Tag: college

Obama to Control the Price of Ivy?

Superabundant federal student aid has done a huge amount to get us into our bankrupting college mess. To get us out, today President Obama will propose, essentially, “soft” price controls. But they will likely leave the root problem intact while, if anything, adding new kinds of woe.

On his college bus tour, President Obama will propose that Washington start publishing ratings of schools based on such measures as average tuition, graduation rates, debt and earnings of graduates, and the percentage of a college’s students who are low-income. The ratings would also “compare colleges with similar missions.” Ultimately, the president will propose that the availability of aid be partly conditioned on the new ratings.

Let’s be clear: The price of college is almost certainly far higher than it should be, fueled largely by federal aid that essentially tells colleges “charge whatever you want – we’ll give students the money.” That’s a major reason that average, inflation-adjusted prices have more than doubled in the last 30 years. And it is good that the president, and many others, are essentially acknowledging the inflationary reality of aid. But will price controls help or hurt?

It’s Obvious Student Aid Is Driven by Politics. But Not This Obvious

Federal aid for college students, it’s really no secret, is driven by what works politically, not what’s best for students. While logic and evidence strongly suggest that aid mainly enables colleges to raise their prices at breakneck speeds, politicians talk nonstop about aid making college “affordable.” Financial reality simply does not trump appearing to “care.” But on Friday, the Obama administration appears poised to take aid exploitation to a new level.

Tomorrow, the President will host what sounds like will be a textbook, campaign-style event featuring lots of no doubt somber – but oh-so-grateful-to-the-President – looking college students. With the photo-op thus set up, Mr. Obama will demand that Congress do something to stop the impending doubling of interest rates on subsidized federal loans from 3.4 percent to 6.8 percent.

But the GOP-led House has done something, and it is largely along the lines of what the President has called for. Last week, the House passed legislation that would peg student loan interest rates to 10-year Treasury bills, and would even cap rates at 8.5 percent or 10.5 percent, depending on the type of loan. It’s not exactly what the President wants – rates will vary over the life of the loan rather than being set at the origination rate, and the add-on to T-bill rates is higher – but the plans are still pretty close.

At this point, you’d think the President would be negotiating, not grandstanding. But then you wouldn’t understand federal student aid (or, really, almost anything government does). It is first and foremost about politicians – who are normal, self-interested people – getting what they need: political support, not sane college prices. And you get a lot of that support by appearing to want to “help people” more than the other guys.

If ever there will be a blatant, inescapable demonstration of what really drives federal aid policy, it will be the event we are likely to witness tomorrow. Let’s hope the public will get the right message: Politicians aren’t primarily driven by a desire to make college affordable. They’re driven by a desire for political gain. And that’s why we need them to get out of the student aid business.

Care about the Poor? Consider Consequences

On the day of the second presidential debate, I had the pleasure of participating in a panel discussion at debate-host Hofstra University. The topic was “defusing the student loan debt bomb,” and I was the lone voice calling for an end to inflation-fueling federal student aid. My co-panelists were Tamara Draut of the think tank Demos, Above the Law blog co-editor Elie Mystal, and U.S. PIRG’s Ed Mierzwinski.

I had perhaps the best interaction with Mystal, with whom I had interesting chats throughout the day. Mystal’s response to my proposal was basically that poor and minority students need help, and phasing out federal aid would disproportionately hurt them. It was an argument with which I could sympathize, and it made more sense than just proclaiming “college education is a public good and should basically be free.” Unfortunately, writing on his blog post-debate, Mystal said that my “view makes a certain kind of sense” but nonetheless smacks of “the classic, Republican ‘f**k ‘em’ approach that disproportionately screws the poor and minorities.”

Um, ouch. Ascribing callousness or cruelty to either me or Republicans because we don’t like the negative effects of aid is, frankly, precisely why we can’t have a reasoned debate about these things. Maybe I’m an exceptionally gifted multi-tasker, or maybe I’ve just contemplated some important logic and facts, but I can be against mega-inflation without being indifferent to the poor. Indeed, quite the opposite.

First, much aid goes to people with little regard to their income. Pell Grants might be pretty well targeted – though they’re getting less so by the minute – but “unsubsidized” federal loans, which are backed by taxpayers, are available irrespective of need. Tax-based aid also skews high-income. The American Opportunity Tax Credit, for instance, can be claimed by joint filers making up to $180,000. And the well-to-do are best positioned to maximize their aid because they can afford financial planners to tell them how to hide wealth, or temporarily reduce income to optimize their eligibility. The cumulative effect of all this is to push up college prices.

