Someone asked Willie Sutton, the notorious bank robber, why he robbed banks. “Because that’s where the money is," he replied.
Saturday, May 13, 2023
Wednesday, January 18, 2023
FSA not completing the required or applicable planning steps or following best practices for acquisition planning for the Next Gen projects we reviewed may have contributed to the stakeholders’ misunderstandings regarding scope, project requirements, and stakeholder needs; and to multiple changes to some of the projects’ solicitations, multiple bid protests, budget deficiencies, and poorly scoped solutions that FSA described in its Summary of Lessons Learned for the Next Gen Enhanced Processing Solution and Interim Servicing Solution projects and in FSA’s Fiscal Year 2023 Congressional Budget Request.
Fortunately, Katherine Knott, an Inside Higher Ed reporter, understands govspeak and translated the auditor's report into plain English. In a nutshell, Knot reported that DOE "didn't follow best practices in budgeting, planning and managing the modernization of its student loan system." Knott also wrote that DOE's Office of Student Aid "didn't complete budget requests for many components of the modernization until after the bid solicitations were issued."Apparently, senior DOE officials couldn't even agree on the modernization initiative's objectives.
As we might expect, DOE's officials had a govspeak excuse for the screwup. Stakeholders, including Congress, were confused and frustrated due in part to "inadequately defined changes in strategy and a failure to account for constituent feedback."In short, DOE's bumbling effort to modernize its byzantine student loan program ended in a SNAFU: Situation Normal; All Fucked Up."
Thursday, June 23, 2022
National Public Radio (NPR) recently ran a poll to determine what Americans think about student-loan forgiveness. More than half the respondents favor President Biden's plan to forgive $10,000 in student debt per borrower.
Among people with outstanding student loans, 84 percent support Biden's debt relief plan, and 68 percent want Biden to forgive all student debt (as reported in Inside Higher Ed.)
That's not surprising. If the President offered to pay off my Visa card, I would certainly say yes.
And here's the NPR poll's most interesting finding: Among college-loan debtors, 82 percent believe making college more affordable should be the feds' priority.
The NPR poll results show that most Americans understand why the federal student-loan program is out of control. A college education costs too much.
Giving student debtors $10,000 in student-loan relief will do nothing to solve the student-debt crisis, which worsens with each passing month. While politicians and pundits debate whether President Biden should forgive some of this massive debt, the colleges keep raising their tuition.
The United States has too many colleges and too many frivolous degree programs. Too many universities offer over-priced, mediocre graduate degrees that don't lead to good jobs.
Most universities are bloated with platoons of highly paid administrators who draw higher salaries than the professors. Several for-profit schools have been found guilty of fraud; almost all charge too much for degree programs that don't pay off financially.
It's easy to shower college-loan borrowers with helicopter money-- a one-time gift of $10,000 in loan forgiveness to every student debtor. Kinda like giving a couple of bucks to a panhandler--how hard is that?
It is much harder to grapple with the underlying reasons for the student loan crisis: corruption, mismanagement, and price-gouging at American universities.
Tuesday, November 30, 2021
After a Long Pause, 30 Million Student Borrowers Will Begin Repaying Their Student Loans in February. Most Say They're Not Ready.
Last year, in response to the COVID pandemic, the Department of Education pressed the pause button on the federal student-loan program.
In March 2020, DOE allowed 30 million student borrowers to stop making payments on their student loans with no penalty and no accumulation of interest. DOE also stopped collection actions during this moratorium and stopped garnishing wages of student-loan defaulters.
That was nearly two years ago, and the party's almost over. Beginning on February 1, 2022, all these borrowers will be required to start making monthly payments on their student loans.
And guess what? Almost 90 percent of fully-employed student debtors who responded to a survey said they are not financially secure enough to resume making loan payments. If they are forced to begin making payments on their student loans, they say, they will not have enough money to pay other bills--like rent, car loans, and medical expenses.
And the loan processors are sending signals that they aren't equipped to reboot the student-loan system for 30 million borrowers all at once. Scott Buchanan, a spokesperson for the loan servicers, said this:
From a resource perspective, from a system perspective and from a staffing perspective, this is going to put a lot of strain on the system.
Poor babies! Somehow I don't think the student-loan servicers are going to miss any meals.
