70 college groups ask Congress for more coronavirus money: Feed me, Seymour!

Writing on behalf of more than 70 college lobbying groups, Ted Mitchell, President of the American Council on Education, wrote a letter to Congressional leaders earlier this month asking for federal money to help colleges cope with the coronavirus pandemic.

Congress had already sent relief money to American colleges and universities through the CARES Act, but Mitchell asked for more--a lot more!

Mitchell said colleges need a total of $46.6 billion to cover increased student aid and lost revenues, and they need another $73.8 billion to pay the costs associated with the COVID 19 pandemic.

One congressional bill (the Corona Virus Child Care & Education Relief Act) calls for sending the colleges $132 billion, and Mitchell says that will do nicely, thank you very much.  Other legislation falls short of what Mitchell says the college industry needs.

Mitchell also asked for some other stuff:

• Colleges want flexibility in how they spend the federal money they want Congress to give them.

• Colleges want more cash even if they don't fully reopen. Or, as Mitchell put it, none of the money should be based on "an institution's reopening status."

• Universities with fat endowments (Harvard's endowment fund is $37 billion) should not be penalized just because they're rich.

Mitchell's letter contained some more requests, but the bottom line is this: American colleges and universities want more federal money. Feed Me, Seymour!

When Mitchell was asking for a federal handout, did he urge Congress to provide some relief for college students? College borrowers, after all, collectively owe $1.7 trillion in student debt.

Oh yes. Mitchell asked Congress to extend the moratorium on monthly student-loan payments and accruing interest for an additional six months.  Thanks for thinking about the students, Ted. So thoughtful!

Mitchell did not mention bankruptcy relief for distressed student-loan debtors or the tax status of forgiven student debt.  He did not mention the millions of parents who took out PLUS loans to get their kids through crumby colleges--loans that sabotaged their retirement plans.

No, Ted Mitchell's letter was all about sucking up more federal money so the college racket can maintain the status quo--which includes robber-baron salaries for college presidents, coaches, and administrators.

Of course, the higher education industry won't admit that it brought its financial woes on itself or that many colleges were sinking even before the coronavirus showed up and crapped in their mess kits. (See Jon Marcus's recent essay in the Hechinger Report.)

Public institutions refused to consolidate their regional campuses even as college enrollments dropped precipitously.  Private colleges continued to insist that the liberal arts degrees they cranked out were valuable, even though they had forgotten what a liberal arts education is all about.

Law schools and business schools refused to cut their tuition or shrink the size of their entering classes even though there was a glut of JDs and MBAs on the market.

And now the reckoning day approaches, and all the college and universities can think of to do as a group is to have their 70 lobbying organizations ask Congress for more money.

U.S.. should run a "blue light special" on bankruptcies for consumers and student-loan debtors

As a young man, I practiced law in a three-man law firm in Anchorage, Alaska. In the winter months, the firm occasionally experienced lean times when clients couldn't pay their bills.

But we three were young, optimistic, and confident. I remember one day during an especially lean winter month when our senior partner jokingly announced: "Gentlemen, it's time to introduce our Blue Light Special: Bankruptcy, name change, and a divorce for only $500!"

I have always been a firm believer in bankruptcy--a process that allows "poor but honest debtors" to get a "fresh start." Although few people know it, bankruptcy is enshrined in our Constitution, and the bankruptcy courts are the main reason why America doesn't have debtors prisons.

I never had to file for bankruptcy myself, but several of my law firm's clients did in the mid-1980s when Alaska experienced a real-life depression due to a steep downturn in oil prices.  These people wiped the slate clean of all their financial misfortunes and started over.

Today, millions of once-middle-class Americans are experiencing severe financial stress. As Steve Rhode recently reported in Get Out of Debt Guy, the economy is running on borrowed time.  Mortgage delinquencies are up, with Miami and New York City leading the way.  People are fleeing the big cities. According to the New York Times, five percent of NYC's population left the town over two months this spring--frightened by the coronavirus, soaring crime rates, and a deteriorating economy.

So far, our government has kept the wolves at bay by pumping trillions of dollars into the economy through Payroll Protection loans and enhanced unemployment compensation. Millions of student debtors have stopped making monthly payments on their loans, but the Department of Education granted a temporary forbearance that allows distressed college-loan borrowers to skip payments for a few months.

But significant sectors of our economy are going to come crashing down within the next twelve months. For middle-class families who are being swept up in this tidal wave of economic isolation, bankruptcy is their only hope of regrouping.

