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Biden has forgiven $42 billion for PSLF student loan borrowers in the last 18 months

More than 615,000 borrowers have had $42 billion total in student loan debt forgiven via temporary changes made to the Public Service Loan Forgiveness (PSLF) process since October 2021, the U.S. Department of Education announced Monday. That includes nearly 610,000 borrowers who have seen their debt already discharged.

The PSLF program was created to encourage people to take jobs in fields like education, health care, law enforcement, and nonprofit work. Those who have worked full-time in a qualifying public service job for at least 10 years and have made 120 on-time payments the entire time can apply for the rest of the remainder of their debt to be forgiven, tax-free.

But the program has long not lived up to borrower expectations: Though its existed for years, just 7,000 people had been approved for forgiveness before Biden took office, according to the Education Department. Thats due not only to the complicated nature of the application process, but also because of mishaps on part of the student loan servicer.

Under Biden, the Education Department has made a number of changes since then to make it easier to actually attain forgiveness, including offering a one-time waiver to retroactively broaden the types of loans and payments that are eligible for relief.

The waiver allowed qualifying borrowers to receive credit for all payments they made on their loans. This includes those who were enrolled in the wrong repayment track, or those who made late or incomplete payments. Borrowers would be eligible for forgiveness if they made 120 on-time payments.

Borrowers receiving forgiveness will be notified by MOHELA, the student loan servicer for PSLF, and by logging into their accounts and seeing the tell-tale smiley face and a $0 balance.

I literally cried tears of joy, Meredith Shuman, a 35-year-old who had more than $43,000 forgiven earlier this year after submitting the waiver, told Fortune. Its nice seeing all those zeroes.

The Education Department also recently announced that starting in July 2023, borrowers on the PSLF track will be able to complete the entire application process online, including allowing applicants and their employers to submit signatures electronically for the first time. Previously, borrowers needed to print and sign their form and have their employers sign the form, before mailing or faxing it in.

Other changes to PSLF program

Aside from the waiver, there are other long-term regulatory changes coming to the PSLF to simplify the application process.

Starting in July 2023, borrowers on the PSLF track will receive credit for late payments and those made in installments. Additionally, some periods of loan deferment and forbearance will count toward the 120 payments needed to receive forgiveness, including deferments for cancer treatments, economic hardship, and military service.

Additionally, the Education Department is undertaking a one-time account adjustment for borrowers with a Direct Loan. More payments will count toward loan forgiveness for those in PSLF or on income-driven repayment plans. This will put more borrowers closer to attaining PSLF, or in some cases, result in them having their balance forgiven and even eligible for a refund, depending on how many payments theyve made. Borrowers dont need to do anything for this relief.

Status of widespread student debt forgiveness

PSLF is a separate program from Bidens one-time student debt forgiveness initiative. That program, announced in August 2022, would forgive up to $20,000 in student loans for most federal borrowers, and is currently being reviewed by the U.S. Supreme Court.

As of now, all borrowers can do is wait for the Supreme Courts decision on whether or not the forgiveness program can go ahead as planned. The decision should be revealed by the end of June. In the meantime, federal student loan payments remain paused.

The outcome of that case will not affect PSLF or the changes to that program the Biden administration has implemented.

Government employees are suing Janet Yellen and President Biden arguing that the law that sets the debt ceiling is unconstitutional

A union of government employees on Monday sued Treasury Secretary Janet Yellen and President Joe Biden to try to stop them from complying with the law that limits the governments total debt, which the lawsuit contends is unconstitutional.

The lawsuit comes just weeks before Yellen has warned that the government could default on the federal debt if Congress fails to raise the borrowing limit by then. Financial markets have been increasingly nervous about the potential for default, with economists warning that a failure to raise the debt limit could trigger a global financial crisis.

The lawsuit, filed by the National Association of Government Employees, says that if Yellen abides by the debt limit once it becomes binding, possibly next month, she would have to choose which federal obligations to actually pay once the debt limit bars the government from further borrowing. Doing so, the lawsuit contends, would violate the Constitutions separation of powers.

