US Department of Education STUDENT LOAN ANNOUNCEMENT!

 FOR IMMEDIATE RELEASE 

Contact: Press Office (202) 401-1576 or press@ed.gov

 

FACT SHEET: The Biden Administration’s Plan for Student Debt Relief Could Benefit Tens of Millions of Borrowers in All Fifty States

 

On Sept. 20, the White House released state-by-state data on how the Biden Administration’s plan for student debt relief will benefit borrowers in all fifty states, Washington, D.C., and Puerto Rico. Last month, President Biden announced his Administration’s plan to give working and middle-class Americans more breathing room by providing up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 to other borrowers. The Biden Administration expects that over 40 million borrowers are eligible for its student debt relief plan, and nearly 20 million borrowers could see their entire remaining balance discharged.

The Biden Administration’s student debt relief plan will help borrowers and families recover from the pandemic and prepare to resume student loan payments in January 2023. Nearly 90% of relief dollars will go to those earning less than $75,000 per year – and no relief will go to any individual or household in the top 5% of incomes in the United States. By targeting relief to borrowers with the highest economic need, the Administration’s actions are also likely to help narrow the racial wealth gap. Nearly 71% of Black undergraduate borrowers are Pell Grant recipients, and 65% of Latino undergraduate borrowers are Pell Grant recipients.

The below analysis from the Department of Education includes state-by-state data on the estimated number of individuals eligible for student debt relief, and the estimated number of Pell Grant borrowers eligible for relief.

In the coming weeks, the Department of Education will release additional details on how individuals across the country can benefit from the Administration’s student debt relief plan. For more information, visit StudentAid.gov/debtrelief.

 

State or Jurisdiction	Estimated Number of Borrowers Eligible for Student Debt Relief (rounded to the nearest hundred)	Estimated Number of Pell Borrowers Eligible for Student Debt Relief (rounded to the nearest hundred)
AK	60,500	37,300
AL	588,000	404,900
AR	365,600	269,000
AS	2,000	1,500
AZ	810,800	554,900
CA	3,549,300	2,340,600
CO	698,100	419,000
CT	454,200	238,200
DC	105,600	60,300
DE	116,900	68,000
FL	2,427,600	1,716,300
GA	1,506,100	1,039,100
GU	6,900	4,500
HI	111,500	65,700
IA	408,700	248,900
ID	201,400	144,900
IL	1,486,600	863,600
IN	856,400	555,500
KS	360,900	225,500
KY	563,300	394,000
LA	608,100	435,200
MA	813,000	401,200
MD	747,100	419,400
ME	175,000	105,300
MI	1,316,000	849,300
MN	729,700	416,300
MO	777,300	502,200
MP	1,400	1,000
MS	417,200	316,400
MT	120,400	78,600
NC	1,190,500	785,500
ND	82,000	49,600
NE	232,100	136,000
NH	175,100	85,300
NJ	1,082,900	590,300
NM	215,900	159,000
NV	315,800	216,900
NY	2,258,800	1,320,100
OH	1,677,800	1,085,700
OK	454,300	321,600
OR	499,000	332,100
PA	1,717,300	988,800
PR	275,500	241,900
RI	133,900	75,300
SC	681,100	458,400
SD	109,100	65,100
TN	795,300	542,000
TX	3,323,200	2,306,700
UT	282,700	206,300
VA	965,100	566,500
VI	7,800	4,700
VT	72,200	37,100
WA	697,600	423,800
WI	685,100	412,700
WV	213,100	145,000
WY	49,600	31,400
Other	10,900	7,400
Unknown	3,770,600	1,376,000

CRE Investment Blues?

 What’s Constraining CRE Lenders?

ByMark Perkowski

1 min read

Mark Perkowski

Commercial real estate has generally performed well throughout 2022. Apartments are full, warehouses are renting at record rates, and retail shopping centers and hotels are rebounding from the impact of COVID lockdowns. Despite the strong performance, CRE owners are finding the debt market to be increasingly constrained and expensive. Factors within the broader capital markets—such as Fed policy, the corporate bond market and savings account balances—are affecting the loan terms that CRE capital providers can offer. Here are some of the most significant factors.

