Friday, September 5, 2014

The Fed's Easy Redemption Plan for Student-Loan Borrowers in Default: Another Sign that the Federal Student Loan Program is a Train Wreck

All of us know people who appeared to radiate good health, but in reality they were terminally ill. Maybe we had a friend with clogged arteries but didn't know it. Perhaps a colleague had pancreatic cancer that hadn't been diagnosed.  These people went about their lives as if they would live forever and then the diagnosis came and shortly after they were dead.

This is exactly the situation the Federal Student Loan Program is in. All across America, colleges and universities, both public and private, depend on federal student aid money to pay the bills. Yes, the student-loan default rate has doubled in recent years; and yes, the average amount borrowed goes up every year. And yes, a high percentage of college graduates are unemployed or under-employed and thus are unable to pay back their loans.

But, hey, no big deal. Colleges will continue to raise their tuition on an annual basis, and the government will continue loaning more and more money. But someday--and soon--those little signs of sickness will become symptoms of a terminal disease; and the whole Federal Student Loan Program  will come crashing down.

And here's one of those little signs of trouble that portend the coming disaster. The New York Times reported recently that the Department of Education has made it easier for student-loan borrowers who defaulted on their loans to rehabilitate their loan status.  All they have to do is make payments based on a percentage of their income. Under the new rules, borrowers can bring their loans back into good standing if they pay 15 percent of their income after subtracting 150 percent of the federal poverty level.  Borrowers who are unemployed or who are working at or near the poverty level won't have to pay anything.   

According to the New York Times, this new rehabilitation policy is even available to debtors who have not been approved for Income-Based Repayment Plans (IBRPs). Pretty sweet deal, right?

What the New York Times article did not say is that interest will accrue on the loan balances of most people who make income-based payments because their monthly payments will not be enough to pay off accruing interest or pay down the principal of their loans. So for most people who choose the income-based option for rehabilitating their loans, the amount of money they owe will grow larger.

And, as the Times pointed out, people who make income-based payments who have not been placed in federally approved income-based repayment plans won't have the benefit of having their payments applied to the 20- or 25-year IBRP repayment plan terms.  In other words, people who make income-based payments who are not in IBRPs will fall into a kind of financial purgatory where they won't be considered defaulters but their loan balances will grow larger with each passing month.

I think it is interesting that the Times reporter who wrote about the new student-loan rehabilitation policy did not point out the pitfalls of the policy, probably because she wasn't aware of the policy's implications. Essentially, the federal government is postponing the day on which it will have to admit that millions of people are not making their student-loan payments or are making payments that are so low that their loan balances are actually growing.  Apparently, the Obama administration and Arne Duncan's Department of Education are hoping to skip town before this mess blows up.

But it is going to blow up. As I have said many times, the percentage of people who are actually paying off their loans is a lot lower than the federal government will admit. The true default rate--the percentage of people who will never pay back their loans--is at least double the rate that the government reports every autumn. 

In short, American higher education is much like France in 1940,  just before the Germans invaded. It is living in dream world that supposedly will last forever. But it won't last forever.  Eventually, this house of cards, which was constructed with federal student-aid money and which has been so profitable for the executives of the for-profit colleges, will come crashing down. And American higher education will be altered in ways we can't now imagine.


Ann Carrns. For Student Loan Borrowers in Default, Redemption Just Got Easier. New York Times, August 23, 2014, p. B6.

Tuesday, August 19, 2014

I seldom agree with the New York Times, but when I do, I like to drink a Dos Esquis: Felony charges against Texas Governor Rick Perry

I seldom agree with the New York Times, but when I do, I like to drink a Dos Esquis.  Unfortunately, I couldn't find a Dos Esquis in my refrigerator, so I popped the cap on an Abita Amber instead.

Recently Texas Governor Rick Perry was charged with two felonies after he vetoed appropriations for the Public Integrity Unit, the state office charged with investigating corruption by Texas public officials.  Perry issued the veto in order to get rid of Rosemary Lehmberg, the Travis County District Attorney who was also in charge of the Public Integrity Unit.  Ms. Lehmberg had been arrested for drunk driving and verbally abusing the arresting officers.  Tests showed that her alcohol level was three times the legal limit.  Lehmberg pled guilty and was sentenced to 45 days in jail.

