Here’s How Trump’s New Budget Will Affect Your Student Loans

Have a student loan? You'll want to read this.

The 43 million Americans with student loans — and the millions more who will take out their first college loans this fall — should pay close attention to President Donald Trump’s proposed 2018 budget. It requests dramatic changes to the help offered to borrowers, calling for an end to many benefits for lower-income students, and making life harder for those repaying graduate school loans. There’s a glimmer of hope, though, for those repaying undergraduate loans.

The budget, which was made public Tuesday, and is available on the White House website, is not set in stone — in fact, it’s more like a wish list the White House sends to Congress every year. Still, it will be used to frame discussion of student loan borrowing and repayment, so it demands attention.

Let’s break down what it could mean for you.

Lower-Income Borrowers Would Take a Hit…

Trump’s budget calls for elimination of the Stafford Loan program, which provides discounted loans to students with financial need. Stafford borrowers pay roughly half the interest rate of standard federal loan borrowers. These borrowers would also have to pay interest on their loans while in school, ending a long-time benefit. Students with standard federal loans don’t make payments while in school, but interest on their loans accrues and is capitalized, or added to their balance.

As Would Service-Based Loan Forgiveness…

The budget also calls for the end of the Public Service Loan Forgiveness (PSLF) program, which allows workers in some professions to see their loan balances erased after they make income-based repayments on their loans for as few as 10 years. The program began under the Bush administration, but under President Obama, the earn-out time was reduced to 10 years.

The program is already the subject of controversy, as the first crop of students eligible for 10-year forgiveness — about half a million graduates — will have that benefit kick in this fall. The Department of Education, under the leadership of Education Secretary Betsy DeVos, already has said it might not honor the forgiveness now. The Department of Education did not immediately respond to a request for comment about the program, or Trump’s budget.

Income-Based Repayment Plans Would be Reduced, But…

The biggest government savings in the budget when it comes to student loans, though, comes from reducing the number of income-based repayment plans made available to struggling graduates, according to a New York Times analysis. Currently, there are a series of complex offerings (explained in detail on the Department of Education website).

Plans with names like income-contingent repayment, income-based repayment, and “pay as you earn” are all designed to keep payments between 10% and 20% of the borrower’s income. Some offer payments as low as $5 per month, depending on income.

…Forgiveness Could Come Sooner

However, the Trump plan offers those using income-based repayment plans something Trump promised on the campaign trail. Monthly payments for undergraduate loan holders would increase slightly to 12.5% of income (from 10%), but would promise forgiveness on a shortened schedule — after 15 years of on-time payments. Currently, many plans require 20 years of payments.

Grad Students Would Be Hit Hard

On the other hand, those with graduate loans would face a tougher road. Graduate students would also have to pay more — 12.5% of their incomes — and would have to pay for 30 years instead of 25 years.

In other words, under Trump’s plan, a student who earned a graduate degree at age 25 would have to make on-time income-based repayments until age 55 to earn loan forgiveness, while someone with an undergraduate degree who graduated at 22 could earn forgiveness by age 37.

Those who plan to stop school after college might cheer the proposal, but an analysis of the student loan problem published by Credit.com shows that the majority of borrowers with oppressively large loans accumulated their balances in graduate school. While the average college loan balance for a 2016 graduate is about $37,000, one quarter of all grad degree earners had borrowed more than $100,000, according to a paper published by the New America Education Policy Program in 2015.

The New America paper also found that 40% of America’s outstanding $1 trillion-plus student loan balance is owed by those who earned a graduate degree. Trump’s budget essentially uses savings from cutting help to graduate school borrowers to offer help to undergraduate-only borrowers.

Whatever your student loan situation, keep in mind that missed or late payments can end up impacting your credit scores, which can hinder your borrowing ability in the future. You can see how your loan repayments are affecting your credit by checking your two free credit scores right here on Credit.com.

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17 Questions Every College Graduate Has (But Is Afraid to Ask)

If you're graduating from college, your work is only beginning. Here are some of life's questions for which you'll need answers.

May is a big month for college graduates. There’s all the last-minute details with finishing school – finals, papers, moving, selling stuff. There’s the family, the cap and gown, the parties, the sad farewells. Then after all that, there are the questions. What now? Where will I go? What will I do? We can’t answer all of them for you (you’ll have to decide to keep or dump that college sweetheart on your own). But here’s a good start at answering some of the questions you may have when it comes to money.

1. What Should I do With Graduation Money I Get From my Family?

Lucky you! Resist the urge to spend it all upgrading your hostels to hotels on that summer trip to Europe. Instead, use half of it to pay down debt or pay for your move to a new city, and the other half to invest for the future, preferably, retirement. Really. Read the parable of the Two Twins. In short, it shows that people who put away money for retirement in their twenties — and stop by age 30 — end up with more money than those who save nothing in their twenties but save from age 30-65. It seems impossible, but it’s true. Those who invest in their early twenties have an amazing advantage over everyone else.

2. When do I Have to Start Making Student Loan Payments?

Most student loans come with a six-month grace period, meaning the first payment is due seven months after graduation. For most of you, that means this November, unless you’re headed to graduate school.

3. Should I Go to Graduate School?

That depends. While it’s tempting to put off “real life” (and student loan payments) for a few more years, many people can benefit from working for a few years before returning to school. Studies can be more focused when students are sure they are studying a field they plan to pursue. A few years working as a paralegal in a law firm can disavow you of the notion you want to be a lawyer, which will save you a lot of money and strife through law school. Of course, in some fields, like medicine, graduate school is a prerequisite, so attending right away can make more sense. But it’s important to remember: The majority of folks who are drowning in excessive student loan debt incur that debt in graduate school, not during undergraduate studies, so poorly-planned grad school can become a real problem.

4. If I Must Start Repaying my Loans, Can I Lower my Payments?

Yes. There are many ways to do this, but all of them can have negative consequences. With federal loans, the simplest way is to select a “graduated repayment plan.” This allows borrowers to pay less now, and more later – payments usually go up every two years —  with the assumption that recent grads will earn more as time goes on. All borrowers are eligible, but it means borrowing more money for longer, which means more interest paid. Beyond that, the Department of Education has numerous plans available to borrowers. Consolidation loans can extend payment terms for up to 25 years – but of course the interest paid will soar. There are also various income-based repayment or loan forgiveness programs. These can be reviewed at the Department of Education websites. You can learn more about what happens if you do default on your student loans here.

5. What Should I Do to Prepare for a Job Interview?

Google yourself. Clean up your social media accounts. Erase, or at least make private, those keg stand pictures.  Then, prepare, prepare, prepare. Learn everything you can about the company you are about to interview with (and even the person if that information is available to you). Read the job description carefully and at least appear to be excited about the specific tasks that will be required of you. Know that while the ad may say “Join an exciting team and help build a life-changing product,” you could be spending nine hours a day composing social media posts. At least, at first. Embrace that. And, maybe get a new suit. You can find 50 more steps grads can take to find their first job here.

