Thursday, June 9, 2016

The Student Loan Crisis and the Democratic Party Platform: Key Reform Proposals Would Entice Young Voters to vote for Hillary

Hillary Clinton has a problem with young  voters. They went 3 or 4 to 1 for Bernie Sanders in the various Democratic primaries this spring. Why did young voters go to Bernie, and how can Hillary win them over?

The Democratic Party insiders--dinosaurs like Nancy Pelosi, Harry Reid, Debbie Wasserman Schultz, Charles Schumer, etc--don't realize it but the number one domestic policy issue in the United States today is the student loan crisis.  Approximately 43 million Americans are carrying $1.3 trillion in student-loan debt, and at least half of them can't pay it back.

As the Wall Street Journal reported in April, about 40 percent of college-loan borrowers in the repayment phase aren't making their monthly loan payments.  And five million people are enrolled in various income-based repayment programs. Most debtors in these programs are making payments so low that the payments don't cover accruing interest. In reality then, most people in income-based repayment plans will never pay off their loan balances.

Bernie Sanders signaled that he understands the scope of the problem when he proposed a free college education at a public college for every American.  By making that pledge, he turned millions of young Americans into single-issue voters.

Hillary could attract millions of Bernie supporters by adding these  planks to the Democratic Party platform:
  • Free college education at a public college or university (as Bernie proposed).
  • Eliminating the tax penalty for people who successfully complete long-term repayment plans but who have a loan balance when they've  completed their repayment terms.
  • Stopping the garnishment of Social Security checks for elderly student-loan defaulters.
  • Forcing the for-profits to stop putting mandatory arbitration clauses in student enrollment documents.
  • Repealing the provision of the 2005 Bankruptcy Reform Act that virtually eliminated bankruptcy relief for people who took out student loans from private lenders.
If Hillary and her handlers are smart, they will adopt these ideas. I hope Bernie refuses to endorse Hillary until she endorses at least some of them. If Bernie can pressure Hillary to make a commitment to solve the student-loan crisis, his campaign for the presidency will not have been in vain. But if the presidential race between Trump and Hillary rolls toward election day without any serious discussion of the student-loan crisis, then this country is in huuuge trouble.



Image result for bernie sanders

References

Josh Mitchell. More Than 40% of Student Borrowers Aren’t Making Payments. Wall Street Journal, April 7 2015. Accessible at http://www.wsj.com/articles/more-than-40-of-student-borrowers-arent-making-payments-1459971348 

Wednesday, June 8, 2016

How many college graduates have jobs that don't require a college degree? You might be surprised.

Last April, the Federal Reserve Bank of New York released an analysis of labor-market conditions for college graduates. Here is what it found:

  • In 2015, almost 45 percent of recent college graduates (graduates aged 22 through 27) were working in jobs that do not require a college degree.
  • Around 35 percent of all graduates (graduates aged 22 through 65) were holding down jobs that don't require a college education.
  • Wages for recent college graduates have remained relatively flat from 1990 to 2015.
So what do these numbers mean for young Americans?

College is not a good bet for everyone. First, although the college industry and their advocates (Brookings Institution, etc.) like to remind us that people who graduate from college make more money over their lifetimes than people who only have high school diplomas, going to college is not a good bet for everyone.

As the New York Fed has shown us, darn near half of recent college graduates are working in jobs they could have gotten without going to college. Of course many recent graduates will eventually find jobs that require a college degree. But even among the college-educated population as a whole, about one third of college graduates are working in jobs that do not require a college education.

 The payoff for getting a college degree is not as good as it once was. Second, wages for college graduates have remained about the same for the past 25 years--about $45,000 in constant 2015 dollars. But the cost of going to college has tripled over the last quarter of a century. That's why about two thirds of college graduates leave school with college-loan debt.

Thus, you may still need to go to college to earn a decent income, but a larger share of that income is going to go to servicing student loans.  In other words, recent college graduates are not as well off financially as their counterparts were 1990 because a majority of them are graduating with a significant amount of debt.

The case for a free college education gets stronger and stronger. People laughed at Bernie Sanders when he argued for a free college education from a public college for anyone who wants one. But, as I have repeatedly pointed out, Bernie's plan would actually cost less than the current federal loan program, because millions of people aren't paying off their loans.

Now Bernie is gone--swept away in the California primary election, and the higher education community can look at this idea afresh without fear of undermining their favorite presidential candidate--Hillary Clinton.

And lo and behold, the Brookings Institution published a paper today by a couple of croakers named Morley Winograd and Michael Hais that suggests free college might be a good thing.

And it would be a good thing. Certainly offering a free college education would be better than Hilary's scheme to pump billions of dollars more into a higher education system that is corrupt, obsolete, inefficient, and horribly overpriced.

References

The Labor Market for Recent College Graduates. Federal Reserve Bank f New York, 2016. Accessible at https://www.newyorkfed.org/research/college-labor-market/index.html

Mathew Boesler. More College Grads Finding Work, But Not in the Best Jobs. Bloomberg.com, April 7, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-04-07/more-college-grads-finding-work-but-not-in-the-best-jobs

Morley Winograd and Michael Hais. The Democrats' Generation Gap. Brookings Institution, Jun 3, 2016. Accessible at http://www.brookings.edu/blogs/fixgov/posts/2016/06/03-millennials-democrats-election-2016-winograd-hais?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30380706&_hsenc=p2ANqtz-8kyQSbZyUfxh-t2hnsxhvRRXvUp2j0eORShy09EK-7-HQpeIdEwoZaQ1CXQ3fR5CAxWRHk2cBWPTT6cCkIOO74q4BLUw&_hsmi=30380706

 Morley Winograd and Michael Hais. The Democrats' Generation Gap, Mike and Morley web site, June 6, 2016. http://www.mikeandmorley.com/the_democrats_generation_gap


Morley Winograd and Michael Hais recommend free college in a Brookings paper less than 24 hours after Bernie Sanders lost the California primary


The Brookings Institution is a cowardly, sniffling organization committed to preserving the status quo in higher education. And here is another indication of that.

On June 8, the morning after Hillary beat Bernie in California, Brookings posted an essay by Morley Winograd and Michael Hais about how the Democrats can win back  the young voters who went for Bernie Sanders over Hillary by 3 or 4 to 1. 

In case you haven't heard of them, Morley Winograd and Michael Hais are two old coots who profess to be experts on the millennial generation. Judging by their photos, Winograd and Hais are not millennials themselves, but they have written some books about millennials and that makes them experts.

In their essay for Brookings, Winograd and Hais cooed approvingly about Hillary's stand on the student-loan crisis:  "[Hillary] has already spoken out forcefully on the need to lift the burden of student debt from this generation," the authors wrote. They note that sheendorses the idea of allowing college-loan borrowers to refinance their loans and she favors loan forgiveness for people who were defrauded by "unscrupulous lenders or schools." 

Big friggin' deal. Allowing distressed debtors to refinance their loans will not solve the student loan crisis. There are 43 million people with outstanding college-loan debt, and most have signed multiple promissory notes. There must be at least 200 million individual debt instruments floating around--maybe twice that many.  Is the federal government really going to refinance all those loans at lower interest rates? In your dreams, Mike and Morley.

And as for the notion that defrauded students should have their loans forgiven, I've got news for you, Mike and Morley. The Department of Education already has a debt forgiveness program in place. The problem is that the process is so cumbersome that very few loans have actually been forgiven.

But here's the money quote.  Mike and Morley recommend a free college education for everybody.
 "[M]illennials and the generations that come after them should be able to get their higher education debt free," Winograd and Hais wrote, "because that’s the level of education they—and America—will need to be successful both in today’s economy and in the years ahead."

Hey, that's exactly what Bernie Sanders said at his first debate with Hillary last fall. If this is such a good idea, why didn't Mike and Morley, the so-called millennial experts, suggest it sooner? Why didn't Hillary endorse this idea? And, more to the point of this commentary, why didn't the Brookings Institution publicize this idea before the California primary rather than after the votes were counted and Bernie was defeated?

I'll tell you why--because Hillary, the Brookings Institution, and the Democratic Party are committed to the status quo in higher education. If Americans could get a free college education from a public college in the same way they get a free high school education, the for-profit colleges would shut down almost overnight and the elite private colleges would be forced to slash their tuition rates.

Hillary is not going to let that happen. She and Bill have made too much money off the higher education industry, and so have Democratic Party insiders like Debbie Wasserman Schultz.  That's why Mike and Morley's whispered suggestion about a free college education didn't surface until after Hillary had defeated Bernie. And my prediction is this: the Brookings Institute will never allow this very good idea to be floated again in any of its publications.

Image result for morley winograd and michael hais
Morley Winograd & Mihael Hais: Experts on millennials

 Note: The Winograd and Hais essay is dated June 3, 2016, but it first appeared for public viewing on the Brookings web site on June 8, 2016. The same essay appeared on the Mike and Morley web site on June 6. 

References

Morley Winograd and Michael Hais. The Democrats' Generation Gap. Brookings Institution, Jun 3, 2016. Accessible at http://www.brookings.edu/blogs/fixgov/posts/2016/06/03-millennials-democrats-election-2016-winograd-hais?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30380706&_hsenc=p2ANqtz-8kyQSbZyUfxh-t2hnsxhvRRXvUp2j0eORShy09EK-7-HQpeIdEwoZaQ1CXQ3fR5CAxWRHk2cBWPTT6cCkIOO74q4BLUw&_hsmi=30380706

 Morley Winograd and Michael Hais. The Democrats' Generation Gap, Mike and Morley web site, June 6, 2016. http://www.mikeandmorley.com/the_democrats_generation_gap


Sunday, June 5, 2016

Someone needs to wake George Will and tell him Ronald Reagan is dead

They tell the story in England of a British politician who dreamt he was addressing the House of Lords. When he awakened, he found that indeed he was!

Today I read the Review section in the Sunday Times and the Opinion section of my local newspaper. I had the feeling all the political pundits are asleep or that they're living in the 1980s.  In the Times, Timothy Egan wrote a rambling and largely incoherent essay about Bernie Sanders. Egan said Bernie's plan for a free college education and universal health care "are no more thought out than a bumper sticker."

Egan's observations are so false as to be almost libelous. Sanders' health care plan and his higher-education proposal are quite sound, and both are less expensive and more egalitarian than Obamacare and our federal student-loan nightmare.

In my local paper, George Will dismissed the rise of Trump and Sanders as "political silliness," and lumped them both with the simplistic socialist politicians of Great Britain.  Will  derided supporters of both candidates, calling them Trumpkins and Sandernistas.

I am astonished by the near unanimity among political columnists on both the right and the left regarding the upcoming presidential election. Almost with one voice, they ridicule both Trump and Sanders--basically implying by their arguments that Americans would be better off if Crooked Hillary became President

Some write from a conservative perspective and some call themselves liberals, but almost all of them share one thing in common--their columns appear under photographs of themselves that are about 20 years out of date.

Indeed all these people are from another era--from a time when the oligarchs had Americans convinced that our politicians were aligned into two political parties based on political principles. But of course we all know now that the Democratic-Republican divide was a charade--just a puppet show to amuse the rubes while politicians on both sides of the aisle lined their own pockets.

But the saps woke up. Some threw their support behind Trump, and some went to Sanders. Now the media elites are hysterical, writing mad drivel that cannot be identified by ideology. Froma Harrop insinuates Bernie Sanders is a racist, and Bill O'Reilly ridicules Bernie as doddering Socialist. Or is the other way around?

All these people--Froma Harrop, George Will, Timothy Egan, Frank Bruni, Steve and Cokie Roberts, Paul Krugman, Maureen Dowd, etc.--need to  wake up and join the 21st century. The peasants are rising, and their fury will not be assuaged by stale prose written by people who come across like eccentric  nursing-home inmates writing letters to the local newspaper.

Image result for george will images
I hate to break it to you, George, but Ronald Reagan is dead.

