TyTrain32

May 6th, 2015 at 7:39 AM ^

So tell me, did you know that off the top if your head or look it up to start a debate?

As I stated "this is due to graduation rates not improving as much as anticipated, which raises other questions about why this incentive is not outweighing the barriers of the underprivileged", it is an issue. Perhaps a more accurate topic would be access to resources. Something as simple as a computer in the home, only 50% of our students have one, let alone internet.

What about early childhood education? The Harlems Children Zone has tried to address lack of early childhood education through parental education.

The list goes on and on man, its a good start but I dont dare get into all the other social barriers that the underprivileged experience.




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dupont circle

May 6th, 2015 at 11:12 AM ^

"The Kalmazoo Promise is undoubtedly a promising initiative. However, roughly half of the students who received funding still don't have a degree.  That's a major issue.  Throwing money at academic underachievment can help, but it's no silver bullet."

Bingo. Kzoo publics are so atrocious these kids just go to college for the hell of it, nowhere near college ready. The concept of graduating high school "behind" (i.e., not college ready) is very alarming. Why? 90% of the kids aren't one or two years of math behind, they're FOREVER behind. You can predict with 90+% accuracy whether or not a 14-year-old will graduate from college, let alone a 17-18 y.o. who has an ACT score in the teens...

That said, pehaps the long-game goal is the Promise brings in a deluge of two-parent, college-educated homes into the district. Significant raising the tide over the next 10 years or so. When you raise the tide, you hope the lower-born students benefit from steeping in an environment with peers who have higher expecations.

TyTrain32

May 6th, 2015 at 3:17 PM ^

It is what you make it. I graduated from KPS and couldnt complain one bit about my education. Of course, we here at KC get an education in life as well. Extremely diverse populations. I owe my professional sucess to that, understanding the world around me and how it works, not that all 3o kids in my pre-calc class were quiet so I could focus and get an A. Plenty of my firends graduated from KPs and went on to get masters and doctarates from prestigious institutions. You sound pretty ignorant labeling us like that. Oh yea, I'm also a counselor in KPS so as far as perspective, I'd say mine is pretty on point. Do you understand social stratification? Doesnt sound like it...

bronxblue

May 5th, 2015 at 9:08 PM ^

Mind you, the premise of the article is that stuff cost less years ago (during the Baby Boomer era) because we weren't paying outrageous salaries and facility costs.  The main force driving those increased salaries?  You guess it, Baby Boomers.

Let it be said that people yelling at you to get off their lawn are doing so because they've priced out anyone reasonable on that lawn.

LSA Superstar

May 5th, 2015 at 9:49 PM ^

1.) Paul Campos is a great, great academic who has been beating this drum for years.  He's a law professor by trade - and law school was the canary in the coal mine for student loan disaster we're in.  Commenters who criticized this article for lacking insight into the contributions of student loans in this disaster haven't read the truckloads of his other articles.  Trust me - he gets it.

2.) Mark my words - we're about to enter a new turn in the narrative, where federal student loan forgiveness recipients are treated as though they are "welfare queens."  Why?  Because this is a cheap credit problem that doesn't have a easily identifiable monster at the root of it.  The housing crisis could be pinned on cartoonish caricature of "Wall Street fat cats" for liberals or "Sammy and Sally Subprime" for conservatives, but there's no easy scapegoat in the student loan crisis.  But debts that cannot be repaid won't, and the generation that can't pay their debts will be raked over the coals for it.  Who will pay?  You will.

3.) A derivative problem is the tremendous future damage to the economy that many economists have predicted from this.  We need consumers, and we've birthed a generation that cannot consume, save, or buy real estate with the same ease as previous generations.  But doubling down on the problem is that these feeble consumers are our prime wage earners - our most educated citizens.

I could talk about this all day.  I'm writing a book.

LSA Superstar

May 6th, 2015 at 7:55 AM ^

Thank you.  This encouragement means something to me.

I'll give you a preview of the moneyshot chapter - here's the solution.  Clawbacks.

The problem, as we've sort of talked around in this thread, is one of incentives.  Secondary education has no skin in the game because they get their money regardless of the "strength" of the product they sell.

So here's the answer.  We keep the student loan system the way it is - schools name their price, the government cuts the check, then the student pays back the government.  We utilize a system of income based repayment, just like we already make available for student loans - all repaying students pay 10% of their mAGI for 20 years following graduation.  We modify the system with a caveat - if, at any point after paying under the system above, a student has paid back 200% of their principal, the repayment obligation is automatically tolled.  This incentivizes student debtors to (1) lower principal by selecting cheaper schools over more expensive ones and (2) seek higher income professions over lower income ones.

