Tuesday, April 13, 2021

College students: Don't take out student loans to get a degree in an easy discipline

"Easy money lays light in the hand," Solzhenitsyn observed, "and doesn't give you the feeling you've earned it."

We can say the same thing about easy college courses and easy academic majors. 

It is quite feasible for a student to get an easy college degree. Universities have ditched rigorous admission standards so that anyone can get into college, and grade inflation has made it possible to pass through a university without studying and without learning anything. 

Every university has a few academic majors that are known not to be challenging. And every college has a few professors who are too lazy to engage in rigorous grading.  

Twenty years ago, when I was teaching at the University of Houston, a professor in my department taught multiple sections of a general education course--a course that students from across the university could count toward their degree requirements. Semester after semester, his classes were packed because he did not grade any assignments, and he gave every student an A. 

Young people may think they are playing it smart by choosing nonchallenging classes and easy academic majors. Why enroll in a class taught by a brilliant professor if the prof is a hard grader?  Why not sign up for classes taught by an indolent professor who gives out puffball assignments and then doesn't grade them?

I confess that I am not speaking from the pinnacle of academic rigor. I majored in sociology--the painful enumeration of the obvious. I made straight As my last semester without even buying textbooks.  And I learned absolutely nothing.

Then I went to law school, where the professors graded on a strict curve. Only 5 percent of first-year students received As, 10 percent got Bs, and 75 percent had to settle for a C (or worse).

To my surprise, I excelled in this rigorous environment, and I graduated with honors from the University of Texas School of Law. Forty years later, this is still my proudest professional accomplishment.

Please take my advice and don't choose the easy path while in college, especially if you are taking out student loans. After four, or five, or six years of study, you will wind up with a vacuous degree and no job skills.  

You may then decide to get a master's degree and select a graduate program with low admission requirements. That choice will lead to a second worthless degree.

Then where will you be?  You will find yourself buried under a mountain of debt you cannot pay off. Those mindless courses and that easy major will embarrass you, and you will feel like a fool. 

As Solzhenitsyn put it, "There [is] truth in the old saying: pay short money and get short value."



Friday, April 9, 2021

Tingling v. ECMC: 52-year old student-loan debtor with multiple degrees loses her case before Second Circuit Court of Appeals

Bankruptcy is intended to give honest but unfortunate debtors a fresh start in life. People who mismanage their finances, spend money improvidently or go broke through their own stupidity can shed their debts in a bankruptcy court.

That is a good thing. 

But the Bankruptcy Code contains an exception for insolvent student-loan borrowers. Unless they can show "undue hardship," they can't get free of their college loans. 

The Second Circuit Court of Appeals defined undue hardship in its Brunner decision, rendered in 1987.  To qualify for a discharge of their student loans, debtors must make three showings: 

1) They cannot pay off their loans and maintain a minimum standard of living.  

2) Their financial condition is unlikely to improve over the terms of the loans.

3) They handled their student loans in good faith.  

Some commentators (including me) hope the Second Circuit will reconsider the harsh Brunner test and perhaps overrule it or at least interpret it more humanely.

Unfortunately, Tingling v. ECMCdecided about a month ago, is a signal that the Second Circuit is not willing to abandon Brunner.

Janet Tingling, age 52, tried to discharge student debt accumulated to obtain multiple degrees (a B.S. and M.S. in biology, an M.B.A., and a Doctorate in Business Administration). Her adjusted gross income was about $50,000 before filing bankruptcy. Her total student-loan debt (including principal, interest, fees, and costs) was $59,000.

Tingling was initially represented by a lawyer in her bankruptcy proceedings, but she released her attorney and pursued her adversary action alone.

Bankruptcy Judge Alan S. Trust denied Ms. Tingling's application to shed her student loans, finding that she failed all three parts of the Brunner test. She appealed to U.S. District Court Judge Joanna Seybert, and she upheld Judge Trust's ruling.

Last month, a three-judge panel of the Second Circuit Court of Appeals (Judges Cabranes, Raggi, and Sullivan) upheld Judge Trust's bankruptcy opinion, ruling that he had applied the Brunner test correctly. The panel expressed no interest in modifying or overruling the Brunner standard.

I am not unduly disheartened by the Second Circuit's Tingling decision.  After all, Janet Tingling's situation was not as compelling as that of other more hard-pressed debtors who have wound up in a bankruptcy court. 

The Second Circuit pointed out that she "is of relatively young age (52 years old), in good health, possesses two graduate degrees in healthcare administration, lacks dependents, and, by all indications, is able to maintain her current level of income" (Tingling v. ECMC, 990 F.3d at 309).

I hope another debtor--someone in more desperate circumstances--takes her case to the Second Circuit and challenges the Brunner test.

 And I hope that person is represented by a competent and energetic lawyer.  Ms. Tingling was handicapped, no doubt, by the fact that she fought her case into the appellate courts on her own, without legal counsel to advise and assist her. 



References

Tingling v. Educational Credit Management Corporation, 900 F.3d 304 (2d Cir. 2021).











Friday, April 2, 2021

President Biden ponders $50,000 student-loan cancelation: That doesn't go nearly far enough

 President Biden has asked Education Secretary Miguel Cardona to prepare a memo on the president's legal authority to cancel up to $50,000 in student debt.  

If he did that, the experts tell us, President Biden would forgive all college-loan debt for 36 million people--about 80 percent of all borrowers. 

Is that a good idea? 

Sort of. Anything the federal government does to provide relief to distressed student-loan debtors is good, so I support a massive cancelation of student debt.

Nevertheless, one-time debt forgiveness is the wrong approach. 

Wiping out student debt without reforming the student-loan program is like fixing a flat tire on a broken-down car and then putting it back on the highway with no brakes. Someone down the road is going to get hurt.

The whole damned, rotten student-loan system has to be torn down. Otherwise, the corrupt, venal, and incompetent American higher education system will continue ripping off the American people.

Obviously, massive reform can't be accomplished overnight.  But here is what we need to do for starters:

1) Congress must remove the "undue hardship" clause from the Bankruptcy Code and allow insolvent student-loan debtors to discharge their loans in bankruptcy. 

2) We've got to shut down the Parent Plus program.

3) The federal government has got to stop subsidizing the for-profit colleges, which have hurt so many young people--especially people of color and low-income people.

