Showing posts with label coronavirus. Show all posts
Showing posts with label coronavirus. Show all posts

Monday, March 30, 2020

God Bless John Prine!

The lonesome friends of science say
"The world will end most any day."
Well, if it does, then that's okay
'Cause I don't live here anyway

John Prine is one of the three greatest American songwriters of the past century. With Merle Haggard and Hank Williams, Prine sang (and still sings) about the world where most of us really live.  He will be remembered long after the Beatles, the Rolling Stones, Lady Gaga, and Elton John are forgotten.

And now John Prine has the coronavirus.  

When I heard the news this morning, one of his lyrics immediately came to mind. "The lonesome friends of science say the world will end most any day." 

And indeed, American life as we know it has ground to a halt.  The world of easy credit, Caribbean cruises, and an ever-rising stock market has been swept away. 

Without a doubt, the world where I made a living--the world of higher education--is fast sinking into oblivion.  As the nation's unemployment rate rises, who will take out student loans to study transnational sexualities and queer theory at Mills College?  Who still wants to borrow money to study sociology, anthropology, fine arts, art history, etc.  Who even needs an MBA?

And if the world of American higher education comes to an end, that's okay with me. I never lived there anyway. I never understood academia's obsession with race and sexuality, its neurotic fixation on victimhood, or the mean-spirited arrogance that permeates our nation's most elite colleges.

In the years to come, most Americans are going to get a lot poorer, and many of us have figured out that a college degree or a graduate degree from an overrated university may not improve our life's trajectory.  

So what should we do? Voltaire said we should cultivate our gardens, but John Prine expressed this sentiment better in the lyrics of Spanish Pipe Dream.  Yes--let's blow up our televisions, throw away our newspapers, plant a little garden, and try to find Jesus on our own.

John Prine assures us we will be fine.







Saturday, March 21, 2020

The coronavirus pandemic and broad relief for battered student-loan debtors: Congress needs to go big or go home!

The coronavirus pandemic rolls along like a tropical storm gathering force in the Gulf of Mexico.
Every day, it kills more Americans and further batters the national economy. The airline industry, the travel industry, and the restaurant business are begging for financial assistance to help them survive an economic crisis that no one saw coming.

PresidentTrump and Congress are working on a $2 trillion aid package to assist industries that have been hit hardest by the COVID-19 outbreak and provide cash assistance to individuals who lost their jobs or their businesses due to the pandemic.

Lawmakers also recognize that student-loan debtors need relief. Even before the pandemic, millions of college-loan borrowers were struggling to pay off their loans. Now--as the unemployment rate rises and whole industries collapse, a lot of student-loan debtors have their backs to the wall.

Republicans and Democrats have both proposed some form of assistance for student debtors. The Republicans recommend giving students a three-month break from their student-loan payments with no interest accruing.  The Democrats want the Department of Education to make student-loan payments on borrowers' behalf for as long as the national emergency lasts.

These proposals are a good start, but they do not go far enough. More than 45 million people have outstanding student loans, and less than half of them can pay them back. As President Trump might say, it's time to "go big" when we think about student-loan relief.

First of all, let's take a look at Senator Bernie Sander's proposal for total student-loan forgiveness—a $1.6 trillion-dollar bailout. Let's also examine Senator Elizabeth Warren's plan for loan forgiveness up to $50,000 per debtor. These ideas are not as wacky as some commentators have made them sound.

Regarding Bernie's idea, let's face facts. More than 8 million people are in long-term, income-based repayment plans, and most of these people are not paying down the interest on their loans. In fact, their loan balances grow with each passing month due to accruing interest. Millions more are in default or have their student loans in deferment. They're not paying their loans back either.

What's the point of pretending the student-loan scheme is a solvent federal program? It's not.  Bernie's plan to wipe out all student debt and offer a free college education is a logical proposal.

Senator Warren's plan to help student debtors also makes sense.  She wants to cap debt relief at $50,000, and that would help a great many people. After all, as  Don Trooper and colleagues recently reported in The Chronicle of Higher Education, people with small loan balances are more likely to default on their loans than people who owe $100,000 or more.

Forgiving student debt for individuals who ow relatively small amounts would help a lot of debtors who took out student loans to attend for-profit colleges and trade schools and didn't benefit from their educational experience.  That would be a good thing.

But if we really want to "go big," Congress must do two straightforward things. First, it must strike the"undue hardship." language from the Bankruptcy Code and allow insolvent student-loan borrowers to discharge their college loans in bankruptcy like any other nonsecured consumer debt. Second, it must repeal those provisions of the 2005 Bankruptcy Reform Act that made it more complicated and more expensive for beaten-down debtors to file for bankruptcy.

The very purpose of bankruptcy in American law is to give honest but unfortunate debtors a fresh start. Lawmakers need to remember that now as we enter into this century's Great Depression.

The 2020 Depression will look a lot like the Depression of the 1930s.









