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Close neighbors of lottery winners in Canada tended to spend more on conspicuous goods, put more money into speculative investments such as stocks, borrow more money — and eventually declare bankruptcy, Bloomberg News reported. “The larger the dollar magnitude of a lottery prize of one individual in a very small neighborhood, the more subsequent bankruptcies there will be from other individuals in that neighborhood,” says the latest version of a working paper from the Federal Reserve Bank of Philadelphia by Sumit Agarwal of Georgetown University, Vyacheslav Mikhed of the Philadelphia Fed, and Barry Scholnick of the University of Alberta. It’s titled: “Does the Relative Income of Peers Cause Financial Distress? Evidence from Lottery Winners and Neighboring Bankruptcies.” An earlier version of their paper got a flurry of publicity in 2016 by presenting evidence from bankruptcy filings that neighbors were trying to keep up with the lottery winner in their midst. A telltale sign was that they raised spending on things that everyone in the neighborhood could see, such as cars, but not on indoor items like furniture. The new version adds some important insights, co-author Mikhed explained in an email. One is that neighbors who filed for bankruptcy tended to have more of their assets in high-risk investments such as stocks vs. low-risk ones like insurance and cash.

Homeownership among Americans in their 20s and 30s is hovering near a three-decade low. Just 35 percent of households headed by someone younger than 35 owned a home in 2017, down from 41 percent in 1982, according to census data, the New York Times reported. At the same time, the nation’s student loan bill has soared to $1.4 trillion, surpassing credit cards to become the largest source of personal debt outside mortgages. A broad set of headwinds is holding millennials back from buying homes. Underwriting standards have become stricter in the last decade, making it more difficult to get a mortgage. Many young people are moving to cities where they can only afford to rent — a problem that has been compounded as home prices have soared while wages have barely outpaced inflation. And recent research suggests that the explosion in tuition costs and student debt is another significant force keeping many millennials out of the home buying market. An analysis published by the Federal Reserve Bank of New York last year suggests that student debt was responsible for up to 35 percent of the decline in homeownership among people between the ages of 28 and 30 from 2007 to 2015.

As treatment costs soar and insurance coverage shrinks, hospitals and patient advocates around the U.S. are rushing to offer more help to patients who have no financial counseling, the Associated Press reported. Cancer centers are hiring experts to help patients navigate the insurance system, while nonprofits are teaching people to think about handling costs when treatments starts instead of waiting for a financial crisis to hit. "We know a lot of very solidly middle class families, they were fine and then ... their financial lives changed," said Jean Sachs, CEO of the nonprofit Living Beyond Breast Cancer. "They're not prepared for the cost of cancer, let alone the care." The Affordable Care Act sets limits for how much people have to spend on care each year. But cancer treatments often extend beyond a year, and those limits don't apply to care sought outside the increasingly narrow network of doctors and hospitals that some insurers offer. Patient costs also can rise because newer cancer treatments are more tolerable, so people can stay on them longer, said Dr. Yousuf Zafar, a Duke Cancer Institute oncologist who studies financial distress.

The ABI Commission on Consumer Bankruptcy provided recommendations in response to the Department of Education’s request for information (RFI) on the evaluation of undue hardship claims in adversary actions seeking student loan discharges in bankruptcy. “The Department of Education plays an important role in the administration of the student-loan system,” Commission co-chairs Hon. William H. Brown (ret.) and Hon. Elizabeth L. Perris (ret.) write in a letter provided with the recommendations. “Action at the regulatory level could have a major effect in alleviating the growing burdens of student debt on everyday Americans and the overall economy.” The Department of Education published its RFI in the Federal Register on Feb. 21 seeking “public comment on factors to be considered in evaluating undue hardship claims asserted by student loan borrowers in adversary proceedings filed in bankruptcy cases.” While the Commission is working on a report of recommendations improving the overall consumer bankruptcy system to be published at the end of the year, it agreed to release several regulatory recommendations that directly respond to the RFI. Click here to read the full submission to the Department of Education.

The attorney general of New Jersey said yesterday that federal education officials had stopped cooperating on issues involving fraudulent activities at for-profit colleges, and requested that the Education Department renew its investigations into the institutions or hand them over to the state, the <em>New York Times</em> reported. Gurbir S. Grewal, who became attorney general in January, expressed frustration with the officials in a letter to Betsy DeVos, the education secretary. Grewal said that they had ignored requests from New Jersey to work with the state on behalf of students who were defrauded by Corinthian Colleges, a bankrupt for-profit chain. And he raised concerns about the status of investigations by the Education Department into large for-profit institutions like the DeVry Education Group, which paid $100 million in 2016 to settle a lawsuit alleging that it misled prospective students with ads about employment and salaries after graduation.

Members of a special team at the Education Department that had been investigating widespread abuses by for-profit colleges have been marginalized, reassigned or instructed to focus on other matters, according to current and former employees, the New York Times reported. The unwinding of the team has effectively killed investigations into possibly fraudulent activities at several large for-profit colleges where top hires of Betsy DeVos, the education secretary, had previously worked. During the final months of the Obama administration, the team had expanded to include a dozen or so lawyers and investigators who were looking into advertising, recruitment practices and job placement claims at several institutions, including DeVry Education Group. The investigation into DeVry ground to a halt early last year. Later, in the summer, DeVos named Julian Schmoke, a former dean at DeVry, as the team’s new supervisor. Now only three employees work on the team, and their mission has been scaled back to focus on processing student loan forgiveness applications and looking at smaller compliance cases, said the current and former employees, including former members of the team.