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National Disability Institute's Washington Insider is a monthly newsletter highlighting key federal policy news that impacts the financial futures and economic empowerment of all people with disabilities. The Washington Insider tracks legislative and policy initiatives gaining momentum on Capitol Hill, specifically in the areas of taxation, asset building and economic development.

 

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April 2015 | Vol. 7, Issue 4
CONTENTS
CFPB To Reform Payday Loan Industry
ABLE Act News and Views
Department of Labor Invests $15 Million to Improve Disability Employment Outcomes
Millions of Americans Will Now Have Access to Their Credit Scores and Reports
New Hampshire to Ban Subminimum Wage
FICO Revises Credit Scoring Model
March Employment Profile


 

CFPB To Reform Payday Loan Industry

At a time when there are nearly as many payday lenders (approx. 20,600) as McDonalds (14,267) and Starbucks (7,049) combined operating in America, the Consumer Financial Protection Bureau (CFPB) is moving forward with proposed rules to protect Americans, with and without disabilities, from unscrupulous payday lenders.

A $46 billion industry and growing, the payday loan market often serves as the “go-to” source of borrowing for America’s working poor and at risk, including countless people with disabilities - many of whom have no savings and lack access to more traditional bank-borrowing methods.

That is why, as the nation’s first nonprofit dedicated exclusively to improving the financial health of all individuals with disabilities, National Disability Institute (NDI) has long documented and advocated for the reform of non-traditional financial services and products that snarl millions of Americans with disabilities in the perpetual cycle of high-interest borrowing (up to 400 percent or more). In fact, based on findings from our report, “Financial Capability of Adults with Disabilities - Findings from the FINRA Investor Education Foundation 2012 National Financial Capability,” 41 percent of people with disabilities used methods of non-bank borrowing, such as pawn shops and payday loans, as compared to only 29 percent of people without disabilities.

The proposed regulations would not outright ban high-interest, short-term loans, but rather require lenders to ensure borrowers have the means to pay. This comes following a CFPB analysis on 15 million payday loans that found: (1) few people have the capability to repay such loans; (2) borrowers took out a median of 10 loans during a 12-month period; (3) more than 80 percent of loans were rolled over and/or renewed within a two-week period; and (4) nearly 70 percent of borrowers used payday loans for basic expenses - not one-time emergencies, as claimed by many payday lenders.

Under the CFPB’s new payday underwriting requirements, short-term loans can be no more than $500. Lenders would also be prohibited from rolling over loans more than two times during a 12-month period, and required to assess a customer’s income and other financial vitals to make sure the borrower has enough money to cover the loan when it comes due. This proposal would also cover certain loans backed by car titles and some installment loans that stretch out longer than 45 days. For longer-term loans (45 days or more), lenders would be required to put a ceiling on interest rates at 28 percent, or structure the loan(s) so that monthly payments do not exceed five percent of a borrower’s pre-tax income. Read the entire proposal by visiting the CFPB website.

NDI commends the Obama Administration and CFPB for taking this important step to help Americans, with and without disabilities, to escape debt traps that prevent them from reaching their full economic potential. Going forward, we will continue to work with President Obama, CFPB and relevant federal agencies to ensure all Americans can access the full scope of financial services and products to live a more financially independent life, as well as improve their financial future.

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ABLE Act News and Views

This month, NDI, along with representatives from The Arc, Autism Speaks and the National Down Syndrome Society, met with Treasury Department officials responsible for drafting regulatory guidance on the ABLE Act. This was the second such meeting NDI has had with Treasury, as the Department continues to work on a framework to guide states on the implementation of the ABLE Act and on associated accounts for individuals with disabilities and their families.

During this meeting, NDI offered further insight on our recently submitted recommendations, as well as to receive feedback from Treasury. The meeting was invaluable, and we look forward to offering additional support to Treasury as it continues drafting ABLE Act rules and regulations.

In other news, states continue to move forward with their respective ABLE legislation. We are happy to report 27 states have pending ABLE legislation and another 13 states have already passed the ABLE Act. NDI remains in close communication with several states to offer input and technical assistance as they shepherd their bills through their respective legislative process.

NDI will continue to keep close watch on all the latest developments and provide further updates in future editions of The Washington Insider.

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Department of Labor Invests $15 Million to Improve Disability Employment Outcomes

Just in time for National Financial Capability Month, the United States Department of Labor announced the availability of $15 million in Disability Employment Initiative (DEI) grants to help state workforce agencies increase participation of people with disabilities in federally-funded education and training programs.

NDI works closely with DEI, and provides training, technical assistance and support for the Initiative. We do so by utilizing a multimodal approach to training and customized technical assistance to help facilitate DEI grantees’ full understanding and purpose of the Initiative.