Thursday, March 19, 2020

Goodbye to all that: The coronavirus will sink many small colleges

Three presidents of elite colleges--Harvard, M.I.T., and Stanford--published an op-ed essay in the New York Times a few days ago, justifying their decisions to close their campuses. To increase social distancing during the coronavirus pandemic, the three university presidents wrote, they were forced to take drastic action:
That meant turning university life upside down: suddenly sending virtually all of our undergraduates home; asking faculty to swiftly bring all instruction online; canceling academic, athletic, artistic and cultural events, and virtually all in-person meetings; shutting our libraries; and asking everyone who could work remotely to do so right away.
The elite presidents basically did what most college presidents did over the past couple of weeks; they shut down their campuses. Of course, this was a severe inconvenience; but Harvard, Stanford, and M.I.T. will weather this disruption.  All three have enormous endowments, wealthy donors, and millions of dollars in federal research grants. When the coronavirus crisis is over, life for them will quickly return to normal.

But a lot of small colleges were teetering on the brink of closure even before the coronavirus pandemic began. As Scott Carlson recently reported in the Chronicle of Higher Education, six out of ten colleges failed to meet their enrollment goals last fall, and two-thirds of the colleges were unable to achieve their revenue goals.

This crisis will push many small colleges over the edge. According to Education Drive, which keeps track of college closings, 95 nonprofit colleges have merged or closed since 2016. This trend will surely accelerate. I think at least 100 small colleges will close within the next two years.

Many small colleges will suffer death from a thousand cuts. To begin with, the demographics for higher education are not good. The number of people in the traditional college-going age has shrunk, and college enrollments have suffered. Colleges have experienced enrollment declines for eight consecutive years.

These declines were not distributed evenly across the higher education community. By and large, the public flagship universities have continued to grow at the expense of small private colleges and regional public institutions.

Colleges have tried various tactics to grow their enrollments. Several years ago, the small, private colleges began discounting their tuition rates to lure students through the doors. The average discount for first-year students at small private colleges is now about 50 percent. But for many colleges, this tactic did not allow them to balance their budgets.

 In addition, a lot of colleges recruited international students to juice their enrollments and their revenues.  Most international students pay the full freight, compared to Amerian students who often receive grants, scholarships, or discounts. But foreign-student enrollment has declined substantially in recent years, and the federal ban on international travel will likely accelerate this trend.

Spring is recruiting season for both public and private colleges, the time when college recruiters strive desperately to sign up enough students to have a healthy sized freshman class. But these recruiting drives are being canceled due to the pandemic, and many colleges will have fewer first-year students as a result.

The coronavirus pandemic itself has a financial cost, and this cost will hit small colleges hard. Colleges that close their dormitories will be forced to pay out refunds to students who live in campus housing. Some schools may not have the liquidity to make these payouts.

Although circumstances will vary, the virus will force many colleges to pay employees to work less productively from home or cease work altogether. Sanitizing college buildings, athletic facilities, and residence halls will be costly. College professors are being ordered to teach their face-to-face classes online, and many professors do not have online teaching skills. Retooling professors to teach their courses in a new way is an unanticipated expense.

Kent Chabotar, a nationally recognized higher-education expert, summarized the pandemic's impact this way: "We've run into a crisis, and our flexibility is shot because we've already given away the store" [with high tuition-discount rates and other desperate measures].

In short, the coronavirus pandemic is an existential crisis for America's small colleges. When the crisis is over, a significant number of them will be closed.

This is my advice. If you are a young person thinking about attending a small, private college with high tuition, you might think again. Enrolling at a state university might make more sense because a public university is less likely to close than a small, private school.

If you are a college professor employed by a struggling, small nonprofit college, it is probably time to develop your Plan B. Think about what you will do if you are laid off, or your college closes.

For everyone who works or studies at a small, private college, it is time to face facts. The future is not bright at the nation's little colleges and universities, whether they are public or private. If you link your future to one of these struggling institutions, you may go down with the ship.






Tuesday, March 17, 2020

James Howard Kunstler says plant a garden: That's good advice

Blow up your t.v.
throw away your paper
Go to the country, 
build you a home
Plant a little garden
eat a lot of peaches
Try and find Jesus on your own

Spanish Pipedream
John Prine

If you would like to get a provocative and unconventional take on the coronavirus pandemic and the accompanying financial crisis, you should read James Howard Kunstler's refreshing blog, clusterfuck nation. Mr. Kunstler has been predicting an economic meltdown for a long time. And now, by God, his prediction has finally come true.

What we are experiencing is not just a health emergency, and it's not a recession. We are at the beginning of the 21st century's Great Depression, and it is going to last a long time. A lot of industries, a lot of organizations, and a lot of jobs are going to disappear, and many of them are not coming back.

