Tuesday, Oct. 1, 2013

Tuesday, Oct. 1, 2013

Government shuts down, health care marketplaces start up; Nearly one in 10 default on federal student loans; Southern University chief hopes funding holds steady in 2014; New flood insurance rate hikes kick in for southeast Louisiana; The Glass-Floor Problem 33,000 – The number of Louisiana veterans and armed forces families with children that receive the EITC or low-Income component of the Child Tax Credit. (Source: Center on Budget and Policy Priorities)

Government shuts down; health care marketplaces start up
The partial shutdown of the federal government that began at midnight could affect nearly 20,000 federal workers in Louisiana, The Advocate reports. The shutdown also means bad news for a range of businesses that rely on the federal government, including hotels and a Baton Rouge exporter of bull semen that cannot get certificates needed to ship its products overseas as long as Congress continues its stalemate. One thing that won’t be affected is the rollout of the new online health insurance marketplaces. Starting today, nearly 400,000 uninsured Louisianans will have the opportunity to buy health insurance with premiums ranging from $15 a month to more than $900, depending on family income and the level of coverage. Nola.com published a Q&A about the health care exchanges on Monday. You can visit the online marketplace for Louisiana by clicking here.

Nearly one in 10 default on federal student loans
Despite some of the lowest tuition rates in the nation, nearly one in 10 graduates of Louisiana colleges and universities defaulted on their federal student loan payments within two years of entering the repayment period, according to data released Monday by the U.S. Department of Education. While Louisiana’s two-year default rate mirrors the national average, another troubling trend is that loan default rates are higher than graduation rates at some Louisiana schools. As USA Today reported in July, Louisiana schools that have higher loan default rates than graduation rates are Career Technical College in Shreveport, Delgado Community College in New Orleans, LSU in Alexandria, LSU in Eunice, Southern University in New Orleans and Southern University in Shreveport. You can access student loan default rates for all Louisiana schools by clicking here.

Southern University chief hopes funding holds steady in 2014
Southern University President Ronald Mason struck an optimistic note Monday to the Baton Rouge Press Club, saying he’s been told that rising state revenues might spell the end of chronic state budget cuts to higher education. Mason said he’s been told by Gov. Bobby Jindal that there’s a “good chance for stable funding” next year after five straight years of deep cuts in state support for colleges and universities. Legislators have cut more than $1 billion in state general fund support for higher education since 2008 – making up part of the shortfall with steep tuition hikes and one-time dollars. The rising tuition, combined with higher admission standards, has caused enrollment to plummet at Southern in recent years. But Mason said things have begun to stabilize and fund-raising is picking up.

New flood insurance rate hikes kick in for southeast Louisiana
Flood insurance rate hikes for many southeast Louisiana homes and businesses will begin being phased in today as new changes to the National Flood Insurance Program goes into effect. As The Advocate reports, the new rates will apply to businesses, secondary vacation homes and homes that have been repeatedly flooded that were grandfathered into artificially lower premiums for flood insurance before the first federal flood maps were created in 1973. Affected policyholders will experience 25 percent annual premium increases over a few years. Nearly 18,000 Louisiana policies will see immediate impacts of the new rate increases, while another 50,000 residences will not be affected until they are sold or the policy lapses. The rate hikes have many homeowners worried that their properties will be unsellable in the near future.

The Glass-Floor Problem
While many economists agree that the growing gap between rich and poor is contributing to America’s economic malaise, author Richard Reeves says the biggest problem is “stagnation of social mobility,” which makes it harder for poor kids to climb the economic ladder. Reeves points out that the wide economic disparity not only hinders poor kids, but also favors rich kids through “opportunity hoarding.” Opportunity hoarding occurs when the higher education system or the labor market are distorted in favor of the powerful. This could result in less talented but affluent children defying social gravity and remaining at the top of the economic ladder. In the end, Reeves believes that the only way to create a competitive economy and a more open society is to create opportunities for the best and brightest to succeed – even if it means some of the children of the affluent must fail.

Number of the Day
33,000 – The number of Louisiana veterans and armed forces families with children that receive the EITC or low-Income component of the Child Tax Credit. (Source: Center on Budget and Policy Priorities)