Showing posts with label Federal Reserve Bank of New York. Show all posts
Showing posts with label Federal Reserve Bank of New York. Show all posts

Monday, February 18, 2019

Cooking the Books: Federal Reserve Bank Says $166 Billion in Student Debt is Delinquent, But the Crisis is Worse Than That

Most Americans have confidence in what the Federal Reserve Bank says about the national economy. I know I do. But when the Federal Reserve Bank of New York reported that $166 billion in student debt is delinquent, it vastly understated the enormity of the student-loan crisis.

In its most recent quarterly household debt report, the Fed pegged total outstanding debt at $1.46 trillion as of the end of December. According to the Fed, about 11 percent of that debt ($166 billion) is delinquent or in default. That's a startling number. But the picture is far bleaker than that.

Just two months ago, Secretary of Education Betsy Devos stated publicly that only one out of four student borrowers (24 percent) are paying down the principal and interest on their loans. "As for FSA's portfolio today," DeVos said, "too many loans are either delinquent, in default, or are [in] plans on which students are paying so little, their loan balance continues to grow." In total, DeVos admitted, "43 percent of all loans are currently considered 'in distress,'" and 20 percent of all federal student loans are delinquent or in default.

DeVos also implicitly acknowledged that the federal government is cooking the books by classifying a lot of student debt as performing loans even though millions of people are not paying them back. "Only through government accounting is this student loan portfolio counted as anything but an asset embedded with significant risk," DeVos observed. "In the commercial world, no bank regulator would allow this portfolio to be valued at full, face value."

In addition to the millions of people who have defaulted on their loans, millions more are in various plans that allow borrowers to skip their loan payments without being counted as defaulters. As of last summer, 7.4 million people were enrolled in long-term income-based repayment plans who are making payments so low that interest continues to accrue on their loans.

Think about that: 7.4 million people whose loans are labeled as performing even though their loan balances get larger with each passing month. You can label that scenario any way you like, but we're talking about 7.4 million additional defaulters.

The Department of Education has been scamming the public for a quarter of a century regarding student-loan defaults. For years, it only reported the percentage of loans that defaulted within two years of entering repayment. To keep their default rates down, colleges encouraged their former students to enter into economic-hardship deferments, which excused them from making payments without officially putting them in default.

Then DOE began reporting three-year default rates, which showed defaults ticking up slightly to the neighborhood of 11 percent. But the Brookings Institute (in a paper written by Looney and Yannelis) reported in 2015 that the 5-year default rate for a recent cohort was 28 percent--more than double the three-year rate.

In other words, for a cohort of borrowers that the Brookings researchers analyzed, more than one out of four student borrowers was officially in default after five years. According to the same Brookings report, the five-year default rate for students who attended for-profit colleges was 47 percent--nearly half!

Of course, loan default rates vary some from cohort to cohort, but there is no sign that the percentage of student borrowers paying off their loans is going up. In fact, the data show the opposite.

In short, the Fed's recent report may be technically accurate but it understates the magnitude of the student-loan crisis. When the Department of Education finally comes clean and gives us some accurate figures, I think we will find that half of all outstanding student loans are not performing--about 20 million borrowers with collective debt totally three quarters of a trillion dollars.



 


Wednesday, September 27, 2017

A Scary Report From the Federal Reserve Bank: More Than Half of a Recent Cohort of Student-Loan Borrowers Did Not Reduce Their Debt by One Penny Over Five Years

Steve Rhode commented recently on a Federal Reserve Bank report published last July. As Mr. Rhode pointed out, the Feds reported that home ownership among young people declined by 8 percent over an 8-year period (2007 to 2015);  and the Feds concluded that a substantial reason for this decline is rising levels of student-loan debt.

The Fed report also observed that more young Americans are living with their parents than in previous years. In 2004, about one third of 23-25-year-olds lived with their parents. In 2015, 45 percent of people in this age bracket were living with mom and dad--a big increase.

These are alarming statistics, but the Fed's report also included information that is even scarier. More than half of student-loan borrowers in the 2009 cohort of borrowers had not paid down their student loans by even one penny five years after beginning repayment.

According to the Fed report, 59 percent of the 2009 cohort who owed $5,000 or less had not reduced their debt by even a dollar by 2014.  Well over half of people with very modest levels of student debt were delinquent on their loans, in default, or had failed to reduce their original loan balance by even a fractional amount.

Among people who owed between $50,000 and $100,000, 57 percent had not cut their student-loan debt by even a penny over five years. Among people owing $100,000 or more, 54 percent had made no progress on their loans during that time period.

The Fed report was commenting on a single cohort: people who took out student loans in 2009. But the repayment rates for more recent cohorts must be at least as bad. The Department of Education has been encouraging distressed borrowers to enter 20- and 25-year repayment plans, which lowers monthly payments. But in almost every case, the lower payments are not large enough to cover accruing interest, so most of the 6 million people in long-term, income-drive repayment plans are seeing their loan balances grow larger with each passing month.

And here's another scary tidbit of information. The Government Accountability Office reported in 2016 that half the people in income-driven repayment plans have been kicked out because they aren't abiding by the plans' eligibility rules.

