Thursday, April 30, 2020

Massive student-loan forgiveness is now a mainstream idea: Even Al Jazeera is on board

Around 45 million Americans owe a total of $1.6 trillion in student loans, and approximately 20 million of those debtors are not paying them back.  Betsy DeVos, President Trump's Education Secretary, admitted more than a year ago that only one out of four student borrowers was paying down principal and interest on their federal loans. "In the commercial world," DeVos observed, "no bank regulator would allow this portfolio to be valued at full, face value."  

So why not just forgive all this festering debt--debt that is preventing struggling Americans from buying homes, having children, or saving for their retirement?

That notion is now a mainstream idea in American politics. Senator Bernie Sanders got the ball rolling when he called for wiping out all this debt.  Senator Elizabeth Warren proposed something slightly less radical--forgiving student debt up to $50,000.  And Joe Biden, the Democrats' presumptive nominee for the Presidency, wants to forgive all debt owed by individuals who attended a public university or a historically black college (HBCU).

Even Al Jazeera, an Arabic-focused news organization, based in Qatar, wants to forgive all federal student loan debt.  America is experiencing its worst economic crisis since the 1930s, Al Jazeera reporters pointed out, and the U.S. needs to prioritize relief  for "people, not profit." Al Jazeera calls for canceling all student loan debt, which would "help those hit hard by the coronavirus pandemic to "rebuild their futures."

Writing off all federal student debt is not a crazy idea, especially, as I just said, a bunch of it isn't being paid back anyway. But does Congress have the political will to do it? I don't think so.

After all, the straightforward solution to this crisis would be to simply allow overwhelmed debtors to discharge their student loans in bankruptcy. Bills have been introduced in Congress that would accomplish just that, but those bills have gotten nowhere. 

I've said this before, and I will repeat it. Congress should allow insolvent Americans to file for bankruptcy and discharge their student loans like any other consumer debt: credit cards, car loans, and business obligations. 

And all Congress needs to do to accomplish this sweeping reform is to remove two words from the U.S. Bankruptcy Code: "undue hardship." It is the "undue hardship" language, after all, that the federal courts have interpreted so harshly, and which has denied bankruptcy relief to millions of honest student-loan debtors.

Of course, if Congress abolished the "undue hardship" standard, it would need to appoint a lot more bankruptcy judges to deal with a torrent of bankruptcy filings. And the judges would need to make sure that people who have the financial wherewithal to repay their loans don't fraudulently apply for bankruptcy relief.


In my view, calls to wipe out all student debt are irresponsible because politicians know this is never going to happen. Bankruptcy reform provides an orderly and fair way to give unfortunate student debtors a fresh start while guarding against fraud. 





Wednesday, April 29, 2020

Coronavirus bailouts for the casinos but nothing for harried student-loan debtors: Let'em eat cake!

Congress turned on the money spigot last month and spewed out cash to millions of people and businesses that were hurt by the coronavirus pandemic.

The airlines are getting bailout money, the casinos are eligible for aid, and corporations are accepting loans they don't needAutoWeb, for example, got a $1.4 million federal loan and gave its CEO a $1.7 million bonus one week later.

Meanwhile, millions of Americans are burdened by federal student loans they can't repay.  More than a year before the coronavirus outbreak, Education Secretary Betsy DeVos publicly admitted that only one out of four student borrowers were paying down both principal and interest on their federal loans.  One out of five borrowers, DeVos disclosed, were delinquent on their debts or in default.

Now, with the unemployment rate hovering near 15 percent, and millions of hourly workers out of a job, college-loan debtors are struggling more than ever.

And what has the Department of Education done to assist harried student debtors? Not much.

DOE is giving college-loan borrowers a six-month deferment from making their monthly payments, and it won't assess interest on outstanding loans during that time. DOE has also temporarily stopped seizing wages, Social Security benefits, and tax refunds of people who defaulted on their federal student loans.

In other words, the Trump administration is shoveling big bucks to corporations, while it throws a few crumbs to college-loan borrowers.

Here's an illustration that shows just how meaningless the Trump administration's response to the student-loan crisis has been.

Laurina Bukovics borrowed $20,000 more than 30 years ago to obtain a bachelor's degree from Wisconsin University. Through the years, she made regular monthly loan payments except during times when DOE gave her deferments or forbearances due to her financial difficulties.

Over 25 years, Bukovics repaid $29,000 on her student loans—140 percent of what she borrowed. Nevertheless, by the time she showed up in bankruptcy court, her student-loan debt had grown to $80,000—four times what she had received from the federal loan program.

How much relief does a six-month moratorium on loan payments give to people like  Ms. Bukovics, who have been burdened by student debt for their entire adult lives and have seen their loan burdens double, triple, or even quadruple?

Hardly any relief at all.  The federal government has poured out trillions to alleviate the financial crisis that was triggered by the COVID-19 virus.  But much of this money has gone to corporations and businesses. 

When corporations ask the feds for money to help them get through the coronavirus pandemic, the government responds by saying, "Where do we send the check?"

