Sunday, August 21, 2022

Thinking about getting a master's degree from a posh private college? Don't do it, buddy!

 Are you one of those poor schmucks who borrowed a lot of money to get a college degree that didn't pay off? 

Perhaps you attended the New England Conservatory of Music, where only 57 percent of students earned more than a high school graduate six years after enrolling.  Or maybe you attended Grambling State University, an HBCU in North Louisiana, where only 43 percent of students earned more than a high school graduate six years after they enrolled.

How will you pay off those student loans if your college degree didn't increase your income? 

Perhaps you think that a master's degree from a posh private school will get you out of the financial hole you dug for yourself when you took out student loans to earn a bachelor's degree.

So you apply to one of those private universities and are surprised and flattered when you get an admission letter. Will a master's degree from a private college get you into a higher income bracket?

Maybe. Maybe not.

Jason Delisle and Jason Cohn, researchers at the Urban Institute, published a report last month that examined master's programs where students acquired high debt levels but made low salaries.  The schools with the highest debt-to-earnings (DTE) ratio had average student-loan debt of $77,000 and an average income of only $43,000 two years after graduating.

Delisle and Cohn found that private nonprofit colleges are most likely to have high-debt-to-earning ratios. Here is what they reported:

Programs in the high-DTE group are heavily concentrated at private nonprofit universities. Although these institutions offer 44 percent of all master's degree programs, they account for 75 percent of high-DTE programs. 

Delisle and Cohn also found that master's degree programs in the high DTE category were often in the social-sciences field:

By looking at specific program types, we see that three types of master's degrees account for a large share of borrowers in the high-DTE category: social work (17 percent); clinical, counseling, and applied psychology degrees (15 percent); and mental and social services (12 percent). 

The Urban Institute's research did not focus on MBA degrees or graduate degrees in fields outside the social sciences.  Nevertheless, other soft-sciences master's programs are also too expensive based on the salaries of their graduates. 

A one-year master's degree in journalism at Columbia University cost an average of $147,000 five years ago when the starting salary for journalists was only $40,000. And as the Wall Street Journal reported last year, a graduate degree from Columbia in film costs an average of $181,000, and graduates had average salaries of $30,000 two years after graduating. 

So, here are three takeaways:

First, as Jason Delise and Jason Cohn pointed out, graduate degrees in social sciences are much cheaper at public institutions. If you are thinking about getting a master's degree in social work or counseling, you will get better value if you attend your state university rather than a private college.

Second, private colleges have promoted graduate-degree programs to generate revenue.  Under the Grad PLUS program, graduate students can take out federal loans to finance their studies up to the cost of attendance--no matter how expensive a program is. Thus, we can thank the federal government's Grad PLUS program for the inflated price of graduate studies and the mindless proliferation of graduate programs.

Finally, many master's degree programs are simply not worth the cost, and this is true not only for the social sciences but MBA programs and graduate degrees in education.

The bottom line is this: If you are already burdened by student loans to get your bachelor's degree, you could wind up deeper in debt by obtaining a master's degree from a private college without getting a job that pays enough to service your student debt. 


Did Cool Hand Luke get his master's degree from Columbia University?








Wednesday, August 17, 2022

A House Divided: Unless We Become Kinder and More Tolerant, America Will Collapse

 Years ago, I read The Coming Fury, Bruce Catton's classic study of the United States on the brink of civil war. In the months preceding the shelling of Fort Sumter, Catton explained, extremists in both the North and The South wanted a war. 

And war they got. When it was over, 600,00 men were dead, and thousands of veterans spent the rest of their lives without their arms or legs.

America was a house divided in 1860, and America is a house divided today. Last night's Republican primary in Wyoming illustrates my point. Liz Cheney, the Republican congresswoman who voted to impeach Donald Trump, was swept out of office by a landslide.

Curiously, Cheney carried two regions of the state: Teton County, where wealthy Democrats reside around Jackson Hole, and the region around the state capitol of Cheyenne--where most  of Wyoming's liberal-leaning government bureaucrats dwell.

As predicted, Democrats "crossed over" in Wyoming's Republican primary--not to support Liz Cheny but to register their contempt for Republicans and Donald Trump, the Republican's tarnished standard bearer.

We similar signs of division everywhere. Dana Milbank, the Washington Post's chief loon, wrote a column a few weeks ago expressing the desire for Texas and Oklahoma to leave the Union. 