In short, a perfect storm is brewing on the nation's economic horizon. Student loans are forcing more and more young people to postpone buying a house and to live with their parents.  Millions of people are making no progress at all toward paying off their student loans.

We can quantify some of the harm caused by the student-loan crisis, but other harms are difficult to measure. How many people have given up trying to get ahead because their student-debt grows larger with each passing month? How many have become cynical, despondent, or angry? How many of those masked antifa anarchists have student loans?

Steve Rhode put his finger on the only solution to the student-loan catastrophe. "Unless we tackle the growing problem of excessive student loan debt and allow those with unmanageable student loan debt to a fresh start in bankruptcy,"Mr. Rhode wrote, "the economic future of the days ahead is going to be less than it could have been."

Exactly. The only path out of this economic quagmire is through the federal bankruptcy courts.

The student-loan crisis is brewing into a perfect storm.

References


Zachary Bleemer, et al. Echoes of Rising Tuition in Students' Borrowing, Educational Attainment, and Homeownership in Post-Recession America. Federal Reserve Bank of New York Staff Report No. 820, July 2017.

Steve Rhode. Student Loan Debt Hurts Economy, Consumers, and Retirement Savings. Personal Finance Syndication Network, September 207.

US. Government Accounting Office. Federal Student Loans: Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates. Washington, DC: U.S. Government Accounting Office, November, 2016.



Student Loan Debt Hurts Economy, Consumers, and Retirement Savings, essay by Steve Rhode

When you live in a society like ours that is dependent on consumers to consumer goods and services, a reduction in the ability for growing sections of society to do their job and purchase stuff is going to lead to slower growth. That’s not good.

When growth slows there is less of a need for workers, jobs are cut, wages go flat, and life becomes tougher for many.

Historically, people accumulated wealth through homeownership and savings. When reaching the age of retirement the home could be sold and the equity created could be withdrawn. With less access to this type of wealth accumulation and the inability to save for retirement due to growing student loan debt, tragedy is on the horizon.

Student loan debt is hurting an entire generation of consumers who are setup for financial failure at this point.

The easy access to student loans has led to a growing for-profit private student loan industry that since 2009 has been drawing in many through loans and co-signing. Private student loans exploded with the advent of the for-profit schools. As an example, read Navient Knew Loans Were Garbage When They Saddled Students With Them. Yet the current Department of Education under Secretary Betsy DeVos seems resistant to crack down on protections from these schools.

Federal government student loans have been a blessing for many to obtain funds to attend higher education but they have been a curse as well. Schools who were qualified to receive federal funds looked at that easy money as a way to make an easy sale of a student into a seat regardless of the ability of the student to benefit from the loan and school.

Data published by the Federal Reserve Bank said, ” findings are consistent with American youth having accommodated tuition shocks not by forgoing schooling, but instead by amassing more debt.”
The Federal Reserve Bank of New York goes on to say, “Further analysis demonstrates that the tuition hike and student debt increase, despite leaving higher educational attainment unchanged, can explain between 11 and 35 percent of the observed approximate eight percentage-point decline in homeownership for 28-to-30-year-olds over 2007-15 for these same nine cohorts. The results suggest that states that increase college costs for current student cohorts can expect to see a response not through a decline in workforce skills, but instead through weaker spending and wealth accumulation among young consumers in the years to come.”

At the same time as homeownership has been declining, kids are living with their parents at an increasing rate.


As a society nothing good is going to come from lower amounts of wealth accumulation, and weaker spending.

Unless we tackle the growing problem of excessive student loan debt and allow those with unmanageable student loan debt to have access to a fresh start in bankruptcy, the economic future of the days ahead is going to be less than it could have been.

Steve Rhode


This article appeared on the Personal Finance Syndication Network web site and also on The Get Out of Debt Guy site. Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve here.

Friday, May 19, 2017

Will the Student Loan Crisis Bring Down the Economy? My Pessimistic View

Mike Krieger recently posted a blog on Liberty Blitzkrieg in which he argued that two issues will dominate American politics in the coming years: health care and student loans.

"Going forward," Krieger wrote,  "I believe two issues will define the future of American politics: student loans and healthcare. Both these things . . .  have crushed the youth and are prevent[ing] a generation from buying homes and starting families. The youth will eventually revolt, and student loans and healthcare will have to be dealt with in a very major way, not with tinkering around the edges."

Krieger concluded his essay with this pessimistic observation:
Student loans and healthcare are both ticking time bombs and I see no real effort underway to tackle them at the macro level where they need to be addressed. Watch these two issues closely going forward, as I think fury at both will be the main driver behind the next populist wave.
Krieger's dismal projection regarding student loans is supported by recent reports from the Federal Reserve Bank of New York.  The Fed reported that more than 44 million people are now burdened by student loans. About 4.7 million borrowers are in default and another 2.4 million are delinquent.

Moreover, a lot of this debt is carried by older Americans. According to Fed data, $216 billion is owed by people who are 50 years old or older. And we know from other sources that student loan debt is following people into their retirement years. In fact, about 170,000 people are having their Social Security checks garnished due to student loans that are in default.

Borrowers carry debt levels of varying amounts, but the Fed reported that 2 million people owe $100,000 or more on student loans. Interestingly, people with small levels of debt are more likely to default than people who have high levels of indebtedness. In the 2009 cohort, 34 percent of people who owed $5,000 or less had defaulted within five years. Among people owing $100,000 or more, only 18 percent defaulted during this same period.

