With Student Loan Forgiveness on Hold, Millions Have Financial Plans in Limbo​​​

Millions of student loan borrowers thought a debt burden was lifted when President Biden announced his student debt relief program in August. Now their financial plans are in limbo, the Wall Street Journal reported. Some 22 million people have either applied for up to $20,000 in student debt relief since applications became available on Oct. 14, or were automatically eligible for the program, the White House said. Days later, a federal appeals court temporarily stopped the administration from taking further action, casting doubt over whether the debt will be lifted. The court is expected to decide in the coming days whether to block the administration’s program for a longer period while Republican leaders in six states challenge it. The White House, which has argued against the states’ legal standing to challenge the plan, said borrowers should continue applying for loan relief while the legal challenges linger in court. Also feeling whiplash are borrowers who continued paying down their loans throughout the federal freeze on payments and interest, which has remained in effect since the start of the pandemic in March 2020. Dalié Jiménez, a professor at the University of California, Irvine School of Law, said that the plan’s temporary halt may confuse some borrowers and dissuade them from submitting an application. She recommended that anyone who thinks they are eligible apply anyway, because the cancellations could still proceed. An additional element of uncertainty is that the pause on federal student loan payments during the pandemic is set to end Dec. 31. The White House estimated that about 20 million borrowers are eligible to have their balance drop to zero if the cancellations go through, but Prof. Jiménez noted that for borrowers who don’t know whether they will have debt canceled by next year, budgeting for the coming months might be difficult. (Subscription required.) Read more.

McKinsey Reaches Deal with U.S. Local Governments over Opioids​​​

Leading consulting firm McKinsey & Co. has agreed to settle claims by hundreds of U.S. local governments and school districts around the country that it fueled an epidemic of opioid addiction through its work for OxyContin-maker Purdue Pharma LP and other drug companies, Reuters reported. The deal was disclosed in a court filing Wednesday evening in San Francisco federal court. Its terms were not made public, and McKinsey and a lawyer for the settling plaintiffs did not immediately respond to requests for comment. McKinsey previously agreed to pay more than $600 million to settle opioid claims brought by all U.S. states and territories, and had argued that those settlements should shield it from local governments' and school districts' lawsuits. It has not admitted wrongdoing. The firm still faces claims by Native American tribes and claims on behalf of children exposed to opioids in the womb, which can cause withdrawal symptoms at birth and long-term health and developmental problems. Read more.

Where Can You Get 30+ Hours of Innovative Online Consumer Bankruptcy Programming and Networking for $100? Register Today for CPEX 2022!​​​

The virtual Consumer Practice Extravaganza from Nov. 10-18 promises to be the premier consumer debt event of the year. Leading practitioners will explore the latest consumer debt practices, including student loans, post-Covid mortgage issues and more during more than 30 hours of innovative online programming. Six broad session tracks will ensure that there is something for everyone: Student Loans, Technology and the Future, Subchapter V, Well-Being, Nontraditional Practice and Vendors: Expanding Your Toolbox. CPEX22 will also feature a range of special “demo days,” showcasing technology and money-saving tools especially designed for consumer practitioners, circuit-specific breakout sessions, and plenaries focused on issues relevant to the entire consumer bench and bar. Register for all this and more for only $100! 

Weekly Unemployment Claims Inched Higher, but Remain Very Low​​​

Slightly more Americans applied for unemployment benefits last week as the labor market remains one of the healthiest parts of an uneven U.S. economy, the Associated Press reported. Jobless claims for the week ending Oct. 22 inched up by 3,000 to 217,000 from 214,000 the previous week, the Labor Department reported Thursday. The four-week moving average rose to 219,000 from 212,250 the previous week. Applications for jobless claims, considered a proxy for layoffs, have remained historically low, even as the Federal Reserve has cranked up its benchmark borrowing rate in an effort to cool the economy and tame inflation. Fed officials have warned that the unemployment rate will likely have to rise as part of their fight against rising prices, and the most recent government jobs report likely snuffed out any hope that the Fed would pause rate increases when it meets next week. American employers slowed their hiring in September but still added 263,000 jobs, and the unemployment rate fell from 3.7% to 3.5%, matching a half-century low. Read more.

U.S. Economy Rebounds as Consumers, Businesses Show Resilience​​​

The U.S. economy rebounded following two quarterly contractions thanks in part to resilient consumers and businesses, although inflation and higher interest rates leave growth vulnerable in the coming months, Bloomberg News reported. Gross domestic product rose at a 2.6% annualized rate in the July-September period after falling for the first two quarters, the Commerce Department’s preliminary estimate showed Thursday. Personal consumption, the biggest part of the economy, climbed at a 1.4% pace, better than forecast but still a slowdown from the prior quarter. While the details of the report showed firm business investment and continued consumer spending on services, the biggest contributor to GDP was the volatile net exports category. Government spending also rose firmly, but the housing sector was a significant drag on growth. Although the quarterly expansion may help alleviate concerns that the U.S. is already in a recession, the economy’s main engine — consumer spending — remains under pressure from the highest inflation rate in a generation. A strong labor market and savings amassed over the course of the pandemic have so far provided Americans the wherewithal to keep spending. Read more.

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Cross-border restructurings involve a wide range of complex processes across jurisdictions. A special abiLIVE webinar on Tuesday, sponsored by Delaware Trust, will address recent developments impacting formal and informal debt-restructuring procedures in the U.S. and Europe, practical issues for lawyers advising on cross-border debt-restructurings, key legal strategies regarding a cross-border debt-restructuring, and the role of management and directors involved in a restructuring exercise. Register for FREE!

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