Nevertheless, three loan servicers are getting out of the business. As reported by Inside Higher Ed, the Pennsylvania Higher Education Assistance Agency, Granite State Management & Resources, and Navient announced that they will not be servicing loans when their federal contract expires.
Navient is turning over its loan servicing business to Maximus, a for-profit company that trades on the New York Stock Exchange. (The current price is about $76 a share.)
Maximus! The name sounds like one of the gladiators in that Russell Crow movie. Maximus was already in charge of collecting on defaulted student loans, a business that must be profitable. Bruce Caswell, Maximus's CEO, made $6.14 million in 2020.
Some commentators say the job of jump-starting the student-loan collection process is so massive that DOE should extend the loan-payment holiday for a few more months. Others say DOE should forgive all student loan debt--now touching on $1.8 trillion. As Cody Hounanian, Executive Director of the Student Loan Crisis Center, put it:
We need to think diligently about what it means to start payments and if we're better off just extending this deadline and canceling student loan debt.
In my view, the federal government will not cancel all student debt, although DOE might extend the repayment holiday for a few more months.
I think it is more likely that Congress and DOE will create more generous income-based repayment plans and make it easier for student borrowers to qualify for debt relief through the Public Service Loan Forgiveness Program.
Those reforms--if that is what one should call them--won't solve the student loan crisis. Tinkering with the system won't fix it. The only fair way to grant relief for distressed student-loan borrowers is to give them reasonable access to the bankruptcy courts.
Note: Quotations come from an article by Alexis Gravely published in Inside Higher Ed.
|Willie Nelson: "Turn Out the Lights, The Party's Over"|
Thursday, November 4, 2021
Thinking About Going to Law School? Read ABA's Report on the Impact of Student Debt on Young Lawyers
If you are thinking about going to law school, you should read a recent report titled "Student Debt: The Holistic Impact on Today's Young Lawyers."
According to the ABA's Young Lawyers Division, 90 percent of young lawyers who responded to an ABA survey said they had taken out student loans to finance their legal education. On average, these young attorneys reported taking on $108,000 in student debt.
The debt level for young Black lawyers was even higher--on average, young African American attorneys had accumulated student debt totaling more than $200,000.
Did any of these young lawyers feel regret about their indebtedness? You bet.
Ninety percent of the respondents said that "their debt impacted their advancement toward major life milestones, and a majority of borrowers said they are anxious, stressed, regretful or guilty due to their loan debt" (as summarized by Insider Higher Ed's Alexis Gravely).
Did these young lawyers feel like they got good value for their law school tuition? Less than half (47 percent) said that their legal education was worth the cost.
How many respondents would still go to law school if they had the opportunity to live their lives over? Only about 6 in 10. And only a little more than half of the lawyers surveyed (55 percent) said they would attend the same law school.
In fact, more than half of the survey respondents who were dissatisfied with their law school said they wished they had chosen a school that charged lower tuition. About three out of ten said they wished they had chosen a school located in a better job market.
In essence, the ABA uncovered a high level of regret and dissatisfaction among young lawyers, feelings associated with their student debt.
Does the ABA have any suggestions for solving the problems that were identified by their survey? Not really.
Here are the ABA's recommendations, which are mostly bullshit:
- "Expand access to and awareness of, free financial and mental health resources for recent law graduates . . ." In other words, free psychiatrists and debt counselors!
- "Continue to lead, sponsor, and support initiatives that holistically foster financial wellness and professional development of young lawyers." I have no idea what that means.
- "Improve the Public Service Loan Forgiveness Program . . ." Lots of luck!
- "Improve financial literacy and awareness of the legal job market and the cost of law school attendance . . . ." In other words, law students should wise up.
- "Reform the federal student aid programs . . . ." Again, lots of luck.
Monday, November 16, 2020
Experts say that the Americans most at risk of dying from the coronavirus are elderly people with serious underlying health problems such as diabetes, obesity, and hypertension.
Something similar might be said about America's colleges. The schools most at risk of closing due to the COVID pandemic are small, private liberal-arts colleges that had severe financial problems even before the coronavirus forced most of them to close their campuses last spring. These are the little schools that were struggling with budget deficits and declining enrollments.
Common Application, an organization that processes a standard application form primarily for liberal arts schools, confirms this view. So far this year, Common App received 8 percent fewer enrollment applications from first-year students than at the same time last year (as reported by Inside Higher Ed).