On the other hand, when beaten-down student-loan debtors try to discharge their student debt in bankruptcy, the federal government almost always opposes relief. Ms. Bukovics, for example, was unemployed while she was in bankruptcy and living temporarily with a friend. She had no car, and she was so impoverished that she qualified for food stamps and Medicaid.

And what was the response by the Department of Education's debt collector to Ms. Bukovics's plight?  ECMC opposed bankruptcy relief because it believed Bukokvics was spending too much money on food.


Betsy DeVos's summer home




Saturday, April 25, 2020

Laurina Bukovics v. ECMC: An Illinois woman took out $20,000 in student loans, paid back $29,000 and still owed $80,000

Laurina Kim Bukovics enrolled as a freshman at the University of Wisconsin in 1985 and graduated five years later. She took out about $20,000 in student loans to finance her studies. Over the years, she paid back $29,000--almost 140 percent of the principle. 

Nevertheless, 25 years after she graduated, Bukovics owed $80,000 on her student loans--four times what she borrowed.  Even though she had made 99 loan payments between 1999 and 2015—equivalent to more than eight years of twelve monthly payments-- her college-loan debt had quadrupled due to accumulating interest.

In 2015, Bukovics sought bankruptcy relief. Two years later, she filed an adversary proceeding to discharge her student loans. In 2018, while her adversary proceeding was pending, Bukovics lost her job.

Educational Credit Management Corporation, the federal government's ever-diligent debt collector, opposed a discharge of Bukovics's student-loan debt. ECMC argued that Bukovics could not meet the "undue hardship" test because she had not tried to maximize her income and not lived frugally.

In particular, ECMC accused Bukovics of spending too much money on food and not being diligent enough in looking for work.  Her job search was too narrow, ECMC claimed. 

In deciding Ms. Bukovics's case, Bankruptcy Judge Jack Schmetterer applied the three-part Brunner test to determine whether Bukovics could repay her student loans while still maintaining a minimal standard of living.  After conducting an extensive analysis of Bukovics's financial history, Judge Schmetterer ruled in her favor.

Clearly, Judge Schmetterer concluded, Bukovics could not maintain a minimal standard of living if she were forced to repay her student loans. After all, Bukovics was unemployed, temporarily living rent-free with a friend, receiving government nutritional assistance (food stamps), and getting her health care through Medicaid.

"Put simply, Judge Schmetterer wrote, given Bukovics's "frugal lifestyle and overall significant budget shortfalls, including the lack of money to provide for even basic needs, she would be unable to maintain a minimal standard of living if required to repay her student loan" (Bukovics v. ECMC, p. 189).

Judge Schmetterer rejected ECMC's arguments that Bukovics had spent too much money on food. On the contrary, he commented, spending $360 for sustenance over two to three months was not excessive.

In any event, Judge Schmetterer observed, ECMC's position "misses the point" (p.188). In the judge's opinion, ECMC was inappropriately looking for pennies that Bukovics might save when it was evident that her income was inadequate to meet her basic human needs.

Judge Schmetterer also rejected ECMC's claim that Bukovics had not looked hard enough for a job.  The judge pointed out that she had applied for over 200 positions over sixteen months and that several applications had led to job interviews (p. 187). Although the judge acknowledged that Bukovics voluntarily gave up her last job, she had testified that she had been pressured to quit and that her position had been eliminated after she terminated her employment.

Implications of the Bukovics decision

The Bukovics opinion is remarkable not so much because Laurina Bukovics won her case but for the fact that ECMC, the Department of Education's designated representative, would oppose her.

Ms. Bukovics borrowed $20,000 to obtain a bachelor's degree from a well-respected public university. She repaid $29,000 by making almost 100 monthly payments. Although financial circumstances forced her to skip monthly payments from time to time, the Department of Education acknowledged her hardship by granting her 10 deferments or forbearances.

Thirty years after graduating, Bukovics had reduced her debt by one dime. In fact, she owed four times what she borrowed. She was in her early fifties and out of a job.

What reasonable person would argue that Laurina Bukovics should not be freed of debt she can never repay?  And yet ECMC, representing the United States government, made that argument.

Today, the American economy is crippled by the coronavirus pandemic, and the nation's unemployment rate is 15 percent. Millions of people are living in circumstances similar to those of Ms. Bukovics.  Surely we need a more compassionate and efficient way of freeing destitute Americans from unmanageable debt than applying the outdated and callous Brunner test that examines how much an unemployed person spends on food.

References

Bukovics v. Educational Credit Management Corporation, 612 B.R. 174 (Bankr. N.D. 2020).

Judge Jack Schmetterer: ECMC missed the point


Friday, April 24, 2020

Living in the Long Emergency, by James Howard Kunstler: A book review

James Howard Kunstler, prolific blogger, novelist, and social commentator, has written a new book titled Living in the Long Emergency. You should read it. America's economy and social order are careening toward the abyss, and Kunstler explains why.