Then there’s the psychological effect of hugely inflated sticker prices. If the message “college is astonishingly expensive” is repeated often enough, who do you think will more often be deterred from attending college, the rich or the poor? Probably the latter.

Next, the poor and minorities are no doubt disproportionately burdened by debt. Data indicate that’s definitely the case for African-Americans, and is likely the case for the poor considering that even debt loads that are small compared to some totals might be huge relative to a poor student’s wealth.

Finally, while people of all income levels and races spend too much time and treasure on higher education, the poor and minorities are probably the most snookered by “college for all.” The unfortunate reality is that those groups tend to be the least prepared to do college-level work or pay mammoth, inflated bills, and as a result tend to most readily pursue degrees without completing them. Among first-time, full-time students entering college in 2004, a weak 58.3 percent that didn’t transfer schools completed a four-year program within six years. Much worse, only 39.5 percent of African-Americans completed their degrees, and 50.1 percent of Hispanics. In large part this is the fault of factors preceding higher education – including our moribund K-12 system – but the dismal college completion reality remains.

In light of all this, is it really fair to proclaim that those who want to phase out inflationary, consumption-driving aid don’t care about the poor and minorities? Or is it long past time to give them a full and fair hearing?

Cross-posted from SeeThruEdu.com

What, Us Worry about Paying for College?

Listen to the media and you might think every American is scared silly about paying for college, and  public aid is stretched micron thin to help just the neediest of students. A new report analyzing what and how Americans paid for higher education last year, however, puts the lie to that image.

How America Pays for College: 2012, from Sallie Mae and Ipsos Public Affairs, offers an interesting breakdown of who pays what and how for college, and furnishes some welcome contextual data. I’m not sure there is a unifying message in the numbers – other than people seem to be economizing a bit since the 2009-10 academic year – but some of the potential lessons are striking.

The first lesson is don’t believe that government aid is just for the poor. Families making $100,000 or more used federal loans, tax-incentivized savings programs, and federal, state, and school-based grants – which do not include scholarships – to cover 27 percent of their total cost of attendance.

Next, don’t get caught up in the overblown controversy over private student loans. It’s a diversion from the much bigger impact of government aid. Only 1 percent of the total cost of attendance last year was covered by private loans, versus 4 percent by federal Parent PLUS loans, 13 percent by other federal loans, 1 percent by federal work-study, and 16 percent by federal, state, or school-based grants. And don’t forget: much of the cost of public institutions is borne by taxpayers before the tuition bills even go out.

Perhaps most interesting, it appears that even though the sticker price of college has risen at astronomical rates, most people aren’t sufficiently concerned that they plan ahead for how they’ll pay. 50 percent of respondents either “somewhat” or “strongly” disagreed with the statement that “before my child/I enrolled, our family created a plan for paying for all years of college.” Only 39 percent somewhat or strongly agreed with the statement.

What does this tell us? Potentially many things, but one might be that many people assume someone, no matter what, will ensure that they or their child will be able to go to college. Unfortunately, that “someone” often ends up being the American taxpayer.

Why College Should Be Given Away for Free

The editor of The Nation thinks college should be given away for free. She’s probably right, but perhaps not in the sense she intends. So many college degrees today are intrinsically worthless that it should really not be possible to find people willing to pay for them. As I wrote in a recent New York TimesRoom for Debate” commentary:

Barely half of students at four-year public institutions graduate in six years — and many learn very little along the way. Nearly half of all college students made no significant gains in critical thinking, complex reasoning, or written communication after two full years of study, according to research by Richard Arum and Josipa Roksa. Even among the more elite subset of students who stick around for four full years of college, a third made no significant gains in these areas.

So what’s the alternative if you’re a high school senior seeking higher education? How about this: instead of handing control over that education to someone else, decide what it is you would like to learn over those four years and then… learn it. Thanks to the Web, the material covered in virtually every undergraduate program is readily available at little cost—and the same is true for many advanced programs. And, having learned it, spend a few hundred dollars to create a website or even simply a YouTube channel on which you demonstrate your new skills/understanding. Conduct research. Write it up. Build something. Translate Cyrano into English, maintaining the Alexandrine meter and rhyme. Whatever it is. Then, when you’re ready to apply for work, submit your resume with a link to this portfolio of relevant work.

Employers, ask yourself this question: Would you rather hire someone with a portfolio such as the one described above, visibly demonstrating competency and personal initiative, or someone with a degree that is generally supposed to signal that competency, but that you can’t readily assess for yourself?

[And since “resume” and “curriculum vitae” are both foreign language terms, why don’t we call these portfolios-in-lieu-of-college-degrees the student’s savoir-faire. Literally: “know how to do.”]

