Arkansas Society of Certified Public Accountants
Private Student Loan Debt
Financial Awareness for Students and Cosigners
By: Lynn M. Petrovich
The U.S. Consumer Financial Protection Bureau (CFPB)
acknowledges federal student loan debt reached $1 trillion.
Private loans bring total student borrowing to $1.2 trillion.
Among borrowers with more than $40,000 in debt, 81% used
private loans, and according to the CFPB’s 8/29/12 report to
Congress “Private Student Loans” (PSL), many borrowers
failed to recognize the difference between private and nonprivate loans, a confusion which, according to the CFPB’s
Report to Congress, “may cause long-lasting and substantial
consumer harm”.
Further, a 2003 study by the State Public Interest Research
Group Higher Education Project found that a staggering 75%
of all private loans originated without prospective borrowers
first exhausting other options (remaining federal loans
available, work-study programs, outright grants, or family
contributions), which was reinforced in the CFPB’s Report.
This is a significant misunderstanding of fact because private
student loan debt, which grew from $1 billion in 1996 to $5
billion in 2001 to more than $20 billion in 2009 before
condensing to $6 billion in 2011 (eliminating the massive
television advertising campaign showing a young person on a
conveyor belt going thru a checkout line, no doubt helped),
offer higher interest-rate risk, fewer repayment options, and
shorter default windows. It’s important to note, with 90% of
PSLs requiring a co-signer, these loans are structured to
survive the borrower’s death. Federal loans are not.
A private education loan is a student loan which is
independently financed and administered by a non-federal
lender. The Federal Reserve categorizes any loan which is
not a Title-IV loan as private.
Aggressive marketing
campaigns helped the private student loan market grow
from 79 products in 1997 to 272 in 2003, an increase of
244%. Large financial institutions make up the majority of
the private student loan debt market, often holding these
portfolios on their books in asset accounts, without
distinction, making it more difficult to accurately assess and/
or contain their volatility.
Continued on Page 4
December 2014
ASCPA STUDENT CAREER FAIR
The ASCPA Student Career Fair was held on September 25, in
Little Rock. Approximately 70 students attended this expostyle event and met face-to-face with accounting
professionals to offer their resumes and to learn more about
the diverse opportunities available after graduation.
Post bachelor and junior and senior level accounting majors
at four-year public and private colleges and universities met
with various public accounting firms of various sizes, firms,
corporations, and state and federal government agencies.
Beverages and snacks were available during the event.
Thank you to the following schools whose students
attended:
Arkansas Baptist College
Arkansas State University
Arkansas Tech University
Central Baptist College
Henderson State University
Hendrix College
Liberty University
Lyon College
Ouachita Baptist University
Southern Arkansas University
University of Arkansas at Little Rock
University of Arkansas at Monticello
University of Arkansas at Pine Bluff
University of Central Arkansas
University of Phoenix
For more information about this event, or to find out the
requirements to attend next year’s event, please call Robin
Harris at the ASCPA Office at (501)-664-8739 or 1-800-4828739, or e-mail: rharris@arcpa.org
Inside This Issue
10 Best Interview Questions to Ask
2
UALR Accounting Society Project
3
Guide to Public Accounting Firms
3
CPA Exam Review Discounts
3
Private Student Loan Debt (Continued)
4
2
ASCPA Student News
President
Charlott A. Jones
Membership/Peer Review Manager
Marsha A. Moffitt
Executive Director
Bruce C. Alt
Public Relations / Communications Manager
Robin E. Harris
Finance/Technology Manager
Pradeep Sapkota
Member Service Specialist / ED’s Assistant
Linda Vance
CPE Manager
Christal N. Miller
CPE Specialist
Stephanie Tanner
The 10 Best Interview Questions to Ask
By: Alison Green
When your interviewer wraps up your job interview by asking if
you have any questions, you might think that he or she is
finished assessing you, but that's not quite the case.
Interviewers draw conclusions about you based on the
questions you ask—or don't ask. You don't want to give the
impression that you're not very interested in the job, or that
you're only concerned about the compensation. Instead, ask
about the work, company, and team. Here are 10 great
questions for your interviewer:
1. What are the biggest challenges the person in this position
will face?
This question shows that you don't have blinders on in the
excitement about a new job; you recognize that every job has
difficult elements and that you're being thoughtful about what
it will take to succeed in the position.
2. Can you describe a typical day or week in the position?
This question shows that you're thinking beyond the interview
and that you're visualizing what it will be like to do the work
itself. This is different from many candidates, who appear to be
focused solely on getting the job offer without thinking about
what will come after that.
