How Australia Gets Student Loans Right – By Helene Olen NOV. 12 2015 7:53 PM


Student loan debt doesn’t have to be overwhelming—and it isn’t in many other places. Photo illustration by Sofya Levina. Images by Burlingham/Shutterstock and irin-k/Shutterstock.

Student loan debt doesn’t have to be overwhelming—and it isn’t in many other places.
Photo illustration by Sofya Levina. Images by Burlingham/Shutterstock and irin-k/Shutterstock.

Graduate from college this year? Congratulations! If you borrowed money, you likely need to pay back more than $35,000. Just how bad is that? Well, the average American with credit-card debt owes less than half that amount. Perhaps that’s why MyBankTracker recently discovered 30 percent of those they polled would agree to sell an organ in order to pay off their student loan bills.

Good luck getting started in the world with that amount of debt—one reason why many economists believe millennials aren’t buying homes or cars at the same age their parents did.

It doesn’t have to be this way—and it isn’t in many other places. Let’s visit Australia, where politicians congratulated themselves this week for closing down what they considered a major loophole in the nation’s student loan program: scofflaws moving abroad to escape the automatic salary deductions of the nation’s income-based student loan program. “You should have to repay that debt,” thundered Simon Birmingham, the nation’s education minister.

But that’s still not true for everyone. Earn less than $54,000 Australian dollars—that’s about $38,000 in the United States—and you have no worries, at least for now and maybe not forever.

So the United States:

Screen Shot 2015-11-13 at Nov 13, 2015 12.54

Australia offers students an income-based student loan plan, and has since 1989, when the system was set up to compensate for the fact that universities were charging tuition at all. That was a change. Higher education had been free in the 1970s and 1980s.

Today, there are two ways Aussies can choose to finance their college educations. If they pay up front, they get a 10 percent discount. Most don’t do that, however. That’s where where Australia’s income-based repayment plan comes in.

Australians borrow money from the government through the Higher Education Loan Program (or HELP—get it?) and related offshoots. When it comes time to repay the bill, the monthly amount has nothing to do with the sum borrowed. Instead, debtors earning more than AU$54,000 ($38,000) pay between 4 and 8 percent of their income, depending on how much they take home annually. Unemployment or illness? Salary falls under the minimum earnings required for repayment? No worries. Payments temporarily cease, with no interest or penalties accruing to the borrower.

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White House, Congressional Leaders Reach Tentative Budget Deal – By Kristina Peterson,  Nick Timiraos and  Siobhan Hughes Oct. 27, 2015 1:55 a.m. ET


Agreement would suspend debt limit through mid-March 2017, boost spending by $80 billion through September 2017

Speaker of the House John Boehner heads to the floor for votes following a GOP conference meeting on Oct. 26

Speaker of the House John Boehner heads to the floor for votes following a GOP conference meeting on Oct. 26 Photo: Chip Somodevilla/Getty Images

WASHINGTON—The White House and congressional leaders reached a tentative deal Monday on a two-year budget plan that also would raise the federal debt limit.

If approved by Congress, the broad pact would allow House Speaker John Boehner(R., Ohio) to resolve two of the thorniest fiscal hurdles before he resigns later this week. If it fails, it could leave the U.S. government a week away from potentially being unable to pay all its bills.

The plan is designed to remove the risk that the government might default and diminish the prospect of a partial government shutdown in December. It would suspend the debt limit through mid-March 2017 and boost spending by $80 billion through September 2017. Lawmakers still would need to pass detailed spending bills by December, likely in one combined measure.

For it to pass the House, the pact will need to quickly win backing from most Democrats and at least a few dozen Republicans who have frequently balked at spending and debt-ceiling bills they say don’t do enough to shrink the budget deficit.

At the same time, the White House and GOP leaders will have to make sure the provisions used to pay for the deal don’t alienate liberal Democrats, who could oppose changes to safety-net programs.

On Nov. 3, the Treasury will exhaust emergency cash-management measures that it has employed since March if the debt limit isn’t increased. Congress, meantime,faces a Dec. 11 deadline when funding for the government runs out.

Congressional Republicans have been torn apart by intraparty feuds, resulting in Mr. Boehner’s surprise decision last month to resign. Still, he has stitched together a few bipartisan accomplishments this year, including a payment-funding fix to Medicare this spring and trade-negotiation authority this summer.

Resolving both major fiscal issues would ease the burden for Rep. Paul Ryan (R., Wis.), who is expected to become House speaker when elections take place Thursday.

 

Article continues:

http://www.wsj.com/articles/white-house-congressional-leaders-reach-tentative-budget-deal-1445925316

Problems Mount for the ‘Other’ College Debt – By Melissa Korn And  Aaron Kuriloff Oct. 8, 2015 5:30 a.m. ET


As education providers look to tap bond markets amid low rates, some investors grow wary

The bond markets are giving a new grade to America’s small colleges: A gentleman’s C.

Spooked by bad news out of the higher-education sector in recent months, including unexpected campus closures, potential mergers and poor enrollment projections, some prospective buyers are steering clear of bonds being sold by small, private colleges that don’t have national reputations, schools that rely heavily on tuition revenue, and those in regions facing population declines.