Living in the Long Emergency is an update of The Long Emergency, which Kunstler published in 2005. In his earlier book, Kunstler predicted the collapse of America's industrial economy due to the world's rapidly depleting supply of recoverable petroleum. 

In Living in the Long Emergency, Kunstler reiterates his earlier thesis and explains why the so-called fracking miracle for extracting shale oil has not altered his predictions. Fracking is far more expensive than traditional methods of extracting oil, Kunstler writes, and is only viable when it can be financed through low-interest rates and high oil prices.  Moreover, it is a short-term phenomenon that does not alter the fundamental reality of dwindling petroleum reserves.  

As Kunstler summarized the matter:

The shale oil "miracle," therefore, was a very impressive financial and technological stunt. In practical terms, it provided a means to pull forward from the future the last dregs of recoverable oil, so the US could live large for a few years longer. As [an] independent oil analyst . . . put it: Shale is a retirement party for the oil industry."

Kunstler's new book also includes a brutal analysis of contemporary American culture, which our oil-dependent economy helped foster. His assessment of American life is unrelievedly bleak. A casual survey of American culture, Kunstler writes, "reveals shocking degrees of neuroticism, delusion, dishonesty, and functional failure in culture."

Suburbia, made possible by cheap gasoline, has "produced yawning ugliness on the landscape, an epidemic of loneliness, family dysfunction, and a dismal cavalcade of mass shootings in public schools." In America's heartland, what we now call flyover country, Kunstler sees traditional American values eroded by opiate addiction, suicide, obesity, and unemployment.

Kunstler is particularly hard on American higher education. "The thinking class," he writes, squanders its waking hours on a quixotic campaign to destroy every remnant of American common culture and, by extension, a reviled Western civilization . . . ."

I've spent a good deal of my life shuffling around in American universities, including a three-year stretch in Harvard's re-education camp (cleverly disguised as Harvard's Graduate School of Education). Kunstler's summation of American higher education is spot on. 

Rather than try to summarize Kunstler's cogent analysis, I'll simply quote him:

It case you haven't been paying attention to the hijinks on campus—the attacks on reason, fairness, and common decency, the kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves, the denunciation of science—here is the key takeaway: It is not about ideas or ideologies anymore. Instead, it's purely about the pleasure of coercion, of pushing other people around, of telling them what to think and how to act.

Kunstler's book includes a lot more provocative ideas and social analysis than I have touched on here. My brief review doesn't do it justice. But I fully endorse his fundamental conclusion, which I think is this: America has crapped in its own mess kit and doesn't have the money or the moral energy to repair the damage it has inflicted on itself.

A hundred years from now, I believe people will still be reading James Howard Kunstler's work to understand how America went so wrong. In my mind, he is one of the very few people who comprehend what has happened to us.




Thursday, April 23, 2020

Recession or Depression? The people who make things are out of work while the people who do very little are still getting paid

What is the difference between a recession and an economic depression?

According to one adage, a recession occurs when a lot of people are thrown out of work. But a depression happens when you lose your job.

Based on those definitions, part of America is experiencing a recession due to the coronavirus pandemic, and another part is suffering through a severe economic depression.  By and large, the people who make things or provide services--factory workers, construction workers, mechanics, and restaurant employees--are unemployed. Many of these folks can't pay their rent or make their mortgage payments, and a lot of them have lost their health insurance.

But the media stars and politicians are still getting paid. Alexandria Ocasio-Cortez said yesterday that unemployed people should boycott the economy and refuse to go back to work after the coronavirus shutdown ends.  That's easy for her to say. She's got a sweet gig as a congresswoman.

And then there's Don Lemon, the CNN reporter who mocked the Michigan protestors who lost their jobs due to the COVID-19 pandemic.  They're upset because they can't get a haircut, Lemon sneered.

Yeh, Don. Make fun of the unemployed. You aren't missing any meals.

It is clear to me that the political class and the media elites have no idea what is going on in America.  More than 20 million people are out of work, and millions more will be unemployed by the end of the summer.

And what does Congress do? It passes a relief bill that includes cash for the Kennedy Performing Arts Center and National Public Radio.

College students, who borrowed money to pay their tuition bills, are sent home in mid-semester; and what's the government response?  A brief respite from making student-loan payments. Meanwhile, Congress creates the Higher Education Emergency Relief Fund and distributes $14 billion to the nation's universities.

And it's not just the politicians and media who have insulated themselves from our Great Depression. People who hold government jobs are still getting paid even though many of them are doing very little. The Baton Rouge airport lost 90 percent of its passenger traffic due to the COVID-19 pandemic, but no airport worker has been furloughed. The feds sent the airport $8.4 million, which helps pay the salaries of people who have virtually nothing to do.

All the colleges and universities shut down this spring. Still, the presidents, vice presidents, associate vice presidents, deans, assistant deans, and Title IX compliance officers have seen no drop in their standard of living.

The professors are still getting paid as well, even though their classrooms are empty. They claim to be doing a bang-up job teaching online, but that's mostly bullshit. Students have sued five universities, demanding to get their tuition money back. They know they've been shortchanged.