4) We've got to stop shoving student borrowers into 25-year, income-based repayment plans that are structured such that no one in these plans can ever pay off their loans.  There almost 9 million people in IBRPs now. 

5) The universities have got to start offering programs that help their graduates get a real job. Degrees in ethnic studies, diversity studies, LGBT studies, and gender studies only prepare people for jobs teaching ethnic studies, diversity studies, gender studies, and LGBT studies.

6) Finally, we must restore the integrity of the nation's law schools.  We've got too many mediocre law schools. California alone has more than 50 law schools, with only 18 accredited by the American Bar Association.   And the law schools need to go back to admitting students based on objective criteria--the LSAT score, in particular.

If we had fewer but better-trained lawyers, we'd have less litigation and fewer attorneys who see their job as being hired political hacks.

Will the Biden administration do any of the things I've outlined? I doubt it.

Higher education is in desperate need of reform. A college education is far too expensive, and much of what is taught at the universities is not useful.  Wiping out student debt will bring some relief to millions of college borrowers. But if the colleges don't change how they do business, the student-debt crisis will not be solved.








Thursday, April 1, 2021

Don't let college professors persuade you that learning to speak Standard English is optional

I've been to Georgia on a fast train honey,
I wudn't born no yesterday.
Got a good Christian raisin' and an eighth-grade education
Ain't no need in y'all a treatin' me this way.

Billy Joe Shaver 

A while back, I met an elderly man who told me he had grown up in the Texas Panhandle back in the 1950s.  As a child, he spoke with a strong West Texas accent. But then his family moved to Arizona, and no one could understand him at his new school.

Fortunately, the man recounted,  an Arizona teacher began tutoring him on a one-to-one basis and taught him to speak standard English without a Texas accent. "If it hadn't been for that teacher," he said, "I would never have made a success of my life."

This man's story made an impression on me because I grew up in western Oklahoma, where the people speak very much like the West Texans.  To this day, I have some range dust in my diction; and I think at least some of my classmates at Harvard wrote me off as hick when they first heard me speak.  

Now there is a movement to de-emphasize standard English because it disadvantages minorities--particularly African Americans.  For example, Professor Asao Inoue of Arizona State University argues that students should not be graded based on the quality of writing but "purely by the labor students complete . . ." 

Why should professors stop grading students on the quality of their writing? "Because, Professor Inoue maintains, "all grading and assessment exist within systems that uphold singular, dominant standards that are racist, and White supremacist."

 Rebecca Walkowitz, chair of the English Department at Rutgers University, is on Professor Inoue's wavelength. She sent an email recently, announcing an initiative to incorporate "critical grammar" into the department's pedagogy.

Critical grammar pedagogy, Professor Walkowitz's email stated, "challenges the familiar dogma that writing instruction should limit emphasis on grammar/sentence-level issues so as not to put students from multilingual, non-standard 'academic' English backgrounds at a disadvantage."

Professors Inuoue and Walkowitz's views on language are in harmony with the ebonics movement, which asserts that Black English should be regarded as a language in its own right and not a substandard dialect of proper English.

I sympathize with the academics who argue that we should show more respect for non-standard English. Indeed, some of America's greatest literature contain expressions in non-standard dialect. Huckleberry Finn, for example. And the lyrics of country music (which I love) are full of non-standard English phrases.

When Merle Haggard wrote Hungry Eyes, he penned, "us kids was too young to realize."  Should we give him a C- because he didn't write "we children were too young to realize"? And Elvis--should he have sung "You are nothing but a hound dog"?

Nevertheless, I believe all Americans should strive to master standard English in both their speech and their writing. After all, shouldn't we endeavor to build a common culture? And if that is so, isn't a common culture built on a common language?

I acknowledge that some Americans grew up in subcultures that did not value standard English. Those subcultures should not be denigrated.  I said "y'all" as a kid, and I still say "y'all." 

But standard English is not that hard to learn. I keep Strunk and White's Elements of Style on my desk, which I consult occasionally; and I subscribe to Grammarly, an online editing tool that checks my writing for spelling and grammar. All our commuters have a spell check function.

Besides, every young American must eventually leave academia, where grammar and spelling are being emphasized, and get a paying job. American employers may insist that their employees write and speak in standard English. Indeed, job candidates who misspell words on their job applications and converse in an obscure dialect may not get hired.

In my view, academics who want to deemphasize standard English grammar and diction are doing their students a disservice. Millions of young people are graduating from universities with crushing student loans. If they leave college speaking and writing no differently from when they entered, what was the point of all that education?







Tuesday, March 23, 2021

"This student loan case fits the definition of insanity": Bankruptcy judge grants 56-year-old Kansan partial relief from his student-loan debt

 In Goodvin v. Educational Credit Management Corporation, Judge Dale Somers, a Kansas bankruptcy judge, began his opinion with these words:  "This student loan case fits the definition of insanity."

Judge Somers went on to chronicle the story of Jeffrey Goodvin. 

Mr. Goodvin attended Wichita State University for four years (1982-1986) but did not obtain a degree. He enrolled at Brooks Institute of Photography in 1987 and got a bachelor's degree in fine arts in 1990. In 2007, he enrolled at Santa Barbara City College and obtained a certificate in multimedia studies. 

Goodvin made repeated attempts to find steady employment over many years, but he worked in an unstable industry.  Judge Somers summarized Mr. Goodvin's job history as being "marked by several relocations, intermittent job loss, layoffs, and periods of unemployment, through no apparent fault of his own." In 2018, Goodvin entered an apprentice program with the Plumbers and Pipefitters Union. 

By the time Goodvin filed for bankruptcy in 2019, he was 56 years old, and he owed $77,000 in student loans. Educational Credit Management Corporation (ECMC) held Goodvin's largest loan, a consolidated loan that Goodvin took out in 1992. 

And here is where Judge Somers found insanity. The principal of Goodvin's consolidated loan was only $12,077, and Goodvin had paid $19,527 on that loan--more than 150 percent of the amount that was disbursed. But interest on that loan accrued at 9 percent. By the time Mr. Goodvin filed for bankruptcy, he owed $49,000 on that $12,000 loan. 

Predictably, ECMC argued that Mr. Goodvin should be placed in the Department of Education's REPAYE plan, a 20-year income-based repayment plan that would end when he was 76 years old. ECMC did not contend, however, that Goodvin would ever pay off his student loans. In fact, Judge Somers noted dryly, "To argue otherwise would strain incredulity."

