Topic: Education and Child Policy

Work “Nonprofit”? Get Free Grad School!

The Cato Institute is a 501(c)(3)—a nonprofit organization. Of course, as an employee I get paid more than my job costs me—I make what you might call “profit”—but because of the tax designation of my employer, I could be getting big forgiveness on any federal student loans I might have. Indeed, a new, quick-read report from the Brookings Institution shows that someone could potentially get all of their graduate schooling covered for free through the federal Public Service Loan Forgiveness (PSLF) program which, by the way, is expected to cost the American taxpayer a lot more than originally anticipated.

The general way PSLF operates is if you work for government, a 501(c)3 organization, or some other qualifying entity like a public interest law firm, you can get the remainder of your federal student loans forgiven after 10 years of regular payments. Sound great? Well don’t order yet! Those payments are also controlled, capped at 10 percent of income above 150 percent of the poverty line. So a single person would pay nothing on income below $17,820, and 10 percent on income above that. And it doesn’t matter if you get paid more than your job-description doppelganger in a for-profit venture—as long as you work for a “nonprofit” you qualify for PSLF.

The Brookings report describes how someone could essentially get a graduate degree for free through PSLF as long as he had substantial—but not huge—undergraduate debt and worked in a relatively low-paid field. Of course, many people will want to earn more than low pay, but PSLF furnishes strong incentives to stick with a low-paying job for awhile, or more likely, take on much bigger debt and all the nice-to-have college stuff that goes with big college revenue.

Go ahead, future Jack McCoy, take that dip in the lazy river!

Of course, this is not free to taxpayers, many of whom have not gone to college, or may work in struggling for-profit businesses, or may even have thought the right thing to do was to get an inexpensive—and frill free—education. But according to the report, their PSLF bill is rising as enrollment in the program is much higher than anticipated, and nearly one-third of enrollees have debt exceeding $100,000. The report doesn’t give estimated total costs because those are very hard to predict, but estimates of what would be saved with controls such as capping forgivable amounts have risen by more than 2000 percent just from 2014 to 2016! The figures are in the billions of dollars.

There is a strong argument, of course, that there is nothing more noble about working for government, or a nonprofit hospital, or even a think tank, than owning a neighborhood shoe store, or being an accountant at Apple, or risking all you have on a new, entrepreneurial venture, all of which seek to offer things of value to other people. Heck, it is the production of goods and services for profit that gives us the “excess” wealth that enables us to pay for government and all its programs. But few employees, regardless for whom they work, are losing money on their jobs, and many—see, for instance, federal workers—make big profits from their nonprofit jobs not just financially, but also with lots of vacation time, or job security, or simply doing something fun every day.

We’re all working for profit. Why should we be treated—especially given big costs and unintended consequences—differently just because of our employers’ tax designation?

Are ITT Alternatives Much Better?

The outcome was certain the moment federal and state regulators spilled blood in the water and swarmed ITT Technical Institutes, but today it became official: ITT is going out of business. No proven guilt, just accused to death. But we’ve been over all that.

What is worth pointing out now are the alternatives to ITT. I’ve recently seen a couple of stories from Ohio about community colleges offering to take in students stranded by ITT’s demise, and thought it might be worth doing a little comparison between Ohio ITT branches—I mean, former branches—and these would-be rescuers.

Here is some broad info from the federal College Scorecard on Ohio ITT branches, and it is certainly not great: Annual after-aid costs ranging from $21,212 to $24,258, graduation rates from “not available” to 52 percent, and salary after attending of $38,400, which appears to be listed for most ITT campuses nationwide.

How about those community colleges?

I couldn’t find Butler Tech or Great Oaks on the Scorecard, but Cuyahoga Community College has an annual after-aid student cost of $5,832—enabled by upfront taxpayer subsidies—but only a 6 percent graduation rate and an annual salary after attending of $27,600. Cincinnati State Technical and Community College has an annual cost of $7,021, a graduation rate of 22 percent, and a salary of $29,700. The community colleges are cheaper than ITT, but their outcomes appear appreciably worse.

The Scorecard, importantly, is a seriously flawed tool, but it comes from the very federal government that has targeted ITT, and it gives the kind of first-blush data that have readily been employed to attack the for-profit sector. What I looked at is also, of course, anecdotal. But what it suggests is that the alternatives to ITT, at least in Ohio, are probably no better than ITT was, and may well be worse. Which supports what you’ve read here many times, and which broader evidence upholds: For-profit colleges are not distinctly terrible. It is the whole, federally distorted system that is a wreck.

Ending Fed Ed Would Hardly Be Pure Loss

The Center for American Progress Action Fund (CAPAF) has sounded the alarm: Donald Trump’s proposal to eliminate the U.S. Department of Education (ED) would be pure loss because a lot of people use federal education money. Lost jobs, lost college access, lost learning. Which makes sense if you assume that the federal government miracles money into existence, people can’t adjust to changing circumstances, and federal control can only help.

