Student Loans: Biden Official Details How Borrowers Can Get on Better Footing for Repayment​​​

One Department of Education official knows that many student loan borrowers are worried about payments restarting next month. This week, he offered a roadmap. "Bills will be going out as payments are due in October, and we're encouraging people to take a look at all of the affordable repayment options," James Kvaal, undersecretary of the Department of Education, told Yahoo Finance. "We've created the SAVE Plan, which is the most affordable repayment plan ever and already has 4 million people in it. Come to StudentAid.gov and take a look at what options are available to you." More than a quarter of Americans with student loan debt say they're not sure how they will be able to repay their loans in October, a recent New York Life survey found. And while another quarter say they have enough money in their budgets to cover the payments, 23% of those said they will need to reduce other spending to make it work. Borrowers can sign up for the new Saving on A Valuable Education (SAVE) income-driven repayment plan with their loan servicer or directly on the Federal Student Aid website, StudentAid.gov. They can also compare SAVE with other income-driven repayment plans available to them using the government’s loan simulator. For a more personalized comparison, borrowers are encouraged to complete the IDR application process, a Department of Education official previously said. For borrowers who are in default, Kvaal encouraged them to check out the Fresh Start program by contacting their loan servicer or visiting StudentAid.gov. Read more.

Commentary: The Student-Debt Bubble Fueled a Housing Bubble*​​​

Credit scores of home buyers have generally improved since the 2000 bubble years, thanks in part to changes in FICO calculations that reduced penalties for unpaid medical debt. A decade of historically low interest rates also made it easier for buyers to finance debt. Yet perhaps the biggest credit boost came from income-based student-loan repayment plans, which capped monthly payments at 10% of discretionary income, according to a Wall Street Journal commentary. Many student borrowers consequently aren’t paying down their debt, but it isn’t counted against them when they attempt to buy homes. While credit scores are improving, it isn’t clear whether borrowers have become more credit-worthy. Added to the mix are government-sponsored enterprises Fannie Mae and Freddie Mac, according to the commentary, which have fueled the housing boom by making it easier for borrowers who can’t afford to repay their student loans to take out bigger mortgages. (Subscription required.) Read more.

*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.

Why More Baby Boomers Are Sliding into Homelessness​​​

Baby boomers, who transformed society in so many ways, are now having a dramatic effect on homelessness, the Wall Street Journal reported. Higher numbers of elderly living on the street or in shelters add complications and expenses for hospitals and other crisis services. The humanitarian problem is becoming a public-policy crisis, paid for by taxpayers. Aged people across the U.S. are homeless in growing numbers in part because the supersize baby boomer generation, which since the 1980s has contributed large numbers to the homeless population, is now old. But other factors have made elderly people increasingly vulnerable to homelessness, and the vast numbers of boomers are feeding the surge. High housing costs — a major factor in all homelessness — are especially hard for seniors living on Social Security who are no longer working. Low-cost assisted living centers, never built in adequate numbers to handle the larger baby-boom generation, have been closing amid staffing shortages and financial troubles, and society’s dispersal of families means less support for older people. (Subscription required.) Read more.

Next ABI Subchapter V Task Force Virtual Public Hearing on Sept. 22 to Examine Post-Confirmation Issues​​​

The sixth virtual public hearing of ABI's Subchapter V Task Force will take place on Sept. 22 at 3 p.m. EDT, and will feature witness testimony from bankruptcy judges and practitioners on post-confirmation issues. Click here to register.

Looking to catch up on previous hearings? Access them here!
 

Inflation Sped Up as Gas Prices Rose​​​

Federal Reserve officials are likely to remain wary about the outlook for inflation after a report released Wednesday: Overall price increases sped up because of a pop in gas prices in August, and a more closely watched index that strips out volatile food and fuel prices climbed at a faster monthly pace than expected, the New York Times reported. The Consumer Price Index rose 3.7 percent in the year through August, the report showed. That was both faster than the 3.2 percent July reading and slightly quicker than what economists had expected. After the removal of food and fuel costs, which are volatile, a core price index slowed on an annual basis but increased faster than economists expected on a monthly basis — rising 0.3 percent, compared with 0.2 percent in both June and July. That pickup came as a range of services, including car insurance and airfares, became more costly. The monthly reading matters because economists monitor it to get a sense of inflation’s momentum, and the acceleration in August was the first in six months. Read more.

Judicial Conference Revises Policy to Expand Remote Audio Access over Its Pre-COVID Policy​​​

The Judicial Conference of the U.S. announced on Tuesday that it has approved a change to its broadcast policy that expands the public’s access to civil and bankruptcy proceedings over the Judiciary’s longstanding pre-COVID policy, which prohibited all remote public access to federal court proceedings. The revised policy, adopted at the Conference’s biennial meeting, will permit judges presiding over civil and bankruptcy cases to provide the public with live audio access to non-trial proceedings that do not involve witness testimony. The new policy will go into effect on Sept. 22, 2023, immediately after the expiration of the temporary exception that the Judiciary put in place when access to courthouses was restricted for health and safety reasons. The exception allowed judges to permit remote audio access to any civil or bankruptcy proceeding. Read more.

Latest "Reframing Mediation" Podcast Delves into Issues Surrounding "Bad Faith"​​​

The latest episode of the ABI Mediation Committee’s "Reframing Mediation" podcast features Committee Co-Chairs Edward L. Schnitzer of Womble Bond Dickinson LLP (New York) and Connor Bifferato of The Bifferato Firm (Wilmington, Del.) discussing the hot-button topic of mediation and bad faith. Click here to listen.
 

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