coming together raise a number of important policy issues. The Fed is the latest voice to join the debate over whether the $22 trillion U.S. equity market is organized appropriately. In December, the U.S.
Source: http://www.bloomberg.com/news/2014-02-14/chicago-fed-sees-risk-from-high-speed-trading-in-stock-market.html

Interim budget key for stock markets in near-term: experts

Last, there is the question of luck. Some countries have resources agricultural, extractive, capital, or intellectual that may confer an advantage compared to other nations. If that advantage is appreciated and already priced in by investors, there can be no expectation of superior investment returns. But if the consensus undervalues those resources, then an astute or lucky investor may outperform. In the 20th century, resource-rich countries like the U.S., Canada, Sweden, or Australia prospered.
Source: http://finance.yahoo.com/news/oddly-stock-market-returns-gdp-203439790.html