Predatory Student Loan Relief Organizations: How They Work And How You Can Avoid Them

Student loan debt is not just financially draining. It can also be emotionally damaging. The tens of thousands of dollars of debt can feel like an anchor hanging around your neck, weighing you down and preventing you from achieving prosperity. You were told to go to college and study hard, so you did. You were told there would be jobs waiting on the other side. There were not. Now what?

There’s usually a 6-month grace period after graduation before you have to start repaying your student loan(s). That started the minute you received your diploma. If, like most of the class of 2014, you don’t have a job lined up immediately, that ticking clock can be pretty panic-inducing.

This is the kind of emotionally vulnerable situation scammers love to exploit. They take advantage of the fact that you’re desperate to get out. Your “too good to be true” alarm doesn’t go off like it should.

You see an advertisement online, at the bus stop, on the radio or on a light post in your neighborhood. The ad tells you there are new student loan forgiveness programs that can free you from your debt. You might not have to pay any of it, thanks to official-sounding programs like the “Obama Forgiveness Program.”

Eagerly, you call the number or visit the office. You tell them your situation and they explain that there are a variety of programs to help people just like you. All you need to do is pay them an up-front fee, which can be as much as $1,200. Compared to the size of your debt, that’s an insignificant cost.

The catch? These agencies, like First American Tax Defense and Broadsword Student Advantage, either don’t offer any services at all or provide information on services that are readily available for free. They’ll send you forms that you could have found at no cost and pocket the difference.

These particular companies have been the target of a lawsuit from the Illinois Attorney General’s office. The Attorney General alleges that these scammers have broken an Illinois law prohibiting the collection of money upfront for debt relief services. That’s a start, but these organizations are likely just the tip of the iceberg. As long as people are desperate and afraid, organizations will be trying to defraud them.

If you have student loan debt, be on guard against these schemes. Getting rid of your loan debt is the obvious solution, but it may not be practical right now. Here are four concrete actions you can take to protect yourself today:

1.) Educate yourself about government loan relief programs. The Department of Education’s website, studentaid.ed.gov is a great place to start looking. Three very popular options are public service loan forgiveness, teacher loan forgiveness, and Perkins Loan cancellation. If you qualify for these programs, you can have your debt forgiven, sometimes altogether.

2.) Speak personally to your lender. Under most of these programs, you don’t need to fill out a standardized form. Each lender has their own paperwork that they’ll provide. They don’t lose money on the forgiveness process; they get the loan paid in full immediately. Even if you don’t qualify for forgiveness, you may be eligible for income-based repayment or some other system to lower your monthly payments. You can ask these questions directly – you don’t need an intermediary.

3.) Make repaying your student loans a priority. As soon as you land a job, set a monthly budget that includes both savings and an aggressive debt repayment plan. Getting out of debt and moving toward financial security will give you the confidence to resist these scams in the future.

4.) Get re-consolidation help from a lender you already trust. If you’re juggling student loan debt, a car payment, and credit card bills, you might be able to save a bundle by getting a debt consolidation loan from NASA FCU. This loan takes all your outstanding debt and re-bundles it into one easy monthly payment. This consolidation can make it easier to make your monthly payments and give you the breathing room to gain financial peace of mind. Speak to a representative about your debt repayment options today!

New Branch Hours Effective September 2, 2014 

The Annapolis, Bowie, Columbia, Falls Church, and Rockville Branch Offices have the following new hours:

Monday – Thursday 9:00 a.m. – 4:00 p.m.
Friday 9:00 a.m. – 6:00 p.m.
Saturday 9:00 a.m. – 1:00 p.m.

The Collington and Greenbelt Branch Offices have the following new hours:

Lobby
Monday – Thursday 9:00 a.m. – 4:00 p.m.
Friday 9:00 a.m. – 6:00 p.m.
Saturday 9:00 a.m. – 1:00 p.m.

Drive-Thru
Monday – Friday 8:30 a.m. – 6:00 p.m.
Saturday 9:00 a.m. – 1:00 p.m.

