College loans, cards and theft, oh my!

On Sept. 10, N.C. Attorney General Roy Cooper and staff from his Consumer Protection Division converged on the Queens campus to provide information on maintaining financial security during college as part of Cooper’s “College Cash and Credit Tour.”

As students and faculty filtered in—some even having to stand—Cooper said he was concerned about the vulnerability of college students to scams and other financial issues. This was an important issue to him, he said.

“I have two college-age daughters and so we talk about this on a personal level,” Cooper said.

He and his staff have several recommendations for students to stay financially secure.

Student loans

Matt Liles, assistant N.C. attorney general, said Americans have $1.3 trillion of student debt.

“I actually had to write that down in my office to understand how big that number is,” Liles said.

That number will double by 2025, he said.

“This stuff starts to stack up, and it really affects people’s lives,” Liles said.

Once a student takes out a loan, it will stay with him or her until it’s paid off, he said. Filing for bankruptcy does not get rid of student loans.

If a student doesn’t pay off his or her loans, he or she can face stiff consequences, including:

  • Fees
  • Wage Garnishment and Confiscation of Tax Refund
  • Bad Credit
  • Contact from Debt Collectors

It can also keep a student from furthering his or her education, he said.

“There’s a story I know of a social worker named Trinity,” Liles said. She has a master’s degree and a 4.0 GPA, but with $60,000 in debt, “she just doesn’t believe…she can go get her doctorate.”

“So, it can really stop you from doing some things,” he said.

However, it can be manageable if students approach the subject with knowledge, Liles said.

There are several types of loans and various payment options, he said, among which are:

  • Subsidized: With this type of loan, the government pays off a student’s interest while he or she is in school.
  • Unsubsidized: If a student receives an unsubsidized loan, interest will accrue throughout his or her college years.
  • Private: This loan type tends to be more expensive. Students need to know who the lender is, the interest rate, the loan balance and whether or not they’re in default.
  • Standard 10-year plan: A student utilizing this plan will pay off the same amount each month for 10 years.
  • Income-based repayment plan: This plan bases monthly payment on income. This usually increases the amount of time it takes to pay off loans.

There are also some options that offer a halting of payments for a specific period of time. One such option is a a grace period, Liles said. This is a period of time—usually about six to nine months— a student is given to get settled before needing to pay off student loans. Deferments and forbearances are also options for a person overwhelmed with debt; they offer a halting of all payments for a specific time period, he said. However, Liles said some deferments and all forbearances continue to be subject to interest during the stoppage.

Credit and debit cards

Creecy Johnson, special deputy attorney general, said she wants to help students know the mechanics behind the credit and debit cards they use daily.

“My goal is to get you really thinking about these things that you carry around in your wallet,” Johnson said.

Debit cards take out money directly from a person’s account.

“However, with a credit card, each time you swipe that card…you’re actually accumulating debt,” she said. “If you pay it back in full every month, then you won’t be charged interest.”

However, if it’s not paid back, interest is applied to the unpaid balance, she said. Debit cards have no interest.

“My main advice for using your debit card is to check your balance every day…[and] view your recent transactions,” Johnson said.

She said students should also be careful about overdrafting their accounts.

“You really don’t want to buy a $5 sandwich, get hit with an overdraft fee of maybe $50 and find out it was a $55 sandwich,” she said.

As for credit cards, a student between the ages of 18 and 21 must meet certain requirements before receiving a card, Johnson said. A student needs either a co-signer willing to vouch for the student’s payments should he or she not pay them, or documentation of independent financial means.

Johnson said students should know several credit card terms:

  • APR: The interest rate for a period of a year. “The most important thing to know…is this is the best number for you to use to compare different credit cards,” Johnson said. APRs normally range from 10-25 percent.
  • Minimum payment: This is the least amount of money a person can pay on a credit card each month.
  • Pre-approved Offer: This is an offer that usually comes in the mail, telling a person that he or she is eligible for a credit card. These offers can be deceptive, though, Johnson said—a person still has to undergo a financial evaluation before receiving that card.

Identity theft

Nimasheena Burns, outreach specialist, said college students students need to be especially careful with their information. People between the ages of 18-28 have a one in five likelihood of being the victim of identity theft, she said.

“That’s higher than any other age group,” Burns said.

Burns said students should do the following to prevent identity theft:

  • Keep a lockbox full of personal information.
  • Shred pre-approved credit card applications.
  • Log off of mobile devices when leaving them unattended.
  • Keep up with their computers’ anti-virus protection.
  • Turn off geolocation software.
  • Set up a security measure on their phones.
  • Limit Wi-Fi usage in public places.

Seventy-five percent of companies have policies that encourage recruiters to search for a potential employee’s “online reputation,” Burns said.

Burns therefore said she encourages students to use their devices’ privacy settings and conduct a “self-audit” before applying to a job or internship.

She said they should also check their credit reports. However, they should only use Equifax, Experian and TransUnion, she said. Students can do a free credit report once a year with each of these credit monitoring agencies, Burns said.

“Get on a good quarterly rotation and you don’t have to worry about paying for your credit report,” she said.

Students should only use annualcreditreport.com because that’s the only website that’s government regulated, Burns said.

Three actions students should take today

Cooper said there are three actions the Queens community should take immediately to prevent financial trouble.

“The first thing I would do is to make sure that you don’t give your personal information to anyone who asks for it,” he said. “There are many people who will call you, email you, pretend to be an official organization that ask for your information. Don’t give them that information unless you know specifically who they are.”

Cooper said he also advises students to check their credit reports.

“And the third thing…is to recommend a security freeze,” Cooper said. “I think that is the best preventive measure that a person can take to prevent identity theft.”

A security freeze makes it impossible for new lines of credit to be taken out in a person’s name. This can be tricky because a person has to unfreeze the account before getting something as simple as a new credit card, Cooper said.

“When you’re a victim of identity theft, when somebody’s stolen your information…things tend to keep cropping up because these criminals sell information to each other,” he said. “You can put out one brush fire, then another one comes up. It is a bad situation to have to go through.”

“So, a little trouble beforehand helps prevent a lot of pain afterwards,” Cooper said.

 

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Published by students of Queens University of Charlotte, 1900 Selwyn Avenue, Charlotte, N.C. 28274.