Obviously,Ms. Lehmberg is not fit to run a Public Integrity Unit or to be a district attorney, where she had been responsible for prosecuting criminal offenses, including drunk driving.  But Lehmberg is a Democrat, and another Democrat rustled up criminal charges against Governor Perry, accusing him of abusing his office and coercing a public servant.
I seldom agree with the New York Times,
but when I do,I drink a Dos Esquis.
This is so outrageous that even the New York Times is objecting. As the Times said on today's Editorial Page,  Perry's veto  does not appear to rise to the level of a criminal act.  "Governors and presidents threaten vetoes and engage in horse-trading all the time to get what they want," the Times pointed out,  "but for that kind of political activity to become criminal requires far more evidence than has been revealed in the Perry case so far."

Of course the New York Times despises Governor Perry, and it couldn't resist the opportunity to label him as one of "most damaging state leaders in America."  It even accused him of "doing great harm to immigrants,"  which is absolutely untrue.

Although the New York Times may not realize it, Texas has, by and large, treated its undocumented immigrants with respect.  Without complaint, Texas educators have enrolled hundreds of thousands of undocumented immigrant children in the public schools.  For the most part, the Texas police departments in Houston, Dallas, San Antonio, Austin, Fort Worth and El Paso do not hassle undocumented immigrants and do not seek to determine the immigration status of people who are detained in routine traffic stops.

Texans--including Governor Perry--recognize that the state's immigrants, both legal and undocumented, are hard-working people for the most part who make positive contributions to the state's economy and its culture.  As far as I know, Governor Perry has resisted pressure from nativists and racists to persecute the undocumented immigrants of Texas.  The New York Times needs to get its facts straight. 

Nevertheless, I was happy to see the Times to speak out in opposition to the filing of criminal charges against Governor Perry. When the Times comes to Governor Perry's defense, we can be sure the charges are unfounded and were trumped up for political purposes.

In closing, I will also say this:  As a law student I was taught that it is an ethical violation for an attorney to threaten criminal charges to settle or advance a civil matter.  And as a practicing attorney, I never forgot this clear rule.  My client might have had both a good civil case and a criminal case against someone, but I was absolutely prohibited from threatening criminal charges in order to leverage my client's civil case.

Almost nothing an attorney can do is more despicable than using the criminal process for political purposes, which is what appears to have happened when felony charges were filed against Governor Perry. The rule of law depends for its integrity on the enforcement of a few basic ethical rules. In my mind, filing criminal charges against Governor Perry was unethical.  When this case is laid to rest, I predict that Governor Perry will be exonerated and that the people who filed these baseless criminal charges will be in trouble with the Texas Bar Association.


Editorial. Is Gov. Perry's Bad Judgment Really a Crime? New York Times, August 19, 2014.

Friday, August 15, 2014

Never Mind! Maybe we don't need to turn our local police departments into paramilitary tactical units

Remember Gilda Radner's "Never Mind!" routine on those long-ago Saturday Night Live skits? Gilda played the part of an elderly, irate woman who railed against public outrages as a guest editorialist on the nightly news. But she always got things mixed up. In every episode, Chevy Chase, playing the part of the news anchor, would patiently point out that she had gotten her facts wrong, Gilda would then smile benignly at the television audience and say, "Never Mind!"

Never mind about those armored personnel vehicles!
Maybe our nation has had a "Never Mind!" moment regarding an alarming trend taking place all over the United States.  Little by little, hundreds of local police departments--both large and small--have been transformed from community-focused law enforcement agencies into paramilitary units.  The men and women who used to wear caps and badges and carry .38 revolvers are now tricked out in military apparel with helmets, body armor, camouflage clothing and assault rifles.  Instead of driving Ford Crown Victorias, increasingly our police officers are tooling around in armored assault vehicles.

How did that happen?

As Elizabeth R. Beavers and Michael Shank explained in a New York Times essay, the federal government made that happen. The Defense Department has been pawning off surplus armored vehicles on local police departments, and the Department of Homeland Security (now there's a euphemism) has distributed $34 billion in "terrorism grants" to train and equip local police departments to join the war on terror.

