More than 600,000 Louisianans owe a combined $21.3 billion for loans they took out to pay for college or other postsecondary training. The average student loan balance in the state ($34,651) is almost three quarters of what the median Louisiana family makes in a year ($47,942), which forces many Louisianans to choose between paying down their debt and meeting their immediate needs. LBP’s Davante Lewis lays out much-need reforms that state lawmakers should enact during the abbreviated legislative session to provide some relief to borrowers, including House Bill 340, sponsored by Rep. Mandie Landry.
Private student loan borrowers are often saddled with predatory, high-cost loans or worthless degrees from for-profit schools – and sometimes both. When borrowers default on these loans, their lenders often take them to court. New research shows that these suits disproportionately target communities of color. House Bill 340 would place a five-year liberative prescription, a type of statute of limitation, on private student loans. Currently, Louisiana law provides for a 30-year liberative prescription on debt owed to education institutions in the state, but does not address debts owed to private lenders making postsecondary educational loans.
The Legislature returns to a bleak economic forecast
The collapse of global oil prices, combined with the shuttering of jobs and businesses in response to the Covid-19 pandemic constitute a “double whammy” for Louisiana’s economy that will be worse than the temporary economic lull that followed Hurricane Katrina. That was the word from state economists as the Legislature returned to work on Monday. With state revenues certain to be much lower than expected several months ago, federal dollars and steady state collections will be essential for maintaining the basic services that keep Louisiana’s economy running. The Advocate’s Sam Karlin reports:
(Commissioner of Administration Jay) Dardenne said a more favorable federal formula for Medicaid will free up close to $200 million in Louisiana’s budget, which should ease the pressure some. Plus, he noted the federal government has injected money in a host of areas – to individuals, businesses, schools and hospitals, among others. The governor is also proposing using much of the state’s surplus from 2019 – nearly $350 million – on infrastructure projects that Dardenne said will help stimulate the state’s economy as hundreds of thousands of people remain out of work. And the Appropriations Committee passed a bill by state Rep. Gary Carter, D-New Orleans, to free up money from the state’s rainy day fund for use after emergencies.
Addressing structural inequality divide
Economists often distinguish between cyclical and structural economic problems. While cyclical problems come and go, structural problems are ubiquitous. People of color are disproportionately affected by the linkage between these two factors. For example, black workers lost their jobs at high rates during the Great Recession (cyclical), but it took them almost a decade to make back these losses (structural). Unfortunately, black workers have lost all of this progress during the coronavirus pandemic. Jared Bernstein, chief economist to former vice president Joe Biden and senior fellow at the Center on Budget and Policy Priorities, explains how America should provide relief to the most vulnerable in good times and bad.
Each one of these structural deficiencies can be at least partially mitigated by policy, from investments in public goods and housing in nonwhite and low-income neighborhoods, to income and employment supports for vulnerable populations during economic expansions, to robust, targeted safety net measures in recessions. [Janelle] Jones and I argue that the figure above is telling us to prepare direct job creation programs to help offset the last-hired, first-fired phenomenon we know is upon us. But the biggest policy lesson is a conceptual one: To ameliorate the cyclical, we must address the structural. The embedded economic and health challenges faced by people of color and the many on the wrong side of the inequality divide must be ongoingly and aggressively addressed in the best of times. It’s the only way to ensure people are truly insulated from the worst of times.
Remembering importance of equity and progress
The health and economic impacts of Covid-19 are too important to be drawn out along partisan and racial lines. Unfortunately that is exactly what is happening. Kim Sport, committee chair, public policy and Charmaine Caccioppi, executive vice president, United Way of Southeast Louisiana explain how the global health crisis has made equity and progress more important than ever.
We originally championed the rallying cry, “Viruses don’t discriminate,” as so many organizations did around the country and the globe, yet we’ve come to learn that is simply not true. … This is a matter of life and death, of black and white, but not of red and blue. We have an opportunity to blaze a path for our future in which all individuals are healthy, educated, and economically stable. Please listen to the experts, listen to the data, and do not ignore the thousands of lives we’ve already lost to COVID-19. We cannot afford to get this wrong.
Number of the Day
3% – Percentage of Louisianans who believe tort “reform” is an issue the Legislature should prioritize for the legislative session. (Source: Public Policy Polling)