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Jim Calloway’s Law Practice Tips Blog
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Jim Calloway’s Law Practice Tips Blog
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The FMHR traders share their top homebuilder and real estate trades right now.
For more info: Traders hot housing plays – CNBC
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Education Secretary Arne DuncanAlbert H. Teich / Shutterstock.comThis week, the Obama administration moved aggressively to crack down on for-profit career training colleges that charge high rates of tuition but offer little in the way of job placement. Using an executive order and the U.S. Dept. of Education’s rule-making authority, the President proposed a regulatory regimen that could shutter hundreds of degree-granting schools — that enroll a million or more students in fields that range from accounting to air-conditioning repair for the schools’ failure to place graduates in well-paying jobs.The administration framed the move as a bold step to protect Americans from predatory institutions that leave students with high debt and few marketable skills. According to POLITICO, the for-profit colleges …
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This week, the Obama administration moved aggressively to crack down on for-profit career training colleges that charge high rates of tuition but offer little in the way of job placement. Using an executive order and the U.S. Dept. of Education’s rule-making authority, the President proposed a regulatory regimen that could shutter hundreds of degree-granting schools — that enroll a million or more students in fields that range from accounting to air-conditioning repair for the schools’ failure to place graduates in well-paying jobs.
The administration framed the move as a bold step to protect Americans from predatory institutions that leave students with high debt and few marketable skills. According to POLITICO, the for-profit colleges rejected the regulation as an unacceptable — and possibly illegal — federal intrusion into the private sector. Some Republicans in Congress weren’t happy, either.
James Kvaal, deputy director of the Domestic Policy Council at the White House, described the regulation as part of President Barack Obama’s campaign to make 2014 “a year of action,” with or without congressional support.
In fact, the administration has been working on the rule, known as the “gainful employment” regulation, for five years. A previous version was blocked by the courts. Analysts who have been tracking the issue closely said another lawsuit over the latest draft is all but inevitable. And the latest draft contains a clause that indicates the administration is anticipating legal complications.
Education Secretary Arne Duncan said the complex regulation has a simple goal: “We want to protect students from enrolling in poorly performing programs that leave them with debt they cannot pay and a degree they cannot use.”
Duncan noted that most of the programs in question receive nearly all their revenue from the public treasury, in the form of federal loans and grants that students use to pay tuition. The colleges, he said, are therefore “failing both students and taxpayers.”
But Steve Gunderson, president of the Association of Private Sector Colleges and Universities, warned that the regulation would deny millions of students the chance to enroll in career training programs of their choice. “The government should be in the business of protecting opportunity, not restricting it,” he said. Even before the draft was released, Gunderson made clear he would fight back. He sent Duncan a five-page letter outlining his concerns — and copied in two top presidential advisers, Valerie Jarrett and John Podesta.
The regulation would apply to about 8,000 career training programs at all types of institutions — community colleges, state universities and for-profit colleges. But for-profit colleges would bear the brunt of the sanctions because they offer the vast majority of the degree programs that would be rated as poor-performing under the administration’s formula. The federal government annually extends about $22 billion in federal loans and $7 billion in grants to students attending those programs.
The for-profit industry includes giants such as the University of Phoenix, DeVry University, Corinthian Colleges and Education Management Corporation. Their programs, offered both online and in-person, train students for a wide range of careers, including crime-scene investigator, graphic artist, physician’s assistant, IT specialist, business administrator, hair stylist and many more.
The draft rule ties data to specific programs. For example, the Los Angeles Film School’s certification in film and video has the worst debt to earnings ratio in the country at almost 55 percent of $17,411.
The Senate Committee on Health, Education, Labor and Pensions spent two years investigating the industry and released a scathing report in 2012 that concluded taxpayers were wasting tens of billions annually because so many students took out huge loans through federal aid programs, yet failed to earn degrees. The investigation, spearheaded by Sen. Tom Harkin (D-Iowa), found that the schools spent millions on marketing and employed armies of recruiters, yet had few support staff to help students stay in school; many who enrolled left after just a few months.
Harkin said he would review the new regulation closely, but based on an initial review, he expressed “serious concerns with this proposed rule’s ability to protect students and taxpayers from costly programs that consistently overpromise and underdeliver.” He called for strengthening the regulation before it is finalized.