In my own home town, the East Baton Rouge Parish Police Department proudly announced the acquisition of a 17-ton armored personnel carrier, which officials said could be used to serve warrants.  It cost the parish less than $20,000 to purchase the behemoth from the Defense Department, about the price of a Honda Civic.  One official was quoted as saying the deal was simply too good to turn down!  Apparently it had only been driven to church once a week by a little old lady in Iraq.

The recent unrest in Ferguson, Missouri has called us to our senses, or it least the turmoil there forces us to examine the wisdom of transforming local police departments into paramilitary tactical units.  As everyone knows who has been following the news, Ferguson's African American population erupted in anger after a police officer shot and killed Michael Brown, an unarmed African American teenager, who apparently was a suspect in a petty robbery.  Rioting and looting broke out, and Ferguson's police department morphed almost instantaneously from a small-down law enforcement agency into a paramilitary unit complete with assault rifles, armored vehicles, and at least one sniper.

This was never a good idea, and I am sorry it took the shooting of Michael Brown to demonstrate the idiocy of this policy.   We should have woken up to this issue after the Boston Marathon bombing, when local police departments descended on Watertown Square with all sorts of paramilitary accouterments and reined gunfire down on a sleeping Boston suburb.  It is true that one police officer was wounded  in the exchange of bullets, but it was later determined that he was shot by "friendly fire" (another great euphemism), not by a terrorist.

I realize that the bad guys are better armed than they used to be, and I admit that terrorism needs to be taken very seriously. But does Ferguson, Missouri need an armored vehicle?

Personally, I think we would all be safer if we turned security over to Barney Fife, who only had one bullet for his revolver.  Let's bring back Barney's approach to law enforcement, although I am willing to upgrade his single bullet to one that will pierce armor.

Give this man an armor-piercing bullet!


Elizabeth R. Beavers and Michael Shank. Get the Military Off of Main Street. New York Times, August 15, 2014, p. A21.

Monday, August 11, 2014

For what cause would I send my own children or grandchildren to die overseas? Genocide in Iraq

As my small band of readers know, I have two blogs: a blog on Catholicism and culture and a blog on the federal student loan program. Occasionally, I comment on foreign affairs at both blog sites. Why do I do that?

Regarding my blog site on the federal student loan program, here is my explanation: The federal student loan program props up our nation's amoral, arrogant, and vapid higher education system; and it is this system that has educated our nation's political leaders who are now making disastrous foreign-policy decisions.

President Obama and almost all his cronies were educated at places like Harvard Yale, Brown, Dartmouth, Georgetown, etc., where they evidently learned no problem-solving skills or even the capacity to make foreign policy decisions based on our long-term national interests or fundamental principles of morality.

And you see where we are now: huge messes in Ukraine, Afghanistan, Syria, Libya, sub-Saharan Africa, and Iraq. So I have commented from time to time that the global mess we are in has its roots in our elitist, arrogant universities.

As for my blog on Catholic culture, I comment on international affairs because my Catholic faith compels me to take stands on international affairs if moral principles are at stake. Servant of God Dorothy Day was a pacifist; she even opposed American involvement in World War II. I am not a pacifist; but I believe we should not send Americans to die or be maimed in order to defend unjust national interests.

Now to the subject of this blog. Ever since the United States abolished the draft, it has excused everyone from joining the military who choose not to do so. Since that time, it has been mostly young men and women from working-class and impoverished families who went to war. Barack Obama's children will never put on a uniform, and neither will the children of most of the people who serve in his administration or in Congress. I can almost guarantee you that no hedge fund manager or corporate CEO has a child who served in a combat role in Iraq or Afghanistan.

And--to be fair, I would not willingly see my own children or grandchildren fight in Afghanistan or Iraq. I am grateful that none of my family members have had to go to either place.

So for what cause would I send my own children or grandchildren to die overseas in a foreign war? To fight Hitler, obviously. That would have been an easy decision for me. But I would not have supported the firebombing of a civilian population as the U.S. and Britain did in Germany. Nor would I have supported the bombing of Hiroshima or Nagasaki--even though my own father was in a Japanese prison camp when those bombs were dropped and the dropping of those bombs may have saved his life.