Money Center Banks

The largest U.S. banks are subject to the Fed’s reserve requirements, which are determined by annual stress tests. The metrics applied for 2022’s hypothetical scenario were especially severe, with the model supposing a 10 percent unemployment rate, 40 percent decline in commercial real estate values and 55 percent decline in stock prices. Although all 34 banks designated as “large banks” by the Federal Reserve passed the test, some then had to take steps to ensure they could withstand such an apocalyptic (albeit unlikely) hypothetical scenario. That entailed the banks reducing lending and tightening credit standards, which has not only had an immediate impact on the largest borrowers—such as REITs, pension funds and debt funds—but also has had a ripple effect throughout the entire commercial real estate sector by raising the cost of capital for all borrowers.

Insurance Companies

Insurance companies employ a very long-term approach to investment and lending. They invest premiums in a diversified set of assets including stocks, corporate bonds, government bonds and commercial mortgages. The investment team evaluates investment options based on relative value and alters allocations based on return metrics. Their CRE mortgage rates are directly impacted by rates in the corporate bond market. Corporate bond spreads gapped out during the first half of 2022 as the market pivoted to a more “risk off” investment thesis. This caused insurance companies to raise the rates on commercial mortgages to match the returns they can achieve in corporate bonds.

The good news for borrowers is that many insurance companies are reluctant to stop lending completely. It takes time to build a pipeline of good loan opportunities, and insurance companies want to remain an active and available source of capital for their best clients. Many lenders will write loans at suboptimal rates (for a short period of time) to maintain relationships with longstanding repeat borrowers and mortgage bankers.

Community Banks and Credit Unions

The primary source of capital for local banks and credit unions is their deposit base. During a recession, savings levels tend to drop; Northwestern Mutual’s Planning and Progress Study 2022 reports the Americans’ average personal savings dropped 15% between 2021 and 2022. This decreases the lending capacity of community banks and credit unions, which prompts them to tighten standards and raise rates. This leads to a natural attrition in loan volume while simultaneously improving credit quality and boosting return metrics.

During times of economic uncertainty, banks and credit unions are more inclined to lend to repeat borrowers with longstanding relationships. They also gravitate towards loans that generate deposits—ideally 10% to 20% of the loan amount. This means C&I loans (operating businesses), and CRE loans with an operating component, become more favored by local lenders during a recession. Examples include owner-occupied industrial buildings, self-storage facilities and high-net-worth borrowers that are willing to store personal deposits with the lender.

CMBS Lenders & Debt Funds

CMBS lenders and debt funds are acutely impacted by capital market fluctuations. CMBS lenders temporarily store loans on their balance sheet until they are packaged with other loans and sold to bond buyers. Debt funds also securitize loans, or they borrow from large money center banks using their loan portfolio as collateral, allowing them to maximize the profitability of their equity investment.

The volatile stock market this year caused a swift drop in demand for securitized bonds, leading to higher spreads. Spreads in the highest-grade tranches were about 70bps higher this summer as compared to Q4 2021. Some lenders have had to sell their loans at a loss (i.e., pay the bond buyers an interest rate higher than the underlying loan) just to get them off their balance sheet. As a response, both CMBS and debt fund lenders have increased their pricing to protect themselves against continued market deterioration.

There may be light at the end of the tunnel, though. Spreads have recently decreased from their highs, and the market seems to be settling. Although a higher rate environment is expected to continue, pricing will stabilize as lenders grow more confident in their ability to offload loans into the secondary market.

Behind-the-scenes factors like Fed policy, bond rates and consumer savings rates have a powerful effect on the amount and cost of capital for commercial real estate. Lenders have become much more cautious in 2022, for now reducing CRE bets or pricing loans higher. But capital is always available for a price, and while the relative free flow of capital of 2021 has ebbed, lenders will continue to seek good opportunities that complement their loan portfolio.

PCS Info On Florida is ON POINT!

