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Tag: Crisis

The Source Of The Student Debt Crisis Is Not Expensive Tuition

Matt York / AP

America's surging student loan debt — which now totals more than $ 1 trillion — has been driven by older, low-income students at for-profit schools and two-year community colleges who enrolled in droves during the recession, according to a report released today by the Brookings Institution.

Many anecdotes suggest that the student debt crisis, and rising rate of student loan defaults, has been built by skyrocketing tuition costs and $ 100,000 loan tabs at America's priciest four-year universities. But the report shows that the crisis is largely the result of a sharp rise in enrollment at for-profit colleges and community colleges, and that it is built by much smaller balances — many of just $ 8,000 or $ 15,000.

More troublingly, the report found, for-profit and community college students are defaulting in higher numbers — since 2011, more than a fifth defaulted within two years, more than double the number for borrowers at four-year universities. Many such borrowers, unable to make any payments, have only seen their loan balances swell since they left school.

The report marks a dramatic shift from fifteen years ago, when borrowing was dominated by graduate students and young people at four-year universities, mostly large public schools. In 1999, 70% of new borrowers were students at nonprofit four-year schools. But between 2009 and 2011, students at for-profit schools and community colleges made up almost half of all borrowers, some 45%.

That change is reflected starkly in the list of schools whose students owed the most federal loans. In 2000, just one of the top 20 schools was a for-profit, the University of Phoenix; 16 were public universities. In 2014, 13 schools were for-profits, including 8 of the country's top 10 schools with the highest loan balances, and just seven were public universities.

The amount owed by students at the University of Phoenix grew 1500%, from $ 2.1 billion to $ 35.5 billion.

Brookings Institution / Via brookings.edu

The borrowers at for-profit schools and community colleges are older, poorer, and more high-risk: more likely to drop out without finishing their degrees and poorly insulated from unemployment. They are the students who, the report found, are defaulting on their loans in increasing numbers.

Those borrowers, the report said, are “mired in a system where they are unlikely to have the resources to repay their loans in full, and yet generally have no way to have those loans discharged.”

As the economy strengthens, the report said, there has been a sharp decrease in students enrolling in both for-profit and community colleges, which is likely to eventually improve loan default rates.

But the Brookings report also highlights a growing “gray area” among borrowers: students at a small cluster of non-selective, “unconventional” four year schools that “share many of the characteristics of for-profit institutions.” Those schools have high borrowing rates and poor employment outcomes, the report said — and have only seen their enrollments increase since 2011.

BuzzFeed – Business

Apple iTunes And AppStore No Longer Work In Greece Due To Debt Crisis

PayPal, iCloud, and many online subscription services are now off limits due to laws banning the use of Greek credit cards to spend money outside the country.

Last weekend, Greece's government imposed capital controls — restrictions on the ability to take money out of the country — due to an economic crisis that continues to deepen after the country failed to make a debt repayment to the International Monetary Fund. The restrictions were an attempt to ensure cash remains within Greece's economy and is not simply moved to a foreign safe haven.

However, the move has also had the effect of stopping many payments made using Greek credit cards to online services based outside the country. As a result, ordinary Greeks who are accustomed to using international services such as Apple's AppStore and PayPal are now finding that they can non longer use popular paid-for internet services due to the financial restrictions.


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BuzzFeed – Tech

The Squeezable Mayonnaise Crisis Is Almost Over

Hellmann’s says the amount of inaccessible mayo trapped in empty squeeze bottles was “very serious problem in America.” But those dark days are almost over.

Hellmann’s

One of the things stressing out the maker of Hellmann's mayonnaise was the faulty design of its squeeze bottle. That, and declining sales in the U.S.

If you eat mayo, you've likely confronted the minor frustration of not being able to get those last few dollops clinging to the bottle walls and out of reach at the bottom. The company calls this “a very serious problem in America right now,” which sounds hyperbolic, even if Hellmann's went through the trouble to calculate that 1,000 pounds of its mayo were trapped in squeeze bottles last year, which is enough to make 32,000 turkey club sandwiches.

So Hellmann's recently launched a redesigned squeeze bottle for its mayonnaise that promises to reduce mayo waste by 60% compared to its previous bottle.

BuzzFeed / Via buzzfeed.com

The redesigned squeeze bottle is part of efforts to reverse a recent slide in sales. Hellmann's mayo sales in the U.S. were down about 4.5 percent last year compared to 2012, according to data from research firm Euromonitor International.

The secret to the new bottle design is “a proprietary technology that uses a micro layer of just enough vegetable oil… to allow it to easily slide out of the bottle,” the company said.

The bottle was remolded by packaging company Sidel “to eliminate any deep curves or grooves that could interrupt the flow of the mayonnaise or create pockets where it could get stuck” and the cap was updated by Ermo “to a silicone valve dispensing system” that apparently makes it easier to control the mayo flow.

“The number one complaint about our old bottles was that mayonnaise would stick to the inside,” a spokesperson wrote in an email. “We're committed to continuing to provide quality products and positive experiences that keeps people coming back.”

For those who don't like the squeeze, all Hellmann's will continue to offer its mayo in jars.


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BuzzFeed – Business

The First Victim Of The Ruble Crisis Offers A Bruce Willis Credit Card

Trust Bank, a small Russian lender, was bailed out by the country’s central bank on Monday. It is the first financial institution to be rescued since the collapse of the ruble, and the only to offer a Bruce Willis MasterCard.

The front page of Trust Bank's website has three Bruce Willises.

Via http://trust.ru

Via Reuters:

Russian mid-sized lender Trust Bank is to receive up to 30 billion rubles ($ 530 million) from the central bank to stop it going bankrupt in the first bailout of its kind during the current rouble crisis.

The central bank said its Deposit Insurance Agency, responsible for managing crisis-hit lenders, would take over interim supervision of Trust Bank as of Monday.

The Russian financial sector is being hit on multiple fronts. Financial sanctions, imposed in the wake of the country's annexation of Crimea, limit the ability of the banks to borrow in international markets. Meanwhile, the value of the ruble has halved in recent months, and the country's economy is sliding into a recession.

Any of these factors alone would stress a banking system, but in combination, they could be devastating. “Today, I can say that we have entered or are entering a real, full-fledged economic crisis,” said former Finance Minister Alexei Kudrin in a press conference on Monday.

The government is already preparing to inject funds into the banking system, and on Friday the lower house of parliament rushed through a draft law that would direct up to 1 trillion rubles ($ 16.5 billion) into the banking sector.

So many Bruce Willis pictures.


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BuzzFeed – Business