Latest News and Reviews

Credit Card Industry Ushers In New Times

Fresh set of rules with the objective of treating some very bad credit issuing abuses come into effect between now and the month of February. Having said this, banks would certainly chase newer ways to bring down cardholders for cash.

Consumers are all set to receive a welcome bounty through credit card reforms as banks will be liable to inform 45 days in advance about any alterations made in their credit card offerings. This is only a commencement of a well chalked out plan. The entire layout will be inclined towards equaling the status of consumers and card issuing companies. It is a relief for customers who have often found themselves at the receiving end of lending malpractices.

Sally Greenberg, executive director of the National Consumers League, suggested the reform to be bearing the greatest importance among all the card reforms last decade. Also, he believes that the reform would tighten screws on abusers of lending practices.

Only A Few Though

For instance, the law remains rather mute on binding arbitration clauses that govern a major part of credit card contracts. Such contracts rob a cardholder the right to court via class action lawsuits and jury trials. Having said this, there are still various parameters through which a normal cardholder is shielded from the heinous practices of issuing companies. Some of them are:
•    Disallowing card issuers from enhancing rate of interest during the first year of opening an account; this, of course, unless the cards command a variable rate of interest or there is a payment default within first 60 days of due date.
•    Disallowing issuers from enhancing interest rates on presently running balances.
•    Asking issuers to bring down interest rates to earlier levels when cardholders make perfect payment for a span of 6 months after a default.
•    Disallowing fee on making payments

Cardholders have been constantly complaining about regularly altered deadlines that create a lot of confusion and subsequent failure in timely payments. At such times, it hurts when a late fee is levied. The new law would require issuers to keep a constant due date each month and also allow payment to be made till 5 pm. For ensuring that a person below 21 is not caught in a vicious debt cycle, the law has made mandatory for an adult to co-sign for an under 21.

Also, fresh plastic offerings can’t be made to under-21 group unless they have deliberately asked for it. Credit card issuers will be required to post their entire contracts via internet so that a consumer can choose among many other equals.

It goes without saying that the banking industry fought tooth and nail against the reform.

President Obama’s Student Loan Plan May End Up Saving Less

President Obama’s student loan plan regarding termination of federal subsidies to student loans providers may not save 87 billion dollars as expected earlier. Instead, it can give a relief of 47 billion dollars according to Congressional Budget Office (CBO).

After taking into consideration the market risk of switching all federal student loans into the direct lending program, CBO has provided a figure of 33 billion dollars as estimated savings. Also, administrative costs pertaining to the direct loan program would minimize savings by roughly 7 billion dollars.

CBO calculations besought by Republicans bring forth dilemmas regarding plans of Obama and congressional Democrats. The crux of their questioning is rationale behind spending the projected saving on education programs and deficit minimization. Representative of Minnesota, John Kline believes that taxpayers would be assaulted in a big way as anything suggesting a saving of 87 billion seems wedded to farce.

Committee Democrats, contrarily, suggested that the Republicans were trying to ambush the books of accounts by beseeching CBO to neglect prevailing market scenario. According to Committee Chairman George Miller, a California Democrat, the Republicans were wary of the idea that the legislation has brought a reprieve of 90 billion dollars to students and taxpayers.

Senator Judd Gregg of New Hampshire, senior Republican of the Senate Budget Committee, has already urged CBO to recalculate its projection to incorporate market risk cost which includes the potential of student loan default over a period of 10 years. He said that he was extremely happy on knowing that CBO has informed the economic and budgetary consequence of Obama’s plan to congress.

Obama along with Miller look forward to putting an end to 43-year-old Federal Family Education Loan Program that subsidizes and ensures loans arranged by private lenders. Fresh federal student loans would be coming under the umbrella of 16-year old Direct Loan Program. Miller’s idea, much like Obama, would allow student loan providers to tussle for loan-servicing requirements; namely payment processing and default collection. Going by Miller legislation, 87 billion dollars of the projected saving would be directed into other programs. About 40 billion dollars would be allotted to Pell Grants and 10 billion dollars for grants pertaining to early childhood education. Another 10 billion dollar would be allotted towards deficit reduction.