But what happens if, after 20 years of paying 10%, there's still outstanding balance on the loan?  The student's schools pay the government back in proportion to the percentage of debt each school is responsible for instead of the government eating it like will start happening - oh wow, really? - next year for the first wave of students earning Public Service Loan Forgiveness.  That's the clawback.  Now we have skin in the game - no more 400K medical schools, 300K public law schools (thanks Cal-Berkley Boalt Hall!), or 120K undergrads.

There are some additional details, but that's the outline.  I welcome comments.

LSA Superstar

May 6th, 2015 at 11:47 AM ^

Again, the FFEL program ended in 2010.  All federal loans are now direct loans.

Which is strange when you think about it.  Why would big banks not lobby aggressively to stop them from lending money fully guaranteed by the federal government and fully immune from discharge through bankruptcy?  Hm...

pescadero

May 6th, 2015 at 2:28 PM ^

"Again, the FFEL program ended in 2010.  All federal loans are now direct loans."



All NEW federal loans are direct loans.

 

Lots and lots of folks are paying (and defaulting) on FFEL loans and will be for a while.

 

...never mind that the banks still have ahook in the business as "loan servicers"

bluebyyou

May 5th, 2015 at 10:44 PM ^

I've wondered on occasion about the ramifications of all student loan debt being eradicated through some federal decree, either an EO or legislatively, which would make me go slightly suicidal after my wife and I worked our asses off to educate our kids without them incurring significant debt. What's an extra trillion or two on top of the 18 trillion we already have as a nation, give or take. What that would produce is a couple of generations of parents who would not pay a nickel of their kids college costs.  Unlike LSA Superstar, I doubt I could write a book on where I think this will end, but I could write a Reader's Digest story or two, and it is not going to be a fun.

MileHighWolverine

May 6th, 2015 at 12:07 AM ^

Are you including the massive amounts of debt the Universities are taking on in an ever increasing arms race for facilities? And I don't mean athletic facilities, I'm talking about dorms and labs. The suites and apartments students get at Michigan today are a far cry from the overstuffed rooms I delt with where we fit 3 people in a room meant for 2. 

Tack on the ever increasing admin costs and Universities obssessive need to raise unheard of amounts in endowment funds and you get yourself a tidy little problem of exploding costs at a time we can least afford it.

The last piece of the puzzle is now the importing of foreign students from countries where they can afford the tuition in cash no matter what the price is and you have local families having to take astronomical debts to send their kids to school just to keep up. Supply and demand at its finest.  

gwkrlghl

May 5th, 2015 at 10:10 PM ^

but it's not hard to see that the education bubble is near bursting. A lot of people are taking on huge debt burdens before theyre 20 and theyre going to earn a degree that wont help them pay that off anytime soon, plus all the other things that come with being financially hampered so much through your 20s

So where does it go? Do people stop going to 4 year schools as much? Federal reform? University cost-cuttingto meet the low cost demand? I dunno, but it ain't gonna stay this way much longer. People are going to figure out this is insane one way or another

Mattinboots

May 5th, 2015 at 10:13 PM ^

This is pretty simple (and a little political). With government underwriting a loan for anyone with a pulse, schools can charge whatever they want and people will find a way to pay for the right product. And 18 year olds don't understand what 100k of debt means on a future salary of 35k a year. And don't get me started on law schools...




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MichiganMAN47

May 5th, 2015 at 10:19 PM ^

The federal government guarantees student tuition loans to the universities. Not all that different than the implicit guarantee during the housing bubble. This creates a moral hazard.



The effect of loan guarantees allows universities to raise tuition without any real consequences. The universities get paid no matter whether students default on their loans. They are not truly limited to the market mechanism of supply and demand, since they get the guarantee.

kb

May 5th, 2015 at 10:20 PM ^

The government decided to make student loans available so everyone could go to college. I think most everyone would agree that providing that opportunity is a positive thing. Because of student loans, colleges experienced an increase in attendance and also kept raising tuition well above inflation because colleges know easy money is available for students to borrow. If student loans were cut back, attendance would go down, and colleges would be forced to lower tuition to attract more students.

El Jeffe

May 5th, 2015 at 10:40 PM ^

I've been involved in higher ed since the late-1980s, first as an undergrad, then as a grad student, and most recently as a professor at a large public university since the early 2000s. There is both disingenuity and merit in Campos's argument. There is no denying that the per-student expenditure on administration has risen and the per-student expenditure on instruction has fallen over time. There is also no doubt that the share of college budgets paid for by states has fallen dramatically over time. At my university, the percentage of the budget paid for by the state has declined from about 40% to about 13% in 30 years. Pretty much every "public" university is for all intents and purposes a private university these days.

