Current Events in July 2015

The Obama Administration today puts its foot down on the metaphorical hose through which federal funds flow to for-profit colleges, likely leading to another round of bankruptcies and campus closings.

Choking off the flow of federal dollars to schools whose graduates don't do well in the job market is intended to save taxpayers money and protect students from spending their time and money on degrees that do them little or no good -- and that often wind up costing much more than students expect.

"The student advisor said the degree I was interested in would be $16k total for tuition, with payments of $50.00. Upon graduation, the total for tuition turned out to be $34k with a combined payment of over $400.00 a month," a Payson, Utah, student said in a ConsumerAffairs review of Everest University last year. 

A growth industry

It was only a few years ago that for-profit schools were seen as a growth industry and were touted as more efficient and responsive than traditional nonprofit public and private colleges. But then a hard truth emerged: graduates of the for-profit schools were having trouble finding jobs.

Students found that many employers simply didn't equate a degree from a for-profit college with one from a public or nonprofit private school.

That was the situation Gina of Seattle encountered when she graduated from ITT: "ITT basically made many promises but never came true. I have a BA in criminal justice and can not find a job to save my life. None of my fellow students have either. It's been almost two years. My student loans are around $80,000," Gina said in a ConsumerAffairs review.

In October 2014, after issuing the new rules, the White House listed shortcomings of for-profit schools:  

• Students who attend a two-year for-profit institution pay four times as much as attending a community college.
• Eighty-eight percent of associate degree graduates from for-profit institutions had student debt, while only 40 percent of associate degree recipients from community colleges had any student debt.
• Students at for-profit institutions represent only about 11 percent of the total higher education population but receive 19 percent of all federal loans and make up 44 percent of all loan defaulters.

Gainful employment

The weapon being wielded by the Obama White House is the Education Department's "gainful employment" rule, which was upheld by a federal court last week. It requires colleges to track their students' success in finding jobs and shuts down funding for those with poor placement records.

The rule applies to nonprofit schools as well but in the vast majority of cases, graduates of traditional nonprofits have a much better record of finding jobs in the field for which they trained and also have a much better record of paying back their student loans. 

The department has estimated that the rule will result in the closure of 1,400 programs that enroll more than 840,000 students, nearly all at for-profit schools. 

Out of business

Many of the nation's larger for-profit chains have already severely cut back or gone out of business. Corinthian Colleges, which includes Everest College and several others, shut down in April. 

Besides the Education Department initiative, large for-profit schools like ITT are facing lawsuits by students as well as federal and state agencies. Just last month, Education Affiliates agreed to pay $13 million to resolve a Justice Department claim that it had submitted false claims to the Education Department for federal student aid.

In January, Kaplan Higher Education -- once owned by The Washington Post Company -- agreed to pay $1.3 million to settle a Justice Department suit that it employed unqualified instructors.

Keeping your personal information safe when using the internet is extremely important. People have their identities stolen every day, and much of that is made possible by online hackers.

Virtual Private Networks, or VPNs, are designed to encrypt users’ internet information so that it is more difficult to gain access to it. Unfortunately, it seems that these networks are not as secure as many people have been led to believe.

A study conducted by researchers at Queen Mary University of London has shown that many VPN networks leak information about their users. This information could be as broad in scope as the websites users were visiting, and as detailed as the actual content of messages they were sending to other parties.

The cause of these leakages is tied to protocols that many network operators are following in order to run the internet. This new protocol, called IPV6, is an updated version of a previous protocol called IPV4. Many VPNs have not adapted to IPV6 traffic on their networks, so their information is vulnerable to attack.

Unencrypted data and DNS hijacking

The researchers tested 14 of the most popular VPN providers to see how susceptible they were to hacking or hijacking attempts. Of that number, 11 of the VPN’s were shown to leak information.

Researchers connected an array of different devices to these networks using WiFi access points. Using techniques that real hackers would use in an attack, researchers were able to collect unencrypted data from users and direct them to web servers that they controlled.

The latter technique is known as DNS hijacking, and is responsible for countless stolen identities and compromised information cases. Researchers also examined how well certain mobile platforms that used VPNs protected their data. They found that Apple’s iOS was much more secure, while Google’s Android platform was much more prone to leakages.

Designed to protect

Co-author of the study Dr. Gareth Tyson and his team are deeply troubled by the effectiveness of these “secure” networks. “It’s worrying that [users] might be vulnerable despite using a service that is specifically designed to protect them,” he said.

"We're most concerned for those people trying to protect their browsing from oppressive regimes. They could be emboldened by their supposed anonymity while actually revealing all their data and online activity and exposing themselves to possible repercussions."

