Monday, December 27, 2021

Why Doesn't the Federal Government Just Cancel All Student Debt? To Find the Answer, Take a Look at Our National Balance Sheet

 When Joe Biden was running for President, he said he would cancel $10,000 of every college borrower's student debt if Congress consented. But Congress hasn't acted.

Senators Elizabeth Warren and Charles Schumer have urged President Biden to cancel $50,000 of every borrower's federal student loans, saying he has the executive power to do so. But that hasn't happened either.

Why not? Given the hardship that student debtors are experiencing--especially since the COVID crisis began--why not just wipe the slate clean and cancel all $1.7 trillion in federal student debt?

In my opinion, President Biden and most members of Congress would like to cancel all student debt. After all, there are about 45 million student borrowers, and canceling their student loans would make them all very happy. 

But Congress can't do that, and neither can President Biden. And here's why.

Student loans are carried on the nation's balance sheet as assets. As of September 30, 2020, the United States held almost $6 trillion in assets, and about a quarter of that amount is listed as outstanding student loans. 

As of September of last year, total national liabilities amounted to roughly $32 trillion, resulting in a national debt of around $26 trillion (give or take a few trillion).

Thus, if Congress simply wiped out all those student loans or President Biden canceled them through executive action, the nation's balance sheet would look significantly worse than it already does.  Instead of holding total assets of $6 trillion, our government would have only a little more than $4 billion.

Simply put, the federal government pretends that all that student-loan debt--closing in on $2 trillion--will be paid back.  And that fiction cannot be maintained if Congress wipes out all student debt or allows large numbers of distressed debtors to discharge their student loans in bankruptcy 

If you are a student-loan debtor, you have benefited from the moratorium on making monthly loan payments--a moratorium that won't be lifted until May 2022.

But just because you haven't made any student-loan payments over the past two years, don't get your hopes up that Congress will simply forgive all federal student debt.  It won't do it because it can't do it. The Federal government's balance sheet simply can't take the hit.






Thursday, December 23, 2021

Biden administration extends student-loan repayment moratorium until May 2022: Loaning money to cousin Rudy

 Don't lend money to a friend, an ancient proverb advises, because you will lose both your friend and your money.

My cousin Rudy taught me that lesson. A couple of years ago, Rudy called me from the Travis County Jail in Austin, TX, asking me to go his bail.

I can't remember why the Texans locked him up. I think he rolled a homeless man on Congress Avenue or took a leak on the State Capitol grounds. Maybe both.  Rudy was a little vague about the charges.

"You gotta get me out of here," Rudy pleaded. "The jailer is threatening to shave my face and my head. I need a good lawyer."

"How much do you need?" I asked, thinking he would ask for a few hundred dollars.

"I need ten grand," Rudy replied. Ten grand! 

But who can say no to a relative in need? I wired the money. "Just pay me back when you can," I told him.

Did Rudy ever pay back the loan? What do you think?

The federal student loan program is sort of like the money I loaned cousin Rudy. More than 40 million people owe Uncle Sam $1.7 trillion, and most of them aren't paying it back.

In fact, I suspect a few million student-loan debtors have concluded that their loans are really gifts--like the money I wired Rudy.

And the government is encouraging that point of view. The Department of Education has put nine million borrowers into long-term, income-based repayment plans (IBRs).  People in those plans make token payments for up to 25 years, but they will never pay off the principal on their loans.

There are millions more who have gotten economic-hardship forbearances, and they ain't paying nothin.'

And yesterday, the Biden administration extended the moratorium on making student-loan payments until May 1, 2022. By the time the moratorium expires, 27 million student borrowers will have avoided making student-loan payments for more than two years.

Let's face reality. Just like my loan to cousin Rudy, the feds will never collect all of that student-loan debt. 

Just pay me back when you can!




Southerners eat black-eyed peas and cabbage on New Year's Day: Do these foods symbolize prosperity or survival?

According to the Farmer's Almanac, Southerners traditionally eat black-eyed peas, cabbage, and pork on New Year's Day. 

