Wednesday, April 16, 2014

The Student Take-Over of the Dartmouth President's Office: Three reasons not to borrow money to attend an elitist American college

Dartmouth students staged a takeover of the Dartmouth College president's office recently, protesting a variety of isms: racism, sexism, heterosexism, ableism, and another ism I can't recall right now.  Will they be disciplined in any way? Probably not.

Students take over Dartmouth President's Officve
photo credit: lipstickalley.com
This is the kind of event that drives Bill O'Reilly crazy, but I'm not going to comment on the insanity of this incident. I think it is enough to say that Dartmouth is one of the most politically correct institutions on earth. It is totally incomprehensible to me why students who are privileged to attend Dartmouth--a thoroughly liberal-minded institution--would behave so irrationally.

But the Dartmouth president's office takeover illustrates why smart, decent young people should avoid attending elitist higher education institutions--especially if attending a nuthouse like Dartmouth requires borrowing money.  Here are three reasons to skip the elitist college experience:

1. The inmates are running the asylum.  First, as the Dartmouth president's office takeover shows, the inmates are running the asylum.  It is the students at our nation's elitist colleges that get to lecture to the  professors--not the other way around. I understand one of the participants in the Dartmouth takeover was a freshman who had only attended Dartmouth for a few months.  Yet he felt himself entitled to condemn Dartmouth for its allegedly racist culture and practices.  And the professors cower in their offices--afraid to express any opinion that would attract the ire of the student thought police.

2.  You won't learn anything useful at an elitist college. A college education is supposed to teach people to think rationally, to learn how to solve problems and to gain a broad understanding of our civilization's history, art, literature and culture. But as the recent Dartmouth incident illustrates, students aren't learning much of anything at our elitist colleges.

I would admire today's college students if they took personal risks to advance social justice in this country. But these Dartmouth students went to the barricades (so to speak) to demand gender-neutral bathrooms!

3. The elitist institutions are deceptive.  You would think that our finest colleges and universities would be driven by the search for truth, that they would encourage a free flow of ideas and debate.  After all, Harvard's motto--Veritas--is the Latin word for truth.

But in fact, our elitist  higher education institutions operate in a web of deception and intellectual dishonesty.  Our colleges and universities pretend to be open to controversial ideas, but in fact they close their ears to anyone who voices an opinion that contradicts the elitists' postmodern worldview.

Ross Douthat made this point in a recent New York Times op ed essay.  Our nation's elitist institutions make a pretense of universality, Douthat observed, when in fact they will not tolerate points of view that are contrary to their own. "I can live with the progressivism," Douthat wrote. "It's the lying that gets toxic."

Of course our nation has experienced irrational social movements before, and most of them faded away after being subjected to the light of public scrutiny. The Know Nothing Party of the 1850s, the second rising of the Ku Klux Klan in the 1920s, the McCarthyism hysteria of the 1950s--all disappeared within two or three years of their first emergence.

But bizarre campus behavior like the recent bedlam at Dartmouth has become embedded in the culture of our elitist colleges.  We've seen campus building takeovers, irrational student demands, and anti-intellectual bullying on America's most prestigious universities for more than 40 years.  What happened at Dartmouth is not an aberration--it is an example of how our elitist college communities think and behave.

So my advice is this--skip the elitist college experience. Get your degree from a respected public university. You might not learn much there either, but at least it will be cheaper. No sensible person should invest a quarter of a million dollars to hang out for four years at a goofball institution like Dartmouth.

References

Ross Douthat. Diversity and Dishonest. New York Times, April 13, 2014, Sunday Review section, page 12.

Oppressed by the Ivy League: What Dartmouth's president should have told bullying students. Wall Street Journal, April 4, 2014. Available at: http://online.wsj.com/news/articles/SB10001424052702303987004579479501134392562





Sunday, April 13, 2014

Two Americas--Where one man makes more in 20 minutes than a widow survives on for a year

Two stories in today's Times caught my eye. According to a report in the Business section, Larry Ellison, CEO of Oracle, makes $37,692 an hour--that's right, 37 grand an hour. Meanwhile, another Times article told the story of Carol Cascio, a widow, who lives on $900 per month. She had hoped for an additional $400 per month from her deceased husband's pension--which would just be a few seconds of Mr. Ellison's salary--but the pension fund went belly up and she will get nothing.

