Tuesday, May 31, 2016

Jerry Brown endorses Clinton: Governor Moonbeam takes a fall for Crooked Hillary

I've long been a fan of Jerry Brown, Governor of California. He is 78 years old now, but he was 36 years old when he was elected Governor of California back in 1974--the youngest governor of the state in over a hundred years. Brown was a progressive politician then--Governor Moonbeam they called him. I admired his politics when I was a youth, and I would have voted for him if I'd been given an opportunity back when he ran for President in 1976.  He once dated Linda Ronstadt, and I gave him a lot of points for that.

But like the movie character Peter Pan, played by Robin Williams, Jerry grew up, and he started listening to what the grownups say. Now, one week before the California primary election, Jerry comes out for Crooked Hillary.

I feel sorry for Jerry Brown. He had a chance to make an important moral statement but he choked. He did what the Democratic political bosses wanted him to do.

Surely Jerry knows the old world is passing away. The status quo won't last forever. Jerry could have joined the Sanders revolution and remained true to the ideals of his younger days.

But Jerry Brown lost his nerve. At this crisis point in American history, Jerry turned out to be just an old man.

Image result for Jerry brown
Jerry Brown: Unfortunately, Peter Pan grew up


Jerry and Linda Ronstadt: Those were the days


References

Jerry Brown. Open Letter to California Democrats and Independents, May 31, 2016. http://www.jerrybrown.org/an_open_letter_to_california_democrats_and_independents

Barney Frank, World Class Sleaze, Accuses Bernie Sanders of McCarthyism

Barney Frank, former Congressman from Massachusetts, will be one of Hillary Clinton's Super Delegates at the Democratic Convention. Indeed, Frank is on the Convention's Platform  Committee. That fact that Barney Frank is a Hillary partisan is reason enough to be a Bernie Sanders supporter.

Most people have forgotten that Barney Frank paid for sex with a male prostitute, hired the guy to be a personal assistant and then turned a blind eye while the prostitute ran a prostitution ring out of Frank's apartment.  (Frank claimed he did not know his apartment was being used for prostitution, and he may have been telling the truth.) And all of this while Frank represented the state of Massachusetts in Congress. The House of Representatives reprimanded Frank, not for hiring a prostitute, but for writing a misleading letter to the prostitute's probation officer. Oh yes. And Frank used his congressional privilege to fix more than 30 of the prostitute's parking tickets

You don't have to believe me.  Read about it in the New York Times and other respected newspapers.

Frank was on the House Financial Services Committee in 2005, when he downplayed concerns about the bubble in the housing industry. Millions of Americans suffered losses in the financial downturn of 2008, but not Frank. As  Liz Peak  reported in 2011, Frank did quite well during the financial crisis and retired from Congress comfortably fixed: 
As a steward of the nation’s purse during the financial crisis Mr. Frank may not have succeeded, but he did quite well personally. Unusually, Mr. Frank’s personal finances sailed right through the downturn. In 2006 he reported assets valued between $525,020 and $1.6 million; by 2010 Mr. Franks’ net worth had soared to between $1.9 million and $4.6 million, with nary a down year in between. No wonder he can afford to retire. 
 And now Frank, speaking as a Super Delegate for Hillary Clinton, has the effrontery to accuse Bernie Sanders--the only decent person left in the presidential race--of McCarthyism!

Barney Frank is one of roughly 400 Democratic Party insiders who have profited from politics while the American economy spirals downward. And Frank's vote as a Super Delegate is worth more than a coal miner's vote in the West Virginia primary or a Walmart clerk's vote in the Oklahoma primary.

The media elites--all self-proclaimed progressives--have closed their eyes to Hillary's cronyism and self-dealing and have thrown their support to Bernie's opponent.

But I have a message for all Hillary's media lap dogs who are disparaging Bernie Sanders--Frank Bruni, Froma Harrop, Cokie and Steve Roberts, etc. etc. etc. Hillary Clinton will not be the next president of the United States.  And the public will remember the journalists who were confronted with a choice between sleaze and decency during the 2016 presidential campaign and who chose to support sleaze.


Barney Frank's quarter century in Congress was interrupted by a scandal that would have buried other men. But this openly gay congressman, who has one of the fiercest wits and sharpest minds on Capitol Hill, remains a force to be reckoned with.
Barney Frank, a Hillary Super Delegate, Accuses Bernie Sanders of McCarthyism

  
References

 Allan Gold. Frank Acknowledges Hiring Male Prostitute as Personal Aide. New York Times, August 25, 1989. Accessible at http://www.nytimes.com/1989/08/26/us/rep-frank-acknowledges-hiring-male-prostitute-as-personal-aide.html?pagewanted=all

Mark Finkelstein. Hillary Fan Barney Frank Accuses of Bernie Sanders of 'McCarthyism."MRC Newsbusters, April 6, 2016. Accessible at http://newsbusters.org/blogs/nb/mark-finkelstein/2016/04/06/hillary-fan-barney-frank-accuses-bernie-sanders-mccarthyism

Froma Harrop, Bernie Sanders and Racism Lite. Seattle Times, May 19, 2016. Accessible at http://www.seattletimes.com/opinion/bernie-sanders-and-racism-lite/

Frances Romero. Sinful Statesman Barney FrankTime Magazine, June 8, 2011. Accessible at http://content.time.com/time/specials/2007/article/0,28804,1721111_1721210_1883878,00.html

A Timeline of Politicians and Prostitutes. U.S. News & World Report, March 11, 2008. http://www.usnews.com/news/articles/2008/03/11/a-timeline-of-politicians-and-prostitutes

Liz Peek. Barney Frank Won't Have To Worry About Money In Retirement. Fox News, December 2, 2011. Accessible at http://www.foxnews.com/opinion/2011/12/02/barney-frank-wont-have-to-worry-about-money-in-retirement.html

Cokie and Steve Roberts. Bernie Sanders plays a dangerous game. Baton Rouge Advocate, May 30, 2016, p. 5B.  Also accessible at  http://kpcnews.com/opinions/other_columnists/kpcnews/article_ac1c34ff-ce96-5376-89c8-26841b44436a.html

Saturday, May 28, 2016

Navient Solutions and Student Assistance Corporation stung for violating the Telephone Consumer Protection Act: 727 automated phone calls to student debtor's mother!

