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Student Loan Problems Mirror those of Mortgages

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By Charlene Crowell, NNPA Columnist

An adage counsels, “The more things change, the more they stay the same.” When it comes to consumer debt, that advice is also a truism. After years of mortgage borrowers complaining about servicing – or the lack thereof – it appears that problems student loan borrowers face are remarkably similar.

With student loan debt topping the trillion-dollar mark, another looming credit crisis could emerge just as the housing market is showing signs of recovery. According to the Survey of Consumer Finance, today one in four American households are headed by someone under the age of 35 with student loan debt. Private student loans account for more than $150 billion of outstanding debt. Moreover, more than 850,000 of these loans are in default and even more are delinquent.

Like the many troubled homeowners who did not understand the terms of their mortgages, student loan borrowers are now having the same difficulty. Servicers, often hired by lenders, often do not share or know the terms of repayment, available options for refinance, or even the total amount owed.

Recently, the Consumer Financial Protection Bureau released a report on the nearly 2,900 private student loan complaints it received since March of this year. Approximately 65 percent of complaints allege problems with servicers regarding fees, billing, fraud and credit reporting. Another 30 percent of borrowers filing complaints with CFPB were concerned with limited repayment options, debt collection practices and problems related to loans in default.

“Student loan borrower stories of detours and dead-ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business,” said Rohit Chopra, CFPB’s Student Loan Ombudsman.

The vast majority of the student loan complaints received by CFPB were about private loans.

Unfortunately, private loans typically do not have the consumer protections built into federal student loans, such as lower interest and fixed rates, income-based repayment plans, military deferments or discharges upon death.

Instead, the typical private student loan servicer actually works for the lender and may not have an incentive to provide a high level of customer service to borrowers. In the face of financial hardship, unemployment or underemployment, these student loan borrowers often discover few or no options that can be adapted for their circumstances. In some cases, servicers encouraged borrowers to pay whatever they could, but failed to inform them their loan status would still be on a path towards default.

With fewer options for refinance or forbearance, some private student loan borrowers are also claiming they were never advised of the difference between a federal and private loan either at the time the loan was first originated or later during repayment. If the original loan was sold or if the servicer changed, many servicers were unable to answer basic questions as to who actually owns the unpaid loan. Depending upon loan terms, it may not be possible to negotiate alternative repayment.

Other complaints filed with CFPB expressed concerns with servicer errors or misinformation. For example, some servicers may take two to four days to process payments – even if the payment was submitted online. As a result, borrowers end up paying interest on a higher outstanding principal in the process. Others complained about faulty record-keeping, lost paperwork and errors that though promised to be quickly corrected were not. Still more complaints charged that even after getting transferred to multiple departments, no one was responsive or empowered to provide a clear answer.

If there is a moral to these unfortunate consumer experiences, it could be summed up with CFPB’s slogan, “Know Before You Owe.” Before any debt is incurred, take the time and necessary persistence to fully learn obligations and responsibilities. Any business or its representative that is unwilling or reluctant to explain their products are probably not a good choice for the consumer.

For consumers now considering a private student loan, invest some time to identify and pursue other forms of financial aid such as grants, scholarships, federal student loans, or work-study programs. Need-based grants often offered by state and federal initiatives can help defray college costs without incurring debt. Other programs are available to promote the growth of minorities in specific career paths.

“Know Before You Owe” is good advice. Knowing more about financing a college education is even better.

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.crowell@responsiblelending.org.

Same-sex Marriage Divides Black Ministers

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By Freddie Allen, NNPA Washington Correspondent

WASHINGTON (NNPA) – The heated debate over same-sex marriage has created a Red Sea-like divide among Black ministers that has serious implications for President Obama’s re-election bid.

As Black some pastors express fervent support for same-sex marriage others are sticking by their guns – at least their Bibles – in arguing that homosexuality is contrary to the teachings of the Bible.

“For too long, the issue of equal treatment under the law for gay and lesbian couples has been mired in theological debate between those on one hand who oppose same-sex marriage based upon their religious beliefs and those on the other who affirm it based upon their [beliefs],” said Delman Coates, Senior Pastor of the Mount Ennon Baptist Church in Clinton, Md.

Coates described the dilemma that many religious leaders find themselves in.

