Yesterday’s WSJ – Parents are Drowning in College-Loan Debt:
Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due. Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government…“This credit is being extended on terms that specifically, willfully ignore their ability to repay,” says Toby Merrill of Harvard Law School’s Legal Services Center. “You can’t avoid that we’re targeting high-cost, high-dollar-amount loans to people who we know can’t afford to repay them.”
We already knew, of course, that many former students are suffering under the burden of their student loans for years and decades, and that the problem is so common and so severe that it is impacting major purchases of things like houses and cars, and probably also marriages and business formations. The article indicates that in many cases the exploding costs of higher education are devastating their parents as well.
And a few days ago:
The California State Auditor has delivered a damning assessment of the management practices at the single largest university system in the United States. The Chronicle of Higher Education reports:
The California State University system has increased its hiring of managers at a steeper rate than its hiring of other employees over the past 10 years, according to a new state audit.
And in a report on the audit released on Thursday, the state auditor, Elaine M. Howle, wrote that the system could not sufficiently explain why it needed all the new managers, including deans, head coaches, and vice presidents, among other positions. […]
The audit also found that the system’s 23 campuses did not have policies for periodically comparing their spending levels or reviewing their budget limits.
In other words, administrators have been hiring more administrators for make-work positions and giving each other raises without sufficient accountability in a self-perpetuating cycle of bureaucratic decay that is sadly endemic to academia at large.
For many people, college is one of the largest investments they will ever make. Yet kids and their parents are encouraged to sign up for long-term indebtedness without serious analysis of risks, and alternatives. The payoff, of course, goes to the higher-education complex and especially to the growing number of college administrators. As the WSJ article notes:
The financing fueled a surge in college enrollment. Between 2005 and 2010, enrollment grew 20%, the biggest increase since the 1970s.
And more enrollment means more money, debt-fueled or otherwise, coming in the door…and hence more and better-paid administrators. Regardless of whether all the new students actually come out ahead or not, regardless of whether anyone actually learns anything or not. And at least in the California system, it appears that the senior executives cannot be bothered to apply ordinary and prudent methods of budgeting and financial analysis in managing the vast sums of money that have been entrusted to them.
The Lexuses and McMansions of the rapidly-growing class of college administrators are paid for with a great deal of human suffering on the part of students and their parents…not to mention taxpayers in general.
Easy solution. Pass a bill making the age of majority 25, so that any loans signed for by children under that age become null. Added advantage: children under 25 can’t vote in future.
It would mean that you might have to rationalise a few other laws – drinking age, for example – but that would be a price worth paying.
Who started this mess? My own guess – out of admitted ignorance – would be that it started under one of the Three Bad Presidents; Slick Willie, W or O.
P.S. Would it be premature to refer to the Four Bad Presidents, and add Donald J Hellary to that list?
Better solution (pushed by Glenn Reynolds)–colleges must cosign on any loan given to their students. When students see that their colleges refuse to sign on for their $70K in debt for a worthless french lit degree, they’ll get the picture. I think this is even better than ideas to make student loan debt dischargeable in bankruptcy.
Also, we need to appoint someone like Mike Rowe as Secretary of Education. Someone who will stop telling teens (and their parents) that they’re doomed to be complete failures if they don’t go to the best, i.e. most expensive, college possible.
I agree on the concept of making the colleges eat bad debt.
My youngest daughter, who is now mad at me and does not speak to me, went to U of Arizona as an out of state student. I wanted her to work a year in Arizona and live in a house I owned there but she wanted to go first. As a result I paid out of state tuition.
I was very disappointed in her freshman survey courses, including one which taught her things that are not true. One example was that (This was on her study guide for her final in “US History Since 1877”) the “Silent Majority of the 60s was made up of white people who refused to accept the 1964 Civil Rights Act.” I was helping her with her studies and saw this.
I called the assistant dean for “General Education”and complained. He told me I should think about another college for her.
She came back to California after a bad experience with a room mate and went to a Jr college in San Diego, rooming with some friends at San Diego State.
She decided she wanted to go back to U of A and I told her I wanted her to go to San Diego State as U of A had raised tuition by a third while she was there.
She was determined to go back to U of A and I went along, being a weakling with my kids. She did graduate in French which was better than it could have been.