The Almanac says these foods symbolize prosperity. Cabbage represents money, black-eyed peas suggest coins, and pork represents forward motion.

On New Year's Day, I will honor this Southern tradition by eating pork, black-eyed peas, and cabbage.  But I wonder if these foods represent something more fundamental than prosperity. 

Perhaps they symbolize survival.

If you are eating cabbage and black-eyed peas in January, that means you planted a fall garden and were able to harvest your crops.  

If you are eating pork in the winter, that means you slaughtered a hog in the fall and are getting some protein in your diet.

In my mind, the humble foods that Southerners eat on New Year's Day are a sign that we will survive until spring because we made prudent preparations in the fall; we planted winter crops and raised a pig.

This year, I planted a fall garden and began harvesting my produce in early December.  I discovered that broccoli, mustard greens, collards, and cabbage are easy to grow and thrive in cool weather.  

 So, I plan to plant a fall garden every year from now on. For me, my fall garden will be a reminder that I can't depend on the government, the national economy, or the global supply chain to keep me alive in my winter years. Ultimately, I alone am responsible for myself and my family.

(Nevertheless, I hope I am never obliged to own a pig. And I'm not crazy about chickens either.)













Wednesday, December 22, 2021

Urgent message from the real world to college administrators: We are sick of academic politics

 I don't care if you are a cool, young wokester with an AOC t-shirt and a biodegradable water bottle or a 90-year-old grandma who wears a MAGA hat and carries a Glock in her purse. Let's all agree on one thing: America is sick of academic politics.

Here are some examples of gratuitous political posturing coming out of our universities. At San Diego State University, a dean tweeted this totally inappropriate message:

Just so we’re clear on the Right’s agenda: racism good, abortion bad, money good, women bad, capitalism good, sustainability bad, stupidity good, science bad, power good, equality bad, white people good, nonwhite people bad. Stench, indeed.

 At MIT, the administration disinvited a University of Chicago professor to give a prestigious lecture because of his unpopular views about colleges' diversity agenda.

And at Buffalo State College, the administration won't rehire a writing instructor because she wrote that she was "sick of talking about Black Lives Matter."

I'm not speaking from a political perspective. I don't give a damn about anybody's politics--particularly the politics of fatuous university administrators.

I'm thinking about the students who are burying themselves in student loans to attend universities run by fools. 

They didn't sign up for a lifetime of debt just to become a captive audience for a bunch of gasbag administrators who think they are entitled to inflict their political views on the paying customers.

To paraphrase Mark Twain, the Constitution gave Americans the right to free speech. Thank God most people are smart enough not to use it.

Woker than thou



 

 

Monday, December 20, 2021

Columbia University v. Jacobsen: Do Colleges Teach Wisdom, Justice, and Beauty?

In a case decided over 50 years ago, Columbia University sued Roy Jacobsen, a former student, to collect about $1,000 in unpaid tuition.

Jacobsen countersued, demanding $7,000 in damages. He claimed Columbia had not taught him what it promised. Specifically, Jacobsen pointed to language in a brochure that said it would teach students "wisdom, truth, character, enlightenment, understanding, justice, liberty, honesty, courage, beauty and similar virtues and qualities."

Jacobsen also argued that Columbia had not lived up to its Latin motto: In lumine tuo videbimus lumen ("In your light, we shall see light") and a similar inscription over the college chapel: "Wisdom dwelleth in the heart of him that hath understanding."

In essence, as the appellate court noted in its opinion, Jacobsen's essential beef was that Columbia "does not teach wisdom as it claims to do."

Not surprisingly, a New Jersey trial court dismissed Jacobsen's claims, and the appellate court affirmed the lower court's decision.

"[W]isdom is not a subject which can be taught," the court observed,  and "no rational person would accept such a claim by any man or institution."

Obviously, the New Jersey court is correct. Students should not be able to sue a college because they failed to obtain all the intangible benefits that the college breezily promised in its brochures.

Nevertheless, the Jacobsen case reminds us that students need to think about why they signed up for college before writing those tuition checks.

The average cost of attending Columbia is more than $80,000 per year. Nobody lays out that kind of bread to get a deeper understanding of wisdom, justice, and beauty.

