There is $62 billion in outstanding debt belonging to parents who’ve borrowed federal Parent PLUS loans to send their kids to school. The Department of Education is considering tightening the loans’ eligibility criteria, amid concern it’s been too easy for low- and moderate-income parents to get in over their heads.
But the last time it did that, it set off a firestorm.
The thing about Parent PLUS loans is they’re not based on income. Pass a credit check, and you can borrow up to the full cost of attendance. Parents don’t have to prove they can actually repay their loans.
“At the time, I was happy to get it,” says 56 year old Barbara Jones of Boston, who took out more than $100,000 in loans she now says she can’t afford.
“Because then if you didn’t get that, then what would you do?” she asks. “You know, how would you keep your child in school, how would you pay it if you didn’t have any other option than the Parent PLUS loan?”
Jones’s son graduated from Pace University last year. Now mother and son are both in debt for the same degree.
Of course, millions of parents take out PLUS loans; they’re a tool to promote college access. The average outstanding balance is $20,338, according to the Department of Education.
But policy analyst Rachel Fishman with the New America Foundation worries it’s too easy for low and moderate income families to borrow too much, as they try to give their kids a better life.
“That really puts the federal government in a dangerous position of telling them, ‘Sure you can do that,’” she says. “'You can mortgage your future. You’re really close to retirement and we can garnish your Social Security, but fine, we’re gonna to let you take on a loan for $20,000, $30,000 dollars.’”
“We absolutely don’t want parents to get in over their head,” says Cheryl Smith, who works with the United Negro College Fund. “That’s why we think there should be a counseling program. At the same time, we don’t think we should be paternalistic.”
UNCF helps minority students get to and through college. It also lobbies for the private historically black colleges and universities. HBCUs have a lot of low and moderate income students, and Smith says thousands were affected when the government toughened the credit check for Parent PLUS loans back in 2011. She says enrollment fell at some private HBCUs , and HBCUs generally lost millions in revenue, “Directly attributable to fewer students being able to get a Parent PLUS loan.”
Even though parents still don’t have to prove they can repay their PLUS loans, Smith says it’s now too hard to get one.
Still, the larger community is conflicted. Johnny Taylor heads the Thurgood Marshall College Fund, which represents the publicly supported HBCUs. He thinks, at a certain point, Parent PLUS loans should be capped.
“Heretofore we have said to students, ‘Pick the school that you want to attend.’ And frankly the narrative may change to pick the school that you can afford to attend,” he says.
It’s a narrative unfolding within the Department of Education too, which is considering changes to the rules this spring.Shea Huffman/Marketplace
By Shea Huffman/Marketplace
Just in time for tax season, the IRS released its first set of rules for Bitcoin. As the cryptocurrency has gotten bigger, there's been a lot of speculation over how best to use it.
One idea involves computer-to-computer transactions. Take email, for example.
"An example might be if it were really easy to attach a tenth of a penny to every email you send, it wouldn't add for the normal emailer very much. In fact you'd be getting a tenth of a penny as you get emails from people. So it'd basically be a wash. But if you're a spammer...looking to send out a billion emails to people and hope that one of them answers, having them attach a tenth of a penny to each of those emails would not make that cost effective anymore."
Aside from its function as a currency, the way in which Bitcoin functions could serve as a model for how the internet could become more efficient. In this example, provided by Jonathan Zittrain, co-founder of Harvard's Berkman Center for Internet and Society, the ease with which cryptocurrency is exchanged is used to deter spammers. It's an idea that some feel is an inevitability. Zittrain points to the the public journal that records the path of every bitcoin, and how this kind of practice could apply to other kinds of data.
"For my part, I think the interest in a distributed public journal of stuff could be used for all sorts of purposes that don't have to do with the exchange of currency. There might be ways to use bitcoin-style journaling so that when a company transfers sensitive data, it gets journaled over. And there'd be a way then for me to see where it's been. Then if it actually should leak, I can trace the source of the leak."
Business is booming for recreational marijuana dispensaries in Colorado, the first of their kind in the nation. Their success has tightened the commercial real estate market and raised warehouse rental rates, in what may be a sign of things to come for other states.
