Tag: Recipients

Over 40% Of Federal Student Loan Recipients Aren’t Making Payments On Their Debts

Shocking Statistic: Over 40% Of Student Borrowers Don’t Make Payments – Zero Hedge

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Over 40 percent of those in student loan programs have stopped making payments. Many borrowers have never made any payments.

The department of education (a useless body that I would eliminate in one second if given the chance), cannot figure out why this is happening.

“We obviously have not cracked that nut but we want to keep working on it,” said Ted Mitchell, the Education Department’s under secretary.

The Wall Street Journal reports More Than 40% of Student Borrowers Aren’t Making Payments.
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More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.

While most have since left school and joined the workforce, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio.

About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment. Three million more owing roughly $66 billion were at least a month behind.

Meantime, another three million owing almost $110 billion were in “forbearance” or “deferment,” meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment. The figures exclude borrowers still in school and those with government-guaranteed private loans.

Navient Corp., which services student loans and offers payment plans tied to income, says it attempts to reach each borrower on average 230 to 300 times – through letters, emails, calls and text messages – in the year leading up to his or her default. Ninety percent of those borrowers, which include federal borrowers as well as those who hold private loans, never respond and more than half never make a single payment before they default, the company says.

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Crisis Easy to Explain

Carlo Salerno, an economist who studies higher education and has consulted for the private student-lending industry, noted that the government imposes virtually no credit checks on borrowers, requires no cosigners and doesn’t screen people for their preparedness for college-level course work. “On what planet does a financing vehicle with those kinds of terms and those kinds of performance metrics make sense,” he said.

I could easily come up with numerous reasons off the top of my head.
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1. Being in the workforce and having a job are two different things.

2. Having a job and making enough money to pay back hundreds of thousands of dollars is yet another thing.

3. Some feel cheated by the system, as well they should.

4. Many have figured out the consequences of default are small. The worst that can happen is wage garnishment. Should that happen, one can always find another low-paying job, buying time until they are discovered again.

5. Some never intended to pay back the loans in the first place. To those borrowers, it’s all free money for a few years. They will stay in school as long as they can. If by some miracle they actually graduate (or are kicked out), they never make a payment.

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Blame Bush!

A large portion of the blame for this mess goes to George W. Bush. Seriously.

The Bankruptcy Abuse Prevention and Consumer Protection Act enacted April 20, 2005 made it much more difficult to discharge debts in bankruptcy.

Among other things, “BAPCPA amended the law to broaden the types of educational (“student”) loans that cannot be discharged in bankruptcy absent proof of “undue hardship.” The nature of the lender became irrelevant. Even loans from “for-profit” or “non-governmental” entities are not dischargeable.

The Deflation Guarantee Act of 2005

I predicted this mess when Bush signed the bill. As proof, I offer The Deflation Guarantee Act of 2005.

Here are my lead paragraphs as I wrote them at the time.
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Today Congress passed the “The Deflation Guarantee Act of 2005” currently known as the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”. Twenty years from now economists are going to be studying legislation from this Congress and signed by this administration and be wondering: “What the * were they thinking?”.

Consumer Protection Act? LMAO

Anytime this administration passes a law with the “protection” in it, assume it will do just the opposite.

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Student Debt Highly Deflationary

I have wanted to refer back to that post on numerous occasions.

I had not done so previously because I strongly dislike my writing style in those days. I frequently used chat room talk like “LMAO” (laughing my ass off), in those early posts.

There are other aspects of my 2005 post that I dislike as well. However, I nailed the idea correctly. Student debt is a hugely deflationary force.

In the wake of that act (albeit with a bit of a delay), we saw massive amounts of seemingly reckless lending to students. Because of government guarantees, lenders did not give a damn who they lent to.

For profit universities flourished. Abuses at the University of Phoenix became rampant. And because of various lending programs that followed, education costs soared as well.

Those debts cannot be paid back, and household formation has gone into reverse. Students moved back home after graduation, and attitudes on debt have changed.

These are all debt deflation forces.