And of course default rates don't tell the full story. Almost 6 million people have signed up for income-driven repayment plans, and most are making payments so low they will never pay off their loans. Millions more have loans in deferment or forbearance; and these people aren't even making token loan payments. Meanwhile, interest is accruing on their loans, making it more difficult for borrowers to pay them off once they resume making payments.

Surely, this rising level of student-loan indebtedness has an impact on the American economy. According to the New York Times, student loans now constitutes 11 percent of total household indebtedness--up from just 5 percent in 2008.  Obviously, Americans with burdensome levels of student-loan debt are finding it more difficult to buy homes, start families, save for retirement or even purchase basic consumer items.  No wonder sales at brick-and-mortar retail stores are down and the casual dining industry is on the skids.

So far, as Krieger pointed out, our government is tinkering around the edges of the student loan crisis, making ineffective efforts to rein in the for-profit college industry and urging students to sign up for long-term income-driven repayment plans.

But this strategy is not working. According to the General Accounting Office, about half the people who sign up for income-driven repayment plans are kicked out for noncompliance with the plans' terms. The for-profit colleges, beaten back a bit by reform efforts during President Obama's administration, have come roaring back, advertising their overpriced programs on television.

All this will end badly, but our government is doing everything it can to forestall the day of judgment. In Price v. U.S. Department of Education, a case I wrote about earlier this week, the Department of Education took six years to make the erroneous decision that a University of Phoenix graduate was not entitled to have her loans forgiven. DOE's ruling clearly violated federal law, and the Phoenix grad finally won relief in federal court.

But DOE isn't concerned about following the law. It just wants to stall for time--knowing that a student-loan apocalypse is not too far away.
The Student Loan Apocalypse


References

Michael Corkery and Stacy Cowley. Household Debt Makes a Comeback in the U.S. New York Times, May 17, 2017.


Mike Krieger. Student Loans and Healthcare--Two Issues that Will Define American Politics Going Forward. Liberty Blitzkrieg, May 4, 2017.

Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw. Looking at Student Loan Defaults through a Larger Window. Liberty Street Economics (Federal Reserve Bank of New York. February 19, 2015.

Wednesday, August 3, 2016

Federal Reserve Bank Report: Households with "negative wealth" tend to have high levels of student loan debt. Should we be surprised?

Households with more debt than assets are said to have "negative wealth." In other words, they owe more than they own. Or to put it more baldly, they're broke.

Researchers for the Federal Reserve Bank of New York published a report this week on negative wealth households, and some of  their findings are not surprising.

Researchers found that negative-wealth households "are younger, predominantly female, more likely to be minority, own homes at lower rates and have lower average annual incomes than households with nonnegative wealth" (quoting from Inside Higher Education). This is what we would expect.

What I found most interesting were the report's findings about the kind of debt that negative wealth households tend to have. Among households that have $47,000 to $52,000 in negative wealth, almost half of their total debt is student loans. Among households with lower levels of negative wealth--between $12,500 and $46,300--college loans made up 40 percent of total debt.

And here is the report's money quote:
Given the importance of student debt in explaining negative household wealth . . ., it is likely that the steady growth in student debt and borrowing combined with the slow rate of student loan repayment . . ., has materially contributed and will continue to contribute to negative household wealth and wealth inequality. 
Should we be worried by this report?

At least a couple of experts suggest that we should not be overly concerned. In an interview with Inside Higher Education, Robert Kelchen of Seton Hall University said that student loans are driving income inequality with just one group of students--those who take out student loans but never complete their degree.

Kelchen pointed out that a lot of households with negative wealth include borrowers "who took out student loan debt to pay for graduate school and professional degrees." Although this group may carry a lot of student-loan debt, it will eventually do well financially.

But of course Kelchen's observation is not completely accurate. Law school graduates, on average, leave law schools with $140,000 in debt; and they are entering a terrible job market. Paul Campos, a law professor at the University of Denver, flatly stated that most people who graduate from second- and third-tier law schools at the bottom or their law school class will be financially hurt by their law school experience. They will likely never obtain an income that justifies the debt they incurred to get their J.D. degrees.

Mark Kantrowitz, another expert quoted in Inside Higher Education, suggested that people who borrow money to get a college degree will be better off than people who don't go to college at all. "Would these individuals have been able to obtain a college education had they not borrowed?" Kantrowitz asked. "And where would their net worth be if they hadn't taken on this debt because they hadn't gone to college?"

Basically, Kantrowitz is repeating the mantra of the higher education community's insiders. Sure, they say, people borrow heavily to go to college. But they're still better off than people who don't go to college at all.

But that is not necessarily true. We know that 35 percent of the college-educated workforce is made up of people holding jobs that do not require a college education.  If those people borrowed a significant amount of money to get their degrees, they might very well have been better off had they skipped the college experience altogether.

And we also know that some people pay more for their college degrees than they are worth. Brenda Butler, who filed for bankruptcy recently, borrowed $14,000 to get a bachelor's degree in English from Chapman University in California, which she obtained in 1995. According to the bankruptcy court's opinion in her case, Butler never made much more than $30,000 a year, and she experienced some periods of unemployment when she was unable to make her loan payments. Twenty years after she graduated from college, Butler owed more than twice what she borrowed and was in bankruptcy.  I think we can safely say that Butler does not fit Kantrowitz's model.

