Medieval America: Victor David Hanson correctly diagnoses the collapse of American liberal democracy

It is difficult to convey a brilliant insight in less than 2,000 words, but Victor David Hanson has done it. In a brief essay published last week, Hanson said it is inaccurate to compare our declining American civilization to the fall of the Roman Empire. In truth, Hanson argued, our nations is becoming like medieval Europe.

Like today's America, Hanson points out, medieval Europe could boast some fine universities where the sum of human knowledge increased. But the universities of that day, like our modern American universities, had strict speech codes. The sun revolved around the earth, and woe to any medieval scholar who argued otherwise.  And today of course professors are permitted to express only one point of view on important global issues like climate change.

Humanist scholars of medieval times "wrote esoteric treatises than no one read," Hanson writes. "These works were sort of like the incomprehensible 'theory' articles of university humanities professors who are up for tenure."

Hanson definitely got that right. Not to mention the 10,000 law review articles that law professors and their students publish every year even as the core principles of our legal system disintegrate.

In my view, Hanson's most trenchant comparison between contemporary America and medieval Europe relates to the economy. Today, as Hanson notes, one fifth of Americans own absolutely nothing or have negative worth, much like medieval serfs. In fact, 18 percent of adult Americans have student-loan debt, which they are permitted to work off by donating a percentage of their income to the government over 20 or 25 years--just like peasants.

Indeed, America becomes more like medieval society with each passing day. The middle class--once the glory of liberal democracy--gets smaller every year. The nation's elites fly in private jets, work in fortress-like offices, and are protected by private security agencies; they are truly lords and barons surrounded by modern-day moats. Their kids go to the best private schools. And the elites do a good job of protecting their income from taxes.

Meanwhile the rest of us ride the subway or commute to work on crumbling freeways. We pay taxes at a higher rate than either Donald Trump or Hillary Clinton, and we send our kids to mediocre schools.  Defined-benefit retirement plans are fast disappearing, and we put our puny savings into the stock market because the elite have declared that we can earn nothing on our savings if we invest anywhere else.

Everywhere, the non-elites are getting poorer, but the slide into serfdom is most evident in rural America. In my own hometown of Anadarko, Oklahoma, the little family shops and stores of my childhood are all empty and boarded up. If you want to buy something--almost anything at all--you must go to Walmart. Hundreds of houses have been abandoned, including the one I lived in as a kindergarten child. Drug addiction and suicide are up; decent jobs have disappeared.

Americans know in their hearts that our slide into medievalism will accelerate after the national election unless our economy is radically restructured. Let us hope President Trump can do what he promised he would do to restore jobs to middle-class and working-class Americans.


References

Victor David Hanson. Medieval America, Town Hall, October 13, 2016. Available at http://townhall.com/columnists/victordavishanson/2016/10/13/medieval-america-n2231213http://townhall.com/columnists/victordavishanson/2016/10/13/medieval-america-n2231213

The Department of Education strips ACICS of accrediting authority: It's time to pull the plug on the rapacious for-profit college industry

Turn out the lights

The party's over

They say that

All good things must end

Willy Nelson

Turn Out the Lights

Last month, the Department of Education stripped the Accrediting Council for Independent Colleges and Schools (ACICS) of its accrediting authority--basically signing ACICS's death certificate. ACICS will appeal of course, and there may be litigation; but for now at least ACICS is essentially out of business.

ACICS accredited 245 post-secondary institutions, mostly for-profit colleges.  These institutions are scrambling to find a new accrediting agency, which is a life-or-death issue for them. DOE requires colleges to be accredited by  a government-approved accrediting agency in order to receive federal student aid money.  Without regular infusions of federal cash, none of these colleges would last a month.

According to Inside Higher Ed, more than 100 colleges that were accredited by ACICS have applied for accreditation with another accrediting body--the Accrediting Commission of Career Schools and Colleges (ACCSC).  ACCSC also accredits for-profit colleges (more than 300), and many for-profits will probably find a new accrediting home with this agency.

