Study: Student Loans Have Grads Feeling 'Buyer's Remorse' over College

The student debt crisis is reaching a breaking point — and many grads are regretting their pricey degrees, YahooFinance.com reported. A new study from the FINRA Foundation found that almost half of Americans with student loans wish they’d chosen a less expensive college, compared to only 9 percent among those who did not graduate with debt. “What we’re seeing is that there is buyer’s remorse when it comes to taking out loans for college,” FINRA Foundation’s Gerri Walsh told Yahoo Finance in a recent interview. “Too many Americans don’t understand how much the true cost of college is and, as a consequence, when they’re faced with all that debt they wish they’d gone to a less expensive school,” she added. Currently, student loan debt has topped $1.5 trillion, making it the largest type of consumer debt outstanding other than mortgages, according to the Center for Responsible Lending. 2020 Democratic hopeful Bernie Sanders recently unveiled plans to cancel $1.6 trillion of student loan debt for approximately 45 million Americans. Meanwhile, JPMorgan Chase CEO Jamie Dimon told Yahoo Finance’s Andy Serwer that student lending in the U.S. is a “disgrace” that’s “hurting America. Student debt holders are more likely to engage in expensive credit card behavior — becoming trapped in an unforgiving “cycle of debt,” Walsh said. “One of the realities of having that much student loan debt is it impacts your finances for quite a long time,” she explained.



Student loan debt and bankruptcy is the first issue that is addressed in the Final Report of ABI's Commission on Consumer Bankruptcy. The issue received considerable attention on Tuesday at a House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing titled "Oversight of Bankruptcy Law and Legislative Proposals." Commissioners Prof. Dalié Jiménez of the UC Irvine School of Law, John Rao of the National Consumer Law Center and Ed Boltz of the Law Offices of John T. Orcutt, P.C. (Durham, N.C.) testified on the issue. To watch a replay of the hearing or to access prepared witness testimony, please click here.

Commentary: The Far-Reaching Effects if Puerto Rico Snubs Precedent and the Rule of Law*

The current Financial Oversight and Management Board for Puerto Rico (Oversight Board) is attempting to invalidate more than $6 billion of general obligation bonds and to initiate clawbacks of principal and interest payments to bondholders, according to a commentary by Dominic Frederico, CEO of bond insurer Assured Guaranty, in Caribbean Business yesterday. The Oversight Board claims that the bonds were issued in excess of a Puerto Rico constitutional debt limit, notwithstanding the Commonwealth’s specific representations to the contrary when the bonds were issued. In taking these actions, writes Frederico, the Oversight Board ignores U.S. Supreme Court precedent, dating back to the 19th century, that if an issuer specifically represents the validity of its bonds to investors at the time of issuance, it is barred from later denying repayment based on a claim of invalidity. The actions also violate the basic tenets of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which the U.S. Congress enacted in June 2016 to provide a formal process for Puerto Rico’s debt restructuring, restoration of its capital market access and to provide supervision of its financial management by the Oversight Board. Trying to repudiate previous debt issued and approved by the duly authorized Puerto Rico government illustrates how far the current Oversight Board has strayed from the purpose of PROMESA, according to Frederico. The Oversight Board has initiated multiple lawsuits not just against bondholders to invalidate liens, but also against hundreds of vendors and contractors who worked for the Puerto Rico Government, in an attempt to claw back billions in payments. In fact, it has allocated $1.5 billion of Puerto Rico taxpayers’ money towards litigation and consultant fees.



*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Dozens of Nursing Homes With HUD-Backed Mortgages Have ‘Serious Deficiencies’

Dozens of the worst-run nursing homes in the U.S. have mortgages guaranteed by a federal agency that mostly stopped inspecting such homes several years ago, the New York Times reported. Seventy-four nursing homes with mortgages insured against default by the agency, the Department of Housing and Urban Development, are among 478 homes identified this month by two U.S. senators as having “serious deficiencies.” That dozens of taxpayer-backed homes appeared on the list reflects the federal government’s spotty history of monitoring for-profit nursing homes that can use the housing agency’s backing to obtain more favorable terms from lenders. The agency’s inspector general has criticized the oversight of nursing homes that belong to the program, known as Section 232, and last month the chairman of the House Ways and Means Committee asked the agency to reinstitute the property inspections, which were largely discontinued in 2012. The mortgage insurance program is a vital financial lifeline to the nursing home industry, but some people contend that the program must do more to ensure better business practices. The housing agency guarantees just over $20 billion in mortgages at 2,368 nursing homes, or about 15 percent of the industry. The department said that a nursing home designated as a special focus facility by Medicare officials cannot qualify for a new guaranteed mortgage. It declined further comment.

