Squeeze the Parents: New Student Loan Goes Straight to Mom and Dad

As rising tuition costs pile ever-higher debts on students, lenders and colleges are pushing for an alternative: Heap more on their parents, the Wall Street Journal reported yesterday. An increasing number of private student lenders are rolling out parent loans, which allow borrowers to get funds to pay for their children's education without putting the students on the hook. The loans mimic a similar federal program but don't charge the hefty upfront fee levied by the government, which could make them cheaper and encourage more use. SLM Corp., the largest U.S. private student lender by loan originations and better known as Sallie Mae, will introduce its version of the loan next month. Parents will be able to borrow at interest rates ranging from about 3.75 - 13 percent, with 10 years to pay it off.

Nuveen, Goldman Buy Chicago School Debt

Chicago's public schools are poised to shut down on Friday as the teachers' union stages a one-day strike, the latest sign of escalating financial pressure on a junk-rated district that's veering toward insolvency, Bloomberg News reported today. The distress hasn't deterred Nuveen Asset Management, Goldman Sachs Asset Management and OppenheimerFunds Inc. According to data compiled by Bloomberg, the three were some of the biggest buyers of the $725 million of bonds the school system sold last month. At that time, the school system was forced to pay yields as high as 8.5 percent -- three times more than benchmark debt, even though it doesn't have the power to go bankrupt. Chicago's school system, the nation's third largest, has been pushed to the brink after years of skipping pension payments and borrowing to cover operating costs, which has led credit-rating companies to downgrade its bonds to as low as five steps below investment grade. Facing projected deficits of $1 billion a year through 2020, the school system is lobbying for more aid from Illinois, while Republican Governor Bruce Rauner is pushing for a state takeover and changing the law to let it file for bankruptcy to reduce its debt.

Can a financially distressed government unit restructure its pension obligations over retiree objections? Prof. Amy Monahan of the University of Minnesota Law School joins ABI Resident Scholar Melissa Jacoby to explore this difficult topic on an ABI Podcast.

The impact of public pension debt on the economy will be the focus of a special "Eye on Bankruptcy" panel before a live audience on April 16 at ABI's Annual Spring Meeting in Washington, D.C. Register today as rates go up tomorrow!

Hot Housing Markets Pinch Seniors

More than 6.1 million people age 65 and older rented their primary residences in 2014, up 29 percent from 2001, according to Harvard University's Joint Center for Housing Studies, the Wall Street Journal reported today. While the 79 percent homeownership rate for people 65 and older is the highest of any age group, the rate is down significantly since the housing boom, when homeownership among seniors peaked at nearly 82 percent. With fewer seniors owning homes and having fixed mortgage payments, they have become susceptible to rent increases, particularly in high-demand areas. Of all renters, those age 75 and older have the greatest incidence of "severe" cost burdens, meaning more than half of their incomes go to rent, according to Harvard research. The typical renter aged 65 to 69 has household income of $24,700 annually, about 40 percent less than the median renter household income for those aged 45 to 49, according to an analysis of census data for 2014 by Enterprise Community Partners, an affordable-housing nonprofit.

Analysis: Newspapers Gobble Each Other Up to Survive Digital Apocalypse

Last year, the industry saw the most deals for the largest amount of money since the 2008 financial crisis, with 70 daily newspapers being sold for a combined $827 million, according to mergers-and-acquisitions adviser Dirks, Van Essen & Murray, Bloomberg News reported on Tuesday. Even after last year's surge of activity, more deals may be coming. The pressure to combine is only expected to grow because several media companies have spun off their lucrative TV stations, leaving newspapers to fend for themselves. Some major newspapers can afford to remain solo, especially if they're fortunate enough to have a national brand like the New York Times or to be owned by a billionaire, such as the Washington Post. But the rest of America's newspapers -- many of which are the sole source of professional journalism in their communities -- are hanging on by a thread, 20 years after the Internet first became a competitive threat by siphoning off classified advertising.

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Upcoming Webinar Examines the Importance of Pre-Bankruptcy Planning to Maximize the Value of Customer Data and IP

When it comes to pre-bankruptcy planning, what is on your "checklist?" ABI's Business Reorganization Committee will be hosting a free abiLIVE Webinar on April 4 to help you identify potential pitfalls and privacy issues, and gain a few tips on best practices. Register here.