Ben Miller, senior policy analyst at the New America Foundation, said the removal of two provisions might weaken the rule.
For programs that lose their eligibility for financial aid under the administration’s proposal, a provision that would have required those programs to repay students is now gone. The administration’s new rule essentially says it’s open to ideas on that front. And a previous section that required capping growth of programs that were about to fail is gone, too.
Overseeing and enforcing this version of the rule will pose a challenge, Miller said, particularly in discerning whether senior officials at institutions are telling the truth about their program certifications.
The new regulation, which would take effect in 2016, would flag programs as weak if their graduates’ average loan payments ate up 8 percent or more of their total earnings or 20 percent or more of their discretionary earnings. They would also be flagged if the default rate for former students exceeded 30 percent.
Any program that failed those tests two out of three consecutive years would face a crippling penalty: The Education Department would refuse to extend financial aid to its students. That would choke off the colleges’ primary source of revenue — and effectively force them to close the targeted programs. Duncan stressed that programs would have a few years to improve before facing sanctions. “The goal is not program elimination,” he said. “The goal is program improvement.”
But the administration has shown little patience with programs it regards as bad actors. Obama’s new Consumer Financial Protection Bureau is suing one for-profit institution, ITT Education Services, for predatory lending practices.
The administration claims authority to regulate for-profit universities based on a line in the 846-page Higher Education Act of 1965. It permits the federal government to extend financial aid to students attending post-secondary programs that “lead to gainful employment in a recognized occupation.”
Shortly after Obama took office, the Education Department decided it was high time to define the term “gainful employment.” Doing so through the regulatory process allowed the administration to circumvent Congress. That has infuriated some members.
“Once again, the Obama administration is making substantive changes in law without consulting Congress,” said Rep. Virginia Foxx (R-N.C.). “We all agree that substandard schools, whether public, private or for-profit, should face consequences if they fail to provide the education and opportunities they promise, but we are in the middle of re-authorizing the Higher Education Act, and this is a perfect opportunity for the president to work with Congress to find a solution on this complex issue.”
The courts rejected the Education Department’s first gainful employment regulation, finalized in 2011, on the grounds that one of the metrics used to assess the vocational programs was too arbitrary.
Administration officials and attorneys have been working ever since to craft a replacement. They spent months in negotiations with key stakeholders, trying to come up with a regulation that everyone could accept. But those negotiations failed late last year, freeing the department to go its own way. In recent weeks, the Office of Management and Budget has held a fresh round of meetings with interested parties, seeking to answer questions and anticipate concerns. In the end, however, the administration did not change much from the drafts it circulated during the negotiations.
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Spring boarding from a piece in the Pacific Standard, we’re spending some time this week looking at a school of thought that is contrary to that of the mainstream: debt and loan counseling may not prevent student overborrowing. According to the essay, if counseling is delivered at the point of sale, for instance, the potential for conflicts of interest is huge. Where does education end and marketing begin? With no credentialing or oversight requirements in the financial literacy world, itâ��s up to the consumerâ��the one in need of enlightenment, rememberâ��to determine whether a lesson objectively and thoroughly covers the most important bases. Take, for example, Ally Financial, a company that offers car loans and other products. It has put together an entire online education site called…
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Spring boarding from a piece in the Pacific Standard, we’re spending some time this week looking at a school of thought that is contrary to that of the mainstream: debt and loan counseling may not prevent student overborrowing.
According to the essay, if counseling is delivered at the point of sale, for instance, the potential for conflicts of interest is huge. Where does education end and marketing begin? With no credentialing or oversight requirements in the financial literacy world, it’s up to the consumer—the one in need of enlightenment, remember—to determine whether a lesson objectively and thoroughly covers the most important bases. Take, for example, Ally Financial, a company that offers car loans and other products. It has put together an entire online education site called Ally Wallet Wise. But the site makes no mention of subprime auto loans, does not say how to determine whether you are being offered one, and doesn’t help users find out what an optimal interest rate might be.
In addition, the very notion that there is some moment that’s “just in time” for many financial decisions may be a mirage. Consider retirement savings for a moment. In our current, do-it-yourself model of financial planning, built on instruments like the 401(k), consumers must begin saving early in life to maximize the money they will have on hand at the end of their careers. But that often doesn’t happen. People stay in school until their late 20s, or, faced with competing demands on their funds, come to believe they can’t afford to put money away for some ill-defined future need. They make bad decisions for what seem like good reasons. If a counselor comes along at some point in this process, it’s likely not going to be “just in time,” but either too early to make an impression—or too late to make a significant difference.
