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(MIAMI) — The arena where the Miami Heat play can now get a new name following the collapse of cryptocurrency exchange FTX.
A federal bankruptcy judge in Delaware agreed to terminate the naming-rights agreement between Miami-Dade County and FTX on Wednesday. The order terminates the 2021 contract that enabled the downtown facility to be called FTX Arena, retroactively to Dec. 30, 2022.
Miami-Dade County now must stop referring to the arena as FTX Arena in all public references and remove signage, advertisements and promotional materials. It is unclear when that process will begin.
The 19-year, $135 million sponsorship agreement between FTX and Miami-Dade County went into effect in June 2021.
The Miami Heat and Miami-Dade County announced that they were “immediately taking action to terminate our business relationships with FTX” in November, on the same day the cryptocurrency exchange began its bankruptcy proceedings.
“The reports about FTX and its affiliates are extremely disappointing,” the team and county said in a statement at the time, adding that they are working to find a new naming rights partner for the arena.
FTX collapsed from a multibillion-dollar crypto darling into a bankrupt cautionary tale within a matter of weeks. The number of FTX investors and customers who prosecutors have said collectively lost $8 billion is likely to exceed 1 million.
FTX founder Sam Bankman-Fried was charged last month in an eight-count indictment with defrauding customers of and lenders to the crypto exchange. He was also charged with defrauding lenders to his privately-controlled hedge fund Alameda Research.
Bankman-Fried pleaded not guilty last week to the federal charges. Prosecutors have accused him of using FTX like a personal slush fund to make risky investments and political donations and to buy lavish real estate.
(NEW YORK) — As cooling inflation offers consumers much-needed relief, many car owners are in for a rude awakening when insurance renewal arrives this year, a new report found.
Car insurance rates are expected to increase by 8.4% across the U.S. in 2023, the largest rate increase in six years, according to the report from research firm ValuePenguin.
The average cost of full coverage car insurance is expected to be $1,780 per year, but rates will vary dramatically between states, the report found.
In Michigan, the state with the highest average price, car insurance will cost $4,788 a year. In Vermont, the state with the lowest average price, car insurance will cost $1,104, the report said.
Vehicle owners in 45 states will see their rates increase by at least 1%, with rates jumping the most in Illinois, Arizona and New Hampshire, the report said. The states that will experience a rate increase below 1% include California, Hawaii, Vermont and Wyoming.
Car insurance companies Geico, Progressive and State Farm did not immediately respond to a request for comment.
The significant nationwide price jump owes to a return to driving patterns resembling pre-pandemic life, as many workers come back to offices and families resume travel, said Divya Sangam, an insurance spokesperson at LendingTree, the parent company of Value Penguin.
“When more people are driving, you have more accidents and a higher volume of claims and that raises insurance rates,” Sangam told ABC News.
The effect of an elevated volume of claims has been exacerbated by the heightened cost of car repairs since a supply chain bottleneck continues to raise the cost of auto parts. A worker shortage adds labor costs too, Cate Deventer, an insurance writer and editor at Bankrate, told ABC News.
Meanwhile, an uptick in medical costs has heightened the amount that insurance companies pay to cover accident-related injuries, she added.
“Inflation is hitting everything across the board,” Deventer said. “It drives up the cost of claims.”
The price of a new car has surged nearly 8% over the past year, while the cost of tires and auto parts have jumped more than 10%, government data shows.
The pandemic-related price pressures tied to pent up demand and supply shortages arrive roughly three years after the outbreak of the coronavirus. The average car insurance rate jumped only 1.3% last year, the report found.
“We were surprised that it took so long for premiums to increase,” Sangam said. “This has been a little overdue.”
The prevalence of extreme weather events makes up another key driver of the insurance price increase, Sangam said.
“With climate change, the biggest story tends to be around homes getting destroyed,” she said. “But in reality, when there’s a massive flood, like in California right now, cars get destroyed. And with weather damage, we’re talking about cars getting totaled.”
The rise of electric vehicles has also contributed to the price spike, since insurance costs total about 28% more for electric vehicles than gas-powered ones, the report said.
The financial pain for car owners will likely prove temporary, Sangam said, predicting that the price increases would slow in the coming years as inflation softens further and the cost of car parts declines.
“It’s not going to rise at the same clip as it has this year,” she said.
