Showing posts with label Elizabeth Warren. Show all posts
Showing posts with label Elizabeth Warren. Show all posts

Monday, September 16, 2019

"Arrogant Bastards": Higher education leaders oppose Democrats' proposal for free college

College tuition has risen faster than the rate of inflation for the past quarter-century. While wages have remained stagnant, the cost of going to college has shot through the roof. According to Forbes writer Camilo Maldonado, tuition rose 8 times faster than wage growth during the years 1989 to 2016. Eight times faster!

Why? The colleges say they are forced to raise tuition rates because the states are providing less support for higher education. But this lame explanation--repeated ad nauseam--is mostly bullshit. The colleges don't mention the explosion in administrative positions-the profusion of assistant vice presidents, executive associate deans, etc. It is not uncommon for senior administrators at public and private universities to draw salaries that exceed a quarter-million dollars a year.

In any event, everyone agrees that rising tuition costs have forced millions of American students to take out student loans, which now total $1.6 trillion. Something must be done to alleviate the distress.

Several Democratic candidates for the presidency have proposed making college education free at all public colleges and universities. You would think the higher education community would love that idea. But it doesn't. Vassar president Catharine Hill criticized Bernie Sanders's free-college idea when he ran for president in 2016. Her lame-brained solution was to expand long-term income-based repayment plans. And that's basically what we've done--creating repayment plans deliberately structured so that students can never pay off their college loans.

Now we are in the early stages of the 2020 presidential election season, and more Democratic hopefuls have joined Bernie in proposing a free college education for everyone. Senators  Elizabeth Warren, Kamala Harris, Cory Booker, and Kirsten Gillibrand (who recently dropped out of the presidential race) have all endorsed a free-college proposal.

But the higher education community still opposes the idea. Just a few days ago, Brian Rosenberg, president of Macalester College, published an op-ed essay in Chronicle of Higher Education, in which he cited a couple of liberal tropes to justify his opposition to free college.

A free college education would hurt low-income students, Rosenberg argues, because they would be "squeezed out" in the application process that would become more competitive if tuition were free. And he also contends that free college would exacerbate the nation's already low graduation rate.

Huh? How could free college be bad for low-income students? How could it make graduation rates go down?

Mr. Rosenberg is the president of Macalester College, a very good liberal-arts school in Minnesota, but he does not mention that free college at public institutions would severely disadvantage the private colleges. Who would pay $54,000 a year in tuition and fees to attend Macalester College if they could enroll at the University of Minnesota tuition-free?

I am not labeling Mr. Rosenberg an "arrogant bastard." I'm sure his arguments against free college are sincere and his commitment to private liberal-arts education is genuine. But a great many university presidents and higher-education policy wonks are arrogant bastards.  They want to preserve the status quo in higher education, with the federal government spewing more than a $100 billion a year to support the present system. The status quo works just fine for them.

How many elite-college presidents have come out in favor of student-loan debt relief? How many have endorsed the Democrats' bill in Congress to make bankruptcy relief available to distressed student-loan debtors? How many have acknowledged that long-term, income-based repayment plans are designed so that student debtors never pay off their college loans? How many have spoken out against the corrupt for-profit colleges?

I don't think any of these arrogant bastards have lifted a finger to ease the student-debt crisis.  That's why I call them arrogant bastards.

Macalester College: $54,000 in tuition and fees
(the bagpipe music is complimentary)



Sunday, February 24, 2019

Congressman John Katko introduces bill to make student loans dischargeable in bankruptcy. Will presidential candidates endorse the bill?

Last month, John Katko, a Republican congressman from New York, filed H.R. 770, a bill that would make student loans dischargeable in bankruptcy like any other consumer debt.

Titled the "Discharge Student Loans in Bankruptcy Act," Katko's bill is quite simple. It merely strikes the "undue hardship" clause from Section 523(a) of the Bankruptcy Code.

Congressman Katko filed the same bill two years ago. When he filed the bill in 2017, it had ten co-sponsors, including Maryland Congressman John Delaney. When Katko refiled the bill last month, he only had two co-sponsors.

If H.R. 770 becomes law, millions of Americans who are overwhelmed by student loans will get relief in the bankruptcy courts. They will have an opportunity to start families and buy homes. They will get the fresh start that bankruptcy is intended to provide.

Let's make Katko's bill the litmus test for everyone who is running for president or is thinking about running. Let's ask them one simple question: Do you support Katko's bill or not?

  • President Donald Trump, do you support H.R. 770?
  • Senator Elizabeth Warren, do you support Katko's bill?
  • Senator Kamala Harris, do you support H.R. 770?
  • Senator Bernie Sanders, do you support Katko's bill?
  • Former Vice President Joe Biden, do you support H.R. 770?
  • Senator Kirsten Gillibrand, do you support Katko's bill?
  • Senator Amy Klobuchar, do you support H.R. 770?
  • Michael Bloomberg, do you support Katko's bill?
  • Beto O'Rourke, do you support H.R. 770?
  • John Delaney, former Maryland congressman who co-sponsored Katko's bankruptcy-relief bill in 2017, you are now running for president. Do you support Congressman Katko's bill?
Our federal legislators are fond of holding committee hearings where they bully witnesses by demanding yes-or-no answers to all their hectoring questions.