“While people of faith have a right to be in the public square, we do not have the right to impose our personal religious beliefs on others in matters of public policy,” he explained. “Marriage equality is primarily a public policy issue and not a theological one.”

Last month, nearly a dozen Black ministers from across the nation gathered at the National Press Club in Washington, D.C. in support of “Question 6,” the marriage-equality referendum on the ballot in Maryland that would legalize gay marriage in the state.

Rev. Al Sharpton, who expressed support for the referendum, said: “This isn’t an issue about gay or straight this is an issue about civil rights. To take a position to limit the civil rights of anyone is to take a position to limit the civil rights of everyone.”

As the group of Black pastors gathered at the National Press Club to proclaim that marriage is a civil right, an apparent attempt to nullify the Biblical opposition to homosexuality and gay marriage, other pastors leaned on God’s Word, preaching that marriage is a union between man and a woman, period.

Rev. Anthony Evans, the president of the National Black Church Initiative, a network of Black and Latino churches focused on healthcare, education and housing, said that President Obama’s announcement of his support of gay marriage was “immoral” and “political” and most likely had little to do with Christian tenets that established marriage between a man and a woman.

“There is no such thing as moving from a righteous Biblical position to an unrighteous Biblical position,” Evans said. “You can’t evolve from righteousness to unrighteousness unless you intend to defy God.”

Black pastors such as Coates see same-sex marriage as a public policy issue, not a Biblical one. That’s a position shared by President Obama.

In May 2012, in an interview with Robin Roberts for ABC News, President Obama said his support of same-sex marriage is merely following the Golden Rule.

But Denny Burk, an associate professor of Biblical Studies at Boyce College the Southern Baptist Theological Seminary and associate pastor of Kenwood Baptist Church in Louisville, Ky., disagrees.

On a post on his Web site, Burk wrote:

“Neither Matthew nor Jesus intended the Golden Rule to be a permission slip for debauchery. ‘Doing unto others as you would have them do unto you’ does not nullify the Bible’s clear teaching about marriage and sexuality. The Sermon on the Mount affirms and intensifies Old Testament sexual norms (e.g., Matthew 5:27-30). Moreover, Jesus himself affirms the creation principle that defines marriage as the union of one man and one woman (Matt. 19:4-5; cf. Gen. 2:24). To imply that Jesus would have supported gay marriage has no basis in the text of scripture. In fact, Jesus stands against it.”

Some theologians contend that Jesus’ never addressed homosexuality or gay marriage directly, and Coates said that leaves room for different interpretations.

“There are many interpretations and views about what the Bible says on a range of issues, that are later imposed on a first century text, or a set of text or ancient text,” said Coates.

“This issue at the core is about education, right? The more educated clergy leaders are about the history of interpretation, theology, and Biblical studies they tend to have a broader framework and context for understanding.”

To opponents of same-sex marriage, there is nothing broad of unclear about Biblical teachings.

They point to Leviticus 18:22 (King James Version), which reads: “Thou shalt not lie with mankind, as with womankind: it is abomination.”

Also frequently cited is Romans 1:26-27: “For this reason God gave them over to degrading passions; for their women exchanged the natural function for that which is unnatural, and in the same way also the men abandoned the natural function of the woman and burned in their desire toward one another, men with men committing indecent acts and receiving in their own persons the due penalty of their error.”

Burk wrote:

“If one allows the democracy of the dead to have their say, the ‘obscure’ interpretations are the ones coming from theological liberals who are standing against 2,000 years of the history of interpretation of this passage.”

And it’s those theological liberals that are standing on the wrong side of history, Burk suggested not the pastors that oppose same-sex marriage.

Even though a state constitutional amendment banned same-sex marriages in Virginia in 2006, Rev. Howard-John Wesley, Senior Pastor of Alfred Baptist Church in Alexandria, Va., said that many of his parishioners reside just over the border in Maryland and it’s important for them to know what they’re voting for.

“As dangerous as voter apathy is also voter ignorance,” Wesley said. “It’s very easy to stereotype and use hatred and fear to create voter ignorance to allow them to vote off of one issue. We are under command to inform intelligence so that the heart and soul can vote on a full scope.”

Although it’s been reported that some Black pastors are choosing to stay home rather than vote for a Mormon or a president that supports same-sex marriage, most Black pastors said that the right to vote is too important to waste.

Pastors on both sides of the issue agree on that point.

