Student Loan Debt: Expansion of Borrowers’ Rights?

Student Loan Debt: Expansion of Borrowers’ Rights?

Kellen Wittkop[*]

 

College students navigate a constant balancing act of managing the many stresses that accompany enrollment at any institution of higher learning: classes, activities, job searches, etc. But one of the largest causes of anxiety for students is something that often looms largely in the shadows – debt. According to American Student Assistance, a non-profit organization that promotes itself as a “nonprofit you can rely on for neutral, honest student loan solutions,” of the approximate 20 million students in attendance each year, 60% (12 million) of those students borrow annually to cover costs of their education.[2] Estimates from the Federal Reserve Bank of New York and the Consumer Finance Protection Bureau (CFPB) put outstanding student loan debt in the range of $902 billion to $1 trillion.

Some members of Congress have recognized this problem and have taken action. In late December 2013, a group of Democratic senators—led in large part by former Harvard Law professor Elizabeth Warren—announced a package of bills aimed largely at giving student loan borrowers greater rights, now officially titled the “Student Loan Borrower Bill of Rights.”[3] Essentially, the bill seeks to amend the Truth in Lending Act to provide greater disclosure information to borrowers and direction for the order of payment applications by servicers, among other goals.

Some of the issues covered in the bill include: new regulations for servicing private loans (about 14% of all student loans) involving advising the borrower of their long-term options; a “Bill of Rights” section aimed at directing servicers to apply any extra money to outstanding loan principle with the highest interest rate, helping to ensure that borrowers pay down their more expensive loans first; a similar section for the “rights” of borrowers of federal student loans including an instruction to the CFPB to draft rules promoting cost-minimization for borrowers; and other sections involving specific provisions for members of the military and enrollment verifications for servicers.[4] The bill has been referred to the Committee on Health, Education, Labor, and Pensions.

For now, those of us with the specter of debt imminent to our futures, we can only hope that this bill and others like it will change the culture of student loan borrowing.  As Senator Jack Reed stated, “If we’re going to make a dent in making college affordable, we have to hold servicers accountable, increase transparency, and ensure students and their families get a fair deal.”[5]


[*] J.D. Candidate, Harvard Law School, 2016.

[2] Steven Hansen, Are Student Loans Destroying Consumption?, Seeking Alpha (Dec. 30, 2012, 3:09 AM), https://seekingalpha.com/article/1086811-are-student-loans-destroying-consumption [https://perma.cc/7YJP-XHBE].

[3] S. 1803, 113th Cong. (2013).

[4] Karen Weise, Unpacking the Proposed Student Loan Borrower Bill of Rights, Bloomberg Businessweek (Dec. 13, 2013), https://www.bloomberg.com/news/articles/2013-12-13/unpacking-the-proposed-student-loan-borrower-bill-of-rights [https://perma.cc/VK75-NWUN].

[5] Press Release, Office of Sen. Dick Durbin, Durbin, Warren, Boxer, Reed Introduce Student Loan Borrower Bill of Rights (Dec. 11, 2013), https://www.durbin.senate.gov/newsroom/press-releases/durbin-warren-boxer-reed-introduce-student-loan-borrower-bill-of-rights [https://perma.cc/GW8C-RNDP].

I Spy: The Problems with NSA Overreach

I Spy: The Problems with NSA Overreach

Tyler Anderson[*]

 

Over the past several months, Congress has generated considerable outrage regarding the NSA’s collection of data from foreign officials.[2] Some of this criticism is surely deserved; for example, we recently learned that the NSA spied on Ban Ki-moon’s talking points before Ban’s meeting with President Obama to discuss, among other things, global climate change[3]—Moon is not the sort of existential threat toward which the NSA should be dedicating its resources.