Navient Solutions, Inc. and Student Assistance Corporation (SAC) got stung last month by a federal district court for violating the Telephone Consumer Protection Act. Navient made 249 automated collection calls to Willie McCaskill, a student debtor's mother.  Co-Defendant Student Assistance Corporation made another 478 automated calls to McCaskill's phone number.

As explained by the court, McCaskill is entitled to $500 for each violation, which adds up to $363,500.  In addition, the court will hold a trial to determine whether the defendants violations were wilful, which would entitle to McCaskill to treble damages. Let's hope she wins.

Navient and SAC asserted a goofy defense, which the court rejected. They argued that McCaskill "gave express consent" to being called about her daughter's debt. The court pointed out that Navient presented no evidence showing that McCaskill knowingly released her phone number to the debt collectors or that she had had any contact with them before they started calling. As if any mom would agree to getting bombarded with hundreds of phone calls from her daughter's creditors.

SAC and Navient also argued that McCaskill and her daughter were in an agency relationship, and that the daughter had legal authority to consent to the phone calls on her mother's behalf. But this is what the daughter testified:
You don't give out my mom's number, which is her business. I handle my own business, she handles her own business .. . .She stay over there, and I stay over here.
The court ruled that the defendants identified no evidence that questioned the daughter's testimony. Accordingly, the court granted McCaskill summary judgment on her TCPA claims.

Who is Navient Solutions anyway? Here's how it introduces itself on the web:
Although our name is new, our business is not. For more than 40 years we learned, evolved, and led in loan management, servicing and asset recovery as Sallie Mae®. And now, we continue to lead as Navient, a company dedicated to helping our clients and the people we serve along the path to financial success.
Navient also says "it is committed to fulfilling our role as an active corporate citizen with integrity and transparency." And oh yes. Navient is big into philanthropy, boasting that "[w]e recognize the importance of corporate philanthropy by giving back to our own communities and encouraging employees to volunteer."

Navient sounds like a model corporate citizen.  But if all Navient says about itself is true, why did it make 249 harassing telephone calls to a student debtor's mother?

References

McCaskill v. Navient Solutions, Inc., No. 8:15-cv-1559-T-33TBM (M.D. Fla. April 6, 2016).

Thursday, May 26, 2016

Free tuition for first-time freshmen at good private liberal arts colleges: Why the hell not?

Small liberal arts colleges are in trouble all over the United States. They're having a heck of a time attracting students, as families respond more and more negatively to outrageous tuition prices. Let's face it: not many people want to pay $100,000 to obtain a degree from a nondescript liberal arts college in Nowhereville, Indiana,

In a desperate effort to attract warm bodies, liberal arts colleges have been discounting their tuition drastically for first-time freshmen, behaving more and more like rug sellers in an Arab bazaar.  (I apologize if I made a politically incorrect observation.) For the past several years, the discount rate has gone ever upward; and last year, private liberal arts colleges discounted tuition for first-time freshman by nearly 50 percent! And they discounted tuition for undergraduates as a whole by more than 40 percent.

All commentators agree: this trend can't go on forever.  And colleges can't reverse course by simply lowering their tuition rates because they would be admitting that they've been overbilling their clients. As one observer noted, if you've been selling Toyotas for $30,000 apiece, how can you explain why you now only charge $20,000?

But what about this? Why don't small private liberal arts colleges--the ones that still have good reputations--offer applicants free tuition for the first year to everyone who enrolls?

Think about it. Colleges have already cut tuition by 50 percent on average for freshmen, and they're still having trouble meeting their enrollment targets. And once they get the little rascals in the door, they still have to discount tuition by more than 40 percent.

If a college offered free tuition for freshman, there would be two good consequences. First, the college would get more applicants and a higher percentage of applicants who are accepted would actually enroll. And second, the college could be more selective because the overall quality of the applicant pool would improve.

Of course, such a move would have to be planned carefully. Here's how I would do it:

1) The college making the  offer would promise to admit students based on published academic criteria--without regard to race, class, gender, or sexual orientation. Applicants would know that their credentials were being judged transparently based solely on academic considerations.

2) Students who accept the offer would agree to attend the college a second year and pay the full tuition price if the college didn't offer a sophomore-year discount.

3) Colleges making this offer would assign their best faculty members to teach freshmen so that students who enrolled would have a top-notch freshman year and thus would be more likely return as sophomores. No more crowding a couple of hundred freshmen into theatre-style classrooms to be taught by an inexperienced graduate assistant or a burned-out gas bag who should have never gotten tenure.

This is a risky strategy I know. But colleges are already charging freshmen half price, and many are still seeing their enrollments decline. If offering a free year led to a 50 percent bump in freshman enrollment, that would absorb a good deal of the cost of this strategy if those students could be retained as sophomores, juniors and seniors.

One thing for sure--college administrators are playing a losing game right now. They can't go on giving big tuition discounts to favored students using secret criteria that families don't understand. They can't rely on public relations firms, perky recruiters, and billboard advertising to juice their enrollments.

The public has figured out that a liberal arts degree from an obscure private college is overpriced. To bring back the paying customers, the colleges must offer value. What better way to communicate value than by giving new students a year of free tuition and then offering a first-class educational experience?

Or is that too simplistic?

Image result for university billboard advertising


References

Rick Seltzer. Discount rates rise yet again at private colleges and universities. Inside Higher Ed, May 16, 2016. Accessible at https://www.insidehighered.com/news/2016/05/16/discount-rates-rise-yet-again-private-colleges-and-universities.



Tuesday, May 24, 2016

University of Phoenix is eliminating mandatory arbitration clauses in its student agreements. Hmmm. When a for-profit does the right thing, it's probably in trouble

On May 19th, Apollo Education Group, which owns University of Phoenix, announced that it is eliminating mandatory arbitration clauses in its student contracts. This is good news and is in harmony with the Department of Education's desire to do away with arbitration clauses in for-profit universities' student agreements.