Why did that happen? I believe the rise in administrators and the decline in state funding derive from the same source--the neoliberal fascination with low taxes at all costs. No polo, but there was a time in the early 1980s when an American President called taxes "burdens" and said that the government wasn't the solution to the problem; it was the problem. So increasingly, Americans didn't want to pay taxes for anything and wanted to turn everything over to the private market because it was more "efficient."

Here's the problem: when you make universities into businesses you have to hire people to run them like businesses. The good thing about government programs is that because there is no profit motive they tend to be much cheaper to run (see: medicare/medicaid vs. every other health insurance company ever). And, what the neoliberal managers of public universities figured out is that consumers' demand for higher ed was extremely price inelastic. So you could keep driving up prices and people would keep paying the bill, no matter how exhorbitant. The availability of credit as a causal mechanism for increasing tuition seems pretty spurious in this regard.

Anyway, rant mostly over. If you really want a neoliberal paradise, you'll have to pay for it yourself. But if you don't like taxes because they are a "burden" instead of as Oliver Wendell Holmes said, "what we pay for civilized society," then you'll keep paying through the nose for college tuition.

Signed,

A Bleeding Heart Liberal College Professor Who Every Year Watches a Bunch of Twatty Administrators Get Paid Way More than He Does for Knowing Fuck All about How to Educate People

Bando Calrissian

May 6th, 2015 at 10:14 AM ^

Because to become an administrator means abandoning your work, your teaching, etc. And it's not about the money, either. Believe it or not, most of us in the academy got here because we like doing what we do. I have no interest in giving that up to wear a suit and go to synergy workshops and glad hand donors and such. That's what you end up doing in administration.




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gbdub

May 5th, 2015 at 11:20 PM ^

You call Campos disingenuous, then you quote state funding as a "share of college budget". Well shoot, if the school budget doubles the state share gets cut in half just by staying the same.

Yeah, the college admins/professors crying about a 5% state cut while raising tuition 10% gets just an eensy bit annoying.




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El Jeffe

May 6th, 2015 at 9:53 PM ^

I don't understand this argument at all. Budgets for all kinds of things increase, and I bet you'd find that one of the major categories is administrators' salaries. Campos is dead right about that. But if those increasing budgets are not met with a commensurate increase in state expenditures then the difference is passed on to the student. And it isn't 5%, at least at my university. It's more like 25-30%.

I know I'm on the internet where there can be only one answer for everything. I just think there's more than one cause, and while Campos correctly diagnosed one of them, he underplayed another, IMO.

jmblue

May 6th, 2015 at 7:36 AM ^

Universities aren't being run like businesses.  Businesses do not constantly expand their outlays during times of economic uncertainty.  

You speak of the percentage of the budget paid for by the state, but how much has your university's budget increased during that time?  Even if the article is a bit simplistic in its conclusions (it glosses over the issue of easy financial aid), I think it raises an important point: universities are increasing tuition by unreasonable amounts in large part due to their own questionable budgeting decisions and then using the state funding issue as a cover. 

 

 

Bando Calrissian

May 6th, 2015 at 10:24 AM ^

I can show you a laundry list of seemingly meaningless decisions made at my institution by university administrators with business backgrounds who have absolutely no conception that a relatively mundane change in policy (in their eyes) actually has crazy implications for students and instructors. There's a fundamental disconnect. These are folks with MBAs with no idea how teaching and research is done, how people publish their work, etc. This is especially an issue with the humanities, as there seems to be this idea that we work, teach, and publish in the same way as the STEM folks. So they implement these bizarre policies on us that make no sense, but fit their view of a one-size-fits-all approach that they view as economically efficient. And they don't care, even when it's explained to them that running a university involves different processes than running a corporation. So, yes, in my experience, universities are being run like businesses, to the detriment of those of us who teach and work in them




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jmblue

May 6th, 2015 at 10:43 AM ^

I can believe that.  I'm sure they feel some pressure to streamline as an organization and I wouldn't be surprised that it would lead to half-assed solutions that make things more annoying for everyone.  

Still, at the macro level, to drastically increase administrative overhead during a time of uncertain funding is not a very typical business approach.

 

El Jeffe

May 6th, 2015 at 9:59 PM ^

Wat? They do if consumer demand is price inelastic. That's my argument for the spuriousness of the credit explanation--when consumers really really want something they'll find a way to pay for it. And creditors will happily loan them the money and reap the interest rewards.

LSA Superstar

May 6th, 2015 at 8:06 AM ^

"The availability of credit as a causal mechanism for increasing tuition seems pretty spurious in this regard."