3. What would a successful first year in the position look like?
Asking this shows that you're thinking in the same terms that a
manager does—about what the position needs to contribute to
the team or company to be worthwhile. You'll also sound like
someone who isn't seeking to simply do the bare minimum, but
rather to truly achieve in the role.
4. How will the success of the person in this position be
measured?
This question is similar to the previous one, but it will also give
you more insight into what the manager really values. You may
discover that while the job description emphasizes skill A or
responsibility B, the manager actually cares most about skill C
or responsibility D.
5. How long did the previous person in the role hold the
position? What has turnover in the role generally been like?
If no one has stayed in the position very long, it might be a red
flag about a difficult manager, unrealistic expectations, or some
other land mine.
6. How would you describe the culture here? What type of
people tend to really thrive, and what type don't do as well?
If the culture is very formal and structured and you're happiest
in a more relaxed environment, or if it's an aggressive,
competitive environment and you are more low-key and
reserved, this job might not be a comfortable fit for you. You'll
spend a large portion of your waking life at your job, so it's
crucial to make sure you know what you're signing up for.
7. How would you describe your management style?
Your boss will have an enormous impact on your quality of life
at work. While you can't always trust managers to accurately
self-assess, you'll at least get some insight into their style by
what things they choose to emphasize in response to this
question.
8. Thinking back to the person who you've seen do this job
best, what made their performance so outstanding?
Most managers' ears will perk up at this question, because it
signals that you care not just about being average or even good,
but truly great. This is the question managers wish all their
employees would ask.
9. Are there any reservations you have about my fit for the
position that I could try to address?
This is a great way to give yourself the chance to tackle any
doubts the interviewer might have about you, as well as for you
to consider whether those doubts might be reasonable and
point to a bad fit.
10. What is your time line for getting back to candidates about
the next steps?
Always wrap up with this question, so that when you go home
you know what to expect next. That way, you won't be sitting
around wondering when you'll hear something.
Alison Green writes the popular Ask a Manager blog, where she
dispenses advice on career, job search, and management issues.
She's also an author and former chief of staff of a successful
nonprofit organization.
ASCPA
Student
News3
ASCPA
Student
News
3
UALR Accounting Society
Becker CPA Review
Students from the University of Arkansas Little Rock
Accounting Society recently made two accounting
career presentations. The first presentation was on
September 17, to approximately 40 students and a
second presentation was made on October 15, 2014 to
twenty-four students, to help demonstrate the value of
a college education. Both presentations were to high
school age groups at Camp Robinson in North Little
Rock, as part of a community service project.
Arkansas Society of CPAs associate and student members
can receive a discount on the Becker Professional CPA
Review for the full 4-part review course. Save $300 off
of the full 4-part review of either Live, Online, or CD-Rom
self study review course format. Becker CPA Review classes
correspond with the exam testing windows that you select.
UALR Accounting Society utilized the ASCPA PowerPoint
presentation for students, which promotes financial
literacy, college, and a career in accounting. The team
said “it wasn't only successful, it was fun and
rewarding!” Special thanks to Cynthia Johnson, UALR
faculty advisor and Dr. Mike Watts.
Pictured are UALR accounting majors during their presentation
on October 15th at the National Guard Arkansas Youth
Challenge. Left to right are: Jacob Downs (UALR Society
President), Patrick Moore (President of programs), Brent Elliott
(Communications Director), Christine Belcher (Treasurer), and
Saliha Qazi. Not pictured, Rose Mary Eckersly.
To request a copy of the PowerPoint for your school or
organization, email Robin Harris, at rharris@arcpa.org
Guide to Public Accounting Firms
The 2014 Guide To Public Accounting Firms booklet is now
online! The Guide can provide a free directory of public
accounting firms throughout Arkansas and surrounding
cities, from which students can select firms to apply for
employment or internships. The booklet contains an
alphabetical listing of firms, as well as a geographical
index by city. Each listing contains contact information,
website, firm size, and description where available. The
Guide also contains a list of accounting organizations,
information on the 150 hour education requirement, tips
for writing a resume and preparing for a job interview,
frequently asked questions, and more.
To view online: go to: www.arcpa.org and click on
Student Lounge.
Then click the Guide to Public
Accounting Firms link.
For more information on this member service, ASCPA
members should click on the Becker icon in the Student
Lounge section of the ASCPA website: www.arcpa.org or
call Becker at (800) 868-3900.
ExamMatrix CPA Review
ASCPA associate and student members can now spend
less than $700 on the ExamMatrix CPA Exam Review.
The ASCPA associate and student member rate is
$629.30 for four-part, two-year full online review ($899
retail), or $195.30 per section ($279 retail). You can now
review on any PC, Mac, iPad or Android tablet device
with internet access. ExamMatrix CPA Exam Review
includes Adaptive Software, Reference Books (includes
embedded E-books), Realistic Simulations, Pass or
Refund Guarantee, and No Lock-Outs.