Employment serves as a springboard to greater financial stability. That is why we are pleased to continue working with the Department of Labor, and various state workforce agencies, to provide the necessary training and skills to individuals with disabilities so that can compete in today’s workforce.   

Labor will award eight grants — ranging from $1.5 to $2.5 million — to be spent in a 42-month period. Funding will be provided to projects with the following three target populations: adults with disabilities (ages 18 and older); youth with disabilities (ages 14-24); and individuals with significant disabilities (ages 14 and older).

Workforce agencies interested in applying for this funding should visit http://www.grants.gov. The deadline to apply is June 11, 2015.

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Millions of Americans Will Now Have Access to Their Credit Scores and Reports

On April 21st, the Consumer Financial Protection Bureau (CFPB) announced a policy change which will have an immediate effect on the financial capacity and capability of millions of Americans with and without disabilities.

Each year, countless people utilize free financial counseling services - the majority of whom are at-risk individuals and families, including many with disabilities. A common component of these services includes pulling a client’s credit reports and scores. This helps counselors better assess individual client needs and institute a plan of action to assist them in reaching their financial goals. Unfortunately, prior to CFPB’s notice, nonprofit organizations offering credit and financial counseling were legally mandated to not provide the report or score to any other entity, including the consumer. The CFPB announcement reverses this “no-sharing policy.”

We welcome this news, as it will allow consumers the ability to review their credit history, give them more control over their own finances, empower them to make better financial decisions and be less dependent on their financial counselor.

People with disabilities are capable of making informed financial decisions on their own. As the nation’s first and preeminent nonprofit committed to improving the financial health and future for all people with disabilities, we have long documented and are continuing to shine the light on this very fact. We look forward to continuing to work with CFPB, as well as the entire federal government, to provide more autonomy and independence to tens of millions of Americans with disabilities.   

To learn more about CFPB’s policy change, please read the press release.

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New Hampshire to Ban Subminimum Wage

New Hampshire is likely to become the first state in the country to repeal laws allowing employers to pay their employees with disabilities below the minimum wage. In addition, New Hampshire will begin to phase out segregated work environments, more commonly known as “sheltered workshops.” The bill, Senate Bill 47, is awaiting Governor Maggie Hassan’s signature. The Governor is expected to sign the bill into law in the coming days.

This is an exciting and important step forward, which will hopefully act as a national model to help place more workers with disabilities in competitive, high-quality employment opportunities that pay competitive wages.

At the federal level, Representative Gregg Harper (R-Miss.) introduced H.R. 188, the Transitioning to Integrated and Meaningful Employment (TIME) Act, a bill similar to the new New Hampshire law.

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FICO Revises Credit Scoring Model

Approximately 90 percent of consumer-lending decisions are based on an individual’s credit score, yet 53 million Americans lack a traditional score, including people with disabilities. However, that is about to change. The Fair Isaac Corporation (FICO) announced it will introduce a new score model intended to make more people creditworthy. The alternative data credit-scoring formula is expected to immediately benefit 15 million Americans, providing them with a FICO credit score for the very first time.

Under the new scoring model, FICO will take into account a consumer’s payment history with various utilities, including electricity, water, gas, etc., and also cable and cell phone bills. In addition, individuals who have successfully applied for a credit card and managed it well - without falling behind on payments and maintaining low balances for at least six months - will also receive regular FICO scores. This will make it easier for millions of Americans to get approved by lenders for a home, automobile and other major life purchases.

Maintaining and possessing good credit is critical to survive in today’s economy, and it opens the door to future economic possibilities. FICO’s new approach will provide additional pathways to, and greater opportunities for, people with and without disabilities striving to achieve the American Dream.

Read more by visiting the “FICO Newsroom.”   

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March 2015 Employment Profile

Disability employment statistics for March 2015 show that the unemployment rate among people with disabilities was 11.7 percent. While this a 2.8 percent reduction from March 2014, only 19.5 percent of people with disabilities are actively in the labor force, as compared to 68.3 percent of people with no disability who are part of the labor force. Data on people with disabilities covers those from the ages of 16 to 64 who do not live in institutions.

U.S. Disability Employment Profile
Statistic
With Disability
Without Disability
 
March
2014
March
2015
March 2014
March 2015
Percent of Population in the Labor Force
19.5
19.8
68.7
68.3
Employment-Population Ratio
16.7
17.5
64.2
64.7
Unemployment Rate
14.5
11.7
6.5
5.3
As reported by the U.S. Department of Labor's Bureau of Labor Statistics, Table A-6

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