Saturday, April 16, 2016

The Immorality of American Graduate Education: A Look At the Fields of Law and Education

When commentators write about the student-loan crisis, they often focus on people who attended for-profit institutions. And indeed, almost half of the students who borrowed to attend a for-profit college default on their loans within five years.

Law schools: Declining admission standards and too many graduates for the job market

But people who borrow to get graduate degrees from respectable institutions are also suffering in huge numbers. Let's start with the field of law, where the job market for full-time attorney jobs has collapsed. According to an article by Joshua Wright, there are more than two attorneys for every law job (based on 2012 data).

Many potential law students have figured this out, and law school enrollments have plummeted.  First-year enrollment in American law schools in the fall of last year was 30 percent lower than 2010. As Aaron N. Taylor pointed out in a Chronicle of Higher Education essay, this decline represents the equivalent of about 60 law schools in 2010.

How have law schools responded to this downturn? In order to keep classroom seats filled, many have been admitting a larger and larger percentage of applicants. As Taylor explained it, the median admission rate among law schools in 2015 was 54 percent, "meaning that applicants at more than half the law schools in the country had better than 50-50 odds of gaining admission." According to Taylor, 24 law schools had admission rates of 70 percent or higher! In other words, some American law schools are drifting pretty darn close to having open admission policies.

And as a recent report from Law School Transparency documents, admissions standards are falling at law schools with a number of schools admitting students with LSAT scores so low that they are at extreme risk of failing the bar exam.

All this is happening as law-school tuition has skyrocketed. The average JD graduate enters an anemic job market with $140,000 in debt.

Obviously, law schools should cut their tuition prices drastically and some law schools should be closed. For example, Southern University Law School in Baton Rouge and Texas Southern University's law school have shockingly low admission standards and their graduates have very low pass rates when they take their bar exams. Why do these schools remain open?

Graduate programs in Education: Declining demand and low quality

But let's not just pick on law programs. Let's look at graduate programs in Education, which is my own field.

The National Science Foundation reported recently that that doctorates in education declined 27 percent in just 5 years: from 6,528 to 4,793. Furthermore, in 2014, less than two thirds of Education doctoral graduates had jobs in their fields or postdoc commitments. Perhaps most disturbing, doctoral graduates in Education had the highest mean debt loads among graduates in all doctoral fields. According to NSF, their mean cumulative debt was $36,260 in 2014, and 23 percent had debt loads of $70,000 or more.

We have far too many colleges of education--around 1200. The National Commission on Excellence in Educational Administration recommended closing three-fifths of the nation's graduate programs in Educational Leadership (the programs that train school principals and superintendents), and it is surely right. Arthur Levine, who published a much discussed report on graduate programs in Educational Leadership, found that most of them were competing in a "race to the bottom," with many Educational Leadership programs having low admission standards, low graduation standards, weak faculty, weak research production, and "irrelevant" curricula.

But have universities improved the quality of graduate programs in Education? Have they closed weak programs or redundant schools of education? By and large, they have not. In Louisiana, where I teach, every four-year public institution has a college or school of education, far more than the state needs. And--based on my own experience working in colleges of education at four public universities, admissions standards are going down for doctoral programs. At the University of Houston, where I worked a few years ago, the Educational Leadership program had several doctoral student with GRE scores in the bottom 10th percentile.


The student-loan crisis has many dimensions, and millions of victims. Students who attended for-profit colleges are among the casualties, but many people who obtained graduate degrees at reputedly respectable institutions are also among the wounded.  Thousands of law school graduates and people with graduate degrees in Education have accumulated massive levels of debt for educational experiences that didn't lead to well-paying jobs.

Do we need to clean up the for-profit college industry? Yes we do. But we also need to close a lot of law schools and graduate programs in Education.


Arthur Levine. Educating School Leaders. Education Schools Project, 2005. Accessible at

Aaron N. Taylor. Are Financially Desperate Law Schools Using a 'Reverse' Robin Hood Scheme' to Stay Afloat? Chronicle of Higher Education, April 20, 2016. Accessible at

Joshua Wright. The Oversaturated Job Market for Lawyers Continues, and On-The-Side Legal Work Grows., January 10, 2014.

