Local colleges say the key to a move by President Obama to rein in college debt is to get more students aware of the action.
Five million young Americans got good news on June 9 when the president announced an executive order expanding the Pay as You Earn program. PAYE is a voluntary college loan repayment program that limits the debtor’s monthly payments to no more than 10 percent of their discretionary income for 20 years.
The first iteration of PAYE was instituted in 2012 and was limited to students who had taken out loans through the U.S. Dept. of Education in 2008 or after. Obama’s new order extends the program for those who had incurred qualified debt prior to 2008.
If the debtor makes all of their payments during that 20-year period and still owes money, that amount is forgiven. This payback period is reduced to just 10 years if the debtor spends that time working for a government or non-profit organization. Phase II of PAYE will not be available until December 2015.
Under PAYE, discretionary income is defined as a person’s adjusted gross income as reported annually on the tax return minus $17,500 for a single person or $23,600 for a family of two. Because of this structure, there is an annual reporting requirement and the payment can fluctuate up and down based on income changes.
According to U.S. Federal Reserve Bank data, 37 million Americans owe a total of $1 trillion in college loans—an amount that is second only to home mortgages. Despite this fact, only about 1.6 million borrowers have taken advantage of the PAYE program so far.
Scott Belabrajdic, associate vice chancellor for enrollment at Southern Illinois University Edwardsville, suggested that one reason for the low participation rate is lack of knowledge about the program. There is no one that is actively promoting PAYE, he said. And, he pointed out another factor that could be throttling participation.
Resignation clouds plans for IDOT
The sudden resignation of the head of the Illinois Department of Transportation, coming even as she was planning for massive revamps at the agency, puts plans for the department into question.
Ann L. Schneider’s resignation was announced June 30 after longtime anti-patronage crusader Michael Shakman called for a federal judge to order an investigation into government hiring following a Better Government Association probe that revealed Schneider’s stepdaughter had been put on the payroll and promoted at the agency, according to the Chicago Sun Times.
Gov. Pat Quinn has named Erica Borggren, director of the Department of Veterans Affairs, to replace Schneider at IDOT.
Schneider was appointed by Quinn in 2011 to head up IDOT. A Quinn spokesman was not immediately offering an explanation about why she resigned.
Just days before the resignation, Schneider sat down for an interview with the Illinois Business Journal regarding burdensome retirements being faced by her agency.
Baby boomer business owners are beating a path to the retirement door, and it’s causing a surge of interest in the field of succession planning.
Attorneys who specialize in estate work are seeing or expecting to see a marked upswing in clients wanting to transition from active owner to retiree. The national trend suggests some 60 percent of small businesses are going to be affected in the next few years.
“The demographics force that conclusion,” agrees attorney Kevin J. Richter, a partner at Mathis, Marifian and Richter, Ltd, of Belleville.
While many businessmen simply want to sell and retire, others want their family to succeed them, and that’s sometimes a challenge.
By some estimates, up to 80 percent of family businesses don’t make it to a second generation. And 80 percent of those that do don’t make it to a third generation. Most of the failure is because of poor planning or targeting the wrong successors, said Richter.
“Usually the originator of the company is very Type A, a very high energy individual who is passionate about what they do,” he said. The second generation takes over and has its own growth and capital issues with which to deal.
“By the third generation, everything’s kind of set up, and they sometimes take the risks associated with running a business for granted, not working as hard to maintain the status quo of the company,” Richter said.
Often the topic of business succession comes about as part of estate planning, when owners conclude their companies are worth more than any other thing they own, including real estate.
Buy-sell agreements are fairly routine, but the challenges are greater when the owner wants to have family take over. The big question is, who gets what?
ST. LOUIS — A federal judge has appointed Simmons Firm Shareholder Derek Brandt as interim co-lead class counsel in a pending national multidistrict litigation proceeding against AIG, its subsidiary companies and former CEO Maurice Greenberg.
In an order dated May 28, the Honorable Robert W. Gettleman, of the United States District Court for the Northern District of Illinois, appointed Brandt and Elizabeth A. Fegan of Hagens Berman Sobol Shapiro LLP co-lead counsel for the plaintiffs in the litigation.
The multi-district litigation centralizes numerous lawsuits filed by businesses around the country alleging that AIG, its subsidiaries, and Greenberg violated federal racketeering statutes and other state laws in connection with a decades-long fraud in underreporting the amount of workers’ compensation insurance that they wrote. The suits allege that by underreporting or mischaracterizing the insurance that they wrote, the defendants caused states to over-assess insured employers for certain state insurance funds.
“We’ve now filed our Consolidated Amended Complaint and I’m looking forward to continuing our work with a great team of lawyers to ensure that we efficiently resolve this litigation and secure a fair result for the businesses harmed by the unlawful practices alleged here,” Brandt said.
The Consolidated Amended Complaint, filed June 10, combines the actions of numerous plaintiff businesses. It alleges that for approximately four decades beginning in the 1970s, AIG engaged in a sophisticated scheme to misreport the amount of workers’ compensation premiums it collected in states around the country. As a result, the suit alleges employers in fifteen states and the District of Columbia were forced to pay more in certain state insurance assessments than they otherwise would have paid.
By making it appear as though less money was collected in workers’ compensation premiums overall in a given state, the complaint alleges AIG caused state regulators to assess artificially inflated fees on insured employers. The 139-page complaint alleges claims on behalf of employers who purchased workers’ compensation insurance, dating back to 1970, in California, Connecticut, Georgia, Hawaii, Indiana, Kentucky, Maine, Minnesota, Missouri, Montana, New Jersey, New York, Oregon, Pennsylvania, West Virginia and Washington, D.C.
Although AIG has paid almost $150 million in fines, taxes and assessments to various states and has agreed to pay $450 million to resolve litigation brought by other insurance companies for injuries they suffered due to underreporting, it has never compensated the many businesses and other insured employers who were for decades defrauded into paying inflated workers compensation fees and surcharges, according to the complaint.
The case is In re: AIG Workers Compensation Insurance Policyholder Litigation, No. 14-cv-2528, U.S. Dist. Ct. N. Dist. Illinois (MDL No. 2519).
Effective July 1, the Simmons Firm and Hanly Conroy merged to become Simmons Hanly Conroy. Together, the two firms have successfully resolved a variety of complex litigation actions including Bextra, Chantix, Toyota unintended accelerated litigation and more.
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