Archive for July, 2012

How Student Loan Debt Burdens The Poor

The staggering statistics on student loan debt and the accompanying concern over increasing default rates have been making news for some time.  According to the Federal Reserve, in the first quarter of 2012, student loan debt rose to $904 billion, an increase of $64 billion over 2011.  During the year leading up to the end of March, all other forms of household debt fell a combined $383 billion. A July 1 compromise between Congress and President Obama maintains an interest rate of 3.4% on new federally subsidized Stafford Loans, at least for one more year, but this temporary measure comes at a cost to other programs and does nothing to address the mounting debt of those with outstanding loans.

While many of us who work in legal aid feel the burden of student loan debt, the reality for those in our client population who struggle to get an education as a way out of poverty is even worse.  A recent community development research brief studying student loan debt and default released by the Federal Reserve Bank of San Francisco looked at trends in poverty status and institution type. Not surprisingly, the study found that the relative cost of post-secondary education was more burdensome for lower income households.  A family living on $36,000 or less per year would have to pay more than 70% of its income to cover college costs, after accounting for grant aid.  Wow!  Again, not surprising, but low and moderate income student are over represented in for-profit schools, and the default rate for for-profit schools increased 36% from 2007 to 2009.

For-profit schools have been waging an intense lobbying and legal campaign to keep the river of federal dollars flowing into their coffers and escape accountability.  Sadly, on June 30 the US District Court for the DC District struck down the US Department of Education’s rule – two years in the making- which proposed to implement the “gainful employment” requirements of Title IV of the Higher Education Act.  The rule proposed debt-to-income ratios and debt repayment rates for graduates for schools to remain eligible to receive federal funding.  The opinion explains Title IV and the history of the regulations. To give you an idea of the money driving these efforts, according to David Halpern who blogs for the Huffington Post, the for-profit college industry gets about $32 billion of its estimated $35 billion annual revenue from federal financial aid.

Another vulnerable population is veterans, which have also been targeted by for profit schools. At the end of June, 20 state Attorneys General, including Ohio, entered into a settlement agreement with the owner of the website.  The states alleged that QuinStreet, Inc. violated the states’ consumer protection laws in the course of operating websites that generate leads primarily for the for-profit education industry. Part of the reason why military members are attractive to for-profit colleges is because their benefits don’t count toward the proprietary colleges’ cap on federal Department of Education funding. The law says for-profit colleges must get at least 10 percent of their funding from sources other than federal student loans or Pell Grants.

For an Ohio-specific snapshot, the Project on Student Debt reports that for the year 2010, 68% of Ohio’s college grads finish with an average student loan debt of $27,713. However, this figure does not include debt figures for for-profit schools. Neither does it include the debt figures for students who drop out, and for a variety of reasons, lower income students have higher dropout rates. People with student loan problems call legal aid when they are being subject to collection activities.  Collection efforts can be extremely aggressive, and the defenses for defaulters are limited, although the information and resources for borrowers in default have improved. Notably, our friends at the National Consumer Law Center established as a resource for borrowers and their advocates.  Recently the Consumer Financial Protection Bureau published about 2,000 comments it received in response to its request for information regarding private student loans.  This request for information is the CFPB’s first step in the investigation of this industry.

I have highlighted only a fraction of the recent news coverage and activities concerning the debt weight of student loans.  It will continue to get attention as one of the many presidential campaign issues, but we need real relief for borrowers, and real reform that prevents industry abuse.  Options for addressing the systemic problems on the state level are limited.  Those of us who are interested need to join forces with our colleagues on the national scene to work for change.

For more information, check out NPR’s interview of Joseph Stiglizt, Nobel prize winning economist, about his latest book:  The Price of Inequality: How Today’s Divided Society Endangers Our Future.


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PIPP Plus Program Has Eliminated Half Billion Dollars in Low Income Customers’ Utility Arrears in 2011

Good news for low-income Ohioans struggling to pay their utility bills:  major changes to Ohio’s Percentage of Income Payment Plan (PIPP) program that went into effect in November 2010 have lowered costs for customers.

The new program, PIPP Plus, lowered combined gas and electric monthly PIPP payments from 15% of the PIPP customer’s income to 12% (6% gas and 6% electric).  Moreover, if customers make their full monthly payment on time, they accrue no new utility arrears (for the difference between the PIPP payment and the actual bill charge), and one twenty-fourth of their existing electric or natural gas that is erased.  If a customer makes 24 consecutive payments, in full and on time, the entire debt will be forgiven.  Income eligibility remained at or under 150% of the federal poverty level for a household.