Finally, it’s worth noting that standards of good advice have a way of shifting over time in a way that, say, basic facts of history or math do not. It used to be that people saving for retirement were told to set aside 10 percent of their salary. Now, many experts suggest that figure should be more like 15 or 20 percent.
A FEW MONTHS AGO, a website called Low Pay Is Not OK brought a burst of national attention to a financial literacy initiative created by Visa and McDonald’s, designed to teach low-wage McDonald’s employees “practical money skills for life.” The online program included a suggested monthly budget for a typical employee that left room for $800 of “spending money” after expenses. The budget assumed that this employee would take a second job to bring in extra money, while not spending a penny on child care or heat, and spending a laughable $20 a month on health insurance. The intended moral of the budgeting exercise: “You can have almost anything you want, as long as you plan ahead and save for it.”
The sheer cluelessness of this exercise caused uproar on the Internet, and no wonder. The United States is an increasingly class-stratified country, where the engines of mobility appear to have stalled. Minimum wage jobs lead to other minimum wage jobs. Salaries are stagnant. College tuition has soared at rates well beyond that of inflation, forcing students to turn to loans to get by, which in turn leaves them servicing massive amounts of debt in their 20s, a time when financial literacy classes—citing the power of compound interest—say they should save. The leading cause of bankruptcy is not overspending, nor lack of adequate financial planning, but the financial free fall caused by a health crisis.
Personal shortcomings and mistakes in managing money can indeed worsen the financial situation for many of us, but even these may be more a function of stress and scarcity than ignorance. Recent research by the behavioral economists Sendhil Mullainathan and Eldar Shafir has shown that perfectly intelligent people become much less so when they are experiencing a shortage of money, time, or attention. They develop a kind of tunnel vision that erodes the long-term thinking essential to financial planning. (Indian sugarcane farmers, for instance, perform worse on cognitive tests before a harvest, when they are cash poor, than they do after they’ve sold a crop.)
Trying to take some of these realities into account, a small group of educators is fundamentally rethinking the concept of financial literacy. Chris Arthur is an eighth grade teacher and a Ph.D. candidate in education at York University in Toronto. When he taught the subject in the past, he exposed his students to the Great Piggy Bank Adventure, a traditional financial literacy game produced by T. Rowe Price and Disney, and introduced them to the business concepts promoted by Junior Achievement, the children’s entrepreneurship organization. But last year he also made them play an online game called Spent, which is not a financial literacy product at all.
Spent was designed a few years ago for the North Carolina charity Urban Ministries of Durham. The concept is simple. The gamer assumes the role of a low-wage worker—like, say, someone at McDonald’s—attempting to get by until the end of the month. Players are faced with a relentless series of decisions and tradeoffs, and almost anything—a gift for a child’s birthday, a plea from a family member to help pay for needed medication—can send them into a financial downward spiral.
Needless to say, it’s just about impossible to achieve anything resembling financial success in the game of Spent. And that’s the point. “It challenges the dominant framing of financial insecurity as wholly a problem of ignorance and irresponsible consumer behavior,” Arthur told me.
Spent, like the controversy that ended up swirling around McDonald’s suggested employee budget, points to an oft-buried truth. The financial literacy movement presumes that with a modicum of education, we can all be equal in the financial and economic marketplace. But that’s a false promise. Financial literacy is, first of all, no substitute for financial regulation. It’s also an ultimately ineffective personal solution to a systemic political and economic problem. And even McDonald’s knows it. As I was reporting this piece, the Low Pay is Not OK website released a recording of a McDonald’s employee calling the firm’s help line for financial advice, saying she could not make ends meet on her salary. The counselor she spoke with suggested she locate a local food pantry and apply for food stamps and Medicaid.