6. It’s my First Job, What Salary Should I Ask for?

The average starting salary for college grads this year is $49,785, according to advisory firm Korn Ferry. That’s not a bad starting reference point. And it’s up 3% from last year. Some professions get more, some less. Software developers earn 31% above average; customer service reps, 28% below. Check out more numbers from the Korn Ferry analysis.

7. How do I Make a Budget?

Budgets don’t have to be complicated. Type into a spreadsheet the costs you know (or guess) for rent, utilities, TV/video, Internet, car, phone, student loan repayments, food, entertainment and whatever else applies. Add it all up, then compare it to your take-home pay. If the first number is higher than the second, you’re going to have to make some cuts, so start figuring out what you can live without. At the end of the month, take out the credit card bill and see how realistic your projections were. Then add lines where you missed things – lines for travel, or savings, or emergencies (they happen, sometimes monthly). Then repeat, every month. You’ll get it. It might be painful, but keep at it.

8. Should I Put Money in a 401K or Pay Down Debt Instead?

Yes! You should do both —save and pay down debt at the same time. It’s a BIG mistake to pay extra to lower your student loan balance at the expense of contributing enough to your 401K to at least maximize your company match. That’s free money you should never leave on the table.

9. Should I Live With Roommates?

For most people, housing is the biggest monthly expense. Ideally, rent will cost no more than one-third of your income. Keep in mind, though, that it’s essentially impossible to afford an average-priced two-bedroom apartment one a single average income anywhere in the U.S. One bedrooms also can be are expensive, so while you may be tired of living with roommates, your best strategy is to live like you are in college for a few more years and save your money. Living with roommates can be the quickest route to owning a home in your thirties.

10. How Much Money Do I Need to Buy a House?

The median home price in the U.S. right now is $189,000. To make a traditional 20% down payment on that would be $37,800. A 5% down payment, accepted in many situations with higher fees, would be about $9,500. Of course, in many populous cities, prices are much, much higher. For example, the median home price in Washington, D.C., is $549,000 – a 20% down payment there is $109,000, and 5% down is $27,500. Some mortgage programs, like FHA loans, allow first-time home buyers to have even less money down, but those come with other fees, and of course, the monthly payment will be higher. Speaking of monthly payments, would-be buyers need to remember house payments also come with insurance and property taxes. Then, there’s maintenance and surprise repair costs. So, save while you can.

11. How Much Does a Wedding Cost?

From $100 to $100,000, or more. Seriously. You can Google the cost of an average wedding, and you’ll quickly find averages in the range of $25,000 to $30,000. But these numbers are based on online surveys, which are self-selecting. Averages are skewed by extremes, plus an “average” wedding in New York will cost more than one in St. Louis. You, you can spend as little or as much on your nuptials as you choose, but guess which one is financially smarter. You can go simple and put that cash toward a down payment instead.

12. How Much Money do I Need to Start a Family?

That’s not an easy question to answer, but here are a few data points. It costs $233,610 to raise a single child through age 17 (not including college), according to the U.S. Department of Agriculture. That’s just one child. Of course, you don’t need it all at once. A kid costs about $12,000-$14,000 annually. Costs will vary regionally, and on your taste in clothes and schools, and on your health insurance plan. Kids are expensive – the average cost of just having a baby in the U.S. is about $10,000, and that’s without any complications.

13. OK, Then. How do I Make More Money?

The easiest way is moonlighting in the gig economy. Drive an Uber one night per week (do it on a weekend night and you’ll save by not spending!) Rent out your place on AirBNB. Sell things on eBay or Etsy. Volunteer for overtime.  Most of all, hone a skill that’s desirable, like software coding. And don’t forget the most obvious: Ask for a raise at your current job …

14. How Do I Ask for a Raise?

Never forget that how much compensation you get from a company is a simple business negotiation. You don’t get to ask for more money because you need it. You have to ask for more money because you are worth it. Do your research. Go to places like Salary.com, Indeed, or Glassdoor and learn if you are paid commensurate with others in your profession. If you aren’t, that’s a good starting point. Chiefly, do a quiet job hunt and see what others in the market might pay you. The best way to get a raise is to get a counter-offer.

Also, note these two disturbing trends in many salary surveys: Workers often don’t get raises any more, they get bonuses, which help corporations keep down their long-term liabilities (it’s easier to kill a bonus than lower salaries when times get hard). And many workers today find the only way to get a real raise is to change jobs.

15. There Are no Jobs in my Major. What Should I Do?

Don’t give up your first love, but be realistic. Right now, the best-paid American workers and the most plentiful jobs are in software, engineering, and health care. Can you switch to one of those fields, and pursue your love of music or the arts on the side? Can you sell what you make on Etsy, but still have a day job? Could you write code during the day, and tutor children at night to fulfill your love of teaching? Creative thinking is your friend here.

16. What Do I Do if I Can’t Find a Job?

Start with part-time work. Research professions that offer piecework which might be similar to the field you wish to enter. FlexJobs maintains a list of jobs you can do from home. Consider joining the gig economy for a while.

17. I Don’t Know What I Want to Do. What Should I Do?

Read. Read a lot. Read books like What Color is Your Parachute. Talk to people. Talk a lot. Most important – DO SOMETHING. Anything. Work in fast food, or work at a Walmart. You can learn something at any job. Even if you hate it, that’s one thing you can cross off your list. And just maybe, you won’t hate it. But above all, don’t do nothing.  Wracking up credit card debt and student loan interest during your twentiess can haunt you for the rest of your adult life. Whatever you do, earn money and tread water. You’ll figure it out.

Image: pixelfit

The post 17 Questions Every College Graduate Has (But Is Afraid to Ask) appeared first on Credit.com.

Want to Roll Your Student Loans Into Your Mortgage? Here’s What to Consider

It can be a good option for some people, but for others it's just trading old debt for new.

It’s a question as old as debt itself: Should I pay off one loan with another loan?

“Debt reshuffling,” as it’s known, has garnered a bad reputation because it often amounts to just trading one debt problem for another. So it’s no wonder the news that Fannie Mae would make it easier for homeowners to swap student loan debt for mortgage debt was met with some caution.

It’s awfully tempting to trade a 6.8% interest rate on your federal student loan for a 4.75% interest rate on a mortgage. On the surface, the interest rate savings sound dramatic. It’s also attractive to get rid of that monthly student loan payment. But there are things to consider.