So what should we do? Kunstler recommends planting a spring garden:
If you’re prudent, you can begin at once to organize serious gardening efforts, if you live in a part of the country where that is possible. I’d go heavy on the potatoes, cabbages, winter squashes, and beans, because they’re all keepers over winter. Baby chicks sell at the local ag stores for a few bucks each now and you’ll be very grateful for the eggs. Get a rooster — even though they can be a pain-in-the-ass — and you won’t have to buy any more chicks.
I think Kunstler is right. I'm not saying we are in danger of starving to death in the coming months. I feel sure that our supply chains and grocery stores will continue to provide us with food. We may not be able to get Mexican blueberries in February, but we will always be able to get canned beans and Kraft macaroni and cheese--or so I believe. And, to paraphrase Humphrey Bogart in Casablanca, we'll always have baloney.

But planting a garden is a good thing to do. I have maintained a vegetable garden for the last eight years, and it gives me great satisfaction to harvest and eat food I grew myself. As everyone knows, homegrown tomatoes are better than the store-bought varieties. And homegrown broccoli, harvested and cooked on the same day, is a totally different experience from eating frozen broccoli from the grocery store.

Furthermore, by planting a garden, we begin to retrieve essential skills that our grandparents knew. My elders knew when to plant various crops and when to harvest. They knew how to preserve fruit and vegetables through the winter. They knew how to butcher a hog and turn it into smoked hams, bacon, sausages, and lard.  

I can't feed my family on what I grow in five raised garden beds.  In fact, if I gathered all the food my garden grows over the course of a year, my wife and I would survive for about a week. But I am learning a few things about raising food crops.

For example, I planted a fall garden this year and learned that broccoli can survive a light freeze.  I also learned that collard greens are ridiculously easy to grow and taste delicious if seasoned with bacon and a little garlic. 

I plant okra in my spring garden.  I've learned that okra likes hot weather and grows so fast once it starts producing that I have to pick okra every other day. But I also learned that I don't like okra very much.

In World War II, Americans ripped out their front lawns and planted victory gardens. I am told that at one time, people's individual victory gardens produced more food than all commercial farming combined.  

That's comforting to contemplate because things are changing in America, and they are changing fast. We are going to have to be more resilient, more frugal, and more self-reliant.  Planting a garden will help us obtain these virtues. 

After all, a tomato bush growing behind the garage is a reminder that we are capable of taking care of ourselves. 





Saturday, March 14, 2020

President Trump waives interest on student loans "until further notice": Woefully inadequate relief for distressed student-loan borrowers

In yesterday's speech on the coronavirus crisis, President Trump announced he is temporarily waiving interest on all federal student loans.

"I've waived interest on all student loans held by federal government agencies ... until further notice," Trump said in his speech "That's a big thing for a lot of students that are left in the middle right now. Many of those schools have been closed."

I appreciate President Trump's effort to assist distressed student borrowers, but yesterday's action is totally inadequate.  Millions of distressed student borrowers need broad and immediate relief, and a temporary waiver of interest offers almost no help at all. 

Around 45 million Americans have outstanding student loans totaling $1.6 trillion.  For many college-loan debtors, interest has already accrued, causing their loan balances to double, triple, and even quadruple.  Temporarily waiving interest on that debt is almost meaningless.

Besides, I think President Trump may have overestimated the Department of Education's ability to implement his moratorium.  Adjusting interest costs for 45 million student borrowers is no small task. Many student debtors have more than one student loan, and these loans have varying interest rates. (In fact, I met a woman yesterday who has five separate student loans.)We're probably talking about interest adjustments on more than 100 million individual loan agreements.

Frankly, I don't think Betsy DeVos's DOE is up to the job. DOE completely botched the Public Service Loan Forgiveness Program, denying 99 percent of the applications for PSLF debt relief. Last year, a federal judge ruled that DOE had managed the program arbitrarily and capriciously and in violation of the Administrative Procedure Act.

Also last year, a California federal judge held Secretary DeVos and DOE in contempt for not abiding by the judge's order to stop trying to collect on student loans taken out by people who had attended schools operated by the now-defunct Corinthian Colleges. I don't think DeVos and her crew intentionally disregarded the judge's order. I think they simply don't know what they are doing.

If DOE cannot manage its routine responsibilities, how can it manage adjustments on student loans held by 45 million people?

As Steve Rhode wrote a few days ago, "People in denial about the impact of COVID-19 may be adequately protected with emergency savings, good health insurance, and paid time off of work. But those of us who work in hourly paid jobs are at a very high risk of having finances slaughtered by this virus."

Mr. Rhode's observation is particularly applicable to college students and former college students.  A lot of people with substantial student-loan burdens are working in temporary jobs that pay low wages. In the coming weeks, these jobs are going to be lost as the public stops eating out, shopping, and traveling. The people who held these lost jobs are going to be unable to service their student loans, and many of them will default.

Giving overburdened student debtors a temporary break from the interest on their loans is like putting a bandaid on a compound fracture (a hackneyed analogy, I admit).  President Trump and Congress need to take far more drastic action.

Specifically, Congress must revise the Bankruptcy Code to allow insolvent student-loan debtors to discharge their student loans in bankruptcy.  

Ultimately, our politicians will be forced to confront the fact that the student-loan program is a colossal disaster, and the coronavirus epidemic is going to make it worse. Now is a good time to do what needs to be done. And what needs to be done is bankruptcy reform.