Well, here is a question to everyone who wants to be president, and we should demand a yes-or-no answer. Unless a presidential candidate can say "Yes, I support H.R. 770 without qualification," that person is nothing more than a windbag who doesn't care about average Americans and does not deserve our vote.

*****

Note: I am grateful to Phil Uhrich for calling this bill to my attention.  Mr. Uhrich wrote a provocative essay on national politics in 2016 that is still timely.

Representative John Katko (R-NY)

Wednesday, February 13, 2019

We are all peasants now: The student-loan crisis is destroying the middle class

As the world changed, we reverted to social divisions that we'd thought were obsolete.  . . . A plain majority of the townspeople were laborers now, whatever in life they had been before. Nobody called them peasants, but in effect that's what they'd become.
World Made By Hand
James Howard Kunstler 

American higher education is the emperor who wears no clothes. College leaders boast that our nation's universities are the envy of the world while they rake in so-called federal "student-aid" and parade about in medieval regalia peddling worthless degrees.



And America's young people are the losers. They've been gulled into thinking they can gain a middle-class lifestyle by getting a college degree and maybe a graduate degree as well. But millions are finding that their college degrees gained them little more than massive debt. And those online MBAs and doctorates they purchased with borrowed money--just junk.

According to the Federal Reserve Bank, outstanding student-loan debt reached $1.56 trillion last January. Around 45 million Americans have student-loan obligations and 7.4 million are enrolled in long-term repayment plans that stretch out for as long as a quarter of a century.  As Secretary of Education Betsy DeVos admitted with shocking candor last November, only one out of four student borrowers are paying off the principal and interest on their loans.

It is now well documented that student-loan debt is contributing to the nation's declining birth rates--now near a record low. People can't afford children because they're paying off student loans.

Young people can't afford to buy homes, they can't save for retirement, they can't pay off their debts.  Their liberal arts degrees, their shoddy law degrees, their fluffy MBAs and doctoral degrees qualify them to become baristas and clerical workers.

We are now in the early stages of the 2020 presidential election season, and what do our politicians talk about? Russia, border walls, free health care, and the Green New Deal.  We should be discussing the New Raw Deal--the deal our government and our universities have imposed on guileless young people.

For too long, Americans have bought the line that our colleges and universities operate for the public good and that the people who run them are wise and kindly. We particularly revere the ivy league colleges where we get nearly all our prune-faced Supreme Court justices and most of our presidents.

But if the folks who run Harvard are so goddamned wise, how could they have fallen for Elizabeth Warren's scam that she's a Cherokee? And if our elite college leaders are sensitive and kindly, how did little boys wind up getting raped in a Penn State shower room? And how could dozens of female athletes get groped by Larry Nasser while he was on Michigan State's payroll?

No, let's face the truth. Many American colleges and universities are not run by wise and kindly people; most are run by administrators who are primarily concerned with the bottom line. And far too often, higher education is not preparing young Americans to enter the middle class. On the contrary, by forcing people to take on oppressive levels of debt to get a college degree, colleges are setting up millions of Americans for a lifetime of peasantry.








Friday, October 6, 2017

Why won't Congress do a few things to ease the student debt crisis like stop the government from garnishing Social Security checks of elderly student-loan defaulters?

James Howard Kunstler posted a blog last week in which he challenged Congressional Democrats to introduce legislation to counteract the effect of Citizens United v. Federal Election Commission, 558 U.S. 310 (2010). In that case, you may recall, the Supreme Court ruled that corporations can give as much money as they like to political campaigns. 

All sensible people agree that Citizens United triggered a new level of corruption in national politics as corporations pump millions of dollars into Congressional campaign coffers in order to protect their venal interests.

President Obama complained publicly about Citizens United while he was in office.  But he didn't do anything about it, even though he could have ameliorated its effect through legislation when the Democrats controlled the Senate and the House of Representatives.

Democrats can still put a Citizens United override on their legislative agenda as Kunstler challenged them to do:
That’s your assignment Chuck Schumer, Nancy Pelosi, and the rest of the Democratic Party leadership. Get serious. Show a little initiative. Do something useful. Draw up some legislation. Get behind something real that might make a difference in this decrepitating country. Or get out of the way and let a new party do the job.
And of course there are plenty of other things the Democrats can do to promote fairness and justice in our society. As Gretchen Morgenson pointed out in a New York Times article last year, hedge fund managers get a special tax break allowing them to pay lower taxes on their income than most Americans.  That's right: a hedge fund manager is taxed at a lower rate than a New York school teacher.  President Obama could have closed that loophole in the tax law by executive action, but he didn't.

And then there's corporal punishment in the schools. Researchers are unanimous that beating children with boards is not good for them, and the United Nations has identified corporal punishment as a human rights abuse.

In the waning days of the Obama administration, Secretary of Education John King, Jr. condemned corporal punishment in an open letter to the nation's school leaders. But why didn't King speak up sooner? Corporal punishment in schools is a wrong that Obama's Department of Education could have stopped with an administrative regulation. Why didn't it? 