Go to: www.ExamMatrix.com/Demo to access a
prerecorded video demo or register for a 72-hour free
trial. Or click on the ExamMatrix icon in the Student
Lounge section of the ASCPA website: www.arcpa.org
Kaplan CPA Review
As an ASCPA student or associate member, you can take
advantage of a 30% discount on Kaplan CPA Review
Courses!
To take advantage of this discount, ASCPA members can
click on the Kaplan CPA Review icon in the Student
Lounge section of the ASCPA website: www.arcpa.org or
call Kaplan at (608) 779-4693 or (800) CPA-2DAY.
Lambers CPA Review
ASCPA student or associate members can receive a
discount of 30% off all Lambers products. Special bundle
pricing is also available.
To take advantage of this discount, ASCPA members can
click on the Lambers icon in the Student Lounge section
of the ASCPA website: www.arcpa.org or call the
Lambers account representative to place your order, at
(800) 272-0707, ext. 212.
Become A Student Member Today!
Arkansas Society of Certified Public Accountants
Any person who is majoring in accounting at a recognized college or
university, who has attained at least junior class standing, with the goal of
becoming a CPA, may apply to become a student member, and will remain
eligible as a student member until graduation. JOIN FOR FREE!
COMPLETE THE APPLICATION ONLINE: http://www.arcpa.org/public/join/join.aspx
For more information, contact us at: 11300 Executive Center Drive, Little Rock, AR 72211-4352
501-664-8739 / 800-482-8739 in Arkansas / Fax 501-664-8320
Private Student Loan Debt (Continued)
Continued from Page 1
The type and characteristics of student loan debt incurred by
students is important when determining signers’ rights and
obligations under repayment, possible consolidation, and/or
discharge, and while there have been significant
improvements in the underwriting of PSLs over the last few
years, their aggressive reach has trapped students, parents,
aunts, uncles, cousins, even grandparents on social security
into decades of suffocating – and perhaps unnecessary - debt.
The following is a list of their hazardous characteristics:
1.
Origination Fee Risk
Federal student loan origination (processing) fees –
normally a percentage of the loan - are deducted from
loan proceeds resulting in net payment to the borrower
(or school). In contrast, PSL agreements often capitalize
origination fees, increasing principal balances resulting in
greater interest paid over the life of the loan.
2.
Interest-Rate Risk.
Unlike Federal, which offer subsidized loans (interest-free
while student is in school), interest on PSLs accrue from
the moment of issuance. Interest rates are determined by
credit worthiness of the borrower (often creating lessfavorable terms), have traditionally higher interest rates,
sometimes as much as 15% (or higher), and have variable
rates tied to the market. All Federal student loans have
fixed rates.
3.
4.
Limited Repayment Options Risk
PSLs are not subject to grace periods (federal loans
overwhelmingly grant 6 month reprieve after a less than
half time school status is observed) or forbearance and
deferment (postponement of payments) rights. Those
choices, if available to PSLs at all, are detailed in the
specific private loan agreements and borrowers are not
protected by federal regulations like borrowers of federal
loan debt.
Default and Credit Score Compromise Risk
PSLs are considered to be in default after 120 days past
due with little or no programs to cure the default.
Aggressive collection tactics normally follow adding
penalties and higher interest rates. Inability to cure
default can result in state license seizure and garnishment
of income tax refunds. Federal loans extend default to
240 days and then offer a variety of rehabilitation
programs to cure or reinstate the loans.
5. Loan Consolidation Risk
PSLs, in general, are not eligible for consolidation. Since
private loans are predominantly based on a borrower’s
credit score, consolidation may not be an option if
creditworthiness has not improved since origination of
the loan. Interest rates are dictated by private lenders
and consolidation may include loan origination fees. If
consolidation is available, interest rates are often not
determined at time of application due to market
constraints (waiting for the loan to be securitized and
bought) and/or offer a weighted-average rate of existing
loan interest rates which have a nominal effect in
lowering monthly payments. Federal consolidation loan
programs help borrowers lock in lower interest rates.
6. Life After Death Risk
For federal loans, the borrower’s death is cause for
discharge. Private loans are subject to the terms and
condition of the specific loan agreement, but
predominantly live on with the co-signer obligated to
make all remaining payments and subject to the terms of
the agreement should default occur.
For information of what type of loans a borrower has incurred,
visit the National Student Loan Data System, online at
www.nslds.ed.gov.
Lynn M. Petrovich is a NJ Certified Public Accountant and can
be reached at thegreencpa@aol.com