Business
Ukraine war leaves Indian students stranded and desperate to finish degrees
Shishupal Rozen’s dream of becoming a doctor was blown apart on February 24 when Russia invaded Ukraine.
The fourth-year medical student was training at Kharkiv’s largest university when Russia unleashed some of the war’s fiercest bombardment on Ukraine’s second city.
Rozen took shelter from the barrage in the Studentska metro station, which reminded him of photos he had seen of London during the second world war.
Under Operation Ganga (Ganges), New Delhi organised the mass evacuation of Indian students, who numbered between 15,000 and 20,000 before the war, into Romania, Hungary and Poland. Rozen managed to cross into Poland in March, and from Warsaw flew home on a government-organised evacuation flight.
“When we arrived in Delhi, there were lots of ministers greeting us,” said Rozen, 23. They did everything so that we would reach safety after we crossed the Ukrainian border.”
But more than five months later, Rozen is living at home with his family in a village near Patna, in India’s north-eastern Bihar state. He recently finished his semester online. But local authorities do not recognise online training for aspiring doctors so he is trying, fruitlessly, to secure a spot at a medical college in India.
“We came from a war zone to fight another war,” Rozen said. “This time, our future is at stake, and the Indian government is in mute mode.”
Rozen is just one of thousands of Indian students whose education has been suspended and are demanding that the Indian government and medical authorities help them.
Since fleeing Ukraine, students have staged protests, including a recent hunger strike in New Delhi. They have petitioned Prime Minister Narendra Modi and other officials to support and have asked authorities to accommodate them at domestic medical colleges so they can complete their degrees.
The students’ complaints are unusual in that they come from a young, largely middle-class and upwardly mobile demographic, where support for the ruling Bharatiya Janata party is widespread.
India needs medical personnel but criticism of the government has been subdued in a country facing myriad economic and social challenges.
“The students are from different parts of India and concerted action among them is difficult in terms of waging a long and effective protest that might make a difference,” added Ashok Swain, a professor at Uppsala University in Sweden and frequent critic of the Modi government.
The plight of the students was raised recently in India’s parliament.
“We have been in touch with educational authorities in Ukraine in this context,” Meenakshi Lekhi, culture minister, said in response. “The Ukrainian side has essentially reiterated its willingness to continue online courses.” She did not address the issue of accommodating students at Indian institutions.
Before the war, Indians were the largest group of foreigners studying in Ukraine, accounting for nearly a quarter of the total.
Ukrainian medical schools offer courses in English, which were a popular alternative for Indians unable to secure spots in their country’s ferociously competitive state colleges or pay for a private institution.
Akash Raj, 19, a second-year student at Ivano-Frankivsk National Medical University in western Ukraine, was woken by a phone call on the morning of the invasion. “My friend called and said there was a bomb blast in a nearby airport and when we woke up we saw a black cloud over it.”
The Indian embassy told students to leave, he said, and he took a bus towards Romania. After an eight-hour trek on foot and an overnight wait in sub-zero temperatures, he managed to cross the border, and then fly to Delhi.
Back in India, Raj returned to his family home in Gurgaon near Delhi, where he follows online classes from Ukraine. “I am not happy because I very much like offline classes,” he said.
His father, RV Gupta, a medical engineer, belongs to an association of parents of evacuated students, which has petitioned the government and courts for redress for their children and staged several protests.
“What we were expecting was that the government would think positively and would accommodate all the students in India,” Gupta said, “But they didn’t.”
A senior Indian official told the Financial Times that the matter was being dealt with by respective state governments. “As far as the central government is concerned, extant rules on medical studies — admissions, qualifications, eligibility criteria, etc — have to be followed and adhered to,” he said.
Authorities have pointed out that admission requirements and medical practitioner standards were always tough for foreign-trained doctors, whether from Ukraine or elsewhere.
Thousands of Indian students studying in China have also returned home since 2020 because of Beijing’s draconian Zero Covid policies.
Last month, India’s National Medical Commission said it would allow medical students who had completed their degrees before being forced to leave Ukraine, China or elsewhere to sit screening tests that would allow them to practise medicine.
However, the measure did not cover students whose courses were interrupted midway, as with the majority of students who had to evacuate, including Rozen.
Despite the obstacles, he hopes to return to Ukraine after the war to complete his course. “I think one day it will happen,” he said. “I can move hell or heaven to become a doctor.”