For your convenience, you can access your account(s) 24/7 through eBranch Online Banking, Mobile Banking, and Contact-24 Telephone Banking.

How to Know When You’ve Invested Wisely in a Certificate

Many consumers who are looking to lock in a higher interest rate than that offered by a savings account, but who still want the security of a federally insured account, find Certificates to be attractive options. If you are one such consumer and have decided that a Certificate should be part of your financial portfolio, below are a few checklist items to help you know that you have chosen your Certificate(s) wisely.

You’ve Researched the Rates

Currently, average interest rates on the gamut of bank deposit products are not all that exciting. However, some banks and credit unions offer Certificate deals that compete well with similar market investments and present attractive opportunities. NASA FCU’s 49-month Certificate special is one example; it tops the national rate boards and comes with an interest rate that more than doubles the national average for Certificates with a similar term length. By researching rates and products like this from financial institutions across the country, you can be sure that you’re taking advantage of some of the top offerings of the day.

You’ve Calculated the Inflation Risk

A certificate is a commitment of funds with a financial institution for an agreed upon period of time, in exchange for a return. Many people value Certificates primarily for the security they provide surrounding return OF one’s capital more so than the return ON your capital. That said, the longer the period of time to which you commit your investment, the more relevant broad economic factors like inflation become. For example, if you were to invest in a standalone Certificate with a 5-year term, the risk of your earnings (and purchasing power) being diminished by rising inflation would be greater than it would be for a shorter term investment like a 1-year Certificate. Exactly predicting what the inflation rate will do over the life of a Certificate’s term is impossible, but you should still keep this important factor in mind when committing your funds.

You’ve Read the Fine Print

Finding a good Certificate investment is many times not as simple as finding the highest rate being offered. Financial institutions include terms of agreement with every product they offer, so you should be aware of the fine print to which you are contractually obliging yourself. Some Certificates have a “call” feature that gives the issuing bank or credit union the right to terminate the Certificate after a specified period of time. You should also investigate how and when the issuer is agreeing to return your funds with the interest earned. Knowing the contractual details of the Certificate before investing will help you avoid a surprise that you weren’t expecting.

You’ve Included it as a Part of a Broader Savings Plan

Lastly, you should consider how investing in a Certificate fits into your overall savings, or retirement, strategy. When are you going to need the funds that you are investing? Could you reach for higher yields by tying your money up for a longer term? Would building a Certificate ladder be advantageous? A Certificate provides savings discipline and can also be a great hedge for riskier investments you are making elsewhere in the market. Considering how a Certificate could fit into your broader financial plan could help you leverage its value and use it as a tool to help you reach your goals.

After you have decided that a Certificate is a financial product for you, completing the above diligence will help you select and use the Certificate wisely within the context of your overall financial plan.

Ready to open a Certificate? Still want to learn more?

If you’d like to discuss NASA FCU’s Certificate options with a Member Service Associate, call 301-249-1800, Ext 555.

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College Credit: Six Ways to Save on Textbooks

Textbooks are one of those necessary, but pricey, college expenses. It’s easy to cut costs on food, clothing and even housing, but textbooks are a necessary requirement while in school. According to the Government Accountability Office, the cost of textbooks rose 82 percent from 2002 to 2012. That’s nearly three times the rate of inflation. And the College Board reports that students spend about $1,200 per year on books and supplies.

So what’s a college student to do? Here are six ways to save on your college textbooks:

  1. Don’t shop at the college bookstore. The bookstore has a captive audience and is very convenient, making prices higher.
  2. Find used books. Online bookstores, CraigsList, and bookstores that are not affiliated with your college are good places to start. MyNextCollege.com has a search tool that can help, too.
  3. Check the library. If your professor is notorious for not using the textbook, consider not purchasing it. Visit the library when you need occasional access to available texts for completing assignments.
  4. Buy or rent the digital version. Many textbooks are now available as eBooks, and they’re often less expensive than purchasing a hard copy.
  5. Share books with a roommate or friend. Split the costs and make the book accessible to both parties. You can even set up a regular schedule or study date so you both have equal access.
  6. Do your research. CenageBrain.com, efollet.com, BestBookBuys.com, BookRenter.com and others are great resources to rent, comparison shop, or even buy or rent single chapters of textbooks. Do your homework to find the best prices!

