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It’s Time to Cancel Student Debt and Make Higher Education Free | Education

The COVID-19 epidemic is about to devastate the economy of the United States. It has already led to unprecedented levels of poverty and unemployment. At this rate, the economic fallout from the pandemic will likely be the worst recession since the Great Depression of the 1930s. To truly cope with the looming economic crisis, the US government will need to provide tremendous relief that puts people first, not people. profit.

A major step in that direction could be the cancellation of the $ 1.56 trillion in student loans, which would help millions recover once the pandemic is over. Making public colleges, universities and trade schools free would also help those hard hit by the crisis rebuild their futures and prevent another student debt crisis from emerging.

For marginalized communities of color, who will bear the brunt of the social and economic devastation the pandemic will leave behind, and for those who were already financially precarious before the outbreak, the need for such measures is more urgent than ever.

Crush Debt and Inequality

Over the past 15 years, student debt has more than quadrupled, from $ 345 billion in 2004 to nearly $ 1.56 trillion in 2020. That’s half a trillion more than credit card debt, which now stands at $ 1,000 billion.

Across the country 69 percent of students take out loans to pay for tuition and other school expenses, and by the time they graduate, they owe an average of nearly $ 30,000.

Today, even though women make up 56% of university graduates, they hold almost two-thirds of all student loan debt amounting to $ 929 billion.

Student debt also weighs disproportionately on students of color, whose communities have historically encountered many barriers to pursuing higher education. Some 85 percent of black high school graduates have loans to pay after graduation, compared to 69 percent of their white counterparts. Black students have an average of $ 34,000 in student debt, which is $ 4,000 more than white students.

On average, white and Asian students graduate from college at a rate of about 20 percentage points more than Hispanic and black students.

Black communities and other marginalized communities of color are disproportionately impacted also by predatory lenders. Private loans for colleges tend to be the last resort when federal scholarships, grants, and loans can no longer cover expenses. These particular loans often come with high interest rates and rigid payment plans. Students then leave college debt-ridden and without a degree to provide them with a pay raise to help them pay off their loans.

According to American Association of University Women (AAUW), 57% of black women paying off student loans were unable to afford essential expenses.

So instead of being an equalizer that helps close the wealth gap between rich and poor, higher education in the United States breeds inequality. It increases the indebtedness of communities which already suffer from high levels of income insecurity and economic precariousness.

It reinforces the cycle of poverty and the paycheck-to-paycheck life that many marginalized families are forced to experience, even though they are more educated. Parents with a university degree and heavily in debt are unlikely to be able to afford higher education for their own children.

The economic fallout from the pandemic threatens to worsen this situation.

Free education

Some student debt relief measures have already been taken.

On March 19, Senate Democrats proposed a plan to write off $ 10,000 federal student loan debt for all borrowers, which was backed by alleged Democratic presidential candidate Joe Biden.

On March 23, House Democrats, led by Congressmen Ilhan Omar and Ayanna Pressley, introduced the Emergency Student Debt Relief Act, which proposes to write off $ 30,000 in student loans. all borrowers and requires the US Department of Education to pay all remaining federal loan payments for the remainder. of the outbreak.

In addition to the House and Senate bills, which are yet to be voted on, Congress passed the CARES Act on March 27, which effectively froze student loan payments and accrued interest rates on federal loans. .

But the measures must go further. Freezing payments and even canceling $ 30,000 in loans per person would still leave millions of Americans indebted, including many medical workers on the front lines of the fight against COVID-19.

The CARES law also does not apply to students who have taken out loans from private lenders (which total $ 124 billion) and some companies are suing for debt collection amid the pandemic.

To truly cope with the current crisis in higher education, especially in the midst of the COVID-19 pandemic, student debt needs to be wiped out completely. And to ensure that another student debt crisis does not emerge in the future, all public colleges and trade schools must be free from tuition and debt.

