The Pepper Spray Incidents at UC Davis and Santa Monica College: Universities Need to Listen to Students' Concerns about the Rising Cost of a College Education

Earlier this month, campus police at Santa Monica College pepper-sprayed more than two dozen students who were trying to enter a Trustees meeting to protest a tuition hike.  Chui L. Tsang, the college’s president, defended the police officers’ conduct, insisting that police used appropriate restraint and did not arrest anyone.  (Rivera, 2012).

Last fall, campus police at UC Davis pepper-sprayed students who were peacefully participating in an Occupy Wall Street demonstration. A video of this incident, posted on You Tube, shows a helmeted police officer calmly pepper spraying students who are passively huddled on a campus sidewalk.

What’s going on here?  Don’t colleges realize that students are the customers? Don’t they understand how bad they look when people view these incidents on You Tube? How many UC Davis students and Santa Monica College students who witnessed their classmates being pepper sprayed are going to donate money to their alma maters after they graduate?

Campus police should not pepper spray anyone—student or nonstudent—who is not behaving violently or physically threatening other people.  The students at UC Davis and Santa Monica College were not behaving violently (although some of the Santa Monica College students were a bit rowdy), and they should not have been pepper sprayed. 

Instead of pepper spraying their students, colleges and universities should listen to student protests about the rising cost of tuition and burgeoning student-loan debt; and they should demonstrate that they are taking action to address their students’ concerns.

What should they be doing?

• First, colleges and universities should stop raising tuition while they continue paying extravagant salaries to college presidents and senior executives. They should freeze or reduce the salaries of their highest paid employees—at least until the national economy recovers-- instead of tacking the cost of these excessive compensation packages onto students’ tuition bills.
• Second, college and university trustees should cap tuition and fees until the economy improves, and they should work harder at making their institutions more efficient.
• In addition, higher education should demonstrate their empathy for overburdened student-loan debtors by urging Congress to amend the Bankruptcy Code to give overburdened student-loan debtors reasonable access to the bankruptcy courts. They should also support legislation that would stop the federal government from garnishing the Social Security checks of elderly people who defaulted on their student loans. 

The cost of higher education is out of control, total student-loan indebtedness approaches one trillion dollars, and student-loan default rates are alarmingly high. Colleges and universities need to show students that they are helping to solve these problems.  Pepper spraying student protesters is the wrong thing to do.

References

Rivera, C. (2012, April 4). College president defends pepper spray against 'unlawful' crowd. Los Angeles Times. http://latimesblogs.latimes.com/lanow/2012/04/students-unlawful-pepper-spray-santa-monica-college-president.html

Student-Loan Defaulters: Not All of Them are Young

What is your image of the typical person who defaults on college student loans? Do you envision a young and irresponsible college graduate—someone who ripped off the federal student loan program by borrowing money to get a fancy college degree and then refused to pay it back? If so, your image would be inaccurate. A great many defaulters are from low-income families. Often they attended a for-profit institution that provided them with little value. And—this may come as a surprise—many student-loan defaulters are not young.

Researchers for the Federal Reserve Bank of New York examined the loan status of 37 million student-loan borrowers. Fourteen percent of these borrowers—approximately 5.4 million people, have at least one past-due student loan account. According to the Federal Reserve Bank report, only about 25 percent of student-loan borrowers with past due balances are under the age of 30. Forty percent of the student loan borrowers with payments in arrears are at least 40 years old. Almost one delinquent borrower in six (17.7 percent) are fifty years old or older. And about five percent of the people who are behind on their student loan payments are at least 60 years old (Brown, Haughwout, Lee, Mabutas, and van der Klaauw, 2012).

Why are so many people falling behind on their student loans in midlife or late in life? There are several explanations.

First, some of the older student-loan borrowers are people who borrowed money in midlife, expecting to increase their income potential. Then—due a variety of life circumstances, these borrowers did not earn the income they expected.  Maybe they became ill, lost their job, or were the victims of the recent economic downturn. As a consequence, some of these older student-loan borrowers fell behind on their loans.

Second, some of the nation’s older delinquent borrowers obtained economic hardship deferments on their loans, which temporarily exempted them from making regular student-loan payments. For a majority of these people, interest continued to accrue on their loans during the deferment period, causing their loan balances to grow.  Consequently, when these borrowers began making loan payments again after their deferments expired, they sometimes had a swollen loan balance that they simply could not repay.