And then there's the student-loan program, which has brought suffering to millions.  According to the Government Accountability Office, the Department of Education garnished the Social Security checks of 173,000  student-loan defaulters in 2015, a practice that Senator Elizabeth Warren bitterly condemned. The amount the government collects each year is a pittance--about one eighth the amount Hillary Clinton spent during the 2016 election season. And most of the money the Feds collect goes to paying interest and penalties without reducing the debtors' loan balances at all.

Senator Warren and Claire McCaskill filed a bill to stop the garnishment of student debtors' Social Security checks, but the measure never made it out of committee. Why won't Senator Schumer and Representative Pelosi get behind that bill? Who could decently oppose it?

In fact, there are numerous noncontroversial things our Congressional representatives could do to ease widespread suffering among the nation's poorest Americans. But  our Congressional representatives are not doing these things. 

Why? Two reasons.

 First, they don't want to do noncontroversial good things because that would mean sharing the credit with their political enemies.

And second, Nancy Pelosi, Chuck Schumer, John McCain, Mitch McConnell and all our other bozo representatives don't work for us. They work for the lobbyists, their campaign contributors, and the global financial institutions; and that keeps them pretty busy.




References

Secretary of Education John B. King, Jr. Letter to Governors and State School Officers, November 22, 2016.

James Howard Kunstler. Homework AssignmentClusterfuck Nation, September 29, 2017.

Gretchen Morgenson. Ending Tax Break for Ultrawealthy May Not Take Act of CongressNew York Times, May 6, 2016.


Senator Elizabeth Warren Press Release, December 20, 2016. McCaskill-Warren GAO Report Shows Shocking Increase in Student Loan Debt Among Seniors

United States Government Accountability Office. Social Security Offsets: Improvement to Program Design Could Better Assist Older Student Borrowers with Obtaining Permitted Relief. Washington DC: Author, December 2016).

Wednesday, May 3, 2017

Senator Elizabeth Warren and Senate progressives should press for hearings on Educational Credit Management Corporation and the student loan crisis

Senator Elizabeth Warren has had a brilliant career. She grew up in Oklahoma, went to law school, and wound up on the Harvard Law School faculty. Now she is in the U.S. Senate, and pundits say she may run for President in 2020. Impressive!

Somewhere along the way, Senator Warren represented that she had Cherokee blood, although she never provided a shred of evidence to support that assertion. Her claim may have been a factor in getting that cushy Harvard Law School job. But Harvard says no, and Harvard always tells the truth.

Nevertheless, Harvard Law School claimed it had a Native American professor while Warren was on the faculty, without identifying who it was. (To be fair, it may have been Alan Dershowitz).

If Warren misrepresented her heritage to advance her career, we can't be too hard on her. Higher education is a rough business, and Warren certainly played the game better than I did. And, as the song goes that Willie Nelson made famous, Liz only did what she had to do.

But Warren is a senator now, and she has an obligation to do some good for the American people. She claims to be an advocate for distressed student-loan debtors, but what has she done for them?

She's written letters to the Department of Education and spouted a lot of nonsense about the "obscene" profits the government makes off the student-loan program. More substantively, she co-sponsored a bill in 2015 to protect seniors from having their Social Security checks garnished, but the bill never became law.

In my view, Senator Warren could do more to address the student loan crisis than file bills and write letters. Specifically, she should join with other progressives in the Senate and press for Senate hearings on the student loan guaranty agencies and Educational Credit Management Corporation in particular. ECMC is perhaps the federal government's most ruthless debt collector and has amassed a billion dollars in unrestricted assets, at least partly from hounding destitute student debtors.

In the Bruner-Halteman case, for example, ECMC garnished the wages of a bankrupt Starbucks employee 37 times in violation of the Bankruptcy Code's automatic stay provision. A Texas bankruptcy slapped ECMC with $74,000 in punitive damages.

And in the Hann case, ECMC continued trying to collect on a woman's student loans even though a bankruptcy court had discharged those loans on the grounds that she had paid them off.  ECMC only got stung with a small penalty for that misbehavior.

Rafael Pardo and the Century Foundation both established that the federal government is paying ECMC's attorney fees, and ECMC is using its attorneys to ground down overburdened student borrowers in the bankruptcy courts. Many of these destitute people don't have the money to hire a lawyer, but ECMC is paying its lawyers as much as $300 an hour.

The public has no idea what ECMC has been up to, and Senate hearings could shine some light on this sleazy organization. How much is ECMC paying its CEO, Jan Hines, and its other senior executives? What is ECMC doing with its wealth? Why does the Department of Education pay ECMC's attorney fees to engage in what Rafael Pardo described as "pollutive litigation"?

Senator Warren could do a great deal of good if she would use her powers of persuasion to get the Senate Banking Committee to hold hearings on ECMC's shady activities. In fact, if Senator Warren got the opportunity to ask ECMC executives some tough questions, I'll bet she could bring this rotten outfit down.

Senator Warren needs to accomplish something tangible to address the student loan crisis if she wants people to regard her as a consumers' advocate. If she doesn't accomplish something soon, Americans will be forced to conclude she is not really a progressive, just as we know she's not really a Cherokee.


How much does ECMC pay its CEO, Jan Hines?

References

Bruner-Halteman v. Educational Credit Management Corporation, Case No. 12-324-HDH-13, ADV. No. 14-03041 (Bankr. N.D. Tex. 2016).