This is not a far-fetched idea and in fact, many colleges in the United States were tuition-free in the past. In California, for example, students from the state did not have to pay tuition fees at public universities until the 1970s.

Student loan debt cancellation and free tuition have already been gain public support in large part because of Senator Bernie Sanders’ 2020 presidential campaign.

Some states have piloted tuition-free programs, but among these, eligibility criteria exclude large numbers of students. In 2017, New York State established SUNY and CUNY Schools for families earning less than $ 125,000 in tuition. In 2018, New Jersey also made community colleges free, but only 13,000 people qualified according to the program’s eligibility criteria.

But the struggle to create a just higher education system should not end with debt cancellation and free tuition. To ensure that students can eat, pay rent, buy books, and navigate life outside of the classroom, federal Pell Grants, which provide funds to students in need, must be increased and their eligibility expanded. Pell grants, scholarships and tuition-free education should also be extended to those currently and formerly incarcerated.

Banks and private lenders have been allowed to benefit from this abusive and unfair system of financing education for far too long. In 2008, when the Great Recession hit, President George W Bush enacted the Troubled Asset Relief Program, allowing the US Treasury to spend taxpayer dollars to buy failed bank assets to bail out the financial system, paving the way for a bailout valued at $ 16.8. and $ 29 trillion.

A total student loan forgiveness would cost between 5-9% of that amount and can easily include the wiping out of the $ 124 billion owed to private lenders. Free tuition at public post-secondary institutions is estimated to be around $ 79 billion a year, which is affordable. In addition, increased access to higher education would lead to increased tax revenues generated by a larger population of better paid university graduates. With the advantages it generates, free education would end up pay for himself.

As the US government prepares to bail out big business again, the time has come to demand real education reform – one that makes it free.

The cancellation of all federal student loans will help alleviate already existing economic stressors. Free education will help society as a whole – and in particular the most disadvantaged – to recover from centuries of inequality that will only get worse because of the coronavirus epidemic.

Everyone deserves to live a life of dignity and the opportunity to realize their full potential. It is time for the US government to invest in the American people, not in financial institutions that concentrate wealth and contribute to national and global inequalities.

The opinions expressed in this article are those of the authors and do not necessarily reflect the editorial position of Al Jazeera.


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Former ITT Tech students in Mississippi to receive debt relief as part of their settlement

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Update:

JACKSON, Mississippi (WJTV) – Mississippi Attorney General Lynn Fitch announced that the state has reached a deal to get $ 1,763,071.28 in debt relief from former ITT Tech students in Mississippi. The funds are part of a settlement with 48 attorneys general and the Federal Consumer Financial Protection Bureau.

“Today’s settlement will bring more than $ 1.7 million directly into the pockets of students targeted by the predatory actions of PEAKS Trust, many of whom continue to suffer the economic impacts of astronomical interest rates,” said Fitch. “This regulation should serve as a warning to other bad actors who take advantage of financially vulnerable Mississippians. My office will continue to seek justice, ensuring that there are serious consequences for illegal actions against consumers in our state. “

The settlement is with PEAKS Trust, a private lending program managed by ITT and affiliated with Deutsche Bank entities. PEAKS was formed after the 2008 financial crisis when the private sources of loans available to for-profit colleges dried up.

ITT had operated campuses in Madison, Mississippi. The for-profit college worked out a plan with PEAKS to provide students with temporary credit to cover the gap between tuition fees and federal student aid and the total cost of education. ITT filed for bankruptcy in 2016 following investigations by state attorneys general and following action by the US Department of Education to restrict ITT’s access to federal aid to students.

Students will not have to do anything to benefit from debt relief. The notices, which will be sent directly to those affected, will explain their rights under the regulation. Students can direct questions to PEAKS at [email protected] or 866-747-0273, Where the Consumer Financial Protection Bureau at (855) 411-2372.

In June 2019, Mississippi was also part of a $ 168 million settlement that relieved the debt of 18,664 former ITT students. This deal was made with Student CU Connect CUSO, LLC, which also offered loans to fund student tuition at ITT Tech.