But some colleges suffered steeper declines than others. Colleges and universities in the Northeast and the Midwest, where the small liberal arts colleges are concentrated, suffered a 14 percent drop in applications.
And small colleges lost more ground than big ones. First-year college applications were down the most among schools with fewer than one thousand students. They also are seeing a 14 percent decline.
If next year's entering class drops by a corresponding rate, then a small college of 1000 students will enroll only 860 students, which would be an existential catastrophe.
But enrollments probably won't drop that much. Why? Because many colleges are lowering their standards to attract less qualified students---students who might have been rejected a few years ago.
Presently, a majority of colleges and universities do not require applicants to submit ACT or SAT scores. They say they took this measure to offer more enrollment opportunities to first-generation and minority students.
But I think they are lying. I think the colleges are abandoning standardized test scores to attract students who don't do well on those tests. By doing away with the ACT and SAT, the colleges can obscure that they are scraping the bottom of the academic barrel to get enough tuition-paying students to pay the light bill.
Also, by giving applicants the option of not submitting a standardized test score, only people with good scores will provide them. And this will cause the colleges' average test scores to go up--making them look better in the US News and World Report rankings.
In a way, American colleges in the age of COVID are like the German Wehrmacht during World War II. When the war began, Germany had plenty of healthy, young Aryan soldiers with blue eyes and blond hair--men who just couldn't wait to get their legs blown off in the service of the Thousand Year Reich.
But as the war wore on, millions of those ideal soldiers were killed in North Africa, the Western Front, or Russia. The Soviets captured about three million Germans soldiers (mostly men but some women) and allowed them to starve to death.
By the time the Russians got to the suburbs of Berlin in 1945, most of those poster-perfect German soldiers were gone, and the Gestapo was rounding up young boys and old men to man the barricades.
Likewise, many small liberal arts colleges are willing to enroll just about anyone who can pay their tuition bill--whether or not the applicants are qualified under the admissions standards of yesteryear.
Unfortunately, many of these unqualified students are taking out student loans that they will never pay off.
In my view, many of these struggling little colleges should close their doors rather than stagger on for a few more years by signing up students who take out student loans for an educational experience that will do them very little good.
|Hey little guy, how would you like to get a bachelor's degree in gender studies?|
Monday, August 17, 2020
There were two ways to avoid that fate: men could enlist in the Army Reserve or National Guard, or they could go to college and get a four-year exemption.
There was just one hitch for a guy who went to college. If he flunked out, he was immediately eligible to be drafted. Oklahoma State University, where I wasted four years of my life, flunked out about 50 percent of the first-year class.
I lived in Cordell Hall, my first year at OSU. Cordell was a gloomy Georgian-style building, which may have been the model for the Shawshank Redemption. Because it was an old dorm with no air-conditioning, Cordell was mostly full of poor, first-year students who came from small Oklahoma towns.
My dorm floor housed a bunch of these guys. They were away from home for the first time, and they had two things on their minds: beer and girls in that order. Were they worried about getting drafted? No, they were not.
Gary, a freshman from Midwest City, was my roommate. Shortly after arriving on campus, he met Susan, and he spent every waking hour with her. He never bought a single textbook, and he stopped going to class two weeks after the semester started.
In those days, male freshmen were required to enroll in ROTC, which included weekly drills and a strict rule about keeping our shoes shined and our khaki shirts clean and pressed.
Gary blew off all that stuff, and at the end of the semester, his parents received his grades. He failed every subject except ROTC, for which he received a D.
Gary was mystified. He understood why he failed five courses, but could not comprehend how he had passed ROTC without ever going to class.
We puzzled over this conundrum for hours and finally came up with two theories. Gary believed he passed ROTC because he never signed up for drill. Thus, he hadn't been counted absent, and the Army thought Gary had perfect attendance. My theory was that the Army knew it was going to get Gary sooner or later and didn't want to discourage him so early in his military career.
Why do I tell this story? To make a simple point: 18-old college boys are oblivious to risk. Do you think college students give a damn about the coronavirus? Can they drink beer while wearing a mask at a campus watering hole? Can they get to first base with a college girl if they socially distance? No, of course not.
If you are a parent of a student who plans to go to college this fall, you probably received many official notices about COVID-19 and all the things the college plans to do to protect your child from becoming infected.
