Don’t Let Student Loan Rates Double

Education can only be the Great Equalizer when access to it is universal. In an era of already high and continually rising tuition prices, student loans provide access to higher education for not just low-income, but increasingly middle- and upper-income families. Higher Education is directly correlated with higher pay, better quality of life, and just about every measurement you can dream up. Yet, our student loan system is wrought with deep problems:

  • National student loan debt topped $1 Trillion this year
  • Tuition costs continue to outstrip inflation
  • For-Profit online universities’ continue to increase in presence
  • Students are strapped with a lifelong debt burden
  • Student loan debt is difficult to refinance

Tackling all of these problems will take concerted effort at the national level and a fundamental rethinking of our higher education system. The starting place for that movement is July 1st, 2013. On that day, if Congress does nothing, the interest rate on Stafford student loans will double from the current 3.4% to 6.8%. According to the United States Public Interest Research Group, each full Stafford loan borrower will see an increase of $1,000 in interest costs.

StudentLoanDebtNational Student Loan debt increased 373% from $260 billion in 2004 to $970 billion by the end of 2012, and has surpassed $1 trillion by most estimates already in 2013. Stacked against the total $1 trillion number, the increase cost of $1,000 may not seem so terrible. Yet student loan debt is permanent debt which cannot be erased through bankruptcy. Students unable to meet their interest payments fall into a default cycle that savages their credit rating. The default rate for those under the age of 30 is 35%, almost double the 18% or so for those over 50 years old. Should the Stafford loan interest rate double, the already enormous 35% delinquency rate will surely rise. Lowering the delinquency rate on student loans will save millions of families and individuals unnecessary economic hardship. A lower debt burden will also increase the lifetime economic output of an entire generation.

Today, April 25th, the United States Students Association  and House Representatives Karen Bass of California and Joe Courtney of Connecticut held the first anniversary of the Student Debt reaching $1 trillion in Washington, D.C.. Instead of kicking the can down the road another year like Congress did July 1st of 2012, join them by lending your support for bill HR1330 to allow students to borrow at lower rates and payback their loans easier and safer.

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COFI Parents Support Eliminating TANF Asset Limit Test

By COFI

This month in the Illinois legislature, Community Organizing and Family Issues (COFI) POWER-PAC parent leaders are supporting House Bill 2262 (and partner Senate Bill 2319) to make it easier for low-income families to save money. COFI is a Chicago-based grassroots community organization composed of parents focused on the well being of children, youth and families. COFI POWER-PAC partners in this effort to eliminate the TANF Asset Limit Test with the Illinois Asset Building Group (IABG) and as part of POWER-PAC’s Stepping Out of Poverty campaign.

Currently in Illinois, persons applying for the public benefits program Temporary Aid to Needy Families (TANF) aren’t allowed to have more than $2,000 in savings. POWER-PAC parents are meeting with state legislators, asking them to support the elimination of asset limits so that families can save and still receive help in difficult financial times.

As POWER-PAC leader Lisa Russell from the North Lawndale community explained: “There are just too many hoops for parents to have to jump through to access needed benefits for the children and families. Eliminating the asset limit on TANF will help families be able to save and uplift themselves.”

After meeting two weeks ago with Lisa and other POWER-PAC parent leaders, Representative Art Turner Jr. agreed to co-sponsor the bill!

In addition to changing policies that make it hard for low-income families to build assets, parents are also educating themselves about ways in which they can better manage their finances, get out of debt, and build their savings. POWER-PAC, the Dvorak, Nixon, and Penn Elementary School Parent Teams, Family Focus – Lawndale, Nuestra Familia, and The Resurrection Project have partnered to host financial literacy classes for low-income parents. The first round of trainings, in the Hermosa community, were held in March and had 36 parents participate. The trainings in North Lawndale start in April.

House Bill 2262 and Senate Bill 2319 are gaining momentum as more legislators, individuals, and organizations recognize the importance of this policy. Please email Lucy Mullany, IABG Coordinator, if you are interested in signing on in support.

This blog was originally posted on the COFI website.

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April Legislative Update

This winter, IABG drafted legislation to remove the asset test in the Temporary Assistance for Needy Families (TANF) program. As we move into the spring, the issue is gaining momentum.