The full study is available through the Queen Mary University of London website. A paper entitled “A Glance through the VPN Looking Glass: IPv6 Leakage and DNS Hijacking in Commercial VPN clients” was presented by Tyson and his colleagues at the Privacy Enhancing Technologies Symposium on June 30, 2015.

Tofu, otherwise known as bean curd, may not be your idea of an ideal lunch but if you're looking to lose weight, a new study finds that a vegan diet produces better results than other weight-reducing plans.

If you can't go quite all the way to eliminating animal products altogether, the primary requirement of a vegan diet, a vegetarian regimen is second best, the study found. Vegetarians can still chow down on eggs, dairy products and fish.

In the study, Ru-Yi Huang of E-Da Hospital in Taiwan found that those on a vegan or vegetarian diet saw better results than those on other plans, often losing more than four pounds in the early stages.

Huang's review includes twelve randomized controlled trials, involving 1,151 dieters who followed a specific eating regimen for between nine and 74 weeks.

It is the first study to combine the findings from various independent projects that weighed up the results of vegetarian diets against other eating plans. These include the Atkins diet, and ones recommended by the American Diabetes Association or the U.S. National Cholesterol Education Program.

Study details

Overall, individuals assigned to the vegetarian diet groups lost significantly more weight (around 4.4 pounds) than dieters who ate meat and other animal products.

Vegetarians who followed a vegan diet lost even more weight. Comparatively, they lost around 2.52 kilograms more than non-vegetarian dieters.

Vegetarians who consume dairy products and eggs lost around 1.48 kilograms more than those on a non-vegetarian diet. People following vegetarian diets that prescribe a lower than normal intake of calories (so-called energy restriction) also shed more kilograms than those without any such limitations being placed on their eating habits.

According to Huang, the abundant intake of whole grains, fruits and vegetables might play a role in the favorable results seen in vegetarian diets. Whole-grain products and vegetables generally have low glycemic index values and don't cause blood sugar levels to spike. Fruits are rich in fiber, antioxidants, minerals and protective chemicals that naturally occur in plants.

Whole-grain products contain soluble fiber. Such so-called good fiber helps to delay the speed by which food leaves the stomach and ensures good digestion. It also allows enough nutrients to be absorbed while food moves through the intestines. Several studies have reported that fiber consumption helps with weight loss.

The findings appear in the Journal of General Internal Medicine.

As health care costs rise and demand for services increases, we may see growing conflict between physicians who are trying to manage scarce and costly resources and groups advocating for the rights of patients.

Such a conflict popped up recently between the American Society of Clinical Oncology (ASCO) and two patient advocacy groups – Vital Options International and My Life Is Worth It.

ASCO has been proposing changes in the way cancer treatment is administered, including end-of-life care. In 2012, Johns Hopkins oncologists laid out some of those proposals in the journal Lancet Oncology.

End-of-life care

The authors suggested that improving end-of-life care with better decision-making and planning could reap large cost savings by reducing hospitalizations in the last month of life. They noted that 25% of total Medicare costs are spent in the last year of life, and 40% of that is spent in the last month of life.

ASCO has solidified many of those proposals into a conceptual “value framework” for assessing the value of new cancer therapies based on treatment benefits, toxicities, and costs. The initial version of the ASCO Value Framework was published June 22 in the Journal of Clinical Oncology.

The framework is designed to serve as the basis for user-friendly, standardized tools that physicians can use with their patients to discuss the relative value of new cancer therapies as compared with established treatments. ASCO said it would solicit public comment through August 15.

Push-back

Representatives of the two patients groups, Jonathan Wilcox, policy director at Vital Options International, and Bob Tufts, co-founder of My Life Is Worth It, made their comments public, urging doctors to pursue a more proactive approach.

“Withholding treatment based on price and a median statistic sounds too close to the death panels that were raised in a political context,” Wilcox and Tufts write. “Patients are individuals not statistics, and we would rather see physicians fight for their patients than surrender to a bad system.”

In the framework, the oncologists argue that escalating health care costs, left unchecked, will damage the U.S. economy and possibly bankrupt the country.

“Projections from the federal government indicate that health care spending will account for nearly one-fifth of the U.S. economy in 2021,” the framework authors write. “Cancer drugs, in particular, are a concern because they currently comprise 8 out of the top 10 most expensive drugs covered by Medicare. Although cancer is responsible for only 5% of current health care expenditures, cancer care costs are expected to grow from $125 billion in 2010 to a projected $175 billion in 2020, a 40% increase.”