Still Not Saving? You’re Not Alone!

We like to think of ourselves as learning animals. We take our lived experiences, extract valuable lessons from them, and use that information to improve our daily lives. This is how we get better at doing things over time.

However, a recent survey from Bankrate.com shows that we haven’t yet learned the lessons of the Great Recession. While Americans paid down their debt in the months since the recovery, a shocking 26% of Americans still report having no emergency fund. Another 24% have less than three months living expenses saved. Only 23% of survey respondents have the recommended 6 months living expenses saved.

It’s not for lack of caring. The same survey reveals that 60% of Americans don’t feel comfortable with their current savings position. We all know we need to save more, but we still don’t actually do it. Why is that?

Many experts say the problem is there’s just not enough money left at the end of the month for savings. This is true no matter how much you make; fewer than half of people with incomes more than $75,000 have that 6-month cushion. Rebecca Kennedy, the founder of Kennedy Financial Planning in Denver, says that after utilities, rent, and other expenses, there’s no money left over for savings.

Not having an emergency fund is like walking a tightrope without a net. No one likes to think about it, but what you would do tomorrow if you lost your job, wrecked your car, or had to miss work due to illness? In 2008, the answer provided by many would have involved tapping into a home equity line of credit. But, when house prices began falling and interest rates rose, these people had to rely on expensive debt to finance their lifestyles. That forced them to postpone retirement, miss vacations, or compromise on educational plans for their children.

You can avoid this problem. It may seem impossible to create an emergency fund, but there are always ways to squeeze a few extra dollars out of each month. Consider these seven ideas:

1.) Start small. If you save $5 a week for four years, you’ve got an emergency fund of just over $1,000. That’s a great start to a rainy day fund, and you can do it by giving up one vending machine soda a day. Many people stash every $5 bill they get in a coffee can or store all their loose change. You might also consider a 52-week plan where you save $1 the first week, $2 second, and so on. These incremental steps can make a big difference in the long term – at the end of a year, you’ll have saved almost $1,400.

2.) Take on a second job. It’s never fun to leave one job and head to another. Remember, though, that you’ll have to work fewer hours to build a savings than you would have to work to pay down debt. Don’t limit your search to part-time jobs. Consider freelancing, taking surveys, babysitting, or selling tupperware. You don’t need to finance another lifestyle. You just need to make enough to start a savings fund.

3.) Pay yourself first. Think about your savings as another bill. This mode of thinking prevents you from treating the money as discretionary and frittering it away on impulse buys and luxuries. Make your savings as important as your house note, car payment, and utility bills.

4.) Automate it. Consider setting up a Club Account or a savings account with direct deposit. This step ensures you’ll remember to take the savings out of your budget each month. You’ll also be earning a little bit of interest on your savings to help you on your way. These savings products have the flexibility to allow for immediate withdrawals if you need it, but are limited by law in how many withdrawals they allow. This means your money is there when you need it, but far enough away that you won’t be tempted to spend it.

5.) Put luxury in the back seat. Whether it’s a fancy coffee drink, a pack of cigarettes, a fast food meal, or the latest cell phone, things we don’t need will consume much of our income. You don’t need to give up your vices all together. In fact, financial expert Candice Elliot compares these choices to dieting. Repeated denials can drain our will-power, leading us to snap back harder. The answer may be to cut back on our consumption instead. Go without your Starbucks on Friday or wait 6 months for the price to drop on a gadget. Put the difference into your savings account.