But, as Willy Nelson once observed, when the party's over, someone should turn out the lights. And the party is about over for the rapacious for-profit college industry.  

Corinthian Colleges and ITT have filed for bankruptcy, leaving thousands of students in the lurch. As state and federal regulatory agencies step up the pressure on the predatory for-profit college industry, more for-profit schools will close. DOE has more than 250 proprietary schools on its "Heightened Cash Monitoring" watch list,an indication that the financial viability of this industry is shaky.  Publicly traded for-profits have seen their stock prices plummet as investors bolt for the exits.

Shutting down the for-profit colleges will be messy. The for-profits have been incredibly litigious, and they will certainly sue to protect their interests. But with each passing day, more unsuspecting and unsophisticated young people takes out student loans to attend  for-profit colleges; and many of them never recoup their investments. Indeed almost half of the people who take out federal student loans to attend a for-profit college default within five years of beginning repayment.

It is going to be ugly, and its going to be complicated. But the time has come to turn out the lights on the for-profit college industry, which has harmed so many innocent and unsuspecting American young people.

References

Scott Jaschik. Slight Drop in Colleges in Heightened Cash Monitoring. Inside Higher Education, July 25, 2016. Accessible at https://www.insidehighered.com/quicktakes/2016/07/25/slight-drop-colleges-heightened-cash-monitoring?utm_source=Inside+Higher+Ed&utm_campaign=8991789a59-DNU20160725&utm_medium=email&utm_term=0_1fcbc04421-8991789a59-198564813

Paul Fain, Hundreds of colleges, many for-profits, seek a new accreditor. Inside Higher Ed, October 6, 2016. Accessible at https://www.insidehighered.com/news/2016/10/06/hundreds-colleges-many-profits-seek-new-accreditor

Adam Looney & Constantine Yanellis.  A Crisis in student loans? Brookings Institution, September 10, 2015. Accessible at: http://www.brookings.edu/~/media/projects/bpea/fall-2015_embargoed/conferencedraft_looneyyannelis_studentloandefaults.pdf

America's "Men Without Work": It's not their fault

Almost a third of American men in their prime working years are not working. Thirty-two percent of men older than 20 are out of the labor force--double the rate in 1948. And a lot of unemployed men aren't even looking for work. According to Nicholas Eberstadt,  author of Men Without Work, only 15 percent of American men in the 25-54 age group who didn't work in 2014 said they were unemployed because they could not find a job.

Of course some of these men are disabled, but the percentage of men sitting on the sidelines because of some certified disability seems too high. Eberstadt reports that there were 134 workers for every officially disabled person in 1960 (as summarized by George Will). Today, there is one disabled person for every 16 workers--in spite of the fact that the American workplace has become much safer over the last 50 years.

Eberstadt argues that unemployment has become a "viable option" for millions of American men, and George Will implicitly scolded this vast population--saying these unemployed men have chosen a life of "protracted idleness."

But I know some of these men, and I think most would prefer to be working. Here are some examples of men I know personally.

• A friend who worked in the petrochemical industry was laid off in his 50s when the company he worked for merged with another company. He found various part-time jobs at minimal pay and then took his Social Security benefits early--at age 62. He and his wife are living frugally on Social Security income and modest savings.

• A guy I know worked as an architectural draftsman but he didn't upgrade his skills when  computer-assisted drawings (CAD) fundamentally changed the nature of his craft by greatly speeding up the drafting process and making it less expensive. He is not lazy. I've seen his enormous garden, from which he derives a substantial amount of his food.

• Another friend worked many years in public education and gained a reputation for being an effective disciplinarian in chaotic urban schools. But the work burned him out, and he took his state pension early. He does carpentry work and cabinet work from time to time, but essentially lives off his pension.

I  come in contact with unemployed men all the time, and few of them are happy. No wonder the suicide rate for middle-aged white Americans has gone up substantially in recent years, along with death from alcohol- and drug-related causes.