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G20 prepares limited extension of debt relief for poorest countries

Updates on the economic impact of the coronavirus

The G20 rich country group is preparing to extend its debt relief offer to the world’s poorest countries until next year, but faces growing criticism for its limited ambition in the face of a growing crisis in emerging economies.

G20 ministers will meet at this week’s annual meetings of the IMF and World Bank on Wednesday, when they are expected to announce a six-month extension of the group’s Debt Service Suspension Initiative (DSSI) under from which 73 eligible countries can apply to G20 governments and their political banks to defer debt repayments due this year and spread them over four years.

The initial initiative was announced as the pandemic took hold around the world this spring, to offer short-term relief to poor countries struggling to meet immediate health, social and economic costs.

But, if confirmed, the extension will be less than requested by recipient countries.

A meeting this month of the United Nations Economic Commission for Africa, the Institute of International Finance which represents private sector creditors and a group of African finance ministers called for the ISDB to be extended until the end of 2021.

The G20 has also been criticized for failing to take into account the views of debtor countries.

A statement released after the meeting said “all stakeholders, including debtor countries and the private sector, should have a seat at the table and their views should be taken into account.”

Stephanie Blankenburg, head of debt and development finance at the United Nations Conference on Trade and Development, said: “There is an agreement between the advanced and developing countries of the G20 to represent only the interests of creditors. . We are absolutely not talking about how the debtor countries could receive their proposals. ”

In particular, she criticized a separate G20 plan for over-indebted poor countries, which will consider cuts and write-downs on a case-by-case basis next year.

It makes the relief of the G20 countries conditional on debtor countries seeking the same treatment from private creditors, including commercial banks and bondholders.

Ms Blankenburg said: “This places a huge burden on eligible developing countries, which tend to be small and poor.”

David Malpass, president of the World Bank, also criticized the efforts of the G20.

Speaking on Tuesday, he said that “the G20 is a forum primarily for creditors and he has been reluctant to move forward with the broader theme [of debt relief]”.

“Bilateral creditors are looking to get as many repayments as possible,” he said. Mr Malpass has repeatedly criticized G20 members for not fully participating in the initiative.

According to the IMF, 44 countries have applied to participate in the DSSI, deferring about $ 5.3 billion in repayments this year, less than half of the potential savings of $ 11.5 billion estimated by the World Bank.

The amount carried forward represents about a tenth of the increase this year in the external financing needs of the 73 countries eligible for the DSSI, estimated by the IMF at around 54 billion dollars.

Of the 44 countries that have used the DSSI, only three have requested comparable treatment from private creditors and no agreement has yet been signed, according to the IMF.

Mr. Malpass also criticized China’s partial involvement in the DSSI. Some Chinese creditors rescheduled principal payments but continued to collect interest, with deferred debt still subject to interest “so this will increase the debt burden of poor countries rather than ease them,” he said. declared.

China has become the main lender to many poor countries around the world in recent years. World Bank data released this week shows that its share of debt owed by the 73 countries in the DSSI fell from 45% in 2013 to 63% at the end of last year, when the combined debts of the 73 countries amounted to $ 744 billion.

China has been criticized for treating its large strategic banks as commercial rather than public lenders, meaning they have a choice of whether or not to participate in DSSI. China says it is a full participant in the DSSI and has provided nearly half of the relief negotiated so far this year.

This article has been modified after publication to correctly reflect the magnitude of countries’ borrowing needs.


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Poorest countries to save $ 12 billion in debt relief in 2020 (World Bank)

NEW YORK (Reuters) – The world’s poorest countries could save more than $ 12 billion owed to sovereign and other creditors this year thanks to their participation in a debt relief program, with Angola alone saving some $ 3.4 billion, according to estimates released Friday in a new World Bank database.

