Wednesday, November 17, 2021

Private Student-Loan Debt at an All-Time High: TICAS Releases Snoozer Report

 According to a recent report by the Institute for College Access and Success (TICAS), the 2020 class of college graduates has amassed $136 billion in private student debt.  When this amount is added to the total student debt from federal student loans--about $1.8 trillion, Americans are on the hook for almost $2 trillion in student debt.

Interestingly, students in the District of Columbia had the highest average private-debt level: $51,738. Eight states in the Northeast were in the top ten for high private student debt. The average private student debt in Delaware for the class of 2020 was over $50,000.

As Cody Hounanian, Executive Director of the Student Debt Crisis Center, aptly noted, the TICAS report shows that the costs of higher education have "skyrocketed and are out of control."

But are colleges doing anything to control their costs? Not much. Higher Education thinks it should be congratulated because tuition costs rose less than the inflation rate--the first time in decades that tuition increases didn't exceed inflation. I suppose that's good news of a sort, but the critical fact is that tuition costs go up every year.

TICAS's report concluded with a list of policy recommendations, but they're nothing to write home about.

TICAS recommends more federal grant money for low-income students, more oversight of the private student-loan industry, more loan counselors, and better advertising of income-based repayment plans.

Ho, hum!

TICAS did not recommend bankruptcy relief for student-loan debtors who are overwhelmed by the college debt. It said nothing about cracking down on the private-college industry, other than a vague recommendation to "Tighten Institutional Accountability."

I've been writing about the student-loan crisis for 25 years, and I've read dozens of reports and policy papers by think tanks and policy centers.  

Most of them recommend more money, more transparency, and more lenient income-based repayment programs.  TICAS's recommendations added nothing new.


Another snoozer report on the student-loan crisis!






The College Bookstore: Where Are the Friggin' Books?

 An LSU student, Kathryn Craddock, wrote a scathing critique of LSU's book store--operated, of course, by Barnes & Noble. 

"The colors are bland, the lighting is nauseating, and the inventory is full of tacky, overpriced LSU-themed junk," Craddock wrote in Reveille, the student newspaper. 

She said the bookstore's atmosphere shares more in common with a Walmart than an academic building. "I would even go far as to say that the building and its contents are creepy." 

Ms. Craddock's assessment of LSU's bookstore is absolutely correct. In fact, LSU's Barnes &Noble outlet doesn't even call itself a bookstore. The sign in front of the building simply says "Barnes & Noble at LSU."

Of course, the bookstore has a coffee shop where it sells Starbucks coffee--vile, overpriced stuff. But the store is really a souvenir and t-shirt shop. You can get an LSU t-shirt there for only $35 plus tax.  Or you can buy an LSU cap that will run you close to thirty bucks.

But books? Where are the friggin' books? As Ms.Craddock accurately described:

The LSU bookstore host shelves upon shelves of nightmares. There are the cheesy self-help books and celebrity memoirs with terrible attempts at relating to younger crowds.

I don't live far from LSU's Barnes & Noble, and I occasionally browse around the place. The store's textbook section is squeezed into a corner on the second floor--kinda hard to find.

The first floor is devoted to LSU-themed clothing, bric-a-brac, and--as Ms.Craddock attested, celebrity memoirs and self-help books. I recall seeing a self-help volume titled Taller, Slimmer, Younger--marked down to only a dollar.

I still remember the campus bookstore from my college days. Most of the store was devoted to textbooks, the ostensible purpose for being a college bookstore.

But the store also had a respectably-sized section devoted to fiction and literature. As a first-year college student from rural Oklahoma, I didn't know nothin' bout no literature, but I was attracted to a line of books with similar covers published by Scribner. I bought The Masters, a novel by C.P. Snow; Hemingway's Farewell to Arms; and F. Scott Fitzgerald's Tender is the Night.

I chose these books on my own; they were not assigned to me for a college class. And I read them uncritically. 

But I only knew about these books because I stumbled upon them at Oklahoma State University's campus book store. 

LSU's Barnes & Noble has a small stock of fiction, and you might find something by Hemingway or Steinbeck. But if you buy an LSU-branded water bottle first, you probably can't afford to buy a good novel.