A massive chasm separates the people who have lost their jobs from the people who are still working. And it will be no consolation for anyone when the unemployment rate hits 30 percent, and the suffering class becomes larger.

The day is coming, and it is coming soon when people who thought their jobs were secure will be unemployed. Even some tenured professors, who believe they enjoy bulletproof job security, will soon be applying for food stamps.



AOC: Don't go back to work, America! 








Monday, April 20, 2020

Coronavirus is a black swan event for regional public colleges: Many will be forced to close

A black swan event is an unexpected occurrence that has potentially devastating consequences. For higher education, the coronavirus pandemic is a black swan event.

Even before COVID-19 forced a shutdown of the national economy, American colleges were suffering from enrollment declines. Declining birthrates have led to a shrinking number of college-age individuals in recent years. Small liberal arts colleges and for-profit institutions were particularly hard hit.

Regional public colleges are also suffering. In Pennsylvania, for example, the state's system of public universities saw an enrollment decline of 20 percent between 2010 and 2019. One small public college, Cheyney University of Pennsylvania, saw its student body shrink by 61 percent to less than 1,000 students. Lock Haven University, another Pennsylvania public school, experienced an enrollment drop of 42 percent.

Thanks in large part to the coronavirus pandemic, the Pennsylvania State System of Higher Education projects that its 14 public universities will lose between $70 million and $100 million this spring. Some state legislators are calling for the system's small colleges to close.

Several Ohio public universities have also seen enrollment declines. Ohio University, Kent State University, the University of Toledo, and the University of Akron all lost students in 2019.

The University of Wisconsin's 26 two- and four-year institutions have recorded enrollment drops as well. UW's two-year colleges experienced a shocking 49 percent drop between 2010 and 2019.  One institution, UW-Plattville at Richland, a satellite campus of UW-Plattville, lost 58 percent of its students in just one year.  As reported by the Wisconsin State Journal, the University of Wisconsin's branch campuses had fewer students in 2019 than they did in 1973.

All these enrollment drops took place before the coronavirus pandemic showed up. And enrollment declines will surely accelerate in the wake of statewide stay-at-home orders that have triggered staggering drops in state tax revenues.

In the years to come, regional publ colleges all over the United States will be forced to close. Many states have far too many regional campuses. As public revenues decline in the wake of the COVID-19 crisis, the states simply can't afford to keep them open.

Moreover, increased opportunities for online learning are making regional campuses obsolete. If students are going to take their classes from home computers, there is no need to have a brick-and-mortar campus in their neighborhood.

College-bound high school graduates who decide to enroll at a public university in their home state should make every effort to get admitted to their state's flagship public university.  By and large, the flagships are seeing an uptick in their enrollments and can offer broader course offerings and student services than the regionals.

A few regional public institutions are thriving and maintaining their enrollment levels. The University of Louisiana at Lafayette, where I taught until I retired, is poised to remain viable even if the economic downturn persists. ULL has a nursing school, engineering programs, and computer-science offerings that make its degrees attractive in Louisiana's job market.

But in Louisiana and in most states, the small, marginal public colleges that were often their community's largest employer will be shutting down. For most students, it will not make sense to attend a regional school that may disappear before they pay off their student loans.











Friday, April 17, 2020

Growing up poor in western Oklahoma: The Kool-Aid years

My parents grew up in the Dust Bowl during the Great Depression. And when I say Dust Bowl, I'm not talking about the generic, dust-parched Midwest. 

I'm talking about THE Dust Bowl--the epicenter of an ecological disaster that struck the Texas panhandle, northwestern Oklahoma, and southeastern Colorado. Topsoil disappeared, wheat crops blew away, and cattle herds had nothing to eat.

More than 300,000 Oklahomans fled to California in the thirties, but my mother and father's families stayed put.  My mother went hungry from time to time. She saw her father's cattle shot by government agents who paid him a dollar per cow for the carcasses. 

The Depression went away when World War II started, but the war did not heal the Dust Bowl. As a child in the 1950s, I remember seeing sand dunes piled so high on the dirt road to my grandfather's farm that our family's 1950 Chevy could not get through.

When I was growing up in the 1950s, my family was still poor, as evidenced by the food we ate. My mother purchased margarine, never butter. We bought Miracle Whip because it was cheaper than mayonnaise, and we made grilled cheese sandwiches with Velveeta, not cheddar.

And we drank Kool-Aid for a treat--lots of Kool-Aid.  We favored a red flavor and mixed the powder with water and refined sugar. In those days, Kool-Aid only cost a nickel a packet. Hey, who needs Coca Cola?

Over time, my mother and father clawed their way into the middle class. My father had a government job with the Bureau of Indian Affairs, and his wages gradually crept up. He also farmed on the side and had a small lawngrass growing business.  He grew bermudagrass in a field at the Wichita Indian Agency, which he sold to people putting in new lawns. No one seemed to mind that he was running a private enterprise on federal property. 