Of course, the federal government does not just will money into existence. It does spend far more than it has, but sooner or later someone is going to have to pay for that. And money arriving through taxation comes from people who may have used it for other, more productive things. Taxpayers may have spent it on new businesses, or housing, or food, or lots of other things that would have potentially grown the economy and created new jobs. Or heck, just made them happier. So there are costs—maybe big ones—that CAPAF ignored: opportunity costs.

Then there are costs to dealing with ED demands. Yes, as CAPAF points out, the department has a relatively small workforce—about 4,300 full-time equivalent employees—but that is in part because ED makes states do a lot of the administrative heavy lifting, forcing them to hire a lot of bureaucrats. There is also a sizeable compliance cost that goes with federal programs. The latest available numbers I could find were from a 1998 report—pretty old—but that precedes the No Child Left Behind Act, which greatly expanded federal management. That report suggested that for every dollar sent to Washington only 85 cents made it back to local districts, and noted that there were nearly three times as many state employees being funded by federal money as ED employees.

How would ED be eliminated? While it is unclear how Trump would do it—details do not seem to be his thing—he would likely phase the department out, not just kill it all at once. Of course, he could just move the programs elsewhere in the federal bureaucracy. But assuming that by killing ED he means to kill the programs, he would probably phase them out, leaving states, districts, colleges, and students time to adjust. And if he were to couple phasing out the programs with, say, proportionate tax relief, or even just block grants to states, that money could still be used for education! It would not necessarily mean any lost teacher jobs, student aid, or anything else. It could just mean that instead of losing 15 cents in bureaucratic processing for each dollar, taxpayers could keep the whole buck!

Would trimming what we spend necessarily even be bad educationally? Signs pretty clearly point to “no.” As the graph below shows, as well as this report on SAT scores, large spending increases haven’t come close to producing commensurate improvements in achievement, at least as measured by standardized tests for high school kids. Those scores have essentially sat still. Same for staffing: In roughly the same period as is covered in the graph, public schools went from about 14 students per staff member, to just 8 students, approaching a doubling of employees per child. Even the high-school graduation rate “all-time highs” that sound so nice aren’t: CAPAF cited a report based on only four years of data, and longer-term data show in 1969–70—close to when the feds first got heavily involved in education—the average freshman graduation rate for public schools was 78.7 percent. As of 2012–13—the latest data on the chart—it was 81.9 percent. Hardly a huge increase, and possibly one inflated by “credit recovery” and other dubious practices. Oh, and the feds coerced states to adopt a single curriculum standard—the Common Core—only to see tremendous backlash after the public finally became aware of what had been foisted on them. At the very least, great political acrimony and stomach-churning educational turbulence have been the result.

The evidence—more of which can be found here—suggests that in K–12 education, federal involvement may well be a loss, not a gain.

How about higher ed? Federal student aid, it is becoming increasingly certain, has largely translated into skyrocketing prices, major non-completion, credential inflation, and big student debt. Hardly the pure affordability effect that is all CAPAF discusses. You can get more in-depth on higher education here.

There is one other thing that ought to be mentioned, though it may seem passé: Washington has no constitutional authority to meddle in education outside of DC itself, federal installations, and prohibiting state and local discrimination in education provision. Yet the vast majority of what ED does goes far beyond those things. Ignoring the Constitution comes with costs all of its own, which CAPAF—and everyone else—may learn very quickly if there is a President Trump and he, among other things, unilaterally tries to change federal education policy. You know, like President Obama.

CAPAF portrays the U.S. Department of Education as all gain, and it’s possible ending all pain. But there is a whole other side to federal education meddling: costs. And they are big.

Maryland’s Governor Is Giving People More Time for Walley World – Like It or Not

Maybe because Chevy Chase is in his state—the town, of course, not the actor—Maryland Governor Larry Hogan (R) yesterday signed an executive order essentially forbidding any school district in the state from starting the academic year before Labor Day, or from ending after June 15. That he announced it at an event in Ocean City, Maryland—a big summer beach destination—left no question that this was largely at the behest of the state’s tourism industry.

Marylanders, you will have more vacation time.

But what if you don’t want to travel the holiday road right up to Labor Day? What if you’d like to start school a week or three early, and maybe trade some summer days for a longer winter break, or heck, maybe some extra time off in April? Too bad: The governor knows what you need better than you do. Or, at least, he knows what other people—the tourism lobby—needs.

Of course this is a big violation of the local control many people think should be a hallmark of public schooling. It hasn’t been for a long time, but if you are going to have government schooling it makes sense for decisions to be made at the lowest levels possible so as to best serve the needs of unique communities. But what if your schedule doesn’t conform with a lot of people—maybe the majority—in your community?

All of this points to one solution if you want what you think is best for your family: educational freedom. Attach money to kids and let parents choose schools where educators might decide to start before Labor Day, or after Labor Day, or to have online content available 24/7, or to send you homeschooling curricula, or…you get the point.

Maybe you want to have your kids in school before Labor Day. Walley World shouldn’t get to tell you you can’t.

Is the Public Confused about School Financing?