Deventer cautioned that a slowdown in rate increases next year will depend on the easing of supply chain bottlenecks and a further cooling of inflation.
“It’s hard to say because we don’t know what’s going to happen with the economy,” she said.
(NEW YORK) — House Speaker Kevin McCarthy, R-Calif., emerged with gavel in hand on Saturday after fierce Republican negotiations, but the concessions he made in the process have heightened concern over a potential economic crisis later this year.
The empowerment of far-right House members in recent days has raised the risk of contentious, high-stakes negotiations over how the federal government should pay for past debts and allocate future spending, economists and budget experts told ABC News.
Failure to reach an agreement before fast-approaching deadlines would send financial markets into turmoil, raise interest rates at a moment when elevated borrowing costs already weigh on economic activity and all but ensure a recession, they added.
Within months, Congress will need to pass two measures in order to avert economic disruption: a debt-limit increase that allows the U.S. government to borrow money for past expenditures, ensuring that the nation continues paying creditors what it owes; as well as a budget that keeps the government funded for next fiscal year.
The faction of conservative Republicans that exerted leverage in the speaker vote has indicated it would not raise the debt limit unless Democrats agree to significant spending cuts; the Biden administration, however, has said it will not take part in policy negotiations conditioned upon the annual borrowing hike.
Sharp spending cuts put forward by some Republicans, meanwhile, risk gridlock over next year’s budget, which could cause a government shutdown that halts some federal payments, economists and budget experts said.
“The events of last week are quite disconcerting,” Shai Akabas, director of economic policy at the Bipartisan Policy Center. “It’s going to make passing any legislation more difficult than usual, and it’s never easy under a divided government to start with.”
“It is a serious risk for the U.S. economy and for Americans’ financial wellbeing,” he added.
Here’s what you need to know about what recent turmoil in the House of Representatives means for the U.S. economy:
Debt limit
The dispute among Republicans over McCarthy centered in part on the party’s approach to the nation’s debt limit, the amount of money that the U.S. is legally permitted to borrow in order to cover its debt.
Since yearly spending by the federal government exceeds tax revenue, the U.S. has accrued tens of trillions of dollars in debt, requiring the country to make ongoing payments so that it doesn’t default on outstanding loans.
In turn, Congress annually passes a measure that allows the U.S. Treasury to increase the amount it can borrow. In some years, the debt-limit increase has become a political lightning rod, setting off debate over the nation’s fiscal responsibility. In 2011, for instance, Congressional Republicans pressured then-President Barack Obama to agree to some spending cuts in order to win their support for a debt-limit hike.
In his effort gain the support of far-right House members, McCarthy agreed to refuse an increase in the debt limit unless Democrats agree to major spending cuts, the New York Times reported.
A dispute over the debt limit will reach a tipping point within months, according to Akabas, who said the organization projects the government will fail to meet its debt obligations at some point in the middle of this calendar year.
Failure to raise the debt limit and ensuing default on U.S. debt — which have never happened before — would cause immense harm to the U.S. and global economies, since the trustworthiness of U.S. Treasury bonds amounts to a cornerstone of domestic and international investment, economists and budget analysts said.
As confidence in U.S. borrowers falls, interest rates on loans for some businesses would rise, slowing economic activity as the U.S. already faces elevated recession risk, they said. Moreover, the stock market would falter, threatening the retirement savings of millions of Americans, they added.
“A default on the debt would be a catastrophe for financial markets and a catastrophe for America’s standing in the world,” Daniel Bergstresser, finance professor at the Brandeis International Business School, told ABC News.
“The American political and economic system is great enough that many treat US Treasury obligations as being as close to a sure thing as exists,” he added, noting that consequences would likely include a fall in the value of the U.S. dollar.
A default on U.S. debt could shed three million jobs from the economy, drive up the cost of a 30-year mortgage by an average of $130,000 and shrink 401(k) savings for a typical worker near retirement by $20,000, according to a report from center-left think tank Third Way.
“If we violate the debt limit for any significant portion of time, we’re almost certain to push the economy into a recession,” Zach Moller, director of the economic program at Third Way, told ABC News.
Akabas, of the Bipartisan Policy Center, described the economic consequences of U.S. debt default as a “conflagration of risks.”
“It’s uncharted waters,” he added. “It would likely bring costs for the U.S. taxpayer, the American economy and the global economy.”