Some analysts have argued that in that case, the government could prioritize interest payments on Treasury securities. That would ensure that the United States wouldnt default on its securities, which have long been regarded as the safest investments in the world and are vital to global financial transactions.

But under the Constitution, the lawsuit argues, the president and Treasury secretary have no authority to decide which payments to make because the Constitution grants spending power to Congress.

Nothing in the Constitution or any judicial decision interpreting the Constitution, the lawsuit states, allows Congress to leave unchecked discretion to the President to exercise the spending power vested in the legislative branch by canceling, suspending, or refusing to carry out spending already approved by Congress.

The NAGE represents 75,000 government employees that it says are at risk of being laid off or losing pay and benefits should Congress fail to raise the debt ceiling. The debt limit, currently $31.4 trillion, was reached in January. But Yellen has since used various accounting measures to avoid breaching it.

Last week, Yellen warned that the debt limit would become binding as early as June 1, much earlier than many analyses had previously predicted, because tax receipts have come in lower than projected. Republicans in Congress have refused to vote to raise the debt limit unless Biden and congressional Democrats agree to deep spending cuts.

On Sunday, Yellen said there were no good options for the United States to avoid an economic calamity if the debt ceiling isnt raised. Biden is scheduled to meet with the top Republicans and Democrats in Congress on Tuesday to discuss a potential breakthrough.

How safe are online banks from collapse?

Consumers place a significant amount of trust in their banking institution. With every deposit made, consumers trust that their money will be protected and readily available when they need it.

However, that isnt always the case.

The long-term security of these institutions isnt inherent. Its credibility and security lies in the hands of the decision makers who are running these institutions and make key decisions about how much risk to assume, underwriting standards, and more.

This year, many consumers experienced a bank failure firsthandleaving many to scramble to find a new place to park their funds. But how can you be sure that your money is actually safe? And in an age of digital banking and fintechs, are certain types of institutions more prone to collapse than others?

2023 Bank failuresexplained

A bank failure is defined as the closing of a bank by a federal or state banking regulatory agency. This typically happens when a bank is unable to meet its obligations to depositors and others.

In recent months, a series of bank failures at the regional and national level have cast a spotlight on the fragility of the banking sector, but history indicates that this isnt a new phenomenon. In the past decade, there have been over 70 bank failures in the U.S. The newest additions to that list include Silicon Valley Bank, Signature Bank, and most recently, First Republic Bank.

For many consumers, this may be the first time they're hearing about bank collapses and realizing that it is possible for their bank to fail them. And for those who opt for a more modern financial institution like an online bank or fintech, there may be an added layer of concern about the fate of their funds in the event of a collapse.

What makes online banks and fintechs different from regular banks?

A neobank or fintech company offers banking services or accounts through online or mobile platforms. These platforms arent usually regulated in the same way that traditional financial institutions are. Unlike traditional banks, neobanks are often not banks and therefore do not have a bank charter with state or federal regulators. Instead, they often partner with an already regulated entity so that their deposits will be insured by the FDIC.

Online banks are usually online divisions of brick-and-mortar banks and any insurance that covers its parent bank will extend to its online subsidiary as well. Whats moreopting for an online bank or fintech offers several perks like lower costs, greater accessibility, and sometimes even more lucrative rewards because these types of platforms and institutions don't face the same overhead costs as traditional banks.

Are online banks safe?

The short answer: Digital banks are not any more or less prone to collapse than traditional banks. Experts say that as long as your deposits are federally-insured and the funds in your deposit account fall below the maximum coverage limit, you can rest well at night.

It may also be worth your while to do some digging and carefully comb through publicly available information to look for any potential red flags that could be key indicators of a bank's financial health. This could include:

Solvency: A bank's solvency tells you if that institution has enough assets to pay its depositors and creditors and continue operations. You might think about this as your bank's net worthits assets, minus its liabilities.
Liquidity: A bank's liquidity is its ability to meet all of its customer's needs and cover withdrawal demand. Having enough cash and liquid investments helps the bank avoid a potential "run" or default as a result of increased withdrawal demand and lack of reserves.