The whole picture

Wilcox and Tufts argue the framework doesn't look at the whole picture. For example, they concede that cancer drugs are expensive but say newer cancer drugs result in lowering the total cost of cancer care.

They also argue that cancer treatment could be improved and costs lowered if the approval process for new therapies were streamlined and modernized.

You can be sure that other stakeholders will voice their own opinions before the August 15th deadline. The cost and allocation of health care, especially for critical diseases like cancer, is an issue that is only now heating up.

Employers announced plans to reduce payrolls by 44,842 workers during June, an increase of about 10% from May. The cut total is 43% higher than June 2014, marking the fifth year-over-year increase in job cuts in the first six months of 2015.

At the same time, outplacement consultancy Challenger, Gray & Christmas reports heavier-than-expected downsizing throughout the first half of 2015 has pushed the midyear total to its highest level since 2010.

Overall, employers have announced 287,672 job cuts during the first half of the year -- up 17% from the 2014, when the 6-month total of 246,034. The midyear total is the highest since 297,677 job cuts were recorded in the first half of 2010.

Pace of cuts holds steady

The pace of job cutting was virtually unchanged between the first and second quarter of year. The 147,458 job cuts announced between April and the end of June was just 5.0% more than the 140,214 planned layoffs in the first 3 months of 2015. The second-quarter total was up 18% from a year earlier.

The first-half surge was due largely to the decline in oil prices that rippled through the energy and industrial goods sectors. All told, the drop in oil prices was blamed for 69,582 job cuts in the first half of 2015, second only to the 86,978 job cuts attributed to “restructuring.”

The energy sector has taken the heaviest hit, cutting its workforce by 60,500 between January and June. Nearly 95% of those were due to the drop in oil prices. At this point last year, the energy sector had announced just 3,908 job cuts.

Retail takes its lumps

Energy is not the only area experiencing increased job cuts. The retail sector ranks second in job cuts for the year, with 45,230 planned layoffs to date -- up 68% from a year ago.

“Retailers should be enjoying the benefits of falling oil prices, as consumers have the money they are saving at the gas pump to spend elsewhere,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “However, it appears that consumers were hording that cash, at least through the first half of the year. The most recent data suggests that consumers are finally starting to loosen up the purse strings.”

Even if consumers start spending consistently, retailers are always vulnerable to changing consumer trends, technology and operational factors. Retail was the leading job cutting sector in June with 17,947 job cuts. Most of those were related to the closure of all Canadian stores by Minnesota-based Target.

“Not all retail cuts are due to frugal consumers,” said Challenger. “In Target’s case, the retail chain simply made significant missteps when entering Canada 2 years ago and never gained traction among Canadian shoppers. The store closures, which resulted in 17,000 job cuts for the American-based employer, was among the first decisions by new CEO Brian Cornell, who is determined to revitalize the store here in America.”

Better days ahead

Challenger thinks job cuts in retail will start to decline in the second half of the year as consumers begin to spend more. “We have already started to see a decline in oil-related job cuts as prices have begun to stabilize. Over the past two months, oil prices were blamed for just 1,297 job cuts. In contrast, oil prices caused 20,675 job cuts in April.

“Overall, we expect the pace of downsizing to slow in the final six months of 2015. The factors that were contributing to increased cuts in the first half of the year appear to subsiding,” he concluded.

For the third time in as many months, the U.S. economy has created more than 200,000 private sector jobs.

According to the ADP National Employment Report, there were 237,000 new jobs in June on top of the 203,000 created in May.

The report, which is produced by ADP in collaboration with Moody's Analytics, is derived from ADP's actual payroll data, and measures the change in total nonfarm private employment each month.

"The U.S. job machine remains in high gear,” said Moody's Analytics Chief Economist Mark Zandi. “The current robust pace of job growth is double that needed to absorb the growth in the working age population. The only blemish in the job market is the loss of jobs in the energy sector. Most encouraging is the healthy rate of job growth among the nation's smallest companies."

Who's hiring

As in the past, businesses with 49 or fewer employees created the most new jobs last month -- 120,000, the same as May. Employment among companies with 50-499 employees increased by 86,000 jobs, versus 63,000 the previous month. Large companies -- those with 500 or more employees – added 32,000 jobs in June, companies with 500-999 employees gained 27,000 jobs, and firms with over 1,000 employees added 5,000 jobs.

The service-providing sector was far and away the biggest job creator, adding 225,000 jobs. Within that category, professional/business services contributed 61,000 jobs, trade/transportation/utilities grew by 50,000, and financial activities added 12,000 positions.

Goods-producing employment rose by 12,000 jobs, the construction industry added 19,000, and manufacturing grew by 7,000 jobs in June, after losing 2,000 in May.