Modest Fee Request

The Department of Education will no doubt waste millions of taxpayer dollars studying this issue, only to come up with the wrong answers because students will lie.

Will anyone realistically admit “I never intended to pay back these loans”?

My modest fee for this analysis is a mere $250,000. Of that amount, I pledge $249,999.99 to the Khan Academy.

All I ask is a penny for my thoughts, saving taxpayers countless millions in useless department of education studies.

For more on the Khan Academy please see Teaching Revolution: Online, Accredited, Free; Start Learning Now!

Obama’s Role

President Obama does not escape criticism for his efforts to fuel the problem.

Here’s my blast at Obama: For Profit Schools Turn Students Into Debt Zombies; It’s Time To Kill The Entire Pell Grant Program.

There is plenty of blame to go around, but I have not seen a single person take this crisis back to the logical origin, the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” making student debt non-dischargeable in bankruptcy.

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Maine Sees 22% Decrease In Food Stamp Recipients Thanks To Republican Work Requirement

What’s Behind Maine’s 22% Decrease In Food Stamp Recipients Since 2012 – Daily Signal

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The Maine Department of Health and Human Services has announced that the state has fewer than 200,000 recipients enrolled in its Supplemental Nutrition Assistance Program for the first time since February 2009.

Enrollment in the state’s food stamp program has decreased to 199,157, a 22-percent decline from a high of 255,663 recipients in February, 2012.

“This is an important milestone for Maine’s economy and safety net,” DHHS Commissioner Mary Mayhew said in a statement. “People on food stamps are living in poverty, and more food stamps does not equal less poverty. This administration is focused on incentivizing employment rather than trapping people in generational poverty and welfare dependency.”

“We need a workforce that is ready and willing to work if we are to attract and retain employers in this state,” Mayhew added. “Today, there are employers around the state who cannot find applicants for their jobs. Doling out assistance with no focus on employment is destructive to individual productivity and detrimental to our efforts to improve Maine’s economy and future. Today, Mainers who support commonsense welfare reform can rest assured that Governor LePage’s efforts are paying off.”

LePage’s administration re-implemented a work requirement for able-bodied adults without dependents enrolled in the program.

According to Maine’s DHHS, “[t]he rule required simply that those adults work for 20 hours per week, volunteer for about one hour per day, or attend a class in order to maintain food stamps beyond three months.”

Rachel Sheffield, a policy analyst at The Heritage Foundation, said, “Work requirements serve to ensure that assistance is going to those most in need.”

“They act as a gatekeeper,” Sheffield said. “Welfare is available to those who truly need it, but people are directed first towards work. Able-bodied adults should be required to work, prepare for work, or look for work in exchange for receiving assistance. Maine is a strong example of promoting work and reciprocal obligation.”

Some were critical of the news.

Chris Hastedt, a policy director with Maine Equal Justice Partners, told Maine’s WCSH, “I hear language that says this is a good thing because it is forcing people to work.”

“People don’t need to be forced to work. People need to be helped to find a job,” Hastedt said.

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Feds Overpaid $371.5 Million In Benefits To Disability Recipients

Social Security Administration Overpaid $371.5 Million In Disability Benefits – Washington Free Beacon

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The Social Security Administration (SSA) overpaid individuals a total of $371.5 million in disability benefits from fiscal year 2009 through fiscal 2013, according to a Government Accountability Office (GAO) report.

These overpayments are cause for concern, as the Social Security’s Disability Insurance Trust Fund is expected to go broke by 2016, according to SSA’s 2015 annual report.

“During a time of growing concern about the solvency of the DI trust fund, it is important for SSA to take every opportunity to help improve the financial status of the program,” the GAO said. The report examined how these concurrent Federal Employees’ Compensation Act (FECA) payments affect Disability Insurance (DI) overpayments.

The GAO found that SSA did not detect concurrent FECA payments for about 1,040 individuals during at least one month from July 1, 2011, through June 30, 2014.