Hann v. Educational Credit Management Corporation, 711 F.3d 235 (1st Cir. 2013).

John Hechinger. Taxpayers Fund $454,000 Pay for Collector Chasing Student LoansBloomberg.com, May 15, 2013.

Joshua Hicks. Did Elizabeth Warren check the Native American box when she "applied" to Harvard and Penn? Washington Post, September 28, 2012.

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

Rafael Pardo. The Undue Hardship Thicket: On Access to Justice, Procedural Noncompliance, and Pollutive Litigation in Bankruptcy. 66 Florida Law Review 2101 (2014).


Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. 

Brian Walsh. Elizabeth Warren is Rewriting American HistoryU.S. News & World Report, April 22, 2014.

Thursday, September 22, 2016

Senator Elizabeth Warren grills Wells Fargo CEO John Stumpf. But hey, Liz: What have you done to help solve the student-loan crisis?

Senator Elizabeth Warren made headlines this week when she grilled Wells Fargo CEO John Stumpf at a Senate Banking Committee hearing. Unless you've been living under a rock, you know Wells Fargo employees were caught scamming customers by creating 2 million fake bank accounts without their customers' knowledge or approval.

In the wake of this scandal, Wells Fargo fired 5,000 low-level employees and refunded some money, but the company did not terminate the senior executive who supervised the unit where the fraud occurred. Wells Fargo's CEO John Stumpf made millions of dollars from these misdeeds because the scheme caused his stock to go up. But Stumpf isn't giving back any of his ill-gained profits.

So Stumpf was a sitting duck when Senator Warren began questioning him at the Senate Banking Committee hearing. "You should resign," Warren told Stumpf. "You should give back the money that you took while this scam was going on, and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission."

Stumpf, of course, is lawyered up. He went into his flak-catcher crouch, continually repeating his talking points and saying he was sorry for Wells Fargo's misdeeds.

All great theater. Who doesn't enjoy seeing a transnational financial executive publicly humiliated? But what will come of all this drama? Nothing. Stumpf won't face criminal charges, and the Wells Fargo senior executives who profited from the fake-account scheme won't give back a penny of their loot.

Elizabeth Warren enjoys a great reputation as the champion of consumer rights and the friend of the little guy. But what tangible thing has she done to help working-class Americans? And more particularly, what has she done to ease the suffering of millions of student-loan debtors?

I'll tell you what Warren has done--she's done nothing.  She's all blather. In fact, I don't think Warren even understands the student-loan crisis. She charged awhile back that the government is making "obscene" profits from the student-loan program, but that's not true. The government would be making a profit on the loan program if borrowers were paying back their loans, but they are not. As the Wall Street Journal reported recently, 40 percent of student-loan borrowers aren't making payments on their loans.

Here are some things Senator Warren could propose that would help relieve the suffering of distressed student-loan debtors.

Legislation banning the government from garnishing the Social Security checks of elderly student-loan debtors who defaulted on their loans. Around 155,000 Americans are having their Social Security checks dunned right now, causing real hardship for these people.

And how much money does our government collect from this disreputable practice? Probably less than the Secret Service spends guarding President Obama on just one of his Hawaiian vacations. Why doesn't Senator Warren use her bully pulpit to stop the government from going after elderly student-loan debtors who are living off their Social Security checks?

Wholesale relief for student-loan borrowers who were ripped off by the for-profit college industry. Senator Warren joined 22 other Democratic Senators in a letter to Secretary of Education John King asking the Department of Education to grant broader relief to the 35,000 students who were enrolled at one of ITT Tech campuses when ITT closed and filed for bankruptcy. But that letter is almost completely incoherent and doesn't  propose real relief.

DOE should forgive the loans of all the people who took out student loans to pay for ITT programs. Giving former students longer to file for loan forgiveness under DOE's "closed school" regulations (as the Democratic Senators proposed) does not go nearly far enough.

Amending the Bankruptcy Code to allow distressed student-loan debtors to discharge their federal student loans in bankruptcy like any other nonsecured debt. Senator Warren co-sponsored a bill to make private student loans dischargeable in bankruptcy, but private loans are only a small part of the overall student-debt crisis--only about 10 percent of total outstanding student-loan debt. The bill does nothing about reforming the Bankruptcy Code to allow distressed student-loan debtors to discharge their federal student loans in bankruptcy.

Conclusion; Senator Elizabeth Warren is a phony

Senator Elizabeth Warren is a phony. She hasn't accomplished anything significant to help solve the student-loan crisis. It is true she supports a bill to make private student loans dischargeable in bankruptcy, but such a law--if passed--is small potatoes.

Let's face it. Although Warren portrays herself as a progressive fighting for overburdened student-loan debtors, she will never do anything that would threaten the core interests of the higher education industry. After all, there are 114 colleges and universities in Warren's state of Massachusetts; and most of the professors and administrators who work at those colleges voted for her.

Those colleges and universities have to have federal student-aid money to survive. They are like crack addicts waiting for their next federal fix. Warren can talk all she wants about helping student-loan debtors, but she won't do anything that upsets the status quo. And real reform of the Bankruptcy Code to allow people to discharge their federal loans in bankruptcy would definitely upset the status quo.