Naturally, Mr. Goodvin did not want to enroll in a repayment program that would not end until he was ten years into retirement. Moreover, as Judge Somers pointed out, Goodvin's payments under a REPAYE plan would not cover accruing interest. As Judge Somers observed, "Goodvin's reluctance to participate in the REPAYE plan for another twenty years is not a lack of good faith; it's called hopelessness."

Very sensibly, Judge Somers granted Mr. Goodvin partial relief from his student debt. The judge discharged the consolidated loan, which he described as "the elephant in the room."  That loan, accruing interest at 9 percent, amounted to 64 percent of Goodvin's total student-loan indebtedness. 

That leaves Mr. Goodvin with an obligation to pay back $27,689, an amount that he can probably manage.

Judge Somers' sensible and refreshing decision is a sign that the federal bankruptcy courts are recognizing the enormity of the student-loan crisis.  ECMC appealed to the U.S. district court, but Judge John Lungstrum upheld  Judge Somers' ruling.

This is the third bankruptcy court decision out of Kansas in recent years to grant a partial discharge of student loans. ECMC was a defendant in all three cases, and it appealed all three decisions. Remarkably, federal district courts, acting in their appellate capacity, upheld the bankruptcy judge in all three matters.

Judge Somers was right: The Goodvin case fits the definition of insanity. His decision, thank God, restores some sanity to Mr. Goodvin's life, which should hearten us all.


References

Goodvin v. Educ. Credit Mgmt. Corp., Case No. 19-10623, Adv. No. 19-3105, 2020 WL 6821867 (Bank. D. Kan. Sept. 9, 2020), aff'd, Educ. Credit Mgmt. Corp. v. Goodvin, Case No. 20-cv-147-JWL (D. Kan. March 17, 2021).





Wednesday, March 17, 2021

Sweet v. DeVos: A federal judge calls Education Department's Borrow-Defense process "Kafkaesque"

In 2019, a group of student-loan debtors filed a lawsuit against the U.S. Department of Education and Education Secretary Betsy DeVos. 

Claiming to represent more than 100,000 student-loan borrowers, the plaintiffs accused DOE of issuing "blanket refusal[s]" when students tried to have their student loans forgiven based on claims they had been defrauded by the for-profit colleges they attended. 

More particularly, the plaintiffs accused DOE of “stonewalling” the fraud-claims process and allowing more than 200,000 fraud claims to languish for eighteen months.

In October 2019, Federal Judge William Alsup certified the lawsuit as a class action (Sweet I); and on May 22, 2020, Judge Alsup approved a preliminary settlement proposal that would end the litigation (Sweet II). 

Under the terms of the proposed settlement, DOE pledged “to decide claims and notify borrowers within eighteen months of final approval and implement relief within twenty-one [months].” DOE also agreed to be penalized if it delayed its decisions.

The plaintiff students apparently believed DOE would process the fraud claims in good faith based on a review of each individual claim. But they discovered that DOE denied almost all claims by sending a form letter that told petitioners their requests were denied based on “Insufficient Evidence.”

As reported in Forbes, borrowers accused DOE of "skirting the spirit of the settlement agreement, by essentially, arbitrarily denying relief to everyone." DOE admitted that since April 2020 it had denied 94% of all borrower-defense claims. 

When DOE’s behavior came to Judge Alsup’s attention, he was not happy. As he explained in his order, DOE’s form letters did not explain why students’ claims were almost uniformly rejected.

  Although individuals could request reconsideration of their individual denials, they had no basis for doing so since DOE gave no reason for the rejections.  Indeed, Judge Alsup observed, “the borrower’s path forward rings disturbingly Kafkaesque” (Sweet III, p. 5).

In fact, it is hard to read Judge Alsup’s opinion without coming to the conclusion that Betsy DeVos’s DOE was determined to deny relief to almost everyone who claimed to have been defrauded by a for-profit college.

As Judge Alsup pointed out, DOE had processed fraud claims expeditiously during the Obama administration. In the final 19 months of President Obama's second term in office, DOE processed 32,000 borrower-defense applications and approved 99.2% of them (Sweet III, p. 9).

But in 2017, President Trump took office and appointed Betsy Devos as his Secretary of Education. DeVos's DOE slowed down the borrower defense review process dramatically. In fact, over an 18-month period, DOE did not issue any decisions on borrower-defense claims (Sweet III, p. 3).

Then, in December 2019, while litigation was pending, the DeVos DOE speeded up its review process and decided 16,000 cases in one day. In contrast to the 99 percent approval rate during the Obama administration, President Trump's DOE denied 95% of the borrower-defense claims (Sweet III, p. 3).

Judge Alsup’s order canceling the proposed settlement was issued less than a month before the 2020 presidential election. Donald Trump was defeated, and DeVos resigned her post as Education Secretary in January.

In short, there is a new sheriff in town. Let us hope Miguel Cardona, President Biden’s Secretary of Education, will resolve student-loan borrowers’ fraud claims quickly and in good faith. The Obama administration determined that most of these claims are valid--that most claimants were ripped off by for-profit colleges.  Surely the Biden administration will come to the same conclusion.

References

Adam Minsky. Dept. of Education Tells Court It Has Denied 94% of Loan Forgiveness Applications, Forbes.com, Sept. 14, 2020.

Sweet v. DeVos [Sweet I], No. C19-03674 WHA, 2019 WL 5595171 (N.D. Cal. Oct. 30, 2019) (granting motion for class certification).

Sweet v. DeVos {Sweet II], No. C19-03674 WHA, 2020 WL 4876897 (N.D. Cal. May 22, 2020) (approving preliminary settlement).

Sweet v. DeVos [Sweet III],  No. C19-03674 WHA, 2019 WL 6149690 (N.D. Cal. Oct. 19, 2020) (refusing to approve settlement agreement).


Bye-bye, Betsy!



Monday, March 15, 2021

All Sales Final! No Refunds! Students lose lawsuit for tuition reimbursement against four Rhode Island universities that closed their campuses during COVID pandemic

Almost exactly one year ago, American higher education shut down in response to the COVID pandemic.  All across the United States, universities closed their campuses and switched from face-to-face instruction to online teaching.

Over the past several months, students brought dozens of lawsuits against their colleges, seeking partial tuition refunds for the 2020 spring semester. They argued that the quality of teaching suffered when teaching shifted to computerized learning.