Obama in Silicon Valley
Photo credit: Pete Souza/White House

And the disparity is even worse than that. According to the Times story, Ms. Cascio borrowed money to finance her daughter's education. In fact, she was hoping to pay back the loan with the pension money she will not be getting.

There's something wrong with a nation in which one American makes three times as much in an hour as another person lives on in a year. And this is taking place in Barack Obama's America--the man who was supposed to bring us hope and change. And yet President Obama spends much more time with people like Mr. Ellison--wealthy people who can make campaign contributions--than people like Carol Cascio, who can do nothing to help Mr. Obama fill the Democratic Party's campaign coffers.

At least Ms. Cascio can take bankruptcy, you may be thinking, and discharge the education loan, assuming it has not been paid back. Probably not. Even someone in Ms. Cascio's situation will find it difficult to discharge an educational loan in bankruptcy. In fact, the Department of Education recently opposed bankruptcy discharge for a student-loan debtor who is a paraplegic and only owed $14,000! That's right, President Obama's Department of Education wanted the young man who is paralyzed from the neck down to sign up for a 25-year repayment plan. Fortunately, a federal bankruptcy judge was a bit more compassionate than the Department of Education and discharged this poor man's education loan.

We should think long and hard about the nation we have become--a nation in which wealthy pet owners call themselves "pet parents" and buy toys for their dogs to stimulate their pets' brains; a nation in which our leading and most respected newspaper printed a story about the new fashion trend in which wealthy women groom their public hair; a nation in which millions of people living on the boundary of poverty have college loans they can't pay back.

The people who run our country--President Obama's arrogant, power obsessed Ivy League bureaucrats; the media elite; and corporate oligarchs like Oracle's Larry Ellison--actually believe they are smarter and more sensitive than the average American holding down a job and raising a family.

But the people who run our country are nothing more than self-absorbed children who grab for all the power, money and recognition they can get while millions of decent Americans suffer economic hardship--hardship that grows worse with each passing day.

The people who run our country believe they are liberal; they believe they are sensitive; they believe they are progressive. But all it means to be a liberal in today's America is to vote the Democratic ticket, watch Jon Stewart on television, and show a proper degree of scorn toward the smucks who didn't get in one the action--perhaps a smuck like you who borrowed money to get a college education and don't make enough money to pay back your loans.

References

Peter Eavis. Invasion of the Supersalaries. New York Times, April 13, 2014, Business Section, p. 1.

David Hochman. You'll Go Far My Pet. New York Times, April 13 2014, Sunday Styles Section, p. 1.

Marisa Meltzer. Below the Bikini Line, A Growing Trend. New York Times, January 29, 2014. Available at: http://www.nytimes.com/2014/01/30/fashion/Brazilian-bikini-wax-women-hair-removal.html?_r=0


Myhre v. United States Department of Education, 503 B.R. 698 (Bkrtcy Rep. Wis. 2013).

Mary Williams Walsh, Thought Secure, Pooled Pensions Teeter and Fall. New York Times, April 13, 2014, p. 1.

Friday, April 4, 2014

More Bad News About Student Loans: The Default Rate for Parent PLUS Loans Has Nearly Tripled Since 2006

Inside Higher Education reported today that the default rate for Parent PLUS loans has nearly tripled since 2006.  According to the Department of Education's most recent report, the three-year default rate on these loans is 5.1 percent.  In 2006, the PLUS loan default rate was only 1.8 percent.

The higher PLUS loan default rate doesn't sound too bad when compared to the overall student-loan three-year default rate--about 14 percent, according to DOE's report last October.  But let's look at the PLUS Loan default rate for parents of students attending for-profit colleges--13.3 percent! 

That's a scary number. And keep in mind that parents are not required to begin making loan payments until their children complete their studies.  If a student takes six years to graduate  (which is typical) or enrolls for graduate studies, the parent is not obligated to make loan payments until those studies are complete. Meanwhile, the interest is accruing on those loans--making them more difficult to repay.



Some institutional players--the Historically Black Colleges and Universities, in particular, are protesting recent efforts by DOE to tighten loan standards for PLUS loans. They say that making it more difficult for parents to borrow money for their children to attend college will disproportionately effect African American families and make it more difficult for African Americans to attend college.