Twitter: @JohnReedwrites
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Business
Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024
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Americans who save for college in 529 plans will soon have a way to rescue unused funds while keeping their tax benefits intact.
A $1.7 trillion government funding package has a provision that lets savers roll money from 529 plans to Roth individual retirement accounts free of income tax or tax penalties.
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The House passed the measure Friday and the Senate did so Thursday. The bill heads to President Biden, who’s expected to sign it into law.
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The rollover measure — which takes effect in 2024 — has some limitations. Among the largest: There’s a $35,000 lifetime cap on transfers.
“It’s a good provision for people who have [529 accounts] and the money hasn’t been used,” said Ed Slott, a certified public accountant and IRA expert based in Rockville Centre, New York.
That might happen if a beneficiary — such as a child or grandchild — doesn’t attend a college, university, vocational or private K-12 school, or other qualifying institution, for example. Or, a student may receive scholarships that mean some 529 funds are left over.
Millions of 529 accounts hold billions in savings
There were nearly 15 million 529 accounts at the end of last year, holding a total $480 billion, according to the Investment Company Institute. That’s an average of about $30,600 per account.
529 plans carry tax advantages for college savers. Namely, investment earnings on account contributions grow tax-free and aren’t taxable if used for qualifying education expenses like tuition, fees, books, and room and board.
However, that investment growth is generally subject to income tax and a 10% tax penalty if used for an ineligible expense.
This is where rollovers to a Roth IRA can benefit savers with stranded 529 money. A transfer would skirt income tax and penalties; investments would keep growing tax-free in a Roth account, and future retirement withdrawals would also be tax-free.
Some think it’s a handout for the rich
However, some critics think the rollover policy largely amounts to a tax handout to wealthier families.
“You’re giving savings incentives to those who can save and leaving behind those who cannot save,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.
A 2012 analysis conducted by the Government Accountability Office found the typical American with a 529 account had “much more wealth” than someone without: $413,500 in total wealth for the median person, about 25 times the amount of a non-accountholder.
You’re giving savings incentives to those who can save and leaving behind those who cannot save.
Steve Rosenthal
senior fellow at the Urban-Brookings Tax Policy Center
Further, the typical owner had a roughly $142,000 annual income versus $45,000 for other families, the GAO report said. Almost half, 47%, had incomes over $150,000.
The new 529-to-Roth IRA transfer provision doesn’t carry income limits.
Limitations on 529-to-IRA transfers
While the new tax break primarily benefits wealthier families, there are “pretty significant” limitations on the rollovers that reduce the financial benefit, Jeffrey Levine, a certified financial planner and certified public accountant based in St. Louis, said in a tweet.
The restrictions include:
- A $35,000 lifetime cap on transfers.
- Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
- The rollover can only be made to the beneficiary’s Roth IRA — not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child’s IRA, not the parent’s.)
- The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
- Accountholders can’t roll over contributions, or earnings on those contributions, made in the last five years.
In a summary document, the Senate Finance Committee said current 529 tax rules have “led to hesitating, delaying, or declining to fund 529s to levels needed to pay for the rising costs of education.”
“Families who sacrifice and save in 529 accounts should not be punished with tax and penalty years later if the beneficiary has found an alternative way to pay for their education,” it said.
Are 529 plans already flexible enough?
Some education savings experts think 529 accounts have adequate flexibility so as not to deter families from using them.
For example, owners with leftover account funds can change beneficiaries to another qualifying family member — thereby helping avoid a tax penalty for non-qualified withdrawals. Aside from a kid or grandkid, that family member might be you; a spouse; a son, daughter, brother, sister, father or mother-in-law; sibling or step-sibling; first cousin or their spouse; a niece, nephew or their spouse; or aunt and uncle, among others.
Owners can also keep funds in an account for a beneficiary’s graduate schooling or the education of a future grandchild, according to Savingforcollege.com. Funds can also be used to make up to $10,000 of student loan payments.
The tax penalty may also not be quite as bad as some think, according to education expert Mark Kantrowitz. For example, taxes are assessed at the beneficiary’s income-tax rate, which is generally lower than the parent’s tax rate by at least 10 percentage points.
In that case, the parent “is no worse off than they would have been had they saved in a taxable account,” depending on their tax rates on long-term capital gains, he said.