Some student plaintiffs found sympathetic courts, but a federal judge in Rhode Island dismissed students' lawsuits against four Rhode Island schools: Brown Univesity, Johnson & Wales University, Roger Williams University, and the University of Rhode Island.

 Judge John McConnell ruled that the four universities had no contractual obligation to deliver in-person instruction during the spring of 2020.  In Judge McConnell's view, the universities' recruitment materials, which touted lovely campuses and stimulating classroom environments, were mere "puffery" and did not amount to a contractual obligation to teach classes face-to-face.

I think Judge McConnell ruled correctly. Confronted with the coronavirus pandemic, American colleges and universities had no choice but to switch instruction from the classroom settings to an online format.

I sympathize with the students who brought these lawsuits, particularly the one brought against Brown University, an elite Ivy League school. Brown's tuition and fees total $58,000 per year. Students did not shell out that kind of money to take classes by sitting in front of a commuter in their parents' basements. 

Nevertheless, America's college leaders were justified in closing their campuses last spring. It was the only responsible thing to do. Surely they realize, however, that they cannot teach students via computers over the long term, even if the coronavirus pandemic stretches out for many months or years to come.

The total cost of attending America's most prestigious colleges now amounts to about $70,000 a year or even more. Most students will have to take out student loans to cover the bill.

If Brown's academic leaders think their students will take out student loans indefinitely for computerized instruction, they are in for a rude awakening.  No one will go into six-figure debt to get an online diploma, even if the credential is from Brown University.

Thus if the COVID pandemic isn't quickly brought under control, it will be the end of expensive private-college education.  After all, a young person smart enough to be admitted to Brown is smart enough not to pay $58,000 a year for an online college degree.




References

Burt v. Board of Trustees of the University of Rhode Island, __ F.3d ___, C.A. No. 20-465-JJM-LDA (D.R.I. March 4, 2021).



Friday, March 12, 2021

A little good news: COVID Relief Act includes tax relief for student debtors whose loans are forgiven

 A little good news. The COVID relief bill that Congress passed a few days ago includes modest tax relief for student debtors whose college loans are forgiven.  

Senators Bob Mendez and Elizabeth Warren introduced the Student Loan Tax Relief Act in the U.S. Senate as a provision of the $1.9 trillion COVID relief legislation. 

Thanks to the passage of the Mendez-Warren bill, student debtors who complete income-driven repayment plans (IDRs) and have their college loans forgiven will not get a tax bill.

In most circumstances, the Internal Revenue Service considers a forgiven debt to be taxable income. Until the Mendez-Warren bill became law, this was a problem for student debtors in IDRs.

Indeed, most college-loan debtors in IDRs will have substantial loan balances when they finish making monthly payments under a 25-year IDR because their payments weren't large enough to cover accruing interest.  

The U.S. Department forgives the remaining student-loan debt for individuals who complete IDRs, but the IRS has treated the forgiven debt as taxable income.  Under the terms of the Mendez-Warren bill, that forgiven debt is no longer taxable.

This is a good development, but the Student Loan Tax Relief Act offers is only a modest reform. 

First of all, the IRS does not tax forgiven debt if the debtor is insolvent when the debt is forgiven. Since most student debtors who complete 25-year IDRs will be insolvent, their forgiven debt would not have been taxable even before the Mendez-Warren bill became law.

Second, for reasons I do not understand, the tax-relief measure expires on January 1, 2026.  After that date, forgiven debt will again be treated as income by the IRS.

Third, as the National Consumer Law Center reported earlier this month, only 32 people who completed IDRs have had their loan forgiven. If this low IDR-completion rate continues, the Mendez-Warren measure will impact very few people.

In short, the Mendez-Warren legislation is a welcome development but is no reason for student debtors to start popping the champagne corks. Save the champagne for the day Congress repeals the undue-hardship language in the Bankruptcy Code and allows distressed student debtors to discharge their student loans in bankruptcy.

Don't pop the champagne corks over the Student Loan Tax Relief Act.






Tuesday, March 9, 2021

You can't get there from here: Millions of student borrowers are in Income-driven repayment plans but only 32 got debt relief

 Everyone knows the story about the hapless motorist who gets lost in rural Maine. When he finds a farmer and asks for directions, the farmer says, "You can't get there from here."

The U.S. Department of Education must be staffed by Maine farmers. DOE has made it almost impossible for student-loan debtors to benefit from DOE's income-based repayment plans (IDRs).  When it comes to getting debt relief from an IDR, DOE's position seems to be: You can't get there from here.

DOE and its loan servicers are responsible for administering the federal student-loan program, including its various income-based repayment plans. These IDRs allow borrowers to make payments on their student loans based on their income--with low-income borrowers making payments as low as zero.

As the National Consumer Law Center (NCLC) reported this month, more than 8 million people are enrolled in IDRs. Two million student debtors have been in an IDR for at least 20 years. 

Yet only 32 people--that's right, 32--have had their student loans canceled through an IDR.

NCLC blames private student-loan servicers for this dismal state of affairs. NCLC accuses the servicers of giving inaccurate or inadequate information to student borrowers and steering borrowers away from IDRs toward options that don't lead to eventual loan cancellation.

And there is another problem. According to NCLC, nearly 6 out of 10 people in IDRs lose their eligibility because they fail to recertify their income annually.

NCLC recommends canceling all student debt that has been in repayment for 20 years--whether or not a borrower was signed up in an IDR.  I agree.

After all, student debtors who have not paid off their college loans after 20 years will probably never pay them off. In fact, interest accruing on their debt will have built up over time so that their total outstanding debt will likely have doubled or tripled.

Another reform--less sweeping than loan forgiveness--would at least prevent a majority of borrowers from getting kicked out of their IDRs. DOE could stop requiring IDR participants to certify their income on an annual basis. Instead, DOE should simply assign that job to the Internal Revenue Service.

Over the past few months, the federal government has issued millions of coronavirus relief checks to Americans based on the recipients' income. This was a relatively easy task because the Internal Revenue Service knows every American's income based on tax returns.

Since the feds know everyone's annual income, DOE doesn't need to ask 8 million IDR participants to certify their income every year. Eliminating that unnecessary requirement would prevent more than half the people in IDRs from getting kicked out of their repayment plans.

But maybe that simple reform is too easy. Perhaps DOE and the student-loan processers don't care whether IDR programs operate as Congress intended.  