Government shutdown
In addition to covering its previous expenses, the federal government will need to reach an agreement on how it should allocate money for next fiscal year, which begins in October.
If Congress does not pass a budget by then, the U.S. government will shut down, as agencies struggle to sustain government programs and pay federal employees.
A group of far-right Republicans has called for major cuts to government spending that would set the nation on course to balance its budget in 10 years.
As part of concessions made to the conservative faction, McCarthy has vowed to advocate for sharp cutbacks that include a shrinking of entitlement programs like Medicare and Social Security — bulwarks of financial health for many older Americans, the New York Times reported.
Spending cuts on the scale demanded by far-right Republicans would dramatically curtail federal programs, though specifics remain murky since lawmakers have yet to put forward a detailed proposal, economists and budget analysts said.
“Balancing the budget in 10 years is too heavy a lift to be a serious policy proposal,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget in Washington, which advocates for fiscal responsibility through spending cuts and tax hikes.
“The policy they’re asking for needs to be achievable,” she told ABC News.
Meanwhile, if Congress fails to hash out a budget and the government shuts down, the turmoil could have far-reaching effects, including the closure of some national parks and cuts to government services like passport processing.
“While disruptive, shutdowns aren’t disastrous,” she said.
A government shutdown would also impose some economic pain, as the nation sees a reduction of some programs on which Americans rely and a pause in work for some federal employees, Akabas said.
“It’s certainly not good for the economy,” he said.
MacGuineas said concessions made to far-right Republicans in recent days have left her uncertain about how negotiations over the debt limit and budget will be resolved.
“It makes my head hurt,” she said. “I don’t know – and that makes me very uncomfortable.”
(NEW YORK) — The formula for success with Super Bowl commercials in the past has ranged from outrageous and funny to nostalgic, but this year one brand is betting big on fans for a creative twist to play out during the big game.
Doritos announced its return to the Super Bowl for the 23rd year with a “mystery superstar and one lucky customer” to make their debut during Super Bowl LVII.
The brand previously enlisted A-list talent like Lil Nas X for its 2020 cowboy and Cool Ranch campaign, as well as actors Peter Dinklage and Morgan Freeman in its 2016 fire and ice ad.
“A bag of Doritos BBQ, paparazzi and a mysterious person walk into a bar…” the brand tweeted alongside an image of screaming fans looking into a car window where an unidentified eater is about to enjoy a chip.
Now, Doritos has asked fans to create a bold and energetic “triangle-inspired dance on TikTok” inspired by the one from @vibin.wit.tay.
To submit a dance, users can upload the video on TikTok along with hashtags “DoritosTriangleTryout” and “entry.”
The competition is underway and three finalists will be selected by Jan. 13, with the winner announced the following week.
The commercial will air on Sunday, Feb. 12 during the game featuring the new Doritos Sweet & Tangy BBQ, which hit store shelves this month.
Fox, the network broadcasting the Super Bowl, has already sold ads for above $7 million for the 2023 broadcast, according to Variety, which represents a possible record-breaking price for a 30-second in-game spot.
Last year during a conference call ahead of the game, Dan Lovinger the now-president of ad sales and partnerships for NBC Sports Group, said 30-second Super Bowl ad spots were selling in record time for upwards of $6.5 million.
Fox has yet to declare whether ads are sold out for the to-be-determined NFL match-up.
(NEW YORK) — Frequent flyers will quickly recognize Biscoff as the addictive in-air treat from Delta airlines, but the brand has three new delicious doughnuts landing on the menu at Krispy Kreme you can try without taking flight.
For a limited time in the U.S., fans can taste the new Biscoff Doughnut Collection, which includes three new doughnuts with Krispy Kreme’s original glaze and Lotus Biscoff’s cookies and cookie butter.
The Biscoff Iced Doughnut is an original glazed doughnut dipped in Biscoff Cookie Butter icing.
The Biscoff Cookie Butter Cheesecake Doughnut is an original glazed doughnut that gets dipped in Biscoff Cookie Butter icing and topped with a swirl of cream cheese buttercream and Biscoff Crumble.
And finally, the Biscoff Cookie Butter Kreme Filled Doughnut is a round doughnut filled with the new cookie butter filling, dipped in cookie butter icing and topped with a swirl of dark chocolate icing and Biscoff Crumble.
