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N.J. lawmaker proposes a lottery to pay off student loans

New Jersey LotteryNew Jersey Lottery: N.J. lawmaker proposes a lottery to pay off student loans

A New Jersey lawmaker says the state should try something novel to help people climb out of all that debt from their college days: set up a lottery in which the winning tickets pay off student loans.

State Assemblyman John Burzichelli (D-Gloucester) on Monday introduced legislation (A4631) that would make New Jersey the first state in the country to establish a lottery in which the winnings would go exclusively to college debt.   

 "Any vehicle that could provide some relief it seems to me it's worth talking about,' Burzichelli said, adding that he had been approached by an attorney representing people interested in starting such a business in New Jersey.

"We have people graduating from universities with just too much on their shoulders," he said. "And that hampers them from doing other things when they reach the workforce."

There's nothing to stop those saddled with student debt from playing the regular lottery. But by its nature, Burzichelli said, the pools in a student loan lottery would be likely be smaller and the chances of winning greater.

Under the legislation, the lottery could be operated by a private company under contract with the state, and the drawings would be conducted by the New Jersey Lottery Commission. Any student – past or present – would register information about his debt to the lottery in order to play. A benefactor could purchase a ticket on behalf of a student. 

Seventy percent of New Jersey students who graduated in 2013 had debt, according to the legislation — the fourth highest rate in the nation.

"The student loan crisis is ripe for a market-based solution to mitigate adverse effects," the legislation says. 

Tickets could not cost more than $3 each and would be available online. A student would not be allowed to spend more than the equivalent of 15 percent of his or her debt on the tickets.

If a student were to win a pot that exceeds his debt, other students would be chosen to receive the rest of the money.

And 25 percent of the pot would go to the company running the lottery.

Burzichelli said that although he's already introduced the bill, he still plans on working out more of its specifics.

"It would provide a vehicle for people to help other people in a way that could be pretty engaging," he said.

But Natalia Abrams, executive director of the Los Angeles-based advocacy group Student Debt Crisis, wasn't betting on Burzichelli's idea.

"Gamble to pay off your student loan? It's all kinds of wrong," Abrams said. "I think that if they can afford 15 percent of what they owe they should just pay it to their student loan servicer.'

Abrams also said it's unclear if the lottery winners would owe a large amount in taxes. Lottery winners in New Jersey have to pay state and federal taxes on their prizes.

"If an $80,000 loan is paid off, who is paying the taxes? Those could be very high tax bills for those who are very low-income. This isn't extra money they're winning like a regular lottery," she said. "Even if they got their student loan paid off, they might have 20 or 30 percent of taxes to pay off."

Under the New Jersey Constitution, proceeds from any state-run lottery are dedicated to "state institutions and state aid for education," and cannot be spent on prisons or juvenile detention facilities. Burzichelli's bill leaves it up to the state Treasurer to decide where any proceeds from the student debt lottery would be spent.

NJ Advance Media

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7 comments. Last comment 1 year ago by One-Day.
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United States
Member #166618
May 30, 2015
84 Posts
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Posted: July 7, 2015, 1:21 pm - IP Logged

Im just wondering how they think its gonna fly... i mean make them buy more to pay off even more? lol i mean im not saying its not a good idea, but are you sure your not being to selfish?

 

this would be good for nonprofit..

    music*'s avatar - nw bookeep.jpg
    Happy California
    United States
    Member #157856
    August 2, 2014
    1518 Posts
    Online
    Posted: July 7, 2015, 1:42 pm - IP Logged

     I would vote NO if it was introduced in California.  Taxes are a real game changer.Confused

     I've been rich and I've been poor. Believe me, rich is better. 

     Attributed to Joe E. Lewis and others

      RedStang's avatar - tallman zps6gf4inoc.jpg
      NY
      United States
      Member #121961
      January 21, 2012
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      Posted: July 7, 2015, 1:52 pm - IP Logged

      approached by an attorney representing people interested   

      Those people are probably Debt collectors and this is just a way for them to get their money instead of getting Colleges to lower their Tuition fees.

        Avatar
        NY
        United States
        Member #23835
        October 16, 2005
        3474 Posts
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        Posted: July 7, 2015, 2:55 pm - IP Logged

        "A student would not be allowed to spend more than the equivalent of 15 percent of his or her debt on the tickets."

        So there'd be a limit of, say, 5 to 15 thousand dollars on how much you could gamble away on the very small chance of  winning a lottery with a relatively modest  prize? Plus the chance to possibly have some of the prize you've won given to other people?

        "25 percent of the pot would go to the company running the lottery."

        Yeah, but I'm sure the state won't also be taking a sizable chunk out of such a noble endeavour as this one.

        How could people turn down a chance like this?

          Raven62's avatar - binary
          New Jersey
          United States
          Member #17843
          June 28, 2005
          49758 Posts
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          Posted: July 7, 2015, 3:56 pm - IP Logged

          What? Gamble Away your Student Loan Money for a Chance to Pay Off Your Student Loan, and when you lose the Student Loan won't be Paid Off and You won't have the Money to make your Student Loan Payment.

          Time to Vote John Burzichelli Out of Office!

          A mind once stretched by a new idea never returns to its original dimensions!

            haymaker's avatar - Lottery-012.jpg
            Egg Harbor twp.south Jersey shore
            United States
            Member #112968
            June 29, 2011
            3856 Posts
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            Posted: July 7, 2015, 3:56 pm - IP Logged

            There's so much wrong w/ this I don't know where to begin...

             

            How about a lottery game that pays off my mortgage and...if I win more than the mortgage payoff figure...some other player's

            mortgage gets paid ?

             

            And the tax ? as others mentioned.

             

            Burzichelli was the one that introduced a failed bill for anonymity, he should take another stab at that.

            Extraordinary Popular Delusions & the Madness of Crowds    -- Charles Mackay  LL.D.

              Avatar
              Portland, OR
              United States
              Member #145973
              August 20, 2013
              226 Posts
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              Posted: July 8, 2015, 9:30 pm - IP Logged

              If they pay the taxes and the investment on the tickets, yes.

              "Understand... people are more complicated than the masks they wear in society... everyone is playing to win, and some people will use moral justifications to advance their side"

                                                                                                                                                                        Robert Greene