Nevertheless, the outrage generated by international spying domestically—and particularly by Congress—largely misses the problems generated by NSA surveillance that is both secret and expansive. Here, the history of intelligence surveillance reform is instructive. The original Foreign Intelligence Surveillance Act and the Foreign Intelligence Surveillance Act Amendments Act (FAA) strongly distinguished between surveillance conducted on foreigners compared to surveillance conducted on Americans.[4] While some of this tailoring is due to Constitutional (primarily 4th Amendment) constraints, it is important to remember that Congress put the policy of limiting surveillance overreach into play as a direct response to the unauthorized wiretapping of non-violent civic activists and other egregious behavior by the intelligence community against American citizens.[5]

In an overly punitive criminal justice system where the typical American commits up to three felonies a day,[6] information gathered by an NSA that can always make credible arguments that its power must be expanded to prevent the next terrorist attack,[7] gives the United States government enormous power that could be leveraged against every American. This is a problem that Angela Merkel and Dilma Rousseff don’t have to worry about.

(I say this while acknowledging that there are many measures the United States government can bring to bear against non-U.S. citizens that can make life very unpleasant for them. Hat tip, Ted Weisman.)


[*] J.D. Candidate, Harvard Law School, 2014.

[2] See Jack Goldsmith, Skepticism about Supposed White House and Intelligence Committee Ignorance About NSA Collection Against Allied Leaders, Lawfare (Oct. 29, 2013, 12:01 PM), https://www.lawfareblog.com/skepticism-about-supposed-white-house-and-intelligence-committee-ignorance-about-nsa-collection [https://perma.cc/TW28-QBBV].

[3] Scott Shane, No Morsel Too Miniscule for All-Consuming N.S.A., N.Y. Times (Nov. 2, 2013), https://www.nytimes.com/2013/11/03/world/no-morsel-too-minuscule-for-all-consuming-nsa.html [https://perma.cc/7D3Y-TFCK].

[4] See generally Tyler C. Anderson, Toward Institutional Reform of Intelligence Surveillance: A Proposal to Amend the Foreign Intelligence Surveillance Act, 8(2) Harv. L. & Pol’y Rev. 413 (2014).

[5] See id.; see also Final Report of the Select Committee to Study Governmental Operations with Respect to Intelligence Activities, United States Senate (“Church Committee”), Report No. 94-755 (1976), available at https://www.intelligence.senate.gov/resources/intelligence-related-commissions [https://perma.cc/9YW2-FC8Y].

[6] See generally Harvey A. Silverglate, Three Felonies a Day: How the Feds Target the Innocent (2011).

[7] See Yochai Benkler, How the NSA and FBI foil weak oversight, The Guardian (Oct. 16, 2013), https://www.theguardian.com/commentisfree/2013/oct/16/nsa-fbi-endrun-weak-oversight [https://perma.cc/56Y9-8ZPV].

Employer Justification for Smoker Discrimination

Employer Justification for Smoker Discrimination

Jenna Tynan[*]

 

Imagine you’re a first-year associate and after your standard fourteen-hour workday, you sit back and indulge in a product recently found more addictive than cocaine: the iconic Oreo.[2] You rush back to work the next morning with a wayward Oreo stain on your favorite blazer only to end yet another long day…with a pink slip!?!  You violated the firm’s categorical ban on Oreo consumption promulgated to reduce diabetic healthcare costs believed to rise with sugar consumption.  Luckily for this author, no employer has banned recreational Oreo consumption, but America’s over 43 million smokers aren’t so fortunate.[3] Healthcare industries, city municipalities and airlines have banned hiring prospective candidates who smoke or use tobacco products, citing controlling costs and presenting a “healthy” image for their rationale.[4] These employers may be justified in their decision given the new “tax” for not proving health benefits to all employees. However, employer regulation, and especially government employer regulation, of what happens in an employee’s home seems to conflict with those penumbral privacy rights cherished and protected by our judicial system.