A ludicrous claim on its face.  An out-of-state student attending the University of Michigan must pay 44,230 per year to meet the total cost of attendance.  Oh whoops, sorry, that's what it would cost to attend Michigan State.  An out-of-state student attending the University of Michigan must pay 55,404 per year to meet the total cost of attendance.

Now, the average household cumulative monetary income for an American was $72,641.  The median was far lower - $51,939.  So, for an out-of-state student, attending the University of Michigan costs more than the median household earns in cumulative monetary income in a year.

This.  Is.  Not.  Possible without artificially cheap credit.  Full stop.

dupont circle

May 5th, 2015 at 10:48 PM ^

The most ignored factor in college expenses is that the average public-educated Michigan kid now takes 5-6 years to graduate, if ever. Literally less than half the kids that go to MSU finish in 4 years. Two extra years to finish is 50% more in cost of attendance and two years out of the work force, a $150,000+ opportunity cost.

If your kid finishes U-M *on time* you're looking at $105K total. Last I checked, the average starting salary of an LSA econ major was like $57K. Ross or CoE was like $75K. The average kid leaves U-M with less than $22K in loans. Please spare me that $20 grand is impossible to pay on a $75K salary. Don't lease an Audi, don't rent a single apartment in downtown Chicago or Dupont Circle or SF, and don't blow your checks on sushi and exotic trips to Istanbul, and you can repay $20 grand in two years, EASILY.

Pinky

May 5th, 2015 at 11:52 PM ^

National student loan debt is about 1.3 trillion dollars, or 6% of the national debt, and 146 billion of that is in default. But sure, if only those kids would stop eating sushi and going to Istanbul!  That will solve the problem!

Let me explain something to you.  With interest compounded annually over a standard repayment plan of ten years, the average college loan costs a graduate about 39,000 dollars.  The average salary for a college graduate in this country is 44,000.  You don't have to have a PhD in economics to know that a near 1:1 income to debt ratio is fucking horrific. And that is the average.  There are hundreds of thousands of graduates in much, much worse situations.

The issue here has absolutely nothing to do with apartments, dinners, or vacations.  The issue is the same as it always is when there's a financial crisis: greedy motherfuckers preying on people who don't understand finance and taking their cut without giving a shit about the future consequences to society.  

Bodogblog

May 6th, 2015 at 8:33 AM ^

Your math is flawed: compounding loan interest while holding salary static at today's dollars is an error. The latter is likely to increase 2-3% annually, which is itself compunded. In fact if loan interest is 4-6%, given that you're coming off a doubled-up base (ie $22K loan amount is half of $44K salary), you'd be able to maintain that 2:1 income to debt ratio over the entire term.

Pinky

May 6th, 2015 at 10:54 AM ^

I'm not sure why you would expect an increase of 2-3% per year given the .75% annual increase we've seen since 2000.  And the 22k loan amount isn't accurate.  Today, it's actually right around 29,500, which is a 37% increase since 2008.  The total amount of student loans doubled from 2003 to 2007 and doubled again from 2007 to 2013. So we have essentially static salaries, skyrocketing student loan amounts, and trends rapidly heading in the wrong direction.

Yes, you are correct about the error, but that is not the point.  The point is that the numbers reveal a large, fundamental debt problem that can't be solved by simply cutting back on a few expenses, and it's going to get worse before it gets better.

Bodogblog

May 6th, 2015 at 12:21 PM ^

Is the .75% the overall rate, or the rate for professional / white collar positions?  It's the former, based on 7 seconds of internet research.  This fortune article from 2013 quotes a rate of 2.9% that year, with the 2009 recession-based 2.2% being the lowest rate of white-collar increase ever recorded in their study, going back to 1973.  With a floor at 2.2% my assumption is sound. 

I countered a specific argument in your post, where you chide another poster for not understanding a 1:1 income to debt ratio is horrific.  It's a flawed argument and should be dismissed, both by you and anyone who reads and has an interest in this topic.  That doesn't mean I don't understand the larger issue being discussed. 

If your salary is going up by 2.9% in 2013, you’re about average for white-collar employees in the U.S., according to a new survey by human resources trade association WorldatWork. That’s an increase of about 25% over the 2.2% average pay hike in mid-recession 2009, which was an all-time low since the association’s annual poll launched back in 1973.

http://fortune.com/2013/07/30/u-s-pay-raises-not-so-hot-but-outpacing-i…

 

LSA Superstar

May 6th, 2015 at 7:45 AM ^

This was an A+ post.  And then it veered into "greedy" territory.  No.