The Office of Consumers’ Counsel (OCC) has analyzed data for 2011, the first full year of PIPP Plus.  The data is remarkably positive.  On average, more than 72% of the payments made by customers enrolled in PIPP Plus during 2011 were submitted in full and on time.  The utilities also reported that nearly $500 million in arrearage credits were awarded to PIPP Plus customers who were current with their payments.

The average monthly PIPP Plus payment was slightly under $54 in 2011.  This averages to approximately $647 paid throughout the year towards electric and natural gas bills.

The PIPP Plus changes did not materialize overnight.  Beginning in the late 1990s, legal aid advocates—including Noel Morgan (Legal Aid Society of Southwest Ohio), Ellis Jacobs (Advocates for Basic Legal Equality), Joe Meissner (Legal Aid Society of Cleveland), Mike Walters (Pro Seniors), and Mike Smalz and Joe Maskovyak (Ohio Poverty Law Center)—joined with OCC in pushing for lower monthly PIPP payments and a PIPP arrearage crediting program.  Advocates won a partial victory with the passage of the first electric restructuring bill—Senate Bill 3—which eliminated pre-2000 PIPP electric debt for many elderly and disabled electric customers.  Additional years of advocacy—converging with the desire of Ohio Department of Development staff to incentivize more consistent and timely monthly payments by PIPP customers (and fewer resulting service disconnections and reconnections)—culminated in the adoption of the PIPP Plus program rules in November 2010.

The PIPP Plus program has not eliminated all payment, disconnection and reconnection problems for low-income utility consumers in Ohio.  PIPP Plus customers still have a higher energy burden (percentage of utility payments relative to income) than middle- and upper-class households.  Moreover, the PUCO has taken steps to pressure utility companies, especially natural gas companies, to move more quickly to terminate service to customers who fall behind in their payments.  PIPP Plus customers who miss two consecutive monthly PIPP payments can be terminated from PIPP and have their service disconnected.  Nevertheless, the implementation of the PIPP Plus program—taken as a whole—was a huge victory for low-income utility advocates and should ultimately wipe out billions of dollars in low-income customer utility arrears.

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New Legislation Would Extend Unemployment Compensation Benefits to Some Part-Time Ohio Workers

HB 484, sponsored by Rep. Mike Duffey (R-Worthington), would create the so-called Shared Work Ohio program.  Under the bill, if a Shared Work program is approved by the Ohio Department of Job and Family Services (ODJFS), employees whose hours are reduced instead of being laid off will maintain pension and health care benefits and would be eligible to receive 26 weeks of unemployment compensation benefits on a pro rata basis.  Any unemployment compensation benefits paid to those part-time employees would be charged to the account of the participating employer.

This legislation would be a win–win for employers and employees.  Employers could retain valuable employees by cutting their hours instead of terminating their employment, and thereby avoid expensive retraining and rehiring when business demand recovers.  Employees would benefit because HB 484 would help some workers to keep their jobs during a severe economic downturn and they could receive unemployment benefits despite their part-time employment.

The Ohio House of Representatives passed HB 484 on May 24, 2012.  The Senate Insurance, Commerce, and Labor Committee is now considering HB 484, and it may be given priority consideration when the General Assembly reconvenes this fall.

To urge Senate passage of this legislation, people should contact their state senators as well as the Senate Committee chairman, Senator Kevin Bacon, at (614) 466-8064.

Anyone who has questions concerning HB 484 should feel free to contact Michael Smalz of the Ohio Poverty Law Center at (614) 824-2502 or

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New Ohio Human Trafficking Law

On June 27, 2012, Governor Kasich signed the new Ohio Human Trafficking Law, House Bill 262 (HB 262), after it was passed by the Ohio General Assembly in mid-June.  It becomes law on September 26, 2012.

Human trafficking—i.e., trafficking of persons, usually undocumented immigrants and often minors, who are forced into prostitution or slave labor—is a serious and growing problem in Ohio and across the nation.  In fact, Toledo, Ohio, has been identified as a major transportation hub for human trafficking victims.  HB 262 provides additional remedies and services for all victims of human trafficking, but also contains provisions specifically protecting or helping minor victims of human trafficking.