“One thing we stress big time: It worries me, taking unsecured debt and making it secured,” said Desmond Henry, a personal financial adviser based in Kansas.  “If you lose your job, with a student loan, there is nothing they can take away. The second you refinance into a mortgage, you just made that a secured debt. Now, they can come after your house.”

The Cash-Out Refinance

The option to swap student loan debt for home debt has already been available to homeowners through what’s called a “cash-out refinance.” These have traditionally been used by homeowners with a decent amount of equity to refinance their primary mortgage and walk away from closing with a check to use on other expenses, such as costly home repairs or to pay off credit card (or student) debt. Homeowners could opt for a home equity loan also, but cash-out refinances tend to have lower interest rates.

The rates are a bit higher than standard mortgages, however, due to “Loan Level Price Adjustments” added to the loan that reflect an increase in perceived risk that the borrower could default. The costs are generally added into the interest rate.

So what’s changed with the new guidelines from Fannie Mae? Lenders now have the green light to waive that Loan Level Price Adjustment if the cash-out check goes right from the bank to the student loan debt holder, and pays off the entire balance of at least one loan.

The real dollar value savings for this kind of debt reshuffle depends on a lot of variables: The size of the student loan, the borrower’s credit score, and so on. Fannie Mae expressed it only as a potential savings on interest rates.

“The average rate differential between cash-out refinance loan-level price adjustment and student debt cash-out refinance is about a 0.25% in rate,” Fannie Mae’s Alicia Jones wrote in an email. “Depending on profile [it] can be higher, up to 0.50%.”

On $36,000 of refinanced student loan debt — the average student loan balance held by howeowners who have cosigned a loan — a 0.50% rate reduction would mean nearly $4,000 less in payments over 30 years.

So, the savings potential is real. And for consumers in stable financial situations, the new cash-out refinancing could potentially make sense. Like Desmond Henry, though, the Consumer Federation of America urged caution.

“Swapping student debt for mortgage debt can free up cash in your family budget, but it can also increase the risk of foreclosure when you run into trouble,” said Rohit Chopra, Senior Fellow at the Consumer Federation of America and former Assistant Director of the Consumer Financial Protection Bureau. “For borrowers with solid income and stable employment, refinancing can help reduce the burden of student debt. But for others, they might be signing away their student loan benefits when times get tough.”

Risking foreclosure is only one potential pitfall of this kind of debt reshuffle, Henry said.  There are several others. For starters, the savings might not really add up.

Crunch the Numbers. Alllll the Numbers…

“You don’t just want to look at back-of-a-napkin math and say, ‘Hey, a mortgage loan is 2% lower than a student loan.’ You’ve got to watch out for hidden costs,’ Henry said.

Cash-out refinances come with closing costs that can be substantial, for example. Also, mortgage holders who are well into paying down their loans will re-start their amortization schedules, meaning their first several years of new payments will pay very little principal. And borrowers extending their terms will ultimately pay far more interest.

“We live in a society where everything is quoted on a payment. That catches the ears of a lot of people,” Henry said. “People think ‘That’s a no brainer. I’ll save $500 a month.’ But your 10-year loan just went to 30 years.”

There are other, more technical reasons that the student-loan-to-mortgage shuffle might not be a good idea. Refinancers will waive their right to various student loan forgiveness options – programs for those who work public service, for example. They won’t be able to take advantage of income-based repayment plans, either. Any new form of student loan relief created by Congress or the Department of Education going forward would probably be inaccessible, too.

On the tax front, the option is a mixed bag. Henry notes that student loan payments are top-line deductible on federal taxes, while those who don’t itemize deductions wouldn’t be able to take advantage of the mortgage interest tax deduction. On the other hand, there are caps on the student loan deduction, while there’s no cap on the mortgage interest deduction. That means higher-income student loan debtors who refinanced could see substantial savings at tax time.

In other words, it’s complicated, so if you’re considering your options, it’s probably wise to consult a financial professional like an accountant who can look at your specific situation to see what makes the most sense. (It’s also a good idea to check your credit before considering any refinancing or debt-consolidate options since it’ll affect your rate. You can get your two free credit scores right here on Credit.com.)

As a clever financial tool used judiciously, a cash-out student loan refinance could save a wise investor a decent amount of money. But, as Henry notes, the real risk with any debt reshuffle is that robbing Peter to pay Paul doesn’t change fundamental debt problems facing many consumers.

“The first thing to take into consideration is you still have the debt,” he said.

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Student Loan Companies are Failing College Graduates in a Crucial Way

college students Teenagers Young Team Together Cheerful Concept

The vast majority of student loan borrowers who default and rehabilitate their loans are set up to fail again because of bad advice, a new government study claims.

The Consumer Financial Protection Bureau says a stunning 9 out of 10 of these high-risk borrowers were not enrolled in affordable repayment plans, such as income-driven repayment — meaning their monthly payments were much higher than they had to be. Predictably, those borrowers were five times more likely to re-default on their loans, racking up $125 million in unnecessary interest charges along the way.

Conversely, students who were enrolled in income-driven repayment plans, which reduce payments based on the borrower’s income, were much less likely to have trouble making on-time payments. Fewer than one in 10 re-defaulted when enrolled in income-derived repayment, the CFPB said.

Loan servicers are responsible for informing borrowers about their options, but the CFPB has alleged previously that they do a poor job of it.

A Government Accountability Office report in 2015 found that while 51% of borrowers were eligible for a repayment program that could lower their payments, only about 15% were enrolled in it. The CFPB complaint database is littered with allegations that servicers make enrollment unnecessarily hard. And earlier this year, the CFPB and the state of Illinois both sued Navient — the nation’s largest servicer — and alleged the firm systematically failed to inform borrowers of their options. (Navient denied the allegation.)

Tuesday’s report focuses on a more narrow group — those who had stopped paying their student loans but had recently restarted payments and “rehabilitated” them. The group, which consists of about 600,000 borrowers, is considered the riskiest of the 43 million Americans who owe student loans.

Their plight shows the system is broken, said CFPB Student Loan Ombudsman Seth Frotman.

“For far too many student loan borrowers, the dream of a fresh start turns into a nightmare of default and deeper debt,” Frotman said. “When student loan companies know that nearly half of their highest-risk customers will quickly fail, it’s time to fix the broken system that makes this possible.”

The Student Loan Servicing Association, a trade group that represents servicers, didn’t immediately respond to requests for comment.

Roughly one in three student loan borrowers are late to some degree on their monthly payments. The Department of Education estimates that more than 8 million federal student loan borrowers have gone at least 12 months without making a required monthly payment and have fallen into default.

At-risk borrowers should know there are multiple programs designed to help them avoid default — income-contingent repayment, income-based repayment, and “pay as you earn” are all designed to keep payments at between 10% and 20% of income. Some offer payments as low as $5 per month, depending on income.