When only 32 people get their student loans forgiven under IDR programs intended to give debt relief, something is terribly wrong. Surely the U.S. Department of Education is capable of managing its IDR programs better than a Maine farmer.


You can't get there from here.




Sunday, March 7, 2021

"Becker College on the Brink of Closure": Small, private colleges are sliding toward oblivion

As reported in Inside Higher Ed, Becker College is on the brink of closure. Located in Worchester, Massachusetts (no garden spot), Becker's enrollments have drifted downward in recent years, and it now enrolls only about 1,500 students. 

The Massachusetts Department of  Higher Education says the school's financial situation is uncertain, and Becker and the Department are working on a "contingency closure" plan. A local newspaper says Becker "is unlikely to survive another academic year."

Becker is an expensive place to study. Tuition and fees total approximately $40,000 a year.  When living expenses are included, attending Becker will cost at least $50,000.

Thus, for students who invest four years of their lives studying at Becker College, a bachelor’s degree could cost $200,000.

Unfortunately, it takes longer than four years for most Becker students to get their bachelor’s degree.  CollegeSimply reports that only 14 percent of Becker students earn their bachelor’s degree within four years, and only 27 percent graduate within six years. (Other sources cite a higher graduation rate, and Becker's website says its graduation rate is above the national average.)

Of course, most Becker students get some kind of financial assistance that can cut costs considerably.  But few people will graduate from Becker College without taking out student loans.  According to CollegeSimply, 83 percent of Becker students have federal student-loan debt when they graduate.

And what kind of job awaits a Becker College graduate?

Today, small private colleges are sliding down a path toward oblivion.  Hundreds of these schools dot the American landscape, especially in New England and the mid-Atlantic states. 

Many are losing students, and some are closing. Atlantic Union College, located only a few miles from Becker College, shut down in 2018. Incredibly, the Massachusetts Department of Higher Education maintains a list of more than sixty closed colleges and schools in the Bay State. 

The COVID pandemic hit these colleges especially hard—accelerating enrollment declines. Federal money has propped some of them up—at least temporarily. Becker College received nearly $5 million in coronavirus aid. 

To an unsophisticated young person, a small private college like Becker may look attractive. In contrast to the public mega-universities, which may enroll 50,000 students or more, the small private schools feel friendlier. Their ancient buildings--Romanesque, Greek revival, or Victorian architecture--their leafy lawns and small, intimate classroom setting are appealing to young people searching for wisdom and guidance that will help them plan their lives.

But these colleges can be dangerous places to study. First of all, they are quite expensive. Tuition prices vary from school to school, but they typically charge about $50,000 per year in tuition, fees, room, and board.  Most students from low-income or middle-class families will be forced to take out student loans to cover those costs.

Second, a degree from a small, private college may not lead to a good job. CollegeSimply reports that a Becker College graduate’s average salary after ten years is only $46,600. That is not a very attractive salary for a person burdened by oppressive student-loan debt.

I sympathize with these small, struggling private colleges.  Some have noble histories dating back to the early nineteenth century or even earlier. Becker College, for example, traces its roots to 1784.

And many of these schools have made commendable efforts to remain relevant. Becker Colege offers a variety of job-oriented degree programs: nursing, criminal justice, veterinary technology, and forensic science. Becker's game design program is nationally recognized. According to the Princeton Review, the program ranks number 2 in the world. 

But the future of the small, private college is bleak. Young people should carefully consider the costs and benefits of attending an expensive private school compared to a public university. 

They should also weigh the possibility that the private college of their choice may shut its doors in the not-to-distance future--perhaps before they pay off their student loans.


Expensive private colleges: Think before you take the plunge.







Tuesday, March 2, 2021

House version of COVID relief bill modifies 90/10 rule for for-profit colleges. Critics say the change may cause some for-profits to close

 The House of Representatives passed a $1.9 trillion relief bill a few days ago, and the legislation is now before the Senate. House Democrats inserted a provision that would modify  an obscure statute that requires for-profit colleges to obtain at least 10 percent of their revenues from non-federal student aid.

The purpose of the 90/10 rule is to require for-profit colleges to obtain at least a small part of their income from non-federal sources. As a recent paper by the Veterans Education Project noted:

The rationale for the [90/10] policy is that a worthwhile educational provider should be able to attract other sources of revenue beyond federal grants and loans, and that students should be willing to put some of their own money toward their education (i.e., “skin in the game”).

 Or as Representative Bobby Scott (D-Virginia) put it, the rule requires for-profit institutions to “show some semblance of attraction to people.”

Under current law, GI Bill benefits--federal student aid for veterans--are not counted as federal student aid under the 90-10 rule. Thus, for-profits can get 90 percent of their revenue from federal student aid and get additional federal money from veterans' benefits without violating the 90/10 rule. 

The House version of the COVID relief bill would change the way the 90/10 rule is calculated by including veterans benefits as federal student aid.  The Wall Street Journal criticized the measure, pointing out the rule change would cause 87 for-profit schools to fall out of compliance with federal regulations and perhaps close.

I disagree with the Wall Street Journal. For-profit colleges have a long and well-documented history of providing overly-expensive, often substandard services to students.  As the Brookings Institute reported recently, for-profit schools enroll only 10 percent of postsecondary students but account for half of all student loan defaults.

Moreover, on average, for-profits are four times more expensive than community colleges, and black and Latino students are overrepresented in this low-performing education sector. Indeed, some research suggests that a for-profit college education may be no better than no college education at all. 

Tightening the 90/10 rule is a modest reform. All it will do is require for-profits to find more non-federal operating funds than they are required to have now.  

If the Senate includes the modified rule in its version of the COVID legislation, some for-profits may indeed closeWe should not mourn their loss.

Rep. Bobby Scott (D. Virginia)



Monday, February 22, 2021

Politicians want $50,000 in student-debt relief: A good idea?

 Top Democrats, led by Senators Chuck Schumer and Elizabeth Warren, are calling on President Joe Biden to forgive student-loan debt up to $50,000 per person. 

According to the plan's proponents, $50,000 in debt relief would wipe out all college-loan debt for 36 million Americans. That would be an impressive achievement.

Moreover, forgiving $50,000 in student debt would particularly benefit women and people of color, who take on more debt on average than men and non-minority students. Under one interpretation of the proposal, parents who took out Parent Plus loans might also get relief.