In my opinion, this doleful trend cannot be explained by laziness. There are lots of reasons.

First, the nation's economy has failed working-class and middle-class Americans--which is what Donald Trump has been saying with considerable effect. Millions of Americans have been shoved out of the workforce as low-skill and medium-skill jobs have gone overseas.  And of course, our multinational corporations don't give a damn about the millions of Americans who have been thrown out of work. Profits are greater if goods are manufactured by exploited Asians rather than middle-class Americans.

Second, Americans have been betrayed by our educational system. The United States has a crummy educational system. Too many people graduate from high school without the  minimum reading and math skills they need to find a job or to profit from postsecondary education. 

And postsecondary education is a disaster. Our government is shoveling money into predatory for-profit colleges that have ripped off our most vulnerable young people--minorities and first-generation college students. Our elite liberal arts colleges obsess on race and sexual identity and care more about creating "safe spaces" than they do about producing problem solvers. Our public institutions have become vast bureaucratic mazes run by spineless and clueless administrative robots.

No wonder so many working-age men are unemployed. They didn't get the skills they needed to be productive workers in our post-industrial economy. Many of them tried to get those skills and wound up with no skills and a lot of student-loan debt.

Third, American cultural institutions no longer respect and support the American family. There was a time when our government, our churches, and our civic institutions honored the American family; and it was universally understood that the foundations of our culture rested on extended families that nurtured children and provided essential support for their members in times of trouble. I thank God I am part of such a family. 

But all that is falling away. And this distressing trend, in my view, contributes to a vast subculture of working-age men who do not work. At one time family obligations and a personal sense of honor prompted men to work to support their families--even if that meant working for poverty wages under humiliating conditions.

But many men no longer recognize family obligations. They do not work and save so their children can go to college. Rather their children are expected to take out loans to pay for their college education. They do not recognize a moral responsibility to be the breadwinner for their wives and children; women are expected to work. In fact, our society celebrates the fact that it now takes two working adults instead of one to support a family--as if every working woman is a lawyer or a brain surgeon instead of working as clerk in convenience store, which is the reality for millions of working American women.

It's not their fault

In short, the high percentage of unemployed men cannot be explained by indolence. Our culture, our government, our colleges and schools, and our post-industrial economy have conspired to create a world in which millions of American men see no point in working. And to suggest--as some commentators have done--that this calamitous trend is attributable to laziness completely misses the mark.

References

Nicholas Eberstadt. Men Without Work: America's Invisible Crisis (Washington, DC: American Enterprise Institute, 2016).

George Will, America's 'quiet catastrophe': Millions of idle men. Washington Post, October 5, 2016. Accessible at https://www.washingtonpost.com/opinions/americas-quiet-catastrophe-millions-of-idle-men/2016/10/05/cd01b750-8a57-11e6-bff0-d53f592f176e_story.html?utm_term=.d45b9f19bab9

Anne  Case and Angus Deaton. Rising morbidity and mortality in midlife among white
non-Hispanic Americans in the 21st century.  Accessible at: http://www.pnas.org/content/early/2015/10/29/1518393112.full.pdf

Editorial. Death Among Middle Aged Whites. New York Times, November 5, 2015.

Katherine A. Hempstead and Julie A. Phillips. Rising Suicide Among Adults Aged
40–64 Years: The Role of Job and Financial Circumstances.  American Journal of Preventive Medicine 84(5):491-500 (2015). Accessible at: http://www.ajpmonline.org/article/S0749-3797(14)00662-X/pdf

Jason Iuliano. An Empirical Assessment of Student Loan Discharge and the Undue Hardship
Gina Kolata. Deaths Rates Rising Middle-Aged White Americans, Study Finds. NewYork Times, November 3, 2015. Accessibe at: http://www.nytimes.com/2015/11/03/health/death-rates-rising-for-middle-aged-white-americans-study-finds.html

Betsy McKay. The Death Rate Is Rising for Midle-Aged Whites. Wall Street Journal, November 3, 2015. Accessible at: http://www.wsj.com/articles/the-death-rate-is-rising-for-middle-aged-whites-1446499495

Hillary Clinton promises free college education and lower interest rates on student loans: These ideas won't solve the student-loan crisis, which is one hot mess

Prompted by Senator Bernie Sanders, presidential candidate Hillary Clinton made two promises to student-loan debtors. First, if she is elected President, all Americans with a family income of $125,000 or less will be able to get a college education for free from a public institution. Second, if elected, Hillary will slash interest rates on student loans.