Savings from the COVID-19 Debt Service Suspension Initiative (DSSI) will be short-term, as the initiative only provides for the suspension of debt payments until the end of the period. the year. It defers these payments to a later date but does not cancel them outright.

The second saver among DSSI-eligible countries would be Pakistan, with $ 2.4 billion, followed by Kenya with $ 802 million, the data shows. here.

In terms of savings relative to gross domestic product, Bhutan would reap the most benefits from the plan with 7.3% savings on GDP, followed by Angola at 3.7% and Djibouti at 2, 5%.

In addition to the estimated savings of each country, the database includes details on debt to multilaterals like the International Monetary Fund as well as official and unofficial bilateral debt disbursed and debt service owed per year.

IMF and World Bank officials have warned that the COVID-19 pandemic will hit developing and emerging markets particularly hard given high debt levels, sharp drops in the prices of oil and other commodities and inadequate health systems.

The DSSI is supported by the G-20, the World Bank, the IMF and the Paris Club of sovereign lenders. The database offers a new level of transparency on debts and creditors, including China, which has emerged as one of the largest creditors in Africa and elsewhere over the past two decades.

The Jubilee Debt campaign estimated that canceling debt payments from poor countries, including to private creditors, would free up more than $ 25 billion for countries this year, or $ 50 billion if extended until in 2021.

The United Nations, many African countries and civil society groups have called for debt relief to be extended for two years to allow countries to recover more fully from the economic shock of the pandemic.

Reporting by Rodrigo Campos and Andrea Shalal; edited by Jonathan Oatis


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IMF’s Georgieva Says Private Creditors and China Must Fully Participate in Debt Relief

FILE PHOTO: IMF Managing Director Kristalina Georgieva speaks at a Vatican-hosted conference on economic solidarity, Vatican City, February 5, 2020. REUTERS / Remo Casilli

WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva on Wednesday called for increased involvement of private creditors and China in debt relief for poor countries, saying this was the key to her success and a potential framework for debt restructuring.

Georgieva told a press conference that the participation of private creditors in a program to suspend debt service for poor countries was largely non-existent, with only three of the 44 countries on the program reaching private creditors.

An IMF spokesperson said the total had recently increased to 43 countries when the heavily indebted Mozambique joined the program. here which suspends payments on official bilateral debt until June 2021.

“What we have seen, unfortunately, is that the private sector has been reluctant, and countries themselves have been reluctant to ask the private sector (for debt relief) for fear that it may erode their future market access. . The access they got the hard way in previous years, ”Georgieva said.

She added that only some of China’s official lending entities participated.

“What we’re also hearing from China is that it recognizes that it is a relatively new creditor, but that it is a very large creditor and that it needs to mature domestically in terms of managing its own lenders, coordinating between them, “said Georgieva. .

Reporting by David Lawder; Editing by Christopher Cushing


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Paris Club debt relief accelerates after G20 deal clarified – France

PARIS, May 19 (Reuters) – The number of countries receiving Paris Club debt relief this year under a deal with the G20 is expected to rise after the Club – a group of state creditors – clarified the conditions, said a source from the French finance ministry. Tuesday.

The Group of 20 Major Economies and the Paris Club, an informal group of state creditors coordinated by France’s finance ministry, agreed last month to freeze the debt payments of the 77 poorest countries this year in order to free up money to enable them to fight the coronavirus pandemic.

However, some debtor countries have been reluctant to sign, fearing it could hurt their credit rating after rating agencies said a default by private creditors who agreed to suspend debt payments alongside it. the Club could be considered a fault.

Kenya’s finance minister told Reuters last week that this was one of the reasons Nairobi would not apply.

So far, the Paris Club has only signed agreements with the Caribbean islands of Dominica and Grenada, as well as with Mali and Nepal, the French source said.

But the Club has now made it clear that candidate countries can specify that they want relief only on their debts to public creditors.

“We have about 20 more in the process of finalizing documents to sign agreements and we expect another dozen to make requests in the coming days,” the source said.

