23 Democrats are worried about ‘plunging’ student-loan borrowers back into repayment in October without a long-term plan for protecting their wages and credit scores

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  • 23 Democrats asked the Education Dept. how it will protect borrowers’ wages when student-loan payments resume.
  • They cited how nearly half of borrowers with defaulted loans can’t return to good credit standing.
  • Democrats are worried about “plunging” the borrowers back into repayment in October without long-term help.
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Even if the pause on student-loan payments does get extended past October, it would only be temporary. Lawmakers want to ensure the Education Department has plans for long-term borrower protections.

On Wednesday, Sen. Elizabeth Warren of Massachusetts, Sen. Cory Booker of New Jersey, and Rep. Ayanna Pressley of Massachusetts led 23 of their Democratic colleagues in requesting information from the Education Department on practices that “harm student borrowers.” Specifically, in their letter to Education Secretary Miguel Cardona, the lawmakers wanted to know the steps the department is taking to protect borrowers’ wages and benefits when payments resume.

“Even before the coronavirus disease 2019 (COVID-19) pandemic, collections on defaulted student loans were catastrophic for borrowers in default, who saw their wages, tax refunds, and even Social Security checks confiscated, in addition to being forced to pay exorbitant fees,” the Democrats wrote.

The letter cited a report from the Center for American Progress that found 45% of borrowers in default have not found a path to return their loan to good credit standing, which makes housing and job opportunities more difficult to land.

Democrats added that although the CARES Act initially paused student-loan payments during the pandemic, the Education Department and Treasury Department still “improperly garnished and withheld” over $200 million from about 390,000 borrowers during this time.

“The Department’s failure to fully implement the collections moratorium raises concerns about how it will handle the upcoming scheduled resumption of collections and payments on October 1, 2021,” the letter said.

The Education Department also said it would refund any wage or tax refunds collected after the pandemic began, but over 23,000 borrowers who had their wages garnished have yet to receive refunds because the department didn’t have borrowers’ correct addresses on file, according to the National Consumer Law Center, which is why the Democrats are stressing the importance of proper preparation to transition into student-loan repayment.

Many Democrats who have signed this letter are also calling for the payment pause to be extended through at least March of next year, given that both borrowers and services have said they are not prepared to resume payments in just a few months.

The lawmakers wrote: “As we near the currently scheduled end of the suspension of payments and collections, we are concerned about plunging borrowers back into an untenable financial situation, causing long-term damage to their credit and financial stability and a sudden unnecessary drag on our recovering economy.”

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A growing number of US states are giving newborns cash for college savings accounts. New research suggests it spurs parents to save more.

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Sen. Cory Booker (D-NJ).

  • Some states have opened college savings accounts for newborns, and the early results are good.
  • Oklahoma’s savings account for newborns spurred a greater interest in pursuing higher education.
  • Sen. Cory Booker reintroduced legislation in February to give every newborn $1,000 in college savings.
  • See more stories on Insider’s business page.

Providing newborns with college savings accounts at birth has been an idea that has floated around lawmakers’ minds for years. Sen. Cory Booker of New Jersey, for example, campaigned on “baby bonds” when running for president, which would provide every child with a $1,000 savings account.

Some states are now beginning to follow suit. New research reveals those efforts could have an encouraging impact on children’s futures in the years ahead.

An Oklahoma research project, called SEED for Oklahoma Kids or SEED OK, launched 14 years ago by the Center for Social Development at Washington University in St. Louis to study whether creating a savings account for newborns would improve graduation rates and chances of going to college years later.

While the study is not completed, research published this month shows that the families given accounts were more college-focused and contributed more of their own money than those without accounts.

“Our findings demonstrate that CDAs (Child Development Accounts) create more positive outlooks and actions in the family, while also enabling families to grow assets for children’s higher education,” Michael Sherraden, the experiment’s principal investigator, told The New York Times on Tuesday, which reported on the research.