Finally, I suspect some of the older people who are behind on their student-loan payments are people who had previously elected to pay off their loans under the income-contingent repayment option, which extends the loan repayment period out to 25 years. For some older people, the prospect of making student-loan payments during their retirement years may have seemed too daunting, causing them to stop making payments on their loans.

Older people who default on their student loans receive no dispensation from their loan obligations due to their age. In fact, in Lockhart v. United States (2005), the Supreme Court has ruled that a student-loan defaulter’s Social Security checks can be garnished.  Thus, some elderly people who failed to pay back their student loans will face severe financial hardship if they are totally dependent on Social Security income during their so-called “golden years.”

Obviously, no one would recommend a government policy that would make it easier for people to default on their student loans. Nevertheless, garnishing the Social Security checks of elderly student loan defaulters is an overly harsh measure. Congress needs to pass legislation that bars lenders and collection agencies from garnishing a student-loan defaulter’s Social Security check.

References

Brown, M., Haughwout, A., Lee, D., Mabutas, M., and van der Klaauw, W. (2012). Grading student loans. New York: Federal Reserve Bank of New York. Accessible at: http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html

Lockhart v. United States, 546 U.S. 142, 126 S. Ct. 699 (2005).

Universities Should Cap Tuition and Fees Until National Unemployment Rate Goes Down

In an article that appeared this week in Chronicle of Higher Education, Gary Fethke argued that college tuition is going up because taxpayer support for higher education is going down.  (Fethke, 2012). Although his essay discusses economic theory on a sophisticated level, Professor Fethke’s argument can be summarized in in the essay’s last sentence: “Students are required to pay more in college tuition] because taxpayers are paying less—it’s that simple.”

Professor Fethke is partly correct.  Taxpayer support for higher education has gone down as a percentage of total costs, and this increase has contributed to higher tuition costs at publicly supported universities.  My own law school experience illustrates the point.  When I attended law school at the University of Texas many years ago, tuition and fees amounted to only $500 per semester.   I was able to put myself through law school by working part time as a law clerk at the Texas Attorney General’s Office, and I graduated from UT Law School—one of the top ranked law schools in the United States—with no debt.  I will always be grateful to the people of Texas for making this educational opportunity so affordable.

Today, of course, UT Law School is not such a bargain. According to the law school’s web site, tuition and fees now amount to more than $32,000 a year—32 times higher than when I attended law school.

Inefficiency Contributes to Rising Tuition Costs

Taxpayer support for higher education has declined over the years as a percentage of total costs, but this does not fully explain why higher education has gotten so much more expensive, with costs going up every year at a rate higher than inflation.  Part of the problem lies in the universities’ lack of efficiency.

  I will provide one example from the first university where I worked as a professor; let’s call it Generic University.  At the time I worked at GU, the university required every doctoral-level class to have at least five students. Otherwise the course was cancelled. One of my colleagues repeatedly had low enrollments for his doctoral-level classes; and one semester, he could not attract five students to enroll in either of his two courses.  Consequently, both courses were cancelled that semester, and the professor taught nothing at all.

At a profit-driven institution, this development would have attracted some attention. Supervisors would want to know why a particular professor’s classes attracted so few students.  Perhaps someone would have asked questions about the professor’s overall productivity; how many doctoral students was he supervising, for example? Undoubtedly, a profit-driven enterprise would have taken some action to ensure that the professor became more productive.

As it turned out, the professor’s small classes were not only an indication of his lack of popularity with students; they were a sign that enrollment was dropping in the program as a whole. Yet GU administrators did little to reverse the decline in enrollment during my years at the institution.

I think most people who work in higher education can provide a similar example of institutional inefficiency that was not addressed by university administrators. Instead of becoming more efficient and keeping costs down, it has been easier for university governing boards to simply raise the price of tuition.  Consequently, students have been forced to borrow more and more money every year in order to pursue a college degree.  Today, postsecondary students borrow about 100 billion dollars annually; and total student-loan indebtedness is one trillion dollars.

Of course, inefficient faculty is but one part of the problem of escalating tuition costs.  University administrators have enjoyed enormous salary increases in recent years, so that the spread between faculty salaries and administrators’ salaries has grown wider and wider.