But you may also have noticed that the college still plans to pack students into residence halls, where they will eat and sleep close to other students, many of whom spent the previous weekend in drunken debauchery. Why all the attention to safety in the classroom but less focus on dorm life?
Why? I'll tell you why. A lot of universities built their dormitories in recent years through a legal device called a Public-Private Partnership agreement (P3). As Rick Seltzer explained in an outstanding article for Inside Higher Ed, P3s allow universities to offload their debt from dorm construction to private corporations that assume the liability and run the dorms in return for a share of dorm-rent revenue.
This is an excellent deal for the corporations because they are virtually guaranteed a nice profit, especially at colleges that require students to live in campus dorms and even eat their meals there.
But what if the students don't show up this fall? The money spigot gets shut off, and the corporation can't pay the mortgage on the debt. Oops!
Parents of college-age students should independently assess the risk to their child if he or she lives in a college dorm this fall. The colleges will do the best they can to keep your kid safe and will buy Purell by the barrel. Still, they may be under severe financial restraints because they have significant financial obligations to private partners that require the colleges to keep the dorms full of rent-paying students.
Waylen Jennings warned rural moms not to let their babies grow up to be cowboys--and indeed, that is an unsettling prospect. But maybe a more useful lyric might be this: Mothers be damned careful about putting your kid in a campus residence hall this fall.
Wednesday, November 13, 2019
What happens to tenured faculty when a college shuts down?: Reflections on the closure of Marlboro College
Small colleges with religious affiliations are also under strong pressure. Among the 10 colleges that will close this year, five have religious ties. College of New Rochelle, Marygrove College, St. Joseph School of Nursing, and the College of St. Joseph are all Catholic institutions. Cincinnati Christian University, which will close next month, has Protestant ties.
Marlboro College, a tiny school with only 150 students, is one of the Vermont institutions that is closing this year. Marlboro transferred its $30 million endowment fund and $10 million worth of real estate to Emerson College, a Boston institution with about 4,500 students. In return, Emerson has agreed to accept Marlboro's students and all 27 of its tenured and tenure-track faculty.
As Lee Pelton, Emerson's president made clear, the transaction is not a merger. After next fall, Pelton said, "Marlboro will not exist."
Marlboro president, Kevin F. F. Quigley, said that Marlboro had "reached out" to a number of colleges before it did its deal with Emerson, but the other schools were not willing to employ Marlboro's faculty.
I took a quick look at Marlboro's faculty bios, and I was impressed. Many of the Marlboro professors are young and most have doctorates from prestigious institutions.
I was also impressed that Marlboro executed a plan that will allow the school to close with dignity while preserving the jobs of its tenured and tenure-track faculty. In essence, Marlboro turned over assets worth $40 million to a college that is willing to employ its professors.
In my view, Marlboro's closure is a model for other struggling liberal arts colleges. Most of them have declining enrollments and dwindling revenues. But many--like Marlboro--have significant endowment funds and own valuable real estate. What should a college do with those assets when it shuts down?
I can think of no better way for a dying college to divest itself of its material wealth than to devote it to the welfare of its tenured and tenure-track professors, many of whom have devoted a substantial part of their working lives to an institution that closes while they are in mid-career.
In this economic climate, even highly acclaimed tenured faculty members will have trouble finding comparable tenured positions if their college shuts down. Marlboro and Emerson performed a civic act when they worked out a deal to save 27 jobs and put Marlboro's real estate and endowment funds to good use.
Wednesday, March 6, 2019
As Toppo reported, David Rees Evans, Southern Vermont's president, announced that the college is closing at the end of the spring semester. The college has been buffeted by a series of blows: an embezzlement scandal, accreditation problems with its nursing program (which the college resolved), and news that the college's principal accrediting body is planning to put the school on probation.
Closing was the right decision. After all, Southern Vermont only has 332 enrolled students--down from a peak of 500 students just nine years ago. President Evans candidly admitted that the trustees decided to announce its closure now rather than later due in part to fear of being sued if it continued recruiting new students and then shut down precipitously. That's what happened to Mount Ida College, and Southern Vermont wisely decided to wind down its affairs more transparently than Mount Ida apparently did.
President Evans partly blamed negative demographics for its predicament. "New England is in a bad way--especially the rural parts of New England," Evans said. Vermont's high school population, which provides Southern Vermont with about a third of its students, has declined dramatically, and it will decline even more in the years to come.