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The knives are out for Goldman Sachs CEO David Solomon, and this time the people brandishing them aren’t the usual suspects — his junior staffers annoyed that they have to work late or come into the office several times a week.
Solomon’s problems are more serious and existential, I am told, and how he handles what can best be described as a revolt in some quarters of Goldman’s middle and upper management ranks could determine how much longer he stays in his job.
Solomon, 60, took the job in 2018 and was always somewhat of an odd choice to run the white-shoe investment bank that usually cultivated its leaders from within. He cut his teeth at a decidedly un-Goldman-like venue: the scrappy investment bank Bear Stearns (ultimately one of the causalities of the 2008 financial crisis).
He joined Goldman in 1999, as a partner, no less, because his deal-making chops allowed him to skip layers of management.
In other words, Solomon is an outsider at a firm with a wickedly insular culture. He has a quirky side gig as a DJ in the summer Hamptons party circuit. He’s also not one for small talk, and doesn’t consult with a lot of people before handing down his edicts.
“He doesn’t breed a lot of love,” said one former Goldman executive who knows Solomon well.
Lots of people at Goldman don’t like him, and they’re letting their views be heard both internally and with pals at rival firms.
For the record: I’ve met Solomon and like him for his no-BS style. And until pretty recently, the numbers show him doing a great job. Goldman was running on all cylinders in deals and trading. Even as the market corrects, shares are up about 60% since Solomon took over as CEO in 2018 compared to around a 44% rise in the S&P during that time.
Goldman is still the top M&A shop, even widening its market share over rivals in that important business line. Solomon was the first among his fellow CEOs to see the downturn and enact significant layoffs to cut costs.
Still, the grumbling about Solomon is spreading to the managing director and partner class. High-priced Wall Street talent don’t call all the shots at any firm, of course. But Goldman’s MDs and partners have historically been a powerful force when the board decides the fate of current management, which makes Solomon’s hold on his job increasingly precarious as more and more of them defect from his camp.
Here’s how they’re building a case against him: Goldman’s longtime archrival investment bank Morgan Stanley now easily dwarfs Goldman in market value, $144 billion to $116 billion, continuing a trend that predates Solomon. That comes amid a slowdown in banking deals, Goldman’s bread-and-butter business, and Solomon’s home turf.
Morgan’s CEO James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues. Solomon’s effort to diversify was an overindulgence in something called Marcus, a digital retail bank launched by his predecessor Lloyd Bankfein that Solomon made his baby. So far, it’s been a disaster, so much so that Solomon has been forced to scale back, possibly on the way to winding it down.
Goldman, meanwhile, has missed targets in its recent earnings announcements, and more downward surprises could be in store as markets continue to wobble. Bonuses are down, in some places cut in half, albeit from the nosebleed levels of 2021.
Traders did well in 2022 because Goldman’s are particularly adept in profiting off turbulence, but part of their pool is being diverted to bankers to keep them in-house until the deal slowdown ends.
Since Solomon is a banker, he’s also being accused of favoritism, which in truth is a pretty lame charge, since bankers often subsidize trader bonuses when the markets aren’t profitable. Still, the Goldman trading department is powerful and can spark management change, as it has done in the past.
There’s also a question about Solomon’s allegiance to Goldman’s stand-alone culture. In its 153-year existence, Goldman has operated on the assumption that it would be the acquirer in any major strategic acquisition. Solomon’s experience at Bear, then one of the most transactional places on Wall Street, means he could be looking for a deal and not one that keeps Goldman in charge.
At a time when most Goldman insiders believe he needs to do a “transformational deal,” i.e., something big that allows it to better compete against Morgan Stanley and super banks like JP Morgan, there is speculation that Solomon might allow Goldman to be swallowed whole by, say, a big asset manager or bank if the price was right.
As best I can tell, this grumbling, though real, doesn’t immediately threaten Solomon’s job. Then again, there is something to be said for keeping your producers happy.
Jack Welch, the legendary CEO of General Electric, was a notorious screamer and demanding beyond belief. Yet Welch knew how to nurture his people.
“Jack could chew your ass, then put his arm around you and make you feel great,” one of his longtime executives, Bob Nardelli, once told me.
It’s why so many other talented execs chose to stay around under Welch, abuse and all, and left when his successor took over, watching GE implode from the outside.
Maybe it’s a good time for Solomon to take a page from Welch and start hugging it out.
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