National Center for Science and Engineering Statistics. 2014 Doctorate Recipients From U.S. Universities. National Science Foundation, December 2015. Accessible at

Wednesday, April 13, 2016

Feds will forgive student loans of disabled borrowers: Doing the right thing in the right way (cutting through red tape)

The Department of Education announced this week that it will write customized letters to 387,000 disabled student-loan borrowers to inform them they are eligible for loan forgiveness. Good for the feds. DOE regulations authorize student-loan forgiveness for borrowers who are permanently disabled, but most people eligible for forgiveness don't apply. In fact, according to an Inside Higher Ed article, almost half of all disabled borrowers (179,000) are in default!

I applaud DOE for doing the right thing and reaching out to people who are entitled to have their student loans forgiven. This is a stark and pleasing contrast to the Department's position in Myhre v. U.S. Department of Education, when DOE opposed bankruptcy discharge for a quadriplegic debtor whose expenses exceeded his income because he had to pay a full-time caregiver to feed, dress, and bathe him.

Apparently, DOE is going to streamline the loan-forgiveness process for disabled borrowers. According to an article by Jillian Berman in Marketwatch:
The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
DOE is to be commended for cutting through red tape to forgive these loans.  Perhaps this streamlined approach can be expanded to include student-loan borrowers who were defrauded by the college they attended--particularly students who attended one of the Corinthian Colleges institutions. Thousands of former Corinthian students have applied for loan forgiveness, but the administrative process has been tedious.

This latest development provides more evidence of the massive suffering experienced by millions of distressed student-loan borrowers. Nearly 400,000 of them are permanently disabled!


Jillian Berman. Why Obama is forgiving the student loans of almost 400,000 people., April 13, 2016. Accessible at

Tuesday, April 12, 2016

Henry Fernandez of Fox Business News says 40% of students aren't paying back their student loans. Is Fernandez correct? Does it matter?

Henry Fernandez of Fox Business News published a story last week reporting that 40 percent of college borrowers aren't paying back their student loans.  Here's what he said:
There's new concern over student loans as more than 40% of people who borrow from the government are not making their payments. That's nine million of the 22 million people with student loans who may never be able to pay their loans.
Is Hernandez correct?

Is Hernandez's analysis correct? And if so, does it matter?

Although the Fernandez did not cite a source for  his 40 percent statement, I think he's right. Looking at data from multiple sources, here's how I get to a 40 percent nonpayment rate.

First of all, 43 million people have outstanding student loans. As the New York Times accurately observed last year, 10 million student borrowers have either defaulted on their loans or are delinquent.  It is true that some people with delinquent loans will eventually bring their loans current, but a lot of them won't because unpaid interest will accrue during the delinquency period, making the loans grow larger and more difficult to repay.  Theoretically, defaulters can also bring their loans current, but the penalties assessed against defaulting borrowers are unbelievably onerous; and once defaulters have penalties attached to their loan balances they are doomed.

Then we have 4.6 million people who have entered income-based repayment plans (IBRPs) that extend loan repayment periods out to 20 or even 25 years. Most of these borrowers are making payments so low that interest will continue to accrue, which means a very high percentage of borrowers in IBRPs will never pay off their loan principal.  And this number grew by 140 percent in just due two years! I think it is safe to predict that within a year, at least 5 million people will be in IBRPs of some sort. So let's add 5 million to the 10 million people whose loans are delinquent or in default.

Finally, there are about 9 million people who are in economic-hardship deferment programs or loan forbearance programs of some kind that excuse them from making loan payments.  Again, interest is accruing on these loans.

When we consider this data together, we can understand why more than half of college-loan borrowers are seeing their loan balances go up within two years of beginning the repayment stage (as reported by the Brookings Institution). This is a clear sign that a lot of borrowers are either not making any payments or are making payments so low that they are not paying down their loan balances.

Based on the analysis I just outlined, it is clear that Mr. Hernandez is right and that at least 40 percent of student borrowers are not repaying their loans, and most never will.

Does it matter?

