How Journalists Can Help People Understand the College Debt Cancellation Program

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With less than a month to go before the federal midterm elections, the U.S. Department of Education opened its website for millions of Americans to sign up for $20,000 in federal college debt forgiveness. The program, which is the result of President Joe Biden’s executive action and is cost estimated at $400 billionhas been challenged in court. One of the main challenges is whether states have the legal right to tax loan exemption as income. At least Seven states want to be able to do that.

The main lawsuit against the loan forgiveness program was filed by the state attorneys general of Missouri, Arkansas, Kansas, Nebraska and South Carolina, as well as legal representatives from the Iowa. A trial summary filed by Missouri Attorney General Eric Schmitt states:

“The majority of massive debt cancellation ‘will accrue to debt borrowers in the top 60% of the income distribution.’ And no benefit will accrue to those who have worked and paid off their debt.” Citing that same study, the lawsuit notes: “The Wharton School at the University of Pennsylvania published a study concluding that the massive cancellation of ED’s debt alone will cost up to $519 billion over ten years, and the overall cost could reach over $1 trillion when factoring in other elements of ED’s announcement.

The lawsuit includes three counts: (1) separation of powers, (2) violation of the law on administrative procedure exceeding statutory authority and violation of the Constitution, and (3) violation of the law on administrative procedure , arbitrary and capricious action of the agency.

But even while the challenges are pending, applications are open.

Current students may also be eligible for the forgiveness program. Their eligibility will be based on the individual’s household income, which will appear on their Free Application for Federal Student Aid, or FAFSA, form. (Anyone who has applied to college in the last decade will be very familiar with this onerous form.) Borrowers enrolled as dependent students will have eligibility based on parental income for 2020 or 2021.

Defaulted student loans are eligible.

Only student loans held by the federal government are eligible for debt relief — private student loans are excluded. Even government guaranteed student loans held by private lenders are not eligible.

To benefit from it, the application asks you to choose one of the following categories:

  • I earned less than the income required to file federal taxes.
  • I filed as a single filer AND I earned less than $125,000.
  • I was married, filed my taxes separately AND made less than $125,000.
  • I was married, filed my taxes jointly AND made less than $250,000.
  • I applied as head of household AND I earned less than $250,000.
  • I applied for an eligible widow(er) AND I earned less than $250,000.

Wages refer to adjusted gross income for the 2020 or 2021 tax year. Adjusted gross income is the amount left over after 401K contributions and/or child support payments, for example.

Here are tons of other questions and answers about who is eligible.

Here’s a step-by-step guide to what happens after you file your application:

(studentaid.gov)

How a Supreme Court ruling could raise the price of bacon

The Supreme Court of the United States is wondering what to do with a trial which seeks to compel pig farmers to raise their herds humanely. The pork industry says that if the judges rule against the farmers, the price of bacon, pork chops, sausages and everything related to pork will go up beyond the 17% price increase you already pay this year.

The lawsuit concerns a California ballot proposal called Prop 12, approved by voters in 2018, which ruled that pork sold in California can only come from pigs born under conditions where the sow (mother pig) was at least 24 feet squares. from space. Pig farmers typically place farrowing mothers in “gestation cages,” metal pens that confine the sow to a space not much larger than her. The National Pork Producers Council and the American Farm Bureau Federation have sued to stop the California law. Even though California produces very little pork, it consumes about 13% of the pork consumed in America.

The Biden administration has sided with farmers, but lower courts, so far, have ruled in favor of animal rights groups.

This isn’t just a battle for pig farming, although that alone affects a $26 billion industry. Also at stake is a legal tenant called the “dormant trade clause.” It is the legal understanding that even though the Constitution says nothing explicitly about state law, the Constitution grant power over interstate commerce in Congress. By extraction, according to the theory, states cannot pass laws that discriminate against interstate commerce. If the Supreme Court accepts this argument farmer groups are doingthen California law would collapse.