In short, we should not dismiss this recent report from the Federal Reserve Bank of New York. The report confirms what we already knew intuitively, which is this: Student-loan indebtedness contributes to rising income inequality in the U.S. and it cripples some families from acquiring wealth.  And as the government shifts millions of college borrowers into 20- year, 25-year, and even 30-year repayment plans, the trend documented by the Federal Reserve Bank researchers is only going to accelerate.

References


Butler v. Educational Credit Management Corporation, Case No. 14-71585, Chapter 7, Adv. No. 14-07069 (Bankr. C.D. Ill. Jan. 27, 2016).

Andrew Kreighbaum. Federal Reserve analysis finds high student loan debt in housholds with most negative wealth. Inside Higher Education, August 3, 2016. Accessible at https://www.insidehighered.com/news/2016/08/03/federal-reserve-analysis-finds-high-student-loan-debt-households-most-negative?utm_source=Inside+Higher+Ed&utm_campaign=56be543194-DNU20160803&utm_medium=email&utm_term=0_1fcbc04421-56be543194-198564813

Olivier Armantier, Luis Armona, Giacomo De Giorgi, and Wilbert van der Klaauw. Which Households Have Negative Negative Wealth? Liberty Street Economics, August 1, 2016. Accessible at http://libertystreeteconomics.newyorkfed.org/2016/08/which-households-have-negative-wealth.html#.V6IRq3qxUwf







Tuesday, July 19, 2016

Susan Dynarski's Fix for the Student Loan Crisis: Simplistic, Dangerous, and Ineffective

Susan Dynarski published an essay recently in the Business section of the Sunday Times with the provocative title of "America Can Fix Its Student Loan Crisis. Ask Australia." Her prescription is simplistic, dangerous, and ineffective.

Essentially, Dynarski recommends putting American student borrowers into income-based, long-term repayment plans. She doesn't say how long, but she wrote approvingly of the English system--which, she attests, gives students 30 years to pay off their loans.

She also recommends putting student borrowers into a payroll withholding system whereby
debtors have their monthly loan payments deducted from their paychecks based on a percentage of their income.  When borrowers' incomes go up, their payments would be larger; if their incomes go down, their payments would be reduced as well.

Dynarski's proposal is very close to what the Obama administration is already doing--pushing millions of student borrowers into income-based repayment plans that stretch out over 20 or 25 years.

Dynarski says long-term student-loan repayment plans make sense because college graduates benefit from their college experience over their entire lives. "A core principle of finance is that the length of debt payments should align with the life of the asset," she writes didactically. "We pay for cars over five years and homes over 30 years because homes last a lot longer than cars." Likewise, Dynarski reasons, "[a]n education pays off over a lifetime, so it makes sense that student loans should be paid off over a long term."

Dynarski urges the United States to follow the example of those savvy Europeans, who give students longer to pay off their student loans than we do here in the U.S. "All the international student loan experts I have spoken with are shocked by how little time American students are given to pay off their student loans," she informs us. Shocked!

Simplistic

Dynarski's simplistic proposal is based on erroneous premises.  First of all, contrary to Dynarski's view, many student borrowers do not have college experiences that benefit them over a lifetime. Students who borrow to attend for-profit colleges and have substandard experiences don't receive a lifetime of benefits. Perhaps that is why almost half of a recent cohort of students  who attended for-profit colleges defaulted within five years. People who drop out of college before graduating don't receive a lifetime of benefits either, although they may acquire a lifetime of debt.

And many people who borrow money to obtain liberal arts degrees are not receiving much benefit. I for one received almost no benefit from the sociology degree I obtained from Oklahoma State University many years ago. But at least I didn't borrow money to pay for it.

People who borrow $100,000 or more to get degrees in sociology, history, women's studies, religious studies, etc. generally are paying far more than their degrees are worth.  In fact, 45 percent of recent graduates take jobs that don't even require a college degree.  And in the workplace as a whole, about a third of college graduates are in jobs that don't require a college education.

Moreover, Dynarski's comparison between American college financing and Europe is not very useful. As she herself points out, higher education in many European countries is free, and most European countries have a bigger social safety net for their citizens than the U.S. does. It is one thing to pay on student loans for 20 years if health care is free and an old-age pension is assured. It is quite another thing for people to pay on their student loans over a majority of their working lives while saving for retirement and paying for health insurance.

Ineffective

If we think about Dynarski's proposal for just a few moments, we can see how ineffective it is for solving the student loan crisis. American higher education is the most expensive in the world, and stretching out students' loan repayments for 25 or 30 years will do nothing to get those costs under control. In fact, the reason so many higher education insiders favor long-term income-based repayment plans is because it enables them to continue jacking up tuition prices.

And Dynarski's plan takes no account of accruing interest.  Borrowers who make small monthly loan payments due to their low salaries won't be paying off interest as it accrues. Most Americans who enter these plans will never pay off their loan balances even if they faithfully make their monthly loan payments for 300 consecutive months.  Isn't it also a core principle of finance that people should actually pay off their loans?

