— USA TODAY (@USATODAY) September 27, 2016
The Arizona Republic just endorsed Hillary Clinton, its first Democratic endorsement ever. https://t.co/FK3ssZVfBC
— Gabriel Debenedetti (@gdebenedetti) September 28, 2016
Source: New Jersey Courts Automated Case Management System (ACMS) and Archive Case Management Information System (AMIS)
While other states have similar programs, New Jersey’s stands apart, both for its size and onerous terms.
Massachusetts, running the next-largest program with $1.3 billion in outstanding loans, automatically cancels debt if a borrower dies or becomes disabled, something many other states also do. The program of the third-largest state lender, Texas, is half the size of New Jersey’s. And Texas offers a flat interest rate, a modest 4.5 percent, while New Jersey’s rates can reach nearly 8 percent. Some other state loan programs also have more flexible repayment options 2014 Rhode Island, for example, offers income-based repayment.
New Jersey, meanwhile, encourages students to buy life insurance in case they die to help co-signers repay. As an agency pamphlet cautions, “Are you prepared for the unthinkable?”
The agency, Karrow said, treats each instance of a deceased borrower case by case and tries to be compassionate, but, she added, “we must also meet our fiduciary duty to our bondholders.”
When consumer lawyers protested the program’s onerous conditions at a 2014 agency meeting, the agency, according to minutes from the meeting, said that giving borrowers a break would make the bonds sold to finance loans “less attractive to the ratings agencies and investors.“
Indeed, in a recent bond assessment, the credit rating agency Moody’s cited the authority’s “administrative wage garnishing, which it uses aggressively” for “significantly higher collections” compared with other programs.
A New Jersey rule adopted in 1998 allows the agency to give borrowers in default a second chance by allowing them to become current on their account through on-time payments. But the agency has never granted a reprieve and instead cuts off contact with borrowers, leaving them at the mercy of collection firms.
Karrow said federal regulations prohibited the agency from offering such relief, but student loan experts disputed that assertion.
“There is nothing in the federal law or regulations that prohibits them from offering private loan rehabilitation,” said Mark Kantrowitz, a financial-aid expert.
The combination of a lack of flexibility, an unwillingness to discharge loans and the state’s power to seize wages has resulted in even “more intractable problems for our clients than predatory mortgages, deceptive car loans or illegal internet payday lending,” said David McMillin, a lawyer with Legal Services of New Jersey, a nonprofit organization that provides free legal assistance to low-income state residents. “Many borrowers and co-signers find themselves facing a lifetime of debt problems.”
Given the lack of options, some New Jersey borrowers have resorted to declaring bankruptcy, even though, as is true of all student loans, their debt is rarely canceled. Declaring bankruptcy also makes it virtually impossible to secure a mortgage, lease a car or even use credit cards for years. But for New Jersey borrowers, such an extreme step at least offers a way to gain manageable monthly payment terms.
As a co-signer, Tracey Timony struggled to help pay off her daughter’s $140,000 in loans. Though the Higher Education Student Assistance Authority can seize wages or tax returns without court approval, it must secure a judgment to dip into borrowers’ bank accounts or place liens on their property. Instead of garnishing Timony’s wages, New Jersey sued her after her daughter defaulted.
“The agency is looking to put as much pressure on the borrower and be as aggressive as possible, and the way that you do that is you go after everybody that is liable,” said Jennifer Weil, a New Jersey student debt lawyer. “In case the garnishment doesn’t work, a judgment will help put pressure on the parents.”
Timony declared bankruptcy and got monthly debt payments that will rise no higher than about $1,000 a month, far less than what the agency had demanded.
“I never thought that sending my daughter to college would ruin our lives,” Timony said.
Few have felt the weight of the agency’s powers more than Gonzalez, the college graduate who was sued after receiving a diagnosis of cancer and losing his job.
He had borrowed the maximum he could in federal loans 2014 a total of about $30,000 for five years 2014 and paid for most of his tuition with loans from New Jersey.
“I felt so comfortable because it was the State of New Jersey,” he said. “It’s the state, my government, trying to help me out and achieve my American dream. It turns out they were the worst ones.”
Over five years, he took out over $180,000 in state loans. Unlike most other states, New Jersey does not impose a strict cap on loans to discourage overborrowing. One family, according to a recent state audit of the agency, took out over $800,000 in loans, more than five times the value of their home.
Gonzalez’s loans had a relatively high interest rate 2014 on average about 7.5 percent. At the time it seemed like a good investment. He graduated with an engineering degree from Embry-Riddle Aeronautical University in Florida and landed a job on Wall Street working as a programmer for Goldman Sachs.
But a few months after he started, unusual rashes began to appear on his legs and underarms. He was diagnosed with non-Hodgkin’s lymphoma and started radiation therapy.
After three years of cancer treatments, Gonzalez was also laid off.
He needed to take care of his student loans. The federal government and his private lenders all deferred his debt for at least six months.
Gonzalez expected New Jersey to do the same, but the agency refused, requiring him to pay at least $500 a month. With unemployment checks as his only income and burdened by continuing health expenses, it was too much for him.
He made no payments while the agency reviewed his case. In June 2014, Gonzalez moved to Florida to lower his cost of living. His health slowly improved and he started his own company, developing technology for small businesses. In his first year, he made just $26,000, but he started to pay back his federal and private bank loans.
On May 8, 2015, after months of hearing nothing, he received an email from New Jersey: His deferral request had been denied and his loan was being sent to a collection agency.