Here’s what states and lawmakers are doing to help further children’s educational successes:

State efforts

In 2007, over 1,300 newborns across Oklahoma were randomly selected to participate in SEED OK, which automatically opens an Oklahoma 529 College Savings Plan account with a $1,000 initial deposit. Another 1,300 – the control group – were also randomly selected to participate, but weren’t given any money. By the end of 2019, those given accounts had an average of $3,243 saved, while only 4% of the control group ended up opening an account.

Also, parents of children with CDAs were over five times more likely to open their own accounts – the CDA in SEED OK prompted a 15-percentage-point increase in the number of accounts opened for the children by their parents.

Across accounts that held deposits from the program between 2008 and 2019, the average balance was $9,032, showing that funds deposited in the account at the child’s birth did not substitute parental savings, but instead, spurred more savings.

Oklahoma isn’t the only state to experiment with college savings accounts. In Maine, the private Harold Alfond Foundation started offering every newborn a $500 grant in 2009, and so far, 116,000 have received a total of $58 million, on top of additional family contributions of $114 million.

Nearly a decade later, in 2018, Pennsylvania adopted legislation to create accounts for every child born in the state with an initial deposit of $100, and this year, Illinois starting giving each newborn an account with $50.

California is also launching a program this year to give approximately 450,000 newborns college savings accounts.

Lawmakers’ efforts

Along with state legislatures, some Democrats on Capitol Hill want to create college savings accounts for every newborn in the country. In February, Booker reintroduced the American Opportunity Accounts Act, also known as “baby bonds,” which would create a savings account with $1,000 at birth, with additional deposits of up top $2,000 each year, depending on income.

“To truly ‘build back better’ our economy, we cannot ignore the extreme and persistent wealth inequality that deprives kids of economic opportunity right out of the gate,” Booker said in a statement. “We know this growing gap has been driven in part by federal policies and a federal tax code that subsidizes asset building for some Americans but fails to extend and expand that opportunity for all Americans. Baby Bonds will start to level the playing field.”

Conservative experts, though, have argued that baby bonds might disincentivize some people from saving their money. Rep. JP Freire, a Republican on the House Ways and Means Committee, criticized Booker’s plans in a February tweet, calling them “job killers.”

“The best path out of poverty is a job,” Freire said.

Rep. Ayanna Pressley joined Booker in pushing for baby bonds, and they wrote a letter to Biden in January urging him to adopt the measure.

“When it comes to racial justice, we cannot afford to wait,” Booker and Pressley wrote. “As we emerge from this dark period of our nation’s history, Baby Bonds is exactly the type of universal, race conscious program necessary to build our economy back better.”

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Democrats urge Biden to stop using local police to enforce federal immigration law

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An LED truck displaying messages expressing concern over the continuing mass deportations of Black immigrants drives past the office of U.S. Immigration and Customs Enforcement (ICE) prior to a #BidenAlsoDeports rally on February 15, 2021 in Washington, DC.

  • Sen. Cory Booker and other Democrats want local police to stop enforcing federal immigration law.
  • In a letter, the lawmakers urged DHS Sec. Alejandro Mayorkas to “immediately terminate” the policy.
  • They argue that using local police makes immigrants afraid to report crimes.
  • See more stories on Insider’s business page.

By enlisting local police in efforts to carry out deportations, the federal government is making the country less safe by discouraging immigrants from coming forward to report serious crimes, Democratic lawmakers argued Thursday in an appeal to the Biden administration.

In an April 22 letter to Alejandro Mayorkas, head of the US Department of Homeland Security, Sen. Cory Booker urged the new administration to “immediately terminate” so-called 287(g) agreements, which effectively allow state and local police “to function as federal immigration agents.”

The New Jersey Democrat was joined on the letter by Rep. Mike Quigley, of Illinois, and Washington’s Rep. Pramila Jayapal, chair of the Congressional Progressive Caucus.

Should the Biden administration fail to act, the lawmakers are prepared to fall back on new legislation, “The PROTECT Immigration Act,” repealing the federal government’s authority to deputize state and local law enforcement.