Dangerous

Finally, Dynarkski's proposal is simply dangerous to the long-term well being of Americans who go to college.  Basically, she is proposing a special tax that everyone who borrows to attend college must pay over the majority of their working lives. Student loan payments will just be another deduction from people's paychecks--like federal income tax withholding and Social Security contributions.

Essentially, Dynarski is proposing a modern-day sharecropper system very much like the one that prevailed in the American South prior to World War II. The sharecropper system of the 1930s required tenant farmers to pay a portion of their crops to Southern plantation owners; the modern system forces college students to pay a portion of their future wages to the government over a majority of their working lives.

Both sharecropper systems are unjust: and Dynarski, by pitching the new sharecropper system in the Business section of the  New York Times, has become an apologist for exploitation.



References

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

Susan Dynarski. American Can Fix Its Student Loan Crisis. Ask Australia. New York Times, July 10, 2016. Business  Section, p. 6.

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

Adam Looney & Constantine Yannelis, A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising default ratesWashington, DC: Brookings Institution (2015). Accessible at: http://www.brookings.edu/about/projects/bpea/papers/2015/looney-yannelis-student-loan-defaults


Wednesday, June 8, 2016

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

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

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

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

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

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

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

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

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

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

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

References

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

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

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

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


Saturday, May 7, 2016

Susan Dynarski, Brookings Institution, and the U.S. Housing Market: Lies, Damned Lies and Statistics

Larry Summers, former Secretary of the Treasury and President Emeritus of Harvard, has expressed concern about growing student-loan indebtedness, which he linked to a slowdown in home ownership in the United States. Joe Stiglitz, Nobel Prize winner in economics, and the Federal Reserve Bank in New York have also expressed the view that growing levels of college-loan debt is hurting the housing market.

But Susan Dynarski, writing for the Brookings Institution, says this is nonsense. Crunching the data from the Federal Reserve System in a different way than the Federal Reserve Bank, she came to this conclusion: education levels, not student-loan indebtedness, explain the difference in home-ownership rates among Americans. In a nutshell, here are Dynarski's conclusions:
Those who borrow for college do have a slower start to homeownership than those who went to college debt-free. . . . But by the time people are in their thirties, when the typical borrower would have finished paying off her student loans, the home ownship rates of the two college-educated groups are statistically indistinguishable. The striking, large gap is between the college-educated and those who stopped with high school.
I have two observations to make about Dynarski's paper for the Brookings Institution.  First, if Dynarski disagrees with Larry Summers, Joe Stiglitz and the Federal Reserve Bank of New York, I"m inclined to be persuaded by these eminences rather than Dynarski.

Second, speaking purely as a layperson with no expertise in economics, Dynarski's arguments simply defy common sense. How can she say that rising levels of student-loan indebtedness has no impact on home ownership given what we know about the massive hardship that millions of college-loan borrowers are suffering?

As the New York Times noted several months ago, 10 million people have either defaulted on their student loans or are in delinquency. Can anyone say this group of people have not been shut out of the housing market?

Another 5 million people have been shoved into long-term income-based repayment plans that stretch out for 20 years or more; and the Obama administration hopes to increase that figure by another 2 million people by the end of 2017. Can anyone argue that having a 20-year financial obligation hanging around one's neck has no impact on the ability to buy a home?

Susan Dynarski and the Brookings Institution have published numerous papers that basically contend  that the student-loan program is under control. Like those cops at a murder scene in a 1950s detective movie, they constantly mutter, "Move along, folks; nothing to see here; move along."

But everyone from Joe the Plumber to Larry Summers knows the federal college-loan program is out of control, with millions of people unable to make their loan payments. In my view, the Brookings Institution and many of its researchers are nothing more than shills for the higher education industry, which desperately needs large infusions of federal cash to keep the doors open.

Like all of higher education's apologists, Dynarski repeats the old bromide that people who graduate from college make more money than people who only hold a high school diploma. Of course that is true. But this platitude doesn't excuse higher education for running up tuition costs at twice the rate of inflation. It doesn't justify the behavior of the for-profit universities, which charge far too much for substandard programs and have shockingly high student-loan default rates.

In my opinion, policy makers and the public in general should discount almost everything the Brookings Institution says about the student-loan crisis, which by and large the Brookings people don't even acknowledge.  We should listen to the Vermont House of Representatives, which adopted a resolution a few days ago calling on Congress to lift restrictions on bankruptcy for student-loan debtors. After all, the small-town legislators in the Green Mountain State live in the real world, which is not the world that Susan Dynarski and her Brookings colleagues live in.

References

Micahel Bielawski. Vermont House asks Congress to let student-loan borrowers file for bankruptcy. VermongtWatchdog.org, May 3, 2016.  Accessible at http://watchdog.org/264079/legislature-requests-student-debt-relief-bankruptcy/

Editorial, "Why Student Debtors Go Unrescued." New York Times, October 7, 2015, A 26. Accessible at: http://www.nytimes.com/2015/10/07/opinion/why-student-debtors-go-unrescued.html

Susan Dynarski. The dividing line between haves and have-nots in home ownership; Education, not student debt. Brookings Institution, May3, 2016. Accessible at http://www.brookings.edu/research/reports/2016/05/03-dividing-line-between-haves-have-nots-home-ownership-education-not-student-debt-dynarski


Tuesday, March 1, 2016

The Student-Loan Bubble: Will the rising level of student-loan indebtedness lead to a national economic catastrophe?


