Homes by Vanderbilt of Sanford, North Carolina, has nothing to do with Vanderbilt Mortgage or Berkshire Hathaway and is not involved with this lawsuit in any shape or form.

Plenty of students are defaulting on their student loans, a worrisome problem that should make us reconsider the value of a four-year college degree.

I would like to preface my thoughts on how more skills training might improve returns on education with a short departure into student loans.  Unemployment is probably behind the high rate of student loan defaults and deferrals.  It could also reflect the changing economy.  Either way, we have a problem. We are encouraging students to pursue college degrees, even though many have to borrow to finance that opportunity.  The payoff, for many, never comes. They are left with debt that changes the course of their adult life.

Lenders are ready to turn off the spigot of student loan debt. High default rates on student loans might underscore the need for better underwriting.  Banks are sure to make good on that fact.  Indeed, new data contradicts the idea that student loans are a poor fit for risk-based pricing. Even these loans can be adequately gauged for performance with credit scoring. A new study says that a 670 credit score seems to mark the difference between making good on private student loans or not.  For borrowers with credit scores above 670, only 1.8 percent failed to pay their debt. Below that number, and the default rate soars to 16.8 percent.

That is pretty powerful data, and it contradicts doubts about credit scoring for these products. Many students seek loans at a point in their life when they have little or no credit history.

Accepting that, what does this tell us about how and why we promote college? A government economist thinks it might be worth a million dollars. The College Board concedes that it is somewhat less valuable.  In many instances, all of that school appears to be  worthless.

Banks may make the decision for us. Lenders, particularly private student loan companies, could (more…)

An article in today’s Wall Street Journal lays out some of the problems with the Home Affordable Refinance Program. “Borrowers Miss Out on Refinance,” reads a headline.  According to WSJ, HARP is not reaching scale because it doesn’t address the needs of people who are under water in their mortgage.

HARP is struggling for several reasons. For one, the program still isn’t designed to meet the needs of borrowers. Second, banks don’t appear to feel compelled to act with integrity in their efforts to make HARP loans. Last, Fannie and Freddie are imposing new charges on loans that make it harder for cash-strapped consumers to make refinances.

This is a shame, of course.  Refinance rates are very low.  Even for borrowers with the best prime mortgages, refinance rates are at historical lows.  The refinance market should be booming.  While last year was a busy year for refinances, it was not nearly as high as it should have been in the context of these low interest rates.

In 2003, when refi rates were roughly the same as those available to prime borrowers now, (more…)

I continue to find evidence that there is a fundamental shift going on in how low-income consumers access the payments system.  Earlier, I wrote at length about MetaBank and their prepaid debit card/line of credit platform developed in conjunction with NetSpend. I made some headway learning about the Emerald Advance and the Emerald Advance line of credit, both from Block.

Later, I made mention of the RushCard – a similiar product issued with funds from Bancorp Bank and M&T Bank.

Today, I see that Bancorp Bank (TBBK) has struck again.  Let’s look at their Eufora Card.  Eufora aims at the segment (more…)

HUD established a long-term of goal of improving the energy efficiency of homes in its Housing Choice Voucher Program (Section several years ago.

Right now, HUD spends $5 billion per year on energy bills. That figure increased by 13.5 percent between 2006 and 2008, alone. Energy costs for subsidies to Section 8 increased 18 percent.

HUD provides utility allowances to 84 percent of the residents in its Section 8 program.

In their own words, HUD states that the focus of its energy plan is Energy Star. EnergyStar is a (more…)