“Our doughnuts made with Lotus Biscoff are popular around the world and it’s definitely time for our U.S. fans to get a taste,” Dave Skena, global chief brand officer for Krispy Kreme, said in a statement.
Customers who purchase any of the Krispy Kreme Biscoff doughnuts will also receive a free Biscoff cookie packet, just like the ones served in the air.
Krispy Kreme also sells these doughnuts in six packs, delivered fresh daily to select grocery stores, including Walmart, Kroger, Food Lion, Publix, Stater Brothers, Wakefern and more.
(NEW YORK) — Millions of Americans have had to struggle to find a new jobs due to a measure in their contracts that prevents them from working for a direct competitor following a set period of time.
These non-compete agreements have been controversial for years, as some economic experts contend they hurt competition within the labor market. Lina Khan, the chair of the U.S. Federal Trade Commission, openly called for ending those clauses in a New York Times op-ed published on Monday.
ABC News’ “Start Here” podcast spoke with Sarah Miller, the executive director of the American Economics Liberties Project, a non-profit that advocates for antitrust regulations, about this proposal.
START HERE: Sarah, you’ve applauded this move. Why?
SARAH MILLER: Absolutely so. Last week, the FTC proposed a new rule that would ban full stop non-compete agreements in employment contracts. So non-compete agreements apply to roughly 30 million Americans. That’s one in five workers. And originally, they were conceived to apply to a kind of very senior level executives who might have access to proprietary or sensitive information. But today, they really proliferated and become an incredibly common part of an employment contract. So they tend to bind workers to jobs and prohibit them from really selling their labor into a competitive labor market. And so that sort of kind of anti-competitive impact in the labor market is part of what FTC Chair Lina Khan is taking aim at.
START HERE: That’s interesting, this idea that it’s not just people that have like big-time company secrets. I mean, how far down the food chain are we talking here? Who has non-compete?
MILLER: So that’s something that we’re going to, I think, [get] at a much fuller picture of during the kind of 60 day comment period that the FTC has just opened.
But we know from anecdotal experience and from kind of talking to working people all around the country that non-compete have applied to everyone from employees at fast food chains like Jimmy Johns, who makes sandwiches to janitors, to engineers, to journalists, to fitness instructors. It really is an incredibly pervasive part of employment causes. Now, like I said…that has a real cost, because what happens when you are essentially bound to a job is you aren’t able to compete with your labor. So you can’t say, move to a job that pays better. You can’t leverage another offer at another firm to increase your salary at know your existing firm.
So the FTC estimates that eliminating [a] non-compete would add about $300 billion cumulatively to workers’ wages. That’s an increase of three or 4%. So we are talking about a significant kind of drain on the pocketbooks of millions and millions of working people from these non-compete agreements.
START HERE: So, I mean, that’s what the FTC says, is that you’d see all the sort of economic growth. You’ve also seen the U.S. Chamber of Commerce immediately came and said this is terrible. In fact, it gives less security to everyone. It means that companies won’t feel as confident when they’re offering contracts in the first place. They’ll actually make less hiring. It’ll hamstring the entire not just they say, not just the entire business community, but also workers themselves. Since companies won’t be as likely to offer that job in the first place. I mean, what’s your response to that?
MILLER: I couldn’t disagree more with that assessment. I think from the Chamber of Commerce— I mean, what we are arguing here is that workers deserve a free market for labor. Workers should be able to start new firms if they have a good idea, and there really shouldn’t be these kind of artificial constraints put on the labor market through the use of non-compete agreements. There’s simply, and kind of on their face, very unfair. And we think that this will create a much more dynamic environment in general when it comes to economic growth by freeing up working people to take the job that’s right. For them to start a new business and serve consumers in a new or different way and to kind of increase economic and business dynamism in the U.S., which has really been on a pretty significant decline over the past 30 or 40 years.
START HERE: Well, can I ask you about the other big criticism of this? I mean, can the FTC even do this? I mean, the U.S. Chamber of Commerce also said this is just blatantly unlawful. The Wall Street Journal had an editorial calling this an air kiss to unions because. Mainly you’d have to tear up if you were getting rid of this right now, you’d have to tear up millions and millions of people’s contracts. Is that possible? Is that feasible and is that legal?
