REPORT: BORROWING BY GRADUATE STUDENTS PLAYING KEY ROLE IN DEBT CRISIS
A report on student loan debt suggests that borrowing by people in graduate and professional degree programs is rising and could total a larger-than-expected portion of the nation's $1 trillion in total outstanding federal student loans, CollectionsRisk.com reported today. New America Foundation's Graduate Student Debt Review report, based on an analysis of recent U.S. Department of Education data, found that an estimated 40 percent of recent federal loan disbursements are for graduate student debt. The report reveals that debt for graduate students in various master's and professional degree programs accounts for some of the most dramatic increases in borrowing between 2004 and 2012. The report comes after the Department of Education recently proposed regulations to address mounting concerns about student loan debt by requiring for-profit career colleges to better prepare students for employment with a salary that will help them pay their loans. Read more. (Free registration required.)
For further discussion of the student loan debt crisis, be sure to attend ABI's Student Loan Debt Symposium, which will feature Rep. Tom Petri, sponsor of a new graduated loan repayment bill, as the keynote speaker. Click here for more information or to register.
LOAN PROGRAM THAT BOOSTED TESLA, FISKER FACES NEW SCRUTINY
A week after the Department of Energy announced it was re-vamping a troubled clean-energy loan program for fuel-efficient cars, government auditors suggested that the program be targeted for extinction, the Wall Street Journal reported today. The loan program, created to support development of new technologies for more fuel-efficient cars and trucks, is important to the White House's climate change agenda. But DOE hasn't made a new loan with the project since 2011, and $4.2 billion in credit subsidies, part of an appropriation made by Congress in 2009, has just been gathering dust, according to the Government Accountability Office, an investigative arm of Congress. "Unless the Department of Energy can demonstrate demand for new Advanced Technology Vehicles Manufacturing loans and viable applications, Congress may wish to consider rescinding all or part of the remaining $4.2 billion" appropriated for it, the GAO said in a report last week in which it identified the program as one of 26 areas that could be trimmed to save tens of billions of dollars. Sen. Tom Coburn (R- Okla.) said that the cuts could save taxpayers about $45 billion over five years. Since it was created in 2007, the loan application process has been criticized as being too "burdensome," said the GAO report. The report added that automakers told the GAO that in many cases, the costs of participating outweigh the benefits to their companies. The loan program has had several setbacks. It was besieged by criticism from Congress over the failure of luxury hybrid car maker Fisker Automotive Inc., which filed for bankruptcy in 2013. Fisker received $192 million from the government program, which lost more than $130 million. Read more. (Registration required.)
LEGISLATION CALLS FOR SMALL BUSINESS ROLE IN CFPB
New bipartisan legislation, introduced by Reps. Denny Heck (D-Wash.) and Robert Pittenger (R-N.C.), calls for small businesses in the financial services industry to have a formal advisory role in the Consumer Financial Protection Bureau (CFPB), ACAInternational.org reported yesterday. The "Bureau of Consumer Financial Small Business Advisory Board Act of 2014," if passed, would create a CFPB Small Business Advisory Board with at least 12 members, according to Heck. Members, appointed by the CFPB director, can be accountants, appraisers, lenders, title insurers, tax advisors and other financial service providers operating in a small business setting. Advisory board members would be able to consult with the agency on the development of policy and procedures, give opinions on their roles in complex financial transactions, and provide information on consumer protection trends that they are observing through their small business operations, according to Heck. Pittenger, a former small business owner, said small businesses involved in financial services have no regular advocate at the CFPB, meaning that new regulations can be developed without considering how they negatively impact small business owners and employees. The House Financial Services Committee is considering the legislation. Read more.
To read the full text of H.R. 4383, be sure to visit "Legislative News" section of the ABI Newsroom.
BIG BANKS RAMP UP BUSINESS LENDING
Banks are boosting lending to businesses, providing fuel for companies to increase spending on workers and equipment as the economy improves, the Wall Street Journal reported today. The rise is being driven both by banks, which are loosening their lending standards, and companies, which are seeking more money, bank executives said. Lenders are making bigger bets on an economic expansion at a time when tighter regulatory restrictions on many banking functions have placed more importance on core lending activities to boost earnings. The increase in commercial lending is helping big banks offset slack demand for mortgages and other types of consumer loans, which has weighed on overall lending numbers. The six banks posted 2.9 percent growth in overall lending in the first quarter. Read more. (Subscription required.)
NEW BANKRUPTCY FILING FEE INCREASES TO TAKE EFFECT JUNE 1
The Judicial Conference of the United States has approved several bankruptcy-related fee increases to take effect starting June 1. Based on the chapter, the cost to file will be:
The fee schedule changes project to raise about $35 million per year for the courts, based on current case loads. For more information, please click here.
KEVYN ORR KEYNOTE, ENGAGING PANEL SESSIONS, SIGNED COPIES OF SEN. ELIZABETH WARREN'S BOOK AND MORE AT NEXT WEEK'S ANNUAL SPRING MEETING!
Over 1,000 are registered to attend next week's 32nd Annual Spring Meeting at the JW Marriott in downtown Washington, D.C. The conference features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Detroit Emergency Manager Kevyn Orr will keynote the Friday luncheon at the conference. Former Attorney General and Governor of Pennsylvania Dick Thornburgh will be the special guest at the opening reception. Watch below to find out more about what is on tap for ASM!
Plus, you can pick up a signed copy of Sen. Elizabeth Warren's brand new book, A Fighting Chance, at the ABI Bookstore at ASM!
NEW CASE SUMMARY ON VOLO: LARSON V. SHARP (10TH CIR.)
Summarized by Shara Cornell of McGuireWoods LLP
The Tenth Circuit BAP affirmed a bankruptcy court's denial of a chapter 7 trustee's objection to a debtor's exemption for tools of the trade. The court ruled that the "gainful occupation" requirement of the "tools of the trade" exemption under Colo. Rev. Stat. 13-54-102(1)(i) (2010) does not require "profitability" on the petition date.
There are nearly 1,300 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.
NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: "INVESTING IN STUDENT SUCCESS ACT" COULD BE DANGEROUS IDEA
A recent blog post is skeptical of a new piece of legislation proposed by Sen. Marco Rubio (R-Fla.) that calls for employers to help fund higher education through so-called income share agreements.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
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