The cost of the Olympics’ ‘runaway arms race’ and new hope for student loan borrowers in bankruptcy

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Are the Olympics a debt trap for the host city?

Hello and welcome back to MarketWatch’s Extra Credit column, a weekly look at the news through the lens of debt.

Research from Matheson, who studies sports economics, and his co-author Robert Baade, suggests that in most cases host cities lose money on the Olympics. There are a few reasons why that’s the case. For one, cities compete for the privilege of hosting by promising the International Olympic Committee that they’ll build the best facilities.Those facilities often need to be built relatively quickly, which can push up the costs, he said.

Given the lack of fans and extra preparation required for COVID-19, it appears unlikely that the Olympics — which according to official estimates will cost $15.4 billion — will be a boon for Tokyo. Still, given that Japan has one of the largest economies in the world, it probably won’t be a huge problem, Matheson said.

The $12,567 Homaidan borrowed from Sallie Mae were not made to cover cost of attendance and they went directly to his bank account, not through his school’s financial aid office, according to court documents. That meant, his lawyers argued, that the loans didn’t fit into any of the categories exempt from discharge in bankruptcy.

That decision applies to a relatively small share of the overall student loan portfolio. But a new paper argues that more could be done to improve the odds of discharge for the largest group of borrowers — those with federal student debt. The essay suggests the Department implement a policy of not contesting when borrowers try to discharge their debt in bankruptcy because of an undue hardship or create decision criteria to decide when it makes sense to contest. For example, the agency would decide not to contest if Social Security benefits account for at least 50% of a borrower’s income.

 

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youd think being over budget for near 50 years, theyd realize they are under estimating. DUH Olympics

Short answer: yes. Long answer: yes.

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