However, there is no tried and true way to predict a bank failure. You can, however, ensure that your deposits are protected.

"There are a number of reasons why a bank could potentially fail. The most recent wave of collapses was caused by poor management and a classic run on the banks. The good news is that you absolutely can safeguard and protect your lifes savings, says Ben McLaughlin, president of SaveBetter, an online savings platform. "The most important thing to verify is that the online bank is FDIC insured. As long as the institution is federally insured and savers keep within the guidelines, your money is safe even in the event of a bank collapse."

The Federal Deposit Insurance Corporation (FDIC) is an independent agency that was created by Congress in the 1930s as a means of building trust and confidence in the banking industry in response to a string of bank failures. Both online banks and credit unions will typically offer some sort of insurance for deposit products in case the institution fails. For banks, the Federal Deposit Insurance Corporation (FDIC) will offer insurance coverage up to $250,000 per depositor, per bank, for each account ownership category.

When a bank collapses, the FDIC sells and collects the assets of the failed bank and settles its debts, including claims for deposits in excess of the insured limit.

Credit unions offer a similar type of insurance through the National Credit Union Administration (NCUA). You can visit each of these corporations sites to verify that the institution youre thinking of banking with is federally insured or that the products offered by that online institution are provided by a parent company that is federally insured.

The takeaway

If youre considering switching to a new financial institution, it isnt a bad idea to vet it before entrusting it with your funds. Take the time to verify that any institutions youre considering are insured by a federal or national entity so that your money is protected no matter what.

The Dunning-Kruger effect is the idea that incompetent people are the last to realize it. Now we're realizing that could be wrong.

John Cleese, the British comedian, once summed up the idea of the DunningKruger effect as, If you are really, really stupid, then its impossible for you to know you are really, really stupid. A quick search of the news brings up dozens of headlines connecting the DunningKruger effect to everything from work to empathy and even to why Donald Trump was elected president.

As a math professor who teaches students to use data to make informed decisions, I am familiar with common mistakes people make when dealing with numbers. The Dunning-Kruger effect is the idea that the least skilled people overestimate their abilities more than anyone else. This sounds convincing on the surface and makes for excellent comedy. But in a recent paper, my colleagues and I suggest that the mathematical approach used to show this effect may be incorrect.

What Dunning and Kruger showed

In the 1990s, David Dunning and Justin Kruger were professors of psychology at Cornell University and wanted to test whether incompetent people were unaware of their incompetence.

To test this, they gave 45 undergraduate students a 20-question logic test and then asked them to rate their own performance in two different ways.

First, Dunning and Kruger asked the students to estimate how many questions they got correct a fairly straightforward assessment. Then, Dunning and Kruger asked the students to estimate how they did compared with the other students who took the test. This type of self-assessment requires students to make guesses about how others performed and is subject to a common cognitive mistake most people consider themselves better than average.

Research shows that 93% of Americans think they are better drivers than average, 90% of teachers think they are more skilled than their peers, and this overestimation is pervasive across many skills including logic tests. But it is mathematically impossible for most people to be better than average at a certain task.

After giving students the logic test, Dunning and Kruger divided them into four groups based on their scores. The lowest-scoring quarter of the students got, on average, 10 of the 20 questions correct. In comparison, the top-scoring quarter of students got an average of 17 questions correct. Both groups estimated they got about 14 correct. This is not terrible self-assessment by either group. The least skilled overestimated their scores by around 20 percentage points, while the top performers underestimated their scores by roughly 15 points.

The results appear more striking when looking at how students rated themselves against their peers, and here is where the better-than-average effect is on full display. The lowest-scoring students estimated that they did better than 62% of the test-takers, while the highest-scoring students thought they scored better than 68%.

By definition, being in the bottom 25% means that, at best, you will score better than 25% of people and, on average, better than just 12.5%. Estimating you did better than 62% of your peers, while only scoring better than 12.5% of them, gives a whopping 49.5 percentage-point overestimation.

