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.


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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.


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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.

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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.


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A Point of View: Why Greece and the eurozone aren’t playing games – BBC News Aug 16 2015

Game theory can’t explain the Greek crisis – the entire euro project is now in the hands of fate, writes philosopher John Gray.

Ripped Greek flag

After much drama, a third bailout has been announced for Greece and approved by the Greek parliament. The details have yet to be settled, but whatever deal finally emerges Greece’s government will be compelled to impose more spending cuts and tax rises at a time when unemployment is already higher than it was in America during the Great Depression. The result will be to lock Greece into permanent poverty, while the burden of debt will never be paid off.

Greece has been forced to submit to another round of destructive and self-defeating austerity policies in order to save the euro. But the euro is weaker than it was before the deal, and many are beginning to consider what for respectable opinion has until now been a forbidden thought: the euro project may have been a colossal error. Instead of leaving it stronger, the deal that has been imposed has strengthened the suspicion that the single currency is irreparably flawed.

It seems a strange outcome for a deal reached among reasonable men and women. But was the deal a result of rational bargaining? If you listened to the media on the negotiations in Brussels, you’d be inclined to think so. There has been constant talk of stratagems and counter-stratagems, bluffs and double bluffs. The Greek drama has been interpreted as a high-stakes poker game, with each of the players trying to maximise their chance of winning.

It’s an interpretation that’s been all the more popular as a result of the fact that one of the players, Greece’s former finance minister Yanis Varoufakis, has written an academic textbook on game theory. A familiar line of commentary has it that the Syriza government destroyed any credibility it may have had among European elites by reckless shifts in strategy. If only the Greeks had played their hand more shrewdly, a better deal could have been reached and the crisis could have been resolved. The eurozone could then become more integrated and more stable.

I think it’s an unrealistic analysis. Unworkable and unreformable, the euro can only produce recurrent and worsening crises. But this can go on for only so long. The euro will break down through a process of political contagion, as resurgent nationalism and radical parties of opposition become stronger throughout Europe. The driving force of the currency’s disintegration will be a mood of popular anger. Attempting to maintain the euro at any cost can only result in mounting desperation, which will seek expression in violence if no practicable policies are on offer to ameliorate the situation.

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How Going To College Could Change Under Hillary Clinton’s New Plan – ANYA KAMENETZ AUGUST 11, 2015 4:53 AM ET

Democratic presidential candidate Hillary Clinton at Trident Technical College during a campaign stop on June 17 in North Charleston, S.C.

Democratic presidential candidate Hillary Clinton at Trident Technical College during a campaign stop on June 17 in North Charleston, S.C. David Goldman/AP

This week Hillary Clinton released a big complicated campaign proposal she calls the New College Compact. It’s stuffed with ideas that have been brought up by other presidential candidates, both to the left and the right: free tuition (Bernie Sanders); debt-free college (Martin O’Malley); more affordable student loan repayment (Marco Rubio); and lowering costs overall (Jeb Bush).

One big takeaway from all this is that college affordability may have become the mainstream, crowdpleasing middle-class issue of the moment, like homeownership or Social Security or health care in previous eras. And when you read between the lines of Clinton’s plan, what emerges are a lot of shifts in how Americans perceive, and achieve, what is increasingly a requirement for prosperity: a college degree.

Here are some of those new realities.

Community college is more important than ever.

Two-year colleges enroll 40 percent of undergraduates in the United States. Clinton’s proposal would make public two-year colleges tuition-free. President Obama proposed the same at the start of the year. Sara Goldrick-Rab, a higher education scholar at the University of Wisconsin-Madison who was an architect of Obama’s proposal, suggests that this is all leading to a public guarantee of 14, rather than 12, years of free education.

Commuting — not living on campus — is the new normal.

Clinton’s proposal would hand out incentive grants to states that agree to guarantee “no-loan tuition” for public universities. But at public colleges on average, living expenses like room and board cost as much as tuition. So avoiding debt could lead to more and more students foregoing the classic tropes of campus life, from frat-house living to unlimited soft serve in the dining hall. Those perks may fall under the axe anyway: Under the New College Compact, the money would go only to institutions that agree to cut costs and apply the funds strictly to instruction, not to hot tubs and climbing walls.


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Colleges in the 2016 crosshairs – By KIMBERLY HEFLING 8/2/15 5:55 PM EDT

Democrats want to make college cheaper, or free. Republicans attack the higher education system.

LONDON, ENGLAND - JULY 15:  Students and family pose for photographs ahead of their graduation ceremony at the Royal Festival Hall on July 15, 2014 in London, England. Students of the London College of Fashion, Management and Science and Media and Communication attended their graduation ceremony at the Royal Festival Hall today.  (Photo by Dan Kitwood/Getty Images)

Presidential candidates from both parties are tapping into Americans’ growing angst over paying for college, placing an unprecedented bright glare on higher education this election.

For Democrats, the solution is making college cheaper, or free. Republicans want more innovation and efficiency.

The surge in candidates’ collective interest in the issue isn’t a coincidence: Nearly half the students who answered a recent UCLA survey on the importance of financial aid in their college decision making said it was “very important” — the highest percentage ever in the 42 years the question was asked. A Gallup poll earlier this year found more parents fret about having enough money to pay for their kids’ college than other Americans worry about any other common financial concern.

Tuition sticker prices, adjusted for inflation, have tripled for public four-year colleges and more than doubled for private ones in the last three decades — helping push higher education issues into the forefront. And the nation faces a collective $1.2 trillion in student loan debt. There’s a fear among many voters that they or their children will be shut out of higher education altogether.

But the Democrats will have to come up with big bucks to pay for their proposals. And the GOP will have to go beyond criticizing the higher ed establishment to come up with solutions at scale.

For a higher education community used to autonomy and valuing the intellectual pursuit of a degree — not just the salary it leads to — the focus from across the political spectrum is in many ways terrifying, said Barmak Nassirian, director of federal policy analysis at American Association of State Colleges and Universities.

“My worry is that we’ll end up with a series of politically appealing messages that represent really lousy policy,” Nassirian said.


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