To test SSA’s internal controls, GAO randomly selected 20 beneficiaries for review. In all 20 cases, SSA’s controls failed to detect and prevent overpayments. In seven of the cases, SSA did not detect overpayments for more than a decade, and each of these individuals received $100,000 in overpaid benefits.

One of these seven individuals received FECA benefits in the 1980s and was approved for disability benefits 14 years later in 1994. The GAO found that this individual received $200,000 in overpayments for more than 20 years.

The SSA’s “internal controls” rely on beneficiaries to self-report overpayments.

“SSA officials told us that if beneficiaries do not self-report benefits, there are no system prompts that would alert SSA staff to ask beneficiaries if they are receiving any workers’ compensation benefits, including FECA payments,” states GAO. “SSA officials agreed that relying on beneficiaries to self-report benefits presents a challenge in identifying overpayments related to the concurrent receipt of FECA benefits.”

The disability insurance program is the nation’s largest cash assistance program for workers with disabilities. In fiscal year 2014 it paid $142 billion to 11 million beneficiaries.

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Leftist Corruption Update: 3.4M Obamacare Subsidy Recipients May Owe Refunds To The IRS

Half Of Obamacare Subsidy Recipients May Owe Refunds To The IRS – Washington Examiner

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As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm.

H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.

“The ACA is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” the president of a tax preparation and education school told the Journal.

While the Affordable Care Act fines those who don’t have health insurance, it also provides subsidies for people making up to four times the federal poverty line ($46,680).

But the subsidies are based on past tax returns, so many people may be receiving too much, according to Vanderbilt University assistant professor John Graves, who projects the average subsidy is $208 too high, the Journal reports.

Tax preparers, who frequently advertise their ability to deliver big refunds, have been working feverishly to avoid customer anger stemming from lower-than-expected refunds due to insurance premiums. They also are trying to make sure customers understand the potential fines for not having insurance.

“Eighty-five percent of our customers get a refund,” said Kathy Pickering, who directs the H&R Block Tax Institute, according to the Washington Post. “That refund could be offset by the penalty. And if that happens, they’re going to be understandably angry.”

The fine for not having insurance in the second year of Obamacare is $325 or 2 percent of taxable income, whichever is greater.

But the IRS is also working on a budget that limits its ability to aggressively enforce reporting on insurance.

“As always, taxpayers are responsible for the accuracy of the information on the tax returns that they sign,” an IRS spokesman told the Journal.

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Federal Government Made $100B In Improper Payments To Unentitled Recipients

Government Made $100B In Improper Payments – Associated Press

By its own estimate, the government made about $100 billion in payments last year to people who may not have been entitled to receive them – tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.

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Congressional investigators say the figure could be even higher.

The Obama administration has reduced the amount of improper payments since they peaked in 2010. Still, estimates from federal agencies show that some are wasting big money at a time when Congress is squeezing agency budgets and looking to save more.

“Nobody knows exactly how much taxpayer money is wasted through improper payments, but the federal government’s own astounding estimate is more than half a trillion dollars over the past five years,” said Rep. John Mica, R-Fla. “The fact is, improper payments are staggeringly high in programs designed to help those most in need – children, seniors and low-income families.”

Mica chairs the House Oversight subcommittee on government operations. The subcommittee is holding a hearing on improper payments Wednesday afternoon.

Each year, federal agencies are required to estimate the amount of improper payments they issue. They include overpayments, underpayments, payments to the wrong recipient and payments that were made without proper documentation.

Some improper payments are the result of fraud, while others are unintentional, caused by clerical errors or mistakes in awarding benefits without proper verification.

In 2013, federal agencies made $97 billion in overpayments, according to agency estimates. Underpayments totaled $9 billion.

The amount of improper payments has steadily dropped since 2010, when it peaked at $121 billion.

The Obama administration has stepped up efforts to measure improper payments, identify the cause and develop plans to reduce them, said Beth Cobert, deputy director of the White House budget office. Agencies recovered more than $22 billion in overpayments last year.

“We have strengthened accountability and transparency, saving the American people money while improving the fiscal responsibility of federal programs,” Cobert said in a statement ahead of Wednesday’s hearing. “We are pleased with this progress, but know that we have more work to do in this area.”