But the HBCUs are primarily thinking about themselves, don't you think?  They don't want the feds to reduce the flow of federal student-aid dollars by making it harder for parents to take out PLUS loans.

A number of people commented on today's Inside Higher Education article, and it is clear to me that many of the commentators know a lot about the PLUS loan issue.  But as of this morning, not a single commentator pointed out that PLUS loans, like all federally-sponsored student loans cannot be discharged in bankruptcy unless the parents can show "undue hardship."

In other words, parents who borrow money under the PLUS program don't have reasonable access to the bankruptcy courts if they run into financial trouble caused by illness or the loss of a job. Thus, if their children get in over their heads by borrowing more money than they can pay back, both the student and the parents will be saddled with a debt that cannot be discharged in bankruptcy absent very unusual circumstances.

The higher education industry's discussions about the federal student loan crisis has an Alice in Wonderland quality about it.  The colleges and universities--whether public, private, for-profit or HBCUs--are primarily interested in keeping that federal student aid money flowing. They are like crack addicts--addicted to federal money just to keep their doors open.

We should be making every effort to keep college costs from continuing to rise. We should discourage parents from taking out personal loans to pay for their children's education. And--this is very important--we should amend the Bankruptcy Code to allow overburdened student loan debtors to discharge their debts in bankruptcy, whether they are students or the parents of students.

References

Michael Stratford, Education Department releases default rate data on controversial Parent PLUS loans. Inside Higher Education, April 3, 2014.  Available at:




Sunday, March 23, 2014

Tardy praise for the Obama Administration's regulations to cut down on abuse in the for-profit college industry

Arne Duncan
I have criticized President Obama and Secretary of Education Arne Duncan for not doing enough to stop the abuse in the for-profit college industry and for failing to pass measures to ease the suffering of millions of stressed-out student-loan debtors.  I have argued for bankruptcy reform so that insolvent student-loan borrowers can discharge their student loans, and I favor a law that would prohibit the federal government from garnishing the Social Security checks of elderly student-loan defaulters. I also favor a crackdown on Dickensian loan-collection practices against student-loan defaulters.

I still favor those things, and I still think the Obama administration has not done enough to help people who have been injured by their participation in the federal student loan program.  But President Obama and Secretary of Education Duncan have tried to rein in the abuses in the for-profit college industry, and they deserve praise for their efforts.

In October 2010, the Obama administration released new regulations--called the program integrity rules--in an effort to stop fraud, misrepresentations, and high-pressure recruiting by for-profit colleges.  The rules prohibited for-profit colleges from paying bonuses to employees based on the number of students they recruited, a practice that encouraged recruiters to sign up students who were unqualified for the programs they borrowed money to enter.  The rules also contained sanctions against institutions that misrepresented their programs or their programs' costs.

In 2011, the Department of Education issued its gainful employment rules--rules designed to close down colleges that did not produce significant numbers of graduates who made enough money to pay off their student loans.

The for-profit industry sued to invalidate these regulations, and they enjoyed quite a bit of success.  A federal court struck down important sections of the program integrity rules, and another federal court essentially gutted the Department of Education's gainful employment rules.

But a few days ago, the Department of Education released new regulations to rein in abuse among the for-profit colleges. These new regulations wee drafted to avoid the legal pitfalls that led the original regulations to be struck down by the courts.

Of course, the for-profits may sue to strike down these new regulations, and they will certainly turn their lobbyist loose to keep the government from effectively stopping abuses in an industry that is ripe with abuse.

But at least President Obama and Secretary of Education are still trying to clean up the for-profit college industry. They face long odds, but they deserve credit for their perseverance.

References

Association of Private Sector Colleges and Universities v. Duncan, 681 F.3d 427 (D.C. Cir. 2012).

Association of Private Sector Colleges and Universities v.Duncan, 870 F. Supp. 2d 133 (D.D.C. 2012).

Chris Kirkham. For-Profit Colleges That Bury Students in Debt Face Second Obama Crackdown. Huffington Post, March 13,  2014. Available at: http://www.huffingtonpost.com/2014/03/13/for-profit-colleges-obama_n_4961163.html


Tuesday, March 4, 2014

Obama advances a good idea: Tax exemptions for student-loan borrowers whose student loans are forgiven

President Obama has proposed legislation that will give tax exemptions to student-loan borrowers who complete income-based repayment programs and whose loan balances are forgiven at the end of the repayment period. This is a good idea.