Arbitration clauses, as many commentators have noted, tend to favor corporate entities over individuals. Students who signed arbitration agreements can't sue the institution they attended in court even if they have a fraud claim. Arbitration clauses generally prohibit class action suits, which would be a useful way for a group of defrauded students to band together to get relief. And arbitration decisions are generally secret. Thus, even if a university loses an arbitration dispute with a student who was victimized, other injured students are unlikely to learn about it.

Please forgive my cynicism about the for-profit industry, but here's my first reaction. When a for-profit college does the right thing, it's probably in trouble. And University of Phoenix is in big trouble.

Enrollments are down by more than half from Phoenix's peak enrollments. Its stock price, once as high as $90 a share, is now selling for a little more than nine bucks. The key senior executives have negotiated a deal with three private equity groups to buy the Apollo Education Group and Phoenix, and all the big boys will get golden parachutes.

The key player in the buyout partnership is Martin Nesbitt, literally Barack Obama's best friend. And the guy in charge (if the deal goes through) will be Tony Miller, former Deputy Secretary of Education in the Obama administration.  Such a cozy arrangement.

So what the heck--why not eliminate mandatory arbitration clauses now, especially since that is what the Department of Education wants the for-profits to do.

But--as I've said before--DOE's push against mandatory arbitration clauses is tardy. President Obama has been in office seven and half years, and DOE is just now getting around to addressing this serious problem. And new rules will be going through a negotiated rulemaking process that the for-profit industry knows well. There is a very good chance that any new rule restricting mandatory arbitration clauses in student enrollment agreements will be watered down.

Nevertheless, Apollo Education Group's announcement is a good start, and higher-education reformers should take heart. Not that there are any higher-education reformers. Just you and me; that's just about everybody.

References

U.S. Department of Education. U.S. Department of Education Takes Further Steps to Protect Students from Predatory Higher Education Institutions. March 11, 2016. Accessible at http://www.ed.gov/news/press-releases/us-department-education-takes-further-steps-protect-students-predatory-higher-education-institutions?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

News Release. Apollo Education Group to Eliminate Mandatory Arbitration Clauses. May 19, 2016.
Accessible at http://phx.corporate-ir.net/phoenix.zhtml?c=79624&p=irol-newsArticle&ID=2169809

Ronald Hansen. Apollo Education sale 'golden parachute' could be worth $22 million to executives. Arizona Republic, March 8, 2016. Accessible at http://www.azcentral.com/story/money/business/2016/03/08/apollo-education-sale-executives-payout-22-million/81483912/

Sarah Jones. Top Apollo Education Investor Urges Board to Resist Takeover. Bloomberg News, January 29, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-01-29/top-apollo-education-investor-urges-board-to-resist-takeover

Patria Cohen and Chad Bray. University of Phoenix Owner, Apollo Education Group, Will Be Taken Private. New York Times, February 8, 2016. Accessible at http://www.nytimes.com/2016/02/09/business/dealbook/apollo-education-group-university-of-phoenix-owner-to-be-taken-private.html

Soyong Kim. Apollo teams with Washington insider for education deal. Reuters, January 12, 2016. Accessible at http://www.reuters.com/article/us-apollo-education-m-a-apollo-global-idUSKCN0UQ23W20160112

Dan Primack. Obama's 'best friend' raises millions for private equity fund. Fortune Magazine, August 11, 2014. Accessible at http://fortune.com/2014/08/11/obamas-best-friend-raises-millions-for-private-equity-fund/

Why the Obama administration launched its REPAYE plan: It had no choice

Late last year, the Obama administration's Department of Education launched its eighth student-loan repayment program, labeling it REPAYE.  Very similar to a previous Obama initiative titled PAYE, the REPAYE program allows college-loan borrowers to pay off their student loans over 20 years. The chief new feature of REPAYE is broader eligibility. Nearly every student-loan debtor will qualify to participate in the REPAY program.

Under both PAYE and REPAYE, college-loan debtors make monthly payments based on their income, not the amount they borrowed. Payment rates are established annually, based on the borrower's reported income for the previous year, with payments calculated to equal10 percent of the borrower's discretionary income.

In many ways, REPAYE is a good deal for overburdened student-loan debtors. Monthly payments will be lower than the standard 10-year repayment plan; and payments will be allowed to fluctuate as borrowers' income goes up or down. People who are unemployed or who live at the poverty level won't be required to make any payments at all.

All in all, the Obama administration's latest student-loan program is incredibly generous. In fact, most debtors on the REPAYE plan will be making monthly payments so low that they won't cover accruing interest on their loans. In other words, at the end of the 20-year repayment program, most debtors will still have large balances on their loans, which will be forgiven.  The forgiven amount will be absorbed by taxpayers.

Why did the Obama administration launch REPAYE, which could reasonably criticized as fiscally irresponsible? I will tell you why: it had no choice.

For years, the government has permitted overburdened student-loan debtors to enroll in economic hardship deferment programs and other forbearance plans that allowed borrowers to temporarily skip their monthly student-loan payments. Colleges encouraged this practice as a way to keep their short-term  student-loan default rates down--particularly the for-profit colleges, which needed to keep their default rates below 30 percent in order to continue receiving federal student-aid money.

For some people on these plans, however, the forbearances weren't temporary--they stretched out for years while interest accrued on their original debt. Thus for virtually everyone in a forbearance or deferment program, their loan balances were getting larger with each passing month due to accruing interest.

This phenomenon was documented in a recent Brookings Institution report written by Looney and Yanelis. These scholars found that loan balances were going up, not down, two years into the repayment period for more than half of student-loan borrowers in repayment.

In fact, for millions of people who have had their student loans in nonpayment status for any considerable period of time, it has become virtually impossible to to pay back their loans. This state of affairs drove many debtors into default, which caused their balances to grow even larger due to the penalties and fees that got tacked on to their debt.