And who needs to read works of fiction anyway when you can buy a self-help book that will make you look taller, slimmer, and younger for only a buck?







 

Tuesday, November 16, 2021

Luxury Student Housing and the Slumification of American College Towns

 In the nineteenth and early twentieth centuries, cotton production was a staple of America's Southern economy.  Even today, the United States is one of the world's largest exporters of cotton.

But cotton has some problems. Grown year after year, cotton depletes the soil.  Before commercial fertilizers became available, cotton growers simply grew cotton on a plot of land until the ground was exhausted and then moved on to places where the land was still fertile.

Something similar is happening in the luxury student-housing market. All over the country, college towns are seeing a boom in student-oriented apartment developments.  Developers buy relatively cheap land near college campuses, build so-called luxury apartments, rent them to college students and then sell the units to new investors--often pension funds and private-equity funds.

Is this a good thing? From an investor's standpoint, luxury student housing is profitable. According to one source, students pay a higher rate per square foot of space than other tenants, and students can take out student loans to pay the rent.

Even better, there is a never-ending supply of new students to keep the apartment buildings full.

But, just as cotton exhausts farmland, student housing gets run down over time, causing maintenance costs to go up. Moreover, college students are famously fickle renters, and they tend to search out newer apartments and offer more amenities than their old digs.

As newer and more luxurious apartment complexes come on the market, older apartment buildings become harder to fill. Rent prices go down, maintenance gets deferred, and then the luxury student apartment complexes of yesteryear become the slum districts of today.

We see this happening in the college town where I live. As the Baton Rouge Advocate noted in a recent news story, the Tigerland neighborhood south of Louisiana State University is "the storied college bar district and surrounding housing options once considered some of the most luxurious for LSU students. . . ."

But most of the Tigerland student apartments were built in the 1960s and 1970s, and they have seriously deteriorated. Several have been converted into so-called "Section 8 housing," housing for low-income households who receive public assistance.

This is no problem for the present generation of college students. They have their pick among hundreds of newer apartments that offer more amenities--fitness centers, swimming pools, recreation rooms, etc. 

Meanwhile, Tigerland has become notorious for crime, including murder. The Sandpiper Apartments on Tigerland Avenue are so infamous that Hillar Moore, the local district attorney, attempted to shut the place down as a "legal nuisance."

According to a 2021 newspaper article, Moore said the police had received 195 calls at the Sandpiper since 2016, an apartment complex with only 14 units!

The Sandpiper's owner asked the judge and prosecutors to be more sympathetic:

"If they shut me down, they should shut down the whole place," he said after the hearing. "The entire neighborhood needs to be condemned, to be honest. You would be appalled to know some of the crimes that are happening there." [As quoted in the Baton Rouge Advocate]

On the bright side, Tigerland is only a short walk to the LSU campus, and the rents are reasonable.  

Why should I care whether the neighborhoods around LSU are becoming slums? After all, I'm a retired professor, not a college student.

But I live in College Town, an old subdivision near the LSU campus. The Sandpiper, which the district attorney tried to shut down, is located only 1.3 miles from my home. 

Tigerland--only a short walk to the LSU campus


 

Wednesday, November 10, 2021

Three-Year College Degrees: Is That a Good Idea?

 I recently stopped off at my local natural food store to pick up a box of my favorite organic breakfast cereal. The stuff tastes like maple-flavored cardboard, which I prefer to strawberry-flavored cardboard.

This cereal is expensive, and when I picked up the box, I noticed it seemed too light--like it was only half full. I realized then that the cereal manufacturer was hiding its rising costs by giving me less for my money instead of charging me more.

Something like that is happening in higher education. According to Inside Higher Ed, "Higher education thought leaders" and several colleges are developing three-year college degree programs. 

Why? Because a college education has gotten intolerably expensive, and a three-year program would theoretically reduce the cost of a college education by 25 percent.

Several models would slash the total number of credit hours from 120 to 90. Sort of like my breakfast cereal. Colleges keep their costs down by offering students fewer courses.

Is this a good idea?