“Unfortunately, because of how the loan originated, the Authority is not in a position to offer forbearance or relief,” Robert Laird, a program officer at the loan agency, said in the email.
Terrified by what a default would mean for his credit rating, Gonzalez told the agency that he would stop paying for health insurance and use the money 2014 $200 per month 2014 to repay the loans.
The agency rejected the offer. “In the event that your doctor declares you total and permanently disabled, please keep me posted,” Laird told Gonzalez in an email.
One day in April, a stranger rang Gonzalez’s doorbell.
“Chris Gonzalez?” he asked. Gonzalez nodded. “You’ve been served with a lawsuit from the New Jersey Higher Education Student Assistance Authority.”
The suit demanded over $260,000 2014 about $188,000 for the original loans, nearly $34,000 in interest, and $44,000 to cover the fees of a collection agency’s lawyer.
Even if his business improves, Gonzalez has no idea how he will afford his ballooning payments.
“I don’t have money,” he said. “I am spending it all on my debt.”
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Here’s one of those anonymously-sourced bitch pieces Politico so loves to do, and this one is about Wall Streeters warning Hillary Clinton not to pick Elizabeth Warren for VP:
Most big donors don’t want Warren on the ticket because she is the most accomplished anti-Wall Street populist in the Democratic Party. But many also think her presence would drive a potential Clinton administration too far to the left, poison relations with the private sector from the start and ultimately be damaging to the economy.
A constant theme that emerged in the interviews is that executives in the financial industry believe the first 100 days of a Clinton administration could feature potential deal making with Republicans, who are likely to maintain their majority in the House of Representatives.
The dream deal for Wall Street would be a combination of targeted infrastructure spending that appeals mostly to Democrats and corporate and international tax reform that could bring Republicans along. The fear is that Warren would make such a deal more difficult.
“Clinton is going to face a divided government unless there is a total tsunami,” said one moderate Washington Democrat with close ties to the banking industry. “What you want in a vice president is someone who can negotiate for you on the Hill, someone like Joe Biden. And that is not a Warren strength.”
All of the donors and senior Democrats interviewed for this story demanded that their names not be used both because they were not authorized to speak about the Clinton campaign’s internal deliberations and because they feared Warren’s wrath.
“There is no upside to my talking to you on the record,” one big donor said. “Either I piss off the Clinton campaign or I piss off Warren, or both.”
An independent federal report on the Trans-Pacific Partnership (TPP) found that the trade agreement between 12 countries would have only modest benefits to the U.S. economy and job growth. The report was mandated by US law as a final step before President Obama could send legislature to Congress for a vote.
The highly anticipated report, conducted by the US International Trade Commission, was revealed on Wednesday. It predicted that by 2032 the TPP would likely increase the national income by $57.3 billion a year, just 0.23% more than what it would be without the trade pact.
This falls short of what private studies had projected would be an increase of over $100 billion annually, including a study by the Peterson Institute for International Economics, which in January of this year estimated an increase of $131 billion in annual real income by 2030.
While the report projected US exports would increase, imports would grow at a faster rate with free trade partners in Japan, Malaysia and Vietnam. Job growth would also be modest in the US with a projected addition of 128,000 jobs by the 15th year of the TPP’s implementation, which is only 0.07% greater than baseline estimates.
Dean Baker, co-director of the Center for Economic and Policy Research, notes the unreliability of these types of projections because of their inability to account for future currency fluctuations and exchange rates.
Top White House trade representative, Michael Froman, who finalized the TPP at the end of last year, emphasized that the International Trade Commission report did not acknowledge the non-tariff benefits including measures to help American firms protect intellectual property, solidify more free and open Internet commerce and reduce the red tape and competition from state-subsidized foreign competitors.
“There has been tremendous focus on the impact on manufacturing,” said Joel Nied, the chairman of the Transactional Group of Price Benowitz, a US law firm that focuses on international business transactions, “but the agreement will have a profound impact on intellectual property protection issues for US companies as well.”
It is important to note that the US-led pact does not include China. Obama stated that the TPP is critical to securing US economic interests in Asia. The Pacific partnership includes Canada, Australia, Mexico, Singapore, Chile, Peru, New Zealand and Brunei, binding economies that constitute nearly 40% of global economic production.
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John Oliver’s weekly 20-minute rants have a knack for seeping into the mainstream. The Consumer Financial Protection Bureau recently announced new, stronger regulations on the payday loan industry, nearly two years after Oliver called them out for their predatory business model. At Oliver’s urging, viewers sent 45,000 emails to the Federal Communications Commission urging them to… Continue Reading →
If there is a single, overriding lesson in the unfolding Trump University scandal, it is this: If you are the defendant in a civil trial in which you are accused of a massive and grotesque act of fraud, it’s probably best if you don’t get up in public and imply (loudly) that the presiding judge is a Mexican criminal. This can result in the judge’s simply saying, “Fck it,” and dumping a metric ton of evidence regarding said fraud into the public domain. This then will require you to hold a press conference in which you are forced to call a reporter “sleaze” and generally act out because—and I am borrowing here from the Twitter account of the great Quinn Cummings—you are really a giant toddler.
If there is a single, overriding question in the unfolding Trump University scandal, however, it is this: Why in god’s name is anyone surprised?
Of course, the fact that He, Trump was behind this scam is prima facie evidence of some thoroughgoing shenanigans, but that’s not what I mean. He, Trump is an apex bunco artist, but he also is a high-profile American corporate businessman of the late 20th century.