student debt

Error message

Deprecated function: The each() function is deprecated. This message will be suppressed on further calls in _menu_load_objects() (line 579 of /var/www/drupal-7.x/includes/menu.inc).

Sierra Leone Is Turning Roadway Vibrations into Electricity

Published by Anonymous (not verified) on Thu, 19/08/2021 - 12:13am in

Three great stories we found on the internet this week.

Good vibrations

“Access to energy is a human right. We cannot function in an energy-less society.”

Those were Jeremiah Thoronka’s thoughts as he looked back on his childhood in war-torn Sierra Leone. Even today, only six percent of rural residents in Sierra Leone have access to electricity, relying instead on expensive batteries or kerosene. 

 

View this post on Instagram

 

A post shared by Jeremiah Thoronka (@jeremiah_thoronka)

So, when he was 17, Thoronka founded Optim Energy, a startup that harnesses the kinetic energy of objects in motion and converts it into emissions-free electricity. The device he developed can be installed underneath busy roads, where it generates electrical currents from the vibrations of cars and even pedestrians. So far, Optim’s pilot programs have proven to be successful. In Kuntoluh, the area where Thoronka lives, the startup has provided free, clean energy to 150 households and 15 schools with over 9,000 students.

“The Sun is not always shining, water is drying up, fossil fuels are not always going to be used,”  Thoronka told the BBC, “but people are always moving.”

Read more at the BBC

Talk it out

Tenants facing eviction in U.S. housing courts often don’t have an attorney. In Cleveland, Ohio, for instance, only two percent had representation when they went before a judge — until recently.

Crushed by negative news?

Sign up for the Reasons to be Cheerful newsletter.
[contact-form-7]

In July 2020, Cleveland implemented its Right to Counsel (RTC) program, which gives tenants free access to a housing attorney during eviction proceedings. This assistance can be pivotal: studies show that judges are less likely to evict tenants when they have representation, and stopping an eviction can prevent a cascade of health, financial and other problems. What’s more, giving tenants an attorney just makes the whole system run more smoothly. In one instance, a landlord was evicting a tenant because he thought the tenant was receiving rental assistance but still not paying his rent. The tenant’s RTC attorney discovered that, in fact, the tenant hadn’t actually received the subsidies, and the eviction was avoided.

RTC has led to a tenfold increase in the number of tenants with representation in Cleveland’s housing courts. It has also been paired with a rental assistance program, which means that when eviction cases do end up before a judge, the system is oriented toward getting the renter the aid they need to keep them in their home. The result? About 93 percent of RTC clients have avoided being displaced. 

Read more at Fresh Water

The old college try

As U.S. lawmakers prepare to debate a budget bill that could make community college free, some of these schools are getting ahead of the game already. 

Community colleges received a deluge of aid from the government’s pandemic relief packages, and many of them are using this money to wipe out student debt. Last month, for instance, El Paso Community College in Texas cleared $3 million in student debt for 3,700 students using CARES Act funding. And Connecticut State Colleges and Universities, a network of 17 campuses, announced it will forgive $17 million in loans for students whose ability to pay was affected by the pandemic. Many four-year colleges have also used relief money to cancel student debt, including Delaware State University, South Carolina State University, and all Historically Black Colleges and Universities.

Enrollment at community colleges fell during Covid, and administrators hope the debt forgiveness schemes will encourage more students to enroll. “By erasing past-due tuition,” said the president of Bergen Community College in New Jersey, “students can return…to continue their path to a degree without debt hanging over their heads.” 

Read more at Route Fifty

The post Sierra Leone Is Turning Roadway Vibrations into Electricity appeared first on Reasons to be Cheerful.

How the System is Failing Young PeopleThere’s a narrative...

Published by Anonymous (not verified) on Thu, 12/08/2021 - 12:45pm in

How the System is Failing Young People

There’s a narrative out there that millennials and the Generation Zs behind them are lazy.

Well, that is just bunk.