Maybe. Most people agree that many students are taking required courses that don't interest them in the least. Why should an engineering student have to take a course in biology?

But the "thought leaders" are forgetting one critically important fact. Most students don't complete their college degrees in four years. In fact, only a little more than half the students at public universities  (57.6 percent) get their degrees in six years!

Private colleges have a slightly higher graduation rate.  Still, only about two-thirds of private-school students graduate within six years.

That tells me that most college students are in no hurry to complete their degrees and enter the world of work.

Some experts think that three-year college programs have significant drawbacks. A Connecticut college discontinued its three-year program because it "did not allow for the psychosocial and academic development of 18- to 22-year olds" that would occur if students were on campus for four years.

In an article published ten years ago, the Washington Post reported that three-year college programs are not catching on. Some students dropped out of the three-year option, the paper said, because they wanted more time to participate in student activities.

I applaud any effort to cut the cost of going to college. And maybe some of those required classes should be dropped. When I was a student (in the previous century), I took required courses in history, geography, biology, and chemistry.

Except for my American history course, which I loved, the information I got from my required classes went in one ear and out the other. I remember selling my chemistry text within an hour after finishing my final exam. (I got a C.)

Let's keep working on ideas to cut the cost of going to college. We've simply got to get tuition prices down and keep students from taking out student loans they can't repay.  Three-year college programs may be part of the answer.

But let's not cut history courses from the college curriculum. I took an American history class when I was a college freshman, and I still remember why Washington crossed the Delaware.


Why did Washington cross the Delaware, and who cares anymore?



Tuesday, November 9, 2021

College students: Don't Take Out Student Loans to Pay for a Luxury Apartment

 When I was a child, my parents were poor. That was OK because almost everyone in my little Oklahoma town was poor, and we all told each other that we were in the middle class.

By the time I graduated high school, my parents had clawed their way into the actual middle class, and they sent me off to Oklahoma State University to be "educated."

I moved my stuff (a few clothes and an electric popcorn popper) into Cordell Hall, an enormous and depressing men's dorm. I could have signed up to live in a newer dorm--one that had air conditioning, but that would have cost my parents more money.

Reflecting back on that experience, Cordell Hall wasn't so bad. My roommate and I installed a window fan that kept our dorm room temperature down to a comfortable 85 degrees, and I became friends with dozens of guys who were sweating it out with me in Cordell Hall.

Today, college kids have more housing options. They can live in a university dormitory or move into a "luxury" student apartment complex.

What is a luxury apartment complex? Based on the advertising, it is an apartment building with a "resort-style" swimming pool, a fitness gym, in-unit clothes washers and driers, granite kitchen counters, and big televisions. 

What does that cost? A lot. A one-bedroom apartment with a bath can cost $1100 a month or more. Older apartment complexes are cheaper, and students can always cut their costs a bit by sharing a unit.  In Baton Rouge, the luxury apartment complexes have lots of five-bedroom apartments for rent.

Millions of young people from low-income families arrive on their college campuses with access to more cash than they've ever seen before--cash in the form of federal student loans.  If they use some of that loan money to rent a luxury apartment, they can live better than their parents.

What does it matter how much an apartment costs if students take out student loans to pay the rent? And if they max out on the amount of federal loan money they need, they can get their parents or grandparents to take out Parent PLUS loans.

But hear these words of caution. Students should not take on more college debt just to live in a luxury apartment complex with a swimming pool and a fitness gym.  

Why? Because it is easy to get used to so-called luxury living while in college. And students who take out loans to pay for a classy address may graduate to find they can't get a job that pays enough to support their upscale lifestyle.

If that happens, these hapless students will wake up to the shock of seeing their standard of living go down after they graduate.  They may wind up having to vacate their luxury apartment to move into a dump on the wrong side of town--the dump where they should have lived while they were in college.

The Vue: Another Luxury Student Apartment Complex is Coming to Baton Rouge







Thursday, November 4, 2021

Thinking About Going to Law School? Read ABA's Report on the Impact of Student Debt on Young Lawyers

 If you are thinking about going to law school, you should read a recent report titled "Student Debt: The Holistic Impact on Today's Young Lawyers."