As is well known, the Obama administration is encouraging more student-loan borrowers to switch from standard 10-year repayment plans to income-based repayment plans (IBRPs)  that will stretch the repayment period out to 20 or 25 years. The advantage of these plans is that monthly loan payments are based on a percentage of the borrowers' income, which means most monthly payments will go down. People who are unemployed will not be required to make any monthly payments.


All well and good except that student-loan balances will actually grow for borrowers who are not making loan payments or are making payments that are not large enough to cover accruing interest on their loans.  Thus, many student-loan borrowers who elect IBRPs will find they still have a loan balance at the end of their 20- to 25-year repayment periods.

The New York Times carried a story recently that illustrates this point. A woman who borrowed around $300,000 to attend veterinary school obtained a job in her field but the job did not pay enough to allow her to pay off her loan in 10 years and still maintain a reasonable standard of living.   The veterinarian elected a long-term repayment plan, which lowered her monthly payments to a percentage of her income; but these payments did not cover accruing interest on her loans. The New York Times, figuring her likely income trajectory, estimated she would owe a total of  $600,000 on her student loans at the end of her 25-year repayment period--double the amount she originally borrowed!

Under the terms of the veterinarian's IBRP, the federal government will forgive this loan --all $600,000 of it; but under current IRS regulations, the forgiven amount is taxable income to her.  Thus, at the end of her 25-year repayment period, she faces a sizable tax bill.

President Obama's proposal would exempt her from this tax, which is a good thing.

Nevertheless, I don't agree with the Obama administration's push to get more student-loan borrowers to sign up for IBRPs. Nor do I agree with proposals to make long-term income-based repayment plans the default option for students who borrow money to attend college, which several commentators have suggested.

Look where we are headed--toward a higher education landscape in which millions of people will be paying on their student loans for the majority of their working lives.  And for many of these people, their loan payments will not be large enough to cover the accumulating interest, which means the federal government will be forgiving massive amounts of student-loan indebtedness.

And of course IBRPS do nothing to reign in the ever-growing cost of attending college.

Forcing people to pay a portion of their income to the government for a quarter of a century is imposing too high a price for the privilege of attending college. As I have said before, we need to allow distressed student-loan debtors reasonable access to bankruptcy.

References

Michael Stratford. Tax Breaks for Students. Inside Higher Education, March 4, 2014. Available at: http://www.insidehighered.com/news/2014/03/04/obama-budget-calls-changes-education-tax-benefits




Friday, February 7, 2014

"Bleep the EU": Victoria Nuland, another Obamacrat Ivy Leaguer, makes a fool of herself

Americans curse more and more--especially on reality-show TV.  Profanity has become so commonplace on television that the producers of Duck Dynasty actually add gratuitous bleeps for the Robertson family's dialog, because the Robertsons--evangelical Christians from central Louisiana--don't curse.

"Bleep the EU"
So we shouldn't be too shocked to learn that Assistant Secretary of State Victoria Nuland said "F--- the EU" in a leaked conversation with the United States Ambassador to the Ukraine, Geoffrey Pyatt.  What's most embarrassing, of course, is that the United States government and the New York Times have been lecturing Russia about meddling in the Ukraine, but the leaked phone call shows that it is the U.S. that turns out to be the biggest meddler.

And where did Ms. Nuland attend college? Brown University.  Yes, Ms. Nuland is another one of Barack Obama's people who was educated at an Ivy League college.  Apparently, these schools do not teach civility and diplomacy; they just  teach people to be scornful and arrogant.

Thus we have Secretary of State John Kerry, a Yale man, who insults the Syrians at the peace talks on the Syrian uprising by basically telling the Assad regime up front that it has to go.  He behaves so arrogantly to the Israelis that the Israeli Defense Minister  accused him of having a messiah complex.  And Barack Obama himself is so contemptuous of the American people that he lies to them repeatedly without bothering to even make a decent apology.

I've said it before, and I'll say it again.  All three branches of our government--but the Executive Branch and the Judicial Branch in particular--are stuffed with people who achieved degrees from elite universities who do not know how to behave decently.  They do not have the simple dignity, grace and character that most Louisiana crawfish harvesters innately possess.