Evans said that he warned NBCI ministers that if any of them told parishioners to stay home on Election Day, they would be sanctioned and kicked out of organization.

“The bottom line is we died to have the right to vote whether or not we have good choices,” Evans added.

For Evans the gay marriage debate illustrates the difficulty of creating an ethical foundation for the Black community and that many diverse views exist within the Black church.

“The gay marriage debate clearly illustrates the difficulty of establishing and creating a coherent ethical foundation for the African American community,” Evans said. “It’s going to get more complicated moving forward dealing with this new generation.”

According to a Pew Research Center poll conducted in 2012, even though Blacks are more religious than Whites and Latinos, with 87 with claiming religious affiliation. Those 18-29 year-olds, also known as the “Millennials,” were nearly twice as likely (63 percent) to support same-sex marriage than their grandparents (33 percent).

Evan said that the debate over same-sex marriage will continue in the Black church long after this election is decided.

He said, “We’ll be fighting this issue for a long time until Jesus comes.”

The Minority Business Hustle

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By James Clingman, NNPA Columnist

“There appears to be no reason in logic why 99 percent of the businesses in the country are forced to squabble over 20 percent of the Federal purchase dollar, when a select 1 percent continue to capture their 80 percent market share largely undisturbed.” United States Commission on Minority Business Development, 1992. (The History of Black Business in America, Juliet E.K. Walker)

While the 20 percent cited above may now be 30 percent in some areas of the country, the issue raised in 1992 is still valid. According to the U.S. Census Bureau, small firms with fewer than 500 employees represent 99.9 percent of the total number of businesses in this country. This statistic is relevant not only to the political discussions regarding taxes but also to the disparities in the system, especially those pertaining to African American owned businesses.

One of the problems is the definition of “small.” Depending on the category and product, a “small” business can employ up to 1,500 persons, and they may have receipts as high as $21.5 million. General and heavy construction companies can be classified as “small” with annual receipts as high as $17 million, depending on the type of construction, and special trade construction annual receipts may not exceed $7 million. This is one aspect of the minority hustle game – and “minorities” are losing every day.

The “minority” business sector has been thrust into a game in which all of the businesses classified as such, and as “small,” must compete against one another. To make matters even worse, their small share is steadily eroding because large companies are playing the “front company” and “pass-through” games. So much for fair competition.

It is unfortunate that some Black owned companies are willing subjects in the front and pass-through games and allow their small businesses to be used by larger ones. They agree to alliances where all they do is sign checks or allow their names to be used in a partnership agreement that is purported to be 51 percent “minority” owned. Control? Well, that’s something else again; the small Black firm has little or no control or say-so when it comes to the actual business dealings. After all, it’s just a “front” company.

That same scenario takes place every day with White owned firms as well. A husband and owner of a large business puts his wife’s name on a business, gets it certified as a WBE (woman owned business) and he’s off and running after a cut of that 30 percent piece of the pie. Sad thing is virtually everyone in the industry knows this occurs, and many of them know exactly who is committing these misdeeds. The small firms are afraid to tell for fear of being excluded from future deals, and the large firms won’t tell because they are raking in the profits.

Other tactics that especially affect small Black construction firms include “bid shopping,” unpaid change orders, high bonding costs, tying up bonds for an inordinate period of time, setting and holding high retainer percentages from contract amounts, unions that steer certain employees to the jobs while passing over qualified Black union workers, and prime contractors taking 60-120 days, and longer, to pay their subcontractors, despite having already been paid themselves.

I am very proud to say, however, that through the cooperative efforts of the Cincinnati branch of the NAACP, the Cincinnati African American Chamber of Commerce, and the Cincinnati City Council, along with major construction company partners, developers, and project owners, we have made significant gains by pointing out and stopping unethical practices that plague the construction industry, in both the public and private sectors.

Yes, the games continue and others are being invented all the time. But we have had tremendous success relative to the problems not only in construction but also in the professional services and supplier industries; and we acknowledge and celebrate the firms and individuals that are working with us to grow our small businesses.

Rock Ventures, Caesar’s Horseshoe Casino, Cincinnati Center City Development Corporation, the Metropolitan Sewer District, Mercy, Children’s, and Christ Hospitals, Princeton School District, the Cincinnati Public Schools, and many of their prime contracting firms have led the way to significant increases in revenues for small Black businesses, as well as other businesses legitimately classified as “minority” and “women-owned.”