Details are available at the Department of Education website. Consumers should not take advice from websites claiming to offer student loan help — many are scams — but should instead contact their loan servicers directly.

The post Student Loan Companies are Failing College Graduates in a Crucial Way appeared first on MagnifyMoney.

How Some States Are Fighting to Protect Student Loan Borrowers

Some states are looking to add Bill of Rights laws to help keep student loan borrowers from drowning in debt.

The student loan crisis is starting to feel a lot like the housing crisis of the last decade, warns Illinois State Attorney General Lisa Madigan — a swelling economic disaster with millions of fragile borrowers unable to get timely help or good advice. If that seems like an overstatement of the situation to you, consider this: A stunning 1-in-3 student loan borrowers are late on loan payments, and several studies show struggling borrowers often don’t know about programs designed to lower their monthly payments.

Unwilling to wait for reforms from Washington, D.C., Illinois and other states are taking matters into their own hands by passing new consumer protection laws called the Student Loan Borrower Bill of Rights.

“There’s been almost no oversight of the student loan industry,” says Madigan, adding that student borrower complaints to her office have skyrocketed right along with the total outstanding student loan burden, which now sits at $1.4 trillion, owed by 44 million Americans.

Madigan helped craft her state’s legislation, which was inspired in part by a recent lawsuit filed by Illinois against Navient, the nation’s largest servicer. The measure recently advanced out of a Senate committee there.

Another Looming Financial Crisis?

“This is work we really didn’t think would ever come our way. But it resembles the mortgage foreclosure crisis. There are many of the same problems, like poor customer service, lost paperwork,” she said. “It’s very clear there is a need for enhanced consumer protections and clear servicing standards.”

The Illinois lawsuit accuses Navient of steering struggling borrowers into forbearance rather than providing them with adequate information about cheaper repayment plans. (Navient says the allegations are “unfounded.”)  But other research shows borrowers clearly aren’t getting the message about available options. In 2015, a study by the GAO found that 51% of people making their student loan payments would have qualified for lower payments, but only 13% of the borrowers knew to ask for the lower payments.

Since good advice can be hard to get, borrowers are “increasingly turning elsewhere for help, including to scam artists who exploit desperate borrowers, much like they did during the mortgage crisis,” Madigan’s office said in announcing its legislative victory.

Need Help With Your Student Loans?

If you’re falling behind on your student loans and aren’t sure what options are available to you, you can check out whether you’re eligible for a student loan forgiveness program or repayment plan. You may also be considering deferment or forbearance of your student loans until you can get your finances in order. Just keep in mind as you sort through the potential options that your student loans have an impact on your credit scores, which can affect your financial goals in both the short and long term, so make sure you keep up with payments as best you can and communicate with your loan servicer to see what options might be available to you.

Enter the Student Loan Bill of Rights Laws

Were the Illinois law to pass, the state would join Connecticut and Washington, D.C., which recently enacted Student Loan Bill of Rights laws. Several other states are weighing similar legislation.

The new laws generally require loan servicers to obtain a license in each state, which gives state watchdogs additional oversight capabilities. The laws also create an ombudsman who can receive and act on complaints from residents, and critically, states set requirements that good advice be shared with borrowers.

States are jumping in because prospects for a national student loan bill of rights, introduced by Sens. Dick Durbin and Elizabeth Warren in the last Congress, are unlikely with the current leadership in Washington.

Obama-Era Protections Killed

Also adding urgency are criticisms that Betsy DeVos, the new head of the Department of Education, has rescinded Obama-era rules that opponents say would have helped protect borrowers. On May 8, 21 state attorneys general sent an open letter to DeVos criticizing her rollback of the new rules.

“DeVos has removed those protections and prioritized the profits of servicers over helping struggling student loan borrowers,” Madigan said. “The need for Illinois to put in place a Bill of Rights is because there won’t necessarily be protections at the federal level.”

The Department of Education didn’t immediately respond to a request for comment.

Should Illinois and other states succeed in passing such laws, they would all be in the odd position of trying to regulate federal student loans and firms working under contracts with the federal Department of Education.

It’s an open question, however, if states can really regulate federal loan programs. Supporters of the bills say states have the right to protect their residents from fraud and abuse, but it’s possible that loan servicers could ultimately challenge their authority in court.

Navient directed questions for this story to the Student Loan Servicing Alliance, which criticized what it said could become a patchwork of laws.

“Servicers help student loan borrowers repay their education loans, and avoid the negative consequences of serious delinquency and default,” said Winfield P Crigler, executive director. “This work is best achieved in a clear regulatory environment. The U.S. Department of Education, which is the lender for more than 90% of new student loans, already uses its regulatory and procurement powers to supervise federal student loan servicers. We believe state regulation of student loan servicing will conflict with federal policies and requirements, and will be a detriment to the very borrowers we intend to help.”

But supporters point out that state-level consumer protection laws can be more effective.

State-Level Consumer Protections Could Help

“Consumer protection at the state level fills critical gaps when the Feds are asleep at the switch. Many states are frustrated that the Education Department has been too cozy with the student loan industry, so they’re looking to protect borrowers in their state,” said Rohit Chopra, senior fellow at the Consumer Federation of America.

States are taking other steps, too. California is considering a law that would cap private student loan debt garnishment at 15% of wages, for example. Several other states have enacted programs making it easier for student loan holders to refinance.

Chris Lindstrom of the Public Interest Research Group welcomes the flurry of state-level activity. Federally, the job falls to the Consumer Financial Protection Bureau, which she fears may lose its authority or influence soon.

“It’s onerous (regulating) the student loan space, especially when looking at the scope of the problem. It’s good to have more eyeballs on what’s going on,” she said. “Then there’s also the whole hedging bets situation, since nobody knows what the next Congress will mean for the CFPB.”

Lindstrom said the state-level ombudsman would be the most tangible and helpful change for borrowers.

“Having a place where you can go to complain and having that complaint count,” she said.

State-level laws would apply only to state residents: An Ohio resident who studied at the University of Chicago would get no relief from the Illinois bill, for example. On the other hand, an Ohio State graduate living in Illinois would be protected.

Ultimately, however if a critical mass of states pass and enforce new rules, the impact could ultimately be nationwide.

“If a slew of large states enact similar legislation, this could be the medicine the industry needs to treat borrowers fairly nationwide,” Chopra said. “We saw a similar approach a decade ago with toxic mortgage lending, where states looked to protect homeowners through new state laws.”

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How Plastc Customers Can Use the 540-Day Rule to Get a Credit Card Refund

Thousands of consumers were left holding the bag — and out about $150 – when all-in-one cardmaker Plastc announced recently it was never shipping a product.

Is there any chance consumers can get their money back?