According to the ABA's Young Lawyers Division, 90 percent of young lawyers who responded to an ABA survey said they had taken out student loans to finance their legal education. On average, these young attorneys reported taking on $108,000 in student debt.

The debt level for young Black lawyers was even higher--on average, young African American attorneys had accumulated student debt totaling more than $200,000.

Did any of these young lawyers feel regret about their indebtedness? You bet. 

Ninety percent of the respondents said that "their debt impacted their advancement toward major life milestones, and a majority of borrowers said they are anxious, stressed, regretful or guilty due to their loan debt" (as summarized by Insider Higher Ed's Alexis Gravely).

Did these young lawyers feel like they got good value for their law school tuition? Less than half (47 percent) said that their legal education was worth the cost.

How many respondents would still go to law school if they had the opportunity to live their lives over? Only about 6 in 10.  And only a little more than half of the lawyers surveyed (55 percent) said they would attend the same law school.

 In fact, more than half of the survey respondents who were dissatisfied with their law school said they wished they had chosen a school that charged lower tuition. About three out of ten said they wished they had chosen a school located in a better job market.

In essence, the ABA uncovered a high level of regret and dissatisfaction among young lawyers, feelings associated with their student debt.

Does the ABA have any suggestions for solving the problems that were identified by their survey? Not really. 

Here are the ABA's recommendations, which are mostly bullshit:

  • "Expand access to and awareness of, free financial and mental health resources for recent law graduates . . ." In other words, free psychiatrists and debt counselors!
  • "Continue to lead, sponsor, and support initiatives that holistically foster financial wellness and professional development of young lawyers."  I have no idea what that means.
  • "Improve the Public Service Loan Forgiveness Program . . ."  Lots of luck!  
  • "Improve financial literacy and awareness of the legal job market and the cost of law school attendance . . . ." In other words, law students should wise up.
  • "Reform the federal student aid programs . . . ." Again, lots of luck.
The ABA had some more vacuous suggestions, but I won't bore you with them.

Note, however, the ABA did not advocate shutting down all the second- and third-tier law schools that are charging their students out the butt for their law degrees and then turning them out into a lousy job market.

Nor did the ABA advocate lowering law-school tuition rates, which are north of $50,000 a year at many schools.

So--thanks for nothing, ABA.



Tuesday, November 2, 2021

105 Organizations Want Biden to Cancel All Student Loan Debt: It Ain't Happenin'

 More than one hundred public interest groups sent a letter to President Biden this week urging him to cancel all student debt. How much are we talking about? Close to $2 trillion.

I will say upfront that I support wholesale student-loan forgiveness. As numerous studies have pointed out, burdensome student debt has kept millions of Americans from buying homes, having children, and saving for retirement. 

If the President were to cancel all student debt, 45 million college-loan borrowers could pour approximately $5 billion a month back into the economy.  That would be good for everybody.

Nevertheless, I don't think President Biden will wipe out $2 trillion in student debt. As Betsy DeVos, President Trump's Education Secretary, pointed out in a 2018 speech, student loans make up one-third of all federal assets

What will be the consequences if the federal government removes one-third of its assets from the national balance sheet?  I don't think anyone knows.

Also, the President surely realizes that forgiving all student debt undermines the integrity of the federal student-loan program.  If all student loans are forgiven this year, how can the Department of Education expect to collect on the student loans it makes in the future?

Moreover, I don't see the wisdom of wiping out $2 billion in student debt unless American higher education is fundamentally reformed. Tuition rates have reached an insane level--$25 thousand per semester at most private colleges. Colleges are cranking out worthless degrees in the liberal arts and social sciences, not to mention vapid graduate degrees in law and business.

And we have far too many colleges. Does it make sense to grant wholesale student-loan forgiveness while the government continues propping up the for-profit college industry and small schools that are losing enrollment and teetering on closure?

I think everyone who calls for massive student-loan forgiveness is sincere. I believe our President and most members of Congress really want to grant relief to millions of Americans who are saddled with unmanageable debt levels.

But when we look closely at the federal student loan program, we see what a monster it has become. We can't fix the loan program without fixing higher education on a massive scale.  And no one has a clue how we can do that.