These are both good ideas, and I endorse them wholeheartedly. But even if Hillary gets elected and keeps these promises, the student-loan crisis will still be one hot mess.

A Free College Education for Families of Modest Means: A good idea

Hillary has promised a free college education at a public institution for everyone whose family income is $125,000 or less. How much would that cost?

Catharine Hill, president of Vassar College, estimated that Bernie Sander's free-college plan would cost about $70 billion a year. The Clinton campaign estimates that her plan will cost less---about $50 billion a year.

Currently, the federal government gives out around $100 billion a year in student loans, and roughly a third of this money goes to for-profit colleges and private institutions. So if the government replaced $50 billion in loans with grants in the same amount, that would go a long way toward giving middle-class families access to a free college education at a public university.

But  Clinton's plan faces major hurdles. First, it will require Congressional approval from a Republican Congress, which seems unlikely. Second, Hillary's plans calls for state governments to contribute one third of the cost, and that assumption may not be realistic.

But let's assume Hillary gets this plan through. We still have a huge problem.  Millions of Americans will still have massive student-loan debt totally $1.3 trillion, and free college for future students will do nothing to relieve them of their suffering. People are having their wages garnished, their Social Security checks dunned, and their income-tax returns seized. Honest people who deserve bankruptcy relief are prohibited by law from getting it.

So if Hillary implements her free college plan she must do something to help the millions of people who are suffering from massive student-loan debt. In my view, she must push for bankruptcy reform that will permit honest but unfortunate student-loan debtors to shed their oppressive student-loan debts. And she should also endorse loan forgiveness for everyone who took out loans to attend an overpriced for-profit college and received no economic benefit from the experience.

Lowering Interest Rates On Student Loans: Another good idea

 Hillary also promises to slash interest rates on student loans if she is elected President, and she has called for a 90-day moratorium on student-loan payments to allow borrowers to refinance their debt. Ag ood idea.

Interest rates on student loans, currently around 4 percent, seem too high when ten-year treasury bonds are going for 1.7 percent. Lowering those rates will give student-loan debtors some relief.

But again, refinancing student loans won't relieve the massive suffering people are experiencing right now. Millions have seen their loan balances grow larger because they obtained economic-hardship deferments that caused unpaid interest to pile up. Others defaulted on their loans, and the loan guaranty companies slapped an 18.5 percent penalty to their loan balance. As a result, many people now owe two or even three times what they borrowed due to accruing interest, penalties, and collection fees.

A two percent interest rate on a $50,000 debt is certainly better than an 8 percent rate, but Hillary must stop the student-loan guaranty companies from imposing unreasonable costs and penalties to borrowers' loan balances. After all, the loan guarantee companies are supposedly charitable organizations, but four of them have each accumulated $1 billion in assets--most of acquired from their debt collection activities.

Conclusion: Hillary must acknowledge that the student-loan program is a catastrophe

Hillary's two proposals for reforming the federal student-loan program are good ideas, but free college in the future and lower interest rates won't relieve the hardship visited on American young people who borrowed too much money to enroll in educational programs that resulted in little or no economic benefit.

We must face facts. Millions of people were ripped off by shoddy and rapacious colleges. The victims of the student-loan program need to get back into the economy and begin building economic security for themselves and their families. That won't happen until massive amounts of  student-loan debt are forgiven.