President Obama and Arne Duncan could see that there were only two ways out of this morass. Either people must be allowed to file for bankruptcy to discharge their college-loan debt or their loans have to be refinanced to make the monthly payments lower. Since bankruptcy reform is politically impossible, Obama and Duncan chose to launch PAYE and REPAYE.

But there are enormous problems with the Obama administration's fix. First, most people entering PAYE and REPAYE are not enrolling immediately after graduating from college. Most struggle for a few years to make payments under the standard 10-year plan and then enter REPAYE because they can't service their loans. For these people, enrolling in a 20-year repayment plan extends their repayment period out over their entire working lives.

Butler v. Educational Credit Management Corporation, decided earlier this year, illustrates this problem. Beverly Butler struggled for almost 20 years to make payments on loans she took out to get her college degree, which she obtained in 1995. Eventually, she enrolled in a 25-year repayment plan that stretches out her loan repayment period until 2037--42 years after she graduated from college!

And of course the other big problem with PAYE and REPAYE is that most people in these programs are not paying back their loans at all; they are making token payments that don't cover accruing interest. In essence, these programs are designed to disguise the fact that for all practical purposes, people in long-term repayment programs have defaulted on their loans.

This is no small matter. Almost 5 million people are in income-based repayment plans now; and the Department of Education wants to enroll 2 million more by the end of next year. Without question, REPAYE is going to be the default option for most student-loan debtors in the years to come, which is what the Brookings Institution and other higher-education industry insiders want to happen.

In reality, the Obama administration has imposed a tax on most people who borrow money to attend college;  REPAYE participants will be obligated to pay a percentage of their incomes for a majority of their working lives in return for the privilege of going to college.

How ironic. Barack Obama, self-proclaimed friend of the disadvantaged, has established a huge sharecropper program for college goers. Ultimately of course, all Obama did was buy time for the college industry. In the long run, REPAYE can't sustain the status quo. At some time in the not too distant future, higher education as we now know it will collapse.

And the first cards to fall in this house of cards will be the for-profit colleges and the small private liberal arts colleges. Be patient. You don't have long to wait.

Enrollment at four-year for-profit colleges declined 9.3 percent from last year, and the University of Phoenix's enrollment has declined by half from its peak years. The private liberal arts colleges are behaving like a Texas fireworks stand (Buy One, Get One Free!!), discounting tuition for first-time freshman by 48 percent.

The end is near.

 References

Erin E. Arvedlund. A new way, REPAYE, to get out of college debt. Philadelphia Inquirer, March 29, 2016. http://articles.philly.com/2016-03-29/business/71877131_1_income-based-repayment-plan-loan-debt-standard-repayment-plan.

Adam Looney & Constantine Yannelis, A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising default rates. Washington, DC: Brookings Institution (2015). Accessible at: http://www.brookings.edu/about/projects/bpea/papers/2015/looney-yannelis-student-loan-defaults

Rick Seltzer. Discount rates rise yet again at private colleges and universities. Inside Higher Ed, May 16, 2016. Accessible at https://www.insidehighered.com/news/2016/05/16/discount-rates-rise-yet-again-private-colleges-and-universities.

Kelly Woodhouse. (2015, November 25). Discount Much? Inside Higher Ed. Accessible at: https://www.insidehighered.com/news/2015/11/25/what-it-might-mean-when-colleges-discount-rate-tops-60-percent?utm_source=Inside+Higher+Ed&utm_campaign=389f6fe14e-DNU20151125&utm_medium=email&utm_term=0_1fcbc04421-389f6fe14e-198565653

Enrollments slide, particularly for older students. Inside Higher Ed, May 24, 2016. Accessible at https://www.insidehighered.com/quicktakes/2016/05/24/enrollments-slide-particularly-older-students?utm_source=Inside+Higher+Ed&utm_campaign=74ec3a191d-DNU20160524&utm_medium=email&utm_term=0_1fcbc04421-74ec3a191d-198564813




Monday, May 23, 2016

A liberal arts degree is not worth much: Don't borrow a lot of money to pay for one

Christ. Seven years of college down the drain. Might as well join the f-cking Peace Corps."

Bluto (played by John Belushi)
Animal House

Americans cling to the touchingly pathetic belief that a college degree will improve their lives. And it is true that people who graduate from college make more money over their lifetimes than people who only have high school diplomas.

But in many instances, a college degree represents nothing more than an individual's dogged tenacity and willingness to sit through four years of meaningless classes--traits that make college graduates adaptable to the sterility and boredom of the American workplace.

That's not always true, of course. I feel quite sure that people who get degrees in engineering, journalism, and the health professions often learn valuable skills.  

But a degree in the liberal arts or the social sciences is highly overrated as a ticket to a good job. Reflecting back more than 40 years from my time at Oklahoma State University ("the Princeton of the Prairies"), I realize I learned more about how to make my way in the world from delivering newspapers as a 12-year-old for the Anadarko Daily News than I did from any of my college courses.

And I received much more vocational guidance from my father than from any college professor. Not that my father gave a damn about what I would do for a living when I left home. But after holding down several hundred bull calves while he castrated them with his Schrade pocket knife, I came to the firm conviction that I would never make it as a cattleman.

At one time, going to college was a relatively harmless activity. Rattling around a campus for four (or five, or six) years didn't do young people much harm other than delay their entrance into remunerative employment. And no question about it--studying for exams improves people's short-term memory.

But things have changed. Today, making the wrong choices about going to college can lead to a lifetime of economic hardship, at least for people who borrow too much money to pay for their college education.

What can go wrong about obtaining a liberal arts education, you might ask?  Here are some mistakes that many people make:

1) Getting a liberal arts degree from a for-profit college. By and large, for-profit colleges are more expensive than public schools; so if you attend a for-profit college you will probably borrow more money than if you attended a public institution. And the for-profits have high default rates. According to a Brookings Institution report, almost half of the people in  a recent cohort who borrowed to attend a for-profit school defaulted on their loans within five years. Thus, attending a for-profit college increases the risk of default.