Image result for elizabeth warren wells fargo


References

Anne Gearan and Abby Phillip. Clinton to propose 3-month hiatus for repayment of  student loansWashington Post, July 5, 2016. Accessible at https://www.washingtonpost.com/news/post-politics/wp/2016/07/05/clinton-to-propose-3-month-hiatus-for-repayment-of-student-loans/?hpid=hp_special-topic-chain_clinton-loans-11pm%3Ahomepage%2Fstory

Ashlee Kieler, Senators Introduce Legislation to Make Private Student Loans Dischargeable in Bankruptcy. Consumerist, March 12, 2015.   Accessible at https://consumerist.com/2015/03/12/senators-introduce-legislation-to-make-private-student-loans-dischargeable-in-bankruptcy/

Jena McGregor. 'You should resign': Elizabeth Warren excoriates Wells Fargo CEO John Stumpf. Washington Post, September 20, 2016. Accessible at https://www.washingtonpost.com/news/on-leadership/wp/2016/09/20/you-should-resign-elizabeth-warren-excoriates-wells-fargo-ceo-john-stumpf/

Josh Mitchell. More than 40% of Student Borrowers Aren't Making PaymentsWall Street Journal, April 7, 2016. Accessible at http://www.wsj.com/articles/more-than-40-of-student-borrowers-arent-making-payments-1459971348

Secretary of Education John B. King Jr. A Message from the Secretary of Education to ITT Students. Accessible at http://blog.ed.gov/2016/09/message-secretary-education-itt-students/

Sen. Warren Questions lack of Private Student Loan Relief Options. Senator Warren Website, July 31, 2014. Accessible at https://www.warren.senate.gov/?p=press_release&id=591

Letter to the Honorable John King, Secretary of Education, from 23 Democratic Senators, September 15, 2016. Accessible at https://www.insidehighered.com/sites/default/server_files/files/9_15_16%20ITT%20Tech%20ED%20Letter%20(1).pdf

Dawn McCarty and Shahien Nasirpour. ITT Educational Services Files for Bankruptcy After ShutdownBloomberg, September 16, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-09-16/itt-educational-services-files-for-bankruptcy-after-shutdown-it6byu6t

Jena McGregor. 'You should resign': Elizabeth Warren excoriates Wells Fargo CEO John Stumpf, Washington Post, September 20, 2016. Accessible at

Reuters. ITT Educational Services Files for Bankruptcy After Aid CrackdownInternational New York Times, September 17, 2016. Accessible at http://www.nytimes.com/2016/09/18/business/itt-educational-services-files-for-bankruptcy-after-aid-crackdown.html?_r=0


Marian Wang. Q & A: Elizabeth Warren on Spiraling Student Debt  and What Should Be Done About ItPro Publica, May 20, 2014. Accessible at https://www.propublica.org/article/qa-elizabeth-warren-on-spiraling-student-debt-and-what-should-be-done-about

Alia Wong. When Loan Forgiveness Isn't EnoughAtlantic Monthly, June 15, 2015. Accessible at http://www.theatlantic.com/education/archive/2015/06/government-corinthian-college-loan-plan-problems/395513/

Tuesday, July 5, 2016

Democratic Party Platform Plank on Higher Education: A Big Pile of Horse Manure

The Democratic Party released its Platform this week, or rather it released a draft marked "Deliberative and Predecisional." The Higher Education plank is only a few hundred words long, but it still adds up to one big pile of horse manure.

First, the Democrats promise to cut interest rates on student loans, "thereby preventing the federal government from making billions of dollars in profits from student loans." What was the Platform Committee smoking when it wrote that sentence?

Everyone who knows even a little bit about the student-loan crisis realizes that the federal government is not making a profit on student loans. It is incurring huge losses--losses that are growing by the day.

Why do I say this? First of all, the student-loan default rate is catastrophic--far higher than the anemic rate the Department of Education publishes every autumn. The Brookings Institution reported that almost half of students who take out loans to attend a for-profit institution default in five years. The five-year default rate for students overall is 28 percent.

Moreover, the Obama administration is pushing distressed student-loan borrowers into long-term repayment plans that set monthly payments so low that borrowers are not paying down accruing interest. In fact, more than half of student borrowers are seeing their loan balances go up two years after beginning the repayment phase of their loan--not down.

Do the Brookings numbers indicate to you that the government is making a profit on the student loan program? Of course not. And the fact that Senators Elizabeth Warren, Charles Schumer, Barbara Boxer, and now the whole Democratic Party insist that the government is reaping huge profits off the student loan program demonstrates that the Democrats are clueless about the student-loan crisis or that they are lying about it.

The Democrats also promise to "simplify and expand access to income-based repayment so that no student loan borrowers have to pay more than they can afford." In other words, the Democrats want to push more and more student borrowers into 20- or 25-year income based repayment plans (IBRPs).

Five million people are in IBRPs now; and President Obama wants to enroll 2 million more by the end of next year. Apparently, the Democrats want to increase that number even further.

Of course, IBRPs are nothing more than a conspiracy by our government to create a giant class of sharecroppers who will pay a percentage of their incomes to Uncle Sam over the majority of their working lives.