Republican lawmaker, Kline feels that taking over the student loan program is nothing but a planned hoopla organized in times of budget to finance the spending spree.

Food Allergy – Doctors Develop Therapy To Cure Peanut Allergy

Thousands of children around the world suffer from peanut allergy, to cure this situation doctors have found a potential solution recently. This breakthrough therapy, controlled doses of the peanut flour that are used for retraining the child’s immune system in order to bring it back to the normal condition.

Initially, doctors treated 20 children who were severely suffering from peanut allergies with this therapy. Six month after the experiment, some youngsters were able to eat up to twelve peanuts daily without undergoing any allergic reaction that may have harmed their life. Now, researchers at the Cambridge want to find out whether a similar technique can also be used for tackling other food related allergies like kiwi fruit, gluten and milk.

It has been found that around 2% of children in Britain suffer from allergy from peanuts and in total; around four hundred and fifty thousand children and adults have this condition. Allergy to peanuts can cause several symptoms in the allergic people that may range from rashes and mild itching to dangerous swellings of airways, severe asthma and breathing problems. Peanut allergy is one the most common allergic reaction in people and it appears to be rising even more.

On an average, 7 children die due to peanut allergy every year. Dr. Pamela Ewan, who played a significant role in the study and works as a consultant allergist in the Addenbrooke’s Hospital, said that the treatment that has been found cannot be identified as a cure. Basically, the aim of the technique is to retrain the immune system of the person by exposing his body to peanuts with a low dose initially and then gradually increasing the amount.

Some people show serious symptoms even at a very low amount of peanut (1/400 peanut) and for such people, the minimal amount is used to begin with. It is still to be seen that how long this desensitization term can work.

Wherever people go, they have to eat peanuts in one or another form, being free from peanut allergy is a life-changing experience. However, parents have been warned to not use the technique at their home. Giving doses of peanut flour to the children can be extremely dangerous and it should be done only under expert medical supervision.

20 children suffering from severe peanut allergy were given small doses of peanut flour daily for 6 months. Initially, the amount of peanut flour given was not enough to trigger an adverse reaction, then the dose was increased in every 2 weeks. The procedure followed until the children were able to eat peanut flour equivalent to 6 peanuts everyday. After 16 weeks, their immune system was desensitized by eating peanuts daily.

According to the researchers and the doctors, the 20 patients who were between 5 to 17 years of age can now eat up to 12 peanuts in a day. They said that these 20 children will be monitored for the next 3-4 years so that their tolerance level can be followed. Studies will also be conducted to see whether peanut flour can also be given in the form of a tablet.

The chief executive of Allergy UK, Jules Payne, has welcomed the study and said that this is giving a tremendous hope for people who are suffering from food allergies because being allergic to foods can make one’s life very miserable.

One of the major causes of food allergies in children is cleanliness in the homes. They believe that homes are too clean today and children are not exposed to germs and dirt of outside, and as a consequence, their immune system is not developed properly and their body reacts even at the slightest amount of foreign matter.

Student Loans : Financing College Education In The Future

The market of student loans is undergoing huge changes. Around a year earlier, people found low-cost federal student loans, both private and government, dependable but today, the situation is different. In the past, private companies were paid by taxpayers to provide loan to students; they are reimbursed when the borrowers default. This impels huge amounts of money from taxpayers which lead to the benefits of the lenders without putting them at any risk.

Barack Obama has top three priorities which are health care, energy and college affordability. Making these things easily accessible will surely enhance the standard of American families and will also make their future secure. Basically, we have two choices: we can either continue channeling amounts paid by taxpayers through the boardrooms or start directing them straight to the dorm rooms.