Stop Ignoring Higher Ed Reality

Like most political discussions, the student aid debate is driven far more by sentiment than reasoned analysis. If we used the latter, we’d be demanding big aid cuts for the sake of students and taxpayers alike.

As I testified to a Senate panel earlier this week, the evidence is powerful that there is massive overconsumption of higher education, and cheap federal aid ultimately fuels the college price skyrocket while encouraging students to tackle programs and debt they often can’t handle.

I won’t go into all the evidence here—you can get much of it in my testimony, and even more in this report—but here are a few of the big points that plead for us to stop the rhetoric and attack the waste:

  • Aid and prices have both increased at breakneck speeds over the last several decades. Growing empirical research shows that this is not an accident—colleges raise their prices to capture the aid—though there is a limit to what research can prove. Fortunately, logic can fill in the rest: People who work at colleges are normal human beings and will take every dollar they can get their hands on. They always have something good—either personally or professionally—they think they can do with it.
  • Inflation is not explained just by state and local budget cuts. Both public and private colleges have seen decades of rampant inflation; total state and local funding to colleges has not dropped during that time; and on a per-pupil basis public schools have raised tuition revenue by roughly $2 for every $1 lost in appropriations.
  • Only 57 percent of first-time, full-time students at four-year colleges finish their programs within six years. Huge numbers of the students we encourage to go to college, including with federal grants and loans, languish there and likely never finish.
  • Roughly one-third of people with bachelor’s degrees are in jobs that don’t require them.
  • Most of the jobs expected to have the biggest growth in the coming decades will not require college attendance, but on-the-job training.

The list could go on, but the point is unmistakable: Talk all you want about the power of education or the future economy; the public dollars we lavish on higher education—including federal student loans with generous terms and interest rates—are largely being squandered, even if with good intentions. Add all this to the nation’s staggering debt, and it is well past time that we stop all the talk and start dealing with reality.

C/P from the National Journal’sEducation Experts” blog.

Did They Learn Correlation and Causation in College?

It looks like Peter Thiel won’t be unopposed advising kids to stay out of college

Thanks to a new report from Georgetown University economist Anthony Carnevale, and a David Leonhardt column based on Carnevale’s study, over the last few days the college-for-all crowd has been striking back. But they seem to have missed something in their own college training: correlation does not equal causation.

Carnevale, Leonhardt, and others’ argument is basically that there are big, positive returns on a college degree. It’s something, frankly, that’s not generally in dispute. I say “generally,” because while on average college grads make a lot more than people without a degree, there’s a lot more to the story than averages. Indeed, there are at least three major problems with making averages the basis for a universal-college offensive, problems that Andrew Gillen recently laid out in a terrific blog post. I won’t reinvent the wheel by going into them all (read Andrew’s post) but I’ll summarize them: (1) There are huge throngs of people who attempt college and never finish, a giant population ignored when you just look at completers; (2) at least part of the college wage premium is simply a function of a degree signaling something about the intelligence, work habits, etc. that graduates already possessed; and (3) there are some majors and degrees that confer no great wage premium and are in about as much demand as Betamax or gangrene.

What is most concerning about the Carnevale report, however, is how the report and its fans make the very basic mistake of conflating correlation with causation in implying that the roughly one-third of bachelor’s holders in jobs not requiring degrees are much better workers thanks to their BAs. They base that conclusion on degree-holders in non-degree jobs earning appreciably more than workers with only high-school diplomas. Heck, a graphic to go with Leanohardt’s column trumpets that dishwashers with college degrees make a lot more than dishwashers without them, a data point seized on by the Fordham Institute’s Peter Meyer to attack anyone who dares say college isn’t the best option for everyone.

Once the dishwasher example comes up, is there any way to escape the causation/correlation problem? Any way to not at least seriously contemplate that it isn’t what someone learned in college that makes him or her a better dishwasher, but that someone able to graduate college will tend to be more punctual and reliable? Heck, even if you believed that the proverbial underwater basket weaving major existed, it would be very hard to conclude that the skills one would need to make the finest submerged wickerwork would be useful for getting dinner plates spotless, even though that often occurs underwater.

And many of the public service jobs cited in the graphic, such as firefighters? At least from what we know about teachers, government employee pay scales often give salary bumps for degrees, but degrees don’t necessarily have any bearing on job effectiveness.

People like Carnevale and Leonhardt are right to guard against efforts, especially by public-school employees, to actively push kids away from college, in particular if that’s driven by students’ class or race. But shoving everyone into ivy walls? Based on what we know, that’s equally unjustifiable.

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