Relevant and even prescient commentary on news, politics and the economy.

Tuition remission…okay, now what?

Tuition is only $1747 a year.  But then comes the other part…austerity budgets and as state support dwindles, one aspect is that creative cost shifting flourishes.  The tripling of student debt since 2004 are discussed here. And graduation rates remain flat.

From the chart provided at Umass Amherst bursar’s office per semester costs are shown, excluding room and board, which is worth a different post as to how that impacts which colleges are chosen.

Pro Publica Hidden charges and tuition for college

This week, anxious high school seniors will be opening letters and emails of acceptance or rejection. For them, there will be a mix of joy and disappointment. But for those students and their parents, there will also be an initial reckoning with the expensive, often opaque issue of college fees.
Lauren Vaughn, a senior at UMass Amherst, is also an organizer for the UMass Students Against Debt coalition. She said appreciating the collective cost of additional school fees is often critical to determining whether any particular school is, in fact, affordable.

“It does seem as though we are not informed about these fees often until it is too late,” Vaughn said, noting that such fees “can be the thing that puts some students who are financially strained over the edge.”

The federal government has made efforts in recent years to make true college costs more transparent. U.S. Department of Education data shows that in more than half the states across the country, degree-granting institutions reported that fees comprised a greater portion of combined tuition and fees in the 2010-2011 school year than they had in 2008-2009.

But fees for specific programs and courses typically get left out of that data. The same goes for fees that apply to specific pockets of students, such as honors students or international students.

Many school officials say they do their best to make sure the necessary information about tuition and fees is clear to students and their parents. But there’s no one definition that schools stick to when deciding what’s covered by tuition and what falls under fees, and the very structuring of tuition and fees can vary wildly between different schools.

“It’s all smoke and mirrors in some ways, the issue of tuition and fees,” said Terry Meyers, a professor of English at the College of William and Mary. “It seems to be one area of the academic world where no one is looking and no one wants to look too closely.”

To best appreciate how confusing — even upside-down — the world of college costs can get, consider this: At state schools in Massachusetts, where the state board of higher education has held tuition flat for more than a decade, “mandatory fees” wind up far outstripping the price of tuition. At the University of Massachusetts Amherst, the flagship of the UMass system, mandatory fees are more than six times the cost of in-state tuition.

And that isn’t the end of it: Students are then hit with still more charges — the $300 “freshman counseling fee,” the $185 “undergraduate entering” fee, and several hundred dollars more if your parents or siblings attend freshman orientation. Honors college and engineering students face still more fees.
A number of forces are driving fees upward. For public institutions, declining state support has left many schools scrambling to find other types of revenue. As well, since the notion of straightforward tuition hikes is often politically toxic, there is considerable appeal to using fees to make up shortfalls.

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Learning To Owe

A few thoughts from a friend of mine and an introduction from a movie I (run75441) watch each year.

“I don’t need 24 hours. I don’t have to talk to anybody. I know right now, and the answer’s no. No! Doggone it! You sit around here and you spin your little webs and you think the whole world revolves around you and your money! Well, it doesn’t, Mr. Potter! In the, in the whole vast configuration of things, I’d say you were nothing but a scurvy little spider!” George Bailey

Learning To Owe

by The Bell

The Cost of Education Is Crushing the Opportunity We Mean It to Provide

The Occupy Wall Street movement has no formal goals but several consistent memes have emerged among the crowd demonstrations in various cities across the country. Most of these have to do with the concentration of wealth and the collusion/corruption between big business and government. However, a more selfish trend also has surfaced among the demonstrators – many want their college student loans forgiven.

A small, informal survey among New York protestors last week by equity research analyst David Maris found ninety-three percent of them advocated student-loan clemency. This idea actually is neither original to OWS nor unique among its members.

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Sign bewailing large student loan debt
from one Occupy Wall Street protestor

New York University Professor Andrew Ross recently proposed a radical solution to student loan debts the he calls “A Pledge of Refusal.” The idea requires those who owe to sign a pledge to stop making payments on their student loans once the pledge garners a million signatures. Meanwhile, an online petition supporting student loan forgiveness has collected over a half million signatures.

President Obama announced a plan last week to provide student loan relief. First, he is reducing the maximum repayment on student loans from fifteen percent of discretionary annual income to ten percent. Second, he will allow borrowers to combine loans from the Family Education Loan Program with direct government loans, with a lower consolidated interest rate. Obama plans to use his Executive authority to bypass Congress for this program.

Democratic Representative Hansen Clarke of Michigan wants to go even further. He has introduced legislation (H.R. 365) that includes creating incentives for banks to negotiate with distressed lenders, providing tax credits for education expenses and student loan debt, and making more private student loans eligible for discharge in bankruptcy proceedings.
Both Obama’s and Clarke’s solutions fall short of general clemency but protestors are unlikely to obtain this remedy. A Rasmussen poll found only twenty-one percent of American adults in favor of blanket forgiveness as contrasted to sixty-six percent opposed. Many feel clemency would be unfair to lenders as well as those borrowers who repaid their student loans. At worst, they write off OWS protestors and other advocates for loan forgiveness as spoiled, lazy slackers who expect a free ride.