However, a new report by the Government Accountability Office questions the accuracy of agency estimates, suggesting that the real tally could be higher. The GAO is the investigative arm of Congress.

“The federal government is unable to determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce them,” Beryl H. Davis, director of financial management at the GAO, said in prepared testimony for Wednesday’s hearing.

Davis said some agencies don’t develop estimates for programs that could be susceptible to improper payments. For example, the Health and Human Services Department says it cannot force states to help it develop estimates for the cash welfare program known as Temporary Assistance for Needy Families. The program is administered by the states.

The largest sources of improper payments are government health care programs, according to agency estimates. Medicare’s various health insurance programs for older Americans accounted for $50 billion in improper payments in the 2013 budget year, far exceeding any other program.

Most of the payments were deemed improper because they were issued without proper documentation, said Shantanu Agrawal, a deputy administrator for the Centers for Medicare & Medicaid Services. In some cases, the paperwork didn’t verify that services were medically necessary.

“Payments deemed `improper’ under these circumstances tend to be the result of documentation and coding errors made by the provider as opposed to payments made for inappropriate claims,” Agrawal said in prepared testimony for Wednesday’s hearing.

Among other programs with large amounts of improper payments:

– The earned income tax credit, which provides payments to the working poor in the form of tax refunds. Last year, improper payments totaled $14.5 billion. That’s 24 percent of all payments under the program.

The EITC is one of the largest anti-poverty programs in the U.S., providing $60.3 billion in payments last year. Eligibility depends on income and family size, making it complicated to apply for the credit – and difficult to enforce, said IRS Commissioner John Koskinen.

“EITC eligibility depends on items that the IRS cannot readily verify through third-party information reporting, including marital status and the relationship and residency of children,” Koskinen told a House committee in May. “In addition, the eligible population for the EITC shifts by approximately one-third each year, making it difficult for the IRS to use prior-year data to assist in validating compliance.”

– Medicaid, the government health care program for the poor. Last year, improper payments totaled $14.4 billion.

Medicaid, which is run jointly by the federal government and the states, has seen a steady decline in improper payments since 2010, when they peaked at $23 billion.

The program is expanding under President Barack Obama’s health law.

– Unemployment insurance, a joint federal-state program that provides temporary benefits to laid-off workers. Amount of improper payments last year: $6.2 billion, or 9 percent of all payments.

The Labor Department said most overpayments went to people who continued to get benefits after returning to work, or who didn’t meet state requirements to look for work while they were unemployed. Others were ineligible for benefits because they voluntarily quit their jobs or were fired.

– Supplemental Security Income, a disability program for the poor run by the Social Security Administration. Amount of improper payments: $4.3 billion, or 8 percent of all payments.

Social Security’s much larger retirement and disability programs issued $2.4 billion in improper payments, according to agency estimates. Those programs provided more than $770 billion in benefits, so improper payments accounted for less than 1 percent.

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Mississippi To Begin Drug Testsing Welfare Recipients

Finally: Mississippi To Start Drug Testing Those Receiving Financial Aid Benefits – Townhall

It looks like Mississippi is taking the right steps to reducing fraud when it comes to government assistance. Temporary Assistance for Needy Families (TANF) will now require new applicants to submit a questionnaire that will evaluate the likelihood of substance abuse.

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Residents who apply for this temporary assistance from the state will have to submit to drug testing if the state deems they are likely substance abusers from this questionnaire. Testing positive once would require a TANF recipient to undergo treatment for substance abuse. For testing positive a second time, the recipient would be kicked out of the program for 90 days. A third positive result would remove the recipient for up to a year.

Governor Bryant said, “The TANF program is a safety net for families in need, and adding this screening process will aid adults who are trapped in a dependency lifestyle so they can better provide for their children.” The state will be using federal funds earmarked for TANF to administer the questionnaires and testing. They estimate the cost of testing will be only $36,000 each year.

There are currently only 9 other states that have passed legislation requiring TANF applicants to be screened for drugs. And there are at least 24 more that are looking into this type of legislation too.

