Search Result(s)

Federal Legislation Seeks to Stop States from Denying or Revoking Licenses Due to Unpaid Student Debt

Student loan debt is a reality for Americans of all ages. The total student loan debt in America is about $1.3 trillion, a figure that has doubled in the last decade. Student loan debt is the second-highest category of debt in America, second only to mortgage-related debt.[1] At the same time, student loan default rates have steadily increased over the last several decades, and “nearly 40 percent of borrowers are expected to default on their student loans by 2023.”[2] Projections like these have driven state and federal governments to be more focused than ever on collecting outstanding student loan debt. Following the lead of the federal Department of Education, some state governments have turned to solutions that exacerbate the problem. Currently, 20 states have laws on the books that allow states to deny applications for or revoke professional and occupational licensure from those who are in default on their student loan debt.[3] The policy of licensure action on those individuals in default on their student loans traces back to a 1990 document from the federal Department of Education titled “Reducing Student Loan Defaults: A Plan for Action.”[4] As the number of student loan defaults steadily increased, the Department of Education recommended (among other solutions) that states “enact legislation to deny professional licenses and state jobs to defaulters until they make adequate repayment arrangements.” Revoking or denying licenses as an incentive to pay back student loans can be self-defeating. It is much more daunting to pay back a loan if one is barred by the state from gainful employment in their field. Without a driver’s license, potential workers, college graduate or not (two-thirds of borrowers who default on student loans did not finish their degree[5]), are often lack reliable transportation to and from work, especially in areas with little to no public transit. And with little support from the state or federal governments until the loans are in repayment, these policies can force people into an unwinnable situation.

Odious Debt (IMF)

"Similarly, Anastasio Somoza was reported to have looted $100-500 million from Nicaragua by the time he was overthrown in 1979. Sandinista leader Daniel Ortega told the United Nations General Assembly that his government would repudiate Somoza's debt, but reconsidered when his country's allies in Cuba advised him that doing so would unwisely alienate Nicaragua from Western capitalist countries. Some countries have attempted to confiscate and restitute funds that an ex-ruler salted away abroad, but with mixed results. For example, Nigeria recently recouped money from Sani Abacha's family, but the Philippines has little to show for its protracted campaign to repatriate Ferdinand Marcos's fortune. Moreover, any money that has been squandered is gone forever."

Can’t Pay Back, Won’t Pay Back: Iceland’s Loud No

Silla Sigurgeirsdóttir and Robert H Wade – Le Monde Diplomatique The people of Iceland have now twice voted not to repay international debts incurred by banks, and bankers, for which the whole island is being held responsible. With the present turmoil in European capitals, could this be the way forward for other economies? The small island of Iceland has lessons for the world. It held a referendum in April to decide, more or less, whether ordinary people should pay for the folly of the bankers (and by extension, could governments control the corporate sector if they depended on it for finance). Sixty per cent of the population rejected an agreement negotiated between Iceland, the Netherlands and the UK to pay back the British and Dutch governments for the money they spent to recompense savers with the failed bank Icesave. That was less resistance than the first referendum last spring, when 93% voted no.

The Value For Money Debt audit: An alternative weapon against state capture

by Mary Serumaga on the CADTM.org anti-debt web site "Many African nations are mired in huge debts arising from foreign loans that have hardly benefitted the people. The citizens need to audit these debts. Odious debts should be repudiated, damn the consequences. Moreover, as Thomas Sankara demonstrated in the four years he was president of Burkina Faso, African nations do not need foreign loans to meet the needs of their people. In the 1990s, post-war Uganda was restructuring the civil service. The country was awash with World Bank funds and donor grants for ‘re-tooling’ public offices, capacity building and rehabilitating infrastructure. At the time, short landings were the order of the day. It is a universal fraudulent practice involving a supplier of goods delivering less than the goods paid for or nothing at all, and then being issued a goods received note by a colluding administrator. The supplier is then paid against the Note. Locally it was called ‘air supply.’"

Causes of the Debt Crisis - Global Issues

"Third world debt has long been recognized as a major obstacle to human development. Many other problems have arisen because of the enormous debt that third world countries owe to rich countries. Debt has impeded sustainable human development, security and political or economic stability. How has this happened?" (Note: it seems this odious and illegitimate "Third World Debt" is cited as one of the reasons for the GATS (???) by the UN in document A/RES/44/232 )

LOOTING:The Economic Underworld of Bankruptcy for Profit.

NBER Working Paper No. R1869 During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds. Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.