Fewer Renters Believe They Are Likely to Ever Own a Home

More American renters believe homeownership is financially out of reach, according to a new survey that shines fresh light on the growing housing affordability crisis, the Wall Street Journal reported today. Only 24 percent of renters said that it was “extremely likely” that they would ever own a home, 11 percentage points lower than four years ago, according to the survey set to be released Thursday by mortgage finance giant Freddie Mac. Of the renters surveyed, 82 percent said renting was more affordable than buying, 15 percentage points higher than in February of 2018. Meanwhile, rising rents also are creating hardships. Of the renters who moved in the last two years, 44 percent said that they did so because they could no longer afford their rent, according to the survey. “The notion that there’s a housing affordability crisis is not new,” said Freddie Mac’s incoming chief executive David Brickman. “But this is really bringing it closer to home in terms of what people are doing about it.” The crisis has been escalating during the latest economic recovery, in part because new supply hasn’t kept up with demand. Home prices and rents have been rising faster than the rate of inflation and wage increases. (Subscription required.)


 

Multiemployer Pension Crisis Puts Active Participants under Heavy Burden, According to Union Report

A report released yesterday said that a failure to address the multiemployer pension funding crisis is placing a heavy burden on active participants in those plans, Pensions & Investments reported. The report, "Multiemployer Pension Plan Reform Policy Issues (June 2019)," was prepared by Horizon Actuarial Services for the Mechanical Contractors Association of America and the United Association of Plumbers and Pipefitters, whose members sponsor 144 of the 770 construction industry multiemployer plans in the U.S., the most of any single industry and union group. In a letter to congressional committee leaders submitted with the report, UA General President Mark McManus and MCAA President Brian Helm urged them to consider the impact on active as well as retired participants, and "to step up this year to enact balanced reforms that are in sight to achieve sustainability in the multiemployer system." An estimated 4 million active participants are already bearing the burden of recent decreases in benefits and increases in contributions, according to the report. Of the seven plans in the report, the value of benefits has declined significantly over time, ranging from 37 percent to 79 percent for participants who work from the 2010s to the 2040s, compared to participants who worked from the 1970s to the 2000s.


 

Bond Fight Pits Main Street Against Wall Street

A rebellion is brewing in the $9 trillion corporate-bond market, as an unlikely alliance of municipal treasurers, algorithmic-trading specialists and individual investors fight a Securities and Exchange Commission proposal they say would unfairly benefit firms that have long dominated the bond world, the Wall Street Journal reported. The battle pits those who depend on equal access to price information against big asset managers and Wall Street banks that have urged the SEC to delay reporting of the largest trades they make with each other. Opponents of the change, including San Bernardino County, Calif., and quantitative trading firm Jane Street Capital, say that the proposal would make most investors more prone to trade bonds at inferior prices, benefiting the few large firms that control the bulk of assets in the market. Boosters of the plan, including banks such as JPMorgan Chase & Co. and asset managers like Pacific Investment Management Co. and BlackRock Inc., say it would increase overall trading by helping banks buy big blocks of bonds from large institutional investors. Banks are less willing to handle such trades if they are publicized immediately, allowing other traders to bet against them, they say. Pimco, a unit of Germany’s Allianz SE , manages $1.8 trillion of assets, while BlackRock manages $6.5 trillion. (Subscription required.)


 

Application Deadline for 2019 ABI 40 under 40 Class Approaching Quickly!

ABI’s 40 Under 40 program recognizes insolvency professionals who are committed to the highest standards of achievement at work and in their communities. Nominations for the 2019 Class are welcome from all areas of the insolvency profession. Applications are accepted until Sunday, June 30. Click here for more information or to submit an application.

Eleventh Circuit Accepting Applications for Bankruptcy Judgeship Position in the Middle District of Florida at Orlando

The U.S. Court of Appeals for the Eleventh Circuit is seeking applications from all highly qualified candidates for a 14-year appointment as U.S. Bankruptcy Judge for the Middle District of Florida at Orlando. All applications must be received by Aug. 1. For qualifications and submission guidelines, please click here.

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