I am paying off a parent loan for the last 18 months at U of A. The French was OK as most of the propaganda is in the freshman “General Studies” courses.
Duke U shows what these General Ed courses can turn into.
The proposed curriculum, called Blue Print, also emphasized areas of knowledge, methods of learning and classroom innovation but sought to streamline requirements, promote student decision making and create something distinctively Duke. It decreased the graduation requirement to 32 courses from the current average of 35 to discourage precollege credits, such as from Advance Placement courses, but otherwise put students in the driver’s seat. A credit/no-credit option — similar to a pass/fail, to be decided up to 96 hours after a grade is posted — for up to one course per semester, up to four courses, was introduced to encourage intellectual risk taking, for example.
A first-year “Frameworks” requirement involved a taking a group of thematically linked courses in the humanities, natural sciences and social sciences that would promote shared learning experiences (including common course materials and activities) and intellectual inquiry. These clusters also would involve coordination with residential life, capstone projects for an end-of-year showcase, and explicit opportunities for students to reflect on their intellectual lives and goals.
In other words, leftist BS.
“In other words, administrators have been hiring more administrators for make-work positions and giving each other raises without sufficient accountability in a self-perpetuating cycle of bureaucratic decay that is sadly endemic to academia at large.”
It’s not just academia, it’s Parkinson’s Law of bureaucracy, first documented in 1957. “The rise in the total of those employed is governed by Parkinson’s Law and would be much the same whether the volume of the work were to increase, diminish, or even disappear.”
“Better solution (pushed by Glenn Reynolds)–colleges must cosign on any loan given to their students.” No, it’s a far worse solution. First, because it doesn’t give one a route to denying the vote to immature chumps. Secondly because it would only put a stop to future loans whereas my scheme (of declaring retrospectively that everyone under 25 was a minor and therefore the loan agreements are null) solves the whole problem of existing debts.
The consequent financial crash is coming anyway; you might as well get some advantage out of it.
Alternatively, pass a law restoring the right of these people to welch on student debt by bankruptcy. It’s my impression that reneging on debt by that route is rather approved of in the US, so why not student debts too? If it’s good enough for companies owned by Donald J Trump, why isn’t it good enough for Gormless S Chump, BA?
Harpoon…Parkinson’s Law….yes, bureaucracy tends to grow in all types of organizations, but it thrives most successfully in organizations where there is little or no incentive for limiting that growth. In a business, too much bureaucracy raises costs and hence cuts income. In American universities today, the administration can just raise costs and demand more money.
A CEO friend spoke of “playing Whack-a-Mole” to suppress outbreaks of bureaucracy. It would appear that in most American universities the game of Whack-a-Mole is unknown.
“First, because it doesn’t give one a route to denying the vote to immature chumps.”
You can’t pass a law to deny the vote to immature chumps. Or even just young chumps. You’d have to amend the constitution.
The problem with making student loans dischargeable in bankruptcy is that it doesn’t punish the schools. They still get to keep the money. If you make them cosigners then they have to pay it back.
Universities receiving federal money directly or as loans should be required to abide by specific and detailed financial reporting requirements. We shouldn’t have to ask ‘what did they spend all that money on?’, the question should be definitively answered in publicly-available annual reports.
And university presidents should be required to certify the accuracy and completeness of those reports, as corporate CEOs are required to do under Sarbanes-Oxley, with serious penalties (to the individual) for lying.
Mike K reports his daughter was taught the “Silent Majority of the 60s was made up of white people who refused to accept the 1964 Civil Rights Act.”
Ha! MY daughter’s college history instructor taught that blacks were denied the vote UNTIL the 1964 Civil Rights Act… was passed by the Democrats.
Fortunately my daughter (then aged 16) was homeschooled, and among other resources we’d already studied was the movie “His Girl Friday”, based on the play “The Front Page”, the 1930s background of which is a corrupt pair of politicians attempting to win one million “colored” votes by executing a white nebbish who — more or less accidentally — shot a “colored” policeman.
ANYhow, as she moves from the 2 year local college to a 4 year college we see the “student aid” office tells her she’s eligible for five different kinds of “aid” – CLICK HERE. Or, (very small) click here to see the terms and conditions, and if one does click thru one sees that four of the five forms of “aid” are loans, ONE of which is a contract that will be sent to the parents to take out a loan on the student’s behalf.
