Showing posts with label college dropouts. Show all posts
Showing posts with label college dropouts. Show all posts

Thursday, November 16, 2017

College dropouts who don't pay off their student loans: The village of the damned

About 70 percent of high school graduates go on to college, but a lot of them drop out before getting their college degrees. And a good number of dropouts took out student loans to finance their studies.

What happens to these people?

A recent survey polled college dropouts who had outstanding student loans; and this is what the pollsters found.
  • Respondents reported that they had, on average, almost $14,000 in student-loan debt.
  • More than half of college dropouts said they were not making any payments on their student loans.
  • More than a third of the survey respondents (35 percent) said they had not made a single payment on their student-loan debt
What are we to make of this?

First of all, indebted college dropouts are probably underestimating how much they owe on student loans. Other studies have shown that a lot of student borrowers are hazy about how much they borrowed, and some don't know the interest rate on their loans. Quite a few don't know the difference between federal loans and private loans, and aren't sure which type of loans they have.

So it seems fair to conclude that if indebted college dropouts report that they owe an average of $14,000, they probably owe more--maybe a lot more. For one thing, dropouts who aren't making loan payments may not understand how much accrued interest has been added to their loan balances. And dropouts who defaulted on their student loans may not realize that the debt collectors undoubtedly added default penalties to their accumulated debt.

It is true that some dropouts who aren't making student-loan payments may have obtained economic hardship deferments that temporarily excuse them from making monthly loan payments. But interest accrues on a student loan while it is in economic hardship status, which means that the loan balance is growing month by month.

This is what we can say for sure: Last year, 1.1 million student-loan borrowers defaulted on their loans at an average rate of 3,000 people each day.  And some percentage of that number are people who took out student loans to attend college and then dropped out.

Indebted college dropouts don't know it, but they have entered the village of the damned. If they defaulted on their student loans, the loan balances ballooned due to default penalties. Even if their loans are in forbearance, interest continues to accrue. At some point, these unfortunate dropouts will realize they are carrying debt loads they can't pay off.

At that point, they will only have two options. They can enter an income-driven repayment plan, which will stretch their payments out for 20 or 25 years. Can you imagine making monthly payments on student loans for a quarter of a century even though you dropped out of college without a degree?

The other option is bankruptcy, and that option is going to be more and more viable as the bankruptcy courts wake up to the fact that the student-loan program is a catastrophe that has wreaked misery and suffering on millions.

In my view, now is the time for people who are overwhelmed by student debt to file for bankruptcy.  It is true that student-loan debtors must prove undue hardship in order to get bankruptcy relief. But, as Matt Taibbi's article in Rolling Stone documented, a lot of people are suffering at the undue hardship level.


College droputs with student-loan debt: The village of the damned


References

Tyler Durden. (2017,November 7). About 33% of Students Drop Out of College; Here's How Many Go On to Default On Their Student Debt. zerohedge.com (blog).

LendEDU (2017, November 2). College Dropouts and Student Debt. LendEDU.com (blog).

Matt Taibbi. (2017, October). The Great College Loan SwindleRolling Stone.

The Wrong Move on Student LoansNew York Times, April 6, 2017.




Monday, May 2, 2016

David Kirp's platitudes for cutting college dropout rates: Keep them sophomores movin'


Keep movin', movin', movin'
Though they're disapprovin'
Keep them doggies movin', rawhide
Don't try to understand 'em
Just rope, throw an' brand 'em
Soon we'll be livin' high an' wide

Theme from Rawhide
Written by Dimitri Tiomkin & Ned Washington

David Kirp wrote an op ed essay in the Sunday Times suggesting ways to cut college dropout rates. College dropout rates are indeed high. As Kirp pointed out, only 53 percent of college freshmen earn a four-year degree within six years. Among community-college students, the six-year completion rate is even lower.

Kirp's prescription for keeping students in college boils down to this: More individualized attention and early intervention for struggling students. I'm sure he's right.

It's not easy to get college professors to care about students

I have two gentle criticisms of Kirp's thesis. First, everyone knows that caring teachers and administrators and individualized attention for struggling students produce better academic outcomes. That is true at both the K-12 and college level. There is nothing new about this observation.

The problem is finding enough faculty members and administrators who care about student success. You can't just snap your figures and make professors more caring. I've worked at four public universities, and I've seen instructors who regularly failed to show up to teach their classes. I've seen faculty members who were sexual predators; and I've known professors who didn't give students any feedback on their written work--they just gave all their students As. And I've seen a lot of professors who are simply burned out.

As I'm sure Professor Kirp is aware, we have tenure at American universities; and we must keep professors on the payroll whether they care about their students or not. I suppose universities could take some sort of remedial action to get professors to up their game, but in my opinion, most of the disengaged and lazy faculty members who work at our universities are irredeemable.   They will hang on to their jobs until they reach retirement age or even longer.

Staying in college doesn't always make sense

Second, it only makes sense to keep students from dropping out  of college if they are in degree programs that lead to well paying jobs.  We're not doing students any favor if we entice them to take out more and  more student loans in order to get college degrees that don't pay well enough to service their college-loan debt.

Paul Campos made this point in his book Don't Go to Law School (Unless).  The job market is so bad for lawyers who graduate from second- and third-tier law schools, Campos argued, that students at these schools whose first-year grades don't put them at the top of their class would be better off dropping out of law school than incurring more debt to continue their studies and get a law degree.

Campos' observation works for undergraduates as well. I have a nephew who flunked out of college at the end of his freshman year and got a job as a pipe fitter's apprentice. He is making good money in the shipbuilding trade--more than he would have made had he continued in college and gotten a liberal arts degree. It would make absolutely no sense for my nephew to leave a good job and go back to college.

The Truth: Most colleges are trying to keep dropout rates down in order to maximize their revenues

Here's the truth of the matter. Most colleges are not trying to cut their attrition rates because they care about students. They're simply trying to keep kids in school to maximize their revenues. In fact, Kirp implicitly acknowledged this fact when he wrote, "The good news for financially strapped universities: not only do these [attrition cutting] initiatives change students' lives, they more than pay for themselves."  After all students who stay in school generate more student-loan revenue and more Pell Grant money.

In reality, college administrators are like the cattlemen who herded Longhorn cows up the Chisholm Trail from South Texas to the Kansas rail heads during the 1870s. Those cowboys didn't care about individual cows, but every little doggie that made it to Abilene meant more money. And what happened to the cows that survived the trail drive? They got shipped to the Chicago slaughter houses.

Likewise, college administrators want to keep as many tuition-paying students in school as they can, even if those students are borrowing money to pursue worthless degrees.  They gotta keep them doggies movin'.

Image result for cattle drive
Keep them sophomores movin'

References

David L. Kirp. What Can Stop Kids From Dropping Out. New York Times, May 1, 2016, Sunday Review Section, p. 3.