So if you want to get a degree in sociology, history, literature, or women's studies, you should probably get it at a public university--even a mediocre one--rather than pursue a liberal arts degree at a for-profit institution.

2) Paying the sticker price to attend a prestigious private college.  Private colleges are more expensive than public colleges, but they are now discounting their tuition drastically. In fact, the average institutional discount rate at private colleges was 48.6 percent for first-time freshmen in 2015-2016. And the discount rate for all students attending private schools was 42.5 percent.

So don't pay the sticker price to attend a fancy private college. Keep in mind that many private schools are scrambling to keep their enrollments up, and they need you more than you need them.

3) Doubling down by going to graduate school without a clear idea how a graduate degree will improve your earning potential. About 40 percent of all outstanding student-loan debt was acquired by people who went to graduate school. Graduate education in some fields has become outrageously expensive--especially for law degrees and MBAs. But graduate degrees in the liberal arts are also pricey.

There was a time when graduate school was a reasonable default option for people with no clear vocational goal. Graduate school was a respectful place for people to park themselves while they decided what they wanted to do with their lives. And opportunity costs were relatively low because tuition was often low--particularly at public colleges.

But the game has changed. Individuals who borrow money to get a liberal arts education and then borrow more money to go to graduate school are playing Russian Roulette with their financial futures; and they're playing with three bullets in their revolvers. Don't go to graduate school unless you have a clear idea about how a graduate degree will lead to a job that pays well enough to make the investment worthwhile.

Beware: A liberal arts degree is no sure path to a middle-class lifestyle

In sum, a liberal arts degree provides no sure path to making a living, and borrowing a lot of money to get a liberal arts education can lead to financial disaster. It is a fine thing to know a little Shakespeare and to be able to identify the causes of Thirty Years' War; and it's nice to talk literature with the swells. But if you leave college with a hundred grand in student loans, you will find that the liberal arts degree you acquired didn't enhance your life; in fact, it might have destroyed it.

Image result for bluto in animal house
"Seven years of college down the drain . . . ."

References

Rick Seltzer. Discount rates rise yet again at private colleges and universities. Inside Higher Ed, May 16, 2016. Accessible at https://www.insidehighered.com/news/2016/05/16/discount-rates-rise-yet-again-private-colleges-and-universities

Froma Harrop insinuates that Bernie Sanders is a racist: Is Froma pimping for Hillary?

The media elite are furious that Bernie Sanders won't go away and that he continues to win primary elections. And some journalists have resorted to making wild accusations about Sanders and his campaign.

Froma Harrop's piece, which appeared last week, is particularly nasty. Appearing under a headline entitled "Bernie Sanders and Racism Lite,' Harrop insinuated that Bernie's campaign is associated with racism. She even accused "Sanders' white posses" of "invading campaign events of other presidential contenders, including Donald Trump rallies. But Harrop cited no evidence to support such a charge.

The liberal media can't have it both ways. Most liberal commentators argue that Trump's rallies are disrupted because Trump incites violence by his message and tone. But now Harrop suggests that it is those nasty Bernie supporters who are causing all the ruckus.

She also cynically interpreted Bernie's observation that his rallies were largely peaceful even when held in "high crime areas."  According to Harrop, "high crime areas" is a veiled reference to African American neighborhoods.

Harrop admits--as she must--that Bernie has a "staunch civil rights record." Indeed, Bernie was arrested in 1963 for participating in a civil rights protest against segregated schools in Chicago; and he was active in the Congress On Race Equality (CORE) during the 1960s. Does Hillary have a comparable civil rights record? No, she does not.

Perhaps the most ridiculous part of Harrop's hatchet job on Bernie was her insinuation that he moved to Vermont, which she described as "the whitest state in the nation," for racist reasons. Vermont, Harrop confides, "had become a safe haven for liberals leaving--the word then was 'fleeing'--the cities."

What a pile of horse manure! A great many states have low minority populations--Montana, Wyoming, North Dakota, Vermont, Maine. Is Harrop suggesting that people who move to those states are a bunch of racists? If that's true, then pack me to a re-education camp because I lived in Alaska for nine years during the 1980s.

In my view, Harrop is one of a band of panting puppies eager to assist Hillary Clinton clinch the Democratic presidential nomination by denigrating Bernie Sanders--the only genuinely decent candidate left in the race. Cokie and Steve Roberts performed a similar service for Hillary in an op ed essay as did Frank Bruni of the New York Times, who suggested that Bernie was a sore loser because he didn't drop out of the race for president.

But it is the liberal media elites who are the sore losers. And what they have lost is the public's respect for their journalistic integrity. And that's why millions of Americans have decided to think for themselves during this election cycle instead of allowing CNN, the New York Times, and journalistic lap dogs like Froma Harrop to do their thinking for them.

I hate to break the news to you, Froma, but a lot of Americans find Hillary totally unacceptable as a president; and insinuating that Bernie is a racist is not the way to persuade Americans to change their minds.

Who is that guy?
References

Frank Bruni. The Cult of Sore Losers. New York Times, April 26, 2016. Accessible at http://www.nytimes.com/2016/04/27/opinion/the-cult-of-sore-losers.html?_r=0

Froma Harrop. Bernie Sanders and Racism Lite. Seattle Times, May 19, 2016. Accessible at http://www.seattletimes.com/author/froma-harrop/

Tim Murphy. Here's What Bernie Sanders Actually Did In the Civil Rights Movement. Mother Jones, February 11, 2016. Accessible at http://www.motherjones.com/mojo/2016/02/bernie-sanders-core-university-chicago



Tuesday, May 17, 2016

The Department of Education almost always fights bankruptcy relief for distressed college-loan borrowers--even when it pointless to do so: You'll never get out of this world alive.

I'll never get out of this world alive.
Hank Williams

Last July, Lynn Mahaffie, Deputy Secretary of Education, issued an insincere letter regarding the Department of Education's position concerning bankruptcy relief for college-loan debtors.