Key provisions of the new law include:

  • Annual publication of statistical data on trafficking by the Ohio Attorney General (AG).
  • Development of training for peace officers by the AG and the Ohio Peace Officer Training Academy.
  • Development of posters providing information regarding National Human Trafficking Resource Center Hotline and other helpful information.
  • Authorizes awards of victim compensation monies from Reparations Fund to minor trafficking victims who are minors, despite otherwise disqualifying prior criminal convictions or delinquency adjudications
  • Creates the Victims of Human Trafficking Fund with money obtained from traffickers under forfeiture law to fund services for trafficking victims.
  • Creates a civil cause of action for trafficking victims.
  • Enhances criminal penalties for trafficking in persons and related obstruction of justice offenses.
  • Authorizes juvenile court diversion and expungement of prostitution-related delinquency offenses for trafficking victims who were minors at the time of their violations.
  • New juvenile court procedure for “expungement” of a conviction or delinquent-child adjudication for solicitation, loitering to engage in solicitation, or prostitution, resulting form that person’s having been a trafficking victim when s/he was a minor.
    • May apply at any time (no waiting period) for an order of expungement.

Anyone with questions about HB 262 should feel free to contact attorney Michael Smalz of the Ohio Poverty Law Center at (614)824-2502 or

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Governor Kasich Signs New Collateral Sanctions Law

On June 26, 2012, Governor Kasich signed Senate Bill 337 (SB 337), which removes, or creates mechanisms for removing, a wide range of so-called “collateral sanctions” against ex-offenders and prisoners who are reentering society.  These collateral consequences create major barriers to prisoner reentry and encourage recidivism by ex-offenders by making it more difficult for ex-offenders to find a job, attain economic self-sufficiency, and/or gain a stable, productive life.  SB 337 will limit or reduce many of those barriers.  Other states have enacted or are considering similar legislation, but SB 337 is one of the most progressive and far-reaching collateral sanctions laws in the country.

SB 337 becomes law on September 25, 2012.  However, some provisions will actually take effect 90 days after that date because the Ohio Department of Rehabilitation and Corrections must issue more detailed rules implementing the statutory provisions during that 90-day period.

Key provisions in the final version of SB 337 include:

  • Removal of occupational licensing prohibitions for certain occupations including optical dispensers, motor vehicle salvage-related jobs, construction workers, hearing aid dealers and fitters, private investigators, security guards, and cosmetologists.
  • Authorizing an ex-offender to apply to the Deputy Director of the Division of Parole and Community Services or the court of common pleas of the county in which the ex-offender resides for a “certificate of qualification for employment” (with an expedited process) for the purpose of removing employment barriers and restrictions in a wide range of occupations.
  • Immunity for employers from negligent hiring or retention claims
  • Expanded opportunities for sealing of criminal and juvenile delinquency records.
  • Various modifications to juvenile court procedures and its dispositions, including places of detention, sealing of juvenile records, case transfers, etc.
  • Driver’s license changes—discretionary instead of mandatory suspension; payment of reinstatement fees in installments; reduced penalties for driving under suspension or for violating the state financial responsibility law; and elimination of requirement for suspension of license of any person who is named in a motor vehicle accident report that alleges that the person was uninsured at the time of the accident and the person then fails to give to the Registrar proof of financial responsibility; etc.
  • Creates a rebuttable presumption against a court or CSEA imputing income to an incarcerated or institutionalized parent when calculating child support
  • Adds a new child support imputation of income factor (militating against imputing income) for the parent’s decreased earning capacity because of a felony conviction.
  • Permits a court or CSEA, when calculating child support, to disregard a parent’s additional income form overtime or additional employment when the additional income was generated primarily to support a new or additional family member, or under other appropriate circumstances.
  • Requires a court or CSEA to collect information about preexisting child support orders for other children of the same parents when calculating a child support order to ensure that the total of all orders for the children of both parents does not exceed the amount that would have been ordered in a single order.
  • Permits a court, pursuant to a request made in a contempt action, to grant limited driving privileges to a person whose driver’s license is suspended because the person is in default under a child support order.
  • Creates a rebuttable presumption against a court or CSEA imputing income to an incarcerated or institutionalized parent when calculating child support.
  • Revises the rebuttable presumption against imputing income to a parent who is receiving means-tested public assistance benefits to limit the presumption to a parent who is receiving “monetary income” from means-tested public assistance benefits (e.g., OWF, DA, SSI and means-tested VA benefits).  This could mean that a parent’s receipt of Food Stamps would not trigger the presumption.

Although the last change might harm some low-income parents, the bill as a whole should greatly benefit many ex-offenders and/or low-income Ohioans.

Anyone with questions about SB 337 should feel free to contact attorney Michael Smalz of the Ohio Poverty Law Center at (614)824-2502 or

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