Unfortunately, Congress revised the Bankruptcy Code in 2005 at the behest of the banks. The nation's large financial institutions were worried about people shedding their credit-card debt in the bankruptcy courts.  The banks wanted to make consumer debt more difficult to discharge in bankruptcy, and Congress obliged.

The revised Code also made it almost impossible for debtors to discharge their private student loans. Under the 2005 Bankruptcy Reform Act, private student loans are nondischargeable unless the debtor can show "undue hardship," a term the federal courts have interpreted harshly. And, as we all know, that brutal standard also applies to federal student loans.

The corporate world has ready access to bankruptcy, and the federal bankruptcy courts have become a playground for big business.  But the little guys are not treated so kindly.

As the 2020 election season rolls along, we should all think about what it is we want our elected politicians to do.  Number one, in my opinion, is a revision of the Bankruptcy Code. We will never recover as a nation from the financial calamity that is bearing down on us unless working people and student debtors can get a fresh start--the fresh start that the bankruptcy courts were created to provide.

Louisiana Supreme Court votes to allow 2020 law graduates to practice law without taking the bar exam: What's black and brown and looks good on a lawyer?

What's black and brown and looks good on a lawyer? A Doberman Pinscher. Isn't that funny?

When I was young, I practiced law in a small Alaska law firm. Those years were the best years of my life. I was proud to be a licensed attorney, under oath to protect the Constitution and to be honest.

A lot of Alaskans hate lawyers, especially outside the cities. I remember eating lunch with my family at a roadhouse on the Glenallen highway. I was chatting with some guy from the bush sitting at the next table.

The guy asked me what I did for a living, and I told him I was an attorney. He immediately became loudly abusive.  He called me a crook and a lot of other things. We had to leave the restaurant with our food half-eaten to get away from him.

I remember that I wasn't angry about the incident. I was just sorry that I had been unable to make this jerk understand that the law is a noble profession.

Later, I became a college professor, and I quickly realized that attorneys, on the whole, are smarter and more ethical than the people who work in the universities. A lot smarter and a lot more ethical.

I am very sorry to see the legal profession transforming itself from being an honest calling to a racket.  And there's plenty of blame to go around.

First of all, when the market for lawyers began shrinking in the late 1990s, the law schools didn't shrink their graduating classes.  They needed the tuition revenue, and the second- and third-tier schools began lowering admission standards.

Before long, pass rates on the state bar exams began going down because a significant percentage of law graduates weren't intelligent enough to pass the bar exam. In California, only 26.8 percent of bar-exam takers passed the state bar exam that was administered last February.

Second, as everyone knows, federal judges ceased being people who were dedicated to the rule of law and became political partisans. We see this trend most dramatically in the U.S.Supreme Court. We have Republican justices, and we have Democrat justices.

Among the lower courts, judges are being called out for corruption and bias. There are plenty of examples in Louisiana, but I saw cronyism and favoritism in the Massachusetts judiciary, and it's not a pretty thing to see.

A few days ago, the Louisiana Supreme Court ruled 4 to 3 to allow 2020 law graduates to begin practicing law without taking the Louisiana bar exam--ever. What's the rationale for this boneheaded move? The coronavirus pandemic. Apparently, it is just too damned difficult to administer the bar exam through social distancing.

Louisiana Supreme Court Justice John Weimer, who voted for the move, has a daughter who graduated from LSU's law school this year.  Justice Weimer refused to recuse himself from voting on this important matter even though his vote benefited his daughter.

Typically, one out of four first-time test takers fails the Louisiana bar exam.  Thus, it appears that the Louisiana Supreme Court unleashed a fair number of unqualified people to begin practicing law in the Pelican State.

People used to say, "Let justice be done, though the heavens fall," a ringing endorsement of honesty and integrity in the American judicial system.  But we know now that the phrase is just bullshit.

Our new motto: It's a good thing to know the law, but it is a better thing to know the judge.

Louisiana Supreme Court Justice John L. Weimer: It's a good thing to know the judge.

U.S. colleges are in big financial trouble, and it's their own damn fault

I doubt that many college presidents listen to country music, but perhaps they should.

Country music is full of lyrics about people getting in trouble because they made poor decisions. In Mama Tried, Merle Haggard admits he wouldn't be in jail if he had listened to his mother. And of course, there are hundreds of country songs about guys who lost their marriages because they hung out in honky-tonks with loose women.

American colleges and universities, like country-music singers, have made spectacular mistakes. But unlike the hillbilly bards, college leaders won't admit it.  They just raise tuition and go on wild building sprees. Now they can't pay their bills.