In that letter, Mahaffie outlined when DOE would not oppose bankruptcy relief for student-loan borrowers. She listed eleven factors to consider when determining when DOE would agree to permit a bankrupt debtor to discharge student loans in a bankruptcy court. In addition, Mahadffie said the Department would not oppose a bankruptcy discharge if it would not make economic sense to fight a student-loan borrower's petition for relief.

But in fact, Mahaffie wasn't telling the truth. Bankruptcy court opinions decided after Mahaffie wrote her letter show that DOE opposes bankruptcy relief for almost everyone--even when it is absolutely clear a debtor will never repay his or her college loans.

Let's review Kelly v. U.S. Department of Education, decided less than two months ago. Cynthia Kelly, a woman in her sixties, filed for bankruptcy in August 2014. At the time of her filing, Kelly had accumulated $160,000 in college-loan debt; and she had had no steady employment for almost 10 years. In fact, she was receiving nearly $200 a month from the local Department of Social Services in food assistance.

Prior to filing, Kelly was approved for an "Income-Contingent Repayment Plan" (ICRP) that reduced her monthly student-loan payment obligation to zero because her income was so low. Based on her employment history, it seems highly unlikely that Kelly will ever be required to pay a single penny on her student loans under her ICRP because she will probably be living at the poverty level for the rest of her life.

Nevertheless, the Department of Education opposed Kelly's bankruptcy application to discharge her student loans, and Judge David Warren, a North Carolina bankruptcy judge, refused, to release her from the debt. In the judge's view, Kelly failed the second prong of the Brunner "undue hardship" test because she could not show "additional circumstances" that precluded her from paying back her loans in the future.

Indeed, Judge Warren was totally unsympathetic to Ms. Kelly's situation.  The judge pointed out that Kelly had taken out student loans over a period of 40 years and had paid almost none of it back (less than $2,300).  Moreover, she had left a secure job with a pharmaceutical company in 2004 to do community service work and had never had steady employment since that time. Although Kelly argued that she had made diligent efforts to find remunerative work, Judge Warren ruled that there was no evidence that she had ever "pounded the payment" to find a job.

Judge Warren pointed out that Kelly appeared to be in good health and was well educated, having both a bachelor's degree, a master's degree, and a doctorate. He seemed offended by the fact that a highly educated person was getting food assistance.  Kelly's "lack of desire and motivation is an insult to those similarly situated," the judge observed, "especially to those lacking the gift of an education." In the judge's opinion, this insult was further compounded "by [Kelly's] complacent acceptance of welfare . . . "

I fully agree with Judge Warren that Kelly is not an attractive candidate for bankruptcy relief.  As the judge pointed out, Kelly took out  student loans for nearly 40 years to obtain a lot of postsecondary education, and yet she chose to live a "voluntary lifestyle" of community service rather than make reasonable efforts to maximize her income.

But let's face it. Ms. Kelly (or Dr. Kelly) will never pay off $160,000 in student loans. Her ICRP requires her to pay nothing due to her poverty-level income, and it is totally unrealistic to believe that a woman in her sixties who hasn't held a steady job in ten years is going to obtain a well-paying job in today's economy.

Moreover, the colleges and universities who took Ms. Kelly's tuition money over a forty-year period bear a good deal of the blame for the situation Kelly is in now. According to Judge Warren, Kelly enrolled at multiple institutions, including Stone School, University of New Haven, Southern New Hampshire University, Spelman College, Drew University, South New Hampshire University, University of Mount Olive, and Shaw University.

Perhaps Kelly is not deserving of  bankruptcy relief, but denying her that relief will not get the taxpayers' money back. The Department of Education would be more honest with taxpayers if it allowed people in Kelly's position to shed their debt in a bankruptcy court and then took steps to prevent colleges all over the United States from enrolling students in programs that will never pay off financially.

But that will never happen because the colleges can't survive without federal student-aid money, including money they get from admitting students to programs that have no economic benefit for the people who complete them.

References

Kelly v. U.S. Department of Education, 548 B.R. 99 (Bankr. E.D.N.C. 2016).

Lynn Mahaffie, Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings. CL ID: GEN 15-13, July 7, 2015.






Thursday, May 12, 2016

Educational Credit Management Corporation v. Acosta-Conniff; A lifetime of Indebtedness is the future for most college borrowers

James Howard Kunstler wrote one of his best essays recently about America's opioid epidemic., and he began his essay with this observation:
 While the news waves groan with stories about "America's Opioid Epidemic," you may discern that there is little effort to actually understand what's behind it, namely the fact that life in the United States has become unspeakably depressing, empty, and purposeless for a large class of citizens.
Kunstler went on to describe life in small town and rural America: the empty store fronts, abandoned houses, neglected fields, and "the parasitical national chain stores like tumors at the edge of every town."

Kunstler also commented about people's physical appearance in backwater America: "prematurely old, fattened and sickened by bad food made to look and taste irresistible to con those sick in despair." And he also described how many people living in the forgotten America spend their time: "trash television, addictive computer games, and their own family melodramas concocted to give some narrative meaning to lives otherwise bereft of event or effort."

There are no jobs in flyover America. No wonder opioid addiction has become epidemic in the old American heartland. No wonder death rates are going up for working-class white Americans--spiked by suicide, alcohol and drug addiction.

I myself come from the desperate heartland Kunstler described. Anadarko, Oklahoma, county seat of Caddo County, made the news awhile back due to four youth suicides in quick succession--all accomplished with guns. Caddo County, shaped liked the state of Utah, can easily be spotted on the New York Times map showing where drug deaths are highest in the United States. Appalachia, Oklahoma, the Rio Grande Valley, and yes--Caddo County have the nation's highest death rates caused by drugs.

Why? Kunstler puts his finger on it: "These are the people who have suffered their economic and social roles in life to be stolen from them. They do not work at things that matter.They have no prospect for a better life . . . ."