Countries likely to sign soon are Cameroon, Democratic Republic of Congo, Republic of Congo, Ethiopia, Pakistan and Mauritania, another source close to the matter said.

Usually, the Paris Club asks borrowing governments to seek the same terms for debt repayment from private sector creditors.

Aside from this exception to this rule, rating agencies now understand that the debt relief program is not negative for ratings, the source said.

Countries eligible for the program have a total of $ 36 billion due this year, made up of $ 13 billion owed to other governments, $ 9 billion to private creditors and the remainder to multilateral development lenders. (Reporting by Leigh Thomas; Editing by Kevin Liffey)


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Borrowing costs after debt relief

The Covid-19 pandemic is straining the public finances of many developing countries (Djankov and Panizza 2020). In response, a series of proposals and calls to action have been launched by experts and policy makers (Bolton et al. 2020a, 2020b, Bulow et al. 2020; Horn et al. 2020; Landers et al. 2020). In a short time, the international community – under the leadership of the G20 – agreed to help poor countries by proposing a suspension of debt service due in the second half of 2020. As part of the Suspension of Service Initiative debt (DSSI), participating countries can ask their bilateral lenders to defer debt service repayments for three years without affecting the net present value (NPV) of public debt. The size of the liquidity provision under the DSSI is not negligible. For all eligible countries, it stands at $ 10.2 billion and represents around one-fifth of the budget deficit due to the Covid-19 shock. However, many eligible countries have so far been reluctant or refused to participate in DSSI. It may seem like a confusing answer to what at first glance is free money in times of great need. Yet these countries fear that participation in the DSSI may signal debt sustainability issues that could trigger sovereign ratings downgrades and higher sovereign borrowing costs.1

In a recent article (Lang et al. 2020), we provide a first assessment of the short-term impact of DSSI on sovereign bond spreads. In particular, we test whether the potential benefits of providing short-term liquidity outweigh the stigma effects that may be associated with participating in the debt relief initiative. Estimating the effect of debt relief on sovereign bond spreads is generally difficult, as debt relief initiatives are generally not attributed to chance. Comparing debt relief recipients to other countries is therefore not instructive. However, the case of the DSSI makes it possible to construct plausible counterfactuals. Unlike most debt restructurings, the DSSI was announced simultaneously for the 73 eligible countries and, therefore, was not tailored to the needs of each country. In addition, the eligibility criteria were based on pre-existing income thresholds rather than financing needs or the severity of the shock, which crucially influence borrowing costs.

Sovereign borrowing costs fell by around 300 basis points

We use this event to analyze its impact on the spreads of sovereign bonds of the 16 countries eligible for DSSI with access to the international market and daily data available. We have used the Synthetic Control Method (SCM) developed by Abadie and Gardeazabal (2003) and now increasingly used in similar contexts (see Marchesi and Masi 2020). For each country eligible for DSSI, we build a synthetic control (or “doppelganger”) combining countries from a pool of middle-income countries not eligible for DSSI.2

Figure 1 shows our main result. The comparison of the spreads of the sovereign bonds of the countries eligible for the DSSI with their synthetic controls shows that the sovereign spreads decreased considerably after the debt relief. Several days after the DSSI announcement, spreads in eligible countries were down about 300 basis points (bps) more than in comparable untreated doppelganger countries. This average effect differs from country to country, but it is negative for all borrowers eligible for debt relief. This result is robust to the different specifications of the model, including the generalized synthetic control method (Xu 2017). In addition, a set of placebo tests in space and time shows that the effect on spreads is due to the DSSI and cannot be explained by the (contemporary) demand of an IMF program.

