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Please Include Student Loans in Your Lessons!!!!

Connecting the dots on a weekend and thinking about recent student loan news. Most standard personal finance courses spend way too little time on this issue of student loans and more broadly paying for college. Why? One major reason is the national standards have not emphasized this issue of college finance (see how many times you find “college” and “student loans” in this 52 page document).

So, what are the dots that I am connecting and why the imperative to include in your curriculum? 1) almost 50% of student loan borrowers are struggling; 2) the fastest growing segment of student loan market is over 60; 3) the largest student loan servicer is being sued for“systematically and illegally failing borrowers at every stage of repayment.” Kinda makes you wonder how much #3 contributes to #1 but I digress:

Article: Can The Credit Scoring System Be Fixed?

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I was thinking about this question recently for two reasons: 1) the $23 million fine that CFPB handed down to a few credit reporting agencies for deceptive marketing around credit scores and 2) As fewer millennials choose credit compared to debit, the number of credit invisibles increase. So, what can we learn from this article from the Atlantic (approximately 10 minutes in length)?

My notes:

  • Chicken or the egg problem with credit: “If you think about the credit-invisible population in this country, their ability to enter the financial mainstream and access affordable credit instead of payday lenders and pawnshops and check-cashing services is tied to what’s in their credit report,” says Michael Turner, the president of the Policy and Economic Research Council. “They’re caught in the credit catch-22: In order to qualify for credit you have to have already had credit.”
By |January 16th, 2017|Article, Credit Reports, Credit Scores, WebQuest|

Chart: How Strong Are American’s Problem-Solving Skills Using A Computer?

From Economist:

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Answer: Meh (or about average for OECD countries with about 33% of adults classified in the “High” category).

This Economist article focused on the need for retraining of low-skilled workers as the pace of automation accelerates and many of their jobs go the way of the buggy whip. As for how to accomplish this, Singapore has a promising example:

By |January 16th, 2017|Article, Career, Chart of the Week, Current Events, Policy, Research|

Chart: How Is Card Fraud Committed In US Compared to Rest of the World?

From Federal Reserve Payment Study 2016:

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Questions for your students:

Dow 20,000: Does It Matter?

Investing commentators are breathless as the Dow Jones Industrial Average closes in on the 20,000 mark. Here’s a smattering of the recent clickbait, I mean, headlines (12.5 million results on Google!):

The Dow closed at 19,963.80 on Friday, January 6th. Ok, let’s just say there is a very high likelihood it crosses that magical 20,000 mark this week. I don’t think I am going out on a limb in predicting that (and you know how much I hate prognosticators!). So, back to the original question, does it matter? 

Question: Who’s Saving For Retirement?

I had the Honorable John Ninfo on my podcast recently who described his “Scared Straight approach” to teaching young people about the perils of credit. He saw the consequences in the decades he served as a Bankruptcy Court judge in the state of New York. After looking at this infographic from the WSJ and the accompanying article, the overwhelming evidence is that we should be employing similar scare tactics to the topic of retirement planning because we better hope that the next generation is better prepared for taking on this responsibility:

Question: What Company Was Strongest Performer in the S&P500 In 2016?

Choices:

A. Amazon

B. Google

C. Tesla

D. Nvidia

Answer: Drumroll please…a company most have never heard of, D. Nvidia!

From Financial Times:

By |January 3rd, 2017|Article, Current Events, Investing, Question of the Day, Research, Stocks|

Question: How Much Do Banks Earn From Overdraft Charges?

Answer: Billions!

Happy New Year! Welcome back to school. I know that banking tends to be a unit that many of you teach early in the semester so this data should prove particularly timely. I have posted on this topic several times but have some new data to report about the three largest U.S. banks and their fees from overdraft charges (from Financial Times, subscription required):

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This quarterly data on the three largest banks shows how fees tend to grow over the course of the year as evidenced by the quarterly data from 2015. So, back to the question about how much they are charging for overdrafts…Let’s make the math easy and say $400mm per quarter or $1.6 billion a year for each of the three banks totaling $4.8 billion for the three of them combined. Some other nuggets from the FT article: