Thursday, September 22, 2022

Why does it take students six years to complete a four-year degree?

 In the early 90s, I was program director for a specially-designed higher education institute at Louisiana State University. I designed the program for senior-level Chinese college administrators. In my hubris, I wanted to introduce my Asian audience to American higher education--the envy of the world.

One of the LSU presenters, an enrollment-management specialist, said that LSU's six-year graduation rate for bachelor's degrees was about fifty percent. The university had a plan, the speaker told the audience, to get the six-year rate up to 60 percent.

I'll never forget the collective gasp that came from the Chinese administrators. One of them spoke up. In China, he said, the four-year graduation rate was 95 percent--about twice as high as LSU's four-year rate. I realized right then that LSU had nothing valuable to teach the Chinese. And I also knew that the Chinese had discovered that too. 

Why the hell does it take so many American college students six years to get a four-year college degree? After all, that's not their expectation. As a Hechinger Report article pointed out, ninety percent of college freshmen believe they will finish college in four years. The reality, however, is that less than half of college students will get their bachelor's degree in four years.

Some commentators speculate that colleges are moving the finish line for graduation to collect more tuition. There may be some truth to that. After all, American universities now measure their completion rates based on six years of enrollment, not four. By adding more course requirements and bureaucratic red tape, the colleges have made it more difficult for students to plan a schedule that will get them a bachelor's degree in four years.

Nevertheless, other factors are in play that help explain why it takes millions of Americans six years to get a bachelor's degree. Thanks to the federal student-loan program, students can finance not only their tuition with borrowed money but they can also pay their living expenses as well.

Low-income students qualify for Pell grants--up to almost $6,500 a year.  Louisiana also doles out so-called TOPS awards to students with good high school GPAs and ACT scores. However, the qualifications are meager; a kid with a 2.5 GPA and an ACT score of only 20 qualifies for a TOPS scholarship.

And a college student may pick up additional scholarships or grant money. In case you haven't heard, universities are emphasizing diversity, equity, and inclusion, and students of color and students from disadvantaged backgrounds might qualify for targeted financial assistance.

In fact, many young people can put together financial packages that allow them to live quite comfortably as college students--perhaps better than they lived at home when they were in high school.  

Using student-loan funds, Pell Grant money, and other financial aid, students can move into luxury student apartments, dine out in restaurants, and maybe even put a downpayment down on a car.

In short, many students are "living their best lives" while in college. If so, why would they want to leave a campus environment, go to work, and start paying off their student loans? Why not stretch out their college career from four years to six?


Luxury student housing: Why graduate and go to work?









Tuesday, September 20, 2022

Feeding Bananas to Baboons: The Student Loan Program Is Designed to Shovel Federal Money to Colleges at Students' Expense

Years ago, I traveled through central Uganda in a Land Rover, accompanied by a native guide. As we came around a curve in the road, we surprised a large troop of baboons.  

All the baboons ran away. Large and small, the whole group fled into the woods. All but one.

The largest baboon was reclining against a tree when we appeared, and he stayed put. He was not afraid of us and wanted us to know it.

My guide stopped our vehicle so that we could observe this human-sized creature. The baboon stood up and slowly walked to my side of the Land Rover. My window was open, and soon he was standing only inches from me.

My guide had bought a bunch of Ugandan bananas (very tasty), and I offered one to the baboon. He stared directly into my eyes for a few seconds, which made me extremely uneasy. Finally, he grabbed the banana from my hand and walked away without the slightest sign of gratitude.

"I just did a stupid thing," I admitted to my guide, and he agreed. "Yes, Mr. Fossey, that was stupid."

Our federal government is doing stupid things with the student-loan program. Today, 45 million Americans hold student debt totaling $1.7 trillion, and millions of borrowers are in income-based repayment plans that last as long as a quarter of a century. The prime beneficiaries of all this largesse are colleges and universities. 

Have the colleges used this money wisely? No, they haven't. They raise tuition rates year after year because they know that students will take out ever-larger loans to pay their tuition bills.  They roll out expensive graduate programs that don't lead to good jobs. They overpay their administrators, who proliferate like feral hogs.

In essence, the feds have been feeding bananas to baboons. 

Although the colleges rake in billions of dollars each year from the student-loan program, they have nothing to say about its flaws. The presidents of the nation's most prestigious universities haven't endorsed bankruptcy relief for distressed student debtors. They haven't spoken out about the rapacious for-profit college industry. They've not criticized the Department of Education for garnishing elderly student debtors' Social Security checks.

Why haven't college leaders called for reforming the student-loan program? Because they don't give a damn. 

They just want their bananas.


Give me that goddamn banana.


Thursday, September 8, 2022

Vermont Law School is rolling out new master's degrees: But does Vermont even need a law school?

 Vermont Law School, located in the bucolic village of South Royalton, has struggled recently with declining enrollment, demographic shifts, and "wobbly finances." Consequently, VLS is rolling out new law-focused master's degrees and changing its name to the Vermont Law and Graduate School.

Karen Gross, a former president of Southern Vermont College, applauded the move. "VLGS should be commended for trying to innovate, and I think what they did and silo-busting, moving programs online, and staying close to their mission, is smart," Gross was quoted as saying in an Inside Higher Ed article

So, what's new at VLGS? In addition to the law school's traditional J.D. program and its master's degree program for J.D. graduates, VLGS now offers several master's degrees that will not qualify graduates to practice law. Specifically:

  • Master's Degree in Environmental Law and Policy
  • Master's Degree in Energy Regulation and Law
  • Master's Degree in Food and Agriculture Law and Policy
  • Master of Arts in Restorative Justice
In collaboration with other universities, VLGS will also offer eleven dual degrees. For example, working with the University of Cergy-Pontoise (France), VLGS students can get a JD/LLM in French and European Law. Partnering with the University of Cambridge (England), students can obtain a JD/Master of Philosophy degree in real estate finance

What will it cost students for these new degrees? About 50 grand a year in tuition and fees.

In short, as several commentators explained in the Inside Higher Ed article, VLGS is "diversifying its product line," it's "silo-busting,"  "moving the needle," and "going big."

I suppose VLGS should be commended for launching these new degrees, but all this activity begs the question:

Does Vermont even need a law school? After all, there are nine law schools in neighboring Massachusetts and fifteen law schools in nearby New York. 

All across the country, law school applications are down. Many people who are smart enough to be good lawyers are choosing other career paths.

To combat this trend, law schools have spun out new graduate programs to attract more students. These programs are targeted toward people who are not seeking to become lawyers. Often, these master's programs put students in debt without improving their graduates' job prospects.

Moreover, the United States has too many law schools and too many lawyers. The public would be well served if the American Bar Association forced some of these schools to close and pressured the remaining schools to concentrate on their core mission--preparing people to be lawyers.

Unfortunately, that is not what the ABA is doing. And the ABA's inaction leaves schools like VLGS free to spin out new and expensive graduate degrees, which may or may not be worth what students are paying.






Tuesday, September 6, 2022

You Do Know Debt Forgiveness Fuels a Healthy Economy. Essay by Steve Rhode

Opinions and emotions are running high right now regarding student loan forgiveness.

It is one of those topics that has become politicized rather than remain rational and logical.

A recent post from Zachary Carter, the author of The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes raised some very interesting points worth remembering.

Debt forgiveness is important to a fully functioning, healthy economy. Debt elimination is part of the Bible, the U.S. Constitution, and routine government functions in various sectors. The USDA even runs a debt settlement program for farmers.

Indeed, debt relief has always been the handmaiden of debt itself. In the United States, we have a formal legal process for eliminating nearly all forms of debt: bankruptcy. When debts become unbearable, people file for bankruptcy to have them discharged in court. In the 15 years preceding the pandemic, more than 14.3 million people filed for bankruptcy. In the decade before the pandemic, more than 20,000 businesses filed for bankruptcy yearly, with a high watermark of 60,837 in 2009. Debts are discharged daily in the United States and have been for decades.

As Carter says, “Capitalism would collapse without debt relief systems. Businesses get in trouble all the time—both good businesses that would work fine without a few onerous debt deals, and bad businesses that need to be liquidated or restructured. Sometimes bad things just happen. People get divorced. They get injured and are overwhelmed by medical bills. They get laid off. They have to pay for a parent’s funeral or care for children with special needs. And yeah, some people just don’t know how to manage their money and buy things they can’t afford. But we do not consign such people to never-ending financial servitude as a result of unforeseen circumstances, or even totally reckless spending habits. We have a formal process to eliminate debts and start over, with a reasonable chance of living a healthy financial life.”

The issues building today regarding student loan debt don’t hinge on the finer points of forgiveness. No, the problem today was manufactured by special interests and politicians that meddled in changing the bankruptcy code.

“In 2005, Congress passed a law that made it next to impossible to discharge almost any form of student debt. Even the most creative consumer lawyers estimate that only about $50 billion—less than 3 percent of the $1.75 trillion in outstanding student debt—had the potential to be wiped away, but only if students could persuade a court that they had been egregiously wronged, by say, non-accredited programs or institutions that didn’t actually offer degrees,” says Carter.

He’s right. Bankruptcy is an orderly process that allows for the individual examination of debtors to determine if they are eligible for a legal Fresh Start.

The elimination of impossible debts helps people start over and consume again. That is how capitalism works. Without the discharge of impossible debts, the economy would bog do, and all would suffer.

Consumers must consume. Their job is in the name.

Carter says, “There’s no real reason why student debts should be so much more onerous than others. Let’s be clear about the supposedly reckless gambit that student debtors embarked on. They didn’t go to a casino, or buy a Maserati or make bad bets on meme stocks. They tried to get an education—exactly what parents, teachers and financial advice columnists have been telling kids to do for decades if they want to live better and more profitable lives.”

That’s an interesting point to ponder.

You do have to give Carter some props for his observation that the Biden student loan forgiveness program is not perfect, but it might be the best we can do now. Excellent point.

“There are perfectly reasonable critiques that can be lodged against Biden’s program. The plan isn’t comprehensive—only $20,000 can be discharged, and this is only for borrowers whose incomes were low enough to qualify for Pell Grants. The program looks the way it does because it is the only solution to this problem that our current politics will bear.

It would be far better to reform the higher education financing system than to simply wipe out a big chunk of higher ed debt. In a better America, students wouldn’t have to pay any more for a college education than they do for a high school education.

But we don’t live in that America right now. In time we may be able to reform the broader higher ed system, but for now, providing reasonable debt relief is the best our government can do.

Biden’s student debt relief initiative is no wild, unprecedented idea. Governments pay for education and eliminate unsustainable debts. That is how the world has worked for centuries.”

If I had a magic wand to wave, it would be to not go forward with the Biden student loan forgiveness program and just return all student loan debt to elimination through bankruptcy.

*****

This essay was originally posted on September 2 on Get Out of Debt Guy.

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


Monday, September 5, 2022

Froma Harrop, Progressive Op-Ed Writer, Chats Up Secession

 Froma Harrop, a cheerleader for the progressive Democrats, chatted up the notion of secession in a recent op-ed column. Likely candidates in Harrop's mind are "the rural South, Appalachia, and Texas." Not all of Texas, apparently. She would like the city of Austin to stick with the union. 

Harrop's secession talk is slightly less radical than Dana Milbank's spiel. He would like to see Oklahoma leave the union along with Texas.

This progressive speculation about secession is in harmony with President Biden's derisive description of Republican voters as "semi-fascist."  

I hear a lot about fascists these days, but I've actually only met one--my high school principal when I was growing up in Oklahoma. My community allowed him to beat school kids with a board, which is a popular fascist pastime, but he died years ago.

Ms. Harrop thinks the U.S. can get along without the Flyover States. She points out that the states that voted for Joe Biden account for 71 percent of the national economy.

Perhaps she is unaware that Texas is the nation's biggest international exporter and has a majority of the country's natural gas reserves. Not to mention that there are about 30 million friendly people who live in Texas--and some of them are Republicans.

Personally, I agree with Rodney King's observation, which he made in 1992: "Can't we all just get along?"

I believe we can all get along, but it would help if progressive pundits stopped spouting bigotry about the good folks who dwell in Flyover Country.


Be careful what you wish for.






President Biden, please be honest with the American people about the student-loan crisis


Be real
Baby, be real
That's all I ask of you
Baby, be real.


An Officer and a Gentleman is a terrific movie about a couple who mistrust each other. Zack Mayo, played by Richard Gere, is an officer candidate at a Navy training facility. To put it mildly, Mayo grew up in a dysfunctional family and wants a better life. 

Paula Pokrifki, played by Debra Winger, is an ethnic factory worker in a dead-end job. She too wants a better life. She can leave her blue-collar world behind if she marries a handsome, up-and-coming naval officer.

Zack and Paula fall in love but are wary. Paula wonders if Zack is just looking for a casual relationship to help him get through basic training. Zack wonders whether Paula is trying to trap him into a marriage that will spring her out of the loser's bracket.

Their complicated relationship is encapsulated in the movie's soundtrack, especially the song "Be Real," sung by the Sir Douglas Quintet. "Be real. Baby, be real. That's all I ask of you. Baby, be real."

An Officer and a Gentleman and "Be Real" are metaphors for the American people who just want to know what the fuck is going on with the federal student loan program.

We know that about 45 million Americans have federal student loans. And we know that the total outstanding debt is about $1.7 trillion. We also know that millions of college borrowers are not paying back their student loans.

Will President Biden's debt forgiveness plan do anything to clean up this colossal mess?

Will the plan rein in the spiraling cost of a college education? Will it help make a college degree something that will get student borrowers into real jobs?

Or is Biden's student-debt forgiveness plan just a gimmick rolled out by the cynical hucksters in the Department of Education to help the Democrats win the midterm elections?

Be honest with us, President Biden. Be real. That's all we're asking: baby, be real.

That's all we ask of you: baby, be real.










Bed, Bath & Beyond CFO leaps to his death: Better to fail with honor than succeed by fraud

 

Rather fail with honor than succeed with fraud.

Sophocles

Gustavo Arnal, the Chief Financial Officer of Bed, Bath and Beyond, leaped to his death from the 18th story of a Manhattan office tower on Friday. He was 52 years old.

Arnal joined Beth, Bath & Beyond in 2020 and was well compensated. His 2021 income was $2.9 million.  Last month he sold company stock worth $1 million.

The shares of Bed, Bath & Beyond, where Arnal worked,  are labeled as a meme stock whose price has bounced around like a ping pong ball in recent months. As the stock gyrated up and down, some people got rich, and others lost a lot of money.

Arnal's death brings up images of the 1929 stock market crash when a few people jumped out of windows as their wealth evaporated over the course of a few hours.

No one can say with certainty why someone commits suicide, but it is always a response to despair.  My guess--and I think it is a good one--is that Gustavo Bernal was an honorable man who could not cope with a financial mess he did not create.

Perhaps he exemplifies Sophocles's observation that it is better to fail with honor than to succeed by fraud.