In Texas, Governor Greg Abbott is busing illegal migrants to New York City and Washington DC. Both towns are self-proclaimed sanctuary cities, but the mayor of DC wants to call out the National Guard to help control the people the District of Columbia claims to welcome.

In California, the state's government forbids travel by California employees to more than 20 states. Why? The reasons are varied, but they include disapproval of states that don't want youngsters with testicles to compete in girls' athletic contests.

Do you want another example? A poll of likely Texas voters found that a strong majority  want to leave the United States! That will make the Washington Post  and the liberal elites happy, but do they really want the nation's leading exporter, energy producer, and cattle raiser to head out on its own? I would think not.

Today the United States is very much like it was just before the guns began to play in 1861.  We need to step back and reflect a bit. Does it make sense for our political leaders to sow disharmony and denigrate the people who live in states where traditional values still prevail?

I do not think it does.





Tuesday, August 16, 2022

LSU Health Chancellor Makes $1.1 million year and Flies First Class: Who Says Higher Education Doesn't Pay Offf?

 If you live outside the bunkers of academe, you may have a rosy view of our nation's colleges and universities. 


Perhaps you envision leafy campuses, stately ivy-covered buildings, and kindly professors wearing tweed jackets with quaint elbow patches--professors who give scintillating lectures to enraptured students and then return to their offices to spend long hours writing scholarly tomes that will make the world a better place.


If that is your image of academia in the United States, you haven't been paying attention. Higher education has become a racket primarily financed by federal and private student loans--loans taken out by millions of students who aren't getting much for their money.


At the top echelon of the slothful, corrupt, and irrelevant cesspool that calls itself higher education, some people are getting rich. For example, let's examine Larry Hollier, who until recently was Chancellor of the LSU Health Sciences Center in New Orleans. Before stepping down from the chancellor's job, Dr. Hollier made $1.1 million a year. Not bad!


And get this. Hollier also had a fat expense account provided by the LSU Health Foundation, a non-profit entity not subject to state spending rules. According to the Times-Picayune, which reviewed 600 pages of Hollier's reimbursement requests, the Foundation reimbursed the chancellor for $128,000 in expenses over three years.


What did Hollier charge to his expense account? Such things as limousine services and first-class plane tickets when he traveled out of state, expensive hotel rooms, and meals at high-class restaurants.

For example, Hollier attended a one-day conference in New York City, but he and his wife flew first class at the Foundation's expense and arrived three days early. Meals, lodging, and transportation for that foray cost $4,200. 


A spokesperson for the LSU Health Center said Hollier's expense account was intended to be used for "high-level faculty recruitment, team-building activities" and expenses connected with graduation exercises. 


Hollier's fat expense account wasn't his only perk. The LSU Board of Supervisors awarded $93,100 in scholarships to three of his grandkids. Hollier said he had nothing to do with those scholarship awards, and of course, I believe him.


Apparently, the LSU Health Foundation wasn't paying much attention to how Dr. Hollier was using his expensive account. That's puzzling because the Foundation has sixteen full-time employees.


Or maybe the Foundation had no idea that Dr. Hollier might use his charge card the way he did. But that can't be true because the Foundation experienced a similar expense-account scandal in 2009--thirteen years ago!


Let us never say that higher education doesn't pay off. It pays off handsomely for top-level university employees. Too often, however, it doesn't pay off for students.


Who says higher education doesn't pay off?







Saturday, August 13, 2022

Own a Piece of the American Dream: Buy Stock in the For-Profit College Industry

 Fifty years ago, most Americans understood that education was a public responsibility. It was the community's job to operate good public elementary and high schools. It was the state's job to support high-quality public colleges and universities.

All in all, this notion of publicly supported education worked well. Some public schools were better than others, but most were pretty good.

Some public universities were also better than others. The University of Michigan, University of Wisconsin, the University of Virginia, and the University of Texas were universally regarded as some of the finest universities in the world. Still, even the states of Idaho, Oklahoma, and other flyover states operated pretty good public colleges.

Of course, there was always a place in American education for non-profit schools and colleges. Harvard, Dartmouth, and dozens of lesser-known private colleges were well respected as public-spirited organizations, and the Catholic Church operated flourishing parochial schools.

Until recently, it hardly occurred to anyone that schooling should be turned over to investors who could make a fast buck in the education racket.

How times have changed. We now have for-profit K-12 charter schools and almost a thousand for-profit colleges.

And anyone can get in on the action. Equity funds own some for-profit colleges, and others trade on the stock market.