Figure 1 Spreads of sovereign bonds in DSSI-eligible countries compared to their synthetic controls

Remarks: The figure represents the difference between the real spreads of sovereign bonds and those of the synthetic control (spread gap) for the countries eligible for the DSSI. The solid red line is the average of the country specific spreads. Solid gray lines refer to countries that joined the DSSI on September 17, 2020, while dotted gray lines refer to countries that have not officially applied to join the initiative (Ghana, Honduras, Kenya, Mongolia, Nigeria and Uzbekistan). The vertical lines indicate the announcement of the DSSI on April 15, 2020 (solid line) and the first participation in the DSSI on May 1, 2020 (dotted line). The dots indicate the participation of each country in the DSSI. See description in main text. Source: Bloomberg, Our World in Data and IMF World Economic Outlook.

The fall in spreads seems to be due to the provision of liquidity

To discriminate between two mechanisms that could drive the results, we test the heterogeneous effects of debt relief. We focus on two sources of heterogeneity – the size of DSSI relief and the share of private creditors in debt service – and estimate their effects in a difference-in-differences framework using the projection method. local. This analysis shows that the decline in bond spreads for DSSI-eligible countries is greater for countries that have a higher share of debt service due during the eligibility period (between May and December 2020, graph 2, part A). On the other hand, the fall in spreads does not depend on the size of private creditors (Chart 2, Panel B). As there is no increase in spreads, not even for countries that owe a large portion of repayments to private creditors, these results do not support the presence of a stigma effect. On the contrary, the results are consistent with a positive liquidity effect due to the postponement of debt service due in 2020.

Figure 2 Cash flow versus stigma

A) Size of DSSI relief

B) Share of private creditors

Remarks: The figures plot the impulse response functions of the differential effect of the DSSI announcement (t = 0) between eligible and non-eligible countries on sovereign bond spreads. Panels A and B divide the sample between eligible countries that have benefited from DSSI relief greater or less than 0.5% of GDP and those whose debt service due to private creditors is greater or less than 60% of the total debt service due under the DSSI (the two thresholds are median values). See description in main text. Data source: Bloomberg and IMF World Economic Outlook.

Discussion

The international community is currently discussing the possibility of extending the current initiative to suspend debt service in developing countries until 2021. Our results suggest that this simple moratorium on neutral NPV debt – involving no discount for creditors – can effectively help countries overcome the crisis.

Our findings also add to the larger literature on debt restructuring. They show that rapid and unconditional debt rescheduling to countries facing short-term liquidity shocks can be an effective instrument of financial support that can help avoid severe defaults (Trebesch and Zabel 2017). In addition, our results support the design and adoption of simple conditional government debt instruments with floating grace periods to help poor countries mitigate their exposure to negative shocks (Cohen et al. 2008).

Two final qualifications are important. First, our results could be generalized to other situations where countries face a short-term crisis. In the presence of severe negative shocks, only the deferral of debt service could help reduce borrowing costs. However, this does not mean that the suspension of debt service will be the optimal response to the Covid-19 crisis in the months to come. If the shock persists, the liquidity crisis could evolve into a solvency crisis, as a change in the long-term growth rate of the economy would affect debt sustainability. In such a scenario, a reduction in the debt stock might be necessary to reduce debt distress and restore debt sustainability. Second, our analysis focuses on NPV neutral debt relief provided by the public sector. How the markets would react if private creditors also joined the initiative (as requested by the G20 and major international financial institutions) remains an open question.

The references

Abadie A and J Gardeazabal (2003), “The Economic Costs of Conflict: A Case Study of the Basque Country”, American Economic Review 93 (1): 113-132.

Bolton P, L Buchheit, PO Gourinchas, M Gulati, CT Hsieh, U Panizza and B Weder di Mauro (2020a), “Born of Necessity: A Debt Stop for COVID-19”, CEPR Policy Insight n ° 103.

Bolton P, M Gulati and U Panizza (2020b), “Legal air coverage», VoxEU.org, October 13.

Bulow J, C Reinhart, K ​​Rogoff and C Trebesch (2020), “The debt pandemic», IMF Finance and Development, Fall.

