The Ivy League's Biggest Scam: Expensive Graduate Degrees That Don't Pay Off

 If you are thinking about enrolling in a pricey Ivy League graduate program, read a recent Wall Street Journal article titled "'Financially Hobbled for Life': The Elite Master's Degrees That Don't Pay Off." 

Reporters Melissa Korn and Andrea Fuller report on a WSJ analysis of student debt owed by people who graduated from prestigious schools like Harvard, NYU, and Columbia. Two years after getting degrees from these toney joints, a high percentage of elite-school graduates were not working in jobs that would allow them to pay off their student loans.

For example, a New Jersey guy got a master's degree in Fine Arts in film at Columbia. Two years after graduating, he owes nearly $300,000 in student loans (including interest) and earns between $30,000 and $60,000 a year. Will this man ever pay off his student loans? Not bloody likely.

And this is not an isolated example. The WSJ reported that the median student-loan debt for Columbia's film program graduates was $171,000 in 2017-2018.  How many of those people are earning $171,000 in their current jobs? How many will ever pay off their student loans?

What attracts bright people to expensive Ivy League graduate programs? As one Columbia film graduate said, "We were told by the establishment our whole lives this was the way to jump social classes."

But we were told wrong. I got an essentially useless doctorate from Harvard, thinking the degree would erase Oklahoma from my vita. But it didn't. I still have range dust in my diction, and I still see the world much like my hard-scrabble ancestors saw it--the ones who lived through the Dust Bowl.

The WSJ analysis focuses mainly on Columbia University's film program and its graduate program in theatre arts. But there are other unindicted co-conspirators.  

Harvard's master of education degree, for example, is a scam.   You can get a master's degree from Harvard Graduate School of Education in only nine months, but the total cost of that experience is $85,000 (including room and board). 

I picked up a Harvard master's degree as I went through Harvard's doctoral program. I was proud of it at the time. I went to the graduation ceremony (very posh) and even framed the diploma.

But I no longer put that degree on my vita, and I lost the diploma somewhere along the way.  Thinking back on that experience, I wonder at my naivete.  I sat in packed classrooms containing as many as 200 students, and most of my teachers were nontenured instructors.  

One of my Harvard professors enjoyed rock-star status while I was there. She gave one two-hour lecture a week for a four-hour course. Her graduate students taught the other two hours.  Office hours? If you wanted to see this professor, you had to submit a written petition to one of her graduate students explaining why your appointment was worth this professor's precious time.

I say again. If you are thinking about taking out loans to get an Ivy League master's degree, read the WSJ article first.  If you still want to pursue that path, consult a good therapist--because you are delusional.

If you are from Oklahoma, a Harvard degree won't take the range dust out of your diction.

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

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

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

Is that a good idea? 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Happy New Year! Your middle-class status has been revoked and a college degree will not get you reinstated

 As 2020 comes to a close, you may think 2021 will be a better year. And if you are among the nation's wealthiest Americans, things look pretty rosy.

But if you are a middle-class person, next year will be worse for you than 2020.

First of all, as Charles Hugh Smith pointed out in a recent online essay, the middle class is an illusion. If you think you are in the middle class, you have been deceived. In fact, you are in a "phantom middle class," a class of permanent debtors.  

Over the past 40 years, earnings for the top one-tenth of one percent of Americans has grown 15 times faster than income for the bottom 90 percent.  Wages as a share of the national economy have been going down for the last half-century. 

You know that because you saw how wages went up for your parents' generation, but are not going up for working people today. 

Or as Mr. Smith put it: 

If the top 10% own 90% of the wealth and has captured virtually all the income gains of the past 20 years, then isn't it obvious America has no middle class? What the traditional middle middle class . . . owns is debt . . . .

Nowhere is this more obvious than when we look at the massive debt that gullible Americans have taken on to get a college degree in the pathetic hope that a diploma would get them into the middle class or keep them from falling out of it.