But demographics doesn't fully explain why so many small liberal arts colleges are closing. There are two more major dynamics in play--and small colleges have no means to counter either of them.
Small, private colleges are too expensive. First, small, private colleges are simply too expensive for the average family to pay. Most of these small institutions charge somewhere north of $30,000 a year for tuition, fees, and room and board--around $120,000 for a four-year degree. Few families have the resources to pay these costs out of pocket, which means students must take out loans to finance their education.
It is true that small private colleges are discounting tuition drastically--on average by about 50 percent. But $13,000 a year in tuition (about half of Southern Vermont's posted rate) is still a big nut to crack. Increasingly, families are sending their children to attractively priced, regional public universities, which look pretty appealing compared to a rural college with less than 400 students.
A liberal arts education has lost its appeal. Secondly, some would say tragically, a liberal arts education has lost its appeal in the minds of most Americans. There was a time when most Americans believed that a liberal arts education has intrinsic value. People once believed that a grounding in the liberal arts nurtured civic values, cultivated an appreciation for beauty, and promoted rational thinking. Liberal arts, it was generally believed, helped prepare young people for a fuller and richer life.
I don't think many people believe that anymore. Most young people are keenly aware that they will go into debt to get their college degrees, and they know they must get a degree that will lead to a well paying job or they will be in big financial trouble. More and more undergraduates are majoring in business, and fewer and fewer are majoring in English, history, and philosophy.
Indeed, colleges themselves are finding it increasingly difficult to articulate exactly what a liberal arts education is these days. For example, there was once a broad consensus about what constitutes the canon of American literature. Scholars might disagree on the details, but most would identify The Great Gatsby as a great American novel--perhaps the great American novel. And most would agree that a basic knowledge of American literature includes at least a passing acquaintance with the works of Hawthorne, Melville, Faulkner, and perhaps Steinbeck.
That's not true anymore. After all, these authors are all dead white men. Where are the works of African American writers, Hispanic writers, women writers, LGBTQ writers?
Of course colleges can add books by marginalized writers to the curriculum, and most are doing so. But students can only read so much, and somewhere on the road to greater relevancy in the liberal arts students start asking--what's the f-cking point?
In fact, I have great sympathy with the critics of traditional liberal arts. I for one would rather be shot than read a novel by William Faulkner, Edith Wharton, or Henry James.
Moreover, literature that is particular to my own life experience means more to me than the so-called great works of American literature. I am a Catholic, and I have read widely in the works of Catholic writers: Graham Greene, Evelyn Waugh, Somerset Maugham, Walker Percy, and Alice McDermott. I am a great fan of Myles Connolly's Mr. Blue, a hidden treasure of Catholic literature that is sadly out of print.
But I would not argue to anyone that the Catholic novels that mean so much to me should form part of the liberal arts curriculum. So how can anyone argue that every educated American should read The Great Gatsby?
And so the liberal arts colleges are dying--victims of demographics, soaring costs, and perhaps most of all by our increasingly diverse society that has become fragmented with regard to our understanding of what it means to be an educated American.
Monday, June 26, 2017
Trump should fire Betsy DeVos as Secretary of Education for gross incompetence. If Trump fails to act, Congress needs to do whatever is necessary to drive her from office
As the New York Times recently reported, borrowers defaulted at the rate of 3,000 a day last year; and a total of more than 8 million people are in default. Default rates are highest in the for-profit college industry; five-year default rates in this sector are almost 50 percent.
The Department of Education is trying to keep default rates down by pressuring borrowers into income-driven repayment plans, but that tactic isn't working. Nearly half the people who sign up for those plans drop out within three years; and a lot of defaulting borrowers don't even bother to sign up.
In short, the federal student loan program is a train wreck, a catastrophe, an unmitigated disaster.
Here is a brief list of DeVos's fumbling misbehavior:
First, she hired consultants from the for-profit industry to give her advice, which is like a hiring a burglar to be a bank guard.
Second, she canceled the Obama administration's order that restrained loan processors from slapping huge fees on student-loan defaulters who quickly brought their loans back into repayment status.
Third, she is overhauling the Department of Education's new regulations for processing borrowers' applications to have their student loans forgiven based on claims of institutional fraud. This bureaucratic delay tactic will leave thousands of defrauded college borrowers in limbo for months and even years.