Adtalam Global Education (ATGE), which owns Walden University and two medical schools in the Caribbean, traded for $39 a share last week--down a few bucks from its 52-week high. 

Grand Canyon Education (LOPE) operates Grand Canyon University, a Christian school that makes money for investors. You can buy into that outfit for $84 bucks a share.

You can't buy shares in the University of Phoenix (UP) anymore. In 2017, a private equity fund out of Chicago took over the company that operates UP.

We all know that complaints have barraged the for-profit industry for many years. Critics have argued that for-profit college tuition is too high at most schools and that many for-profits deliver a shoddy product. Some commentators have pointed out that the for-profit industry preys on minority and low-income students.  

But, hey--this is America, and we're all entitled to make a buck off the rubes. So, if you want a piece of the American Dream, you can purchase some for-profit stock or buy a piece of an equity fund that owns a college.

As for me, if I am going to invest in a dodgy industry, I would prefer to buy stock in the casinos. 

Chicago, home to Adtalem's corporate headquarters



Thursday, August 11, 2022

Unlicensed medical doctor who owes $650,000 in student debt is directed to pay 80 bucks a month for 25 years: "The law is an ass"

 

"If the law supposes that," said Mr. Bumble, squeezing his hat emphatically in both hands, "the law is a ass - a idiot".

Charles Dickens, Oliver Twist 


About a year ago, I blogged on the bankruptcy case of Tamara Parvizi, a 51-year-old unlicensed medical doctor who sought to discharge $650,000 in student debt --most of it accumulated from going to medical school.


Actually, Ms. Parvizi attended two medical schools. First, she went to med school at the University of Rochester but dropped out. Later she enrolled at St. George's University School of Medicine, a for-profit medical school on the Caribbean island of Grenada.


Parvizi wasn't represented by a lawyer when she went to bankruptcy court. As an appellate court observed in a footnote, she didn't even file a proper complaint. She simply submitted a two-page letter asking to have her student loans forgiven.


Judge Elizabeth Katz, a Massachusetts bankruptcy judge, denied Parvizi's plea for relief, ruling in part that Parvizi had not made sufficient attempts to maximize her income.


Parvizi appealed, and a Bankruptcy Appellate Court affirmed Judge Katz's decision. The BAP court agreed with Judge Katz that Parvizi had failed to maximize her income, although it admitted that she would be unable to pay back such a mountainous debt even if she tried her best to get a better-paying job.


Judge Katz and the BAP court both said Parvizi should sign up for a REPAY income-based repayment plan. Based on her low income, her monthly payments would only be $80 a month. If she makes regular payments for 25 years, her student debt will be forgiven.


Of course, as the BAP court acknowledged, Ms. Parvizi's debt is negatively amortizing. In other words, her debt grows larger every month because her $80 payments aren't nearly large enough to cover accruing interest.


Indeed, Ms. Parvizi's debt has probably grown by $50,000 since the date of Judge Katz's 2021 decision. That's right--she must now owe around $700,000.


Does any of this make sense to you? It makes no sense to me. Why force a woman in her fifties to make token payments on a debt that will grow to well over a million dollars by the time she finishes her REPAYE plan?


Who benefits from this nonsense? Two medical schools benefited, and one of those schools is a for-profit shop located outside the United States.

And, of course, the four federal judges who reviewed Ms. Parvizi's debt are doing okay. They all make nice salaries and will get fat federal pensions.


The outcome of this litigation is insane. Perhaps Charles Dickens was right when he observed in one of his novels that "the law is an ass."


Our government loans people money to enroll at foreign medical schools


Sunday, August 7, 2022

Would You Flip Burgers For $12 an hour? I Thought Not

 I live near a Sonic Drive-In restaurant that has been closed lately during business hours. At first, I thought it closed for good, but yesterday I saw a big HelpWanted sign out front.

Sonic is looking for  "crew" workers--$10 per hour. It's looking for cooks--$12 an hour. And it's looking for managers--$15 an hour.

I had a lot of low-end jobs when I was young, and I did them willingly. I saved some of the money I made working for a buck an hour and banked it at the Anadarko Bank & Trust, where it earned three percent interest.

I was willing to do those jobs because I was confident about my future. Someday, I told myself, I would have a middle-class job and a middle-class lifestyle.

 Yesterday, as I drove by that closed Sonic Drive-In, I found myself wondering how many young Americans are willing to work for $10 or $12 an hour.