This is the way the world ends
Not with a bang but a whimper.


T.S. Eliot                       
The Hollow Men            

In recent years, I have heard speculation that the federal student-loan program is similar to the real estate bubble that developed in the early years of this century and which ultimately led to the national financial meltdown of 2008.  Does the student loan program have the potential for running our economy into the ditch?

I once discounted this notion. After all, the home-mortgage crisis involved a lot more money than the federal student-loan program.  It is true that Americans now owe about $1.3 trillion in student loans, which is not chicken feed. But compared to the national debt--about $19 trillion--the student-loan program doesn't seem like a big deal. After all, the government's quantitative easing program involved the creation of $1 trillion a year when it was in full swing.

But I'm beginning to think differently about the student-loan crisis based on these considerations:

Enormous growth in student-loan debt. First of all, total student-loan indebtedness has grown enormously over the past 10 years. According to a recent report by the Federal Reserve Bank of New York, total outstanding indebtedness grew from  around $400 billion in 2007 to more than $1.2 trillion in 2015. In other words, total indebtedness tripled in less than 10 years.

Indeed, as has been widely reported, student loans now comprise the second largest category of consumer debt, surpassed only by home mortgages.  Student -loan indebtedness is now larger than both automobile loans and credit card debt.

More student-loan debtors.  Second, the total amount of student-loan borrowers keeps growing--43 million people now have outstanding student loans. That's almost 18 percent of the nation's adult population.

High loan default rates. Third, student-loan default rates are distressingly high. Although the U.S. Department of Education reported recently that three-year default rates are dropping, the drop is deceptive. Three-year default rates are dropping because the Department of Education and the college industry are encouraging students to obtain economic-hardship deferments or other form of forbearance that excuse former students from making monthly loan payments. But the fact remains that a high percentage of borrowers in the repayment phase of their loans aren't making payments,

In fact, as the Brookings Institute reported, 5-year default rates are 28 percent.  In the for-profit sector, the five-year default rates is an eye-popping 47 percent! Given the catastrophic consequences of default, it is astonishing that almost half the people who attend for-profit colleges eventually default on their loans.

Discounted tuition rates. Finally, private colleges are discounting their tuition rates more and more, an indication that American families simply refuse to pay the sticker price for a college education.  According to an article in Inside Higher Ed, private colleges are now discounting tuition for freshman students by an average of 48 percent!

Obviously, the federal government can't go on forever lending ever larger quantities of money and expecting students to passively take out larger and larger loans for the privilege of going to college.

So yes, there is a student-loan bubble; and the bubble is going to burst. When? I don't know, but I think we will see growing turmoil in the for-profit-college industry and the private-college sector. Within five years, we will see a significant number of non-elite private colleges bite the dust. And we will see increasing pressure on the for-profit colleges.

But when the bubble bursts, I don't think we will witness a spectacular meltdown in the economy that we saw in 2008. To borrow a phrase from T. S. Eliot, the federal student loan program is not going to explode with a bang, but with a whimper.  And the people who will be whimpering most are the millions of people--probably 20 million--who simply cannot pay back their student loans and who cannot discharge them in bankruptcy.

In my opinion, everyone in the higher education industry should be praying for more compassionate bankruptcy judges who are willing to discharge billions of dollars in student-loan debt and give millions of distressed borrowers a fresh start. If distressed student-loan borrowers don't obtain some form of tangible relief, we are going to see a shrinking middle class and a class of lifetime student-loan debtors who have been pushed to the sidelines of the national economy by student loan debt from which they cannot shake free.  In other words, as I have said before, we are hurdling hell-bent toward a sharecropper economy.

References

Jesse Bricker, Meta Brown, Simona Hannon, and Karen Pence. How Much Debt Is Out There? FEDS Notes, August 7, 2015. Accessible at http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/how-much-student-debt-is-out-there-20150807.html

Kelly Woodhouse. (2015, November 25). Discount Much? Inside Higher Ed. Accessible at: https://www.insidehighered.com/news/2015/11/25/what-it-might-mean-when-colleges-discount-rate-tops-60-percent?utm_source=Inside+Higher+Ed&utm_campaign=389f6fe14e-DNU20151125&utm_medium=email&utm_term=0_1fcbc04421-389f6fe14e-198565653

Adam Looney & Constantine Yannelis, A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising default rates. Washington, DC: Brookings Institution (2015). Accessible at: http://www.brookings.edu/about/projects/bpea/papers/2015/looney-yannelis-student-loan-defaults

Karyne Williams. Federal Reserve Bank of New York Takes On Student Debt Crisis in New Blog Series. Generation Progress, February 27, 2015. Accessible at http://genprogress.org/voices/2015/02/27/35083/federal-reserve-bank-of-new-york-takes-on-student-debt-crisis-in-new-blog-series/





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

Tuesday, November 11, 2014

According to the Federal Reserve Bank of New York, one third of student-loan borrowers in repayment during 2012 were delinquent!