MILLER: I think the FTC has clear authority to make this move. I mean, most of the workers that are subject to non-compete are not unionized. So I would take issue with the categorization of this as an air kiss in general. But what we have seen and what research bears out is that the use of non-compete actually lowers wages for everybody because they are so pervasive, because they put such a chill on the labor market that even if you are not subject to a non-compete yourself, there are jobs that should be available to you that you could compete for that are not available because they are so pervasive across the economy.
START HERE: And like, if you don’t put in a non-compete. Great. Well, will this pay you $10,000 like that, seen as a favor to the employee all of a sudden?
MILLER: Yes, exactly. And so I think that the FTC has authority granted to it from Congress to prohibit unfair methods of competition. That authority, I think, applies in this case. You know, the name of these agreements are non-compete, right? So if the FTC’s mission, if part of its mission is to address kind of anti-competitive practices, I think this falls clearly in the in the purview of that authority.
(NEW YORK) — Near-historic price increases for basics like food and gas have drawn scrutiny to a question at the heart of the economy: How much money must a worker make to stay afloat?
The price of eggs has risen nearly 50% over the last year; while the cost of milk and bread have each jumped about 15%. Even after falling from a summer peak, gas prices remain 10% higher than a year ago.
While price increases have slowed in recent months, they continue to hover near a 40-year high.
For some, a pay hike has softened the blow. Nearly half of U.S. states raised their minimum wages at the outset of 2023. Meanwhile, some major companies have recently upped their entry-level pay. Target, for instance, hiked its base wage to $24 an hour last year.
As cost increases persist and workers try to keep up, buzzwords like “poverty wage,” “minimum wage” and “living wage” are coming back into the lexicon, shaping conversations about what it means to make enough and who decides where to draw the line.
But the definitions and implications of these terms can get overlooked, muddying a centuries-old issue that affects workers and employees alike.
“Ultimately, this boils down to a philosophical question of what the bare necessities really are,” Steve Allen, an economist at North Carolina State University’s Poole College of Management, told ABC News.
Here are the differences between a poverty wage, a minimum wage and a living wage; and why they matter:
Poverty wage
A poverty wage is a level of pay that would put a full-time worker below the U.S. poverty line, an income threshold set by the federal government each year.
The government began to measure the threshold in the mid-1960s, soon after then-President Lyndon Johnson declared a “war on poverty.” Mollie Orshanksy, an employee at the Social Security Administration, developed the measure by multiplying the cost of food by three, since at the time many economists believed that food costs should make up a third of a household’s budget.
“Lyndon Johnson needed a way to demonstrate what people needed to live on,” Amy Glasmeier, a professor of economic geography at the Massachusetts Institute of Technology and the creator of a living wage calculator, told ABC News.
The method of calculating the poverty line has remained the same over the ensuing decades, but officials have updated the measure each year to adjust it for inflation. The poverty line is a uniform measure for all 48 states in the continental U.S. and Washington D.C., but the federal government has developed separate measures for Hawaii and Alaska.
Many economists regard the poverty line as antiquated since it extrapolates overall financial circumstances from a single category of costs and remains uniform regardless of cost-of-living differences between regions, Glasmeier said.
“National data puts New York together with Tupelo, Mississippi,” she said. “That’s about the difference between Mars and America.”
The poverty line is used to determine whether people qualify for a host of federal benefit programs, including the Supplemental Nutrition Assistance Program, or SNAP, which is commonly referred to as food stamps; as well as assistance for school lunch.
Last year, the poverty line for a one-person household was $13,900, which when spread over the number of hours a full-time employee works in a given year, comes out to about $6.80 per hour.
Health and Human Services, a federal agency, will release the 2023 poverty line later this month.
Minimum wage
The minimum wage is the lowest legal pay rate that a company can offer its employees. Crucially, the minimum wage does not derive from a calculation of the subsistence level for a given region or household size, but rather is set by elected officials within a federal, state or local government.
“When employers are saying, ‘How much do I have to pay?’” Glasmeier said. “That’s the minimum wage.”
The U.S. set its first federal minimum wage at $0.25 in 1938, amid the depression, when jobs were scarce and workers lacked leverage.
The federal minimum wage, which was last raised in 2009, stands at $7.25 an hour. When adjusted for inflation, the federal minimum wage last summer reached its lowest level since 1956, the left-leaning Economic Policy Institute found.