Yes. Even those who’ve already been told by their credit-card issuing banks that the charge is too old to dispute. Read on to learn about a little-known rule that gives credit and debit card customers up to 540 days to file a dispute in some situations. Even if you aren’t a Plastc victim, there’s a powerful consumer lesson to be learned here.

To refresh your memory, starting about four years ago, several firms announced products that promised to thin out Kramer-sized wallets everywhere — a single, digital credit card on which all other plastic cards could be loaded. New technology would let the makers of Plastc, Coin, and several others rewrite the magnetic stripe in real time, eliminating the need to carry around multiple credit cards. Optimistic buyers raced to preorder the gadgets. One by one, they were all disappointed, as so far, no all-in-one card has proved viable.

During a Facebook Live chat on Sept. 29, 2016, Plastc CEO Ryan Marquis apologized for production delays. Less than 7 months later, the company announced its bankruptcy.

The makers of Plastc sure tried, however. At least, they said they did. Back in the fall, Plastc CEO Ryan Marquis took to Facebook to claim the firm had raised $9 million from 80,000 “backers,” and once again promised that success was around the corner. On April 21, Plastc gave up, announcing it was declaring bankruptcy. That left thousands of consumers wondering what would become of their preorders.

For the earliest backers, like Andrew Goodman, there’s probably very little hope.

“I’ve been a backer since April 2015 and certainly have no delusions of getting my money back,” said Goodman, who lives in West Chester, Penn. “I was given a flat ‘no’ from both Amex customer service and the third party they refer you to for complaints on purchases older than 12 months.”

[Read more: The Unfulfilled Promise of ‘Smart’ Credit Cards]

The 540-Day (or 120-Day) Rule

But others, who gave Plastc their money a year or so ago, shouldn’t give up hope, even if they are initially rejected by their bank. A little-known rule governing most credit card transactions — so little known that even many in the banking industry don’t know it — means many consumers are eligible to dispute their transactions up to 540 days after they were initially posted.

Reddit threads and Facebook pages set up for disgruntled consumers are full of conflicting information, with some saying they’d managed to get a refund, while other say their card-issuing bank denied one, citing a 120-day time limit for disputes.

There is a 120-day time limit for disputes, but there is confusion over when that 120-day clock starts. The answer for Visa users, however, is quite clear on a document that sits on Visa’s website called “Visa Core Rules and Visa Product and Service Rules.” In a section titled “Chargeback Time Limit — Reason Code 30,” Visa tells participating banks and merchants that the clock doesn’t start until the purchased merchandise was supposed to be delivered — with a limit.

“If the merchandise or services were to be provided after the Transaction Processing Date, 120 calendar days from the last date that the Cardholder expected to receive the merchandise or services or the date that the Cardholder was first made aware that the merchandise or services would not be provided, not to exceed 540 calendar days from the Transaction Processing Date.”

Since customers were only told their orders wouldn’t be filled April 21, that rule suggests the 120-day clock starts then, not on the date of the transaction. In other words, while some banks have been telling Plastc buyers they can’t dispute their charge if it was processed earlier than January of this year, that Visa rule says folks who ordered as far back as November 2015 still have the chance to dispute. That’s a big difference.

So for clarification, I called Visa.

“Your read of the rule is correct,” said Visa spokeswoman Sandra Chu. “It’s 120 days from (the notification of non-delivery).”

Chu advised consumers who are told otherwise by their Visa-issuing bank to have a link to the Visa service rules handy and point customer service agents to that section. The rules, she said, are required for any credit or debit transaction that is processed on the Visa network.

What about other credit card issuers?

Mastercard did not immediately return my call for comment, but its “Chargeback Guide” contains similar language. In a section titled “Time Frame,” the criteria is listed as “15 to 120 days from the delivery/cancellation date of the goods or services.” Another section mentions a 540-day overall limit.

American Express media relations did not offer an answer to the question, and I was unable to find official documentation online. An old response from the firm’s official Twitter account hints that consumers – at least back in 2011 – had a long time frame to file disputes over purchases they never received as promised.

“For non rcvd orders u can disputed even after 65 days from charge.U are given 60 days from promise date of delivery 2 dispute,” the account said at the time. That contradicts the explanation Goodman received, however; if MagnifyMoney gets clarification, we’ll update this story.

Discover didn’t immediately respond to a request for comment.

Meanwhile, some consumers with even older-than-540-day transaction dates say they’ve received goodwill refunds for Plastc from their banks.

So the moral of the story is: Always call your bank and ask. And if you get no for an answer, don’t assume that’s the only answer.

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Why Even Full-Time Workers Struggle With Expenses

A new book based on extensive research of U.S. households says income instability is to blame.

Unemployment is low, inflation is historically low and even wages are perking up, leading many observers to believe the U.S. economy is humming along nicely. So why do many Americans say they are struggling?

A new book born of meticulous, years-long research offers a fresh insight into this burning question. Month-to-month swings in income, even for those with full-time jobs, are often the cause of Americans” financial anxiety, claim the authors of “The Financial Diaries: How Americans Cope in a World of Uncertainty.”

For a stunning number of American households, both income and expenses swing 25% or more in either direction on a regular basis, leaving many families scrambling on a month-to-month basis, even if things don’t look so bad annually, the authors argue in their book and a Harvard Business Reviews essay.

Economic data tends to examine broad movements; even at its most micro, it tends to identify years-long trends. Researchers Jonathan Morduch and Rachel Schneider had a sense government statistics were missing things, so they went nano. They spent 12 months getting 235 families to track every single dollar going in and out — 300,000 cash flow events in all. The product of their painstaking research offers perhaps the clearest view yet of why even middle-class Americans find themselves living with deep economic anxiety. The book even offers up a new term — “precarity,” or precarious economic volatility — to describe the plight of everyday Americans.

One of the more bold claims made in the book: Despite all the talk about income inequality, the authors say income instability has risen even faster and is the more immediate problem.

What’s Income Instability? 

Many readers are familiar with the idea that unexpected expenses — like a health scare or major auto repair bill — can derail many households. But the book establishes another reality that might be new to many: income volatility, even among those with full-time jobs.

The book’s opening anecdote cites a research subject who works as a truck mechanic in Ohio. While he works full time, his pay relies largely on commissions and can vary from $1,800 to $3,400 each month. In bad weather, trucks break down more often. That means in the spring and fall months, mortgage payments aren’t made, and the electricity bill goes unpaid. Later, for a fee, the family catches up. (You can see how any missed loan payments may be affecting your credit scores by viewing your free credit report summary on Credit.com.)

This same problem is repeated again and again among the families studied. Morduch and Schneider found that the term “average income” is a bit of a farce, as typical families lived through five months each year with income that swings either 25% above or below “average.”

“This is creating a lot of anxiety and uncertainty that is impossible to see in the usual data,” Morduch said in an interview. About five months out of each year, incomes “weren’t even close” to average.