And finally, DeVos blocked implementation of a Department of Education directive banning for-profit colleges from forcing students to sign mandatory arbitration clauses as a condition of enrollment.
In my view, allowing the for-profit colleges to continue including mandatory arbitration clauses in their student enrollment documents is DeVos's most outrageous decision. Mandatory arbitration clauses bar students from suing their institution for fraud and prevent students from banding together to file class actions suits against colleges that engage in massive fraudulent behavior.
About a year ago, the Century Foundation urged the Department of Education to require the for-profits to stop including mandatory arbitration clauses in their enrollment documents, and two for-profits--University of Phoenix and DeVry University, publicly agreed to abandoned them voluntarily.
Numerous commentators have criticized the use of mandatory arbitration agreements when they are used by corporations to insulate them from lawsuits. Just within the last year, two courts have struck down mandatory arbitration clauses that for-profit education providers tried to enforce. In one case, a university's arbitration agreement required California students to arbitrate their claims in Indiana!
Since taking office, DeVos has shown herself to be a stooge for the for-profit college industry. If she knowingly does the bidding of this shady racket, then she behaving reprehensibly. If she is acting on the industry's behalf out of ignorance, then she's grossly incompetent.
But her motivations don't matter. Betsy DeVos has got to go. If Trump doesn't fire her soon, then federal legislators should join in a bipartisan call for her removal. Americans deserve a competent Secretary of Education who will act in the public interest, not the interests of the venal for-profit college industry.
Patricia Cohen. Betsy DeVos's Hiring of For-Profit College Official Raises Impartiality Issues, New York Time, March 17, 2017.
Danielle Douglas-Gabriel. Trump administration rolls back protections in default on student loans. Washington Post, March 17, 2017.
Seth Frothman & Rich Williams. New data documents a disturbing cycle of defaults for struggling student-loan borrowers. Consumer Financial Protection Bureau, May 15, 2017.
Andrew Kreighbaum. Advocates say department inaction forced arbitration,defrauded borrowers in bind. Inside Higher ED, June 26, 2017.
Andrew Kreighbaum. Education Department to hit pause on two primary Obamaregulations aimed at for-profits. Inside Higher ED, June 15, 2017.
Consumer Financial Protection Bureau. New Data Documents a Disturbing Cycle ofDefaults for Struggling Student Loan Borrowers. May 15, 2017.
Tariq Habash & Robert Shireman. How College Enrollment Contracts Limit Students' Rights. Century Foundation, April 28, 2016.
Magno v. The College Network, Inc.. (Cal. Ct. App. 2016).
Morgan v. Sanford Brown Institute, 137 A.3d 1168 (N.J. 2016).
News Release. Apollo Education Group to Eliminate Mandatory Arbitration Clauses. May 19, 2016.
Friday, June 13, 2014
We Don't Need No Stinkin' College Rating System: President Obama's Plan to Rate Colleges on Value Faces Congressional Opposition
Republican Representative Bob Goodlatte of Virginia and Democrat Representative Michael Capuano of Massachusetts introduced a resolution in the House of Representatives opposing Obama's college rating proposal. The resolution states in part:
[T]he Administration's proposal to rate postsecondary institutions through an oversimplified Federal rating system that is not supported by postsecondary institutions, statute, or by the House of Representatives, will lead to less choice, diversity, and innovation, and should be rejected.Senator Lamar Alexander has also stated his opposition to the college-rating plan in a speech on the floor of the U.S. Senate. Senator Alexander expressed skepticism that the Department of Education can come up with a reliable and workable rating plan.
I don't know whether Representatives Goodlatte and Capuano are right to conclude that a college-rating system will lead to less diversity and fewer choices in higher education. But I do think the plan will have no beneficial impact on the spiraling cost of attending college and will add yet another level of bureaucracy to universities that are already bloated with too many administrators.
|Don't form a committee on snakes.|
Photo credit: NBC News
In my mind, the Department of Education's focus on a college-rating system is a diversion from the urgent task of reforming the federal student loan program. As Ross Perot once observed, if you see a snake, kill it. Don't form a committee on snakes.
My prediction is this: President Obama's college-rating proposal is going nowhere.
