Posts Tagged ‘poor’

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by Ellen Brown

This is the second in a two-part article on the debt burden America’s students face. Read Part 1 here.

The lending business is heavily stacked against student borrowers. Bigger players can borrow for almost nothing, and if their investments don’t work out, they can put their corporate shells through bankruptcy and walk away. Not so with students. Their loan rates are high and if they cannot pay, their debts are not normally dischargeable in bankruptcy. Rather, the debts compound and can dog them for life, compromising not only their own futures but the economy itself.

“Students should not be asked to pay more on their debt than they can afford,” said Donald Trump on the presidential campaign trail in October 2016. “And the debt should not be an albatross around their necks for the rest of their lives.” But as Matt Taibbi points out in a December 15 article, a number of proposed federal changes will make it harder, not easier, for students to escape their debts, including wiping out some existing income-based repayment plans, harsher terms for graduate student loans, ending a program to cancel the debt of students defrauded by ripoff diploma mills, and strengthening “loan rehabilitation” – the recycling of defaulted loans into new, much larger loans on which the borrower usually winds up paying only interest and never touching the principal. The agents arranging these loans can get fat commissions of up to 16 percent, an example of the perverse incentives created in the lucrative student loan market. Servicers often profit more when borrowers default than when they pay smaller amounts over a longer time, so they have an incentive to encourage delinquencies, pushing students into default rather than rescheduling their loans. It has been estimated that the government spends $38 for every $1 it recovers from defaulted debt. The other $37 goes to the debt collectors.

The securitization of student debt has compounded these problems. Like mortgages, student loans have been pooled and packaged into new financial products that are sold as student loan asset-backed securities (SLABS). Although a 2010 bill largely eliminated private banks and lenders from the federal student loan business, the “student loan industrial complex” has created a $200 billion market that allows banks to cash in on student loans without issuing them. About 80 percent of SLABS are government-guaranteed. Banks can sell, trade or bet on these securities, just as they did with mortgage-backed securities; and they create the same sort of twisted incentives for loan servicing that occurred with mortgages.

According to the Consumer Financial Protection Bureau (CFPB), virtually all borrowers with federal student loans are currently eligible to make monthly payments indexed to their earnings. That means there should be no defaults among student borrowers. Yet one in four borrowers is now in default or struggling to stay current. Why? Student borrowers are reporting widespread mishandling of accounts, unexplained exorbitant fees, and outright deception as they are bullied into default, tactics similar to those that homeowners faced in the foreclosure crisis. The reports reveal a repeat of the abuses of the foreclosure fraud era: many borrowers are unable to obtain basic information about their accounts, are frequently misled, are surprised with unexpected late fees, and often are pushed into default. Servicers lose paperwork or misapply payments. When errors arise, borrowers find it difficult to have them corrected.

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This is a war on you, and you better wake up soon.

Behind Trump’s plan to target the federal safety net

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rich_poor

CNN: ‘Scandinavian Dream’ is true fix for America’s income inequality
  • Clamp down on Wall Street and require certain asset managers to disclose their holdings, returns and fees.
  • Enact a transaction tax to reduce short-term trading and encourage long-term investment.
  • Require companies to provide more information about their CEO’s pay relative to performance and workers’ earnings.
  • Raise taxes on capital gains and dividends.
  • Tax corporations on global income.

And to promote growth among the middle class, Stiglitz suggests that the U.S.:

  • Invest in infrastructure for long-term economic and job growth.
  • Strengthen workers’ bargaining rights.
  • Raise the minimum wage to reflect local economic conditions. (Many cities and metro areas could justify $15 an hour.)
  • Invest in young children through early education.
  • Require universal paid sick and family leave.

Obvious Land

Posted: April 30, 2015 in -
Tags: , , , , , , , ,

romney-style

Tax cuts for middle, lower income Americans boost economy while tax breaks for the rich do little to help

Economists finally study what everyone else already knew. Are they shitting me? That’s some major fucking malpractice on the part of the entire economics cult. How can anyone take these people seriously when they just get around — in 2015 — to studying how class affects jobs and job creation? They are a ridiculous and pathetic lot who are largely employed to suck the corporate cock of their ideological masters. Prove me wrong.

The study is unusual in that it is believed to be the first study that relies on empirical evidence to measure the impacts of tax cuts for different types of people on total employment in the U.S.

“I find that the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups and that the effect of tax cuts for the top 10% on employment growth is small,” Zidar says.

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The great betrayers of America seek your Social Security and Medicare money to add to their coffers, so that the empire can grind on as before.

Talks Focus on Cuts to Medicare and Social Security

“In an interview Wednesday with CNBC, Obama made clear that he is considering cuts to social programs—including Medicare and Social Security—as part of a broader deal with the Republicans over the debt limit and funding for the federal government.”

 

“I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So, I was increasingly compelled to see the war as an enemy of the poor and to attack it as such.”

-Martin Luther King Jr., Beyond Vietnam