Category Archives: Education

Bankruptcy Options for Student-Loans??

Another MAJOR ‘wealth transfer’ from taxpayers, to non-payers. An absolute crock…
By Josh Mitchell And Katy Stech
March 10, 2015 12:17 p.m. ET

WASHINGTON—The White House said Tuesday it is weighing whether to make it easier for Americans to discharge student loans through bankruptcy, a major change that would effectively open the door for student debt being treated on par with credit-card debt and mortgages.

Federal law prohibits student loans—whether made by private lenders or the federal government—from being wiped out in bankruptcy, except in rare circumstances. Other forms of consumer credit, including mortgages, credit-card balances and auto loans, face looser requirements for being discharged in bankruptcy.

President Barack Obama , in a presidential memorandum Tuesday, directed administration officials to study whether to push for legislation to loosen the rules imposed on “all student loan borrowers” in the bankruptcy process. The White House released few details on how far the possible changes would go.

Some 40 million Americans currently hold student debt, the White House said, with total debt outstanding now roughly $1.3 trillion.

The effort was announced as part of a broad initiative the White House labeled a “Student Aid Bill of Rights.” The other steps under Mr. Obama’s plan include setting up a system for borrowers to register complaints about the companies, known as servicers, that collect student-loan payments on behalf of the government. The servicers would face stricter federal oversight and new rules designed to make them more proactive in reaching out to distressed borrowers and offering better repayment terms.

Any change to bankruptcy law for student-loan payments would likely drive up taxpayer and lending-industry costs. The government is the primary lender of student loans, making 90% of student loans annually. Private lenders such as Sallie Mae, Wells Fargo & Co. and Discover Financial Services make up about 10% of student loans.

Student loans are considered a risky form of debt because borrowers face only minimal credit checks when applying for federal student loans. Many borrowers have checkered histories and are often unemployed, or in part-time or low-paying jobs. The lending industry has argued that loosening the bankruptcy rules for student loans would increase the risk of losses and drive up borrowing costs, since lenders would raise rates to account for the additional risk of bankruptcy.

The White House said the efforts announced Tuesday are designed to stem defaults among borrowers and ease the nation’s student-loan burden. Consumer advocates have long argued that many Americans remain burdened by unsustainable student-debt loans for years, sometimes decades, and that bankruptcy should be an alternative.

“The agencies will develop recommendations for regulatory and legislative changes for all student loan borrowers, including possible changes to the treatment of loans in bankruptcy proceedings and when they were borrowed under fraudulent circumstances,” the White House said in a statement.

Fewer than 1,000 people try to get rid of their student loans every year using bankruptcy.

Bankruptcy experts say that attempting to discharge the loans in bankruptcy is both expensive and uncertain. The process involves filing a lawsuit in federal court, and lawyers typically charge several thousand dollars upfront for that work. A Wall Street Journal analysis found 713 such lawsuits were filed last year.

Many bankruptcy lawyers say they are hesitant to take on these cases because of the wide range of rulings that judges have handed down. In court, lawyers for a bankrupt student-loan borrower have to convince the judge that the borrower will never be able to afford their monthly payments—a difficult case to make.

Starting in 1976, federal loans were automatically dischargeable after five years of repayment, but borrowers could get out of them earlier if they proved that repaying them would cause an “undue hardship.” But that benefit was gradually removed, and student loan borrowers now need to establish “undue hardship” no matter how many years of federal loan payments they have made.

In 2005, Congress passed a sweeping bankruptcy overhaul for consumers that made private student loans non-dischargeable as well.


Colleges Need a Business Productivity Audit

And you would think universities would be leading the effort to figure this out. Not.
By Frank Mussano And Robert V. Iosue Dec. 28, 2014 6:54 p.m.

College tuition rates are ridiculously out of hand. Since the late 1970s, tuition has surged more than 1,000%, while the consumer-price index has risen only 240%. The percentage of annual household income required to pay the average private four-year tuition reached 36% in 2010, up from 16% in 1970. What explains the ever-increasing costs?

For one, three quarters of a typical college budget is spent on personnel expenses, including benefits. Yet the average professor spends much less time in the classroom today than two decades ago. In 2010 44% of full-time faculty reported that they spent nine or more hours a week in the classroom, according to the Higher Education Research Institute at UCLA. In 1989 more than 60% said they did. The traditional 12-15 hours a week teaching load is changing into a six-to-nine-hour workweek, a significant decrease in productivity.

The typical defense of the reduced workload goes something like this: Professors have increased research demands, more extensive classroom preparation and committee work, as well as additional administrative and student-counseling responsibilities.

Except for a handful of elite researchers, this argument doesn’t add up. High-school teachers, for instance, teach 20-30 hours a week, while also facing increased administrative responsibilities. Some parents work longer hours or perhaps even two jobs to defray a child’s college expenses.