As Mr. Smith pointed out, Americans are burdened by "$I.7 trillion in student loan debt burdening those who bought the narrative that a college diploma was a passport to the security of the middle class. The debt load carried by those clinging on to aspirations of middle-class security is staggering."

Indeed, "burdening powerless students with uncertain futures with trillions in high-interest debt would have been viewed as criminal two generations ago, but now it's celebrated by those reaping interest from precarious debt-serfs."

The poor saps who have been plunged into poverty by their student loans cannot discharge their debt in bankruptcy courts, and they got nothing but crumbs from Congress's so-called coronavirus relief legislation.

College presidents--most of whom make more than half-million dollars a year, whined to their legislators about how much the pandemic was costing them, and Congress bailed them out. But did even one of these charlatan bozos urge some relief for their ex-students who are groaning under the burden of student loans they can never repay? No, they did not.

If Americans graduated from colleges and graduate schools with useful skills, they would earn enough to pay off their student loans quickly--within 10 years at least. But they are not acquiring practical skills--especially if they majored in the liberal arts or the social sciences.  

Again, Mr. Smith:

As for possessing skills, much of the workforce has few producer skills, as the consumer economy devotes inordinate attention not to producing but to marketing, speculation and complying with counterproductive regulations and bureaucratic file-shuffling.

But our fun-house economy cannot continue indefinitely with the superwealthy exploiting the rest of us while the government prints money and runs up the national debt--now pushing $28 trillion. As Smith observed:

Once the con of printing trillions of dollars out of thin air dissolves and the nation has to balance its books in the real world, these file-shuffling and speculative skills will no longer generate meaningful income.

Those of us in the bottom 90 percent of the nation's earners can do very little to stop the downward spiral in our wealth and income.  But at least we can advise our children not to take out student loans to get worthless college degrees, useless MBAs, obscenely expensive law diplomas, and meaningless doctorates.

Does Harvard President Larry Bacow have anything to say about student debt?

 

Things are falling apart for American higher education: It is time to be cautious about taking out student loans

Things are falling apart for many American colleges and universities. The signs of stress and turmoil are everywhere.

First, college enrollments are down significantly, putting an enormous strain on colleges that are heavily dependent on tuition revenue. Over the past decade, college enrollment dropped by more than 2 million students, dipping below 18 million students in the fall of 2019.

Second, the for-profit college industry is on the verge of collapse. According to Forbes, the number of for-profit institutions declined by 25 percent between 2010 and 2018, and total enrollment dropped by half.

Third, private nonprofit colleges are closing at an accelerating rate. An analysis in The Chronicle of Higher Education reported that more than 50 small private colleges have closed since 2016.  Already this year, MacMurray College and Nebraska Christian College have announced they are shutting down.  And Notre Dame de Namur University stated that it will not enroll a first-year class this fall. 

Fourth, small liberal arts colleges are slashing tuition for their first-year classes by 50 percent. Although most small colleges post a very high sticker price, in reality, they are giving out financial aid and scholarships like candy. As a result, the average net cost of tuition is only half the posted price.

Fifth, business schools and law schools have rolled out new types of graduate degrees to counteract declining enrollment.  Business schools have introduced one-year MBA degrees because the demand for traditional two-year programs has dropped. And law schools have started offering law-based degrees for people who do not intend to practice law. According to numbers released by the American Bar Association, 14 percent of law school students were in non-JD programs in 2018.

Sixth, the coronavirus crisis has caused some college students to feel less positively about their educational experience.  The COVID-19 pandemic forced the vast majority of colleges to cancel face-to-face classes this spring and replace them with online instruction.  Unfortunately, the quality of online teaching has often not been good.  A recent survey found that 63 percent of undergraduate respondents reported that the quality of their online instruction was "worse" or "a lot worse" than the live teaching they received before the pandemic.

