A Democratic member of the New Jersey General Assembly has proposed a lottery especially for student loan borrowers.
The gimmick of the lottery is that it would only allow winners to use their jackpots to pay off student loans.
The lawmaker who introduced the legislation is John Burzichelli, reports NJ Advance Media.
If Burzichelli’s bill (No. 4631) passes, New Jersey would become the first state in the union to launch a raffle devoted solely to people saddled with student debt.
“Any vehicle that could provide some relief, it seems to me, it’s worth talking about,” Burzichelli, who represents a swath of small towns roughly between the Delaware River and Atlantic City, told NJ Advance Media.
“We have people graduating from universities with just too much on their shoulders,” the lawmaker also explained. “And that hampers them from doing other things when they reach the workforce.”
The Democrat said that an unidentified lawyer approached him with the novel idea. The lawyer represents certain businesspeople — also unidentified — who would be behind the student-loan lottery.
Under Burzichelli’s proposed lotto scheme, the New Jersey Lottery Commission would contract with a private business operating in the Garden State to manage the lottery. The lottery would be conducted online.
Student loan debtors who want to buy tickets would register their student loans. Other interested people could also buy tickets on behalf of specific borrowers.
Under the proposed legislation, the private company running the student loan lottery would keep 25 percent of the lottery pot. The remaining 75 percent would go to the winner (or winners).
Tickets for the special student loan sweepstakes would cost $3 each.
Debtors would be prohibited from spending more than 15 percent of their total sum debt on the loan lotto. (It’s unclear if the drawings would be weekly, monthly or measured in some other time period.)
If the total lotto payout exceeds a winner’s total loan debt amount, the remainder of the prize would be distributed to other winners.
Burzichelli agreed that student loan debtors can already play the New Jersey Lottery. However, he suggested, the special student loan lottery would have a smaller pool of participants and, therefore, the odds of winning would be greater.
“The student loan crisis is ripe for a market-based solution to mitigate adverse effects,” the legislation declares.
The New Jersey Lottery system (which is managed by a private corporation) features nine games including “Powerball, “CASH4LIFE,” “MONOPOLY MILLIONAIRES’ CLUB” and “Jersey Cash 5.”
Burzichelli noted that the specific details on the new lottery would need to be worked out.
Natalia Abrams, executive director of Student Debt Crisis, a Los Angeles-based group, is not enthusiastic about a student-loan lottery.
“Gamble to pay off your student loan? It’s all kinds of wrong,” Abrams told NJ Advance Media. “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 observed that winning the lottery typically entails income tax implications.
As PBS notes in an excerpt from the book “True Odds” by James Walsh, the odds of winning most lotteries are exceedingly small. For most, the odds of winning are smaller than the estimated odds of getting dealt a royal flush in poker game (1 in 649,739) or getting killed in terrorist attack while traveling abroad (1 in 650,000).
A University of Nevada, Reno study suggests that a person who buys 100 tickets each week for a standard lottery from the age of 18 to the age of 75 would have a one percent chance of winning at some point.
Lotteries generate an estimated $25 billion each year in the United States.
About 70 percent of all 2013 New Jersey college graduates are wallowing in some amount of debt, Burzichelli’s legislation notes. That percentage represents the nation’s fourth highest collective student-borrower debt rate.