As a result, twenty-nine states and the District of Columbia have enacted “smoker protection laws,” which prohibit various forms of discrimination based on a candidate’s off-duty smoking habits.[5] The laws vary in their expansiveness and application.[6] For example, D.C.’s legislation exempts employers who prove nonsmoker status is a Bona Fide Occupational Qualification (BFOQ). This carve out may lessen the worries of the hospitals, clinics and fire stations most likely to institute the bans. Other state legislation such as Kentucky’s statute eases employers’ cost concerns by banning smoking-based discrimination for hiring and termination decisions but allowing employers to charge higher rates to smokers for employer-subsidized healthcare premiums. However, most of these laws prohibit any smoker-directed discriminatory activity, and some, such as California’s and North Dakota’s, extend protection to any employee’s “lawful off-duty” activities. Especially with the recent legalization of marijuana, employers may question how these laws square off with previously adopted drug-free workplace policies.

Though employers’ smoking-based discrimination seems to infringe an employee’s right to engage in a lawful off-duty and private activity, state intervention could also be attacked with a similar rationale.  First, employers may invoke the “contract clause” constitutional defense, which states that no state can enact a law violating the obligation of contracts.[7] Employers could aver that such statutes impinge on both their rights and an employee’s rights to enter into valid employment obligations. However, such an argument is likely to fail in the post-Lochner Era. Employers could also appeal to theories that such regulation constitutes confiscatory “takings;”[8] but they are more likely to rely on business needs (such as the case with hospitals), the need to guarantee compliance with smoke-free workplace requirements,[9] or the notion that they shouldn’t have to pay for wrongs caused by tobacco companies. In this case, a business’s right to control costs and shape its workforce conflicts with a person’s right to engage in a lawful private activity. This conflict evokes the questions of whether states should legislatively declare smokers a protected class and how legislation should be tailored to balance competing employer interests. With the rapidly-changing healthcare regime, this issue is one to watch in the future.


[*] J.D. Candidate, Harvard Law School, 2016.

[2] Oreos just as addictive as cocaine—in rats, United Press Int’l (Oct. 15, 2013), https://www.upi.com/Health_News/2013/10/15/Oreos-just-as-addictive-as-cocaine-in-rats/76821381873121/ [https://perma.cc/L9DY-GACE].

[3] See Current Cigarette Smoking Among Adults in the United States, Ctrs. for Disease Control and Prevention, https://www.cdc.gov/tobacco/data_statistics/fact_sheets/adult_data/cig_smoking/ [https://perma.cc/WVQ3-ADX2].

[4] David A. Asch, Ralph W. Muller & Kevin G. Volpp, Conflicts and Compromises in Not Hiring Smokers, New England J. Med. (Apr. 11, 2013), https://www.nejm.org/doi/full/10.1056/NEJMp1303632 [https://perma.cc/H2TY-E4LR].

[5] State ‘Smoker Protection’ Laws, Am. Lung Assoc., http://www.lungusa2.org/slati/appendixf.php [https://perma.cc/AR6R-ERNY].

[6] Discrimination Laws Regarding Off-Duty Conduct, Nat’l Conf. of State Legislatures (Oct. 18, 2010), http://www.ncsl.org/documents/employ/Off-DutyConductDiscrimination.pdf [https://perma.cc/JNN5-8MAC].

[7] U.S. Const. art. I, § 10, cl. 1.

[8] U.S. Const. amend. V.

[9] See, e.g., State Smoke-Free Laws for Worksites, Restaurants, and Bars—United States, 2000-2010, Ctrs. for Disease Control and Prevention (Apr. 22, 2011), https://www.cdc.gov/mmwr/preview/mmwrhtml/mm6015a2.htm [https://perma.cc/99C3-V36U].