Now here is the point I wish to make. These Americans, who now live in despair, once hoped for a better life. There was a spark of buoyancy and optimism in these people when they were young. They believed then--and were incessantly encouraged to believe--that education would improve their economic situation. If they just got a degree from an overpriced, dodgy for-profit college or a technical certificate from a mediocre trade school, or maybe just a bachelor's degree from the obscure liberal arts college down the road--they would spring into the middle class.

Postsecondary education, these pathetic fools believed, would deliver them into ranch-style homes, perhaps with a swimming pool in the backyard; into better automobiles, into intact and healthy families that would put their children into good schools.

And so these suckers took out student loans to pay for bogus educational experiences, often not knowing the interest rate on the money they borrowed or the payment terms. Without realizing it, they signed covenants not to sue--covenants written in type so small and expressed in language so obscure they did not realize they were signing away their right to sue for fraud even as they were being defrauded.

And a great many people who embarked on these quixotic educational adventures did not finish the educational programs they started, or they finished them and found the degrees or certificates they acquired did not lead to good jobs. So they stopped paying on their loans and were put into default.

And then the loan collectors arrived--reptilian agencies like Educational Credit Management Corporation or Navient Services.  The debt collectors added interest and penalties to the amount the poor saps borrowed, and all of a sudden, they owed twice what they borrowed, or maybe three times what they borrowed. Or maybe even four times what they borrowed.

Does this scenario--repeated millions of time across America over the last 25 years--drive people to despair? Does it drive them to drug addiction, to alcoholism, to suicide?

Of course not. And even if it does, who the hell cares?

References

James Howard Kunstler. The National Blues. Clusterfuck Nation, April 28, 2017.

Sarah Kaplan.'It has brought us to our knees': Small Okla. town reeling from suicide epidemicWashington Post, January 25, 2016.

Natalie Kitroeff. Loan Monitor Is Accused of Ruthless Tactics on Student DebtNew York Times, January 1, 2014.

Gina Kolata and Sarah Cohen. Drug Overdoses Propel Rise in Mortality Rates of Young Whites. New York Times, January 16, 2016.







Saturday, May 7, 2016

Susan Dynarski, Brookings Institution, and the U.S. Housing Market: Lies, Damned Lies and Statistics

Larry Summers, former Secretary of the Treasury and President Emeritus of Harvard, has expressed concern about growing student-loan indebtedness, which he linked to a slowdown in home ownership in the United States. Joe Stiglitz, Nobel Prize winner in economics, and the Federal Reserve Bank in New York have also expressed the view that growing levels of college-loan debt is hurting the housing market.

But Susan Dynarski, writing for the Brookings Institution, says this is nonsense. Crunching the data from the Federal Reserve System in a different way than the Federal Reserve Bank, she came to this conclusion: education levels, not student-loan indebtedness, explain the difference in home-ownership rates among Americans. In a nutshell, here are Dynarski's conclusions:
Those who borrow for college do have a slower start to homeownership than those who went to college debt-free. . . . But by the time people are in their thirties, when the typical borrower would have finished paying off her student loans, the home ownship rates of the two college-educated groups are statistically indistinguishable. The striking, large gap is between the college-educated and those who stopped with high school.
I have two observations to make about Dynarski's paper for the Brookings Institution.  First, if Dynarski disagrees with Larry Summers, Joe Stiglitz and the Federal Reserve Bank of New York, I"m inclined to be persuaded by these eminences rather than Dynarski.

Second, speaking purely as a layperson with no expertise in economics, Dynarski's arguments simply defy common sense. How can she say that rising levels of student-loan indebtedness has no impact on home ownership given what we know about the massive hardship that millions of college-loan borrowers are suffering?

As the New York Times noted several months ago, 10 million people have either defaulted on their student loans or are in delinquency. Can anyone say this group of people have not been shut out of the housing market?

Another 5 million people have been shoved into long-term income-based repayment plans that stretch out for 20 years or more; and the Obama administration hopes to increase that figure by another 2 million people by the end of 2017. Can anyone argue that having a 20-year financial obligation hanging around one's neck has no impact on the ability to buy a home?

Susan Dynarski and the Brookings Institution have published numerous papers that basically contend  that the student-loan program is under control. Like those cops at a murder scene in a 1950s detective movie, they constantly mutter, "Move along, folks; nothing to see here; move along."

But everyone from Joe the Plumber to Larry Summers knows the federal college-loan program is out of control, with millions of people unable to make their loan payments. In my view, the Brookings Institution and many of its researchers are nothing more than shills for the higher education industry, which desperately needs large infusions of federal cash to keep the doors open.

Like all of higher education's apologists, Dynarski repeats the old bromide that people who graduate from college make more money than people who only hold a high school diploma. Of course that is true. But this platitude doesn't excuse higher education for running up tuition costs at twice the rate of inflation. It doesn't justify the behavior of the for-profit universities, which charge far too much for substandard programs and have shockingly high student-loan default rates.

In my opinion, policy makers and the public in general should discount almost everything the Brookings Institution says about the student-loan crisis, which by and large the Brookings people don't even acknowledge.  We should listen to the Vermont House of Representatives, which adopted a resolution a few days ago calling on Congress to lift restrictions on bankruptcy for student-loan debtors. After all, the small-town legislators in the Green Mountain State live in the real world, which is not the world that Susan Dynarski and her Brookings colleagues live in.

References

Micahel Bielawski. Vermont House asks Congress to let student-loan borrowers file for bankruptcy. VermongtWatchdog.org, May 3, 2016.  Accessible at http://watchdog.org/264079/legislature-requests-student-debt-relief-bankruptcy/

Editorial, "Why Student Debtors Go Unrescued." New York Times, October 7, 2015, A 26. Accessible at: http://www.nytimes.com/2015/10/07/opinion/why-student-debtors-go-unrescued.html

Susan Dynarski. The dividing line between haves and have-nots in home ownership; Education, not student debt. Brookings Institution, May3, 2016. Accessible at http://www.brookings.edu/research/reports/2016/05/03-dividing-line-between-haves-have-nots-home-ownership-education-not-student-debt-dynarski


Wednesday, May 4, 2016

Vermont lawmakers urge Congress to lift bankruptcy restrictions for distressed college-loan borrowers: Bernie Sanders, here's your cue!