As Jon Marcus wrote for The Hechinger Report, higher education's bad choices left it dangerously vulnerable when the coronavirus pandemic became its black swan.  What did the universities do wrong?

First of all, colleges continued hiring faculty even though they were attracting fewer students. As Marcus pointed out, overall enrollment in American colleges and universities shrank by 12 percent since the last recession (2008-2009), while higher education increased the number of employees by five percent.

In particular, many colleges didn't decrease staffing levels for programs that were in decline. Fewer and fewer students choose education or liberal arts as their major. Still, many institutions did not reduce staff or eliminated majors even though the professors had fewer students to teach.

Second, Marcus correctly noted that the trustees at many universities abdicated their leadership role to be "boosters, cheerleaders, and donors."  Many college boards paid their presidents lavish salaries with overly generous benefits, bonuses, and hefty retirement packages.  For example, Penn State University and Michigan State paid departing presidents millions of dollars in golden-parachute money after they left their positions in the wake of explosive sexual-abuse scandals.

Rather than trimming their financial costs or operating more efficiently, most colleges responded to rising costs by raising tuition, forcing students to take out larger and larger student loans. As students reacted to sticker shock, the colleges switched tactics by offering huge tuition discounts of 50 percent or more to lure students into enrolling.  That didn't work out well for most higher education institutions.  Their tuition discounts didn't reverse their financial woes, and revenues continued to drop.

Now the coronavirus has become an expensive problem for colleges and universities. Many of them will close. But they can't blame COVID-19 for their misfortune. A lot of colleges were "dead men walking" even before the pandemic showed up as a black swan event.

A financial tsunami is coming to sweep away our huckster economy: Time to scramble to high ground

I confess I have always been on the lookout for disaster, and so far, I've never experienced one.

As a practicing lawyer years ago, I was drinking a beer with one of my law partners in a harborside bar in Juneau, Alaska.  We happened to catch a breaking news story on the bar's television about an earthquake out in the Pacific Ocean. The reporter mentioned the possibility of a tsunami hitting Hawaii or some other unspecified place.

I told my associate we were leaving the bar that very minute to find high ground. He could barely conceal his mirth, but I was his senior at our law firm, and he dutifully followed me out the door, leaving his half-consumed beer on the table.

There was no tsunami, it turned out, and I admit that I overreacted. But I had a vision of being buried under a wall of cold Pacific Ocean water pouring through the streets of Juneau. I did not want to die that way.

We know, however, that catastrophes happen from time to time. The Holocaust, for example.  Some people saw it coming and escaped before the Nazis showed up, and some waited until the goons beat down their front door.

In Night, Elie Weisel's personal memoir of the Holocaust, Weisel told the story of Moishe,  a neighbor who lived in Sighet, a Jewish village in Hungary. The Nazis arrested Moishe first be because he was a foreign Jew. The Hungarian police rounded him up with other Jews and shipped them to Poland in cattle cars. There the Gestapo took over and transported the Jews to an extermination site.  The prisoners were then forced to dig their own graves, and then they were shot one by one.   Moishe escaped, however, and came back to Sighet to warn his neighbors about what he had witnessed.

Nobody believed him. It was just too incredible.  The Nazis would never slaughter civilians wholesale, they reasoned. But of course, they were wrong.

On the other hand, some people can see the future clearly in all its horror. William Shirer was a news correspondent in Germany as the Nazis came to power.  Shirer's wife was Austrian, and she gave birth to her first child in a Vienna hospital. As it happened, she was in the maternity ward when the Nazis invaded Austria. A Jewish woman in a room across the hall heard the news and knew what it meant. She jumped out a window, killing herself and her newborn baby.

For our own sake and the sakes of our family and loved ones, we have a duty not to lull ourselves into complacency during a time when an unthinkable disaster looms on the horizon.  And we are now in such a time.

The hatred toward our President has not abated since the 2016 election. It has intensified. The Democrats and Republicans are at each other's throat, and they've turned a medical pandemic into a political event.

I don't think it will matter who wins the November election. Either way, Americans are screwed. The Federal Reserve Bank is propping up the stock market to postpone an economic calamity, but that can't go on forever. The market will crash soon,  probably in less than a year.

Then we will know who acted wisely as the storm built on the far horizon and who will lose everything. And the people who did this to us--the crooks on Wall Street and their corporate cronies--will still be living large because they know the party is over and are already taking steps to preserve their wealth.

When the economy collapses, the oligarchs will be drinking mai tais in Costa Rica. The rest of us will be scrambling to pay our mortgages--and we will be damned lucky if we don't lose more than our homes.