References

Catharine Hill. Free Tuition Is Not the Answer. New York Times, November 30, 2015, p. A23. Accessible at: http://www.nytimes.com/2015/11/30/opinion/free-tuition-is-not-the-answer.html?_r=0

Matt Flegenheimer, Old Foes Bernie Sanders and Hillary Clinton Team Up to Woo the Kids, New York Times, September 28, 2016. Accessible at http://www.nytimes.com/2016/09/29/us/politics/bernie-sanders-hillary-clinton.html

Laura Meckler. Hillary Clinton's Free College-Tuition Plan Short on Specifics. Wall Street Journal, August 14, 2016. Accesible at http://www.wsj.com/articles/hillary-clintons-free-college-tuition-plan-coming-up-short-on-specifics-1471167001

Letter to the Honorable John King, Secretary of Education, from 23 Democratic Senators, September 15,2016. https://www.insidehighered.com/sites/default/server_files/files/9_15_16%20ITT%20Tech%20ED%20Letter%20(1).pdf

Dawn McCarty and Shahien Nasirpour. ITT Educational Services Files for Bankruptcy After Shutdown. Bloomberg, September 16, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-09-16/itt-educational-services-files-for-bankruptcy-after-shutdown-it6byu6t

Reuters. ITT Educational Services Files for Bankruptcy After Aid Crackdown. International New York Times, September 17, 2016. Accessible at http://www.nytimes.com/2016/09/18/business/itt-educational-services-files-for-bankruptcy-after-aid-crackdown.html?_r=0

Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. Accessible at https://tcf.org/content/report/student-loan-guaranty-agencies-lost-way/

U.S. Department of Education mistreats bankrupt Corinthian Colleges' former students and Senator Elizabeth Warren complains

Corinthian Colleges closed its doors and filed for bankruptcy last year, leaving about 80,000 currently enrolled students in the lurch.  Corinthian was besieged with charges of fraud and misrepresentation at the time it went belly up and subsequently had a $1.5 billion judgment entered against in California.

A couple of days ago, Senator Elizabeth Warren wrote Secretary of Education John King a letter complaining about how DOE has treated Corinthian's former students who have outstanding student loans. She said about 80,000 former Corinthian students are eligible for debt relief relief under DOE's "closed school" program, but are in some form of debt collection.

According to Warren:

• More than 30,000 student borrowers are in "administrative offset" and could have tax refunds and Social Security checks seized for nonpayment of their loans.
• More than 4,000 borrowers are having their wages garnished by the federal government for loan nonpayment.
• Less than 4,000 former Corinthian students have had their loans forgiven under DOE's "borrower defense" discharge, far fewer than the number who are entitled to relief.
• Only 23,000 former Corinthian students have even applied for borrower defense discharges, less than a third of the number of Corinthian students who have been put into DOE's collection process.

I've been critical of Senator Warren in the past, but I commend her for her vigorous efforts to help former Corinthian students who have outstanding student loans. As Warren herself put it in her letter to Secretary King, Corinthian's meltdown "left an estimated 350,000 students with worthless degrees or credits and mountains of fraudulent debt." There is ample evidence of wrongdoing throughout Corinthian's operations, and all its former students deserve to have their loans forgiven.

What would that cost? According to the New York Times, if all 350,000 former Corinthian students had their loans forgiven, it would cost taxpayers about $3.5 billion.

But that is what should be done. Instead of requiring hundreds of thousands of former Corinthian students to file applications for discharge under DOE's cumbersome administrative process, every student loan taken out to attend a Corinthian campus should be forgiven.

And let's not forget the Corinthian students who may still be attending Corinthian campuses that were sold to a subsidiary of Educational Credit Management Corporation in a deal engineered by DOE.  ECMC created a subsidiary named Zenith Education Group to run 53 Corinthian campuses that ECMC bought for peanuts--$24 million or less than half a million dollars per campus.

According to an Inside Higher Ed article, the Zenith-run campuses are not doing well. Zenith has consolidated some of the campuses it bought and is closing others. It seems quite possible that the Zenith-run operation will also shut down. In any event, any relief granted to former Corinthian students should include all students who continued their studies on campuses operated by Zenith.