More than 40 percent of the undergraduate respondents said that their view of their college had gotten worse as a result of COVID-19. And one out of 10 high school seniors who had intended to enroll in a 4-year college this fall said their plans will likely change. 

Seventh, student debt has doubled from $750 billion in 2010 to $.15 trillion in 2019. Today, 45 million Americans hold student loan debt.  More than one million people defaulted on their student loans last year. Almost 9 million more are shackled by long-term, income-based repayment plans that can last as long as 20 or 25 years. 

Conclusion: Students should do everything possible to avoid taking out student loans

For three decades, colleges and universities raised tuition on an annual basis at twice the national inflation rate. College students financed the rising cost of their education by taking out larger and larger student loans.

College leaders assured students they were getting good value for their tuition dollars. After all, they purred soothingly, salaries for college graduates vastly exceed the wages of people without college degrees. Taking out student loans to get a college degree seemed like a smart investment.

In fact, inflation-adjusted salaries for American workers have remained flat for the last 40 years. "[T]today's average hourly wage has just about the same purchasing power it did in 1978." The wage gap between college graduates and non-college graduates has widened, but this is mostly because wages for non-college graduates have declined.

In other words, a college degree may be a good investment for most Americans. Still, it may not be as good as the colleges have represented.  People who take on enormous student debt to get liberal arts degrees or graduate degrees will find that their college education was a terrible investment if they do not land a good job.

The coronavirus pandemic has put millions of Americans out of a job. Experts predict an unemployment rate of more than 30 percent—higher than during the Great Depression of the 1930s.  Forty million Americans may be out of a job by the end of this year.

Our economy will bounce back, but who knows when that will be? So if you are thinking about going to college or graduate school, let me give you a little advice:

Now is not the time to take out massive student loans to finance a bachelor's degree in gender studies from an expensive private college.

Now is not the time to finance a luxury apartment with your student loan checks.

And now is not the time to thoughtlessly take out loans to enroll in a master's degree program without a clear sense of how that program will increase your income. 

It is a terrible thing to be unemployed—as millions of Americans will soon be. But it is far worse to be unemployed and burdened with student loans that you will never be able to repay.

College leaders are the new Marlboro Man--touting dangerous products to gullible Americans

I'm old enough to remember when a lot of Americans smoked cigarettes.

People smoked on buses and airplanes, they smoked in restaurants and bars, they smoked in movie theatres. People even smoked in hospitals and grocery stores. I remember seeing a guy pick up a head of lettuce in the produce section of my local supermarket, and he had a cigarette wedged between the fingers of the same hand that grabbed the lettuce. Hey, no problem!

It's not like people didn't know that cigarettes were dangerous to our health. We all knew people who died slow, painful deaths from lung cancer and emphysema. We all saw elderly people who were basically living skeletons with sunken chests, yellowish skin, and discolored teeth. We knew why cigarettes were called coffin nails. But we ignored all that to appear cool.

Meanwhile, the cigarette industry advertised their products on television. I must have seen the Marlboro Man a thousand times on TV--that rugged, ruddy-faced cowboy with a viral cigarette clamped in his perfect teeth. But the Marlboro Man was a cynical, vicious lie.  Robert Norris, the original Marlboro Man, didn't smoke.

America's college presidents are like the cigarette industry in the 1950s. Just as Madison Avenue pitched cigarettes as sexy,  university leaders blather on and on about the value of higher education, how American graduate schools are the envy of the world, and about the big income bonus that comes with a college degree. They dress up in clown suits (academic regalia) on commencement day as if they were bestowing a high honor on the rubes by handing them diplomas.

But for millions of Americans, higher education's cheery bullshit about the benefits of a college degree are lies. More than 45 million Americans are student-loan debtors; collectively they owe $1.6 trillion. Eight million people are in income-based repayment plans that can last as long as 25 years. Millions have defaulted on student loans that they can't discharge in bankruptcy. College debt hampers Americans from buying homes, getting married, and having children.