But although we entered the middle class, my parents never got over the Great Depression. My mother's childhood was so seared by poverty that she remained convinced until the day she died that the next Depression was right around the corner. She was a modest food hoarder and had an impressive collection of vintage Jello boxes at the time of her death.

My father never went to the doctor. If he felt poorly, he treated himself from veterinarian supplies he kept on hand for his cattle.  He would cut off a piece of a three-inch-long bovine penicillin tablet and pop it into his mouth. 

As a youth, I scoffed at my parents' attitudes about money, their mystical belief in the value of hard work, and their deep disapproval of neighbors who lived more lavishly than they did. Who needs to drive a Mercury, they asked? After all, a Chevrolet is a perfectly respectable car. Who needs a color television when our Halicrafter black-and-white works just fine?

And now America faces another Great Depression.  Twenty-two million workers filed for unemployment over the past three weeks, and millions more will soon join them. And this time, when the bottom drops out from under our economy, we will be burdened with student loans, credit card debt, and 72-month car loans.

In short, we are going to suffer just like our parents and grandparents did in the 1930s. God grant us the grace to suffer in good spirits, to come to the aid of our family members and neighbors, and to keep our sense of humor.  We will be more cash-strapped in the years to come, but who knows? Life might be just as rich and satisfying even when there are no credit cards in our wallets.


Who needs Coca Cola?

Wednesday, April 15, 2020

As the economy spirals downward,take charge of your mental health


Let us pause in life's pleasures and count its many tears
While we all sup sorrow with the poor

Hard Times
Stephen Foster (1854)

Make no mistake. America is spiraling downward toward a major Depression. Seventeen million people have already lost their jobs, and the unemployment rate will undoubtedly rise later in the year. Many unemployed people won't be able to pay their rent or make their mortgage payments.   Laid-off workers who had employer-provided health insurance will lose it and find they can't afford to pay for it themselves.

Financial stress has mental-health consequences and people who have suffered financial setbacks will be understandably depressed.  Thus, if you are one of the millions of Americans who have lost their jobs or a substantial part of their retirement savings, you need to pay close attention to your own mental health.

First, if you find yourself slipping into clinical depression, let your doctor know. Depression is a fairly common malady and is treatable. Your family physician can prescribe an antidepressant that can alleviate this medical condition.

Second, get some physical exercise, but don't overdo it. You don't need to run a marathon to get the benefits of physical activity. Just take a walk or ride your bicycle. Exercise is a proven way to reduce stress and depression, and relief is usually immediate.

Third, pay attention to what you eat. If you are down on your luck and scraping by on unemployment checks and food stamps, you may need to cut your food budget. But try to continue eating foods that you enjoy.  A good meal, especially a meal shared with family and friends, helps relieve depression.

If you are pinching pennies, you will probably stop eating in restaurants. But you can buy a cheap grill and broil hotdogs in the backyard.  You can also learn to cook inexpensive food so that it tastes delicious. I once swore I would never eat collard greens, but my wife cooks them so well that greens taste like a gourmet dish. 

Fourth, don't neglect relaxation. During the Great Depression of the 1930s, people went to the movies, which provided cheap entertainment. Today, a movie, a soda, and some popcorn will set you back about fifteen bucks.

But a Netflix subscription doesn't cost much, and you can see a new movie every night of the week. Don't cancel that subscription to cut costs unless you are desperate.

Fifth, take up a hobby.  If you are poor, you will probably not take up golf or skiing. But you can plant a small garden, even if it is nothing more than a potted tomato plant by your back door. You will find it immensely satisfying to grow and eat vegetables you grew yourself.

Finally, remember that the financial hardship you are experiencing is not your fault. You are the victim of twin evils: corporate greed and the coronavirus. 

If you've been laid off precipitously, told to clean out your desk, and walked to your car by a security officer, you have not lost your human dignity or the capacity to live a rewarding life. Do everything you can to take care of yourself and your family, and remember to manage your mental health.


Tuesday, April 14, 2020

Bait and Switch: In response to the coronavirsus pandemic, colleges shifted to online instruction. Students aren't happy

According to Investopedia, "Bait and switch is a morally suspect sales tactic that lures customers in with specific claims about quality or low prices . . ." However, once customers are lured in,  "the advertised deal does not exist, or is of far inferior quality or specifications, where the buyer is then presented with an upsell."

When the universities shut down last month in response to the coronavirus pandemic, they sent their students home and partially refunded dorm fees they had collected from students living on campus. They also shifted all face-to-face teaching to online instruction while continuing to charge full tuition.

In essence, the universities engaged in bait and switch. They promised a classroom learning experience, but they substituted an inferior product--cobbled together online classes.

 But many students weren't happy with the change. In their view, online teaching is an inferior product.

Inside Higher Ed told the story of Arica Kincheloe, who took out $50,000 in student loans to enroll in a one-year accelerated program in social service administration at the University of Chicago.
Like most higher education institutions, the University of Chicago canceled on-campus classes and directed faculty to shift to a distance-learning format.

