Consumer Action empowers educators with new tools and techniques

The conference kicked off with tips from Dr. Billy Hensley of the National Endowment for Financial Education (NEFE) on how to evaluate the efficacy of financial literacy training efforts. Dr. Hensley was asked what financial education approach he’s seen that reaches high school students. “Research shows that cumulative information is what works,” said Hensley. He pointed to Colorado, a state where financial education starts in kindergarten and continues through 12th grade, which helps students build on what they learn.

On the second day, counselors were asked to put NEFE’s evaluation toolkit to work in an activity. Linda Williams and Nelson Santiago, Consumer Action outreach managers, demonstrated ways attendees can transform financial seminars into fun activities.

Another session was devoted to credit scores. Sarah Davies of VantageScore—a less widely used alternative to the prevalent FICO score—described how one 30-day-late payment could damage an individual’s credit score. “The first delinquency takes the largest hit,” said Davies. She added that a 30-day-late notation on one’s credit report could lower a healthy score by 70 to 90 points. She discussed how some credit bureaus are interested in adding alternative data such as utility and telephone bill payments and even rental payments to credit reports. However it was noted that much work must be done before such information could be obtained consistently.

CBO representatives in the audience asked if credit bureaus have any plans to separate medical or student loan debt from a typical credit score. Davies said the VantageScore does not include original medical debt unless it is transferred to a debt collector.

“How long does it take to recover after a foreclosure?” asked one participant. Davies, referring to VantageScore, said that with regular on-time bill payment, individuals could see their credit score improve by 80 to 90 points within nine to 12 months after foreclosure. However, a former lender in the audience cautioned that people should not expect to be eligible for a new loan for up to three years.

Conference participants heard from Rich Williams of U.S. PIRG (Public Interest Research Group) about the dire state of student loan debt. Self-governing PIRG advocacy organizations are active in 47 states and on many college campuses. Collectively, the national federation of state PIRGs is known as U.S. PIRG.

Williams noted that in the recent past, one-third of college students borrowed money to attend college. Today, two-thirds of all students take out student loans, and the amount of debt has more than doubled to $26,000, on average. Williams warned of the high cost differential between federal student loans and those offered by private institutions. He also stated that half of the students who attend vocational, technical and certain for-profit institutions are simply “not employable with the degrees they earn.”

Participants gasped audibly on day two as Doug Heller, executive director of Consumer Watchdog, a California-based advocacy organization, spelled out the disparity in auto insurance rates for low- and moderate-income drivers. Costs range from $481 to $2,517 for people with the same good driving record who live in a lower-income ZIP code and who have a lower education level. Heller called on participants to tackle this discrimination, state by state, by insisting that premiums be based on driving record, length of experience and miles driven.

Scott Pluta, head of the Consumer Financial Protection Bureau’s (CFPB) complaint unit, explained the bureau’s process for handling complaints. Much to the delight of participants, who have seen the financial fallout from predatory lending, Pluta told the group that the CFPB will begin scrutinizing payday loans in 2013.

The conference also covered mobile payments, asset building for the underserved and prepaid cards as a tool for the unbanked.

As they left with new tools to engage and empower their clients, participants deemed Consumer Action’s 3rd Annual National Consumer Empowerment Conference the “most substantive one yet.” Capital One and Visa Inc. were conference Underwriters. AT&T, Bank of America, Consumer Action’s Housing Information and Managing Money Projects and VantageScore Solutions were Leadership Circle patrons; Citi was a Benefactor, and RushCard, a Sponsor.