From the perspective of society as a whole, does it matter whether students pay back their college loans? Yes it does. Steve Hayward, a professor at Pepperdine University, who was interviewed for Fernandez's story, said that colleges are delivering an inferior product, "and I think there is a bubble coming." In fact, Hayward went further and said if colleges were publicly traded, he would short them.

Hayward has it right.  Let's look at Apollo Education Group, the owner of the University of Phoenix. Apollo once traded at $80 a share and now trades for about $8.  If you had shorted Apollo, you would have made some money.

Basically, I think what Hayward was suggesting is this: The government cannot go on forever loaning billions of dollars a year to college students when a high percentage of college borrowers are receiving inferior educational experiences and aren't paying back their loans.

In fact, higher education is in a bubble right now. Hundreds of private liberal arts colleges and for-profit colleges are struggling to survive and could not survive 30 days without federal student aid money. They are like drug addicts who must have federal dollars flooding into their coffers just to survive from month to month.

But the government cannot keep loaning more than $150 billion a year in student-loan money if 40 percent of the borrowers don't pay back their loans.

The Obama administration and the entire bloated college industry are relying on a single strategy to keep the gravy train rolling: long-term income-based repayment plans.  If they can force the kiddies into 20-year or 25-year repayment plans with lower monthly payments than the standard 10-year repayment period, they think the party will go on forever and the bubble will never burst.

But the party won't go on forever, and the bubble is about to burst. Within five years, we will see dozens of colleges close their doors because more and more students will simply refuse to pay outrageous tuition prices for degree programs that don't lead to good jobs. And we will see nonpayment rates go higher than they are now, and they already pretty damn high.

In fact, the student-loan bubble is already causing more suffering than the home-mortgage bubble. According to the text at the end of the movie The Big Short, about six million people lost their homes during the home-mortgage crisis of 2008  But those people could file for bankruptcy and get a fresh start. More than 20 million people are burdened by unmanageable student-loan debt, and most of them cannot get relief in the bankruptcy courts..


Henry Fernandez. 40% of Students Aren't Paying Back the Government., April 8, 2016. Accessible at

Saturday, April 9, 2016

Trump, Clinton, Cruz & Sanders: "The Grace of God is in Courtesy"

Of Courtesy, it is much less
Than Courage of Heart or Holiness,
Yet in my Walks it seems to me
That the Grace of God is in Courtesy.
Hilaire Belloc

I became profoundly uneasy about Donald Trump when I saw him treat Jeb Bush so contemptuously a few months ago, mocking him on the debate stage. It seemed to me then--and seems to me now--that a person who publicly humiliates a political opponent with school-yard taunts does not have the temperament to be President.

And Mr. Trump has done nothing to alleviate my doubts about his character in the months following his first Presidential debate. And now we are presented with the disgusting spectacle of Donald Trump and Ted Cruz (or their supporters) insulting each other's wife. Even the most bare-knuckle ward politician knows that there is one line that cannot be crossed--no political candidate with any claim to decency can disparage an opponent's spouse.

We must have a president who is honest and not venal, and Hillary Clinton does not qualify by either measure. But we also must have a President who is not a bully.

Increasingly, I am swayed by Hilaire Belloc's profound little poem, Courtesy. Surely Hilloc is right: the grace of God is in courtesy. And by that standard, the only top contender who is qualified to be our President is Bernie Sanders, who declined, perhaps to his disadvantage, to scold Hillary Clinton for her email scandal.

Hilaire Belloc
"[T]he Grace of God is in Courtesy."

Friday, April 8, 2016

Artist burns student loan records at private university in South America: What a cool idea!

A friend recently sent me an article from The Guardian about an artist using the name Fried Potatoes (Papas Fritas in Spanish) who sneaked into the vault of Universidad del Mar, a private university in Chile, and burned all the documents pertaining to the university's student loans.  Yep, a half billion dollars in student debt went up in smoke.

What a cool idea!

Of course, destroying all loan documents pertaining to private college loans would be impossible in the United States. There are literally millions of student-loan documents in the U.S. involving hundreds of for-profit colleges. Most are in electronic format and the government  maintains records of these debts, since the government guarantees all loans issued through the federal student-loan programs.