Moody’s Investors Service Inc. in September warned investors to expect closures at public and not-for-profit colleges to triple by 2017 from an average of five a year over the past decade, concentrated among the smallest schools. Some small schools have experienced several years of shrinking class sizes, which leaves fewer students paying for their relatively high fixed costs, and have lost market share to larger universities, Moody’s said.

Concerns about market forces were at play at Roseman University of Health Sciences in Henderson, Nev., when the school of about 1,500 students sought $67.5 million worth of bonds to pay for a new office and research building last spring. The process took two to three times longer than usual, said Ken Wilkins, the school’s vice president for business and finance. Standard & Poor’s had downgraded the 16-year-old school’s debt in February, and investors were asking about everything from the market viability of the school’s academic programs to its possible responses to increasingly far-fetched disaster scenarios.

“It felt excessive at times, especially those questions which we affectionately began to call the ‘asteroid questions,’” he said.

 

Article continues:

http://www.wsj.com/articles/problems-mount-for-the-other-college-debt-1444296600

That Big Security Fix for Credit Cards Won’t Stop Fraud – KIM ZETTER 09.30.15. 8:00 AM


Tomorrow is the deadline that Visa and MasterCard have set for banks and retailers across the US to roll out a new system for more secure bank cards with microchips embedded in them.

Over the last few years, card issuers have spent between $200 million and $800 million to distribute new debit and credit cards to accountholders, while large retailers like Target, Home Depot and Walmart have spent more than $8 billion to install new card readers capable of reading the chips.

Despite this effort, retailers say the new system is highly flawed because instead of issuing the so-called chip ‘n’ PIN cards that offer two-factor authentication, banks and other card issuers are distributing chip ‘n’ signature cards, which thieves can easily undermine.

“Chip and PIN has been proven to combat fraud dramatically,” says Brian Dodge, executive vice president of the Retail Industry Leaders Association. “But that’s not what American consumers are getting, and thus far banks have gone to great lengths to blur the lines between the two distinctly different transactions.”

Even with PINs, however, the new technology will not eliminate fraud, but will simply shift the type of fraud that occurs.

The Hope of a More Secure System

The new technology—called EMV for Europay, MasterCard and Visa—consists of cards with a microchip that contains data traditionally stored in the card’s magnetic strip. These work with new point-of-sale readers that scan the chip and process payment transactions in a secure manner using encryption.

The chip reduces fraud because it contains a cryptographic key that authenticates the card as a legitimate bank card and also generates a one-time code with each transaction. This means thieves can’t simply take account numbers stolen in a breach and emboss them onto the magnetic strip of a random card, or program them onto the chip of a random chip card, to make fraudulent purchases at stores or unauthorized withdrawals at ATMs.

Article continues:

http://www.wired.com/2015/09/big-security-fix-credit-cards-wont-stop-fraud/

 

Obama Makes College Aid Application Earlier And Easier : NPR Ed : NPR


The Obama administration announced big changes Monday to help students fill out the Free Application For Federal Student Aid, predicting hundreds of thousands more students will get help as a result.

Source: Obama Makes College Aid Application Earlier And Easier : NPR Ed : NPR

Obama Administration College Scorecard Offers Guide on Graduate Earnings, Debt – By Douglas Belkin Sept. 12, 2015 6:05 a.m. ET


New system using IRS data spells out how students fare 10 years after graduation

The 2015 graduating class of Texas Southmost College attending a commencement ceremony in Brownsville on May 16.ENLARGE

The 2015 graduating class of Texas Southmost College attending a commencement ceremony in Brownsville on May 16. Photo: Associated Press

The Obama administration released its much-anticipated college scorecardSaturday morning, offering new insights into the value of a university degree—and the risks associated with getting one.

The new system will present the average earnings of graduates at individual schools using Internal Revenue Service data. The scorecard spells out how students fare 10 years after graduation as well as how they compare with people who entered the workforce with just a high-school diploma.

Americans will “be able to see how much each school’s graduates earn, how much debt they graduate with, and what percentage of a school’s students can pay back their loans,” President Barack Obama said in his weekly radio address, according to prepared remarks provided by the White House. The scorecard “will help all of us see which schools do the best job of preparing Americans for success.”

The president announced a ratings system two years ago with the goal of exposing poor performing schools and curbing college costs. His approach sparked an immediate backlash from college presidents who claimed the paucity of reliable earnings data and the diversity of missions among postsecondary institutions would necessarily make a one-size-fits-all rating system both specious and misleading.

Mr. Obama bowed to that pressure by dropping his plan to compare schools against one another and abandoning plans to tie public funding to the results of the system. He also walked back expectations by changing the “ratings system” to a “scorecard,” saying the comparisons should be left to others.

Still, the watered-down scorecard didn’t please the higher-education establishment, which has a long track record of blocking federal accountability measures.

 

Article continues:

http://www.wsj.com/articles/u-s-college-scorecard-provides-figures-on-graduate-earnings-debt-1442052321