The Impact of the Affordable Care Act on Drug Trafficking

The Impact of the Affordable Care Act on Drug Trafficking

Colin Ross[*]

 

Forget the Tea Party—it’s international drug traffickers who truly fear the successful implementation of the Affordable Care Act. The law of supply and demand makes it clear why. Traffickers service, and help create, the American demand for illegal drugs such as cocaine, heroin, and methamphetamine. In 2010, about 1 million Americans suffered from cocaine dependence or abuse; about 350,000 suffered similarly from heroin.[2] Those customers send a steady stream of cash that keeps traffickers well-armed, equipped, and funded. We see the devastating effects of that cash flow when traffickers fight their rivals in bloody battles on Mexican streets or brazenly assassinate top prosecutors in Honduras.[3]

No one could fault the United States for lacking enthusiasm in combatting the international drug trade. But that enthusiasm is usually directed at drug supply—arrests, interdictions, seizures, Miami Vice. Squeezing supply can keep demand in check by making drugs far more expensive and far less accessible than they would be in a legal market—and it has.[4] But the remaining demand is large enough to keep the traffickers prosperous. But were this persistent customer base to begin to erode, traffickers would be in trouble.

Meanwhile, in the hallowed halls of the United States Congress, the Affordable Care Act (ACA) enters the picture. If you didn’t know that the Act deals directly with the nation’s drug problem, join the club. The relevant parts of the law have garnered hardly a mention in most media outlets; they do not have the drama of a drug bust or a shoot-out.

But deal with our drug problem the law does, by targeting what we have too often neglected: drug demand. The fundamental idea is simple: drug abuse and addiction are deeply unhealthy and often self-destructive afflictions; the more people who have health insurance and can afford regular, and preventative, medical care, the more people who will be able to keep addiction out of their lives.[5] Because healthcare is more than resetting your broken leg or being told to go for a jog. Treatment for mental problems and substance abuse (the two are often closely related) is crucial.[6]

The ACA recognizes this by classifying mental and substance coverage as essential benefits that most new health policies must include.[7] And the substance and mental coverage must be comparable to the more standard medical and surgical coverage—this is referred to as the law’s “parity” provision.[8] Americans with health problems that often stem from or lead to the heavy use of illegal drugs will be better able to get the help they need and cease being customers of the traffickers. As far-reaching as the change may be, it is hardly radical. Parity was first put on the books in a 2008 law,[9] but because substance and mental coverage itself was not mandated, the impact was limited.

As you’ve probably heard, and possibly benefited from, the law also allows young adults to remain on their parents’ insurance plans until they are 26. This gives them healthcare in the critical years when virtually all addicts first turn to drugs. And the ban on excluding people with pre-existing conditions?[10] Being formerly addicted to cocaine is one heckuva pre-existing condition. But if we are to significantly reduce drug demand by treating addiction and preventing relapses, it is people with that type of condition that we most need to bring into the healthcare fold.

The law casts an even wider net in search of preventable and treatable addictions with its screening, intervention, and treatment referral program, known as SBIRT.[11] As with much of the rest of the law, the idea of SBIRT is to invest in a modest amount of preventative care to avoid serious health problems down the line. Screeners at sites such as health clinics and emergency rooms will automatically evaluate patients’ alcohol and drug use. They can then offer advice and information if they detect signs of substance abuse, or grant treatment referrals in severe cases.

Some have criticized the new provisions, especially parity, on the grounds that they will increase costs.[12] In the short-term, these critics are probably right. Better insurance costs more.

But we all are already paying under the status quo, in both economic and moral costs—for the addiction of our fellow citizens, for the wasted potential, for the resulting crime, and for the violence in drug source and transit countries. To not act is to accept those costs.

But the Act is on the ropes now, threatening to collapse under the weight of technical problems and misleading presidential rhetoric. Will it? The traffickers can only hope.


[*] J.D. Candidate, Harvard Law School, 2016.

[2] Substance Abuse and Mental Health Servs. Admin., U.S. Dep’t of Health and Human Servs., Results from the 2010 National Survey on Drug Use and Health: Summary of National Findings 71 (2011).