Pompous college presidents, administrators, and professors think of themselves as superior individuals with keenly attuned social consciences and highly developed intellects. But they are lying to themselves and the world at large. In reality, they're the new Marlboro Man, selling products that they know are often dangerous.

Cigarettes are sexy and American higher education is the envy of the world.

The Baby Boomers are Toast: Massive Suffering is Right Around the Corner

I never liked the term "Baby Boomer"--an infantilizing appellation if ever there was one.

I am a Baby Boomer myself, having been born in 1948, almost exactly three years after my father was liberated from a Japanese prison camp in Korea. My birthday, August 9, marked the third anniversary of the day Nagasaki was obliterated by an atomic bomb. And my birthday also fell on the sixth anniversary of the day the Nazis killed St. Edith Stein at Auschwitz.

I was raised to believe that life for my generation would be better than it was for my parents' generation. And for a long time, that expectation looked like it would be fulfilled. My father owned one suit. When I practiced law, I owned seven. My parents' house had one bathroom. For years, I have lived in houses that have two or even three bathrooms.

But when I reached my 50s, I could see that my generation's rise to greater prosperity had stalled. My father and my wife's father retired when they were in their mid-50s. I will retire at the age of 71; and my closest friends, all in their early 70s, are still working.

And many of my contemporaries are frightened. One-third of senior Americans live entirely on Social Security, and the average payout is only $1,220 a month. That's 19 million retirees living near or below the poverty line.

The experts say people need to have $1 million in savings to retire, but most don't have near that amount. And even if they did, how would they invest that money? This morning, the interest rate on the 10-year note dropped to 1.75 percent--1.75 percent! So if you invested your million dollars in Treasury notes, you would have an income of $17,500 a year.

So my generation is still in the stock market--a rigged casino where the croupier (Goldman Sachs and their cronies) can push the hidden button under the roulette table any time they want to make the stock market go up or down. We all know this is going to end badly.

Incredibly, many people my age still have student loans hanging over their heads--loans they will never repay. The federal government is pushing millions of distressed debtors into 25-year income-driven repayment plans that are designed never to be paid off.

More and more television advertising is targeted toward seniors--new medications, financial services, reverse mortgages, etc. All these commercials show prosperous, silvered-haired couples in radiant health, and the wife always looks about 15 years younger than the husband. These couples are shown surfing, skiing, hiking, and fishing with their adorable grandchildren off the docks of their lakeside retirement homes.

But we all know those advertisements are a lie. The reality is this: millions of baby boomers are going to live out their last years in starkly reduced circumstances. In short, the baby boomers are toast.

Put your retirement savings in the stock market. What have you got to lose?

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

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

World Made By Hand

James Howard Kunstler 

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

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

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

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

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

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

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

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

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

California bar exam pass rate hits 32-year low, but law-school graduates who fail the bar exam must still pay off their student loans

Last July, 7,737 people sat for the California bar exam, and only 3,332 test takers passed--a 43 percent pass rate. A total of 4,405 people--57 percent of test takers--failed the exam, the lowest pass rate since 1984.

In all 50 states, J.D. graduates cannot practice law until they pass a bar exam pass.  Thus, the 4,405 law graduates who failed the California bar exam last July suffered a major setback in their professional careers.

They also suffered a financial catastrophe. The average J.D. graduate leaves law school with more than $100,000 in student-loan debt; and that debt must be paid regardless of whether the graduate passes a bar exam or ever gets a job as a lawyer. Without a doubt, a majority of the people who failed the California bar exam last July have student-loan debt.

Obviously, the risk of failing the bar is not equally distributed among test takers. People who graduate from ABA accredited law schools have higher pass rates on the California bar exam than people who attended a law school that is only accredited by the state of California. Sixty percent of test takers who graduated from out-of-state ABA accredited schools passed the July bar exam, while only 21 percent of people who attended state-accredited schools passed.