6.) Look at recurring expenses. If you’re honestly spending everything you get on your monthly bills, it may be time to look at them. Consider cutting your TV services or switching to a pre-paid cell phone plan. Simply giving up a premium movie channel for a year could save you as much as $240. Now that Game of Thrones is over for the season, do you even need it? These don’t have to be long-term choices. Your goal should be to make temporary sacrifices to ensure yourself against future loss.

7) Don’t spend it. Your emergency fund should only be used for actual emergencies. Ask three questions before you take even a dollar out of your emergency fund. Is the thing I’m paying for absolutely necessary? Is there nothing I can cut back on this month to pay for it? Do I have to pay for it right now? Unless the answer to all of these questions is yes, leave the money where it is.

Early Retirement Costs You Might Have Missed

Retiring early is the dream. You get to spend more time with your family and enjoy your hobbies while you’re healthy enough to do so. You can say goodbye to the workaday world and begin your permanent vacation.

Maybe it’s less of a dream and more of a necessity. Maybe health problems like chronic pain or arthritis, are forcing you to consider giving up your career before age 65. Perhaps your children need you to help with caring for your grandchildren.

Whatever your reason for retiring early, a new study released on 6/12/14 by Fidelity Investments warns it will cost you in ways you might not expect. According to the study, early retirees can expect to pay an extra $17,000 per year in medical expenses.

The reason? Medicare coverage gaps. You give up your employer-provided health insurance when you retire, and Medicare doesn’t kick in until age 65. This means you’re on your own at a time when your health care costs are near their peak. Insurance companies charge older policyholders higher premiums, which means they’ll claim a bigger chunk of your retirement money.

As a savvy credit union member, you know the advantages of planning ahead for your golden years. Let’s look at a few ways you can avoid sticker shock at your retirement party:

1) Short-term insurance

One popular option is to look for an emergency-only or high-deductible insurance plan (HDHP). These plans feature inexpensive monthly premiums, but offer little in the way of coverage. These budget-friendly insurance options are great if private health insurance is too expensive.

You can expect to pay for a variety of costs out-of-pocket. Routine, preventative, and non-emergency medical procedures will be your responsibility. A regular checkup will cost at least $75 and the costs can escalate if your doctor orders tests or other procedures. You may also pay full price for prescription drugs.

This option is best if you’re retiring just before age 65. You can afford a few months of risk before Medicare coverage starts. However, you’ll still want another savings option to help with massive medical bills.

2) Staggering your certificates terms, so that you always have something renewing can provide flexibility, accessibility and growth potential

You likely use savings certificates (similar to CDs at a bank) to keep an emergency fund on hand. These savings instruments are ideal for building up money in case of a rainy day. You may want to create one specifically for your health care costs.

You’ll want to keep this money separate since you’ll have different needs for it. A sudden, unexpected medical bill is different than needing a new car. You’ll likely have a little more time to pay your medical bill. Many hospitals are willing to work around your financial situation.

A 6- or 12-month certificate provides the perfect combination of accessibility and growth. Once you turn 65, you can add your remaining funds to your other retirement savings or even use it to finance a vacation!

3) Open (and use) a Health Savings Account

A Health Savings Account (HSA) is a special tax-advantaged account for your savings that allows you to defer taxation on the money. The idea is that the money you spend on health care costs shouldn’t be taxed. So, you can save money to pay premiums, deductibles, and other healthcare-related expenses.

These accounts have been growing in popularity this year. If your family insurance plan has a deductible of $2,500 or more, you can open an HSA at your credit union. You can contribute up to $6,450 to your HSA per year, tax-free. Many employers also provide matching contributions to HSAs as part of their benefits package.

While withdrawals from your HSA are allowed only for medical expenses, this rule is waived for people 65 or older. While non-medical withdrawals are taxed, the money still grows tax-free. Many financial planners are advocating the use of HSAs as a kind of “shadow IRA.” With them, you reduce your current tax burden while saving for retirement.

Planning for your future health care costs can be scary, but it’ll be much scarier to go into retirement unprepared. Sit down with a representative from your credit union today to discuss how you can save for your health care in retirement. You’ll thank yourself later.