There’s another problem: The number of college administrators has increased 50% faster than the number of instructors since 2001, according to the Education Department. Administrative costs have far outpaced other college expenses during the past two decades.

There are numerous examples, but some of the more stunning cases include the University of Minnesota, which added 1,000 administrators in the past decade, reaching a ratio of one administrator for every 3.5 students, according to 2012 reporting in this newspaper. Arizona State University increased the number of administrators by 94% between 1993-2007, according to the Goldwater Institute, and the University of Pennsylvania nonteaching staff swelled by 83%—even though the schools’ respective student enrollments and instructional expenditures did not grow anywhere near those rates.

All the while, colleges launched a prestige arms race, dropping millions on extravagant buildings. Higher-education construction spending has doubled since 1994, with a peak of $15 billion in 2006 that has leveled off at $11 billion in recent years. Adding to the frenzy are the various magazine rankings that base much of their quality-assessment formula on the amount of money spent on student services and facilities, even if the funds are wasted. Campuses have everything from lazy rivers to climbing walls to luxury dormitories.

On top of that, student-loan debt has skyrocketed to $1.2 trillion. Easy access to government loan money has given colleges license to boost tuition with no motivation to keep costs down. College counselors encourage incoming freshmen to take on unconscionably large loans that ultimately fatten school coffers. The institutions know they will not be held liable for missed loan payments. More than 20% of the nation’s households have incurred student debt, averaging $33,000 for the class of 2014, according to The Wall Street Journal. Default rates stand at 14%—higher than for mortgages, autos or credit cards.

In short, colleges and universities engaged in a spending spree because they can. But there’s one simple idea that might start to reverse the spending spree: audits of higher education. In the business world, officials keep an eye on the bottom line. If profits are down, there’s a performance audit to identify unprofitable practices. Similar audits are conducted on defense plants, hospitals, social agencies and other businesses that benefit from tax dollars. Why not audit higher education?

A required review could focus on basic teaching workloads, space utilization and personnel costs as they relate to program revenues. Since the federal government already collects data annually on higher education, it could start asking for more information related to productivity. Colleges would be forced to reconcile sloppy and obscure bookkeeping methodologies to report statistics in a format consistent with government-defined metrics.

Eventually, benchmark comparison data could be established for various categories of institutions. The Education Department’s new college rating system could also collect and present cost-income productivity ratios that consider credit hours completed compared with labor costs and other expenses per student. Wouldn’t it be helpful to know which colleges are most productive with their tuition dollars?

Granted, there would be a lot of gnashing of teeth in the higher-education community at the thought of using a business assessment technique within its ivory walls. But even if what resulted were recommendations, and not mandates, the scrutiny would open many eyes to inefficient practices.

Mr. Mussano is the former dean of administrative services at York College of Pennsylvania. He and Mr. Iosue are co-authors of “College Tuition: Four Decades of Financial Deception” (Blue River Press, 2014).

via Frank Mussano and Robert V. Iosue: Colleges Need a Business Productivity Audit – WSJ.


Here Come the Child-Care Cops

At the White House’s early-childhood-education summit on Dec. 10, President Obama highlighted two new federal competitive-grants programs: the Early Head Start-Child Care Partnerships, aimed to increase the availability of high-quality infant and toddler care, and the Preschool Development Grants, which are meant to expand preschool programs in disadvantaged communities. Health and Human Services Secretary Sylvia Mathews Burwell and Education Secretary Arne Duncan announced the winners: 18 states along with more than 200 school districts, agencies, programs and nonprofits will receive about $750 million in federal funding.

Before accepting the money, though, winners would be wise to read the fine print. While these grants represent an admirable effort to ensure the well-being of America’s most vulnerable young children, they’re also a Trojan horse bearing counterproductive requirements such as mandating college degrees for all preschool teachers, and a mountain of federal regulations.

The first program, Early Head Start-Child Care Partnerships, is administered by HHS and provides $500 million to increase infant and toddler care for working parents, especially in poor communities. The 234 winners get money to expand the scope of federally funded Early Head Start programs by partnering with local child-care centers “who agree to meet high standards of quality.”

While “high standards of quality” seem like a great idea, the devil is in the details. Child-care providers who receive the new funding will be subject to federal monitoring and required to comply with the 2,400 Head Start “Performance Standards” stipulating everything from staff qualifications to cot placement to how to clean potties.

This new program also contradicts the spirit of the reauthorized bipartisan Child Care and Development Block Grant Act that President Obama signed last month, which explicitly gives states the responsibility for defining and improving the quality of local child care. The grants amount to an end-run around the states by enabling the federal government to enforce burdensome standards at the local level.