The measure of how students compared themselves to others, rather than to their actual scores, is where the DunningKruger effect arose. It grossly exaggerates the overestimation of the bottom 25% and seems to show, as Dunning and Kruger titled their paper, that the least skilled students were unskilled and unaware.

Using the protocol laid out by Dunning and Kruger, many researchers since have confirmed this effect in their own fields of study, leading to the sense that the DunningKruger effect is intrinsic to how human brains work. For everyday people, the Dunning-Kruger effect seems true because the overly arrogant fool is a familiar and annoying stereotype.

Debunking the Dunning-Kruger effect

There are three reasons Dunning and Krugers analysis is misleading.

The worst test-takers would also overestimate their performance the most because they are simply the furthest from getting a perfect score. Additionally, the least skilled people, like most people, assume they are better than average. Finally, the lowest scorers arent markedly worse at estimating their objective performance.

To establish the Dunning-Kruger effect is an artifact of research design, not human thinking, my colleagues and I showed it can be produced using randomly generated data.

First, we created 1,154 fictional people and randomly assigned them both a test score and a self-assessment ranking compared with their peers.

Then, just as Dunning and Kruger did, we divided these fake people into quarters based on their test scores. Because the self-assessment rankings were also randomly assigned a score from 1 to 100, each quarter will revert to the mean of 50. By definition, the bottom quarter will outperform only 12.5% of participants on average, but from the random assignment of self-assessment scores they will consider themselves better than 50% of test-takers. This gives an overestimation of 37.5 percentage points without any humans involved.

To prove the last point that the least skilled can adequately judge their own skill required a different approach.

My colleague Ed Nuhfer and his team gave students a 25-question scientific literacy test. After answering each question, the students would rate their own performance on each question as either nailed it, not sure or no idea.

Working with Nuhfer, we found that unskilled students are pretty good at estimating their own competence. In this study of unskilled students who scored in the bottom quarter, only 16.5% significantly overestimated their abilities. And, it turns out, 3.9% significantly underestimated their score. That means nearly 80% of unskilled students were fairly good at estimating their real ability a far cry from the idea put forth by Dunning and Kruger that the unskilled consistently overestimate their skills.

DunningKruger today

The original paper by Dunning and Kruger starts with the quote: It is one of the essential features of incompetence that the person so inflicted is incapable of knowing that they are incompetent. This idea has spread far and wide through both scientific literature and pop culture alike. But according to the work of my colleagues and me, the reality is that very few people are truly unskilled and unaware.

The Dunning and Kruger experiment did find a real effect most people think they are better than average. But according to my teams work, that is all Dunning and Kruger showed. The reality is that people have an innate ability to gauge their competence and knowledge. To claim otherwise suggests, incorrectly, that much of the population is hopelessly ignorant.

Eric C. Gaze is Senior Lecturer of Mathematics, Bowdoin College.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Inside the next $1.5 trillion farm bill that will shape how America eats with a former Agriculture official

For the 20th time since 1933, Congress is writing a multiyear farm bill that will shape what kind of food U.S. farmers grow, how they raise it and how it gets to consumers. These measures are large, complex and expensive: The next farm bill is projected to cost taxpayers $1.5 trillion over 10 years.

Modern farm bills address many things besides food, from rural broadband access to biofuels and even help for small towns to buy police cars. These measures bring out a dizzying range of interest groups with diverse agendas.

Umbrella organizations like the American Farm Bureau Federation and the National Farmers Union typically focus on farm subsidies and crop insurance. The National Sustainable Agriculture Coalition advocates for small farmers and ranchers. Industry-specific groups, such as cattlemen, fruit and vegetable growers and organic producers, all have their own interests.

Environmental and conservation groups seek to influence policies that affect land use and sustainable farming practices. Hunger and nutrition groups target the bills sections on food aid. Rural counties, hunters and anglers, bankers and dozens of other organizations have their own wish lists.