But Kincheloe believes she has been shortchanged. "It's a throwaway--a shortened quarter," she said. "I do not feel like I am getting the same education that I would have otherwise."

Other University of Chicago students agree with Kincheloe.  Fifteen hundred students signed a petition calling for a 50 percent reduction in tuition, and 850 students formed a group that is threatening to withhold their tuition payments.

UChicago administrators don't see a problem with the change. Administrators say students will get full credit toward their degrees even though the instruction has been modified. Therefore, the university will continue charging students full tuition.

The University of Chicago probably considers this controversy a temporary annoyance. All this may blow over if the university returns to traditional on-campus teaching this fall.

But I doubt it.

Private colleges have justified extortionary tuition by arguing that a student's on-campus experience--both curricular and extracurricular--is superior.  Those ivy-covered buildings, those cerebral tweed-coated professors, networking opportunities to mingle with rich people--the elite universities claim the whole package justifies charging tuition as high as $60,000 a year.

But if students are sitting at home taking classes that are little more than correspondence courses, then they might as well go to a less expensive state university.

Likewise, HBCUs are going to have difficulty justifying their existence if their instruction moves to a distance-learning format. As Pearl K. Dowe argued in a recent essay, the survivability of HBCUs "has always been rooted in their commitment to serve, educate and advance Black students in a [physical]space that is edifying, nurturing and empowering." So why would Black students enroll at an HBCU if they're taking their classes online?


I'm not saying the universities intentionally engaged in bait and switch. The pandemic forced them to suspend traditional classroom teaching. But they know that their hastily put-together online classes are a cheap substitute for face-to-face interaction with professors. In fact, many universities have gone to pass/fail grading for online instruction--an implicit admission that this mode of teaching is inferior.

I agree with the University of Chicago students.  The online instruction they are getting is not what they bargained for and is a shoddy substitute. The University of Chicago should slash tuition for the spring semester by 50 percent.

Online instruction is a shoddy substitute for classroom teaching.









Monday, April 13, 2020

Fighting for milk: Now is the time to take any kind of work you can get

In the movie Cinderella Man, Russell Crowe plays the part of James J. Braddock, a professional boxer who breaks his hand in the ring, forcing him to leave his chosen profession and work as a common laborer. Then the Depression comes, and Braddock's family faces starvation. Braddock returns to boxing with ferocious intensity and winds up winning the World Heavyweight Championship.

In the movie, a reporter asks Braddock to explain why he had become a better boxer. Braddock answered that he was a better boxer because he had discovered what he was fighting for.  And what was that, the reporter asked?

"Milk," Braddock replied.

Washington Post columnist Michelle Singletary made a similar point to people who have been laid off or furloughed from their jobs.  "Apply for any kind of work," she advised. Despite the economic downturn, some companies are still hiring, and all jobs bring in at least some money.

There was a time when experts advised people not to take menial jobs if they had been laid off from a professional position. A stint as a restaurant worker does not look good on the resume of someone who applies for a job as a financial analyst.

Also, many employers are reluctant to hire people who appear to be overqualified for the jobs they are seeking. Unemployed lawyers, for example, have difficulty getting employed as paralegals because the law firms believe that a licensed attorney working as a paraprofessional will be perpetually dissatisfied.

But these are desperate times, and they are becoming more desperate. If you have a home and a family, it makes sense to take any kind of work at all--any money you earn helps protect what is important to you.

After all, as the cinematic version of James Braddock showed us, working for milk is a dignified occupation.


Russell Crow as James J. Braddock: Working for milk

Saturday, April 11, 2020

Joe Biden's student-loan forgiveness is seriously flawed, but it is a step in the right direction

Joe Biden announced his plan for student-loan forgiveness in a Medium commentary posted a few days ago.  He proposes to forgive all federal student loans for persons who earn up to $125,000 a year and who acquired their loans to attend a community college, a public college or university, or an HBCU (historically black college or university).

Biden's debt forgiveness plan is a step in the right direction, but it is seriously flawed.

First, Biden's plan does nothing for people who racked up student debt to attend for-profit colleges. We've known for a long time that the for-profit college industry has preyed on disadvantaged populations--people from low-income families, minorities, and first-generation college attendees.  On average, students leave their for-profit institutions with more debt than they would have acquired had they attended a public university.

So why not extended student-loan forgiveness to people who took out loans to attend a for-profit institution?

Second, student debtors who enrolled at private universities get no relief under Biden's plan unless they attended a private HBCU. This makes no sense to me at all.

Why should students who studied at Xavier University, a Catholic university in New Orleans, get debt forgiveness, while students who attended Loyola University, another New Orleans Catholic school, receive no relief at all? Are students who attended HBCUs more worthy of assistance than students who attended other colleges and universities? I don't think so.

Finally, Vice President Biden's proposal gives no relief to people who took out private student loans. Let's remember the fact that the so-called Bankruptcy Reform Act of 2005 explicitly made private student-loans virtually nondischargeable in bankruptcy.  Then-Senator Biden supported that bill and voted for it.