SB2319 / HB2262 will remove the TANF Asset Test. The asset test prevents our most vulnerable families from having more than $3000 in savings and other assets. The asset test is an outdated policy that has become harmful for families and unnecessarily costly for the Illinois Department of Human Services. By removing the TANF Asset Test we:

  1. Promote savings and encourage our poorest families to develop savings behaviors that lead to self-sufficient.
  2. Allow families to preserve the few resources they do have, like emergency or college savings, and avert financial disaster.
  3. Increase government efficiency with substantial savings for taxpayers.

In 2012, only 8 out of more than 51,000 families had their TAMF cases cancelled because their assets exceeded $3000. That’s less than 1 in every 6000 cases. However, IDHS caseworkers must spend substantial administrative resources regularly checking the assets of each TANF family. This requires extensive verifications that have proven to be unnecessary.

Because of the impact on both families and the state, there is a growing trend across the country to remove asset limits from public benefits programs. States that have removed the TANF asset test have found a significant administrative cost savings with little to no increase in the TANF case load.

SB2319 & HB2262 have both moved out of their respective committees. As we head back to Springfield after the legislative spring break, IABG and our partners will be working to ensure that it passes out of both houses. We need your help. Contact your legislators and ask them to support SB2319 & HB2262.

Retirement Savings Update

In addition to advocacy to remove the TANF Asset Test, IABG is also advocating for the creation of an Automatic IRA program. The Automatic IRA Program is a simple, cost-effective, way to increase retirement security for Illinois workers. SB2400 would create a statewide infrastructure that gives workers access to a savings tool that will help them build financially secure retirements. We expect the issue to be up in the Committee in April. In the meantime, we are continuing to educate legislators about growing retirement insecurity and ways to address the problem.

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Program Profile: The Renaissance Collaborative

“The participants in our program were homeless for a myriad of reasons, loss of employment, family disputes, mental illness, substance abuse etc… By providing educational coaching to groups and individuals I am able to help facilitate change and growth in our participants’ lives. I get the privilege of helping people realize the vision that they have for their lives.
-Sherri Allen-Reeves
Life Skills Manager

An Economic Development Strategy for Bronzeville
The Renaissance Collaborative (TRC) understands that a Bronzeville economic renaissance will do much to increase the quality of life for community residents. In addition to their community building efforts like their Bronzeville Retail Initiative’s transit-oriented economic development along the CTA Green Line, they have focused on a people-centric economic development approach. In 2009, TRC launched Bronzeville Green, a social venture initiative of TRC featuring training and educational opportunities for employees, and landscaping services to clients. The Bronzeville Works facility also trains participants for customer service and green technologies (energy efficiency, computer repairs and recycling, etc…). Asset building programs like their Individual Development Account (IDA) program provides a cash match for residents who saved regularly to help them achieve their goal of self-sufficiency. Financial literacy courses are offered to residents of The Renaissance Apartments and the Senior Village to help in money management. TRC recently joined the Bank On Chicago project as a Community Partner to help the unbanked in Bronzevillie open up safe checking accounts when appropriate.

From Vision to Results
Graduates of their IDA program have gone from obtaining their GED to getting their Master’s Degree in Social Work. They have found jobs in the government and started their own. They have even progressed from living in The Renaissance Apartments to owning their own homes. A recent participant was able to enroll in school for medical billing, purchase a computer and the required software, and successfully obtained certification. She is currently fulfilling her goal of working in the medical field practicing medical billing and coding.

History of The Renaissance Collaborative
The Renaissance Collaborative  was originally born out of a mission to save a cultural landmark, the historic Wabash YMCA building in Chicago’s Bronzeville community. The Wabash YMCA was the hub of Black civic and social activity in the early 1900s. As Blacks migrated from the South to the North, the Wabash YMCA served as the orientation center for migrants seeking a better way of life. Four Churches –  Quinn Chapel AME, St. Thomas Episcopal, St. Elizabeth Roman Catholic, and Apostolic Faith – came together to save the historic YMCA, and later created The Renaissance Collaborative, Inc. in 1992 in an effort to further support the community. TRC provides affordable housing, financial education, asset building, workforce development, and community development for the Bronzeville community.

Directed by community stakeholders, TRC has expanded to meet the needs of its community from offering affordable housing for those experiencing homelessness and seniors taking care of dependents, to a workforce development program offering education and training, to an Individual Development Account (IDA) program helping participants save for the future. All services and programs are free to the participants and are designed to help them achieve self-sufficiency and a better quality of life.

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