And finally, the Democrats pledge to "restore the prior standard in bankruptcy law to allow borrowers with student loans to discharge their debts in bankruptcy as a measure of last resort." I interpret this pie-in-the-sky promise to mean the Democrats will delete the "undue hardship" provision from the Bankruptcy Code.

I hope that is a promise the Democrats will keep if Hillary becomes President. If Congress would actually strike the "undue hardship" standard from the Bankruptcy Code, millions of Americans would be lining up to file bankruptcy within a week after the law is changed. And if distressed student-loan borrowers could truly get relief from their oppressive student-loan debt, a half trillion dollars in student loans would be wiped off the books.

That scenario would cause the student-loan program to collapse, which would cause hundreds of colleges and universities to close.

Our government will never let that happen. Which is why the Democratic Party's Higher Education platform is a big pile of horse manure.

Image result for elizabeth warren and charles schumer
Senators Schumer and Warren: Shoveling horse manure

References

Democratic Party Platform Draft, July 1, 2016 [Deliberative and Predecisional]. Accessible at https://demconvention.com/wp-content/uploads/2016/07/2016-DEMOCRATIC-PARTY-PLATFORM-DRAFT-7.1.16.pdf

Schumer and Warren Pushing Obama to Address Student Debt. CNN Transcript, January 12, 2016. Accessible at http://www.cnn.com/TRANSCRIPTS/1601/12/nday.06.html

Democrartic Senators Highlight Obscene Government Profits Off Student Loan Program. Senator Warren press release, January 31, 2014. Accessible at https://www.warren.senate.gov/?p=press_release&id=329


Friday, January 29, 2016

If I Had a Hammer! With great courage, distressed student-loan debtors all over America are going into the bankruptcy courts and petitioning for justice


If I had a hammer,
I'd hammer in the morning,
I'd hammer in the evening,
All over this land,
I'd hammer out danger,
I'd hammer out a warning,
I'd hammer out love between,
My brothers and my sisters,
All over this land.

It's the hammer of Justice,
It's the bell of Freedom,
It's the song about Love between my brothers and my sisters,
All over this land.

Peter, Paul & Mary

Our government has committed a grave injustice on working Americans--young and old--by dispensing student-money recklessly to millions of people who accepted the money in good faith in the hope that they could use their student-loan funds to educate themselves and have better lives.


In effect, the government has engaged in predatory lending--something you and I would go to jail for. It has spewed billions of dollars around the United States for the benefit of sleazy colleges--public, private, and for-profit--knowing that nearly half the people who got the loan dollars would not be able to pay off their student loans. And this money got sucked up by the college industry. 

After lending the money like a benevolent grandmother giving out Christmas checks to her grandkids, the government then morphed into a heartless monster. In fact, all three branches of our federal government have conspired to grind student-loan debtors into the dust.
  • Congress passed laws making it extremely difficult for people to discharge their student-loan debt in bankruptcy.
  • Congress enacted legislation that wiped out the statute of limitations for collection lawsuits against student-loan debtors--essentially destroying a key principle of the common law of equity.
  • The Department of Education allows for-profit colleges to insert "you can't sue me" clauses in their college-admissions materials.
  • The Supreme Court, an assembly of nine old geezers, upheld a federal law that allows the Department of Education to garnish Social Security checks of elderly people who defaulted on their student loans.
More than 40 million people carry student-loan debt, and 20 million can't pay it back. They are trapped like rats while the government and its collection agencies conspire to drive student-loan debtors out of the economy and out of the middle class into a dark world of hopelessness.  

Our government leaders pretend to be sympathetic. Senator Elizabeth Warren and Senator Charles Schumer coo soothingly about lower interest rates. President Obama spins out one long-term repayment plan after another.  Secretary of Education Arne Duncan issues press releases announcing lower default rates, knowing that DOE is cooking the books.

This scheme--driven by the greed and indifference of higher-education leaders--cries out for justice, for a return to common decency.

And a few people, like Peter Finch's character in the movie Network, have stood up and said, "I'm mad as hell, and I'm not going to take it anymore."  Going into the bankruptcy courts, often without attorneys, a few intrepid souls have applied to have their student loans discharged in bankruptcy. Not all of them have been successful, but all have shown great courage.

So in this posting, I pay tribute to the grit and the bravery of the people who filed adversary actions in the bankruptcy courts to throw off their student-loan debt:

Alethea Lamento, single mother of two, who was working full time but who was forced to live with relatives because she did not make enough money to house her family. A bankruptcy court discharged her student loans over the objection of the Department of Education.


Lamento v. U.S. Department of Education, 520 B.R. 667 (Bankr. N.D. Ohio 2014)

George and Melanie Johnson, a married couple with two children who lost their home in foreclosure and who defeated Educational Credit Management Corporation in an adversary proceeding in Kansas. And they did it without a lawyer!


Johnson v. ECMCCase No. 11-23108, Adv. No. 11-6250 (Bankr. D. Kan. 2015)

Bradley Myhre, a quadriplegic working full time but did not make enough money to support himself because he was required to pay a fulltime caregiver just to feed and dress him and transport him back and forth to work. The Department of Education refused to forgive his student loans, but Myhre beat DOE in an adversary proceeding.