Still, some variation of this idea is worth considering. Let's start with Corinthian Colleges, which filed for bankruptcy last year and now has a $1.2 billion judgment against it for false advertising and misleading lending practices. A California judge ordered Corinthian to pay most of the judgment ($820 million) as restitution to former students who were victimized by its scam. The bulk of this money represents federal loans students took out to pay their tuition bills at one of Corinthian's campuses.

But of course Corinthian doesn't have the money to pay the judgment. At the time it filed for bankruptcy, it claimed to have only $20 million in assets--about one sixtieth of the total California judgment.

Department of Education regulations allow students to apply for loan forgiveness if they were students at a college that closed or if they were defrauded by the college they attended. Thousands of Corinthian alums have applied for relief under these regulations.

But the administrative process for resolving these claims has been tedious, and so far only a small number of ex-Corinthian students have had their loans forgiven.

Why doesn't the Department of Education do what Papas Fritas did and just dissolve the debt? Of course, DOE wouldn't need to actually burn all those loan documents, although I'm sure a bonfire would be personally satisfying to Corinthian's former students. But the loans could be forgiven by government fiat. And that is what DOE should do.

After all, Corinthian's former students will never pay back those student loans. In fact, almost half of all students who attended for-profit colleges eventually default on their federal student loans. Wouldn't it be easier and more just for the government to simply decree that any student who took out federal loans to attend a for-profit college will have those loans forgiven if the college is found guilty of fraud or misrepresentation?

Of course it would, but DOE will never take that straightforward step because the amount of money involved is enormous. It would rather deal with student claims through a cumbersome administrative process, knowing that most students won't go to the trouble of filing a claim.

And here's a better idea. Given the high levels of fraud, misrepresentation, price-gouging and totally worthless educational experiences connected with the for-profit college industry, I think we should simply allow anyone who took out student loans to study at one of these shyster for-profit institutions to discharge those loans in bankruptcy under the same standards that apply to other unsecured debt. In other words, people who are otherwise qualified for bankruptcy relief should have their student loans discharged through the routine process of a bankruptcy filing without the need of filing an adversary proceeding.

Image result for crowd around bonfire


Jonathan Franklin. Chile students' debts go up in smoke. The Guardian, May 23, 2014. Accessible at

Matt Hamilton. Corinthian Colleges must pay nearly $1.2 billion for false advertising and lending practices. Los Angeles Times, March 23, 2016. Accessible at

Thursday, April 7, 2016

John L. King, Jr., Secretary of Education, spouts nonsense about financial literacy for student borrowers

John L.  King, Jr., the new Secretary of Education, knows the student-loan program is careening out of control and that millions of people owe billions of dollars they can't pay back.

So what's Secretary King's solution? Financial literacy. We can solve the student-loan crisis, Secretary King apparently believes, if college students are educated to make better financial decisions.

Thus as the nation enters "Financial Capability Month," Secretary King is touting a recent report prepared by the Financial Literacy and Education Commission that outlines how college students can develop better financial management skills.

Interestingly, the report emphasizes the role that colleges and universities can play in enhancing their students' ability to make good decisions about financing their college experiences. And the report highlights financial literacy programs that universities around the nation are offering.

For example, New Mexico State University "held a money management fair to promote games, websites, and outside financial education organizations to students." I'll bet that was fun.

And Louisiana State University, famous for its planned "Lazy River" water feature, created "financial education' handouts called "Financial Basics on the Geaux" and developed "CashCourse quizzes" to evaluate students' financial knowledge.

The Department of Education seems to think that colleges are great places for students to learn financial literacy, including the skills to manage their student loans. After all, as the Financial Literacy and Education Commission pointed out, colleges have an incentive to produce alumni who repay their student loans.

But of course this isn't really true. Colleges and universities have an incentive to maximize their revenues, which means luring tuition-paying students through the door. But higher education institutions have zero incentive to warn potential students that some of their degree programs are a bad financial investment.