 PCS Information 

1 big thing: Homeowners' home equity is falling Tappable equity, the amount a homeowner can borrow against while retaining a 20% equity stake in their home, is now declining after hitting its highest point at $11.5 trillion in the second quarter, peaking in May. Why it matters: A home’s equity is often the largest asset that most people own. Over the past few years, as prices have risen, homeowners have felt security in seeing their nest eggs grow. Now that the equity is declining along with median prices, homeowners may lose that sense of security. Annual home price growth moved from deceleration to decline in July when the median home price fell 0.77% from June, which is the largest single-month decline since January 2011, according to Black Knight’s July 2022 Mortgage Monitor. Home equity levels are an important leading indicator for the economic health of future generations: A home’s equity is a source of generational wealth that is passed down from one generation to the next. While rents increase annually along with the rate of inflation, a home’s mortgage payment stays the same. Homeowners’ incomes may rise over time, meaning they have more disposable income each year to use for other things such as children, travel, education, and home improvements. Meanwhile, tenants are on a hamster wheel of rising rents that have been outpacing their wage increases, preventing them from accumulating additional reserves like a homeowner can do.  The bottom line: Homeowners' savings have been growing while their mortgage balance drops. But it has no effect on renters who are treading water. Our thought bubble: Now that prices are dropping, pulling equity down with it, homeowners could start feeling more like renters, treading water.  Mix that with expected higher levels of unemployment, and we can expect homeowners to join tenants in pulling back on their spending.

2. Flood maps are outdated FEMA’s director this week said that flood maps used by federal agencies, the same ones used by insurance companies, surveyors, and mortgage lenders, are outdated in light of crazy amounts of rainfall caused by climate change. Why it matters: Surveyors use federal flood zone maps to determine when homes and other structures are located in areas prone to flooding. Insurance companies then use those surveys to determine what flood insurance is required to repair or replace those improvements after a flood. In addition, mortgage lenders rely on insurance coverage to protect the asset that is collateral for the loan.  If the maps are inaccurate based on current weather patterns, then homes will be destroyed by floods but there is no insurance to repair or replace them, meaning that homeowners and their lenders can lose it all.  I wrote about this issue from a different angle almost a year ago. The new Risk Rating 2.0 covered in that edition would incorporate other private data, models, and actuarial science.  However, no risk rating will be applied if a property doesn’t appear to be in a flood zone from the outset.  State of play: Regular homeowners’ hazard insurance doesn’t cover rising flood waters. Flood insurance is a separate policy that covers such catastrophes, and the policies are backed by the federal flood insurance program. Mortgage lenders require this additional insurance whenever a home is located in a flood zone, and it can be very expensive.  Recent heavy rainfall in Georgia, Mississippi, Missouri, Kentucky, and Illinois highlights the fact that current flood maps underestimate by 67% the number of homes and businesses that are in significant danger of a flood.  Until the maps are updated, more homeowners will lose their homes to floods with no way to rebuild. Go deeper: The Guardian

3. News you missed: a housing slump, not a crisis Photo Credit: Shiro Hatori The average home sold for less than 100% of the asking price for the first time in 17 months in August. And despite the price reductions, demand is still down. National Mortgage Professional The 30-year fixed rate hit 6.25% this week. Whoa! CNBC Half of US workers say they are “quiet quitting,” meaning they “go slow” as they’d say in the UK. The Hill Home price growth is slowing dramatically, but Tampa again had the highest year-over-year home price increase in July at 29.7%. Housing Wire Jared Dillian opines that it’s a housing slump, not a crisis. Real estate is local, so we’re not going to see anything like we did in the mid-2000s Great Recession. Exotic loan programs haven’t flooded the market with supply as it did then. Bloomberg

4. Pic of the day Who can resist a sloth of huggable bears? Be sure you hug a teddy bear today. I’m so tired, I’m going to curl up with one and take a nap. Wake me up when September ends. Real Estate Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access and ultimately, power.  Knowledge is power…

WWJD About Rich Politicians Crying Over Student Loan Forgiveness….Hmmmm

 

Helping young people crushed with debt is a handout, but a PPP loan isn’t?