“June job numbers came in at their highest level since December 2014," said Carlos Rodriguez, president and chief executive officer of ADP. "Small businesses continue to lead the way adding over half of the total jobs this month."

Diabetes can be a difficult disease to manage for anyone, but for teenagers it presents a whole new set of challenges. Luckily, researchers from UT Southwestern Medical Center have found a way to ensure that teens are taking care of themselves and managing the disease more optimally.

By having them associate their own medical care with daily pet fish care, scientists have seen significant improvements to their hemoglobin A1C levels.

“Teenagers are one of the most difficult patient populations to treat, mainly because of the many psychosocial factors associated with that stage of life,” said Dr. Olga Gupta, who is an assistant professor at UT Southwestern. The challenge for researchers was finding a way to get teens to regularly monitor their blood glucose levels. This would ensure that they were self-sufficient and able to manage their disease.

In order to do this, researchers selected 28 adolescent participants who ranged from ages 10 to 17. All of them had Type 1 diabetes mellitus. All participants were provided with a fish, fish bowl, and instructions on how to care for the fish.

They were advised to feed their fish every morning and evening while also recording their own blood glucose levels. Participants were also asked to change a fourth of the water in the fish bowl once a week and review their blood glucose logs with a caregiver.

Improved glycemic levels

As a result, many participants became much more active at checking their blood glucose levels. Because they were monitored much more closely, participants were able to adjust to the numbers and improve their glycemic levels. Participants also became much more vocal about their disease.

“Throughout the entire experience we owned two fish that became a part of our family,” explains Jeannette Claxton, the mother of one of the participants. “The first fish was named Bob, and Raymon would feed him, read to him, and even watch TV with him…He didn’t even realize that he was talking about his diabetes more and taking his blood sugar more often…I would recommend this approach to other families because it creates ownership not just of the fish, but ownership of your diabetes.”

After three months, progress was quite evident. The intervention group’s A1C levels decreased 0.5 percent in comparison to their peers in the control group, who experienced a 0.8 percent increase in A1C levels. Parental involvement was very important to the process, but teens were much more responsive to it.

Researchers would like to continue this study by monitoring a group of adolescents for a longer period of time. They will be focusing on specific mechanisms that led to glycemic improvement, such as mood, routine, level of parental involvement and the type of pet that participants are given. 

Up, down, up, down. The volatility in the mortgage application business continues.

After rising last week, applications posted a decline, dipping 4.7% in the week ending June 26, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

The Refinance Index was down 5% to its lowest level since December, with the refinance share of mortgage activity falling to 48.9% of total applications.

The adjustable-rate mortgage (ARM) share of activity was unchanged at 7.0%, the FHA share rose to 14.0% from 13.9%, the VA share of total applications slipped to 10.8% from 10.9%, and the USDA share of total applications edged up to 1.0% from 0.9% the week before.

Contract interest rates

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose 7 basis points, from 4.19% to 4.26%, its highest level since October 2014, with points decreasing to 0.33 from 0.38 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped to 4.21%, its highest level since October 2014, from 4.14%, with points increasing to 0.38 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA advanced 8 basis points -- to 4.04%, its highest level since September 2014, with points increasing to 0.18 from 0.14 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year FRMs increased to 3.44%, its highest level since October 2014, from 3.38%, with points falling to 0.31 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs rose 5 basis points to 3.09%, with points decreasing to 0.45 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The survey covers over 75% of all U.S. retail residential mortgage applications.

Yamaha Motor Corporation, U.S.A., of Cypress, Calif., is recalling about 200 Yamaha SRViper snowmobiles.

The brake line and its components can come in contact with the clutch causing the brakes to fail, posing a risk of injury or death.

No incidents or injuries have been reported.

This recall involves the 2015 SRViper L-TX (Model name SR10LSFO) and the 2015 SRViper M-TX 162 LE (Model name SR10M62LFO) snowmobiles. The recalled snowmobiles are blue and orange. The model name is on the left and right side of the fuel tank cowling. SRViper and Yamaha are printed on the side of the snowmobiles.

The vehicle identification number (VIN) is stamped on the frame (tunnel) near the right foot well. The letter F in the 10th position of the VIN indicates that the unit was made in the 2015 model year.

The snowmobiles, manufactured in the U.S., were sold at Yamaha snowmobile dealers nationwide from February 2015, through April 2015, for between $13,000 and $14,100.

Consumers should immediately stop using the recalled snowmobiles and contact their local Yamaha dealer to schedule a free repair. Yamaha is contacting all registered owners directly.

Consumers may contact Yamaha at (800) 962-7926 anytime.