Showing posts with label Nicholas Eberstadt. Show all posts
Showing posts with label Nicholas Eberstadt. Show all posts

Monday, March 6, 2017

Newman University and Paula Maxine Edwards: Does a college have a moral duty to warn students that some of its programs are not financially worthwhile?

Paula Edwards attended Newman University to become a school teacher. 

Paula Edwards, a single mother with two children, obtained a bachelor's degree in education from Newman University, a small Catholic college located in Wichita, Kansas. Newman's tuition rates are higher than public universities in Kansas, but Edwards chose Newman because she could take most of her classes in the evening while continuing to work as a paralegal.

Edward's education degree qualified her for a job in education, and in the fall of 2016 she was in her fourth year as an elementary school teacher in Wellington, Kansas. Edwards' teaching job does not pay well; she makes only $35,300 a year. Moreover, unless she obtains more education, Edwards' salary will not go up much. In fact, her salary is capped at $35,700--only $400 a year more than she is making now.

Most people who choose the teaching profession are attracted by the intangible rewards of educating children; they realize they will never become rich. Unfortunately, Edwards chose to get her teacher training at an expensive college, and she had to borrow a lot of money to get her degree. In fact, in 2015, when she filed for bankruptcy, Edwards owed $151,000 in student loans.

Obviously, there is no plausible scenario whereby Edwards can pay back $151,000 on a salary of $35,000. In fact, she seems like an ideal candidate for bankruptcy.  But when Edwards filed for bankruptcy in 2015, she was confronted by a major obstacle. Under Section 523(a)(8) of the Bankruptcy Code, debtors cannot discharge their student loans in bankruptcy unless they can show undue hardship. And this is very hard to do.

Remarkably, Edwards won something of a victory in a Kansas bankruptcy court. Although the bankruptcy judge refused to relieve her of $72,000 in federal student loans, the judge did discharge her private student loans--about $58,000.  Essentially, the judge forced Edwards to sign up for an income-driven repayment plan (IDR) for her federal loans with monthly payments set at only $21 a month based on her current salary. If she makes regular payments for 20 years, the balance of her loan will be forgiven.

But here's the problem with  Edwards' IDR--assuming she enrolls in the plan the government offered. Interest is accruing on the $72,000 Edwards owes on her student loans, and $21 a month doesn't begin to pay that interest. All unpaid interest will be capitalized and added to her loan balance.

Given her likely income trajectory as a Kansas school teacher, Edwards will probably owe twice what she borrowed when her 20-year repayment plan comes to an end in 2036.

But it gets worse. The federal government considers a forgiven loan as taxable income. Thus, Edwards could be forced to pay taxes on $150,000 in so-called "income," because that is probably the amount she will owe when her 20-year repayment plan is concluded.

If Edwards were indebted for any reason other than her student loans, she could shed her debts in bankruptcy and get the "fresh start" that bankruptcy is intended to provide. But the "undue hardship" rule in the Bankruptcy Code has probably forced her into a repayment plan that will stretch over the majority of her working life. She will be 56 when her payment obligations stop and she will face a whopping tax bill.

Newman College bears some responsibility for Edwards' plight.

Tuition and fees at Newman amount to almost $28,000 a year; and that does not include books and living expenses. No wonder Edwards owes $151,000 in student loans.

Does Newman University bear any responsibility for what happened to Edwards? I think it does. Surely Newman officials should have warned Edwards that it would not work out for her financially if she borrowed money to get a Newman degree in order to become a school teacher.

Nicholas Eberstadt, writing for zerohedge.com, reported recently that a lot of graduates believe their college studies were not worthwhile. People who graduated in liberal arts or social studies were particularly dissatisfied. In a survey of 1800 graduates, more than two thirds of psychology graduates said their degrees were "not worth it."  And almost half the people who graduated in fine arts, history, geography, and politics expressed the same view.

Eberstadt's report did not include any data for people who graduate in the field of education, but I feel sure a great many people who chose to get education degrees from expensive private colleges regret their decision.  More than 20 years after getting a doctorate in education policy from Harvard, I can assure you that my Harvard experience was extravagantly overpriced.

Eberstadt argues persuasively that the federal government has fueled the demand for postsecondary education by offering students cheap money to go to college. "Loaning these funds at below market interest rates and backing up these risky loans has led to massive malinvestment . . ." Eberstadt wrote.

Eberstadt is right. And Paula Edwards, who borrowed more than $100,000 in good faith to attend an expensive private college in order to become an elementary-school teacher, is just one among millions of casualties of our disastrous federal loan program.

Harvard Graduate School of Education: an elite school for suckers


References

Tyler Durden. The Most (And Least) Worthwhile Degrees. zerohedge.com (March 5, 2017).

Edwards v. Navient Solutions, Inc., 561 B.R. 848 (D. Kan. 2016).



Monday, October 10, 2016

America's "Men Without Work": It's not their fault

Almost a third of American men in their prime working years are not working. Thirty-two percent of men older than 20 are out of the labor force--double the rate in 1948. And a lot of unemployed men aren't even looking for work. According to Nicholas Eberstadt,  author of Men Without Work, only 15 percent of American men in the 25-54 age group who didn't work in 2014 said they were unemployed because they could not find a job.

Of course some of these men are disabled, but the percentage of men sitting on the sidelines because of some certified disability seems too high. Eberstadt reports that there were 134 workers for every officially disabled person in 1960 (as summarized by George Will). Today, there is one disabled person for every 16 workers--in spite of the fact that the American workplace has become much safer over the last 50 years.