Michael Stratford. Obama defends college rating system amid growing backlash from Capitol Hill. Inside Higher Ed, June 11, 2014.
House Resolution Strongly supporting the quality and value of diversity and innovation in the Nation's higher education institutions and strongly disagreeing with the President's proposal to create and administer a Postsecondary Institution Rating System. [Introduced by Reps. Goodlatte and Capuano on June 10, 2014]
Friday, May 16, 2014
"Be sure To drink your Ovaltine": Inside Higher Ed partners with a Inceptia, a "debt prevention" company, to produce a tepid booklet of bromides on the student loan crisis
|"Be sure to drink your Ovaltine"|
When the "Little Orphan Annie" program comes on the air, Ralphie anxiously uses the ring to decode Little Orphan Annie's secret message to radio listeners. Ralphie thinks the message might have something to do with one of Little Orphan Annie's adventures.
But he is wrong. When he finishes decoding the message, the disillusioned Ralphie finds that it just an advertisement for the program's sponsor. "Be sure to drink your Ovaltine."
"A crummy commercial?" Ralphie wails. "Son of a bitch!"
I felt a bit like Ralphie when I looked at the online collection of Inside Higher Ed articles that Inside Higher Ed produced recently on the future of student loans. I was expecting some hard hitting pieces on the student loan crisis. But what I found was a booklet of tepid pieces that was produced in partnership with Inceptia, a nonprofit company that cryptically describes itself as a "leader in default prevention and financial education solutions."
What does Inceptia do to prevent student loan defaults? I'm not sure, but I'll bet its activities include contacting students who are at risk of default and encouraging them to sign up for economic hardship deferments. Senator Tom Harkin's committee report on the for-profit loan industry pointed out that putting at-risk students into economic hardship deferments is good for the colleges because those students will not be counted as people who default on their loans within three years of beginning repayment--even though they are not making payments on their loans. And if those students officially default after DOE's three-year default measurement period expires--who cares?
Inceptia is a unit of the National Student Loan Program (formerly the Nebraska Student Loan Program), which is located in Lincoln, Nebraska. Randy Heesacker, Inceptia's CEO, is well paid. I couldn't find out his current income, but I found the Nebraska Student Loan Program's 2011 federal tax return. According to that tax filing, Heesacker received total compensation of $378,457 when he was CEO of the Nebraska Student Loan Program (including bonuses and deferred compensation).
Does that sound like an extravagant salary for a non-profit oranization's employee? Don't worry. The Nebraska Student Loan Program's tax return assured the IRS that "[o]utside legal counsel undertakes a comprehensive evaluation of the compensation and benefit packages for officers and other affected employees of the organization, comparing the same relevant industry and other market comparables."
Oh, that's a relief.
And if Heesacker made $378,457 in 2011 as CEO of the Nebraska Student Loan Program, what do you think he's making now as CEO of Inceptia?
I think it is a safe bet that the articles Inside Higher Ed chose for its online booklet were acceptable to Inceptia. And not surprisingly, most of the articles quoted various student-loan organizations that basically support the status quo.
One writer advocated larger Pell Grants. Someone argued for lower interest rates on student loans. And one organization wants lending standards loosened for Parent PLUS loans.
No one in the Inside Higher ED's collection of articles advocated for revising the bankruptcy laws to make it easier for distressed student-loan debtors to discharge their loans in bankruptcy. No one recommended elimination of the Bankruptcy Code provision that makes private student loans very difficult to discharge in the bankruptcy courts.
No one recommended tighter restrictions on the for-profit college industry or regulations to stop abusive collection practices or the garnishment of of Social Security checks.
No--almost everyone who participates in the public conversation about the future of the student loan program is an insider--an organization that benefits directly or indirectly from the $100 billion that the federal government spends each year to subsidize the higher education industry, which has been raising the cost of attending college every year for the past 30 years.
I'm sorry Inside Higher Ed and Inceptia--your vision of the future of student loans is not sustainable.
Someday--and I hope that day comes soon--we will have to introduce radical remedies for the student loan mess. Those remedies--to be effective--will have to include bankruptcy relief for distressed student loan debtors, strict regulation of for-profit colleges, and a candid reporting on what the student-loan default rates really are.
Inside Higher Ed (with support from Inceptia). The Future of Student Loans: A Selection of Higher Ed Articles and Essays. May 2014.