[3] See Patrick Corcoran, ‘30 Killed’ in Gunfight as Mexico State Heats Up, InSight Crime (Aug. 31, 2012), https://www.insightcrime.org/news/analysis/30-killed-in-gunfight-as-mexico-state-heats-up/ [https://perma.cc/8FSW-4VKQ]; Marguerite Cawley, Honduras’ Top Anti-Money Laundering Prosecutor Murdered, InSight Crime (Apr. 19, 2013), https://www.insightcrime.org/news/brief/honduras-top-anti-money-laundering-prosecutor-murdered/ [https://perma.cc/Z98T-RJVW].

[4] See Peter Cohan, Is it Time to Legalize Illicit Drugs?, Forbes (July 9, 2012), https://www.forbes.com/sites/petercohan/2012/07/09/is-it-time-to-legalize-illicit-drugs [https://perma.cc/8K3X-F7WE].

[5] See generally Keith Humphreys, The Dramatic Arrival of Health-Oriented Drug Policy, The Reality-Based Community (Mar. 11, 2013), http://www.samefacts.com/2013/03/drug-policy/the-dramatic-arrival-of-health-oriented-drug-policy/ [https://perma.cc/5PDU-6HAS].

[6] See Jun Yan, Survey Finds Substantial Overlap of Mental Illness, Substance Abuse, Psychiatric News (Aug. 3, 2012), https://psychnews.psychiatryonline.org/doi/full/10.1176/pn.47.15.psychnews_47_15_8-a [https://perma.cc/Y982-2TQB].

[7] Kirsten Beronio, Rosa Po, Laura Skopec & Sherry Glied, Affordable Care Act Expands Mental Health and Substance Use Disorder Benefits and Federal Parity Protections for 62 Million Americans, U.S. Dep’t of Health and Human Servs. (Feb. 20, 2013), https://aspe.hhs.gov/report/affordable-care-act-expands-mental-health-and-substance-use-disorder-benefits-and-federal-parity-protections-62-million-americans [https://perma.cc/NH6G-X2Q9].

[8] Jeffrey A. Buck, The Looming Expansion And Transformation Of Public Substance Abuse Treatment Under The Affordable Care Act, HealthAffairs (Aug. 2011), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0480 [https://perma.cc/X5V6-32UE].

[9] Mental Health Parity and Addiction Equity Act of 2008, Pub. L. No. 110-343, 122 Stat. 3765.

[10] See Jesse Singal, Why You Should Care About Obamacare, The Fix (Apr. 3, 2012), https://www.thefix.com/content/obamacare-supreme-court-addiction-treatment-decision8921 [https://perma.cc/3ZXU-32JE] (“Almost everyone who develops an addiction to alcohol or tobacco or to other drugs does so in adolescence or in young adulthood . . . .”).

[11] SBIRT: Screening, Brief Intervention, and Referral to Treatment, SAMHSA-HRSA Center for Integrated Health Solutions, U.S. Dep’t of Health and Human Servs., https://www.integration.samhsa.gov/clinical-practice/sbirt [https://perma.cc/D7JC-25WQ].

[12] See J.D. Tuccille, Mental Health Parity is a Nice Obamacare Gesture, With a Big Price Tag, Reason: Hit & Run (Nov. 13, 2013, 12:16 PM), https://reason.com/blog/2013/11/13/mental-health-parity-is-a-nice-obamacare [https://perma.cc/SZ6N-6SUW]; Merrill Matthews, New Mental Health Mandate Will Make Obamacare More Expensive, Increase Fraud And Canceled Policies, Forbes (Nov. 11, 2013), https://www.forbes.com/sites/merrillmatthews/2013/11/11/new-mental-health-mandate-will-make-obamacare-more-expensive-increase-fraud-and-canceled-policies/ [https://perma.cc/DNG2-DVH8].