“Often we see the (financial) problems as a discipline problem, a failure of personal responsibility. What we’re trying to say is there’s something else going on,” he said. “The underlying conditions are really hard. It probably isn’t just about self-discipline.”

Income swings are to be expected among families suffering job loss, the self-employed or those who rely on tips, like waiters. But the researchers found a stunning rate of income volatility even among those with traditional-sounding full-time jobs.

“This was the single biggest surprise (in the research),” Morduch said. “There’s insecurity that’s because you are going to lose your job, but that’s not what’s driving anxiety for these folks … What we see is that when paychecks bounce from month to month, people can be making good financial choices but are still struggling.”

As a result, even earners who are safely in the middle class spent a month or two living as poor or “near poor,” the book says. The problem for many is better described as a lack of liquidity — getting enough cash to pay the mortgage this month — than as insolvency, or a hopeless difference between income and expenses.

“Not balancing on a high wire, driving on a rocky road,” the book says. “(There’s a) distinction between not having money at the right time vs. never having the money.”

While economists might just be becoming aware of this month-to-month struggle, the financial industry has known about it for some time. That’s one reason there are more payday lending storefronts in America than McDonald’s restaurants. (You can find tips for escaping payday loan debt here.)

Trouble Saving for a Rainy Day

The volatility problem is closely related to Americans’ lack of emergency savings. Study after study shows a large percentage of Americans don’t have the recommended three months of living expenses stored in short-term savings. Some studies show even more dire data. A stunning 46% of Americans told the Federal Reserve in 2015 they could not cover an emergency $400 expense without selling something or borrowing the money. Income and expense volatility, combined with no savings, is a perilous combination.

“Households don’t have a big cushion. Into this mix is the reality that levels of income have not risen – the bottom 50% has seen no income growth since 1980 — then you are really squeezed,” said Morduch. As a result, even in good months, earners don’t have any extra left over to build a rainy-day fund – economists say their budgets have no “slack.”

“There is a knock-on effect of diminished slack so when the budget gets hit by a car repair or the house needs a new roof, it’s just that much harder,” Murdoch said.

How did this income volatility come to pass? The authors blame what they call “the Great Job Shift.” Employers are increasingly sharing risk with their workers. That means cutting back hours, often on the spot, when times are slow. Or basing a large portion of pay on commission, as in the case of the truck mechanic. In other cases, workers rely on tipping to top-up wages that otherwise aren’t livable. In one of the book’s more frustrating scenes, as casino blackjack dealer in Mississippi describes how her income relies on events as whimsical as the nearby college football team schedule.

The subjects in the book are anonymized. Their names changes and a few other personally identifiable data points have been obscured, but otherwise, their financial diaries are disturbingly real.

How Do We Fix it? 

When asked for policy recommendations, Morduch leaps to the defense of the Consumer Financial Protection Bureau, which he says is working hard to regulate many of the short-term lending products that have emerged to services workers with volatile incomes. He says there’s also been constructive conversations with large firms about making hourly wage worker schedules more predictable, and moving away from so-called on-call workers. The “Schedules That Work Act” that would have promised some workers two-weeks scheduling notices was considered but tabled by Congress under President Barack Obama.

Other changes would help, too. Many social benefits programs are cumbersome to apply for and don’t offer much help for families who are only occasionally “near poor,” and might need help one or two months per year.

Changes that could encourage saving for short-term events would help, too. Tax-advantaged products like 401K accounts help families plan for decades in the future, but families living on the margins are afraid to use them for emergency savings because of the severe early withdrawal penalties. (You can learn more about withdrawing from your 401K here.) More flexible rules would encourage greater use of retirement accounts, Morduch believes.

“A lot of Americans wisely don’t want to lock up their money,” he said. “There isn’t enough attention paid to shorter-term policies.”

In a larger sense, Americans should probably change the way they think about income and spending, Morduch said, and many could learn from research subjects described in the book.

“The families we got to know, they think a lot about liquidity. They have a lot to tell other Americans. Mainly, prepare for a life of ups and downs,” he said.

If you’re looking for ways to keep your finances in check, we’ve got a full 50 ways you can curb and stay out of debt here

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These Are the States Where Mortgage Debt Is Rising Fastest

Mortgage debt is rising fast. Here's a look at the states where it's happening.

Mortgage debt is rising fast. Nationwide, the average balance owed on a mortgage is $196,014, up 2.5% from the year prior and 6.4% from nine years ago.

You’d expect to hear about soaring mortgage debt in pricey places like New York and San Francisco. But — surprise — the top five states where mortgage debt climbed the fastest in the past 12 months were North Dakota, Texas, South Dakota, Kansas and West Virginia, according to new data from Experian.

To be sure, traditional real estate hotbeds aren’t getting off easy. As far as average mortgage debt goes, Washington, D.C. tops the list at $385,159, followed by California, Hawaii, Maryland, Massachusetts and New Jersey. New York, Virginia and Connecticut are close behind.

And traditionally less expensive markets are catching up quickly.

Over the past nine years, when total debt in states like California and Illinois was essentially flat, mortgage debt soared by 52.29% in North Dakota. It was up sharply in Wyoming (32.36%), Louisiana (27.18%) and Texas (27.08%) as well.

Of course, in these traditionally poorer states, mortgages had plenty of room to grow. For example, over those nine years, average mortgage debt in North Dakota rose from $99,833 to $152,039. While that’s a big increase, a $159,000 mortgage balance still looks great to Californians, who typically owe more than twice as much.

What’s Driving the Trend

The obvious explanation for rising mortgage debt is rising prices, which lead to larger loans.

“This list definitely lines up with trends in median prices,” said Daren Blomquist, senior vice president at ATTOM Data Solutions, which studies the housing market. “States with the highest median home prices mean higher loan amounts for purchase mortgages.”

The overall housing market comeback explains a lot of the increase, but local factors matter too, said Experian’s Susie Henson.

“North Dakota and Wyoming … This is purely related to the oil boom and bust economy,” she said. “When oil was about $60 a barrel, North Dakota had an instant demand for housing because of the flood of workers who came to the state for work. Personal income grew, people bought houses.”

The share of homes that are underwater also contributes, Blomquist said. Underwater homeowners generally can’t refinance or take out home equity loans due to poor credit. (You can view two of your credit scores for free on Credit.com.)

“Homes that have not yet regained their equity lost during the housing downturn by definition will not be selling for higher price points and higher loan amounts, and the owners certainly won’t be able to do cash-out refinance,” he said.

The reverse is also true. As regions soak up their underwater inventory, thanks to rising prices, existing owners can increase their mortgage balances. ATTOM said the number of “seriously underwater” U.S. homeowners has decreased by about 7.1 million since 2012, an average decrease of about 1.4 million each year.