According to the Department of Education's most recent report, 13.7 percent of student-loan debtors in the most recent cohort of borrowers defaulted on their loans within three years of beginning the repayment period.  That's not a good number, but DOE tells us that the student-loan default rate actually went down a bit from the previous year, when the three-year default rate was 14.7 percent.

The DOE's report on student-loan default rates is mildly intersting, but the Federal Reserve Bank of New York drilled down a little deeper into the data; and its findings are alarming.  In a report issued last  April,  FRBNY concluded that about 17 percent of the nation's 39 million student-loan borrowers were in default in 2012. Interestingly, people in the 30 to 49 year-old age bracket had the highest delinquency rates--higher than either younger borrowers or older borrowers.

 Moreover, as the Federal Reserve Bank pointed out, this percentage figure is based on a denominator that includes borrowers who are not in the repayment phase of their loans. Some are still in school, some have deferments, and some are participating in income-based repayment plans.

Among borrowers in the repayment phase (which constitute a smaller denominator), almost one third are in delinquency. This figure should alarm everyone in the higher education community.

Furthermore, the percentage of borrowers transitioning into delinquency on a quarterly basis is going up. The FRBNY report found that 6 percent of non-delinquent borrowers transitioned into delinquency in 2005. "By 2012, that rate had increased to 9 percent." Thus, there has been "an increasing trend of borrowers becoming newly delinquent over time"(Brown, et al., 2014, p. 12).

So what's the bottom line? In 2012, almost a third of student-loan borrowers who are in the repayment phase on their loans are delinquent on their monthly payments.  And that doesn't include millions of people who have economic-hardship deferments that excuse them from making payments. And when we add in all those people in income-based repayment plans who are making monthly payments that are so low that their loan balances are not going down, we can see that the percentage of people who are not paying off their student loans is quite high.

In short , the evidence is all around us. The federal student loan program is in real trouble.

References

Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw. Measuring Student Debt and Its Performance. Federal Reserve Bank of New York, April 2014. Accessible at: http://www.newyorkfed.org/research/staff_reports/sr668.pdf

Thursday, November 29, 2012

Arne Duncan Did Such A Great Job Managing the Student Loan Crisis, Let's Make Him Secretary of State!

Secretary of Education Arne Duncan
After Arne, the deluge
credit(Wikipedia)
In a recent New York Times editorial, Thomas Friedman endorsed Secretary of Education Arne Duncan as the next Secretary of State. Right.  Duncan has done such a great job managing the nation's student loan crisis, let's put him in charge of the Middle East.

Without a doubt, the federal student loan program is DOE's biggest challenge. As everyone knows, the program has about $1 trillion in outstanding student loans and about 6 million people are either behind on their loan payments or in programs designed to help people who can't make their regular payments.

What has DOE done about the federal student loan program under Secretary Duncan's watch?

First, DOE has increased the measurement period for computing default rates from two years after the loan repayment period begins to three years. This is a good thing, because it moves us closer to determining what the real default rate is.

But research shows that most student-loan debtors default after three years,and we know that some For-Profits have encouraged their former students to apply for economic hardship deferments to keep those students from showing up as defaulters. We still don't know what the default rate is over the life of students' repayment period, but it is much higher than DOE reports. The default rate for students attending for-profit schools is quite high--maybe 50percent.

Second, the Obama administration has eased the repayment terms for borrowers who elect to enter the Income-Based Repayment Program, which is also a good thing. But we are not solving the student-loan crisis by putting borrowers in 20 year repayment plans.  In fact, we may be creating a new class of indentured servants, people who pay a percentage of their income to the federal loan program for the majority of their working lives.

I realize the federal student loan program has enormous economic and political dimensions, with many powerful players wedded to the status quo.  I would not expect Arne Duncan to solve all the problems associated with the program without broad political support.

Nevertheless, these are the things that President Obama and Secretary Duncan could have done and should have done, whether or not there was Congressional support.

Number One: DOE needs to report an accurate student-loan default rate, which it has not done. Instead, the public has had to rely on outside agencies to provide some clues as to what is going on. The Federal Reserve Bank of New York's recent report is enormously informative, but the Reserve Bank relied on a credit agency, not DOE, to get data to assess the student loan program.

Number Two: The Obama administration and DOE could stop the garnishment of elderly student-loan debtors' Social Security checks. Social Security income is exempt from garnishment for a wide variety of debt, but not student loans.  This year, the government garnished Social Security checks of 119,000 elderly people (Lewin, 2012). This practice is a scandal and undermines President Obama's image as a person who truly cares about Americans suffering economic hardship.

Number Three:  I know I am repeating myself, but we must provide reasonable avenues for people to discharge their student loans in bankruptcy. Presently, a significant percentage of people make bad choices when borrowing money to attend college. Instead of enhancing their economic future, they have sealed their economic fate--basically casting themselves out of the middle class because they are saddled by unmanageable student-loan debt.  For these people, the student-loan mess is not just an economic crisis, it is a crisis of human suffering.

In years to come, when Arne Duncan's tenure as DOE Secretary is assessed, historians will say he did an admirable job of managing the student-loan crisis, which grows bigger every day. But we don't need a problem manager to head DOE right now, we need a problem solver.  Arne Duncan has not been a problem solver, and for someone of Thomas Friedman's status to suggest that Duncan should run the State Department is difficult for me to understand.  (Fortunately, Duncan said no to Friedman's suggestion (Fabian, 2012).