SCOTUSblog explores the question, which may seem wonky, but consider the implications raised by the judges last week:

A brief filed by the National Association of Manufacturers warned that upholding the lower court’s ruling would open a Pandora’s box to all sorts of food supply regulations. “If California can enact laws controlling out-of-state pork production,” the group wrote, “Texas can dictate how California grows avocados and tomatoes.” A brief filed by the Center for Trade Litigation warned that the 9th Circuit’s decision could affect the supply chain of other retail and restaurant products more broadly.

The numerous “friends of the court” briefs filed in the case also dispute the facts and assumptions underlying the dispute. A brief submitted by a group of professors of agricultural and resource economics suggests that the economic impact of Proposition 12 will not be as great as the challengers predict. Under Proposition 12, they say, California consumers will pay more for uncooked pork products, but it will have relatively little effect on other pork consumers in the United States. Producers for whom it makes economic sense to comply with Proposition 12 will do so, the professors reason, while those who “choose not to supply the California market will suffer at most only marginal economic harm.”

And what about the claim that pig farmers mistreat their herds? ScotusBlog gives us two views from veterinarians who have filed briefs with the Court:

Another brief, filed by a veterinarian, seeks to refute the challengers’ claim that the structure of the pork industry, with the possibility of different cuts of the same pork going to different parts of the country, makes it difficult for producers to know whether their products will ultimately be sold in California. The pork industry has developed “highly sophisticated” methods to trace and separate pork products, writes Dr. Leon Barringer. Indeed, notes Barringer, the use of these methods allows “pork producers to make marketing claims such as ‘antibiotic free’ and ‘source verified’ on their pork products.”

Two other briefs filed by veterinarians discuss the benefits that Proposition 12 can bring to animals. In a brief supporting the challengers, the American Association of Swine Veterinarians cites “well-established scientific literature” demonstrating that the use of both individual stalls and group pens “can be important in managing a healthy herd.” Outright banning any of them, as Proposition 12 does,” the group concludes, “is likely to harm animal welfare rather than improve it.”

But a brief from nearly 400 animal welfare scientists and veterinarians counters that the AASV brief “relies heavily on studies published by the National Pork Board and funded by the pork industry, which focus on…the economic benefits to pork producers – rather than the animal welfare”. The AASV’s analysis, according to the submissions, “disregards peer-reviewed research” and “ignores the harm that gestation crates inflict on pigs.”

Judgment is expected before the end of June 2023.

Interest in buying a home is rapidly declining

Real estate broker Redfin, which operates in 95 U.S. markets, reports:

Housing market activity plunges further this fall than it did over the summer, with mortgage rates nearing 7% and the upside-down economy deterring buyers and sellers potentials. Price declines are at an all-time high, and home sales and new listings are down.

  • Fewer people wanted “houses for sale” on Google. Searches in the week ending October 8 were down 35% from a year earlier, falling to a level comparable to March 2020.
  • The seasonally-adjusted Redfin Homebuyer Demand Index – a measure of requests for home visits and other home-buying services from Redfin agents – is down 25% year-on-year , but slightly up from the previous four-week period.
  • Mortgage purchase applications have been down 2% week-over-week, seasonally adjusted, and were down 39% from a year earlier in the week ending October 7.

Homes that sell maintain their prices, for the most part. In fact, 99% of homes sold last month in America cost 99% of the final listing price. But that can be a bit misleading as nearly 8% of homes listed had lowered their price from the original listing price.

(Redfin)

But look at the size of those mortgage payments!

(Redfin)

It now takes twice as long to sell a house as it did in January, so what?

One of the effects of inflation on the housing market and combined with rising interest rates is that it takes longer, and by that I mean MUCH longer to sell homes.

(Redfin)

In January, a seller could expect to find a buyer in 2.1 months. It is now 4.1 months and you can expect the trend to lead to higher inventory of homes for sale and longer wait times to sell them. Eventually, prices will fall and buyers will gain some advantage.

This is bad news for several groups in addition to sellers. Home building could slow as building prices and competition for buyers increase. Think of all the businesses that depend on construction: construction workers, appliance vendors, forestry companies and architects.

Local governments rely on property taxes to fund a significant portion of local services. Their budgets depend on the increase in sales, which generally increase the value of properties. That’s why it’s worth noting that the National Association of Realtors reports that in August the median home price fell to $389,500, down from a record high of $413,800 in June.

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