This is (and always has been) type-A (also called "common" or "market") rent seeking.  99% of people, had they been University administrators, would have come to the same conclusion we actually observed:  I can charge whatever I want for a product with unlimited demand because the government provides unlimited funding with no hook on me.  I will, therefore, increase the price of my product exponentially, year after year.

The problem is the credit.  And it's easy to see that the credit was made so freely available not for reasons of graft, but for altruistic reasons - we want to make college an opportunity for anyone, regardless of socioeconomic background.  That's not greed, nor is it any other type of evil.  But it is misguided because the solution makes the problem worse.  And this isn't an academic discussion because we've seen the effects.

gbdub

May 5th, 2015 at 11:35 PM ^

Honestly the real issue in my mind is lousy primary and secondary education. An awful lot of high schools suck, and anybody with a pulse graduates. So a diploma isn't worth a damn to employers. Now you need a college degree to manage a freaking burger shop.

Half of freshman classes are remedial crap that should have been covered in high school. Think there are blow off classes at Michigan? It gets way worse. Are those students really gaining anything going into debt getting a C in a class they should have mastered for free two years ago?

And I deeply respect humanities scholars, but damn there are way too many curricula that will happily take $100k from you to earn a degree that offers no career options other than advanced latte distribution. If you want to be an artist, a musician, or a scholar of whatever studies, fine, but you're a fool if you go in debt to do it. I'm a firm believer that college should offer more than just employability and that the liberal arts have value, but at $50k a year or more they sure as hell better offer some marketable skills too.

Make a high school diploma worth something again, bring back the trades, and you'll have employable high school grads that don't need to waste 5 years partying and accruing debt to come out with no more skills than they went in with.




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MichiganTeacher

May 5th, 2015 at 11:58 PM ^

Ok, so wow, the Times got it right. Late, as this has been obvious ever since the feds and states increased their higher ed subsidies and started stuffing more and more people into colleges, but better late than never.

Also, the OP misinterprets the article. The article correctly states that the root cause (or one of the root causes) of the skyrocketing tuition price is federal and state subsidies. In keeping with that idea, Increasing administrative salaries are an effect, not a cause. Interesting that gov't subsidy = good is so deeply conditioned into our consciousness that we often fail to see when it is doing harm. Also, isn't this treading across the no-politics line?

Evil Empire

May 6th, 2015 at 8:39 AM ^

Because they can.  In fact, they would be dumb not to.  Any tuition increase results in an increase in the government's willingness to loan money to students to pay that tuition.  That's a broken system.

What gets me is the schools' constant fundraising drumbeats.  Why do colleges need their alumni to donate more and more money?  What are they going to do with it?  Will they lower tuition if they get enough donations?

The LSA dean spoke to our local alumni club about ten years ago.  A parent of a then-current student asked what the school was doing to keep a lid on tuition increases.  The dean did his best not to smirk and failed.  I was impressed that he did not laugh hysterically and pound the lectern with tears streaming out of his eyes.  That's not their mission - their mission (aside from education, of course!) is to keep tuition marching upwards and justify the expense by doing more and more peripheral things.

In 10 years my daughter will be graduating from high school, followed four years later by my son.  My wife and I make far more than my parents ever did, but our ability to pay for their college education will be less than half of my parents'.  That's fucked up.

dupont circle

May 6th, 2015 at 9:27 AM ^

"In 10 years my daughter will be graduating from high school, followed four years later by my son.  My wife and I make far more than my parents ever did, but our ability to pay for their college education will be less than half of my parents'.  That's fucked up."

Two parent, highly-educated family, I presume living in a very strong school district? There's zero reason why you should be stressed about paying for college. You should easily be able to groom your high-SES kids to earn serious scholarships. I have a few friends from high school that got full rides to Oakland U and MSU, and they were by no means brilliant. There's a ton of merit dough out there. With Michigan's sagging schools, it's easier than ever to be a top 5% student. U-Detroit gives $25,000 to every kid that has a 3.5 GPA and a 30 on the ACT.

late night BTB

May 6th, 2015 at 9:40 AM ^

lots of words being said, only a couple need saying.

'federal, non-dischargable loans.' Fix those and you'll see the cost of college go down.

for undergrad, there's no logical reason to pay OOS to go to Michigan.  People pay OOS because they can (#1), and/or they feel an alligience to the school.  Chances are you can find an instate school that gives a comparable education as the one your kid would get at Michigan for a fraction of the cost.  Getting a biology degree from NC State or Michigan isn't going make a big difference.  It'll probably be easier to get into a good med school going to a smaller school.  Then you can spend the big bucks for grad school.