References

Meta Brown, Andrew Haughwout, Donghoon Lee, Maricar Mabutas, and Wilbert van der Klaauw. (2012). Grading Student Loans. Federal Reserve Bank of New York. http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html

Fabian, Jordan (November 28, 2012). Education Secretary Says No to Secretary of State. ABC News. http://abcnews.go.com/ABC_Univision/Politics/education-secretary-arne-duncan-secretary-state/story?id=17826816#.ULd-4Ky5Plg

Thomas L. Friedman (November 27, 2012). My Secretary of State, New York Times.

Tamar Lewin (November 12, 2012). Child's Education, but Parents' Crushing Loans. New York Times.


 

Monday, April 23, 2012

Albert Lord Says Student Loan Program is Not in a Bubble: Should We Believe Him?

Albert Lord Says Student Loan Program is Not in a Bubble
Albert Lord
CEO, Sallie Mae

According to recent news stories, Albert Lord, CEO of Sallie Mae (SLM Corp.)  rejected any claim that student loan debt has reached dangerous levels.  “We don’t see anything of any evidence close to a bubble,” Lord said in a conference call to financial analysts. “This country underwent a significant financial crisis in our very recent past. It’s not really a surprise that many see bubbles around every corner” (Mulholland, 2012). 
So Mr. Lord assures us the student loan program is not in a bubble. Should we believe him?
No, we should not. First of all, as everyone knows, the percentage of students who borrow money to attend college is going up and students' average indebtedness is going up as well.   Moreover, annual student-loan default rates have almost doubled between 2003 and 2009—going from 4.5 percent to 8.8 percent.  And these numbers only reflect the numbers of students who default within two years after beginning repayment.  When the default rate is expanded to measure defaults during the first three years after repayment begins, the rate goes up substantially—especially for students who borrowed money to attend for-profit colleges.  According to one projection, the three-year default rate for the 2009 cohort is 29 percent for students who attended for-profit schools.  (Lederman, 2011). Surely this is a sign of serious trouble ahead for the student loan program.
We should also look at some recent reports by outside analysts when we assess Mr. Lord’s assurances about the student loan program. The Federal Reserve Bank of San Francisco, in a 2011 publication, reported that private lending increased dramatically from 2000 to 2007, reaching 26 percent of all student loans during the 2006-2007 academic year. Private loan volume then retreated from a high of $22.6 billion in 2006-2007 to only $7.9 billion in 2010-2011.  (Choi, 2011). This may be an indication that the private banking industry has concluded that student loans are becoming riskier for banks, in spite of the fact that these loans—like federally guaranteed loans—are almost impossible to discharge in bankruptcy.
In a 2012 publication, the Federal Reserve Bank of New York reported that total outstanding student-loan indebtedness has reached $870 billion, surpassing the nation’s entire outstanding credit-card balances and its outstanding car-loan balances. According to the New York Reserve Bank, there are about 37million people with student-loan balances, Sixty percent of these borrowers are 30 years old or older, and about 27 percent of all borrowers have at least one past-due student-loan account.  Seventy-five percent of individuals with past-due student-loan accounts are 30 years old or older, and 40 percent are 40 years older or older.  These numbers tell us that a lot of people are struggling with student-loan debt well into midlife. 
In addition, Moody’s issued a report in July 2011, which is sharply different in tone from Mr. Lord’s optimistic reassurances. “The long-run outlook for student lending and borrowers remains worrisome,” the Moody report stated. “[T]here is increasing concern that many students may be getting their loans for the wrong reasons, or that borrowers—and lenders—have unrealistic expectations about borrowers’ future earnings.” Moody’s warned that “[u]nless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place” (Moody’s Analytics, 2011).
In my opinion, Mr. Lord is wrong to say the student loan program is not in a bubble. Independent analysts see trouble ahead.  As I have written earlier, there are many things we can do to ease the burdens that weigh down overstressed student-loan borrowers.  But the first thing we must do is face reality and admit that the student loan program is out of control.
References
Choi, L. (2011, December). Student debt and default in the 12th District. San Francisco: Federal Reserve Bank of San Francisco. http://www.frbsf.org/publications/community/research-briefs/Student-Debt-and-Default-in-the-12th-District.html (last visited April 23, 2012).
Brown, M., Haughwout, A., Lee, Donghoon, Mabutas, M., & van der Klaauw, W.(2012). Grading students loans. New York: Federal Reserve Bank of New York.  http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html (last visited April 23, 2012).
Deritis, C. (2011, July). Moody’s Analytics: Student Lending’s Failing Grade.


Lederman, D. (2011, May 23). Trouble ahead on student loan defaults. Inside Higher Educationhttp://www.insidehighered.com/news/2011/05/23/student_loan_default_rates_rise_sharply_especially_for_for_profit_colleges (last visited April 23, 2011). 
Mulholland, S. (2012, April 19). Sallie Mae CEO Albert Lord Rejects Education Loan Bubble Claims. Huffington Post. http://www.huffingtonpost.com/2012/04/19/sallie-mae-ceo-albert-lor_n_1438595.html (last visited April 23, 2012).