And people who fail the bar exam the first time they take it have a lower pass rate than overall test takers if they retake the exam. Among exam repeaters, only 17 percent passed the California bar exam last July. Pretty bad odds.

The California bar exam results are just another indication that the future for many law-school graduates is bleak. The legal job market has less than six  lawyer's job for every ten new law graduates, and it offers no law jobs for graduates who cannot pass the bar. People who graduate high in their class from a prestigious law school such as Harvard or Stanford are eminently employable, but people who graduate in the bottom half of their class or who attend bottom-tier law schools may never obtain a job that will justify the student-loan debt they piled up to get a law degree.
So if you are thinking about going to law school, here's my advice.  Read Paul Campos' book titled Don't Go to Law School (Unless). And heed Campos' warning; unless you have family connections or are admitted to a top-tier law school, you probably should not take out student loans to pursue a legal career.

And if you went to law school, can't find a law job, and are unable to pay off your student loans, you should consider bankruptcy. But if you go that route and try to get your law-school loans discharged, you must educate the bankruptcy judge about the terrible job market for lawyers.

Now if we can just find a job.

References

Paul Campos. Don't Go to Law School (Unless). 

Kyle McEntee. Law Grads Still Face Tough a Job Market. Bloomberg  Law, May 4, 2016.

Noam Scheiber. An Expensive Law Degree and No Place to Use It. New York Times, June 17, 2016.

Ann Yarbrough. Bar exam pass rate dips to 32-year low. California Bar Journal, December 2016.

Sandy Baum's new book on student debt contains some good ideas

In the past,  I have been critical of Sandy Baum's work on the federal student-loan program. In my view, she sometimes drastically understated the enormity of the student-loan crisis. But her new book, titled Student Debt: Rhetoric and Realities of Higher Education Financing, contains some good ideas, which I endorse.  Here are some of her most important recommendations:

"Don't Garnish Social Security Payments." I have long argued that the federal government should stop garnishing the Social Security checks of elderly student-loan defaulters. Baum agrees. As she put it, it is one thing for the government to garnish wages of student-loan defaulters or scoop up defaulters' tax refunds, but "[f]urther diminishing the living standards of senior citizens . . . with no potential for labor market earnings who are struggling to make ends meet on their Social Security payments is quite another thing." Bravo.

Stop giving private lenders special protection in the bankruptcy courts. In 2005, Congress amended the Bankruptcy Code to make private student loans nondischargeable in bankruptcy unless the borrower could show "undue hardship," the same standard that applies to federal student loans. This is wrong.

As Baum observed, "[t]here is no good reason for the government to sanction these unsecured loans as student loans or to grant them any special provisions, particularly . . ., protection from bankruptcy proceedings." This is an eminently sensible observation, and other respected policy commentators agree with Baum on this.

Treat student loans like any other unsecured debt in bankruptcy. I have argued for years that student loans should be treated like any other unsecured debt in bankruptcy and that the "undue hardship" provision in the Bankruptcy Code should be repealed or at least interpreted far more humanely. 

I was heartened to read that Baum, a leading expert on the federal student loan program, agrees with me on this point. Indeed, reforming bankruptcy laws to allow distressed student-loan debtors relief from oppressive student loan debt is the key to reforming the entire student loan program.

Other reforms Baum proposes. Baum made some other good points in her book. For example, some limits should be placed on the amount of money people can borrow to fund their college studies; and some limit needs to be placed on the amount of interest that can accrue on student-loan debt. She also said limits should be placed on the amount elderly people can borrow to fund their studies since they won't work long enough to pay off enormous amounts of student-loan debt.

Baum makes other good points in her book. But the reforms I've listed here are critical.  If the policy makers aren't going to listen to me (and so far they have not), then perhaps they will listen to Sandy Baum.

References

Sandy Baum. Student Debt: Rhetoric and Realities of Higher Education Financing. New York: Palgrave-MacMillan, 2016.