The second program, the Preschool Development Grants competition—jointly administered by the Departments of Education and HHS—aims to help states develop and expand preschool for low- and moderate-income 4-year-olds. The program awarded $250 million to 18 states to implement preschool plans that meet the federally defined conditions of “High Quality Preschool.”

The Preschool Development Grants also require states to define “high quality” by compliance with input standards, like staff qualifications and class size, rather than by good outcomes such as improved knowledge and skills.

The requirement that all preschool teachers have bachelor’s degrees (in any field) to ensure “a qualified workforce” in early childhood education is particularly detrimental. Young children don’t need a qualified workforce. They need an effective workforce. There’s no evidence that bachelor’s degrees make preschool teachers more effective.

New research, such as the work of professors Robert Pianta and Bridget Hamre at the University of Virginia’s Center for Advanced Research on Teaching and Learning, clearly shows that what counts isn’t what degrees teachers have but how they teach. That’s especially critical in early childhood when interactions between teachers and students, not content knowledge, is what drives success. Focusing on bachelor’s degrees is an easy way bureaucrats can claim to be raising teacher quality without actually doing it.

Based on College Board data for the average price of four-year degrees, it would cost at least $23 billion for the 300,000 current preschool teachers who don’t have college degrees to get them. Great teachers will be forced to go into debt to pay for a college degree they don’t need just to keep their jobs. Others will be forced out of teaching because they can’t afford to spend four more years in school. The cost of college will prevent many potentially wonderful teachers from entering the profession.

Teacher quality—and pay—should be defined by effectiveness in the classroom, not credentials. College doesn’t provide the essential skills needed to teach young children. Those skills are best learned through specialized training combined with on-the-job practice under the supervision of an expert teacher.

As a recent study by Mathematica Policy Research showed, apprenticeship-based training models open to bright, hardworking high-school graduates hold promise as an effective and less expensive approach and will expand, rather than limit, the pool of potential high-quality teachers for early learners. In the U.K. prospective teachers are carefully screened and required to pass skills tests in both numeracy and literacy to qualify for teaching apprenticeships.

Research shows that good preschool, like good child care, can be critical to young children’s development and is insufficiently accessible to poor and working-class families. But these new federal grants are paying states to institutionalize a misguided conception of quality, repeating the same mistakes that the education establishment has been making in K-12 for decades: focusing on teacher credentials rather than effectiveness, holding programs accountable for compliance rather than outcomes, and advocating centralized control rather than innovation.

Support for early education is growing and presents an opportunity to build new systems right, from the ground up. Once bureaucrats start down the road of overregulating the wrong things, though, it’s going to be very hard to turn back.

Ms. Stevens is a research fellow in education policy studies at the American Enterprise Institute, specializing in early childhood education.

via Katharine Stevens: Here Come the Child-Care Cops – WSJ.


The High Cost of Unfree Speech on College Campuses

Some good stuff.
How many salaried counselors, deans and lawyers does it take to prohibit the distribution of copies of the U.S. Constitution on campus?
WSJ Dec. 21, 2014 3:07 p.m.

Regarding your editorial “Unfree Speech on Campus” (Dec. 13): Recently, at the University of Michigan, one conservative Muslim student was suspended from the establishment paper, The Michigan Daily, and had his door vandalized with food and vulgar warnings due to penning a satirical piece for the independent, conservative student paper, The Michigan Review, on the micro-aggressions the left-handed minority faces in Ann Arbor, Mich., due to right-hand privilege. It was a harmless piece which made some students feel “uncomfortable” and others outright criminal. No college administrator or teacher did these things. They were done by students who need some backbone.

My peers are incentivized to remain infantilized by university policies, but the culture of speech crime is now the mantle they carry.
Ryan Shinkel
Ann Arbor, Mich.

Not only is speech unfree on college campuses, it is expensive. Cadres of bureaucrats are necessary to conjure, decide on, draft and redraft, enact, enforce and litigate the severely restrictive policies, rules and regulations that prohibit constitutionally protected speech. I am curious. How many salaried counselors, deans and lawyers does it take to prohibit the distribution of copies of the U.S. Constitution on campus? How much time is spent trying to determine whether an email is “harsh”? The expense isn’t only the unjustifiable increase in the cost of tuition, it’s the cost to society of limiting economic mobility by pricing out smart, but economically challenged, potential leaders from the benefits of a college education.
Alan Levins
San Francisco

Eric Hoffer wrote, “The beginning of thought is disagreement—not only with others but also with ourselves.” Colleges should encourage free inquiry and disagreement, promoting diverse opinion and vigorous debate for all members of the university from the faculty to the students. Universities are meant to be places where students encounter new ideas and challenges. I find it very disappointing when only those on one side of an issue are allowed to express their opinions freely, while those on the other side have targets on their backs.
Zach Harner
University of Michigan
Class of ’14
Eau Claire, Mich.