Earlier this week, the Vermont House of Representatives adopted a resolution urging Congress to allow distressed student-loan borrowers to file for bankruptcy without restriction. In effect, the Vermont lawmakers asked Congress to repeal the "undue hardship" provision of the Bankruptcy Code.

The measure had broad support among Vermont legislators.  The resolution was sponsored by more than 70 of  the Vermont House's 150 representatives.

This is an amazing development. Everyone knows the federal student loan program is in crisis and that millions of college-loan borrowers are burdened by massive debt they can't pay back. Congress won't do anything about it because our federal legislators have been bought off by the college industry and the banks. Now we have a state legislative body asking for bankruptcy relief.

Joint House Resolution 27, as the Vermont resolution is titled, is remarkable for its clarity.  As the resolution stated: "27 million borrowers are either in default or some other form of loan repayment delinquency . . . "  Moreover, the Vermont legislators pointed out, plans to reduce interest rates or restructure the student loan program might be helpful to future borrowers, but these proposals do nothing to help people who are suffering right now.

I hope other state legislatures across the United States will follow the lead of the Vermont House of Representatives and call for the elimination of bankruptcy restrictions for desperate college-loan borrowers.  Multiple state-level legislative resolutions would put huge pressure on Congress to quit doing the bidding of the college industry and amend the Bankruptcy Code.

And here is an opening for Bernie Sanders.  If he would endorse Joint House Resolution 27 and call for a reform of the Bankruptcy Code, he would attract even more voters.  At the very least, Bernie's endorsement might force Hillary Clinton to endorse Resolution 27 as well.  So far, her only plan for reforming the federal student loan program is to shovel more money toward the inefficient, corrupt, and venal higher education industry.

Hooray for the state legislators in Vermont.  Bernie, please jump on board. The time for action is now.

Vermont lawmakers urge Congress to lift restrictions on bankruptcy for student-loan borrowers

References

Micahel Bielawski. Vermont House asks Congress to let student-loan borrowers file for bankruptcy. VermongtWatchdog.org, May 3, 2016.  Accessible at http://watchdog.org/264079/legislature-requests-student-debt-relief-bankruptcy/

Monday, May 2, 2016

David Kirp's platitudes for cutting college dropout rates: Keep them sophomores movin'


Keep movin', movin', movin'
Though they're disapprovin'
Keep them doggies movin', rawhide
Don't try to understand 'em
Just rope, throw an' brand 'em
Soon we'll be livin' high an' wide

Theme from Rawhide
Written by Dimitri Tiomkin & Ned Washington

David Kirp wrote an op ed essay in the Sunday Times suggesting ways to cut college dropout rates. College dropout rates are indeed high. As Kirp pointed out, only 53 percent of college freshmen earn a four-year degree within six years. Among community-college students, the six-year completion rate is even lower.

Kirp's prescription for keeping students in college boils down to this: More individualized attention and early intervention for struggling students. I'm sure he's right.

It's not easy to get college professors to care about students

I have two gentle criticisms of Kirp's thesis. First, everyone knows that caring teachers and administrators and individualized attention for struggling students produce better academic outcomes. That is true at both the K-12 and college level. There is nothing new about this observation.

The problem is finding enough faculty members and administrators who care about student success. You can't just snap your figures and make professors more caring. I've worked at four public universities, and I've seen instructors who regularly failed to show up to teach their classes. I've seen faculty members who were sexual predators; and I've known professors who didn't give students any feedback on their written work--they just gave all their students As. And I've seen a lot of professors who are simply burned out.

As I'm sure Professor Kirp is aware, we have tenure at American universities; and we must keep professors on the payroll whether they care about their students or not. I suppose universities could take some sort of remedial action to get professors to up their game, but in my opinion, most of the disengaged and lazy faculty members who work at our universities are irredeemable.   They will hang on to their jobs until they reach retirement age or even longer.

Staying in college doesn't always make sense

Second, it only makes sense to keep students from dropping out  of college if they are in degree programs that lead to well paying jobs.  We're not doing students any favor if we entice them to take out more and  more student loans in order to get college degrees that don't pay well enough to service their college-loan debt.

Paul Campos made this point in his book Don't Go to Law School (Unless).  The job market is so bad for lawyers who graduate from second- and third-tier law schools, Campos argued, that students at these schools whose first-year grades don't put them at the top of their class would be better off dropping out of law school than incurring more debt to continue their studies and get a law degree.

Campos' observation works for undergraduates as well. I have a nephew who flunked out of college at the end of his freshman year and got a job as a pipe fitter's apprentice. He is making good money in the shipbuilding trade--more than he would have made had he continued in college and gotten a liberal arts degree. It would make absolutely no sense for my nephew to leave a good job and go back to college.

The Truth: Most colleges are trying to keep dropout rates down in order to maximize their revenues

Here's the truth of the matter. Most colleges are not trying to cut their attrition rates because they care about students. They're simply trying to keep kids in school to maximize their revenues. In fact, Kirp implicitly acknowledged this fact when he wrote, "The good news for financially strapped universities: not only do these [attrition cutting] initiatives change students' lives, they more than pay for themselves."  After all students who stay in school generate more student-loan revenue and more Pell Grant money.

In reality, college administrators are like the cattlemen who herded Longhorn cows up the Chisholm Trail from South Texas to the Kansas rail heads during the 1870s. Those cowboys didn't care about individual cows, but every little doggie that made it to Abilene meant more money. And what happened to the cows that survived the trail drive? They got shipped to the Chicago slaughter houses.

Likewise, college administrators want to keep as many tuition-paying students in school as they can, even if those students are borrowing money to pursue worthless degrees.  They gotta keep them doggies movin'.

Image result for cattle drive
Keep them sophomores movin'

References

David L. Kirp. What Can Stop Kids From Dropping Out. New York Times, May 1, 2016, Sunday Review Section, p. 3.