Without a doubt,  student-loan forgiveness on this scale would be expensive. The federal government would be writing off  $1 trillion in student debt. But, as then Education Secretary Betsy Devos admitted more than two years ago, only one out of four federal-loan borrowers are "paying down both principal and interest" on the loans.  Writing all this debt off in one fell swoop would merely recognize reality.

Some policy experts argue that writing off all student debt--about $1.7 trillion--would be good for the American economy. In a 2018 report, researchers at the Levy Economics Institute of Bard College wrote that wholesale student-loan forgiveness would boost the Gross National Product by $86 billion to $108 billion a year over ten years. Released from their student loans, millions of Americans would see an immediate increase in their disposable income, permitting them to buy homes, save for retirement, purchase consumer goods, and start families.

So what's my take on the Schumer-Warren proposal? I think any action that gives meaningful relief to millions of struggling college borrowers is a good thing.  So if the choice is between the Schumer-Warren plan and no plan, I support the Schumer-Warren initiative.

But wiping $1 trillion of student debt off the government's books is no panacea for the student-loan crisis. 

First, there is the issue of fundamental fairness. Millions of Americans made enormous sacrifices to get through college with no debt--often working at part-time jobs to make ends meet. Millions more lived frugally in the years after graduation to pay off their student loans.

Somehow it seems unjust to reward people that borrowed to attend college when so many people worked extra hard to avoid debt or to pay it off quickly.

Second, for our government to wipe out a trillion dollars in college loans is an implicit admission that the college experience is not worth what the universities are charging. President Biden should not forgive a trillion dollars in student debt without insisting that the universities reform their operations.

What reforms are most urgent. In my view, colleges should stop grinding out expensive and often worthless graduate degrees. When Congress passed the GRAD Plus Act, it allowed people to borrow the entire cost of graduated education, no matter what the price.  As we might have expected, universities raised the price of their graduate degrees. They ginned out new programs: MBAs, Master's degrees in public administration, graduate degrees in gender and ethnic studies, and so on.

Second, we need to close down the Parent PLUS program, which has driven millions of moms and pops to the verge of poverty by taking out loans for their children's education that they can't discharge in bankruptcy.

In my view, it would be wiser to loosen the restrictions on bankruptcy relief for overburdened student debtors. People who took out student loans and obtained good jobs with their college degrees should pay back their loans. People whose lives were ruined by student debt could get a fresh start in the bankruptcy courts.

Surely all Americans can agree that postsecondary education should improve the quality of people's lives. College degrees that leave people with no job and massive student debt should not be subsidized by the federal government.

Let's forgive $1 trillion in student debt: The rubes will love us for it!



Sunday, February 7, 2021

The real estate bubble: Think of your home as a shelter, not an investment

 Real estate in my little corner of Flyover Country is "on a hot streak." In Baton Rouge, housing sales rose 12 percent last year, and prices shot up by 7 percent. 

Everywhere, Baton Rouge builders are scrambling to meet the demand for new houses, new condos, new apartments.  Thousands of apartment buildings are under construction in the Mississippi River floodplain, where land is relatively cheap; and new subdivisions of starter homes are springing up like dandelions.

Everyone is jumping into the housing market. And why not? Interest rates on a 30-year loan are below 3 percent! You'd be crazy not to buy a new home or snap up some rental housing as an investment.

But wait a minute. Louisiana actually lost population last year. So who is going to buy the new starter homes down by the River levee? Who is going to rent all those new apartments?

And when we take a closer look at the real estate boom in my hometown, it begins to look a little less rosy. In the zip codes that border the Mississippi River, home prices actually went down. 

If we take a deep breath and search for reality, we see that real estate across the U.S. is in a bubble--very much like the bubble that led to the home-mortgage crisis in 2008-2009.  Artificially low interest rates have juiced home sales in some parts of the country, but real estate languishes in the nation's urban centers.

Houston, for example, has a magnificent skyline, but a lot of skyscrapers have empty space. Houston's office-vacancy rate was 24 percent last year. According to Bloomberg, business tenants vacated a net 3.2 million square feet of Houston properties in 2020. Meanwhile, 3.1 million square feet of "new top-tier space [is] set to be completed over the next 18 months."

Downtown Houston has thousands of townhomes and condominiums occupied by people who work in Houston's office towers. But people are working at home these days. Many businesses have concluded that they don't need to cram their employees into skyscrapers.  Folks can work from home.

And if you work from home, you don't need to live in a crowded city. You don't need to pay sky-high property taxes. You don't need to send your kids to crummy schools.  Suddenly, the suburbs are looking better and better.  Maybe it wouldn't be so bad living next door to Ozzie and Harriet.

Housing prices are up because interest rates are at a historic low. But interest rates won't remain low forever. Builders are constructing cookie-cutter housing projects at a dizzying pace, but it is not clear who will live in these new homes.

Now is not the time to speculate in real estate.  Now is a good time to stop thinking of your home as an investment and begin thinking about it as shelter for your family. 

Ozzie and Harriet's home: Did Ricky mow the lawn?

Saturday, February 6, 2021

What will happen to you if you take out student loans to get a liberal arts degree and can't find a job?

 Late last year, the University of Vermont announced it will shut down two dozen academic programs with low enrollment. 

Geology, religion, and Asian studies are on the chopping block, along with several language programs--Greek, Latin, and German.  At least three departments will close: Religion, Classics, and Geology. Some minors are being eliminated--Theatre and Vermont Studies.

All across the country, universities are shrinking or closing their liberal arts programs because fewer students major in those disciplines. Young people sense they are in a bleak job market, and many are shifting to more vocation-directed academic majors.

Indeed, Jeffrey Selingo and Matt Sigelman, writing in the Wall Street Journal, report that entry-level college graduate jobs have fallen 45 percent in recent years.  Many graduates will be forced into "lifeboat jobs," where they will be underemployed both in terms of salary and vocational development. 

"[T]hose who graduate into underemployment are five times more likely to remain stuck in mismatched jobs after five years compared with those who start in a college-level job," Selingo and Sigelman warn.

Should students stop majoring in the liberal arts? Not necessarily, Selingo and Siegelman argue. Instead, they give this advice:

None of this requires abandoning the liberal arts or social sciences; it's just a matter of ensuring that students also acquire marketable skills. English departments don't need to teach computer programming, but they should show students how to develop writing and critical thinking skills in ways that resonate with employers. And they should help students to acquire more technical skills, whether on campus, through internships or through the growing array of online  options.