Thirty states have raised their minimum wage above the pay rate guaranteed by the federal government, including 23 states that imposed a price hike at the start of this year. Washington is the state with the highest minimum wage, offering workers $15.74 per hour.
In addition, 27 cities and counties raised their minimum wage at the outset of this year, stretching from San Diego, California, to Portland, Maine. The city with the highest minimum wage, SeaTac, Washington, raised its base pay to $19.06.
The nationwide push for minimum wage hikes intensified a decade ago, when fast food workers launched a campaign, called Fight for $15, aiming to raise wages and unionize the fast food sector.
Living wage
A living wage is a pay rate that would allow a given worker or household to afford its basic needs, such as housing, food, health care and transportation.
Unlike the poverty line, which extrapolates a national baseline subsistence based on food costs, a living wage typically derives from a more complicated calculation that takes into account additional expenses as well as cost-of-living differences across regions.
A living wage usually exceeds the poverty wage, since it takes a more expansive view of household expenses, including the need for savings in the event of a financial emergency, Allen said.
“It takes into account a broader set of expenditures that they feel are the bare necessities,” he said. “It includes enough that the household can be in a position to save something.”
There is no single, authoritative living wage measure. A popular example is the Living Wage Calculator at Massachusetts Institute of Technology, which Glasmeier created.
The calculator first asks users to input their location, such as a city or metro area, allowing the metric to incorporate specific regional costs. The metric also offers multiple figures that correlate with the number of adults and children within a given household.
In New York City, for instance, the living wage for a household with one adult and no children stands at about $22.70. In Montana, a living wage for the same household stands at about $16.30.
Living-wage metrics help Americans understand how much money it takes to afford basic necessities, Glasmeier said.
“As a nation, we’re only as good as the conditions of our people,” Glasmeier said. “This information should be a reflection of what is needed, because otherwise it’s arbitrary – and there are always losers.”
(NEW YORK) — Student loan borrowers could soon pay less money back on their loans and be on the hook for a shorter amount of time, should a new Biden administration rule take effect later this year.
The Department of Education on Tuesday began the regulatory process to bring the new loan repayment program into effect — but the exact timing for when student borrowers could take advantage of the new system wasn’t clear.
The process could take any number of months, though it will likely not be finalized before springtime at the earliest, a source familiar with the discussions said.
Under the new plan, the lowest-income borrowers would see their payments fall by about $0.83 per each dollar they owe, the Department of Education estimated. The highest-income borrowers would see their payments per dollar fall by about $0.05.
It would revise a payment program in which roughly eight million Americans are enrolled in, known as the income-driven repayment plan. It ties the amount borrowers owe each month to the amount they make in income.
“Today, we’re making a new promise to today’s borrowers and to generations to come: your student loan payments will be affordable. You won’t be buried under an avalanche of student interest. And you won’t be saddled with a lifetime of debt,” Secretary of Education Miguel Cardona said on a call with reporters.
At their core, the revisions to the program are intended to allow Americans to pay back less in loans over time.
“It means money in the pockets of hard-working Americans,” Cardona said.
It will require smaller minimum payments from borrowers, including $0 in payments from low-income Americans. It will also keep interest accrual more at bay and allow debts to be forgiven sooner — between 10 and 20 years after they were taken out.
Department of Education Undersecretary James Kvaal called it the first “true student loan safety net in this country.”
The new plan was first announced alongside President Joe Biden’s student debt relief policy, which has since been bruised by court challenges. Temporarily halted, its fate will be decided by the Supreme Court by the summer.
But Cardona on Tuesday called the revisions to the loan repayment program the most influential part of the Biden administration’s plan.
Exactly who does this impact, and how?
The new plan would prevent single low-income Americans from having to make any monthly payments if they make less than the annual equivalent of $15 an hour, which is around $30,600 a year. For a married couple with two kids, that would rise to $62,400.
“Workers getting by on $15 an hour often struggle to pay for their housing, food and other basic needs, let alone student loan payments,” Kvaal said.
The new repayment plan would mean they aren’t required to.
It would also cut down the amount that borrowers have to make on their monthly payments by half — from 10% of their discretionary income to 5%, which would protect more of peoples’ incomes from being put toward loan payments.