College students, beware: Do your own COVID-19 safety check before moving into a dormitory this fall

When I was young, I practiced law in Alaska, and many of my clients lived in the Alaska bush--that vast terrain of mountains and tundra that is off the road grid. Consequently, I traveled a lot in small single-engine airplanes. The bush pilots who flew these planes were all young, and many were inexperienced.

I knew nothing about aviation. I figured--incorrectly--that the pilots were the experts and I crawled into many a small, antiquated airplane without a thought about the danger I might be in.

But my senior partner set me straight. "Richard," he said:

You are responsible for your own safety. Before you get in a plane make your own assessment about whether the plane is overloaded or whether flying conditions are less than optimal.  If you don't feel safe, don't get in the airplane.

That was good advice, and I'm passing it on to young people who plan to enroll in college this fall. Every American university has adjusted its curriculum in response to the coronavirus pandemic.  A lot of teaching will be delivered online, through Zoom, or in socially-distanced class spaces.

 But notice how many colleges are assigning students two-to-a-room in campus dormitories, even though we are in the middle of a pandemic.  All across the nation, thousands of young people--not known for social distancing or wearing masks--are going to live together in close quarters for three or four months.  A good many will experiment with weekend binge drinking at the local bars where they stand an excellent chance of contracting COVID-19.

How safe will that environment be? The colleges say they are concerned about your safety, but they desperately need the revenue from dorm rentals because many of the dorms were built with borrowed money.   The universities have got to have students' cash to service that debt.

Before moving into a dormitory, ask yourself these questions:

1) Will you feel safe sharing a dorm room with another student and sharing restrooms and showers with people you don't know?

2) Will you feel safe eating your meals in a communal dining hall?

2) Does it make sense to live on campus when most of your classes will be delivered online or by Zoom, and there will be few if any opportunities to socialize with your peers?

The colleges want students to live on campus because they want your money. But make your own decision about whether it is safe to live in a dorm this fall. You may conclude it is better to find your own housing arrangements or live at home with your parents.  Remember, the coronavirus doesn't care who you are or where you live.

The Cessna 185 Skywagon: Alaska's flying pickup truck

Things fall apart: MBA programs are collapsing across the U.S. Don't get buried in the rubble

COVID-19 is shaking business education to its core, highlighting weaknesses that were already apparent even before the pandemic.  The Wall Street Journal reported yesterday that 100 business schools closed their M.B.A. programs between 2014 and 2018. Nearly half the schools in a professional association of business colleges anticipate enrollment declines this fall.

What happened?

First of all, the M.B.A. degree lost its luster.  When the federal student loan program lifted the borrowing cap on graduate education, universities all over the United States created new programs or jacked up tuition on the ones that already existed. M.B.A. programs became cash cows for colleges that desperately needed to increase their revenues.

People who already had professional degrees in law, medicine or other fields, falsely believed an M.B.A. degree would make them more marketable.   But suddenly it appeared that everyone had an M.B.A. As The Economist observed four years ago, "Simply put, M.B.A.s are no longer rare, and as such are no longer a guarantee for employment."

Second, as enrollments began to decline in the U.S. market, many business schools began aggressively recruiting international students.  Last year, 40 percent of business-school applicants were from overseas.  Foreign students were especially welcome because they often paid full tuition--no scholarships or grants for those folks.

But foreign-student enrollment has slipped.  The coronavirus has made international students wary of studying in the United States. And no doubt the Asians have figured out that M.B.A. programs at the elite schools are too expensive.

Third, second- and third-tier universities created online M.B.A. programs, diluting the prestige of M.B.A. degrees.  Although a handful of schools have maintained their prestige and allure--Harvard, Yale, Stanford,  etc.--people with online M.B.A.s from second-rank schools discovered that employers were not impressed.

I sympathize with working adults who took two years off from working to obtain an expensive M.B.A. degree. I did much the same thing when I went to Harvard to get a doctorate in education policy.  I was out of the job market for three years and learned almost nothing.

The M.B.A. boom is being seen now for what it often is--a big scam by universities eager to boost their revenues.

So--if you feel stuck in your present job and think you can make yourself more marketable by going to business school, think again.

How much money will you need to borrow to finance your studies? What will you gain from leaving your job for two years to take classes? If you opt for an online degree from a lackluster school, what will that be worth to you when you put that M.B.A. degree on your vita?

If you decide--against my advice--to enroll in an M.B.A. program, at least remember this. Business schools need you a hell of a lot more than you need them.  Don't pay full freight to get a graduate degree in business. Make the bastards give you a grant or a scholarship.