With all due respect to Mr. Selingo and Mr. Sigelman, I am deeply skeptical of the proposition that liberal arts departments can make their academic programs more vocationally driven. 

Does anyone think a medieval-history professor will adjust his teaching style to help students acquire more technical skills?  I doubt it.

And how will sociology, political science, and religion departments develop internship programs that help students find jobs after graduation? I don't see it happening.

It is no good to say liberal arts departments can adjust their academic programs to make them more job-relevant. Students won't buy that line.  They know that a degree in liberal arts probably won't lead to a good job. That's why more and more of them are majoring in business.

Brutally put, it is madness for young people to take out six-figure student loans to get degrees in history, religion, political science, ethnic studies, or sociology.  In today's economy, an individual who takes out student loans to earn a bachelor's degree must immediately find a good job.  

What will happen to you if you borrow $100,000 to get a humanities degree and can't find employment? You will be forced to apply for an economic hardship deferment to get short-term relief from making your monthly loan payments.

But while you are skipping those payments, interest is accruing on your student loans. That interest gets capitalized so that your loan balance increases.

At some point, your student loan debt will become unmanageable, and then your only option will be to sign up for an income-based repayment plan that stretches out your loan obligations for a quarter of a century.  

And that will give you plenty of time to ruminate about the stupid decision you made when you were 18 years old to major in sociology with a minor in Vermont Studies.

Will this guy teach you critical thinking skills?




Monday, February 1, 2021

Young v. Grand Canyon University: Eleventh Circuit rules doctoral student is not compelled to arbitrate his claim against a for-profit university

 Donrich Young enrolled in a doctoral program at Grand Canyon University based on his understanding that he could finish the program by taking 60 credit hours. However, he didn't complete his degree in 60 hours and was forced to pay for three additional research-continuation courses.

Young sued Grand Canyon for breach of contract, intentional misrepresentation, and violations of the Arizona Consumer Fraud Act. But Young had signed an arbitration agreement that forced him to arbitrate his claims rather than file a lawsuit.

An Obama-era federal regulation prohibited for-profit colleges from requiring their students to arbitrate their disputes. Grand Canyon argued for a tortured interpretation of this rule, and it convinced a federal judge to buy it.  Thus, the court dismissed Young's lawsuit and required him to arbitrate his beef with Grand Canyon.

On appeal, however, the Eleventh Circuit reversed. It began by stating that the regulation was "poorly written." Nevertheless, in the appellate court's view, the regulatory language clearly prohibited Grand Canyon from forcing Young to arbitrate his breach-of-contract and misrepresentation claims.

Indeed, in the Eleventh Circuit's view, "common sense" confirmed that Young's interpretation of the regulation was correct.

We need not dwell on the Eleventh Circuit's analysis of regulatory language. The critical point is this: Obama-era regulations prohibited for-profit schools from enforcing arbitration clauses that bar students from suing for breach-of-contract or misrepresentation.

Unfortunately, Education Secretary Betsy DeVos rolled back the Obama rules to allow for-profit schools to force their students to sign arbitration agreements. As David Halperin wrote last July:

Predatory schools love forced arbitration — a secret proceeding with a paid corporate rent-a-judge — and class action bans, because those things make it harder for a ripped off student to obtain a lawyer, afford a legal process, get justice before an impartial decision-maker, and create precedents and expose information that could help future students.

It will be interesting to see whether President Biden will reinstate the ban on arbitration clauses that the Obama administration commendably instituted.  Let us hope so because mandatory arbitration has been the chief way that unscrupulous for-profit colleges have protected themselves from being sued by their students for fraud and misrepresentation.

References

David Halperin. 

For-Profit Colleges Race To Block Students From Suing Them. Republic Report, Jul 20, 2020.  https://www.republicreport.org/2020/for-profit-colleges-race-to-block-students-from-suing-them/.

Young v. Grand Canyon University, 980 F.3d 814 (11th Cir. 2020).



Sunday, January 31, 2021

When did university book stores become T-shirt shops?

 I live about a mile from the Barne & Noble bookstore, the official bookstore for Louisiana State University. Yesterday, I walked over for a cup of hot chocolate at the bookstore's Starbucks coffee shop.

While the barista was constructing my cocoa (a laborious business), I contemplated the murals above the counter. Overhead, I saw some of the great English-language authors: Faulkner, Hardy, Joyce, Kipling, Melville, Nabakov, Shaw, Whitman, and others. 

I found myself wondering whether Barnes & Noble sold any books by the authors who are celebrated at Starbucks.  It is a college bookstore, after all.

So I went upstairs to the store's tiny "fiction and literature" section and looked for works by these famous writers.  Most of them I couldn't find: no Kipling, no Nabakov, no Whitman. 

I did see some comic books, however, in a section titled "graphic novels."  And I saw a hell of a lot of  $20 LSU T-shirts, $70 LSU sweatshirts, and hundreds of LSU ballcaps, selling for $25 a pop.

I also saw $9 LSU wine glasses and $27 LSU waterbottles. And I saw a pile of stuffed animals depicting Mike, the LSU tiger mascot.

In fact, as I scanned both floors of LSU's bookstore, I realized that Barnes & Noble's campus address isn't a bookstore at all; it's a T-shirt shop.  Yes, it sells some textbooks in an obscure corner, but most of the space is dedicated to overpriced souvenirs. 

I am not saying LSU students should be reading the authors who are memorialized at the Starbooks coffee shop.  I've read some Faulkner, some George Bernard Shaw, some of Henry James's excruciatingly dull novels. In my opinion, students can skip all that.

But I find it unsettling to see LSU students swiping their credit cards to buy exorbitantly priced junk and $5 lattes. Why? Because I know many of these students are purchasing that stuff with their student-loan money. 

If these students graduate and can't find good jobs--and many of them won't--what will be their best option? For millions, it will be to sign up for a 25-year income-based repayment plan. That's a high price to pay for an LSU T-shirt.






Saturday, January 30, 2021

Preparing for an academic career? Better have Plan B in your back pocket

As reported by the Star Tribune a couple of weeks ago, the University of Minnesota will not accept new students into many of its liberal arts programs in the fall of 2021.