The new plan also prevents interest accrual, one of the largest issues borrowers face, by forgiving unpaid interest so long as borrowers make their monthly payments on the loan itself.
“As you make your payments, your balance won’t grow. In other words, you won’t go deeper into debt because interest is more than you can afford,” Kvaal said.
The timeline for some debt forgiveness will also be shortened under the new plan, especially for community college students.
After 10 years, the new plan would relieve outstanding debts for people who took out less than $12,000 in loans initially — commonly students who attend less expensive, shorter programs like community college.
The Department of Education estimated that 85% of community college students would be debt-free within 10 years, if they enrolled in the new plan.
And, as is already the rule with the income-driven repayment program, all borrowers with outstanding debt after 20 years of payments would have their debt relieved. (For graduate students, the timeline is slightly longer — 25 years).
How much will the program cost?
The department estimated that the new plan will cost a net total of $137.9 billion over the next 10 years.
That cost increase comes after Congress has already decided to keep the budget flat for the Office of Federal Student Aid during the upcoming year — potentially putting programs on thin ice.
Asked if the Department of Education could still afford the reforms to the IDR plan, a senior administration official said they were still working through the “full impact” but that it was their goal.
“It’s true that we were very disappointed with the level of funding we received from Congress for Federal Student Aid, and that’s going to make it a challenge for us to carry out a number of our policy initiatives,” the senior administration official said.
“We’re currently working through the full impact of the funding level that we received from Congress. And again, our goal is to implement this IDR plan in 2023,” the official said.
Critics of the new plan argue that it could cost even more if it incentivizes more people to take out student loans by changing the rules in borrowers’ favor.
“The changes mean that most undergraduate borrowers will expect to only repay a fraction of the amount they borrow, turning student loans partially into grants,” Adam Looney, a senior fellow at the Brookings Institute, wrote in September, when the plan was first announced.
“It’s a plan to reduce the cost of college, not by reducing tuition paid, but by offering students loans and then allowing them not to pay them back,” he said.
But a senior administration official pushed back on that criticism.
“Almost every time there is a change in student loans to make the terms more generous for students, people talk about moral hazards and potential abuse of the program and there’s just, you know, there’s just no evidence that those predictions have ever come to pass,” the official said.
The department was attempting to change the repayment system because Americans are taking on higher debts than ever before, the official said.
“And the result has been that student debt makes it difficult, even for college graduates, to climb into the middle class, buy a home, start a family, and that many students are left worse off because of their student debt than if they had never gone to college at all,” the official said.
“So our goals are to address those challenges, which are very real,” the official added.
(NEW YORK) — The U.S. Consumer Product Safety Commission is once again warning parents and caregivers not to use any models of Fisher-Price’s Rock ‘n Play sleepers, a type of chair used to soothe and rock infants to sleep.
The safety agency released the repeat announcement Monday, nearly three years after the Rock ‘n Play sleepers were first recalled in April 2019.
The recall applies to approximately 4.7 million sleeper products, many of which were sold between 2009 and 2019 at major retailers such as Target and Walmart and online on e-commerce sites like Amazon.
The sleepers were recalled in 2019 after 30 children were reported to have died after they were placed in a Rock ‘n Play sleeper and “rolled from their back to their stomach or side while unrestrained, or under other circumstances.” Since the initial announcement, there have been reports of at least 70 more children who have died in connection to the sleeper, according to the CPSC.
Both recall announcements add, “Fisher-Price notes that in some of the reports, it has been unable to confirm the circumstances of the incidents or that the product was a Rock ‘n Play Sleeper.”
Fisher-Price immediately stopped sales of the sleeper following the recall, and worked to remove the product from the market.
A congressional investigation was launched following the initial recall, and in June 2021, the House Oversight Committee released its findings, alleging that Fisher-Price “ignored multiple warnings that the Rock ‘n Play was not safe for infant sleep, including reports of infant injuries and deaths,” according to former Rep. Carolyn Maloney, the committee chair at the time.
When reached for comment, Fisher-Price told ABC News’ Good Morning America it had no new statement on the matter, but the company told ABC News back in June 2021 that there “is nothing more important” to the company than the safety of its products and that its “hearts go out to every family who has suffered a loss.”