Colleges Should Cap Tuition and Fees or Get Out of Federal Student Loan Program

As the economy continues to sputter and college graduates struggle to find employment, the rising cost of higher education in the United States has become an enormous problem. The Obama administration has addressed this problem in various ways, but tuition costs keep going up.

If the federal government is really serious about rising tuition costs and rising student-loan indebtedness, it can implement a simple solution that would go a long way toward keeping tuition costs in better control   Congress could simply amend eligibility requirements for colleges and universities to participate in the federal student loan program.  Under the new rules, higher education institutions would be required to freeze tuition and fees at their present levels until the national unemployment rate drops below a certain level—let’s say 6 percent.

If the federal government would require colleges and universities to cap their tuition and fees at the present level until the unemployment rate goes down, higher education institutions would be forced to become more efficient. Currently, universities are free to raise their tuition at will, permitting them to pass of the cost of their inefficiency onto students and forcing students to borrow ever larger amounts of money.  A cap on tuition and fees is the simplest and quickest way to deal with this problem.  College and universities that are unable or unwilling to rein in their costs should be expelled from the student loan program.

References

Fethke, G. (2012, April 1). Why does tuition go up? Because taxpayer support goes down. Chronicle of Higher Education. 

Occupy Wall Street Needs a Clear Objective: How About Bankruptcy Relief for Overburdened Student-Loan Debtors?

You can fool all of the people some of the time, Lincoln observed, and some of the people all of the time. “[B]ut you can’t fool all of the people all of the time.” The Occupy Wall Street protestors--huddled in tents and shanties in cities across America--are some of the folks who are not fooled about economic conditions in the United States. Conservative pundits revile the Occupy Wall Street protestors as communists, anarchists, and criminals; and counter-protestors hold up der isive signs that read, “Get a Job!”

But of course that is the point. Many of the protestors are unemployed or severely underemployed. If these people had good jobs they wouldn’t be camping in urban parks or subjecting themselves to police beatings and arrest. No--the Occupy Wall Street protestors are not wild-eyed radicals. Most are simply angry Americans demanding economic justice. (Lacey, 2011).

Unfortunately, the Occupy Wall Street movement cannot achieve its goals for economic justice without defining some clear objectives--which so far it has not done. It is not enough to say Congress should tax the rich or regulate the financial sector better. Occupy Wall Street needs to boil down its broad demand for economic justice to articulate some clear and realistic political goals.

Student Loan Default Rates Are Catastrophic

Let me suggest one plank for OWS’s economic justice platform--bankruptcy relief for overburdened student-loan debtors. Although the U.S. Department of Education won’t admit it, default rates on student loans are catastrophic--especially for students who borrowed money to attend for-profit colleges and vocational programs.

Even by DOE’s own anemic standard for measuring default rates, those rates have doubled over the past few years (Blumenstyk, 2011). And DOE’s rating system only measures defaults in the first two years of the student-loan repayment period. When the measurement period is expanded to three years--which DOE will soon do--the default rate will spikes dramatically--particularly for students who borrowed to attend for-profit institutions.

 And even these numbers don’t tell the full story. Students who qualify for economic hardship deferments are not making their loan payments, but they are not counted as defaulters. Some for-profit institutions have encouraged their students to apply for economic hardship deferments in order to keep their institutions’ official student-loan default rates down. Unfortunately, for most of the people who have economic hardship deferments, the interest on their loans continues to accrue (In re Halverson, 2009). If student-loan debtors defer their payments for just two or three years, they will see the outstanding balance on their loans grow significantly--perhaps to an amount so high that they will never be able to pay back their loans.

Some experts estimate that the student-loan default rate for students who attended two-year for-profit institutions is 40 percent (Field, 2010); and another analysis concluded that a majority of students who borrowed money to attend for-profit institutions are in default (Lewin, 2010). And of course a student-loan default subjects the defaulter to a torrent of bad consequences. Their credit is ruined; they become subject to all the wiles and torments of debt collectors; they can have their income-tax refunds garnished; they can even have their Social Security checks dunned (Fossey & Cloud, 2011; Cloud, 2006). In short, as a recent New York Times editorial put it, defaulting student-loan debtors wind up in “financial purgatory” (Editorial, 2011, p. A34).  

Conclusion?  OWS Should Demand Bankruptcy Relief for Student-Loan Debtors

For complete article and references click here