Myhre v. U.S. Department of Education503 B.R. 698 (Bankr. W.D. Wis. 2013)

Alexandra Acosta-Conniff, an Alabama school teacher and single mother of two, who went into the bankruptcy court without a lawyer and discharged student-loan debt over the opposition of Educational Credit Management Corporation.  

Acosta-Conniff v. ECMC, 536 B.R. 326 (Bankr. M.D. Ala. 2015)

Ronald Joe Johnson, a grandfather in his early 50s who took out student loans in the early 1990s to pursue a college degree he was unable to complete and is now living with his wife on about $2,000 a month. Unfortunately, Johnson did not have a lawyer, and the Department of Education persuaded a bankruptcy judge not to discharge Johnson's student loans. 

Johnson v. U.S. Department of Education541 B.R. 759 (N.D. Ala. 2015)

Michael Abney, a single father of two with a record of homelessness who is living on less than $1200 a month, in spite of the fact he is working fulltime as a delivery driver. Acting as his own attorney, he defeated the U.S. Department of Education in a Missouri bankruptcy court.

Abney v. U.S. Department of Education540 B.R. 681 (W.D. Mo. 2015)

All these people are heroes, as brave in their own way as the farmers who defied the British army on Concord bridge in 1775, as brave as the heroes of the Alamo, as brave as the Okies who were driven off their farms during the Great Depression and took their families to Oklahoma in search of a better life.

Let us hope these heroes will inspire others to take the brave step of going into the bankruptcy courts to throw off their student-loan debt.  With each pasisng months, the bankruptcy courts are growing more sympathetic. 

Wednesday, December 16, 2015

Racist hiring at the University of Louisville: Does it matter?

 The University of Louisville got caught this week by openly doing what most universities are doing surreptitiously: hiring faculty member based on race.  Through some incredible slip up at the University's human resources office, the Department of Physics and Astronomy posted a job that contained this language:
The Department of Physics and Astronomy announces a tenure-track assistant professor position that will be filled by an African-American, Hispanic American or a Native American Indian [sic].
 Let's give the University of Louisville credit for at least being honest. Most American universities, both public and private, now take race into account when hiring faculty and admitting students. In fact, in Gratz v. Bollinger, one of the Supreme Court's seminal opinions on affirmative action, Justice Ruth Ginsburg argued in a dissenting opinion that the courts should allow universities to admit students based on race because they will do it anyway, even if the Supreme Court rules that it is a constitutional violation. Let them do it openly, Ginsburg counseled, rather than force them do it with winks and subterfuge.

So what difference does it make if the University of Louisville decides that whites and Asians are not eligible for a faculty position in the Physics Department? On one level, it's no big deal.

Twenty-five years go, when I was a doctoral student at Harvard Graduate School of Education, it was well known that only minority students would be admitted to the staff of the Harvard Educational Review. In fact, one faculty member told me candidly that the Harvard Educational Review was "a racial ghetto."  I applied, and I was not selected.

But being rejected by the Harvard Educational Review had no major impact on my life. I feel quite confident that I have published more scholarly work than all the students in my HGSE doctoral cohort put together--certainly more than all the students who were on the Harvard Educational Review when I was at Harvard.

Likewise, the whites and Asians who won't be hired for a Physics professor's position at the University of Louisville will probably find other jobs.

And certainly, greater diversity on America's college campuses is good thing.  We need more African American and Hispanic professors, and we need more minority students.

But here's the thing. Academia's obsession with race, gender and sexual orientation has diminished higher education as a moral enterprise.

First of all, most racial and gender preferences are done dishonestly. The University of Louisville goofed when it said in print that whites and Asians would not be considered for a particular faculty position. In fact, a university spokesperson said the job advertisement was an "error" and muttered some gobbledygook about the university's commitment to diversity. But in fact, at least some people at the University of Louisville wanted to make a hiring decision based on race. You can call that diversity if you want, but that's racism.

And this dishonesty has permeated every aspect of American higher education. The universities are dishonest about their racism, dishonest about their tuition prices, and many are dishonest about the employment prospects of their graduates.

Moreover, this morbid obsession with race is eroding the rigor of higher education. Just last year, students at three prestigious law schools--Harvard, Columbia and Georgetown-- asked to postpone their examinations because they were so upset about the racially charged shooting death of an African American in Ferguson, Missouri that they couldn't study for their exams.
Think about that. People trained at our top law schools are so sensitive that they can't do their school work because they are upset by current events. Who would want to hire a lawyer who gets the vapors from reading the morning newspaper?

And occasionally, racial fixations at our elite universities have become downright embarrassing. Awhile back, Harvard Law School claimed to have a Native American on its faculty. A real live Indian! And who did that Indian turn out to be? Elizabeth Warren, who said vaguely that she thought her grandmother might have been a Cherokee!

Who cares, in an authentic academic environment, whether a law professor is one sixteenth Cherokee? The fact that Harvard Law School thought it was legitimate to claim it had a Native American faculty member based on Elizabeth Warren's unverified assertions tells you all you need to know about the intellectual and moral rigor of Harvard Law School.

Eventually, young Americans are going to ask themselves why they bother to enroll in these flim-flam shops--these palaces of hot air that obsess on race and blather about academic freedom while charging outrageous tuition prices that most people can't pay without taking out student loans.