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The price of silver rallied during last week. Will silver market continue to heat up? Let’s examine the recent news that may affect silver (SLV). The recent recovery of silver has also reflected in the rise in demand for leading…
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Stocks were higher in early trading on Friday as traders try to figure out what to do with weak job-creation data. According to the Bureau of Labor Statistics' non-farm payroll report, the economy generated 113,000 new jobs in …
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Following yesterday's slight rebound, stock futures dipped in pre-market trading today despite a better-than-expected private-sector jobs report. In earnings news, Twitter Inc (NYSE:TWTR) and Yelp Inc (NYSE:YELP) might …
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An investigation into student- lending practices of for-profit colleges is being expanded by the Consumer Financial Protection Bureau and state attorneys general, according to government officials and regulatory filings. The Wall Street Journal reported that Jack Conway, Kentucky Attorney General and chair of a group of 32 state attorney generals investigating such colleges, said that states are working with the CFPB to weed out unfair or otherwise deceptive student lending practices. “I expect in 2014 you’ll see action by the CFPB in coordination with states in coming months,” Conway told the WSJ. Corinthian Colleges, along with ITT Educational Services, disclosed in recent regulatory filings that the CFPB is considering legal action over the companies’ lending practices. A CFPB spokeswoman declined to comment on this claim…
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An investigation into student- lending practices of for-profit colleges is being expanded by the Consumer Financial Protection Bureau and state attorneys general, according to government officials and regulatory filings.
The Wall Street Journal reported that Jack Conway, Kentucky Attorney General and chair of a group of 32 state attorney generals investigating such colleges, said that states are working with the CFPB to weed out unfair or otherwise deceptive student lending practices.
“I expect in 2014 you’ll see action by the CFPB in coordination with states in coming months,” Conway told the WSJ.
Corinthian Colleges, along with ITT Educational Services, disclosed in recent regulatory filings that the CFPB is considering legal action over the companies’ lending practices. A CFPB spokeswoman declined to comment on this claim.
According to the WSJ, the probe “focuses in part on loans provided by outside investors through the colleges as well as on the for-profit-colleges’ job-placement promises, ramping up pressure on an industry that receives about $30 billion annually in taxpayer-funded federal grants and loans.”
The federal crackdown is occurring during a larger battle between federal regulators and the for-profit-school sector. That sector has been criticized by both the Obama administration and Democratic lawmakers for “allegedly charging high-interest loans without fully disclosing the loan terms and exaggerating students’ future earnings potential,” according to the WSJ.
The larger showdown has set in motion probes by the Securities and Exchange Commission and Justice Department. In addition, the WSJ reported that the Education Department is also “moving forward with a plan to deny federal student-aid dollars to vocational programs at for-profit and community colleges if their former students defaulted at high rates or had high debt levels relative to their incomes after graduating.”
ITT and Corinthian disclosed the SEC probes last year. And this past September Corinthian disclosed a Justice Department investigation “into whether the company manipulated attendance records to retain federal education funds. The probe also looked at the company’s recruiting and financial-aid practices,” the WSJ reported.
CFPB officials appear focused on whether students are adequately informed of loan risks. “We’ve seen instances when some of the for-profit schools are anticipating as much as a 50% default rate on loans they make to students,” CFPB Director Richard Cordray said in an interview with a student-advocacy group in 2012. “They’re not telling the students that, but they are disclosing that information to their investors.”
“We believe that all of our actions were lawful and we intend to vigorously defend ourselves,” an ITT spokeswoman said of the CFPB and SEC probes. A Corinthian spokesman said all students are provided with detailed descriptions of the terms of their loans and are told “clearly and in writing that no student or graduate can be guaranteed employment.”
Corinthian was also sued in October by California Attorney General Kamala Harris. The lawsuit cited internal Corinthian documents saying the company targets students who are “isolated” or “individuals with low self-esteem,” through TV ads and telemarketing campaigns.
ITT has said that it has “not identified any third-party private education loan programs for our students’ use since 2011,” according to an ITT spokesman said. A Corinthian spokesman said loans made through its program are “well-below” market rates, with a maximum rate of 9.9%.
According to the WSJ, for-profit colleges account for a rising share of federal financial aid in recent years, increasing from 11% of federal student loans in 2000 to 23% in 2010. These estimates are based on a report by the Center for Analysis of Postsecondary Education and Employment.