After vigorously discussing with the key stake holders, the legislation has been revealed for creating an affordable, reliable and good quality program for federal student loans which will make college education easier for all the Americans. Under this legislation, grant aids will be increased and student loans will be stabilized, thus helping more number of students to graduate without or with fewer debts. Apart from that, taxpayers will not need to pay extra dime for this. Among the changes include:

1. First of all, Pell Grant will be strengthened which aims at providing financial aid to the low income students. The annual scholarship will be increased $5,500 to $6,900 by the year 2019.
2. Secondly, the interest rates will be kept down for students from middle class. In the year 2012, the rates of interest on the subsidized federal loans will increase from 3.4% to 6.8%. As per this bill, the interest rates will be variable starting from that year thus, they will be kept affordable.
3. Thirdly, the legislation will make payments for the investments and cut off all the federal loans for students from the market swings from 2010 through more stable Direct Loan Program. Direct lending will provide same low-cost financial aid as the lenders but at a lower cost plus without the interest related conflicts. The Congressional Budget Office says that this small change will save $90 billion for the tax payers over a decade, thus proving a more efficient, affordable and dependable program for both tax payers and students.
4. Fourth, customer services will be upgraded for all the borrowers of federal loans. Instead of forcing the private industry to be out of the system, a new private-public partnership will be forged which will maintain jobs as well as provide a higher quality service to the borrowers when they repay their loans. In this way, non-profits and lenders will try to do their best as far as the service loans are concerned. The private sector innovation will be harnessed for the welfare of the general public.
5. Fifth, the legislation will provide new initiatives proposed by Obama for preparing the students to compete in future jobs. $10 billion will be invested for turning the community colleges into education and job training vessels that will be helpful in the recovery of the economy.
6. Finally, a sound fiscal future will be built for the students and $10 billion will also be returned for paying down the deficit.

After all, all the parents want their children to receive best of the education without the need to be heavily indebted. For this, the financial aid system has to be transformed which will aim at the benefits of the students rather than of the banks.

Obama’s Student Loan Reform Plan Passed The House Committee On 30-17 Vote

The House Committee has approved the plan of President Barack Obama to eliminate the subsidized loans for students by companies that are led by Sallie Mae. George Miller, representative of the legislation from Democrat which includes President Obama’s plan passed House Education and Labor Committee on 30-17 vote.

Education Department has been responsible for running competing systems of college loans for 16 years, but now, Miller and Obama seem to end this. The Federal Family Education Loan Program is meant for subsidizing and guaranteeing loans given out by the private lenders for the pass 43 years. Another program which was created in the year 1993 facilitates the government to give out loans to the students directly.

The plan of Obama and Miller aims at eliminating the guarantee programs and switching all the new federal student loans to direct lending. The plan will be executed from July 2010. Like Obama’s plan, Miller’s proposal will also force the companies to compete among themselves for tasks of loan-servicing like collecting on loan defaults and processing payments. According to the estimates of the Non-partisan office of Congressional Budget, the plan of Obama will save around $87 billion in the period of 10 years. Out of these savings, the legislation from Miller will direct $40 billion for Pell Grant and $10 billion for early-childhood educational grants. $10 billion will also be used to help in reducing the deficit.

As a consequence of the bill, the wasteful tax payer subsidies will be ended. As per the legislation, its administration proposals will simplify the application procedure of college aid and new grants will be created for early-childhood education and community colleges.

Sallie Mae from SLM Corp of Virginia is the largest student loans provider in US. Last year, Sallie Mae earned $24.2 billion out of student loans, out of which 74% were federally guaranteed. Sallie Mae recently faced a fall by 2.9% in the New York Stock Exchange Composite trading after its shares profited 6.9% since the beginning of this year.

Most of the Republicans including Brett Guthrie, a representative from Kentucky, opposed the legislation of Miller, arguing that it will create a monopoly of the government over college loans. As an alternative, Guthrie proposed another bill which will allow the companies to offer federal loan to students which will be sold to the federal government. This measure was rejected by the committee in 30-16 vote.

Executive Director of America’s Student Loan Providers, Kevin Bruns, said that the legislation passed by the committee will eliminate competition, consumer choice and default prevention programs that private lenders offer. America’s Student Loan Providers is a group from Washington which represents over 80 money lending companies including Student Loan Corp, Nelnet and Sallie Mae.