References

Tamar Lewin. Government to Forgive Student Loans at Corinthian. New York Times, June 9, 2015, p. A11.

Paul Fain. More Cuts for Zenith. Inside Higher Ed, March 28, 2016. Accessible at  https://www.insidehighered.com/news/2016/03/28/nonprofit-owner-former-corinthian-colleges-campuses-loses-100-million-while

Help for Victims of College Fraud (Editorial). New York Times, June 10, 2015, p. A24.

Andrew Kreighbaum, Warren: Education Dept. Failing Corinthian Students. Inside Higher Ed, September 30, 2016. Accessible at https://www.insidehighered.com/quicktakes/2016/09/30/warren-education-dept-failing-corinthian-students

Senator Elizabeth Warren to Secretary of Education John B. King, Jr., letter dated September 29, 2016. Accessible at https://www.warren.senate.gov/files/documents/2016-9-29_Letter_to_ED_re_Corinthian_data.pdf

The Century Foundation criticizes Educational Credit Management Corporation (ECM) in a recent report: Shining a light on a shady debt collector

INTRODUCTION: THE CENTURY FOUNDATION SHINES A DIM LIGHT ON ECMC
AND OTHER STUDENT LOAN GUARANTY AGENCIES

The Century Foundation recently issued a report criticizing the federal student-loan guaranty agencies--including Educational Credit Management Corporation (ECMC), which has earned a reputation as a heartless student-loan debt collector. The report explains the complicated history of the loan guarantee agencies and is well worth reading.

Collectively, these guaranty agencies hold more than $5.4 billion in unrestricted assets, most of it obtained from collecting on defaulted student loans.  Four agencies--ECMC, Lumina Foundation, Great Lakes Higher Education Corporation, and USA Funds each hold more than a billion dollars in unrestricted funds.

According to The Century Foundation, most of this money was acquired from the agencies' student-loan debt collection activities. The Foundation did not explain the fee structure for collecting student-loan debt, but in some cases at least, the guaranty agencies slap an 18.5 percent penalty on defaulted loans--18.5 percent of the loan balance and accumulated interest.

In other words, a student who takes out a student loan of $15,000 and sees the debt grow to $20,000 due to accumulated interest, can get a $$3,700 penalty attached to the loan balance if the student defaults. Thus, a $15,000 debt can grow to $23.700 in a relatively short period of time. And this is where the guarantee agencies make a lot of money.

What do these so-called charitable agencies do with their money? The guaranty  agencies spend some of their money distributing grants for purported charitable purposes, but the biggest share of these grants (25 percent) goes to "Policy Organizations." Unfortunately, the Century Foundation did not name the policy organizations that are getting the money; but my guess is that the money goes to the various think tanks and policy groups that churn out reports proclaiming that the student loan program is under control.

I wonder, for example, whether the Urban Institute and the Brookings Institution got some of this money.  Both organizations have been soft peddling the student loan crisis for years.

The Century Foundation did not examine the guaranty agencies' loan collection practices, but the Foundation gently suggested that the agencies should take a more compassionate approach to collecting on defaulted student loans. "Lacking the profit motive," the report observed mildly, "a guarantee agency might be more humane in its treatment of borrowers, even if it resulted in less revenue from collections."

Ya think? ECMC in particular has savagely fought bankruptcy discharge for distressed student loan debtors for years. In the Roth case, for example, ECMC opposed bankruptcy discharge for an elderly debtor with chronic health problems who was living on less than $800 a month!  Indeed, there has been nothing charitable about ECMC's attacks on student-loan debtors in the bankruptcy courts.

Notably, the guarantee agencies awarded no grants to legal aid groups that could represent student-loan debtors in legal actions against fraudulent for-profit colleges. No money goes for legal aid to help student loan debtors in bankruptcy. Quite the contrary, ECMC and other loan guarantee agencies are spending millions of dollars paying attorneys to fight destitute debtors in the bankruptcy courts. ECMC hired six attorneys to fight Alexandra Costa-Conniff, who is fighting ECMC's appeal of her bankruptcy discharge before the 11th Circuit Court of Appeals.