So here is my position. I believe the United States should calibrate its policy of military intervention around basic human rights and the rights of religious minorities and virtually nothing else. In the Middle East right now it is almost impossible to tell the good guys from the bad guys. Is the Assad regime in Syria morally superior to the forces that oppose it? Who knows? Is the military regime that runs Egypt better than the Morsi government that the military overthrew? Again, who knows?

So I propose that the United States should take this stand: We will not go to war against any government that protects basic human rights and respects the rights of religious minorities. Thus if the Assad regime protects Christians in Syria, we would support it over ISIS. If the Military junta respects Egyptian Christians, then we would support it over the Islamic Brotherhood. And we would intervene to help nations facing outrageous atrocities against innocent civilians like the genocide in Rwanda and the kidnapping of more than 200 school girls in Nigeria by Muslim extremists.

Right now, ISIS is overrunning parts of Iraq and threatening Kurdistan. ISIS terrorists are committing genocide against religious minorities in the region--including Christians.

The Christians of the Middle East (and increasingly in sub-Saharan Africa) need American military help. With apologies to Dorothy Day, I think we should give it to them. Surely, if there is any emergency important enough to send a hedge fund manager's son to die in the Middle East it is the current crisis in Iraq. God help me--this emergency might even justify sacrifices from my own family.

Sunday, August 10, 2014

Student Debt and Physical and Financial Well Being Among College Graduates--What Did the Gallup Poll Tell Us?

The media has commented widely on a recent poll conducted by Gallup and Purdue University that compared five elements of personal well-being between college graduates who did not take out student loans and those who did.  Not surprising, people who did not take out student loans to attend college are more likely to be thriving than people who borrowed.

The poll measured the percentage of people who considered themselves to be "thriving," "struggling" or "suffering" in five areas:

1) social ("having supportive relationships and love in your life")

2) sense of purpose ("liking what you do each day and being motivated to achieve your goals")

3) financial ("managing your economic life")

4) community ("liking where you live, feeling safe, and having pride")

5) physical ("having good health and and enough energy to get things done daily")

The study found little difference between people regarding social well-being among people who took out student loans and those who didn't; but in two areas--financial well-being and physical well-being--there were stark differences.

Among people who graduated between 2000 and 2014 and took out no student loans, 38 percent reported to be thriving financially, compared to only 22 percent of the people who borrowed $50,000 or more. That's a a gap of 16 percentage points.

I'm broke, and I don't feel so good.
Among the same comparison group, 33 percent of the people who didn't borrow money to attend college reported that they were thriving in terms of their physical health and energy, while among the group who borrowed $50,000 or more, only 22 percent reported to be thriving. That's a gap of 11 percentage points.

The poll also studied people who graduated from college between 1990 and 1999.The discrepancy in well being was not as stark among people who graduated during the 1990s, but there were still significant differences.

A couple of points: First, this study only reported on people who graduated from college, not people who borrowed money to attend college but who didn't graduate.  How many people do you think are thriving who borrowed $50,000 to attend college but didn't get a degree?

I think the nation would be shocked to know how people are doing who borrowed money to attend for-profit colleges and didn't get degrees. A high percentage of these poor souls are from low-income families or are minorities.  How many are thriving now, do you think, in their physical and financial lives?

Second, as several commentators have pointed out, the Gallup study doesn't establish a relationship between student loans and diminished health and financial stability. It seems likely that people who borrowed a lot of money to attend college came from poorer homes and faced multiple challenges to getting ahead that students from wealthy families simply do not face. 

 Nevertheless, the recent Gallup polls adds to a growing body of research showing that people who borrow money to attend college suffer multiple handicaps.  They are less likely to be able to buy homes, start families, and save for their retirement, for example. And the Gallup study didn't tell us anything we didn't already know when it reported that people who borrowed a lot of money to attend college are not doing as well financially as the people who finished college with no debt.

But the Gallup finding that college graduates who borrowed $50,000 or more to attend college are less less likely to be thriving with regard to their physical health should give us pause.