References

Timothy Egan. Bernie's Last Stand. New York Times, June 5, 2016, Review Section, p. 2. Accessible at http://www.nytimes.com/2016/06/05/opinion/sunday/bernies-last-stand.html?_r=0

George Will. Britain, too, is infected with political silliness. Baton Rouge Advocate, June 5, 2016, p. 7B. Also accessible in the Washington Post at https://www.washingtonpost.com/opinions/britain-too-is-infected-with-political-silliness/2016/06/03/77560a20-28e8-11e6-b989-4e5479715b54_story.html







Saturday, June 4, 2016

Nearly 95 million Americans aren't working: The government's unemployment rate is just a bullshit number

During the First World War, it is said. the British military kept three separate casualty lists: one list to deceive the public, a second list to deceive the War Office, and a third list to deceive itself.

We could say much the same thing about the government's official unemployment rate.  The Bureau of Labor Statistics (BLS) claims the nation's unemployment rate is only 4.7 percent, less than half the rate in Europe and about half what it was when Obama came into office.  "We cut unemployment in half, years before a lot of economists thought we could," President Obama boasted recently to a crowd in Indiana.

The BLS unemployment rate is just a bullshit number

But nobody believes that. Everyone knows the government's official unemployment rate is just a bullshit number.

Even the government admits the unemployment rate is higher if we include people who are working part-time involuntarily and the people who have given up looking for work. But including those people in the analysis still understates how bad the employment situation is.

In fact, when we ponder how many American adults are simply not working, we get a clearer understanding of the employment picture.  A few days ago, BLS reported that 94,708,000 American adults are not in the labor force--37 percent of the entire American adult population.

Of course, not all of these people are unemployed. Millions are retired, millions are pursuing post-secondary education, and millions are not working  because they are disabled and receiving disability benefits. Obviously, not all non-working Americans are suffering.

But a lot of non-working Americans are suffering. Millions of Americans are unemployed or underemployed, millions gave up looking for work and elected to take early retirement at reduced benefits. And there are millions who are still in the labor force but are working at substandard wages, including a lot of college graduates who hold jobs that don't require a college degree.

Signs of economic decline are everywhere

Although Obama takes credit for leading the nation out of the 2008 recession, the standard of living for millions of Americans continues to decline.  As the Brooking Institution paper noted in 2012, median wages for male workers have gone down precipitously in recent years.  In constant dollars, median wages for American men have slipped  by 19 percent since 1970.

Although the Obama administration insists that the economy is creating new jobs, that's probably bullshit as well. BLS reported last week that 38,000 new jobs came on line in May, a dramatic decline from an average of 178,000 a month over the first three months of 2016.  But a Brookings analysis, using a different form of measurement, claims the economy actually lost 4,000 jobs last month.

 And more and more people are on food stamps--1 out of 7 Americans are now receiving food-stamp assistance. That's 45 million people--up from around 28 million when Obama took office.  Do these numbers suggest that the economy is in recovery?

And then there's the student-loan crisis

And then there's the student loan crisis.  Approximately 43 million Americans owe 1.3 trillion in student-loan debt.  Although  the Department of Education's three-year default rate is only around 10 percent, that's just more bullshit.  By encouraging people to obtain economic hardship deferments, the government has artificially kept default rates down, because people with deferments aren't counted as defaulters even though they aren't making loan payments.

But of course people who accepted deferments are seeing their loan balances go up because interest continues to accrue. Now the only way they can service their loans is by signing up for 20-year income-base repayment plans.

The true student-loan default rate is probably 25 percent; and it's 50 percent for people who took out loans to attend for-profit colleges. And even this estimate may be too low.

Millions of Americans are suffering and they're  foaming with rage

In short, millions of Americans are suffering. They know the economy is deteriorating; they know their standard of living is going down. They know Barack Obama despises ordinary Americans--the poor stiffs who live in fly-over country and still go to church on Sundays.

And ordinary Americans are foaming with rage.

The political and media elites think they can keep a lid on all this anger, that they can persuade a majority of Americans to vote for Hillary and prolong the status quo. They think Americans are listening to Anderson Cooper and Don Lemon when they paint Trump as a racist and a bigot on CNN. They think columnist Froma Harrop will persuade her readers that Bernie Sanders is a racist.

But I've got news for the elites. The people who are angry aren't listening to CNN. They aren't reading Froma Harrop. The elites may succeed in crowning Hillary Clinton as the next queen of post-modern America, but the pundits will never tamp this anger down. It's real, it's ugly, and it's permanent.