As a former Senate aide and senior official at the U.S. Department of Agriculture, Ive seen this intricate process from all sides. In my view, with the challenges in this round so complex and with critical 2024 elections looming, it could take Congress until 2025 to craft and enact a bill. Here are four key issues shaping the next farm bill, and through it, the future of the U.S. food system.

The price tag

Farm bills always are controversial because of their high cost, but this year the timing is especially tricky. In the past two years, Congress has enacted major bills to provide economic relief from the COVID-19 pandemic, counter inflation, invest in infrastructure and boost domestic manufacturing.

These measures follow unprecedented spending for farm support during the Trump administration. Now legislators are jockeying over raising the debt ceiling, which limits how much the federal government can borrow to pay its bills.

Agriculture Committee leaders and farm groups argue that more money is necessary to strengthen the food and farm sector. If they have their way, the price tag for the next farm bill would increase significantly from current projections.

On the other side, reformers argue for capping payments to farmers, which The Washington Post recently described as an expensive agricultural safety net, and restricting payment eligibility. In their view, too much money goes to very large farms that produce commodity crops like wheat, corn, soybeans and rice, while small and medium-size producers receive far less support.

Food aid is the key fight

Many people are surprised to learn that nutrition assistance mainly through the Supplemental Nutrition Assistance Program, formerly known as food stamps is where most farm bill money is spent. Back in the 1970s, Congress began including nutrition assistance in the farm bill to secure votes from an increasingly urban nation.

Today, over 42 million Americans depend on SNAP, including nearly 1 in every 4 children. Along with a few smaller programs, SNAP will likely consume 80% of the money in the new farm bill, up from 76% in 2018.

Why have SNAP costs grown? During the pandemic, SNAP benefits were increased on an emergency basis, but that temporary arrangement expired in March 2023. Also, in response to a directive included in the 2018 farm bill, the Department of Agriculture recalculated what it takes to afford a healthy diet, known as the Thrifty Food Plan, and determined that it required an additional $12-$16 per month per recipient, or 40 cents per meal.

Because its such a large target, SNAP is where much of the budget battle will play out. Most Republicans typically seek to rein in SNAP; most Democrats usually support expanding it.

Anti-hunger advocates are lobbying to make the increased pandemic benefits permanent and defend the revised Thrifty Food Plan. In contrast, Republicans are calling for SNAP reductions, and are particularly focused on expanding work requirements for recipients.

Debating climate solutions

The 2022 Inflation Reduction Act provided $19.5 billion to the Department of Agriculture for programs that address climate change. Environmentalists and farmers alike applauded this investment, which is intended to help the agriculture sector embrace climate-smart farming practices and move toward markets that reward carbon sequestration and other ecosystem services.

This big pot of money has become a prime target for members of Congress who are looking for more farm bill funding. On the other side, conservation advocates, sustainable farmers and progressive businesses oppose diverting climate funds for other purposes.

There also is growing demand for Congress to require USDA to develop better standards for measuring, reporting and verifying actions designed to protect or increase soil carbon. Interest is rising in carbon farming paying farmers for practices such as no-till agriculture and planting cover crops, which some studies indicate can increase carbon storage in soil.

But without more research and standards, observers worry that investments in climate-smart agriculture will support greenwashing misleading claims about environmental benefits rather than a fundamentally different system of production. Mixed research results have raised questions as to whether establishing carbon markets based on such practices is premature.

A complex bill and inexperienced legislators

Understanding farm bills requires highly specialized knowledge about issues ranging from crop insurance to nutrition to forestry. Nearly one-third of current members of Congress were first elected after the 2018 farm bill was enacted, so this is their first farm bill cycle.

I expect that, as often occurs in Congress, new members will follow more senior legislators cues and go along with traditional decision making. This will make it easier for entrenched interests, like the American Farm Bureau Federation and major commodity groups, to maintain support for Title I programs, which provide revenue support for major commodity crops like corn, wheat and soybeans. These programs are complex, cost billions of dollars and go mainly to large-scale operations. https://www.youtube.com/embed/6Sz9PJ5BUc4?wmode=transparent&start=0 How the U.S. became a corn superpower.