The university is stopping admission in twelve programs, including history, political science, theater arts, and gender studies. New enrollments will be limited in 15 other programs.  No program outside the university's college of liberal arts will be affected.

Universities across the nation are making similar decisions--cutting or reducing programs in languishing liberal arts disciplines.

Interest in the traditional fields of liberal arts has been declining for decades, and job opportunities in these disciplines have dwindled.

I recall sitting in Professor William Stott's graduate-level American Studies class at the University of Texas more than 30 years ago. Professor Stott handed out the vitae of about a dozen candidates for a history professor's job at UT. Every applicant had a Ph.D. from an Ivy League school: Harvard, Yale, Brown, etc.

Dr. Stott didn't have to say anything to make his point. How can you compete with a Harvard Ph.D. holder for a professor's position with your doctorate from a less prestigious public university?

I took the hint and went to law school. And I have never been sorry.

Without question, there will be fewer faculty positions for liberal arts professors in the years to come.  Many of these positions are in second- and third-tier liberal arts colleges that are experiencing enrollment declines--especially those located in the Northeast and the Mid-Atlantic states.  

If you take out student loans to get a Ph.D. in history or political science, you will find yourself in serious trouble if you can't find a position in your chosen field.

You may think a Ph.D. will get you an excellent job of some kind, even if you can't find one in academia. But you may be wrong. Employers may be reluctant to hire an employee with a doctorate in medieval history, thinking that such a person is overqualified or will be unhappy working in a mundane bureaucratic job.

Paul Campos, writing about the job market for lawyers in his brilliant little book Don't Go to Law School (Unless), advised law students with mediocre grades at bottom-tier law schools to consider cutting their losses dropping out before graduating:

 [G]iven the state of the legal market, most people at most law schools who find themselves in the bottom half of their class after the first year would be better off dropping out.

As bad as it would be to have student loans and no degree, he pointed out, it might be worse to take out more loans to get a J.D. and then be unable to find a job.

These are volatile and unstable times for American higher education--especially graduate education. Don't be lured into an expensive master's program or doctoral program with a vague sense that another university degree will somehow improve your job prospects.

You could be wrong--terribly wrong. And if you wind up with a graduate degree, no job, and six-figure student-loan debt, you will have doomed your financial future and perhaps the future of your family. 


A cushy professor's job: You probably won't get one.








Thursday, January 28, 2021

SUNY chancellor Jim Malatras chirps cheerily while college enrollment applications plunge 20 percent

 College enrollment applications plunged 20 percent at the State University of New York, an enormous college system with 64 campuses. The coronavirus pandemic bears most of the blame.

But SUNY Chancellor Jim Malatras is upbeat.  The coronavirus "invites us how we can do better," he assured the public a few days ago.

 "Let's ride the wave," he chortled. After all, SUNY is "on the cutting edge of the new student-focused approach." 

Of course, Chancellor Malatras can afford to be upbeat. He makes $450,000 a year and gets a $60,000 annual housing allowance. 

Where did this bozo come from? Did SUNY do a national search before it hired Mr. Malatras?

No, it did not.  According to Nicolas Tampio, writing in USA Today, Malatras is a crony of New York Governor Andrew Cuomo. Newspaper headlines referred to him as "Cuomo loyalist Malatras," and "Cuomo aid Malatras," Tampico observed. Malatras was formerly Cuomo's director of operations and one of the governor's advisors on New York's COVID response.

I feel so much better. After all, Cuomo's administration did a great job managing the coronavirus pandemic--especially at the nursing homes, where COVID deaths were underreported by 50 percent.

Merryl Tisch, SUNY's board chairwoman, stoutly maintains her board acted wisely when it hired Malatras without a national search. Why?  

[Because the board] felt it was imperative to act now in a reasonable and deliberate and socially aware moment to protect the SUNY system across the full array of challenges and help produce a model for sustainability in a post-COVID world.

What the hell does that mean? Did chairwoman Tisch pull that sentence out of her butt? Or did some hack in SUNY's public relations office pump out that swill?

But perhaps I'm too hard on Chancellor Malatras. After all, SUNY pays him half a million bucks a year to be a cheerleader--not Debbie Downer.

But here is some advice to New Yorkers about their college choices. Make up your own mind about your post-secondary education, and don't take out too many student loans to pay for it. Don't just listen to some clown blather on about his university's "student-focused approach" for spending your borrowed money.


Don't borrow too much money to "ride the wave" with Chancellor Malatras.



The Parent Plus Program was a policy blunder that hurts low-income and African American families: Shut It down

Our government's Parent PLUS Program is an insidious scheme to lure low-income parents into taking out student loans so their kids can go to colleges they can't afford.

 Insider Higher Ed's Kery Murakami tells the story of Ewan Johnson, whose mother owes $150,000 in Parent PLUS loans--money she borrowed so her son could get a degree from Temple University in strategic communications and political science.

As Johnson related, he comes from "a low economic background." Will his mother will ever pay off her Parent PLUS loans? I doubt it.

Johnson's mother is one of 3.6 million parents who collectively owe more than $96 billion in Parent PLUS loans. For the most part, parents aren't taking out these loans so their kids can attend elite
private schools like Harvard. 
"Rather," as Wall Street Journal reporters Andrea Fuller and Josh Mitchell observed, "they include art schools, historically Black colleges and private colleges where parents are borrowing nearly six-figure amounts to fulfill their children's college dreams . . "

Indeed, African American parents are hurt the most by the Parent PLUS Program. The WSJ reported that 20 percent of African American parents who took out Parent PLUS program in 2003-2004 defaulted on their loans by 2015.  

Default rates for some colleges are exceptionally high. A New America study found that 30 percent of Parent PLUS borrowers at 15 institutions default within two years!

Should all this debt--nearly $100 billion--be forgiven? President Biden proposes to knock $10,000 off of every federal student loan, but it is unclear with his plan includes people with Parent PLUS loans. 

Policymakers worry that forgiving all Parent PLUS debt will unfairly benefit wealthy families who have the resources to pay back their loans.  Sandy Baum, a student-loan expert, said that forgiving all Parent PLUS debt would be "outrageous."

Hardly anyone suggests that we just eliminate this dodgy government boondoggle that exploits low-income and minority families.  

So why don't we just make one straightforward reform? Let's allow parents who wrecked their financial futures so their kids could attend the wrong college to discharge their Parent PLUS loans in bankruptcy