Demographics could also be playing a role.

Older populations mean older mortgages with shrinking balances. More first-time buyers mean “younger” mortgages with larger balances. EllieMae, a mortgage processing company, publishes a “Millennial Tracker” with data on places where young adults make up a large share of buyers. It includes several metro areas in Texas, the Dakotas and Kansas showing young people moving there, which has helped lift the overall mortgage debt total.

For example, millennials, at the time of this writing, make up 37% of buyers in Wichita, Kansas; 44% in Sioux Falls, South Dakota; and 53% in Odessa, Texas. In San Francisco, only 18% are young buyers. In the New York/New Jersey area, only 25% are young buyers. That’s something to think about.

The Return of Low Down Payment Loans 

Another lesson from the data is that low down payment loans are back. Blomquist said his firm’s data shows that the “percent down payment” on new mortgages hit a four-year low in 2016.

According to Zillow, in 2009, fewer mortgages were obtained with 5% or 10% down payments, and nearly half of buyers put 20% or 25% down. In recent years, a 5% down payment had become “just as common as a 20% down payment.” (Here’s how to determine your down payment on a home.)

“Higher home prices, a lot of times, mean lower percent down payments, so that rings true with the cycle,” said Logan Mohtashami, a California mortgage broker and economics expert.

Low down payment home loans are on the long list of suspects to blame for the last decade’s housing bubble. Would-be homebuyers who feel uneasy about low down payment loans can look to places in the country where real estate is cheaper, but as cheaper markets “catch up,” there might be another option — looking in areas they may have thought were too expensive before, such as New England.

The five states where mortgage debt grew the slowest last year were Vermont, Connecticut, Wisconsin, Ohio and Rhode Island. In each state — three of which are in New England — total debt remained essentially flat.

Image: elenaleonova

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Why Student Loan Borrowers Are Being Treated Like Criminals

If it sometimes feels like student loan borrowers are treated like criminals, that's because the law actually does.

Student loans are different from almost any other form of borrowing. Unlike credit cards or other unsecured debts, they can rarely be discharged in bankruptcy. (You can learn more about the implications of bankruptcy here.) Legally, it’s better to think of college and grad school debt as akin to a child support payment.

The $1.3 trillion student loan crisis has many causes, but the slow erosion of consumer rights to gain student debt relief ranks right near the top. That $1.3 trillion debt is truly an anchor for life to the 44 million Americans who owe it. (And not paying those loans can have pretty severe consequences, including serious credit damage. You can see how your student loans affect your credit by a free snapshot of your credit report every 14 days on Credit.com.)

How It All Started 

The trouble began in the mid 1970s, as student loans became common and urban legends around “deadbeat” former students started to spread. In 1976, Congress considered a dramatic change to the nature of student loans — taking them out of the bucket that makes them similar to credit cards or personal loans, and moving them into the bucket that governs criminals like tax scofflaws. Back then, Congress was wise enough to commission a Government Accounting Office study, making such a step permanent.

The study came back showing that fewer than 1% of student loan borrowers had declared bankruptcy. That led Rep James O’Hara (D-Mich.) to say it would be grossly unfair to lump them in with the deadbeats. Soon after, the U.S. Senate voted to strip the provision from a proposed bankruptcy reform bill that made college debt non-dischargeable. But for reasons unknown, a group of Congressmen in the House, led by Rep. Allen E. Ertel (D-Pa.), held firm to their conviction that student loans were creating a moral hazard. They won the day, and non-dischargability of student loans was included in the Bankruptcy Reform Act of 1978.

The 1978 limitation meant students had to try to pay their loans back for at least five years before they could seek relief in bankruptcy court. Even today, critics of the way bankruptcy laws work don’t find fault in that notion — to prevent someone from leaving school and immediately erasing their debt before making an honest effort to earn an income.

However, the 1978 law opened the door for further tightening of the debt noose on borrowers, which happened methodically over the next decades. In 1990, the repayment period before a discharge was extended to seven years. The Debt Collection Improvement Act of 1996 allowed Uncle Sam to garnish Social Security checks. Then, in 1998, the seven-year ban became infinite. Loans made or guaranteed by Uncle Sam to students could never be discharged, with very few exceptions.

Worse still, in 2005, the permanent ban on bankruptcy for student borrowers was extended to private student loans — those that have nothing to do with Uncle Sam. Private banks lending teenagers money for college now hold a “till death do us part” contract.

Times Have Changed

Steven M. Palmer, a Seattle-based bankruptcy attorney who has written about the history of student loans, said it’s important to keep some perspective about what Congress might have been thinking back in the 1970s.

In 1976, tuition, room and board cost an average of $2,275, according to the Department of Education (in current dollars). By 2015, it was $25,810.

“Back then, the cost of education was so much less,” Palmer said. “The total amount of debt was a tiny fraction of what it is today … The system has led us to where we are now, where everyone has to take out student loans. And then they are getting out of school and not able to find jobs.”

For the desperate student borrower, there is an exception to the bankruptcy code, known as “undue hardship.” But practically speaking, that’s legalese for “nearly impossible.” (Disabled borrowers may also qualify for a total disability discharge of their education debt.)

An attempt to discharge a student loan requires a separate legal process from a traditional bankruptcy, called a Complaint to Determine Dischargeability. It’s an adversarial process that can require discovery, depositions and even arguments in court against Department of Education lawyers.

This can cost the debtor 10 times the price of a standard bankruptcy, Palmer said. And an attempt to get free from student loans can easily cost $20,000 to $30,000 in fees — which still may not work. Also, said Palmer, it’s critical to remember that declaring bankruptcy is hardly easy, nor does it erase all a family’s problems.

“Many of my clients have so much they still need to end up paying after bankruptcy, my counseling is often to ask, ‘How will you be better off?’ In some cases, they are really in a terrible spot … really still pretty well screwed after the bankruptcy.”

More Calls for Reform

In 2007, Michigan Professor John A. E. Pottow wrote the definitive history of the issue in an academic paper, “The Nondischargeability of Student Loans in Personal Bankruptcy Proceedings: The Search for a Theory.”

“This is harsh and dramatic treatment, and it is worthy of scholarly attention,” he wrote.

Pottow dispensed with most operating theories using data – that bankruptcy encourages students to commit fraud, or that Uncle Sam is merely protecting taxpayers, for example. He ultimately suggested some kind of income-contingent test, which ties bankruptcy eligibility to a calculation that takes into account school costs and potential post-school income.

“In addition to being attractive theoretically, income contingency could also help a troubling trend,” he wrote. Apparently certain “sub-prime” schools target a financially vulnerable client base by upselling classes and educational programs of dubious worth, confident that they will have repayment leverage through non-dischargeability in bankruptcy. An income-contingent approach might dry up this unwelcome market.”