And here's an example. Law students who graduated from Thomas Jefferson School of Law in San Diego in 2013 had an average student-debt load of $180,000 (among students who borrowed). That was the highest student-debt load of any law school in the United States that year.

Yet Thomas Jefferson's admission standards are quite low. According to a recent report by Law School Transparency, 75 percent of Thomas Jefferson's entering 2014 class had LSAT scores so low that they were at high risk of failing the bar. Twenty-five percent of it 2014 freshman class had LSAT scores so low that they were at extreme risk of failing the bar.

Not surprisingly, Thomas Jefferson's bar pass rates aren't high. Among first-time test takers who sat for the California bar in July 2014, less than half of TJSL graduates (44.7 percent) passed the bar exam.

As Paul Campos wrote in his 2012 book, "[I]t's likely that somewhere around four out of five current law students would be better off if they hadn't gone to law school" (emphasis supplied). And that percentage is surely even higher for people who graduate from TJSL.

Do you think Thomas Jefferson School of Law is telling its entering freshman students that they will probably face job prospects so poor that it makes no sense to borrow $180,000 to get a TJSL degree? Probably not. Thomas Jefferson needs to maximize its revenue by admitting as many law students as it can, even if  a majority of its entering students have LSAT scores so low that they run a high risk of failing the bar exam.

So what's my point? Simply this. The Department of Education is being naive or cruelly cynical to suggest that "financial literacy" can be usefully taught by colleges and universities that have every incentive to attract tuition-paying students and no incentive at all to warn potential students of the risks they run when they take out student loans to enroll in expensive programs that aren't likely to pay off financially.

In short, whether you are contemplating a bachelor's degree in religious studies from an expensive, elite university or a law degree from a mediocre law school, you can't count on the higher education institutions to give you good financial advice. When it comes to acquiring financial literacy, you are largely on your own.


Focusing on financial literacy for students. U.S. Department of Education blog site.

Jeff Schmitt, The Leaders in Student Debt. Tipping the Scales, March 31, 2014. Accessible at

Paul Caron. July 2014 California Bar Exam Results. Taxprof blog, December 29, 2014.

Financial Literacy and Education Commission. Opportunities to Improve Financial Capability and Financial Well-Being of Postsecondary Students. Updated 2016. Accessible at

Law School Transparency. Reports on law school admission data accessible at

4.6 million student debtors are in long-term repayment plans, default rates are up, and President Obama's "best friend" is buying University of Phoenix: "Things fall apart; the centre cannot hold."

Things fall apart; the centre cannot hold

The Second Coming
William Butler Yeats

As William Butler Yeats put it, "Things fall apart; the centre cannot hold." Everywhere, we see signs that the federal student-loan program is on the verge of collapse. And when the loan program collapses, so will American higher education.

Here are some portents of the coming disaster:

Student borrowers are enrolling in long-term repayment plans in record numbers

First, the U.S. Department of Education recently announced that 4.6 million student debtors are enrolled in Income-Driven Repayment plans (IDRs) to pay off their college loans. This is a 48 percent increase since December 2014 and a 140 percent increase since December 2013. 

People in IDRs are obligated to pay on their student loans for 20 or even 25 years, and most are making payments so small that their loan balances are going up, not down, due to unpaid accumulating interest. In other words, most people in IDRs will never pay off their college loans.

Yet lenient income-based plans are President Obama's chief strategy for addressing the student-loan crisis. As the DOE blog put it," President Obama has fought hard to make college more affordable and to help borrowers keep their student loan payments manageable." And thanks to those efforts, DOE continues, students in the new IDRs never have to pay more than 10 percent of their monthly income on your federal student loans."   Indeed, borrowers who are  "temporarily unemployed" don't have to pay anything. "After all, as DOE cheerily pointed out, "10 percent of zero dollars is zero dollars."

But of course, 20-year and 25-year repayment plans are crazy, especially when we consider that most people don't sign up for these plans until their backs are against the wall. Remember Brenda Butler, who entered a 25-year repayment plan 20 years after graduating from college? She won't be finished with her student loans until 2037, 42 years after acquiring her degree!