References

Alan Bjerga. Food Stamps Still Feed One in Seven Americans Despite RecoveryBloomberg News, February 3, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-02-03/food-stamps-still-feed-one-in-seven-americans-despite-recovery

Christopher Goins, 44.7 Million Americans Now on Food Stamps--More than at Any Time Under Bush, CNS News, February 3, 2012. Accessible at http://cnsnews.com/news/article/447-million-americans-now-food-stamps-more-any-time-under-bush

 Michael Greenstone and Adam Looney. The Uncomfortable Truth About American Wages. Brooking Institution, October 23, 2012. Accessible at http://www.brookings.edu/research/opinions/2012/10/22-wages-greenstone-looney

Susan Jones, Record 94,708,000 Americans Not in Labor Force; Participation Rate Drops in May. CNS News, June 3, 2016. Accessible at http://www.cnsnews.com/news/article/susan-jones/record-94708000-americans-not-labor-force-participation-rate-drops

Matthew Boesler. More College Grads Finding Work, But Not in the Best Jobs. Bloomberg.com, April 7, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-04-07/more-college-grads-finding-work-but-not-in-the-best-jobs

Nicholas Wells and Mark Fahey. What's the REAL unemloyment rate? CNBC.com, January 8, 2016. Accessible at http://www.cnbc.com/2016/01/08/

Jonathan Wright. Amidst unimpressive official jobs report for May, alternative measure make little difference. Brookings Institution, June 3, 2016. Accessible at http://www.brookings.edu/blogs/jobs/posts/2016/06/03-amidst-unimpressive-official-jobs-report-for-may-alternative-measures-wright?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30258460&_hsenc=p2ANqtz-8wODcWxeX-Vo8PGswc2439RPH_hV1yCM05S_knJvJmuSfYUbz-xh1mWd76dc0m2GG5fhL55iubJxPERM_sbHc3qH5Hfg&_hsmi=30258460

Thursday, June 2, 2016

Bill Kristol wants David French to run for president against Trump and Hillary: Don't bring a knife to a gun fight

Bill Kristol, Editor of Weekly Standard, is promoting David French, a National Review writer, to run for president as an independent against Donald Trump and Hillary Clinton.

What a terrible thing to do to Mr. French. It's like throwing a puppy into a nest of crocodiles.  And isn't Donald having enough fun already? Do we really need to give him another person to belittle and ridicule?

On the other hand, French is a Presbyterian as is Trump; and Hillary is a Methodist. I would love to see these candidates debate theology.


Image result for don't bring a knife to a gunfight


St. Catharine College and Dowling College are closing: "After us, the deluge."

After us, the deluge.  I care not what happens when I am dead and gone.

Marquise de Pompadour

Just this week, two small colleges announced they are closing: St. Catharine College, a Catholic institution in Kentucky; and Dowling College, a private school on Long Island.  

Clearly, a lot of small private colleges are in trouble. Last autumn, Moody's Investor Service predicted a sharp increase in the number of college closures, forecasting that 15 would close in 2017. I think Moody's is far too optimistic. By 2017, I think we will see three or four colleges shutting down every month.

What's going on? Several things.

Small colleges have priced themselves out of their markets. First, many small non-elite colleges have priced themselves out of their markets. Tuition has been rising every year for the past 20 years, and even obscure little colleges now charge students from $30,000 to $35,000 a year, just for tuition. For years, students and their parents passively submitted to yearly tuition hikes; but no more. Mom and Pop aren't willing to pay $100,000 for Suzie or Johnny to get a bachelor's degree from an undistinguished private college.

It's true that small private colleges are heavily discounting their tuition--almost 50 percent for first-time freshmen. And it is true that students can take out student loans to pay for their college tuition. But families are not sure whether they will get a tuition discount big enough to fit their budgets or whether they are getting as good a discount as another family gets. They've lost trust in the integrity of the admission process.

And young people have finally begun reading the newspapers and are waking up to the fact that student-loan debt can be a financial death sentence for graduates who don't quickly find good jobs. They have become wary about enrolling at a little college named after a saint they've never heard of. Who in the hell is Saint Scholastica  anyway?