More recently, in a 2012 report, the Consumer Financial Protection Bureau called on Congress to make bankruptcy available to some student debt holders.

“(It would be) prudent to consider modifying the code in light of the impact on young borrowers in challenging labor market conditions,” CFPB director Richard Cordray said.

Palmer, the bankruptcy lawyer, noted giving such debtors a fresh start wouldn’t only help former students. College debt has been tied to delayed household formation, which can have a domino effect: Young graduates may get married later, start families later, buy homes later, and so on. (If this sounds like you, here’s how to tell if you’re ready to shop for a home.)

Other critics have gone even farther.

David Graeber, author of the book, “Debt: The First 5000 Years,” says the punishing student loan situation is wrecking a generation, and by extension, its future.

“If there’s a way of a society committing mass suicide, what better way than to take all the youngest, most energetic, creative, joyous people in your society and saddle them with, like $50,000 of debt so they have to be slaves?” he said at a talk in 2013. “There goes your music. There goes your culture.”

Image: Jacob Ammentorp Lund

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6 Ways Trump’s Budget Proposal Could Affect Your Bottom Line

President Trump's proposed budget would reduce services to the poor and elderly. Here are the programs that stand to be hit hardest.

Do you commute to work, have a family member who’s out of work or know anyone who’s ever lived in a flood zone? If so, you should be paying close attention to that most Washington of annual rituals — the making of the federal budget. President Donald Trump’s dramatic budget has one clear winner (defense) and a long list of losers so you don’t want to ignore his proposals until it’s too late to influence the final outcome. So here’s our guide to some of the 80 or so programs that are targeted for deep cuts or outright elimination by Trump’s accounting.

Before we start, it’s important to understand that the federal budget process is a marathon, and we’re only at mile marker one. The White House has only released the so-called “skinny” budget. Many of the cuts it describes are not yet specific, and there’s a more detailed budget to come, followed by Congress’ own ideas about how to spend Americans’ money.

Still, there are enough programs called out specifically by Trump’s budget that one can imagine how America, and your community, might change were the budget to pass as is. The Trump administration did not immediately respond to request for comment on how the budget proposal would affect taxpayers. (On the note of budgets, here are some helpful tips for getting control of your personal budget.)

Changes for Train Travelers

If you like train travel, you might want to get your trips in now. Trump’s budget directly calls for the elimination of long-haul routes on Amtrak. These are largely used by tourists and have often been criticized as money-losing and unnecessary, particularly when the busy Northeast Corridor between Washington D.C. and Boston is overcrowded and profitable. So people who tour by train may need to spend their money on other travel options, like road trips or air travel. The good news for east coasters is some of those savings are being directed to improve service on the nation’s busiest rail line.

The Trump budget actually calls for a 13% overall cut at the Department of Transportation, which will impact local rail projects, too — like Seattle’s decades-long effort to get a light rail system off the ground. The proposed budget cut would actually half its funding. Some 70-such projects around the country are on the chopping block. So is a program named TIGER, which helped local governments pay for so-called “multi-modal” projects — often bike trails.

“Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects,” the proposal says.

How Floods Could Cost More

Do you live near a flood-prone area or care about someone who does? Your life could get more complicated under Trump’s budget, which eliminates the Flood Hazard Mapping Program.

Flood maps are controversial because when they change — and change always means “expands,” because development almost always expands — they require more homeowners to buy flood insurance. On the other hand, the consequences of failing to update flood maps can be devastating, which America learned the hard way during Hurricane Katrina. People buy homes thinking they are safe from floods, and a developer may build on unsafe land. (And if you have flood insurance, it’s important to know what it does and doesn’t cover.) And when a flood comes, recovering from it without insurance assistance can be really expensive.

The budget says Trump’s administration will “explore other more effective and fair” ways to pay for new maps. Detractors oppose anything that makes flood insurance premiums more expensive, however, as that might lead to folks dropping flood insurance, creating another long-term headache.

Need a Lawyer? It’ll Cost You

If you’ve ever had a dispute with a landlord or a domestic partner and turned to a non-profit legal aid service for help, you might have been helped by the Legal Services Corp. Since 1974, Legal Aid has provided access to America’s otherwise expensive court system through a network of 133 independent nonprofit legal aid programs in 800 offices around the country. The program is targeted for elimination in the Trump budget. Some 1.9 million Americans used legal aid in 2014, the last year for which data is available, the organization says.

“Our nation’s core values are reflected in the LSC’s work in securing housing for veterans, freeing seniors from scams, serving rural areas when others won’t, protecting battered women, helping disaster survivors back to their feet, and many others,” said Linda Klein, bar association president, in a statement supporting the LSC. “The LSC embodies these principles by securing the rights of the least fortunate among us.”

Military Base Cities, Cyber-Warriors & Veterans Will Benefit

Trump’s budget calls for a huge increase in defense spending, with general guidance suggesting cities and companies that support nearly every branch of the military would benefit. The budget calls for fresh spending on munitions, warships, F-35 Joint Strike Fighters and a “fully equipped” Marine Corps. It also calls for large investments in cyber security, which appears under several budget items, including a $1.5 billion program within the Department of Homeland Security to “protect federal networks and critical infrastructure from an attack.” If you work in these fields, this budget could be good news for you.

The Department of Veterans Affairs also gets a sizable budget bump of 6%, including $4.6 billion to improve VA health care and “patient access and timeliness of medical care.” The funds will help continue the Veterans Choice program, which lets vets choose private providers when seeking care.

Out of Work? There’s Less Money for Retraining

Unemployed Americans, particularly older Americans, who seek retraining help may have a harder time under Trump’s budget. The Labor Department, which funds many such programs, is targeted with a 21% cut. Federal funding for local job training programs would be decreased, “shifting more responsibility” to local authorities. Specifically, Trump’s budget eliminates the $434 million Senior Community Service Employment Program, a community service and work-based job training program for older Americans that prioritizes help to veterans. Trump’s budget specifically calls out the program as “ineffective,” saying as many as one-third of participants fail to complete it, and only half of those get jobs.

Vouchers & Charters Win, After-School Programs Lose

For fans of charter schools and other open-enrollment public school initiatives, Trump’s budget includes a lot of new money and support. There’s $250 million for a new school choice program, $168 million more for charter schools, and $1 billion more for voucher-style programs that let local funding “follow the student to the public school or his or her choice.”

Trump’s budget eliminates $1.2 billion spent on 21st Century Community Learning Centers, which funds after-school and summer programs for 1.6 million kids around the country. The budget says the program “lacks strong evidence of meeting its objectives.” Both increases and cuts in spending in these areas could affect what families budget for education and child care.

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