The Feds are garnishing wages and Social Security Checks, and default rates are rising

Meanwhile, the government garnished $176 million in wages from student-loan defaulters during the last three months of 2015. And the government garnishes Social Security checks of 155,000 elderly student-loan defaulters. 

And despite governmental assurances to the contrary, student-loan default rates are rising. According to a recent analysis by Jason Deslisle, 20 percent of all borrowers with loans due are in default. A Brookings Institution report noted that almost half of  a recent cohort of student borrowers who attended for-profit colleges defaulted within 5 years

And let's not forget the nine million people in the repayment phase of their loans who aren't making payments because they've obtained economic hardship deferments or some other deferment from making loan payments.  Those folks are counted as defaulters, but in reality, most of them will never pay back their loans. 

Law schools are in trouble

And then there are the law schools, some of which are in real trouble. Over the last few years, law schools began behaving like pirates, raising tuition rates to insane levels even as the market for lawyers imploded. Now they are seeing  a 20 percent decline in enrollment applications; and many have lowered their admission standards just to get warm bodies in their classrooms. A typical law student now graduates with $140,000 in debt; and many have almost no prospect of getting jobs in the legal field.

The for-profit college sector: The barbarians are at the gates

Finally, in the private sector, the barbarians are at the gates. Corinthian College, which had 350,000 students or former students as of last year, filed for bankruptcy; and thousands of its victims have filed claims to have their student loans forgiven. The Department of Education brokered a sale of some Corinthian campuses to a company affiliated with Educational Credit Management Corporation, the rapacious college-loan debt collector, just to maintain some semblance of order in the chaos of the Corinthian collapse.

Apollo Education Group, owner of the University of Phoenix, is in real trouble. Enrollments at UP dropped from a a peak of 475,000 in 2010 to less than half that number in 2015. Apollo's stock, which once sold for more than $80 a share, is now trading below 8 bucks.

Apollo is in negotiations to sell out to a group of private equity firms, including Visteria Group. Visteria was founded by Martin Nesbitt, described as President Obama's "best friend." In fact, Nesbitt was treasurer for both of Obama presidential campaigns; and he heads the Obama Foundation that is planning the Obama Presidential Library. 

If the deal goes through, Tony Miller, former Deputy Secretary of Education in the Obama administration and Martin Nesbitt's business partner will become Apollo Education Group's new Board Chairman.  Very cozy!

"The ceremony of innocence is drowned."

To borrow a phrase from Yeats, "The ceremony of innocence is drowned" in American higher education.  Colleges and universities were once honored as the guardians of our civilization's ideals, the places where young people came to grow and learn, and to develop the civic and moral values that are indispensable to maintaining a healthy and vibrant society.

No more.  Arrogant college presidents, greedy profiteers, and mindless bureaucrats now control our once beloved universities. The best of these characters "lack all conviction, while the worst are full of passionate intensity." 

All of this craziness is paid for by federal student-loan money. And millions of college-loan borrowers are strangling in debt they can never pay off. This cannot go on forever.

President Obama and Martin Nesbitt

Anthony W. Miller official portrait.jpg
Tony Miller, former Deputy Secretary of Education
and soon-to-be Board Chairman of Apollo Education Group

Jillian Berman. Americans just had $17 million in wages garnished by the government due to unpaid student loans., March 22, 2016. Accessible at

Ronald J. Hansen. Apollo Education, parent company of University of Phoenix, to go prvate at $1.1 billion deal. Arizona Republic, February 9, 2016. Accessible at

Jason Delisle. @usedgov latest data out today shows student loan defaults just hit another record high, 20% of those w/ loans due. M

Matt Sessa. Student Aid Posts Updated Reports to FSA Data Center. Department of Education, March 17, 2016. Accessible at

Dan Primack. Obama's 'best friend' raises millions for private equity fund. Fortune Magazine, August 11, 2014. Accessible at

Patricia Cohen and Chad Bray. University of Phoenix Owner, Apollo Education Group, To Be Taken Private. New York Times, February 9, 2016. Accessible at

No, You Won't Be Arrested for Falling Behind On Your Student Loans. US. Department of Eduation Official Bog, April, 2016. Accessible at