Why should a student who took out student loans from Wells Fargo or Sallie Mae be denied debt relief while students who took out federal loans get their student debt completely wiped out?

I support any legislation that brings assistance to overburdened student debtors--including plans proposed by Senator SandersSenator Elizabeth Warren, and former VP Biden.  So Biden's plan, imperfect as it is, has my support.

But wouldn't be simpler and fairer to amend the Bankruptcy Code and allow beaten down debtors to shed their student loans in bankruptcy like any other nonsecured consumer debt--regardless of where they went to college?

After all, the bankruptcy judges have the authority and the expertise to reject bankruptcy claims that are fraudulent or brought by people who have the financial means to pay back their lawful debts.

In my view, Biden's student loan relief plan is not well thought out. If implemented, it will ignite bitter resentment from people who are burdened by college loans taken out to attend private universities or for-profit colleges. And it will undoubtedly offend people who took out private student loans that are nondischargeable in bankruptcy because of a law Joe Biden helped enact back in 2005.

Joe Biden wants to forgive your student loans if you attended this Catholic university but not if you attended another Catholic school located in the same city.

Friday, April 10, 2020

"If I were a carpenter": Manual skills will be more valuable than a liberal arts degree in the post-coronavirus economy

If I were a carpenter, and you were a lady
Would you marry me anyway?
Would you have my baby?

Tim Hardin
Sung best by Johnny Cash and June Carter

James Howard Kunstler wrote somewhere that in the coming age, carpenters will be more valued than people who design video games (or words to that effect). Kunstler's observation worried me because I have no mechanical skills at all, although I am a pretty good gardener.

Kunstler is right, and the coming age is now. Coronavirus is transforming the American economy. Millions of jobs have been lost that won't come back. All of a sudden, it matters if a person has real skills. A carpenter is going to be more valued in the years ahead than a sociology professor.

Americans have indulged themselves in the acquisition of meaningless university degrees--hundreds of thousands of degrees, and they will soon learn that all the millions of hours spent in university classrooms won't help them feed themselves.

I should know. I have been a university professor for 25 years, and I sat on dozens of dissertation committees. I would be embarrassed to list the titles of some of the dissertations I approved.  I remember one doctoral student at the University of Houston who wrote his thesis on what it felt like to be a graduate student.  I feel sure he is a tenured professor at some obscure regional university.

During my years in the Alice and Wonderland world of higher education, I stumbled across several instances of plagiarism. No plagiarist I discovered was ever kicked out of graduate school.  We treated plagiarism like a punctuation error--easily corrected.

All this foolishness was financed by the federal student-loan program, the Pell Grant program, and various forms of state and federal government support. And most of the people who acquired frothy university degrees got jobs--often soft-skill jobs in the public sector.  But few people who collected these degrees learned how to make anything useful.

Of course, not all higher education is vacuous. Programs in engineering, the medical profession, law, and accounting all teach useful skills. And several of my colleagues in my own field, which is education, are excellent scholars and dedicated teachers. I cast no aspersions on their work. But in general, the fields of education, liberal arts, and social studies offer degrees that lack real substance.

As I write this, nearly 17 million Americans are out of work, and this is just the first wave of job losses. Before the end of this year, people in government and education are going to feel the cold breath of a new Depression.  Experts reasonably predict that the unemployment rate in this country will reach 30 percent.

The world of higher education is in for a rude shock. Slovenly professors, who did very little work and made rare appearances on campus dressed in gym clothes, are going to lose their cushy sinecures.  If they are smart, they will acquire a craft skill and retool themselves as carpenters, plumbers, electricians, or technical workers.

As the job market for college professors collapses--and it will collapse, few laid-off professors are going to find new positions in academia. So If they don't retool, they will be forced on the dole, subsisting on food stamps and living with someone who has a real job.  

As for the people who took out student loans to get frivolous degrees, they are going to find it damned difficult to get a decent job and even more challenging to pay off their student debt. They, too, will need to master a useful skill if they aspire to own a home, get married, or have children.






Thursday, April 9, 2020

Things are falling apart for American higher education: It is time to be cautious about taking out student loans

Things are falling apart for many American colleges and universities. The signs of stress and turmoil are everywhere.

First, college enrollments are down significantly, putting an enormous strain on colleges that are heavily dependent on tuition revenue. Over the past decade, college enrollment dropped by more than 2 million students, dipping below 18 million students in the fall of 2019.

Second, the for-profit college industry is on the verge of collapse. According to Forbes, the number of for-profit institutions declined by 25 percent between 2010 and 2018, and total enrollment dropped by half.

Third, private nonprofit colleges are closing at an accelerating rate. An analysis in The Chronicle of Higher Education reported that more than 50 small private colleges have closed since 2016.  Already this year, MacMurray College and Nebraska Christian College have announced they are shutting down.  And Notre Dame de Namur University stated that it will not enroll a first-year class this fall. 