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“Is the NSA’s Spying Constitutional? It Depends Which Judge You Ask; Two recent rulings draw diametrically opposed conclusions about the same set of facts.” Andrew Cohen has this essay online at The Atlantic. Posted at 03:30 PM by Howard Bashman”N.S.A. Phone Surveillance Is Lawful, Federal Judge Rules”: The New York Times has this news update. You can access today’s ruling of the U.S. District Court for the Southern District of New York at this link.Update: In other coverage, The Associated Press reports that “NY judge rules NSA phone surveillance is legal.”Jonathan Stempel of Reuters reports that “U.S. judge upholds NSA phone surveillance program.”And Bloomberg News reports that “NSA Call Data Program Ruled Lawful in ACLU Case.”Posted at 12:10 PM by …
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“Is the NSA’s Spying Constitutional? It Depends Which Judge You Ask; Two recent rulings draw diametrically opposed conclusions about the same set of facts.” Andrew Cohen has this essay online at The Atlantic.
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Six years ago on April 3rd 2007, I pressed ‘publish’ on a post to welcome people to a blog about freelancing. FreelanceSwitch was an instant hit with more than 250,000 visitors in its first month on the air. Over the next six years the site hosted hundreds of writers, and gave advice to millions of dedicated readers pursuing a freelance career. Today I’m here to announce that we’ll still be putting together great freelance content, but it’s going to be in some different locations.
As many of you know, FreelanceSwitch is one of a family of products from Envato. As a company we’ve grown a lot since those early years, from just a handful of people to over two hundred. Along the way the company has built two very large franchises: The Envato Marketplaces, and Tuts+. This year we launched what is quickly becoming our third: Microlancer. To help focus the company, we’ve been rolling up and in some of our smaller sites, such as RockablePress, and now FreelanceSwitch.
Over at Tuts+ we’ve been building the future of the Tuts+ network – a massive destination site where we publish volumes of high quality educational content, broken up into learning hubs. One of those hubs – ‘Business’ – is going to be the new home of most of FreelanceSwitch’s article library. We’ll still be publishing new content, from the same great authors in that space.
The Business hub isn’t ready yet, and when we get a bit closer, we’ll post again on FreelanceSwitch about the move and with links to stay subscribed. It should be a few weeks away, so stay tuned!
In addition to the Tuts+ Business Hub, our other product in the freelancing space, Microlancer, is launching its own blog. We’ll be publishing content targeted at general freelance audiences, as well as Microlancer service providers. Some of our FSw library is moving over to this new Microlancer blog.
We haven’t yet started any migration as we’re putting the finishing touches on the blog, but you can already stop in and visit the Microlancer Blog and say hello!
Along with the FreelanceSwitch blog, we are closing the job board. For people looking to hire freelancers, we recommend trying out the new Microlancer freelance marketplace. We’ve had over 3000 jobs completed there already, and the site is home to an amazing array of very talented freelancers.
I’d like to say a heart felt thank you to all the people who have supported FreelanceSwitch over the years. In particular the editors: Cyan, Skellie, Joel, Sean, Amanda, Glen, as well as NC Winters who has illustrated one heck of a comic series in Freelance Freedom, all of our writers, podcasters, commenters, job board subscribers, and of course, readers.
When I hit publish that day six years ago, I never imagined the site would have such a huge reach, and touch the lives of so many freelancers. And I couldn’t be more proud, and grateful that we were able to offer something of value. I look forward to continuing our freelance content over at the new Tuts+ Hub when it launches soon.
Thank you all for your support and readership!
For more info: End of an Era – FreelanceSwitch is Merging into Tuts+ and Microlancer
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New short GBPUSD @ 1.6173October 23, 201314.45 gmtThis is as per the system signal. These days I barely look at the charts or the news – perhaps a few minutes at night and mornings (Singapore time). That sort of works to my advantage, since I have been trying to follow my system blindly, but too much screen time always distorts one’s thoughts. Let’s see how this works out.Short $5/pip GBPUSD at 1.6173, SL at 1.6252.The Aussie has also generated a sell signal, but I am hoping for a little bounce to catch it near 0.9650.About these adsShare this:Email Print Facebook Google From → Trades
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14.45 gmt
This is as per the system signal. These days I barely look at the charts or the news – perhaps a few minutes at night and mornings (Singapore time). That sort of works to my advantage, since I have been trying to follow my system blindly, but too much screen time always distorts one’s thoughts. Let’s see how this works out.
Short $5/pip GBPUSD at 1.6173, SL at 1.6252.
The Aussie has also generated a sell signal, but I am hoping for a little bounce to catch it near 0.9650.
For more info: New short GBPUSD @ 1.6173
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