Rosie the Riveter Cuts the Cap

Rosie the Riveter Cuts the Cap

Jenna Tynan[*]

 

This year, Harvard Business School celebrates the 50th anniversary of its first coed class.[2] This effort to break gender barriers in education was just one piece of the greater movement (advanced through direct action, judicial decisions, and legislation) to enhance the status of women in the business community. The next legislative advance for female entrepreneurs comes from an unlikely source: The National Defense Authorization Act of 2013 (NDAA).[3]

The specific provision in the 600-plus-page document eliminates caps on contracts set aside for Women-Owned Small Businesses (WOSB) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSB). Previously, contracting officers could only set aside contracts valued less than $6.5 million for manufacturing and $4 million for all other industries. Proponents believe that government agencies will be in a better position to meet the statutory goal of WOSBs representing no less than 5% of federal contracting and subcontracting revenue.[4] But should women business owners celebrate because the NDAA has cut the cap?

The legislation provides an example of how the law of unintended consequences may thwart otherwise favorable efforts. The legislative history itself fails to indicate dubious intentions: Senator Olympia Snowe (R-Me.) proposed the amendment, which was co-sponsored by six senators (Democrats and Republicans, male and female).[5] However, this change may not favor female small business-owners as expected. First, the number of contracts set aside for women-owned small business concerns may dwindle as agencies meet representation goals with a few big-ticket procurements. In essence, the same amount of contracting funds may become concentrated in a few WOSBs. If these businesses remain under revenue thresholds for their procurement category, a WOSB oligopoly could ensue, thereby restricting the competition the amendment sought to enhance. However, considering the practical context of government procurement, this result is highly unlikely to occur: “small business” definitions prevent, perhaps imperfectly, such concentration.

The more interesting result involves an ancillary amendment in the NDAA that changes how subcontracting is calculated for “similarly situated entities.”[6] Small business “set aside” contractors generally cannot subcontract out more than 50% of a contract’s value. However, the amendment now treats activities subcontracted to “similarly situated entities” (i.e. other women-owned businesses) as “prime activities” (i.e. not subcontracted) for purposes of the threshold. What’s the issue? Assume Rosie Rivets (a WOSB) wins a $10 million contract, but that Rosie Rivets subcontracts 70% of the project to Betty Builders (another WOSB). There’s no problem yet, as both contractors are promoting the legislation’s goals. Now assume that Betty Builders subcontracts out 90% of its tasks to Big Boys, a standard company (i.e. not a small business and not women-owned). Because the amount contracted to Betty Builders is treated as “prime” no subcontracting flag is raised.  As a result, Rosie Rivets walks away with $3 million in revenue, Betty Builder with $700,000 and Big Boy’s wins the lion’s share of $6.3 million.

Many protections against this type of gaming do exist. For example, contracting officers are not impelled but merely allowed to set aside higher contracts. Moreover, procurement regulations and/or the fact that economic benefits from the arrangement would be minimal may further restrict gaming on the behalf of larger contractors. Thus, well-intentioned legislation may result in unexpected consequences, but for now, Rosie has indeed cut the cap.


[*] J.D. Candidate, Harvard Law School, 2016.

[2] 50 Years of Women in the MBA Program, Harvard Business School (last updated Apr. 17, 2013), http://www.hbs.edu/women50/ [https://perma.cc/GU4S-3VRT].

[3] National Defense Authorization Act for Fiscal Year 2013 (“NDAA”), Pub. L. 112–239, 126 Stat. 1632.

[4] See Press Release, United States Small Business Administration, SBA Announces Changes to Contracting Program For Women-Owned Small Businesses (Jan. 17, 2013), https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-announces-changes-contracting-program-women-owned-small-businesses [https://perma.cc/7GVP-CNRA].

[5] See S. Amdt. 3218, 112th Cong. (2012) (agreed to in Senate by voice vote, Dec. 3, 2012).

[6] See NDAA § 1651(e)(2)(C), 126 Stat. at 2081 (2013) (codified as amended at 15 U.S.C. § 657s).