All from one top level CLICK HERE.
My 4.0 GPA, honor-earning graduate from the local community college with NOT be attending THAT university.
MY daughter’s college history instructor taught that blacks were denied the vote UNTIL the 1964 Civil Rights Act
We could probably compare horror stories.
Mine was also taught that the western pioneers were taught how to farm by the Indians. This, of course, was the Plains Indians who were hunter gatherers. The Navajos and Hopi did farm but were pretty isolated and did not come into contact with white settlers until quite late.
Maybe the instructor was confusing the Iroquois with the Apache and Comanche. I wouldn’t be surprised. The Apache were the last population to arrive in the migration.
Once she got into her major courses in French, I had no complaint. I wanted her to do Accounting but she is hard headed and later wished she had.
One of my medical students had been an undergrad French major so I considered it more rigorous than many college courses.
She wanted to live in France but hasn’t figured out a way to do so yet. She loves France.
Anonymous Says @ April 27th, 2017 at 12:50 pm
Ha! MY daughter’s college history instructor taught that blacks were denied the vote UNTIL the 1964 Civil Rights Act”¦ was passed by the Democrats.
The stupid, it burns… The vote was extended to blacks by the 15th Amendment in 1870. White Southerners stopped black voting in the South by terror and trick laws (but it took them until 1900 to finish it off).
Blacks outside the South voted freely (though there weren’t a lot of them).
Fortunately my daughter (then aged 16) was homeschooled, and among other resources we’d already studied was the movie “His Girl Friday”, based on the play “The Front Page”, the 1930s background of which is a corrupt pair of politicians attempting to win one million “colored” votes by executing a white nebbish who ”” more or less accidentally ”” shot a “colored” policeman.
The Front Page is set in Chicago; as early as 1900, there were enough black voters that a black was elected County Commissioner (Oscar De Priest; his name is on the plaque of the County Building, built in 1907; he was later a U.S. Representative).
I remember taking a CPA preparation course in college in the 1980’s. In the law section the instructor on the video said
“do you know why student loans are not discharged in bankruptcy? Because the doctors used to complete medical school and accept their degree with one hand and declare bankruptcy with the other hand”
The fact that these loans are not dischargeable in any way means that at some point there likely will be a huge amnesty because these students can’t pay them back. A significant percentage (half?) don’t even graduate at all so they are paying off loans (theoretically, many of them are not doing so) that confer them little value. And many went to private schools which in turn have gone bankrupt or provide little value in terms of credentials.
A more logical solution is to only provide a certain amount of loans every year. This would de-facto cap tuition since most schools would not be able to charge much more. Above that perhaps the school is partially on the hook or something like that.
The university business is like the utility business. There used to be a lot of utilities, with big headquarters and lots of executives. Then when competition came, they merged together and the big buildings were gone along with most of the overhead. The same thing will happen with the medical and education industries when they come under financial pressure. Along with an absence of capital investment – they will be forced to leverage their current assets and run them harder rather than continually expanding.
Chicago was founded by a black Creole, Jean Baptiste Point DuSable in the late 18th century. He may have been mixed race, which was common in French controlled areas of North America. By the time Illinois became a state in 1818 there were many here, perhaps thousands, and they had the right to vote as long as they were integrated in society.
Despite both a state constitutional ban on slavery and a prohibition of slavery in the Northwest Ordinance of 1787, some blacks were still slaves in Illinois until about the 1840s. Many were held by the French missionaries along the Illinois and Mississippi Rivers. That’s where the term ‘sold down the river’ came from. If there were any problems the threat was they would be shipped south to work the plantations.
Slaves were generally treated humanely by the French Friars and Jesuits and were educated and baptized. They were well prepared to integrate when the time came. Finally, in 1839, the Pope banned religious orders from holding slaves, so they all became free citizens.
Soon the Quakers arrived, and they were probably the biggest reason Illinois kept slavery illegal. Their utopian communities believed in freedom for all races and wouldn’t support any pro-slavery politicians. The Quakers marginalized the remaining French and helped Whigs win the governorship over Jacksonians. They had a profound effect on Lincoln, who wasn’t otherwise a religious man.