Across the nation the hustle goes on, but we must continue to fight against it by calling out the offending companies and even our own brothers and sisters who participate in unfair practices. We must also be resolute in our stance against those union officials who perpetuate the inequities that exist, particularly in the construction industry. If we work together to bring fairness to the game, our businesses will have every opportunity to grow into large businesses, rather than having to stay in that “small” and “minority” category. How does your city measure up?

Jim Clingman, founder of the Greater Cincinnati African American Chamber of Commerce, is the nation’s most prolific writer on economic empowerment for Black people. He is an adjunct professor at the University of Cincinnati and can be reached through his Web site, blackonomics.com.

Death of Affirmative Action

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By William Reed, NNPA Columnist

(NNPA) “We expect that 25 years from now, the use of racial preferences will no longer be necessary.” – Justice Sandra Day O’ Connor, 2003.”

The U.S. Supreme Court recently heard arguments regarding a longstanding racial controversy. So, in the traditional form of our time in America, the Black descendants of slaves will still be losers when the Fisher v. University of Texas case decision is handed down. The court’s decision will affect relatively few students at Texas, which admits most students through a system that doesn’t factor in race. But a broad Supreme Court ruling will roll back affirmative action and be an earthquake at other campuses, and institutions that will mark the death of affirmative actions that use race toward instituting their plans and policies.

Instead of holding pity parties over the demise of affirmative action, it would be good if the descendants of slaves moved to “demand money to compensate them for their ancestors work as slaves.” Blacks have been “disadvantaged” and “non-compensated” throughout our tenure in America. The majority of Black Americans have bought into the theory and culture of “American Exceptionalism” and “Mainstream Mindsets” that we are more than compensated for the damage of slavery by the good fortune we enjoy by living in America. Some African-American patriots say: “Every Black in the United States is much better off economically, legally, politically, and morally than any Black living in Africa.”

It’s time to accept the fact that the basic nature of America excludes parity for Blacks. From the beginning, this country has shown “a particular reluctance to absorb people of African descent.” Because of White Americans intransigence, the little progress made toward racial parity has been slow, cautious, and incremental.

For more than four centuries, Blacks were subjected to the most heinous crimes ever committed. Though slavery has been abolished, to this day, no one has been brought to justice for those crimes. Racial disparities persist at nearly every level of society. From criminal justice to education, employment to housing, Black Americans continue to face an uphill battle toward social and economic equity.

Instead of a constant demand that America apologize for slavery and compensate us, Blacks gamely “go along to get along” in a system they know that’s stacked against them. Most African Americans are oriented toward “mainstream” values and cultures and are eager to live in a “post-racial” society that requires no extraordinary affirmative actions. Over the past half-century, and to be good citizens, as they blended in, Black Americans blithely accepted affirmative action programs and policies as remediation for past injustices. Over its existence, affirmative action has been viewed by many as a “milestone” and others as a “millstone.”

Let’s be clear that racism still runs rampant across this nation and that the possibility of using affirmative action to redress the perpetration of past wrongs is in serious doubt. Whereas, Black Americans support Affirmative Action as a remedy or tool of social policy, the major item stifling the issue is that America’s White majority sees nothing wrong with maintaining the status quo.

The status quo in America equates to disparate differences in prison populations and childhood mortality rates, biases in the application of capital punishment, and unequal access to education and health care. Systematic exclusion of slaves and their descendents from positions of political and economic power continues to haunt African Americans. Past iterations of affirmative action haven’t helped us as racism continues to shape most Blacks’ lives.

Sixty-two percent of Americans say that the country should “make every possible effort to improve the conditions of Blacks … even if it means giving them preferential treatment.” We can wait for their acts, or institute reparations toward repairing damages inflicted by slavery and continuing racism. From now on, Blacks need to think of themselves as creditors seeking payment of an overdue debt, rather than as social supplicants seeking an undeserved preference.

William Reed is head of the Business Exchange Network and available for speaking/seminar projects through the Bailey Group.org.

Funding Shortage Causes Prison Overcrowding

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By Freddie Allen, NNPA Washington Correspondent

WASHINGTON (NNPA) – The Department of Justice will spend $6.6 billion this year to stack drug dealers, addicts, shooters, and illegal immigrants like Lego blocks in prisons that are overcrowded, understaffed and barely safe, according to a recent report from the Government Accountability Office.