The reason a lot of young people are not doing nearly as well as their parents at this stage is that they’re paying huge amounts – much more than their parents ever paid, as a proportion of their paychecks, for education, higher education or student debt, housing for rent, health care, even transportation. 

All of these costs have increased faster than inflation, and at the same time, jobs are not paying that much more. 

One in 10 college graduates are underemployed. By underemployed, we mean they are not spending 40 hours a week doing things that are challenging and taking advantage of their education. One out of 20 is unemployed.

In the post World War II era, we have never seen anything like this. We have always expected that we’re going to do better. Individuals and families are going to do better. They’re going to be trading upward, and their children are expected to do better than they have done. 

For the first time now, we see the pendulum moving in exactly the opposite direction. Today, your chance of getting ahead as a young person is hugely dependent on the parents you have and their income and their wealth.

Meanwhile, we are on the verge of the largest inter-generational wealth transfer in history. You’ve got 74 million baby boomers. They’ve never done so well, raking it in. This extra resource is going to be going to those small slice of Millennials and Generation Zs who have wealthy parents and grandparents.

If nothing changes, the two-tiered society we have now is going to become a chasm between the haves and the have nots.

The most important things America can do is make college free, make healthcare cheaper, and provide more affordable housing.

We cannot continue on the way we are right now.

Cancelling Student Debt

Published by Anonymous (not verified) on Thu, 29/07/2021 - 8:26am in

Tags 

student debt

Fixed a link. Feel free to share with your members of Congress who are still using the austerity lens and don’t seem to realize the opportunity.

The Macroeconomic Effects of Student Debt Cancellation Summary.
— Scott Fullwiler, Stephanie A. Kelton, Catherine Ruetschlin and Marshall Steinbaum. The Levy Economic Institute of Bard College (@LevyEcon) 2018

Research, proposals and commentary here.

Who Pays What First? Debt Prioritization during the COVID Pandemic

Published by Anonymous (not verified) on Thu, 17/06/2021 - 12:37am in

William J. Arnesen, Jacob Conway, and Matthew Plosser

Who Pays What First? Debt Prioritization during the COVID Pandemic

Since the depths of the Great Recession, household debt has increased from a low of $11 trillion in 2013 to more than $14 trillion in 2020 (see the New York Fed Household Debt and Credit Report). In this post, we examine how consumers’ repayment priorities have evolved over that time. Specifically, we seek to answer the following question: When consumers repay some but not all of their loans, which types do they choose to keep paying and which do they fall behind on?

We use data from the New York Fed’s Consumer Credit Panel to construct a “head-to-head conflict” among different types of debt. In other words, if a consumer chooses to repay all of their auto loans, while defaulting on their consumer debt, that would constitute a “win” for auto loans over consumer debt. We then run a logistic regression to predict the overall strength of each debt type, focusing on three categories: auto loans, mortgages, and consumer debt (we have excluded student debt from the analysis because substantial changes in repayment rules—such as the dramatic rise of income-based repayment plans—might make comparisons over the full twenty-year period difficult.

The chart below illustrates repayment prioritization over the last twenty years (because of the rise in mandatory and voluntary forbearance programs during the COVID pandemic, we exclude 2020 data). The y-axis represents the probability that a given form of debt will be repaid over consumer debt (which includes bank card, consumer finance, and retail trade debt) when a consumer must choose to fall behind on at least one form of debt. Two dominant patterns emerge. The first, as previously explored in a Liberty Street Economics blog post, is that mortgage prioritization collapsed during the 2008 financial crisis, before steadily climbing back to its previous peak in the last few years.

Who Pays What First? Debt Prioritization during the COVID Pandemic

The Decline of Auto Prioritization Rates

The second dominant pattern is that in the last fifteen years auto loan prioritization has inexorably declined, falling far below parity with mortgages by 2020. The intersection of the mortgage (gold) and auto (gray) lines implies that consumers are equally likely to choose to repay their mortgage or their auto loans when they only repay one. This trend parallels a previously reported surge in outstanding subprime auto debt and a consequent increase in default rates.