“Immigration enforcement should not be delegated to state and local police departments that are not equipped to enforce immigration laws – it is the job of the federal government,” Sen. Booker said in a statement. “These agreements undermine public safety and result in the racial profiling and harassment of members of the immigrant community.”

Naureen Shah, senior advocacy and policy director at the ACLU, praised the effort to repeal the program. There is a “growing consensus” that such collaboration is harmful, she told Insider, arguing that it “encourages racial profiling and makes everyone less safe.”

What 287(g) does

Under the 287(g) program, initiated by Congress in 1996, participating law enforcement may interrogate suspected noncitizens who have already been arrested; as of July 2020, police departments in 21 states do this, according to the American Immigration Council. Departments in nine states also directly enforce administrative warrants from US Customs and Immigration Enforcement.”

Perhaps the most infamous partner of the federal government was the Maricopa County Sheriff’s Department, in Arizona, under Joe Arpaio, which in 2007 had signed an agreement with DHS allowing trained officers to interrogate “any alien or person believed to be an alien.” A 2011 investigation by the US Department of Justice’s Civil Rights Division subsequently found the department “engages in racial profiling of Latinos.”

A federal court, the same year, ordered Arpaio to stop detaining people solely for immigration offenses; he refused and was later convicted of criminal contempt.

In light of such abuses, President Barack Obama terminated some previous 287(g) agreements and “generally limited” their use, according to a report by the Congressional Research Service. That came after not just unlawful abuse, but evidence that the program was being used to target “noncitizens arrested for misdemeanors and traffic offenses,” not serious offenders, per the Migration Policy Institute.

President Donald Trump, however, expanded the program, signing 23 agreements with local law enforcement in Texas alone. That, along with highly visible mass raids in major cities, was followed by a steep decline in both lawful and undocumented immigrants coming forward to report domestic violence and other crimes, according to law enforcement.

President Biden has rescinded a number of his predecessor’s policies on immigration, resulting in significantly fewer arrests and formal deportations, not including those summarily removed after crossing the border. But he has thus far declined to terminate 287(g) and related programs, such as “Secure Communities,” which allows local law enforcement to share arrested individuals’ fingerprints with ICE.

In February, more than 60 members of Congress urged the president to end those initiatives.

DHS did not immediately respond to Insider’s request for comment.

“While we’ve begun a new presidential administration, we still need to put an end to our country’s long history of targeting, profiling, and tearing apart immigrant communities while criminalizing those who call them home,” Rep. Jayapal said in a statement.

Have a news tip? Email this reporter: cdavis@insider.com

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The COVID-19 relief bill includes $5 billion in aid for farmers of color who have long faced discrimination by federal officials

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A steel cutout depicting a 19th-century Black farmer rises from a field across the highway from the small community of Nicodemus, Kansas.

  • The COVID-19 relief bill has a $5 billion provision that will forgive debts for farmers of color.
  • Democratic Sen. Raphael Warnock of Georgia led the push for the inclusion of the funding.
  • Farmers of color, and especially Black farmers, faced years of discrimination by federal officials.
  • Visit the Business section of Insider for more stories.

For over a century, Black farmers faced discrimination from the US Department of Agriculture and were largely excluded from federal loans and farm improvement initiatives.

In an effort led by Democratic Sen. Raphael Warnock of Georgia, the $1.9 trillion COVID-19 relief bill that passed on Saturday includes a $5 billion provision that will forgive debts for Black, Hispanic, Indigenous, and other farmers of color, to enable reforms that will assist farmers with building generational wealth.

Last week, Warnock, Georgia’s first Black senator, praised the incorporation of the Emergency Relief for Farmers of Color Act into the COVID-19 bill.

He said that Democrats sought to “ensure equity in our recovery efforts and address longstanding injustices that have left some communities behind for far too long” and pledged that the aid “will not only help farmers of color, but will also lift up the economies of our rural communities working to recover from the economic turndown,” according to Rolling Stone.

Due to systemic racism from both private lenders and government officials, many Black farmers did not have set deed structures that allowed for properties to be passed down in whole, which created fractional ownership setups.