Elizabeth Warren:
I think I am a Cherokee Indian


References


Philip Marcelo. Law Schools Delay Exams For Students Upset by Ferguson, Eric Garner Decisions. Huffington Post, December 10, 2014. accessible at: http://www.huffingtonpost.com/2014/12/10/law-schools-exams-ferguson_n_6301282.html




Monday, May 11, 2015

Senator Elizabeth Warren and the Brookings Institution's Matthew Chingos are ignoring reality: The federal government is not making a profit off the student-loan program

Do you believe the federal government is making a profit off the student loan program? You do? Then I have some beautiful beachfront property in southwestern Oklahoma I would like to sell you. That's right--Caddo County, Oklahoma is going to be the next Hamptons! 


Caddo County, Oklahoma in springtime
Beachfront lots are still available!
Uncle Sam is not making a profit on student loans

Some people actually believe that Uncle Sam is making a bundle off the federal student loan program. Senator Elizabeth Warren is of that mind. She once said that the government's profits from the student-loan program are "obscene."


And last February, Senator Warren and five other U.S. Senators wrote Secretary of Education Arne Duncan a scolding letter charging the Department of Education with making a profit off of student loans. The Senators accused the government of overcharging student borrowers and "pocketing the profits to spend on unrelated government activities."


Senator Elizabeth Warren: Government profits on student loans are "obscene"
And apparently, the policy wonks over at the Brookings Institution also think the student loan program is producing a profit for the federal government. Matthew Chingos recently published a Brookings paper proposing to significantly lower interest rates on student loans while assessing student borrowers a fee that would be placed in a "guarantee fund" to cover student loan defaults. Chingos argued that his plan would keep the government from profiting from student loans while having a contingency fund to cover the cost of defaults.

Theoretically (and only theoretically), the government is making a profit on student loans.  The government's cost for borrowing money is about 1.9 percent on ten-year Treasury Bonds . And the government is currently loaning money to undergraduate students at a 4.7 percent interest rate. If all students paid back their loans, the government would indeed make a handsome profit.

But, as everyone knows, a high percentage of students are defaulting on their loans. According to Chingos, the government estimates only 0.6 percent of students will default, but of course that is absurd. Every year, for the past 20 years, the Department of Education has been issuing reports on the percentage of students in the most recent cohort of borrowers who default within two years of beginning the repayment phase of their loan. Over that period, that number has never been lower than about 5 percent. Last year, the figure was 10 percent--16 times higher than the DOE default estimate that Chingos cited.

In a Forbes.com article, Jason Delisle and Clare McCann reported that the government estimates that about 20 percent of student-loan borrowers will eventually default on their loans--that's 30 times higher than the rate cited by Chingos.

And let's not forget A Closer Look at the Trillion, the Consumer Financial Protection Bureau's 2013 report on the federal student loan program.   CFPB reported that 6.5 million out of 50 million outstanding student loans were in default--13 percent.


Need more data? The Federal Reserve Bank of New York issued its most recent report on household debt in February 2015. The Bank found student loan delinquency rates worsened in the 4th quarter of 2014, with 11.3 percent of aggregate student-loan debt being 90 days delinquent or in default.(up from 11.1 percent in the previous quarter).

Just one more tidbit of information. The Department of Education recently admitted that more than half of the student-loan borrowers who were signed up for income-based repayment plans, the government's most generous loan-payment option, had dropped out due to failure to file their annual personal income reports on time.  That is a clear sign that many student-loan borrowers are so discouraged that they aren't bothering to file the necessary paperwork to keep their loan status in good standing.

The Chingos Report and Senator Elizabeth's Letter to Secretary Duncan Ignore Reality

I am astonished that Michael Chingos and Senator Warren would publicly state that the government is making a profit off the student-loan program when it so clearly losing money. What's going on?

Tragically, our politicians and policy analysts simply can't face the fact that the student-loan program is out of control. It is so much easier to demand a pseudo reform based on the fantasy that the government is making money off the student loan program than to face reality.

References

Chingos, Matthew M. End government profits on student loans: Shift risk and lower interest rates. Brookings Institution, April 30, 2015. Accessible at: http://www.brookings.edu/research/papers/2015/04/30-government-profit-loans-chingos

Rohit Chopra. A closer look at the trillion. Consumer Financial Protection Bureau, August 5, 2013.  Accessible at: http://www.consumerfinance.gov/blog/a-closer-look-at-the-trillion/

Jason Delisle and Clare McCann. Who's Not Repaying Student Loans? More People Than You Think. Forbes.com, September 26, 2014. Accessible at: http://www.forbes.com/sites/jasondelisle/2014/09/26/whos-not-repaying-student-loans-more-people-than-you-think/?utm_content=buffer1e0e0&utm_medium=social&utm_source=facebook.com&utm_campaign=buffe

Federal Reserve Bank of New York. Quarterly Report on Household Debt and Credit: February 2015. Accessible at: http://www.newyorkfed.org/householdcredit/2014-q4/data/pdf/HHDC_2014Q4.pdf

Senator Elizabeth Warren, et. al to Arne Duncan, February 25, 2015. Accessible at: http://www.warren.senate.gov/files/documents/2015_25_02_Letter_to_Secretary_Duncan_re_Student_Loan_Profits.pdf