The Century Foundation leveled several specific criticisms of ECMC:

ECMC handsomely compensates its trustees and CEO. First, the Foundation reported that ECMC, a nonprofit charitable organization, pays its trustees annual compensation ranging from $76,000 to $142,000. According to the Foundation, it is highly unusual and controversial for a charitable organization to pay trustees such outrageous sums for what should be public service. And the Foundation says ECMC's CEO makes more than $1 million a year.

ECMC created a subsidiary to buy and run more than 50 campuses of the bankrupt Corinthian Colleges. The Century Foundation also raised questions about ECMC's purchase of more than 50 campuses from the bankrupt Corinthian Colleges system.  ECMC, which has no experience running a college, created a nonprofit subsidiary called Zenith Education Group to operate the chain of schools.

The Century Foundation asked a reasonable questions about this transaction:

Is this the case of a charity that, in purchasing the Corinthian campuses, made a noble if misguided attempt to transform a corrupt enterprise? Or is this just a corporate board seeing if they can make a buck? 

And, as TCF pointed out, the trustees for Zenith are the same people who are the trustees for ECMC. The Foundation charged that ECMC hid the fact that the Zenith trustees were being paid as ECMC trustees when it filed Zenith's application for IRS tax-exempt status. The Foundation also pointed out that the IRS apparently did no more than a cursory review of Zenith's application, approving the new organization's tax-exempt status in only six weeks (far faster, apparently, than the Tea Party groups' applications).

CONCLUSION:

THE CENTURY REPORT ON LOAN GUARANTEE AGENCIES IS A GOOD START BUT GLARING QUESTIONS REMAIN UNANSWERED

The Century Foundation's report is a useful document. In particular, the report explains how the guaranty agencies were formed and how they make their money. But some glaring questions remain unanswered, including:

Exactly how much do the executive officers of the loan guaranty agencies get paid each year? The Century Foundation's report said that ECMC's CEO makes more than a million dollars a year, but we've known that for some time.  Bloomberg reported in 2013 that Richard Boyle, ECMC's CEO at the time, made $1.1 million in 2010 and that the ECMC's CFO made a half million.  Surely Jane Hines, ECMC's current CEO, makes more than Boyle did in 2010. How much did Dave Hawn make when he served as ECMC's CEO?

How much are other ECMC executives making now?  And how much are the senior officers making at the other guaranty agencies?

Which policy foundations get paid by the guaranty agencies? If we see the list, I'll bet we'll find the guaranty agencies are funding think tanks that support the status quo in the student loan program.

How much does ECMC pay the attorneys it hires to harass destitute student-loan debtors who file for bankruptcy? The Department of Education said in 2015 that loan collectors shouldn't fight bankruptcy discharge for student loan debt when it is not cost effective to do so, but ECMC and DOE itself appear to be fighting every college-loan borrower who seeks to discharge student debt in bankruptcy. ECMC must be spending millions on lawyers, but I would like to know exactly how much.

Are the guaranty agencies paying lobbyists; and if so, how much? Corinthian Colleges filed a list of its creditors when it filed for bankruptcy awhile back, and that list showed that Corinthian had hired several Washington lobbyists to represent its interests. It would not surprise me to learn that the guaranty agencies have also  hired lobbyists to protect their operations.

In short, The Century Foundation report just scratched the surface regarding the loan guaranty agencies. All we know for sure about them is that they have accumulated more than $5 billion, most of it from distressed student-loan debtors and that one of them pays its trustees unseemly amounts of money.

Let's find out more. Maybe those Senators who are so outraged by Wells Fargo could vent some of their pent-up spleen toward the loan guarantee agencies.