Eberstadt argues that unemployment has become a "viable option" for millions of American men, and George Will implicitly scolded this vast population--saying these unemployed men have chosen a life of "protracted idleness."

But I know some of these men, and I think most would prefer to be working. Here are some examples of men I know personally.

  • A friend who worked in the petrochemical industry was laid off in his 50s when the company he worked for merged with another company. He found various part-time jobs at minimal pay and then took his Social Security benefits early--at age 62. He and his wife are living frugally on Social Security income and modest savings.
  • A guy I know worked as an architectural draftsman but he didn't upgrade his skills when  computer-assisted drawings (CAD) fundamentally changed the nature of his craft by greatly speeding up the drafting process and making it less expensive. He is not lazy. I've seen his enormous garden, from which he derives a substantial amount of his food.
  • Another friend worked many years in public education and gained a reputation for being an effective disciplinarian in chaotic urban schools. But the work burned him out, and he took his state pension early. He does carpentry work and cabinet work from time to time, but essentially lives off his pension.
I  come in contact with unemployed men all the time, and few of them are happy. No wonder the suicide rate for middle-aged white Americans has gone up substantially in recent years, along with death from alcohol- and drug-related causes.

In my opinion, this doleful trend cannot be explained by laziness. There are lots of reasons.

First, the nation's economy has failed working-class and middle-class Americans--which is what Donald Trump has been saying with considerable effect. Millions of Americans have been shoved out of the workforce as low-skill and medium-skill jobs have gone overseas.  And of course, our multinational corporations don't give a damn about the millions of Americans who have been thrown out of work. Profits are greater if goods are manufactured by exploited Asians rather than middle-class Americans.

Second, Americans have been betrayed by our educational system. The United States has a crummy educational system. Too many people graduate from high school without the  minimum reading and math skills they need to find a job or to profit from postsecondary education. 

And postsecondary education is a disaster. Our government is shoveling money into predatory for-profit colleges that have ripped off our most vulnerable young people--minorities and first-generation college students. Our elite liberal arts colleges obsess on race and sexual identity and care more about creating "safe spaces" than they do about producing problem solvers. Our public institutions have become vast bureaucratic mazes run by spineless and clueless administrative robots.

No wonder so many working-age men are unemployed. They didn't get the skills they needed to be productive workers in our post-industrial economy. Many of them tried to get those skills and wound up with no skills and a lot of student-loan debt.

Third, American cultural institutions no longer respect and support the American family. There was a time when our government, our churches, and our civic institutions honored the American family; and it was universally understood that the foundations of our culture rested on extended families that nurtured children and provided essential support for their members in times of trouble. I thank God I am part of such a family. 

But all that is falling away. And this distressing trend, in my view, contributes to a vast subculture of working-age men who do not work. At one time family obligations and a personal sense of honor prompted men to work to support their families--even if that meant working for poverty wages under humiliating conditions.

But many men no longer recognize family obligations. They do not work and save so their children can go to college. Rather their children are expected to take out loans to pay for their college education. They do not recognize a moral responsibility to be the breadwinner for their wives and children; women are expected to work. In fact, our society celebrates the fact that it now takes two working adults instead of one to support a family--as if every working woman is a lawyer or a brain surgeon instead of working as clerk in convenience store, which is the reality for millions of working American women.

It's not their fault

In short, the high percentage of unemployed men cannot be explained by indolence. Our culture, our government, our colleges and schools, and our post-industrial economy have conspired to create a world in which millions of American men see no point in working. And to suggest--as some commentators have done--that this calamitous trend is attributable to laziness completely misses the mark.



References

Nicholas Eberstadt. Men Without Work: America's Invisible Crisis (Washington, DC: American Enterprise Institute, 2016).

George Will, America's 'quiet catastrophe': Millions of idle men. Washington Post, October 5, 2016. Accessible at https://www.washingtonpost.com/opinions/americas-quiet-catastrophe-millions-of-idle-men/2016/10/05/cd01b750-8a57-11e6-bff0-d53f592f176e_story.html?utm_term=.d45b9f19bab9

Anne  Case and Angus Deaton. Rising morbidity and mortality in midlife among white
non-Hispanic Americans in the 21st century.  Accessible at: http://www.pnas.org/content/early/2015/10/29/1518393112.full.pdf

Editorial. Death Among Middle Aged Whites. New York Times, November 5, 2015.

Katherine A. Hempstead and Julie A. Phillips. Rising Suicide Among Adults Aged
40–64 Years: The Role of Job and Financial Circumstances.  American Journal of Preventive Medicine 84(5):491-500 (2015). Accessible at: http://www.ajpmonline.org/article/S0749-3797(14)00662-X/pdf

Jason Iuliano. An Empirical Assessment of Student Loan Discharge and the Undue Hardship
Gina Kolata. Deaths Rates Rising Middle-Aged White Americans, Study Finds. NewYork Times, November 3, 2015. Accessibe at: http://www.nytimes.com/2015/11/03/health/death-rates-rising-for-middle-aged-white-americans-study-finds.html

Betsy McKay. The Death Rate Is Rising for Midle-Aged Whites. Wall Street Journal, November 3, 2015. Accessible at: http://www.wsj.com/articles/the-death-rate-is-rising-for-middle-aged-whites-1446499495