Asheville Citizen Times

The notoriously reclusive Marjorie Taylor Greene appeared on NewsMax last week to criticize Biden’s student loan forgiveness initiative as “completely unfair” despite records showing that the construction company she and her husband own had $183,504 worth of Paycheck Protection Program (PPP) loans forgiven in 2020. Additional reporting by Yahoo News shows that the month after receiving a six-figure PPP loan, then congressional candidate Taylor Green donated $450,000 to her own campaign. 

I figured conservative hypocrisy was imminent. I didn’t expect the official White House Twitter to showcase it. Per that account, Pennsylvania Rep Mike Kelly and Florida Rep Matt Gaetz, both vocal critics of loan forgiveness, had $987,237 and $482,321, respectively, in PPP loans forgiven. 

Kelly especially stepped in it when he tweeted, “Asking plumbers and carpenters to pay off the loans of Wall Street advisors and lawyers isn’t just unfair, it’s bad policy,” which is willfully misleading. Wall Street advisers and lawyers typically make way over the $125,000 yearly-salary threshold for forgiveness eligibility. Despite what Republican politicians tweet, this isn’t for “elites.”

It’s bailing out indebted college-educated working-class Americans; teachers, nurses, physical therapists, customer success reps, graphic designers, realtors, small-business owners, the people you most likely live and work around, your family, friends, and neighbors.

On April 6, our own Chuck Edwards also tweeted about how “unfair” it would be to forgive student loan debt. On April 19, 2021, Charlotte’s WBTV published an article titled “Lawmakers push for PPP change that would give them tax break.” 

Per that piece, “Under a law passed last year, the state currently does not tax PPP loans as income but also prevents businesses from deducting the PPP money that was spent as an expense, functionally making the money a wash. Under the proposals to change the law, PPP loans would remain un-taxed and companies could count the PPP money spent as an expense for the purposes of a tax deduction.”

The primary sponsor of the bill that “passed the committee with a unanimous voice vote, without any public disclosure that many of the lawmakers pushing for the bill owned businesses that accepted PPP money.” was good ole Chuck, who’d accepted a $1.1 million PPP government handout, and who stood to make $40,000 to $50,000 if the bill passed. You know what doesn’t seem fair to me? Using your position of power to create legal loopholes that benefit your wallet. 

There’s a war of words that conservatives have perfected for years, and “handout” is the star of this semantic manipulation. Why is it a “handout” for student loans to be forgiven, but with large corporations, it’s always a “bailout?” Why is helping young people crushed with debt a “handout,” but a PPP loan isn’t?” Why are Trump’s two bankruptcies savvy business moves and not socialism? 

Ohio Representative Jim Jordan, a man whose legacy needs to promptly be Paterno-ed, tweeted, “Why should a machinist in Ohio pay for the student loans of a jobless philosophy major in Los Angeles?” I’d ask why a machinist in Ohio should pay 435 congressional reps $174,000 annually for a large majority of them to spend more time tweeting than legislating?

See, the rich, the elites (who include multi-time congresspersons profiting off their connections) have done a solid job of fooling many Americans into thinking that they are above handouts or assistance, all while rigging the system with loopholes designed to give them the most government support. We squabble about handouts, the rich get richer.  

On Aug. 7, our Senator Thom Tillis tweeted, “This is a slap in the face to middle and working-class Americans already struggling with high inflation who will now have to pay off the debt of higher earners.”

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Tillis, however, had no problem voting for Trump’s 2017 Tax Cuts and Job Acts. Per ProPublica, that bill ensured the top 1% of Americans “reaped nearly 60% of the billions in tax savings created by the provision.” Michael Bloomberg, then the 20th wealthiest person in the world, slashed his taxes by $68 million. Isn’t that a slap in the face to working-class Americans? 

Since most cameos in this piece claim to be Christians, I thought we’d end with a quote by my favorite philosopher, Jesus Christ. Jesus said, “He that is without sin among you, let him cast the first stone.” He also strongly advocated helping anyone less fortunate. Conversely, I scoured the bible, but nowhere found, “Thou shalt provide tax-break handouts to billionaire space enthusiasts.”

Pat Brothwell is a former high school teacher, and current writer and marketing professional in Asheville, N.C.

• 
  
• Real Estate
• Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access and ultimately, power.  Knowledge is power…