The shortage of warehouse space is particularly acute in the Denver region, where the vacancy rate has dropped from 6.1 percent to 4.2 percent in 2013. Since January, when Colorado became the first state to legalize recreational pot, dispensaries have been gobbling up warehouses to meet strong demand. So strong, in fact, that some dispensaries have been forced to ration their supplies.
“We used to see approximately 100 people through our store every day. Now, we’re seeing approximately 300 people through our store every day,” says Luke Ramirez, co-owner of the Walking Raven dispensary - one of the first medical marijuana shops in Colorado to start selling recreational pot.
Dispensaries can’t buy pot from outside providers, so they need warehouses to grow all of their own supply.
“We have seen a dramatic increase in people who are looking for warehouse space, and a dramatic decrease in the amount of available warehouse space in Colorado, and especially in the metro Denver area,” says Taylor West, a spokesperson for the National Cannabis Industry Association. “Warehouse space that for some amount of time may have been difficult to sell, or harder to lease, are now in high demand in the area.”
Landlords have been asking for increasingly higher rents. Ramirez, who pegs the current rent for one of his two warehouses at $20 per square foot -- the national average is $5 per square foot -- has been shopping for a third warehouse. He has seen more than a dozen properties. But so far, he says his insistence on due diligence, to have properties inspected and assessed, means he has been slower than his competition and lost out. In other instances, Ramirez found the landlord’s demands simply too expensive.
“They want too much sometimes. They want a right to our profit sharing. It can become a much more complicated deal than just simply a tenant, landlord lease,” Ramirez says.
The rise in warehouse rental rates is not uniform across the Denver industrial real estate market. It has been particularly acute for Colorado’s marijuana industry, because of its needs for particular kinds of warehouses that have the proper zoning, location, and potential to meet the high electricity demands of a pot growing operation. But, as prices have risen and supplies dwindled, other industries that require warehouses have begun to feel the impacts. Denver’s commercial real estate agents report a very tight market and rising rents for all kinds of warehouses.
“Everything I’ve read and heard from realtors is, it’s not only about fully leased, but also leasing at a little bit higher rates than in our history,” says Kelly Brough, CEO of the Denver Metro Chamber of Commerce.
Alaskan voters will decide in a ballot measure this summer whether to become the next state to legalize recreational marijuana. Taylor West expects to see a similar story for the commercial real estate industry there, and in other states that have legalized pot.
“Each state is handling the regulations around growing slightly differently. So, it depends on the cultivation rules that are being put in place," West says. "And in some of these cases, either the state is involved in the growing or is pinpointing the areas where the grows can happen, but regardless, it’s going to be an area that continues to need more space."
If you’ve noticed your receipt from the grocery store seems larger than usual, you have food inflation to thank.
While the prices of everything usually go up due to regular boring inflation, commodities like food have outpaced other goods.
Matthew Boesler, Business Insider reporter, says food inflation is increasing because of a few different factors.
“A lot of it is due to weather. We have a big drought in California. We’ve had dry conditions across the Midwest, the Great Plains regions,” Boesler says. “The extreme weather events serve to disrupt crop supplies. and that can drive prices up.”
“Another factor you have is the ‘financial-ization’ of these commodities markets,” he says. Hedge funds and other investors are increasingly pouring money into goods like beef and coffee. “It’s very easy for an investor to bet on rising commodity prices. And no one really bets on those prices going down, so you have a lot of one-way money flowing into these markets, and they can become quickly overwhelmed because [investment markets are] not designed for that.”
Data: Bureau of Labor StatisticsRaghu Manavalan/Marketplace
“Supply and demand sort of governs the price of a commodity, but the way these markets are set up and you know, given how much capital is flowing seeking investment opportunities, the jumps in prices can be very volatile and large.”Marketplace Money for Friday, April 11, 2014by Raghu ManavalanPodcast Title Food inflation, or, why bacon is a good investmentStory Type InterviewSyndication Flipboard BusinessSlackerSoundcloudStitcherBusiness InsiderSwellPMPApp Respond No