Before the pandemic, many adults in my town were willing to work low-wage jobs. But then things changed.

During the pandemic, many unemployed Louisianians received enhanced unemployment checks--equivalent to an annual salary of about $40,000. According to a 2020 Brookings report, $40,000 a year puts a family of four in the middle class.

Forty thousand dollars a year not to work; that's a pretty sweet deal. How many people who got that deal are willing to flip Sonic burgers or do other menial work for 40 hours a week only to earn an annual salary of $25,000? 

Not too damn many, judging from the Help Wanted signs I see all over Baton Rouge. 

According to the Wall Street Journal,  the national economy created about half a million jobs last month, and that unemployment is down to only 3.5 percent.  That's terrific news.

However, remember that the 3.5 percent unemployment rate only measures people looking for work. Millions of Americans aren't looking.

They certainly aren't looking for the countless minimum-wage service jobs in the United States: big-box store clerks, airport baggage handlers, burger flippers, and receptionists.

Years ago, economists predicted that the United States would transform itself from being a manufacturing economy to a service economy.  In the future, the pundits predicted, manufactured goods would be assembled in Asia while Americans would perform high-end services--medical care, research, financial services, legal services, and education.

That prediction turned out to be a pipe dream. It is true that Americans don't manufacture much anymore, but most of them aren't working in high-end service professions.

No, Americans are finding tons of jobs in the low-end service sector: jobs that pay between $10 and $15 an hour: hotel maids, fast-food cooks, delivery truck drivers, and retail sales workers.

Until the Covid pandemic, many Americans were willing to do those jobs, at least until they could find something better. However, once they got a taste of what it was like to raise their living standard by not working, they became unwilling to lower their living standard just so they could go home at the end of the day smelling like a hamburger.

That's my opinion anyway. Would you like fries with it?


Ten bucks an hour to smell like a hamburger? 



Thursday, August 4, 2022

The Middle Class is Shrinking, But You Already Knew That

In recent years, the Brooking Institution published a series of papers as part of its Future of the Middle Class Initiative. In a 2020 paper, Brookings defined the Middle Class as the middle 60 percent of household income distribution--"not poor, but not prosperous either."

How much income must a family have to be considered middle class under the Brookings definition? Its paper says that the average middle-class income is about $70,000, and a family of three would have to have an income of between $40,000 and $154,000 to be middle class.

In that same paper, Brookings reported on income growth among American households between 1979 and 2017. According to the paper's analysis, the bottom 20 percent of American families (the lower class) saw income growth of 86 percent, and the top 20 percent (the upper class) saw income growth of 111 percent.

In contrast, the middle class saw income growth of only 49 percent in that same period.  In other words, the middle class lost ground--especially compared to the wealthiest American families. 

In a 2022 paper, Brookings examined wealth accumulation across generations.  This paper is accompanied by dizzying charts and data, but I think a fair summary is this: Rich people tend to stay rich across the generations, and poor people are more likely to remain poor.

I am somewhat jaundiced about all this Brookings analysis. First, anyone who claims (as the 2020 Brookings paper did) that a family of three living on $40,000 a year is a middle-class family has not lived with two people on forty grand a year. That definition is simply not accurate.

Secondly, I believe the American middle class is disappearing so fast that it is misleading to even speak of a middle-class America.

Robert Reich, President Clinton's Labor Secretary, wrote a book in 1991 titled The Work of NationsReich said that the top 20 percent of income earners--"the fortunate fifth"--were prospering in a global economy and lived in a different world than the rest of us.  The Fortunate Fifth live in gated communities or secure luxury apartment buildings, send their kids to private schools, and have little interest in what is happening to the rest of us.

I think Reich's 1991book was prescient in its analysis.  Today, the wealthiest Americans tend to be clustered on the East and West Coasts. Many have acquired their wealth by financial manipulation and speculation. Their interests and desires are endorsed by the elitist media, national political leaders who cater to corporate lobbyists, and the nation's wealthiest universities.

In short, the Fortunate Fifth doesn't give a damn about the bottom 80 percent, who see their lifestyles declining rapidly due to inflation, growing household indebtedness, and diminishing opportunities to prosper.

As I said, America is disappearing as a nation of middle-class families prospering in a democratic society. Our country has become an oligarchy--controlled by powerful people who don't care about the shrinking middle class and, in fact, despise us. 

Perhaps that is why the people traveling from coast to coast in private jets refer to the places where most Americans live as flyover country.