70 percent of New Jersey students from 2013 left school with debt, making it the fourth most-burdened state in the nation for student loans. Now, Assemblyman John Burzichelli is proposing an unconventional fix for the problem: a loan lottery.
According to CBS New York, Burzichelli’s proposed bill would have a private company facilitate a lottery and the New Jersey Lottery Commission would be enlisted to run a drawing for a jackpot to be used to help people pay down their student debt.
People would be able to buy tickets online at $3 each and the winnings would go exclusively to paying down college debt.
“The proceeds do not come to the individual. They go directly to whoever holds the loan, whether it be a lending institution or a university,” Burzichelli said. “So the winner never really sees a check, but their student loan gets satisfied.”
If the legislation passes ,New Jersey would be the first state to have a student loan lottery, reports Matt Friedman for NJ.com.
Burzichelli’s logic for proposing the bill is that while those weighed down with debt could, of course, enter the regular lottery, the pool of people entering the student lottery would be smaller, therefore increasing people’s chances of winning.
Even if the pool in the student lottery is smaller, the odds of winning won’t be high, writes Christine DiGangi for St. Louis Post-Dispatch. This leaves most people in a position of having to figure out a way to pay their student debt, and if they have maxed out the allotment of lottery tickets they will be left with significantly less money to do so.
The bill also states that 20% of the pot would go to the private company running the lottery.
While possibly well-intentioned, the bill has faced harsh criticism. In an editorial from App.com, it was named the winner of the “Dumbest Bill Proposed by a New Jersey Legislator”.
The editor points out that suggesting debt-ridden graduates gamble away money is probably not the most effective way to address the student debt problem, and that the assemblyman should instead look into proposing legislation that would allow students to refinance debt or put monthly caps on loan payments.
The article also points out that the amount of tax the winner would have to pay on the money would defeat the purpose of paying down debt in the first place.
Despite naysayers, Burzichellii is optimistic about his plan:
“It seems like a novel approach. It seems like if properly conducted that it could help some people,” Burzichelli said. “There’s certainly a lot of interest in it, and we have a lot of work to do on the details to figure out where it would fit and how it would work, but it’s a worthwhile conversation because any opportunity that a person has to pay off their student loan and that heavy debt I think would be welcomed.”