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NAB stops dealing with unlicensed debt management providers



The major bank is cracking down on unlicensed debt management companies, revealing that it will no longer deal with them.

NAB has announced that it will no longer deal with unlicensed, fee-charging debt management providers in a bid to “help protect customers from potentially being placed in a worse position financially and help give them confidence they are getting the best support possible”.

The major bank said this was an important step as more Australians seek financial assistance as they deal with the economic impacts of the coronavirus pandemic.

Many for-profit providers do not hold a current Australian Financial Services Licence (AFSL) or an Australian Credit Licence (ACL) from ASIC, despite often appearing to offer services that require a licence.

In 2019, almost 20,000 NAB customers sought financial hardship assistance, the bank revealed. Additionally, around 9 per cent engaged debt management providers that charged fees and often operated without any professional credentials.

In 2020, the over 150,000 customers sought financial assistance in the wake of the COVID-19 crisis.

However, the financial services regulator has previously warned consumers about paying high fees for debt management companies, warning that some unlicensed companies claim they can fix poor credit ratings but often fail to do so, leaving the consumer in a worse financial situation.

NAB group executive, personal banking, Rachel Slade said the lender wanted to ensure that financially vulnerable customers were professionally supported, either directly by NAB or by an accredited representative.

“Now more than ever, customers are facing situations that can leave them in a vulnerable financial position,” Ms Slade said.

“We continue to check in with our customers who have requested payment deferrals due to the impact of COVID-19, and know many still need our support through this crisis.

“However, we also understand that some customers won’t be able to bounce straight back. As more Australians seek help, it is important that we no longer deal with unlicensed, fee-charging debt management providers.”

Ms Slade said NAB will continue to work with customers who are unable to make repayments to find the appropriate solution, or refer them to free and independent services that can assist them.

She added that this move would help protect customers from potentially being placed in a worse financial position.

“We’ll then work with the customers’ appropriately accredited debt advocate to give them time to get things back on track,” she said, adding that NAB Assist can help customers with grants, low interest loan and support for finding employment.

NAB added that consumers experiencing financial stress or hardship, or those facing credit or debt problems, could also:

  • talk to their lender or bank;
  • engage a “free and independent financial counsellor or community legal service (such as Way Forward or The National Debt Helpline);
  • seek assistance from the Consumer Action Law Centre or Financial Counselling Australia; or
  • visit ASIC’s MoneySmart website for more guidance around debt and credit repair.

Background to debt management provider warnings

In 2018, a Senate economics references committee recommended tighter regulation of all credit and debt management, repair and negotiation activities.

The move was initiated by NAB’s independent customer advocate Catherine Wolthuizen and has received ASIC’s support.

At that time, ASIC issued a warning to consumers about paying high fees for credit repair and debt advice services to companies that claim they can fix a poor credit rating.

ASIC was running a month-long campaign with other government agencies to help consumers understand that they may end up paying high fees by using these services.

Instead, the corporate regulator advised consumers facing debt problems to seek free help and guidance from financial counsellors and the National Debt Helpline.

ASIC deputy chair Peter Kell said consumers who believe they have had a credit default wrongly listed against them can contact the creditor and ask for it to be removed. If they are not satisfied with the outcome, they can contact the relevant dispute resolution service for help.

“Consumers experiencing money or debt problems don’t need to put themselves under further financial stress by paying high fees to firms providing credit repair and debt solution services,” Mr Kell said.

NAB’s announcement in relation to debt management providers comes as the bank also revealed that it would partially close 114 smaller regional branches – only opening them in the mornings – from next month.

The change, which will come in effect on 17 August, will see bankers splitting their time between over-the-counter service (during the hours of 9.30am-12.30pm) and digital or phone banking support.

[Related: ASIC to review responsible lending guidance]

NAB stops dealing with unlicensed debt management providers

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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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