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I heard about a settlement worth $10 billion with the credit bureau TransUnion that is supposed to give millions of people access to free credit-monitoring services. That sounds too good to be true. How can I find out if I am eligible? If so, should I sign up? Sometimes these class-action settlements are more trouble than they're worth.
L.S.S. Washington, D.C.
You're almost certainly eligible to get the services, and they're worth signing up for. Trans-Union agreed to offer free credit monitoring to more than 160 million people as part of a preliminary lawsuit settlement. The suit claims that Trans-Union violated the Fair Credit Reporting Act by selling lists with consumers' personal and financial information for marketing purposes. TransUnion discontinued that business several years ago.
The settlement applies to everyone who had an open credit account or open line of credit from any lender from January 1, 1987, to May 28, 2008. Anyone with a credit card, car loan, mortgage, student loan or any other loan qualifies -- which means essentially most adults do.
To sign up, go to www.listclassaction.com from now until September 24. You have two options. If you sign up for six months of free credit monitoring, you may also receive a cash payment if there is a cash distribution. And you could still file an individual lawsuit against TransUnion. If you sign up for nine months of "enhanced" services, you won't receive any cash payment and you can't file a lawsuit against the company (see the "Summary Notice" at www.listclassaction.com or call 866-416-3470). A court hearing is scheduled for September 10, and it's expected that you'd get your benefits soon after that.
The credit-monitoring services being offered by TransUnion can be very valuable, especially when you don't have to pay. With the six-month option, you get unlimited daily access to your TransUnion credit report and your TransUnion credit score (which is different from the more widely used FICO score), as well as 24-hour e-mail notification of any "critical" changes in your credit report. The serv-ice retails for $59.75.
The nine-month service, which retails for $115.50, also includes a suite of scores calculated by insurance companies, plus a mortgage simulator to show how lenders would rate you. Trans-Union won't collect credit-card numbers upfront and can't continue charging for the service after the initial period ends, unless you request it.
Steven Katz, TransUnion's director of consumer education, says the company's offer "is consistent with TransUnion's commitment to providing consumers with tools to help them be active managers of their credit health."
Help for Grad School
My 24-year-old daughter is about to start a graduate program, which she is expected to complete in 15 months. We have $13,000 we want to give her, which is about what her program will cost. Should we give her the money now? Or should we let her take out Stafford loans to borrow the money she needs, then give her the $13,000 at the completion of her schooling?
Bill Segur Wilmington, N.C.
Don't give your daughter the money yet. Because she's an independent student, her parents' income and assets don't affect her financial-aid eligibility. But giving her the money could make a big difference in her aid award. If you give her the money now, as a gift, it will be considered untaxed income, and 50% would be deemed available for college costs according to the federal financial-aid formula, says Gary Carpenter, of College LOAN Evaluator, in Syracuse, N.Y. Any assets in her account would also be assessed at 20% when determining aid eligibility.
Carpenter recommends waiting to give your daughter the money until after she files her last Free Application for Federal Student Aid before graduating. At that point, the money won't have an impact on her financial-aid eligibility.
Carpenter says your daughter is likely to qualify for $12,000 in unsubsidized Stafford loans and probably $8,500 in subsidized loans. Interest won't start accruing on the subsidized loans until she graduates, when you can give her the $13,000 to help pay off the loans.
POSTED BY: Christian Tentoni (July 18, 2008 01:06 PM)
I don't think anyone should be taking hardship withdrawals from their retirement plan, but it's not true that you can't take out employer matching contributions in a hardship withdrawal.
From IRS webpage: (see last sentence)
4. What is the maximum amount of elective contributions that can be distributed as a hardship distribution from a 401(k) plan?
The amount of elective contributions available for a hardship distribution cannot be more than the amount of the employee's total elective contributions, including designated Roth contributions, as of the date of distribution reduced by the amount of previous distributions of elective contributions. This "maximum distributable amount" generally does not include earnings, qualified nonelective contributions or qualified matching contributions, unless the plan provides that certain grandfathered amounts are included. Other amounts under the plan, if any, such as regular matching contributions and discretionary profit-sharing contributions may also be distributed on account of hardship if the plan so provides.
(Reg. §1.401(k)-1(d)(3)(ii))
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