Agriculture Secretary Tom Vilsacks current stump speech spotlights the fact that 89% of U.S. farmers failed to make a livable profit in 2022, even though total farm income set a record at $162 billion. Vilsack asserts that less-profitable operations should be the focus of this farm bill but when pressed, he appears unwilling to concede that support for large-scale operations should be changed in any way.

When I served as deputy secretary of agriculture from 2009 to 2011, I oversaw the departments budget process and learned that investing in one thing often requires defunding another. My dream farm bill would invest in three priorities: organic agriculture as a climate solution; infrastructure to support vibrant local and regional markets and shift away from an agricultural economy dependent on exporting low-value crops; and agricultural science and technology research aimed at reducing labor and chemical inputs and providing new solutions for sustainable livestock production.

In my view, it is time for tough policy choices, and it wont be possible to fund everything. Congress response will show whether it supports business as usual in agriculture, or a more diverse and sustainable U.S. farm system.

Kathleen Merrigan is Executive Director, Swette Center for Sustainable Food Systems, Arizona State University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Move over Milk Duds! AMC is rolling out its own line of candy

AMC says the supply-chain issues of last year have prompted it to start making its own line of candy, which it will offer to moviegoers for less than what they normally pay for Milk Duds and Twizzlers.

AMC Entertainment CEO Adam Aron said during an earnings call late last week that the chain hopes to roll out the AMC candy later this year or in early 2024.

We noticed recently, as a result of the pandemic and the supply-chain shortages, that candy manufacturers had increased their price to us by a huge amount, Aron said, according to a transcript from Seeking Alpha. Some candymakers [are] increasing their cost for wholesale candy as much as 33% in a one-time bump. Thats kind of [got us] thinking very hard about our candy. And we realized that we could manufacture a private label brand of candy to very high-quality standards. Price it less expensively than our current candy is priced and have a higher profit margin.

The chain says it will continue to carry name brand candy for the people who want it.

Food and beverage spending is critical to the bottom line of AMC. Aron teased second quarter numbers in the call saying the food and beverage per patron spending in April is higher than what it was in the first quarter. We are killing it in F&B. Our F&B spending per patron pre-pandemic was around $5.60. In the first quarter, it was $7.99.

AMCs branded candy would follow the rollout of AMC Perfectly Popcorn in Walmart stores nationwide. The company has also introduced an AMC Visa card in recent months.

Pasta prices in Italy are increasing at twice the rate of the country's inflation

Pasta prices in Italy are increasing at twice the rate of the countrys already considerable inflation. That has spurred the government to assemble a crisis meeting to look at ways to temper the price surge of the popular food.

Set to occur on May 11, reports Reuters, the talks will be headed by a government-appointed watchdog on inflation. The cost of pasta in Italy has skyrocketed 17.5% in the past year, even though the cost of wheat has gone down. Overall inflation in the country currently stands at 8.8%.

Pastas not just expensive in Italy. Prices in the U.S. have spiked since last October as well. A report from the St. Louis Fed tracking the average price of spaghetti and macaroni shows a jump from $1.067 per pound in October to $1.465 in March, after peaking slightly higher than that in February. Thats the highest price on record, with the figures (from the U.S. Bureau of Labor Statistics) reaching back to 1984).

Theres a difference between U.S. and Italian pasta, though. A 1967 Italian decree called the purity law requires that all dried pasta sold in Italy be made from durum wheat, a strain of hard-grained, coarse wheat. That varietal is considerably more difficult to use than traditional bread wheat, but it makes a pasta that holds its form during cooking without becoming soft or bland.

Less than 10% of the worlds total wheat production is durum wheat.

While inflation has impacted several food items in the past few years, pasta is a staple in so many households, especially in Italy, that the impact is considerably more painful. While higher wheat prices have been part of the reason, higher energy costs and supply chain issues have also been blamed for the increases.