References

John Hechinger. Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans. Bloomberg.com, May 15, 2013. Accessible at: http://www.bloomberg.com/news/2012-05-15/taxpayers-fund-454-000-pay-for-collector-chasing-student-loans.html

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

Natalie Kitroeff. Loan Monitor Is Accused of Ruthless Tactics on Student Debt. New York Times, January 1, 2014.  http://www.nytimes.com/2014/01/02/us/loan-monitor-is-accused-of-ruthless-tactics-on-student-debt.html

Roth v. Educational Credit Management Corporation, 490 B.R. 908 (9th Cir. BAP  2013). 

Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. Accessible at https://tcf.org/content/report/student-loan-guaranty-agencies-lost-way/

Our nation's highest paid public employees work for universities and most are coaches

Reporters for 24/7 Wall St. published an informative online article recently that listed the highest paid public employee in all 50 states. In 47 of the 50 states, the highest paid public employee works for a university.  In 26 states, the highest paid public employee is a college football coach. In 11 states, the best paid public employee is a college basketball coach.

King of the heap is Nick Saban, head football coach for the University of Alabama, who makes more than $7 million a year, exponentially more than the UA president makes or Alabama's governor. In fact, several of Saban's assistant coaches make more than the governor of Alabama, including Lane Kiffin, Saban's offensive coordinator, who makes $1.4 million. 

What does this mean? At least three things:

College athletics is entertainment and has nothing to do with higher education. First, college sports has nothing to do with higher education anymore. It is entertainment, and highly paid coaches, assistant coaches, and athletic directors are in the entertainment industry. Football coaches don't make as much money as George Clooney or Madonna--at least not yet. But they live in a completely different world than the professors and instructors who toil away on university campuses for crap wages.  

College football players don't get paid, it is true; but essentially they are interns grooming for careers in  the NFL. A typical football player has only the flimsiest allegiance to the university he attends. Believe me, the 280 pound hunks that entertain us on Saturdays are not thinking about the Homecoming Prom. And at LSU, at least, the football players have a depressing tendency to get arrested on various misdemeanor charges.

More and more cash flows into college athletics while academic programs are starved for money. According to the 24/7 Wall St. story, college coaches' salaries have gone up an average of 90 percent in just 10 years. Meanwhile, state contributions to public university budgets are shrinking.

I'm not saying that coaches' salaries are the whole explanation for rising tuition prices. A few college football programs earn enough money to be self sufficient. And many coaches receive the bulk of their compensation from private foundations, not public funds.

But surely there is something wrong when LSU pays Coach Les Miles around $4.5 million a year while LSU tuition skyrockets upward. LSU would argue that its football program is completely self sustaining, which is true. But the fat cats who donate tax-deductible money to LSU's athletic foundation to pay Miles' salary are basically ripping of the public. They should be paying higher taxes instead of getting tax write-offs to support their hobby.

Sports are the 21st century equivalent of the Roman Empire's bread and circuses. Finally, America's sports craze at every level is a distraction to keep people from thinking about the fact that our middle-class way of life is evaporating before our eyes.  Wages have been stagnant for years; the typical working male actually makes less today in real dollars than he did 20 years ago. Both spouses now have to work just to pay the mortgage; and young people are going into debt to get a college education with no assurance they will find a job that pays well enough to service their monthly student-loan payments.

But let's not think about that. Will Alabama win the national title this year? Which team will win the Sweet 16? Will the Saints ever climb out of the toilet?

Meanwhile, the wealthy sit in their air-conditioned executive sky boxes at our unversities' enormous stadiums, drinking premium whiskey while the rubes sit sweating in the bleachers munching on popcorn at seven  bucks a box.

References

Evan Comen, Thomas C. Frolich, and Michael B. Sauter. The Highest Paid Public Employees in Every State. 24/7 Wall St., September 20, 2016. Accessible at http://247wallst.com/special-report/2016/09/20/the-highest-paid-public-employee-in-every-state/

In the Mix: Ten Candidates Who Could Replace Les Miles (in alphabetical order). The Advocate (Baton Rouge), September 26, 2016, p. 2C.