But again, the really shocking story, I believe, is unfolding among the millions of young people--a high percentage of them being minority students from poor families--who loaded up on debt to attend for-profit colleges and didn't even get a degree or a credential.  If Americans knew that story, I think they would put great pressure on Congress to shut down the seedy for-profit college industry.

But maybe not. Perhaps as a people, Americans are indifferent to the scandal of the for-profit college industry--this seedy neighborhood of the higher education community that sucks up 25 percent of federal student aid money while destroying the lives of millions of young people.


Andrew Dugan and Stephanie Kafka. Student Debt Linked to Worse Health and Less Wealth. Gallup Well-Being, August 7, 2014.  Accessible at

Kelly Field. Is Student Debt Harmful to Your Health? A New Study Raises the Possibility. Chronicle of Higher Education, August 7, 2014.

Friday, July 18, 2014

Why Not Help Africa? American Universities Should Make a Civic Commitment to Strengthening Higher Education in Sub-Saharan Africa

Not long ago, the New York Times broke the scandal about New York University's new Abu Dhabi campus, which had been launched with much fanfare by NYU President John Sexton. According to the Times, construction workers for the Abu Dhabi campus, most of whom were migrants, were required to pay high fees just to get their jobs and forced to endure substandard living conditions.

NYU expressed regret for how the workers had been treated but suggested that it had no control over the contractor who hired the workers.  Later it was discovered that the owner of the construction firm that built NYU's Abu Dhabi campus sits on NYU's board of trustees!

John Sexton: Ain't life grand?
This unseemly incident illustrates how too many American universities involve themselves internationally.  For the most part, American higher education institutions confine their foreign initiatives to two activities: establishing overseas branches at exotic locations like Abu Dhabi or Shanghai or sponsoring Study Abroad experiences for American students, which are often little more than European travel adventures for both students and professors to places like Madrid and Rome.  I don't know how many students take out federal student loans to pay for their Study Abroad semesters, but I'll bet a lot of American students are funding their trips to the Great Wall with money they borrowed from Uncle Sam.

It is true of course that many American scholars make international contributions through such initiatives as the U.S. State Department's Fulbright Scholars program. But how many American professors have delivered papers at conferences in places like New Zealand, Hong Kong or Britain just to take brief foreign vacations at their universities' expense?

American university leaders like to boast that our nation's universities are the envy of the world, but if that is true, doesn't that impose a civic obligation on our universities to help make the world a better place?  And if that is true, why haven't American colleges and universities made more of a contribution to strengthening higher education and building the economies in the world's developing countries--particularly sub-Saharan Africa?

Sub-Saharan Africa
Right now sub-Saharan Africa is destabilizing. Boko Haram has captured school girls in Nigeria and burned children alive in a boarding-school dormitory. Kenya has suffered several recent terrorist attacks by Islamic extremists including an attack on a shopping mall in Nairobi. Uganda and Tanzania have been relatively free of terrorism in recent years, but a Catholic church was bombed in the Tanzanian town of Arusha in 2013 and people I talked with in Uganda think it is only a matter of time before Uganda experiences the same kind of terrorism that Kenya has begun to suffer.

East African universities are making a heroic effort to expand higher education opportunities for East Africa's young people. In particular, East African universities affiliated with religious denominations are growing and offering new programs designed to lead to good jobs for their graduates and to building stronger national economies.

But they are severely under resourced. They lack experienced faculty members, technology infrastructures, and adequate physical facilities. Often they lack higher-education management expertise.

Meanwhile, American universities have excess capacity. We have too many law programs, too many MBA programs, and too many colleges of education for the current demand. Why don't American universities offer some of their programs and some of their skills and expertise to aid African higher education?

If American universities would make a selfless contribution to strengthening higher education in sub-Saharan Africa, they would help strengthen the economies of the countries in that region and would help raise education levels of the young people of sub-Saharan Africa.  They would be helping to bring prosperity to a region wracked by poverty and crippled by centuries of colonial exploitation. They would be helping to foster the values on which western higher education is founded--values dedicated to the search for truth and justice and equality among all the peoples of mankind.