This seems like a great way for the state to spend a minimal amount in order to save the system a lot of money. What many people will think here is how Republicans hate poor people and how we don’t want to help them, but in all reality we want to help those who really need it and aren’t abusing the system. The governor of Mississippi and his legislature have figured out a way to do this, and I say “kudos” to them!

Click HERE For Rest Of Story

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Kansas Governor Signs Law Requiring Welfare, Unemployment Recipients To Take Drug Tests

Brownback Signs Bill That Requires Welfare, Unemployment Recipients To Be Tested For Drugs – Wichita Eagle

Calling drug addiction a “scourge in Kansas,” Gov. Sam Brownback signed into law Tuesday a bill to test welfare and unemployment recipients suspected of using illegal drugs.

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“This is a horrific thing that hits so many people,” he said. “What this effort is about is an attempt to get ahead of it and, instead of ignoring the problem, start treating the problem.”

The drug testing bill lets the Department for Children and Families require urine tests of any welfare recipient suspected of using illegal drugs. That could be triggered by a person’s demeanor, missed appointments or police records.

Opponents of the bill said that may leave the decision open to people’s biases. But the bill was swiftly approved by the House 106-16 and backed by the Senate on a 29-9 vote.

Senate Vice President Jeff King, R-Independence, called it “the most treatment-focused drug testing bill in the entire country.”

Any person who is tested and failed, can request a second test and be reimbursed for that test, which runs about $50, if they test clean.

Welfare recipients who fail the test will lose their benefits until they complete a drug treatment and job skills program. That’s paid for by federal welfare funds. A second failed test will result in a year-long loss of benefits. A surrogate can apply for benefits on behalf of children whose parents fail a drug test and lose benefits.

Senate Bill 149, effective July 1, also bans anyone convicted of a drug-related felony from getting welfare for five years. Those convicted a second time lose benefits for life.

The testing program for unemployment recipients is similar, although Department of Labor officials will require employers who usually drug test job applicants to submit a list of people who applied and didn’t get a job because they failed a pre-employment drug screen.

The testing, already required of the governor and several other top state officials, now also extends to House and Senate members suspected of illegal drug use.

The tests will not look for alcohol use.

Officials acknowledged they have no precise number of how many people getting welfare or unemployment use drugs or how many people will require government-funded treatment and job training.

“I’ve not found a piece of legislation I’ve been around yet that is perfect,” Brownback said. “But this starts to address a significant issue.”

King said about 8.5 percent of those applying for welfare fail substance abuse screening.

Kansas is one of dozens of states that have been considering such drug tests. Florida required all new applicants to take such tests, as opposed to Kansas’ plan that hinges on “reasonable suspicion.” Data showed that program provided no direct savings to the state and only 2.6 percent of those tested failed tests, usually for marijuana use.

Marijuana, which is now legal for recreational use in two states and for medicinal use in several others, tends to be detectable in standard urine drug tests for much longer after use than drugs such as cocaine and methamphetamine that cycle out of the body faster.

Kansas officials have yet to decide on the details of how the testing and treatment will be done. Testing would begin by Jan. 1. Anyone convicted of a drug-related felony after July 1 would lose welfare benefits for five years.

The state estimates it will need to hire four more employees to deal with drug testing and treatment management under the bill. The drug testing program and treatment is estimated to cost about $1 million the first year, after any savings from people losing benefits.

Brownback and King pointed to a program called Partners in Change at Neosho County Community College as a model for job skills training.

Neosho college president Brian Inbody, who attended the bill signing, said the six-week program was started by businesses who couldn’t find a steady flow of skilled workers. So they started a program to assist the “chronically unemployed.”

He said the first three weeks is about crisis management and attitudes toward the workplace. It then focuses on resume writing, math and English. He said 72 percent of those who completed the program kept a job for a year or got an industry certification to get a job.

“They went from unemployable and constantly churning in the system to employed and from a tax consumer to a taxpayer in just a few weeks,” he said.

Click HERE For Rest Of Story

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