No, when students enroll at Columbia, they do so for one primary reason. They hope to benefit enough from their education to obtain a good job--one that justifies their student loans.

In lumino tuo videbimus lumin: What the hell does that mean?

Thursday, December 16, 2021

Omicron variant harasses American colleges: "I've enjoyed as much of this as I can stand!"

 Porter Wagoner, singing about a chance encounter with an ex-girlfriend, quickly bade farewell. "I've enjoyed as much of this as I can stand," he tells her.

College students are singing the same song. The COVID pandemic has been with us for almost two years, and Omicron promises to prolong the disruption well into 2022.

This week, several colleges announced that final exams for the fall semester would be online, and classes at some schools were temporarily switched to online formats earlier in the fall term.  

NYU recently banned all "discretionary, nonessential nonacademic gatherings," presumably allowing nonessential academic meetings to proceed. At some schools, students who meet friends over pizza and beer at an off-campus dive run the risk of being suspended from their classes.

Since the campus closings in March 2020, students have sued more than 300 colleges, demanding their money back. Specifically, they want tuition refunds for classes that switched from face-to-face classroom settings to an online format.

They also want their fees refunded--the fees they paid for access to campus recreation centers, varsity sporting events, and collegiate health clinics. You closed all these venues, the students argue, but you kept our goddam money.

As I have said since the beginning of the pandemic, I sympathize with the universities.  College leaders acted reasonably when they closed their campuses in the spring of 2020, cleared out the dorms, and sent students home.

But the students who got booted paid big bucks to take classes during the 2020 spring semester.  At the private schools, tuition bills were north of 25 grand! Many students shelled out $30,000 for the dubious privilege of matriculating at snooty universities for four months when you tack on housing, fees, and books.

Colleges responded reasonably to a public health crisis when they closed down in March of 2020, but they need to understand that it costs too damn much to go to college these days. Students will put up with this banditry when they can stroll through elm-shaded campus quads and listen to gassy professors opining in quaint, wood-paneled classrooms.

But they ain't gonna put up with face-to-face college classes periodically going online or rules that prevent them from meeting their friends off-campus.  Not for long anyway.

College enrollments are already down significantly from pre-pandemic levels.  Men, in particular, are increasingly deciding to sit out of college until the chaos comes to an end.

What can colleges do to entice students to continue taking out loans to pay their tuition bills?  They can start by publicly admitting that online classes are inferior to on-campus learning and lowering their prices accordingly.


Porter Wagoner: "I've enjoyed as much of this as I can stand!"





Wednesday, December 15, 2021

Paul Campos says that college presidents and varsity coaches "are robbing us blind," and he is right

Paul Campos, a professor at the University of  Colorado Law School, wrote an essay for The Chronicle of Higher Education on the astounding salaries paid to college football and basketball coaches, who are now making far more money than university presidents. 

Campos commented specifically on the salary paid to Louisiana State University's new football coach, Brian Kelly, and Michigan State University's contract with its football coach, Mel Tucker. Tucker and Kelly both got ten-year contracts worth $95 million.

Varsity coaches are paid far more than college presidents, but they too are making out like bandits. As Campos points out:

[T]he outrageous athletic salaries can even seem to justify the administrative overpay. By a kind of perverse psychological effect, paying a college football coach $10 million per year makes paying a university president $1.5 million, a provost $800,000, and various vice provosts and vice chancellors $500,000 each seem positively parsimonious by comparison. 

Campos notes that most universities operate as tax-exempt charitable institutions,  but they have been captured "by the most rapacious forms of contemporary capitalism." Or, as the Campos essay's headline put it, "Coaches and Presidents Are Robbing Us Blind."

Meanwhile, undergraduates are increasingly being taught by graduate students and non-tenured instructors who are paid a mere pittance.  At my former university, some instructors are paid less than $3,000 per course. If they teach five courses per semester (a killing teaching load), they work at the poverty level.

Meanwhile, the football coach makes three-quarters of a million dollars a year.


LSU's new football coach makes $9.5 million a year and gets personal access to private jet