Sen. Debbie Stabenow of Michigan, chairwoman of the Agriculture Committee, strongly backed the effort, lauding Warnock for “coming in and and working to embrace this and get it over the line right away,” according to Rolling Stone.

In 1910, 14% of farmers in the US were Black, compared to 2% today, something that Stabenow highlighted.

“When you look at one of the very first ways that there was racial discrimination after slavery was legally abolished, it was lack of support for black farmers,” she said, adding that they “were discriminated against in terms of land ownership.”

Last year, Democratic Sen. Cory Booker of New Jersey introduced “The Justice for Black Farmers Act,” which would allow Black farmers to individually reclaim 160 acres through a system of land grants to address racial discrimination in federal agricultural policy.

“Overtly discriminatory and unjust federal policy has robbed Black families in the United States of the ability to build and pass on intergenerational wealth,” he said in a statement. “When it comes to farming and agriculture, we know that there is a direct connection between discriminatory policies within the USDA [US Department of Agriculture] and the enormous land loss we have seen among Black farmers over the past century.”

Booker reintroduced his bill last month with cosponsors Warnock, Sens. Elizabeth Warren of Massachusetts, Kirsten Gillibrand of New York, Tina Smith of Minnesota, and Patrick Leahy of Vermont.

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Senators move to make State Department internships paid

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Sen. Cory Booker just won his second term in November.

  • Sens. Cory Booker and Tim Scott just introduced a bill to make State Department internships paid.
  • The bill would also help cover transportation and housing costs for State Department interns.
  • It’s aimed at increasing diversity in the intern ranks and part of a larger paid internship movement.
  • Visit the Business section of Insider for more stories.

Unpaid internships have come under renewed scrutiny in recent days, as discourse has swirled online over their potential for exploitation and inequity. Rep. Alexandria Ocasio-Cortez even weighed in with a tweet on Monday, writing: “Pay your interns! It’ll improve your operation and make it more diverse and just.”

Now, Sens. Cory Booker and Tim Scott are taking it one step further, introducing a bipartisan bill to make all State Department internships fully paid. Booker has already been an advocate for paid internships.

In a press release, the duo cites declines in the number of women and Black workers at the State Department.

The bill would make all State Department internships pay the jurisdiction’s minimum wage. It would also provide housing for students who would live outside the US for their internships, as well as for students who work more than 50 miles away from their permanent addresses. In addition, travel for getting to and from those locations would be covered and targeted outreach to minority-serving institutions would be mandated.

“For far too long, the State Department has failed to recruit low-income and students of color within their internship program largely due to it being unpaid,” Booker said in a press release. “Having a diplomatic corps that represents the diverse makeup of the United States will increase the institutional knowledge and capacity of the State Department and improve our image abroad.”

It’s similar to bipartisan legislation recently reintroduced by Rep. Joaquin Castro.  

“This commonsense legislation will make internships at the State Department fairer, more rewarding, and more open to all, and is a crucial part of my focus on ensuring American diplomats reflect the diversity of the American people,” Castro said in a press release.  

There’s a larger movement to make internships paid

Carlos Mark Vera is the executive director of Pay Our Interns, a group that advocates for paid internships and supports Castro’s legislation. Since its founding in 2016, Pay Our Interns has been changing the conversation around getting interns paid. It was previously successful in getting Congress to allocate $31 million to intern compensation – and now it’s chipping away at the State Department with this bill.

“This is, in my opinion, the golden standard,” Vera told Insider. He said a highlight is how it would make pay the minimum wage rather than a stipend, which sometimes are not enough to live on. 

The bill would transition all unpaid internships to paid ones in three years, and has built-in reporting guidelines, for instance on whether interns are going to public or private schools, what their home state is, and other transparency measures. 

The debate over unpaid internships and their potential for exploitation is not a new one. Research from the National Association of Colleges and Employers finds that students of color are underrepresented in paid internships. 

“This is a big deal for us because it could serve as a model for all other federal agencies, which is our goal,” Vera said.

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