“The Rock ‘n Play Sleeper was designed and developed following extensive research, medical advice, safety analysis, and more than a year of testing and review,” a Fisher-Price spokesperson said at the time. “It met or exceeded all applicable regulatory standards. As recently as 2017, the U.S. Consumer Product Safety Commission (CPSC) proposed to adopt the ASTM voluntary standard for a 30-degree angled inclined sleeper as federal law.”
Fisher-Price has had to issue consumer alerts about other rocker models before and issued a notice to consumers to stop using their Infant-to-Toddler and Newborn-to-Toddler rockers for sleep in June 2022.
In addition to Fisher-Price’s rocker recall, Kids2 also re-announced a recall Monday for its rocking sleepers, which were also initially recalled in April 2019.
CPSC recommends parents stop using the Rock ‘n Play at once and said consumers can contact Fisher-Price for a refund or a voucher.
(NEW YORK) — More than 7,000 nurses at two hospitals in New York City went on strike early Monday morning demanding better pay, better working conditions and more staffing.
The strike began at 6 a.m. after nurses at Montefiore Medical Center in the Bronx and Mount Sinai Hospital in Harlem failed to reach an agreement with hospital administration during a bargaining session Sunday night, according to the New York State Nurses’ Association.
“These nurses are dedicated professionals who provide quality patient care under unimaginable conditions day in and day out that were exacerbated by the pandemic,” Mario Cilento, president of the New York State AFL-CIO, a labor union, said in a statement Monday. “Now they are faced with the added challenge of short staffing that has reached critical levels and could compromise their ability to provide the best quality care to their patients.”
“It is time for the hospitals to treat these nurses fairly, with the dignity and respect they deserve, and to negotiate in good faith, quickly, to ensure nurses can get back to serving their communities by providing superior care to their patients,” the statement continued.
Strikes are occurring at three locations in the Bronx and one location in Manhattan and will occur until 7 p.m.
In a statement, Montefiore Medical Center said it offered a 19.1% compounded wage increase and promised to create more than 170 new nursing positions ahead of the strike.
“We remain committed to seamless and compassionate care, recognizing that the union leadership’s decision will spark fear and uncertainty across our community,” the statement read.
Separately, Philip Ozuah, president of Montefiore Hospital, wrote a memo to staff members claiming the strike was unnecessary because all parties are allegedly near a final agreement. He added that the nurses turned down an offer that “exceeded the terms already agreed to at the wealthiest of our peer institutions”.
Mount Sinai told ABC News in a statement it also offered a 19.1% increased wage proposal but that nurses rejected the offer.
“Our first priority is the safety of our patients. We’re prepared to minimize disruption, and we encourage Mount Sinai nurses to continue providing the world-class care they’re known for, in spite of NYSNA’s strike,” Mount Sinai officials said.
During a press conference Monday afternoon, Nancy Hagans, president of the NYSNA said the current contract does not address nurse/patient ratios — which they are calling for and has led to stalled negotiations. She also claimed hospitals did not want to be held “accountable.”
Mount Sinai said it was preparing for the strike by “diverting a majority of ambulances,” starting “to cancel some elective surgeries … perform emergency surgery only,” “starting to transfer patients” to other hospitals and medical centers, and “working to safely discharge as many patients as appropriate,” according to an internal memo obtained by New York ABC station WABC-TV.
Gov. Kathy Hochul called for binding arbitration Sunday night to avert a strike, but union officials did not accept the proposal.
“Gov. Hochul should listen to frontline Covid nurse heroes and respect our federally protected labor and collective bargaining rights,” NYSNA said in a statement. “Nurses don’t want to strike. Bosses have pushed us to strike by refusing to seriously consider our proposals to address the desperate crisis of unsafe staffing that harms our patients.”
The NYSNA also urged New Yorkers to not be fearful or concerned about seeking medical care due to the shrike.
“To all of our patients, to all New Yorkers, we want to be absolutely clear: If you are sick, please do not delay getting medical care, regardless of whether we are on strike,” the organization tweeted. “In fact, we invite you to come join us on the strike line after you’ve gotten the care you need.”
The New York State Department of Health said it’s “working closely with affected hospitals to ensure the health and safety of patients as the New York State Nurses Association (NYSNA) strikes proceed at Mount Sinai and Montefiore Hospitals.” The department said it was continuing to monitor the safety and staffing of patients.
ABC News’ Sasha Pezenik and Eric Strauss contributed to this report.