The GAO report found that the Bureau of Prisons (BOP), the agency that runs the federal penitentiary system, operated at 39 percent over recommended capacity nationwide and at 55 percent over capacity at high security facilities. From 2006 to 2011, prison population grew at 9.5 percent, outpacing the 7 percent growth in infrastructure and new beds. Prisons are staffed at 90 percent, the minimum safe standard for BOP.

“According to BOP data, 81 percent of male inmates housed in low security facilities were triple bunked at the end of 2011,” the report stated.

Instead of moving low level inmates to contracted private-run facilities such as halfway houses for budget reasons, the BOP packed 4,500 low level inmates into medium security facilities. The population shift compounded problems in higher level prisoners.

According to the GAO, the Bureau of Prisons reserves beds in Special Housing Units and Special Management Units for the most dangerous prisoners who “threaten the safety, security, or orderly operation of the facility or potentially cause harm to the public.” Because of overcrowding, the worst of the worst often wait more than 100 days for a cell on the Special Management Units.

The rise in the prison population forced BOP officials to convert TV rooms and gyms to makeshift dorms, cut education programs, delay drug treatment programs, and curb much-needed job placements for the inmates.

“These factors, taken together, contribute to increased inmate misconduct, which negatively affects the safety and security of inmates and staff,” the report said.

“According to BOP, the increase in sentence length is the primary reason for the growth in federal inmate population from 42,000 in 1987 to over 218,000 today,” the GAO reported.

When security breakdowns occur in prisons, correctional officers often find themselves on the receiving end of vicious attacks.

In a written statement submitted to the House Judiciary Committee last December, Dale Deshotel, president of the Council of Prison Locals, American Federation of Government Employees said, “These serious correctional worker understaffing and prison inmate overcrowding are resulting in a significant increase in inmate assaults on correctional workers.”

Deshotel recounted the murder of Correctional Officer Jose Rivera in June 2008 and the stabbings of two other correctional officers.

According to a 2011 GAO report, in 2007 there were 70 inmate-on-staff attacks that resulted in injury to correction officers. By 2009, that number increased to 110 assaults. In 2010, there were 73 serious attacks.

In an effort to address the negative impact of overcrowding, some federal prisons have started staggering meals and recreation time for inmates. Prison officials also reward inmates for good behavior with benefits such as greater access to phones, “honor dorms,” and e-mail.

Although BOP can implement strategies to control inmate populations within their prisons, external factors have a much greater influence on overcrowding.

Draconian drug laws established in 1986 under President Ronald Reagan’s Anti-Drug Abuse Act ensured mandatory minimums for a range of drug offenses. These laws disproportionately affected minorities for more nearly 25 years.

Blacks represent 50.5 percent of drug offenders in state prisons, compared to 30.4 percent for Whites.

Drug offenses represent the majority of admissions to BOP, and the average time an inmate served for drug offenses increased from 250 percent after 1987, GAO said.

The bureau can’t control who gets sent to prison and for how long, but often states do and some of them, dealing with their own budget crises, are taking advantage of that flexibility.

In 2009 New York changed the draconian drug laws that relegated drug offenders to mandatory minimums.

“For example, in 2009, New York implemented changes to its drug statutes, which affected the sentencing of some drug felony offenders. These changes included revising the ranges of for state prison sentences by lowering the minimum sentence allowable for certain nonviolent drug felony offenders,” the report said.

The number of drug offenders in New York prisons decreased from 17.7 percent in 2009 to 13.6 percent in 2011.

The Fair Sentencing Act of 2010 decreased the disparity in sentencing for crack cocaine and powder cocaine drug violations, which will ultimately affect the length of prison terms drug offenders serve.

By 2020, the Bureau of Prisons plans to decrease overcrowding in federal prisons from 71 percent to 58 percent at mid-level prisons and 55 percent to 12 percent at high security prisons. The agency said that it can accomplish this goal by increasing capacity by adding private contracted beds, infrastructure and new prisons to keep up with the expected growth in population. But without funds, the path forward is not certain.

The bureau has not included funding for the additional beds in current congressional budget requests.

If the BOP continues to experience budget shortfalls, GAO said that their “plans are subject to change.”

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