And by strengthening higher education in Africa, American universities would help stabilize a region that is rapidly destabilizing.  They would be directly refuting the philosophy of nihilistic terrorism that has begun to infect sub-Saharan Africa.

But perhaps helping Africa is too difficult for American universities.  Far easier to engage in self-indulgent Study Abroad programs and egotistical campuses in places like Abu Dhabi.  And far more comfortable. And far safer.


Adamu Adamu, Michelle Faul. 29 boarding school students burned alive, shot dead by Islamists militants in Nigeria. July 6, 2013.

Jon Lee Anderson. Letter from Timbuktu: State of Terror. New Yorker, July 1, 2013, pp. 37-47.

Clinton Lauds N.Y.U. Graduates, and Inquiry, in Speech. New York Times, May 25, 2014.

Ariel Kaminer. N.Y.U. Apologizes to Any Workers Mistreated on Its Abu Dhabi Campus. New York Times, May 20, 2014, p A16.

Ariel Kaminer. N.Y.U. Impeding Compensation Inquiry, Senator Says. New York Times, July 10,2013. Accessible at:

Tamar Lewin. Universities Rush to Set Up Outposts Abroad, New York Times, February 10, 2008. Accessible at:

Andrew Ross Sorkin. N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street. New York Times, May 26, 2014.

Tosin Sulaiman. Insight--Africa makes the grade for richest U.S. university investors. Reuters, July 7, 2013. Accessible at:

Like the Crocodile, American Higher Education is Eating Its Young: Reflections While In Africa

I just returned from Uganda, where I visited several Ugandan universities and toured a game preserve on the upper Nile River. As I viewed the wildlife of Africa--the elephants, the baboons, the giraffes--I was deeply impressed by how fiercely most African species protect their young.

Cape buffalo: Don't mess with my family
I was particularly struck by the cape buffaloes, which are quite effective in protecting their calves from predators. When they sense trouble, the adults instinctively form a circle around their young ones; and acting together, they can even fend off lions.According to my guide, lions do not even try to attack a herd of cape buffalo unless they are in a large group because they know the buffaloes will rough them up.

At least one African species, however, does not protect its young--the crocodile. A guide told me crocodiles will protect their eggs, but after baby crocs are hatched, their mothers show no interest in them. In fact, crocodiles are cannibals; the bigger crocodiles will sometimes eat the small ones.

As I received this information, I could not help but draw a comparison between the crocodiles and American higher education. At one time, we Americans believed our colleges would nurture the young, transmit and preserve our cultural heritage, and prepare our young people for adult life and the world of work. In other words, Americans once considered their colleges to be something like cape buffaloes, which would do all they could to make sure their young grew up to be healthy adults.

I'm not sure Americans believe that anymore. In fact, American higher education today looks much more like a crocodile than a cape buffalo. Every year, the cost of higher education goes up a bit more, requiring students to borrow more and more money in order to attend college. Our college presidents and administrators have become overpaid, arrogant bureaucrats more intent on wooing wealthy donors and constructing impressive buildings than on serving their students.

Crocodile: Come a little closer and I promise you'll have a good educational experience
In particular, the for-profit college industry has exploited low-income and minority students by using high-pressure recruiting tactics to enroll them in expensive programs that frequently do not lead to well-paying jobs. Students who attend for-profit institutions have the highest default rates on student loans, loans which they cannot discharge in bankruptcy.

In short, with each passing year, American higher education--and the for-profit college industry in particular--becomes more and more like the crocodiles, which eat their young, than the cape buffaloes, which nurture and protect them.

And everyone knows this. Indeed, not long ago, President Obama said the for-profit colleges were "making out like a bandit," and his administration has admirably tried to bring them under tighter regulatory control.

But you can't regulate crocodiles; you have to stay away from them. As long as we permit the for-profit college industry to feast off of federal student-aid money, we will have corruption and exploitation. The sooner we face this cold fact, the sooner we will realize that this industry must be shut down.

Of course, as I have just said, the public universities and the non-profit colleges have serious problems as well; but compared to the for-profit colleges, the publics and non-profits are more like alligators than crocodiles. And according to the Ugandans, in comparison to a crocodile, an alligator is merely a Presbyterian.