Cohen, D, H Djoufelkit-Cottenet, P Jacquet and C Valadier (2008), “Lending to the Poorest Countries: A New Counter-Cyclical Debt Instrument”, Working Paper 269, OECD Development Center.

Djankov S and U Panizza (2020), “COVID-19 in Developing Economies: A New eBook», VoxEU.org, June 22.

Cor S, C Reinhart and C Trebesch (2020), “China’s foreign lending and the looming developing country debt crisis», VoxEU.org, May 4.

Landers C, N Lee and S Morris (2020), “Over $ 1 trillion in MDB firepower exists as COVID-19 ‘shattering glass’ moment approaches”, Center for Global Development.

Lang V, D Mihalyi and AF Presbitero (2020), “Debt relief, liquidity provision and sovereign bond spreads”.

Marchesi S and T Masi (2020), “Debt restructuring during COVID-19: private and official agreements», VoxEU.org, May 4.

Trebesch C and M Zabel (2017), “The output cost of hard and soft sovereign default”, European Economic Review 92: 416-432.

Xu Y (2017), “Generalized synthetic control method for causal inference with cross-sectional time series data”, Policy Analysis 25: 57-76.

End Notes

1 See reports from international institutions (IMF 2020, World Bank 2020), Think Tanks (ODI 2020) and press articles in The Economist and Reuters, among others. More details on DSSI can be found here and on the World Bank website.

2 Since the dynamics of sovereign spreads depend on fiscal and economic performance, we take the growth of real GDP, the current account, the fiscal balance and the public debt (all in shares of GDP) as macroeconomic variables to construct the synthetic control. . Additionally, to compare countries with similar bond spread dynamics before DSSI, we match the spread levels to specific dates. Finally, to take into account the differences in the intensity of the Covid-19 crisis, we use the number of cases per inhabitant. See Lang et al. (2020) for more details.


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Student debt relief company ordered to repay and cease operations in North Dakota

BISMARCK – North Dakota Attorney General Wayne Stenehjem has ordered Student Loan Services LLC to reimburse clients in the state and to stop doing business here.

The California student debt relief company is not licensed in North Dakota, and Stenehjem says it cannot operate in the state until it is in full compliance with the law. state licenses. Debt relief companies must be licensed by the North Dakota Department of Financial Institutions and post a bond with the state.

The attorney general’s consumer protection division investigated the company after a woman who paid the company nearly $ 900 filed a complaint, saying she had not received services for several months after the start of payments. The company had taken no action to reduce its student debt, according to Stenehjem’s office.

Student Loan Services, which had contracts with 18 people in North Dakota, agreed to cancel all of those contracts and reimburse anyone who asks. The company is prohibited from soliciting new clients in the state until it complies with licensing requirements.

Student debt relief companies charge fees to help reduce or eliminate loan payments and customer debt by enrolling customers in federal student relief programs. Almost all of the services offered by these companies can be provided for free.


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‘We’re being left behind’: troubled tenants call for debt relief, extended eviction protections

This is an archived article and the information in the article may be out of date. Please look at the history’s timestamp to see when it was last updated.

SAN DIEGO – Tenants struggling to pay their rent are calling on state lawmakers to extend the moratorium on evictions and give debt relief to some tenants and landlords before protections expire at the start of the season ‘next year.

Protesters gathered in the Logan Heights neighborhood near the home of Congressman Ben Hueso, D-San Diego on Wednesday, demanding he act at the legislative level.

Most protesters are struggling to pay their rent, and many say they have lost their jobs. If state lawmakers don’t act quickly, it will become a life-and-death situation for many struggling families, they say.

They are calling on Hueso to defend bills that give debt relief to eligible tenants and landlords and extend protections against evictions, most of which are due to expire on February 1.

Patricia Mendoza was part of the group imploring lawmakers to act.

“We’re probably going to end up living in my little white van, and it’s your worst nightmare, you know, as a parent you have to protect your kids and you have to do whatever you can,” Mendoza said.