After last week’s release of Education Next’s 2016 survey of education opinion (see Jason Bedrick’s and Neal McCluskey’s responses), Phi Delta Kappa yesterday released its own poll (see Neal’s take on that here). Once again, the poll sheds light on the public’s understanding (or misunderstanding) of school financing.

In an open-ended question, Americans for the 15th consecutive year designated “lack of money/financial support” the biggest problem facing public schools. Perhaps as a result, most Americans—53% in support to 45% opposed—favored increasing property taxes to boost school funding. However, there was broad skepticism (47% of respondents) that increases would spur quality improvements. What explains this apparent inconsistency?

It turns out support for increased property taxes is correlated with how respondents ranked local public schools. Those that viewed their public schools more favorably were more likely to support property tax hikes and be confident that increased funding would improve schools. Conversely, those that rated local schools lower were more resistant to hikes and skeptical that increased funding would result in improvements. While two-thirds of those that gave their local schools an A grade were confident that increased funding would help, only 17% of those that gave their schools an F agreed.

In what PDK calls its most “lopsided” result, Americans overwhelmingly preferred keeping a failing school open to closure, 84% to 14%, but 62% favored replacing teachers and administrators to increasing funding in the turnaround. Americans, it seems, agree that increased funding will not improve underperforming schools. Furthermore, 26% of those that gave their schools a failing grade thought school closure was the more appropriate response, compared to only 13% of the general public.

Listing funding as a problem also does not necessarily result in support for increased property taxes. In the latest poll, 19% of respondents cited school funding as the biggest problem, down from a record high of 36% in 2010 and 2011, the peak of the recession years. But the Education Next poll demonstrates that support for property tax hikes declined dramatically during those years.

Another reason so many respondents cited “lack of funding” as a major problem? The open-ended nature of the question allowed up to three responses, increasing the likelihood that many respondents would include school funding as one of their answers. That only 19% of respondents included it seems low given that that majority of respondents favored property tax increases. Moreover, the EdNext pollsters theorize that support for increases in funding rises in election years, when this issue is most hotly debated, and it’s therefore unsurprising that it was seen as the biggest problem in public education.

An important caveat to these findings is that support for increased funding dramatically drops when an individual is informed of real spending. In the EdNext poll, uninformed respondents estimated average per-pupil spending at $7,020, a little more than half the actual average of $12,440. When uninformed respondents were asked if they favored an increase in school funding, 61% supported the idea; when a separate group of respondents was told the actual per-pupil expenditure, support dropped to 45%.

These results lead to a number of conclusions. First, support for increased schooling taxation comes disproportionately from the wealthy, already well-performing public schools, where parents are confident that spending is put to good use. The poll results shouldn’t be seen as supporting property tax hikes in communities with failing schools where the effectiveness of more funding is suspect. Second, because the public appears uncertain about funding as a tool to turn around schools, perhaps a better alternative is to give parents more control over their children’s education via school choice policies, as minority groups favor. Finally, these studies together reinforce the importance of a well-informed public. Support for spending increases drops for all groups—teachers, Republicans, Democrats, and the general public—when given accurate information.

Despite large numbers of respondents favoring property tax increases, the PDK poll demonstrates a broad skepticism of more funding for failing schools. And there is no powerful  link between spending and academic performance, making it heartening that the public appears intuitively aware of this.

The Public Speaks on Curriculum Standards: “Meh”

Back-to-school season is also education survey time—Jason Bedrick and I examined the Education Next poll last week—and today we get the latest Phi Delta Kappa poll. For decades the PDK survey was done in conjunction with Gallup but is not this year. It also dropped questions specifically about such hot-button topics as vouchers and the Common Core. Maybe avoiding specific mention of the latter explains an interesting finding: the public’s response to curriculum standards is quite, well, blah.

The pollsters asked several questions about standards—especially an un-specified “new set of educational standards”—and inquired what parents thought of their effects.

First, when members of the public were asked if they thought the standards in their local public schools addressed “the things students need to succeed in their adult lives,” 27 percent answered that they addressed them “extremely” or “very” well, and 30 percent said “not so” or “not at all” well. 40 percent gave the middling “somewhat” answer. Ho-hum.

The University of Chicago Has No Room for Crybullies

I’m delighted to join the many people spreading the news today that the University of Chicago, my graduate alma mater, is bucking the trend at colleges and universities across the country by refusing to pander to the delicate but demanding “snowflakes” and “crybullies” who’ve tyrannized American campuses over the past few years. As the Daily Beast reports, Dean of Students John Ellison told the incoming class of 2020 “something they wouldn’t hear on most other liberal-arts campuses: ‘We do not support so called “trigger warnings”… and we do not condone the creation of intellectual “safe spaces.”’” At Chicago, students are expected to live “the life of the mind.”

Just yesterday Nick Rosenkranz posted in this space about the efforts he and colleagues over at Heterodox Academy are taking to encourage greater ideological diversity in academia. On both of these closely connected issues I’ve spoken at some length and in detail—it’s not a pretty picture out there. But this silliness could not go on forever—not at these prices. Let’s hope that these are signs of changes in the offing.