One reason is the growth in borrowers with multiple auto loans. The chart above makes clear that those with multiple loans (blue line) prioritize auto payment even less than those with a single car loan (red line). Presumably, the potential loss of one’s second car is less devastating than the loss of one’s only vehicle. As seen in the chart below, the share of borrowers taking out multiple auto loans has increased roughly 72 percent over the sample period. However, compositional shifts toward multi-auto loan borrowing cannot explain the full decline, as rates of prioritization within the single-loan and multi-loan cohorts have fallen. Indeed, increased frequency of multiple-auto borrowers can explain roughly 40 percent of the decline in the overall auto prioritization decline pre-2007, but only 10 percent of the decline after 2007.

Who Pays What First? Debt Prioritization during the COVID Pandemic

We investigate several other factors, none of which are sufficient to explain the decline in isolation. The first is an aging population; older adults tend to drive less and consequently de-prioritize auto loan repayment. The share of elderly auto-loan borrowers (75+) has grown, topping out at 4.5 percent in 2020 vs 2.5 percent in 2007. Hence aging can explain only a small fraction of the overall trend.

We also investigate urbanization patterns. Borrowers in highly urbanized census tracts hold similar priorities to borrowers in rural tracts, despite the potentially higher levels of access to alternative forms of transportation.

Finally, we investigate changes in lending standards. Empirically, we don’t see a substantial difference in prioritization scores between borrowers with low credit scores at the time of their first loan and those with higher credit scores (see chart below), making it an unlikely culprit. So while credit score may predict default, it does not appear to have much bearing on households’ prioritization conditional on default.

One avenue for future exploration might be to examine the relationship between prioritization and changes in interest rates. It is possible that borrowers with higher rates might choose to prioritize those debts for fear of the heightened consequences of falling further behind. Indeed, according to data from the Federal Reserve, the average interest rate on a new 48-month auto loan from a commercial bank has declined from 6.61 percent in August 2009 to 4.98 percent in August 2020 whereas credit card rates have risen from 13.71 percent to 14.58 percent over the same time period.

Who Pays What First? Debt Prioritization during the COVID Pandemic<br />

Takeaways

Household debt prioritization has been surprisingly dynamic over the past twenty years. A key factor appears to be the value of the underlying collateral to the household. Low home equity reduced the incentive to prioritize mortgage debt following the Great Recession and the growing prevalence of a second car loan lowered the importance of remaining current on the additional automobile. However, other factors, including demographics and relative pricing, also appear to influence households’ decisions. We hope to further understand these forces in future research.

William J. Arnesen is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Jacob Conway is a Ph.D. candidate in economics at Stanford University and a former senior research analyst at the New York Fed.

Plosser_matthewMatthew Plosser is an officer in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:

William J. Arnesen, Jacob Conway, and Matthew Plosser, “Who Pays What First? Debt Prioritization during the COVID Pandemic,” Federal Reserve Bank of New York Liberty Street Economics, March 29, 2021, https://libertystreeteconomics.newyorkfed.org/2021/03/who-pays-what-firs....

Related Reading

When Debts Compete, Which Wins?

CMD: Household Debt and Credit Report

Disclaimer

Conway’s contributions are based upon work supported by the National Science Foundation Graduate Research Fellowship Program under Grant No. DGE-1656518. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation, or the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

The 2021 federal budget

Published by Anonymous (not verified) on Tue, 04/05/2021 - 1:04pm in

I’ve written a ‘top 10’ overview of the recent federal budget. The link to the post is available here: https://nickfalvo.ca/ten-things-to-know-about-canadas-2021-federal-budget/

The 2021 federal budget

Published by Anonymous (not verified) on Tue, 04/05/2021 - 1:04pm in

I’ve written a ‘top 10’ overview of the recent federal budget. The link to the post is available here: https://nickfalvo.ca/ten-things-to-know-about-canadas-2021-federal-budget/