As part of the protest, a few dozen community members set up a Posada, a Mexican holiday tradition where actors reenact Mary and Joseph in search of a room at the hostel. It’s a tradition that currently resonates with many local families, including Gabriel Guzman and his family who were kicked out by what he calls a “loophole” in the system.

“I have no idea we’re both unemployed, our kids are coming home from school,” Guzman said of where he and his family will be living next.

Hueso released a statement, which reads in part: “In the next legislative session, I will work diligently with my constituents and fellow legislators to keep a roof over the heads of families and prevent further new ones. deportations in our state. “

But there is a need for relief in the community, protester Carlos Hernandez said.

“Businesses, many big business owners, they’re relieved, they’re getting help,” Hernandez said, “while we – the hardest hit communities – are being left behind.”


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The G20 fails to reduce the debt of poor countries

G20 updates

Support to the world’s poorest countries in the form of debt suspension of the G20 group of rich countries is well below what was expected at the start of the coronavirus crisis, with just $ 5.3 billion in bilateral debt repayments due to be suspended so far this year.

This is far less than the $ 11.5 billion or more expected from official creditors; furthermore, no country has demanded similar treatment from private creditors, despite strong encouragement from the G20 and debt activists.

The G20 released the figure after a meeting of its finance ministers and central bank governors on Saturday, to a scathing response.

David Malpass, president of the World Bank, criticized the group for its lack of debt relief and said more needed to be done.

World Bank data shows that the 73 countries eligible for the G20 Debt Service Suspension Initiative (DSSI) launched in May could delay payments worth $ 11.5 billion this year, and 41 countries have so far requested to do so, for a total of $ 8.8 billion.

This flies in the face of the G20 statement that 42 countries have asked to defer payments worth $ 5.3 billion. Of this amount, nearly $ 2 billion will be reported by China alone, according to a breakdown of the figures seen by the Financial Times.

The total does not include loans from the Development Bank of China, according to the breakdown document, which said that “China encourages CBD to participate in DSSI [as a commercial creditor] under comparable conditions ”.

Mr. Malpass said that “all official bilateral creditors, including domestic banks, should implement the DSSI in a transparent manner. For example, the full participation of the Development Bank of China as an official bilateral creditor is important for the initiative to work.

He said the G20 should do more to ensure transparency and consistent treatment, to “avoid the ongoing secret rescheduling in some countries, such as Angola and Laos, often with undisclosed deadlines and grace conditions.” .

He also urged the G20 to extend the DSSI until next year and move beyond the suspension of debt service and “open the door to consultations on the debt overhang itself and effective means. reduce the net present value of bilateral and commercial public debt for the poorest. countries.”

If so, it would almost certainly make bilateral debt relief conditional on similar treatment by private creditors, which many sovereign borrowers have been reluctant to seek for fear of damaging their creditworthiness and therefore their access to markets. international capital.

Emerging market governments have raised nearly $ 90 billion by selling bonds in global markets since April 1, according to the Institute of International Finance, often at lower interest rates than those available before the outbreak. coronavirus thanks to the trillions of dollars injected into capital markets by the US Federal Reserve and other advanced economies central banks.

Debt activists have reacted with dismay to the G20 statement and the World Bank’s response.

“I am surprised that the World Bank, as one of the stewards of global development, is not seized by a greater sense of urgency,” said Gayle Smith, president of One Campaign and former special assistant to the president Barack Obama.

She said the Bank was taking more debt repayments from poor countries than it was disbursing in emergency loans and should join bilateral creditors in freezing debt service. She also criticized the lack of transparency and confusion over the amounts of debt benefiting from the G20 initiative.

“If I was in my old seat I would be tempted to ask what’s going on in the name of God if we can’t even pin down the numbers,” she said. “As if we needed another reminder that the world doesn’t act globally, here’s another.”

A G20 spokesperson said more debt relief deals could still be reached, so the eventual total amount could be higher.

This article has been edited after publication to note that total debt relief may increase.


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