Onerous federal regulations have raised operating costs. So price is a factor.  But there is another reason why small colleges are closing. Federal regulation have become too onerous for small schools to manage. They simply cannot afford to comply with ever more burdensome regulations that spew out of the Department of Education.  The Department's 2011 "Dear Colleague" letter on sexual harassment triggered a flurry of new college regulations, policies, and training programs to meet DOE's heightened standards for complying with Title IX. DOE's new transgender restroom rules will cost colleges money, and the rules will be a real headache for the little religious colleges that pride themselves on their traditional moral values.

Here's an example of how colleges are being subject to more and more federal regulation. Virginia Tech suffered a horrible tragedy when a deranged gunman massacred more than thirty students in 2007. The University was sued for negligence after the incident, but the Virginia Supreme Court ruled that Virginia Tech was not liable under Virginia tort law.

But the Department of Education concluded that Virginia Tech violated the Clery Act in the way it alerted students about an ongoing threat and assessed a fine against the University. The fine wasn't large compared to Virginia Tech's overall budget, but the University spent a lot of money defending against DOE's charge, and it will spend even more trying to make sure it does not run afoul of the Clery Act again.

Virginia Tech is big enough and rich enough to deal with DOE's mandates, but hundreds of small colleges don't have the resources for dealing with the ever growing complexity of the federal regulatory environment.

St. Catharine College is a case in point. It got squeezed by DOE, which held up its federal student aid money based on some technical issue. The college sued but apparently didn't get relief. This week it announced its closure, which it said was triggered by DOE sanctions.

Small liberal arts colleges are headed for extinction and there is no way to revive them.  Small colleges have implemented all sorts of strategies to keep their enrollments up and maintain their revenues. Many have tried to reinvent themselves by hiring marketing firms to enhance their images and juice their enrollments.

By and large, this strategy has failed. Let's face it: hiring a marketing firm to design an edgy college logo or a catchy slogan is no remedy for the massive problems facing the nation's small liberal arts colleges.

I don't see any way to revive the small liberal arts college. Their tuition rates are too high, and offering heavy discounts has not lured middle class students into small-college classrooms.

Moreover, the Department of Education does not care whether it is regulating small colleges out of business. The DOE minions probably gave each other high fives when they heard St. Catherine is closing its doors.

Nor is there any way for colleges to walk away from their total dependence on federal student aid and the federal regulations that come with it. The colleges drank the Kool Aid of federal student-loan money, and their is no antidote.

If you are an administrator or a professor at a small college and you are nearing retirement, perhaps you don't care about the demise of liberal arts colleges. As Marquise de Pompadour put it: "After us the deluge.  I care not what happens when I am dead and gone." But a young person with a new Ph.D. would be a fool to try to build a career by taking a job at a small liberal arts college. 





References

Another Small Private Closes Its Doors. Inside Higher Ed, June 1, 2016. Accesible at https://www.insidehighered.com/quicktakes/2016/06/01/another-small-private-closes-its-doors-dowling-college?utm_source=Inside+Higher+Ed&utm_campaign=a0fafeb056-DNU20160601&utm_medium=email&utm_term=0_1fcbc04421-a0fafeb056-198564813

Paul Fain. The Department and St. Catharine.  Inside Higher Ed, June 2, 2016. Accessible at https://www.insidehighered.com/news/2016/06/02/small-private-college-closes-blames-education-department-sanction?utm_source=Inside+Higher+Ed&utm_campaign=3d1c6eed79-DNU20160602&utm_medium=email&utm_term=0_1fcbc04421-3d1c6eed79-198565653

Lyndsey Layton. Virginia Tech pays fine for failure to warn campus during 2007 massacre. Washington Post, April 16, 2014. https://www.washingtonpost.com/local/education/virginia-tech-pays-fine-for-failure-to-warn-during-massacre/2014/04/16/45fe051a-c5a6-11e3-8b9a-8e0977a24aeb_story.html

Kellie Woodhouse. Closures to Triple. Inside Higher Education, September 28, 2015. Accessile at https://www.insidehighered.com/news/2015/09/28/moodys-predicts-college-closures-triple-2017