References

Michael R. Gordon & Jodi Rudoren. Israeli Official's Reported Criticisms of Kerry and Peace Effort Draws U.S. Rebuke. New York Times, January 15, 2014, p. A8.

Andrew Higgins & Peter Baker. Russia Claims U.S. Meddling Over Ukraine. New York Times, February 7, 2013, p. A1.


"Fill out those forms, fill them out!" Michelle Obama recklessly urges low-income students to go into debt to attend college



Michelle Obama and Secretary of Education Arne Duncan were in Alexandria, Virginia earlier this week urging students to fill out federal financial-aid forms to attend college. "Fill out those forms, fill them out!" Michelle urged students as she watched them fill out the forms. "Don't leave money on the table."


Fill out those forms, fill them out!
I don't mean to be hard of Ms. Obama.  I commend her for urging high school students to attend college.  And I realize most low-income students need to borrow money in order to pursue the dream of a college education.  And the forms are complicated to fill out, although the Department of Education is trying to make them simpler.

Nevertheless, it is reckless and irresponsible to urge poor families to borrow money to attend college unless that advice includes some warnings about the trouble poor kids can get into when they take out college loans.

First of all, the federal student loan program has created a giant morass of debt that has sucked many people into a lifetime of penury. People who attend for-profit colleges are especially vulnerable.  According to DOE's own data, one out of five students who take out loans to attend for-profit institutions default within three years of beginning repayment.   And, as I have said before, the true default rate is probably double that.  And research shows that low-income and minority kids are most likely to be snagged by the rapacious for-profit college industry.

Is it irresponsible for the First Lady to urge students to take out student loans without warning them about the for-profit colleges?  Yes, it is.

Second, millions of people with college degrees hold jobs that don't require a college education, and millions more have made poor borrowing decisions--borrowing money to get an expensive degree in art education, for example, that will never open the door to a high paying job.

Consequently, lots of people have defaulted on their loans or have gotten economic hardship deferments. According to the Consumer Financial Protection Bureau, a federal agency, 15 million people have either defaulted on their loans or have stopped making payments because they are under some sort of economic hardship deferment or other forbearance program.

 Among the people who are making loan payments, quite a few are making payments that don't cover accruing interest, which means their debt is growing larger over time, even though they make their loan payments every month.

Is it irresponsible for Michelle Obama to encourage young people to borrow money to attend college without warning them of the consequences of making poor choices in terms of a college major or the cost of tuition at the college they choose?  Again, the answer is yes.

Meanwhile, Arne Duncan's Department of Education is frantically urging student-loan borrowers to sign up for income-based repayment plans that lower monthly payments but stretch out the loan  repayment period to 20 or even 25 years.  In my opinion, DOE is setting up America's young people to become a class of indentured servants--forced to turn over a portion of their paychecks to student-loan creditors over the majority of their working lives.

Let's face it: Barack Obama, Michelle Obama, and Arne Duncan are in a frenzied effort to preserve the status quo for the higher-education industry--a bloated, self-satisfied, increasingly isolated and irrelevant bunch of institutions led by overpaid blow-hard presidents.

Millions of people have fallen into the student-loan trap.  Financially stressed debtors can't take bankruptcy to discharge their loans.  They don't have access to consumer protection laws.  Those who are ripped off by the for-profit colleges can't sue because the for-profits force students  to sign agreements promising not to sue as a condition of taking classes.

Michelle may think her life story is an inspiration for aspiring young people who are living in poverty.  But the chance that these kids will go to Princeton and Harvard Law School like Michelle did is about as good as getting a lucrative contract to play for the Pittsburgh Steelers.

If Barack, Michelle and Arne want to start behaving responsibly, they should work to kick the for-profit colleges out of the federal student loan program.  They should work to amend the Bankruptcy Code to allow insolvent student-loan debtors to discharge their loans in bankruptcy. They should publicize the true student-loan default rate--which is probably double what DOE reports every year.

But Barack, Michelle, and Arne won't do that.  The higher-education industry's lobbyists and campaign contributions make sure no serious reforms will ever take place.  And millions of low-income and minority young people are seeing their financial futures destroyed, not enhanced, by the federal student loan program.

References

Emmarie Huetteman. First Lady Urges Students to Apply for College Aid. New York Times, February 6, 2014, p. A15.