Fourth, small liberal arts colleges are slashing tuition for their first-year classes by 50 percent. Although most small colleges post a very high sticker price, in reality, they are giving out financial aid and scholarships like candy. As a result, the average net cost of tuition is only half the posted price.

Fifth, business schools and law schools have rolled out new types of graduate degrees to counteract declining enrollment.  Business schools have introduced one-year MBA degrees because the demand for traditional two-year programs has dropped. And law schools have started offering law-based degrees for people who do not intend to practice law. According to numbers released by the American Bar Association, 14 percent of law school students were in non-JD programs in 2018.

Sixth, the coronavirus crisis has caused some college students to feel less positively about their educational experience.  The COVID-19 pandemic forced the vast majority of colleges to cancel face-to-face classes this spring and replace them with online instruction.  Unfortunately, the quality of online teaching has often not been good.  A recent survey found that 63 percent of undergraduate respondents reported that the quality of their online instruction was "worse" or "a lot worse" than the live teaching they received before the pandemic.

More than 40 percent of the undergraduate respondents said that their view of their college had gotten worse as a result of COVID-19. And one out of 10 high school seniors who had intended to enroll in a 4-year college this fall said their plans will likely change. 

Seventh, student debt has doubled from $750 billion in 2010 to $.15 trillion in 2019. Today, 45 million Americans hold student loan debt.  More than one million people defaulted on their student loans last year. Almost 9 million more are shackled by long-term, income-based repayment plans that can last as long as 20 or 25 years. 

Conclusion: Students should do everything possible to avoid taking out student loans

For three decades, colleges and universities raised tuition on an annual basis at twice the national inflation rate. College students financed the rising cost of their education by taking out larger and larger student loans.

College leaders assured students they were getting good value for their tuition dollars. After all, they purred soothingly, salaries for college graduates vastly exceed the wages of people without college degrees. Taking out student loans to get a college degree seemed like a smart investment.

In fact, inflation-adjusted salaries for American workers have remained flat for the last 40 years. "[T]today's average hourly wage has just about the same purchasing power it did in 1978." The wage gap between college graduates and non-college graduates has widened, but this is mostly because wages for non-college graduates have declined.

In other words, a college degree may be a good investment for most Americans. Still, it may not be as good as the colleges have represented.  People who take on enormous student debt to get liberal arts degrees or graduate degrees will find that their college education was a terrible investment if they do not land a good job.

The coronavirus pandemic has put millions of Americans out of a job. Experts predict an unemployment rate of more than 30 percent—higher than during the Great Depression of the 1930s.  Forty million Americans may be out of a job by the end of this year.

Our economy will bounce back, but who knows when that will be? So if you are thinking about going to college or graduate school, let me give you a little advice:

Now is not the time to take out massive student loans to finance a bachelor's degree in gender studies from an expensive private college.

Now is not the time to finance a luxury apartment with your student loan checks.

And now is not the time to thoughtlessly take out loans to enroll in a master's degree program without a clear sense of how that program will increase your income. 

It is a terrible thing to be unemployed—as millions of Americans will soon be. But it is far worse to be unemployed and burdened with student loans that you will never be able to repay.



Saturday, April 4, 2020

"Seeing poor white people makes me happy": Should you take out student loans to attend SUNY Old Westbury?

Do you remember Associate Professor Nicholas Powers, who made the national news a while back for posting an online essay titled "Seeing poor white people makes me happy"?

According to the New York Post, Powers penned an essay in which he wrote that "White people begging us for food feels like justice . . . it feels like a Black Nationalist wet dream."

Professor Powers is a tenured professor at SUNY Old Westbury, a public university in the state of New York. He makes $82,122 a year, plus benefits, which undoubtedly includes excellent health insurance and a pension plan.

And yet he rails against poor white people.  Describing his reaction to seeing a homeless white man in a black neighborhood, Powers wrote, "Should I kick him in the face? Hard?" Also describing his emotions about seeing a white homeless man, he wrote: "Today I own my anger. I want to snatch his food and say, 'Go beg in a white neighborhood!' And eat it. And rub my belly. And laugh."

So what does it cost to attend SUNY Old Westbury, where Professor Powers teaches in the English Department?  For in-state students, it cost about  $24,000 for tuition, fees, room, and board. That's roughly $100,000 for a four-year degree.

America has plunged into a deep economic Depression. According to the Federal Reserve Bank of St. Louis, the unemployment rate may hit 32 percent--higher than during the 1930s.  Young people who are in college now need to keep their expenses down and study a subject that will lead to a good job.

So if you are a young New York college student, ask yourself this question. Does it make sense to take out student loans to attend SUNY Old Westbury and take classes from Professor Powers? I don't think so.

On the other hand, if you borrow money to get a degree from SUNY Old Westbury and can't get a job, you shouldn't worry. You can always sign up for a 25-year, income-based repayment plan to service your student loans.

That plan will terminate when you are in your fifties. By that time, Professor Powers will probably be retired and living on his generous New York state pension, a pension you will help pay for with your taxes.


Professor Nicholas Powers: "Seeing poor white people makes me happy."




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