Such epithets are unfair, counters conservative columnist Nicholas Kristoff this week in the New York Times. “While alarmists seem to think that the movement is a ‘mob’ trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.” Kristoff goes on to deplore how “some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us . . . they can privatize profits while socializing risk.”
Representative Clarke concurs that most protestors “are not asking for [a bailout]. They are simply asking for a system that is not rigged against them.” When big bankers and investment firms can make poor decisions without suffering obvious consequences, then the motivation for individuals requesting similar absolution may not be admirable but it is understandable.
While the current crop of students and recent graduates may be whining about the problem more than past generations, they face an objectively bigger problem. This year, the average borrower graduating from a four-year college left school with roughly $24,000 of student debt, with ten percent facing debt of $40,000 or more, according to the College Board. Total student loan debt will exceed $1 trillion this year and it now exceeds outstanding credit card debt, according to the Federal Reserve Bank of New York.

Only seven percent of graduating bachelor’s degree holders come from the bottom quarter of income earners, as compared to twelve percent back in 1970. Intended as relief and opportunity for the distressed poor, student loans have become an unavoidable middle class reality. In addition, a series of laws passed by Congress last decade have increased the difficulty of discharging debt, including student loans, through bankruptcy.
The website College Scholarships reports on several programs that forgive or reduce student loan debt for graduates willing to work in high need/disadvantaged areas. The problem is such programs are limited to highly targeted professions, such as nurses, attorneys, and teachers. What is more, they often require a minimum of five years experience. Traditionally, graduates take such jobs immediately after graduation to acquire experience, when they are most inclined to social activism and less acclimated in their lifestyles to larger salaries.

I attended college for six years, ultimately earning a master’s level degree in 1984. I won several scholarships, based on merit; qualified for several grants, based on need; and I worked. In spite of this, I fell short of the necessary money for tuition and books on a couple of occasions. I took out a couple of federal student loans to make up the difference that I was able to repay within a few years of graduation.

Contrast my experience with that of Robert Applebaum, who graduated from Fordham Law School in 1998 with about $65,000 in debt. After going to work as an Assistant District Attorney in Brooklyn, his salary forced him to put his student loans in “forbearance,” which prevents default but allows continued accrual of interest. Applebaum began repaying his loans upon leaving the DA’s office in 2004 but remains $88,000 in debt today.
Tommaso Boggia is an MPA candidate at Presidio Graduate School and an advocate for student loan clemency. He writes at the website Triple Pundit, “Regardless of work ethic, more and more middle class families are slipping into poverty, in part because of the heavy debt burden of house ownership and of pursuing a higher education degree . . . A whole generation is seeing their plans and ambitions shackled by the extra weight of their student loan payments. These young people are unable to buy a home, start a family, or do the socially important but underpaid jobs in the social services sector.”

In the post-World War II era, a college education was the chief means by which children from working poor families could leapfrog into the middle class or even affluence. Increasingly, however, the cost of this requirement is becoming the very thing holding them back from the opportunities promised by the American Dream.

The most cited reason for exploding debt is the ever-increasing cost of college. Average in-state tuition and fees at four-year public colleges rose an additional eight point three percent in 2001 alone, passing $8,000/year ($17,000/year with room and board). In addition, the American Council on Education notes that budget cuts and other austerity measures have reduced state appropriations to higher education by eighteen percent over the last three years.

Richard Vedder, Director of the Center for College Affordability and Productivity and author of the book Going Broke by Degree – Why College Costs Too Much, maintains that we are looking at the problem exactly backwards. Writing in the National Review, he argues that just as an abundance of easily obtainable, low interest mortgages spurred the housing bubble that caused the 2008 financial crisis, “Arguably, federal student financial assistance is creating a second bubble in higher education.”

Vedder also points out that government doles out loans without discrimination to a student’s prospects of success in college, despite the fact that over forty percent of those pursuing a bachelor’s degree fail to receive one within six years, or chances of success after college, regardless of whether a student’s field of study offers poor versus good job/career availability. During a 2011 PBS NewsHour appearance, Vedder argued American society must “open up opportunities for people to consider a variety of different options after high school, one of which is college, but there are many others.”

Most of us may not agree with those advocating total clemency for student loan debt. While this solution may be overly simplistic and impractical, it seems clear that some reforms are necessary – whether the efficiencies proposed by Obama, the incentives proposed by Clarke, or Vedder’s more draconian measures toward higher education in general. It also means we need to give OWS protestors and other loan forgiveness advocates more credit for identifying a real, substantive, and systemic problem beyond their selfish interests.

If we value an education for our children as much as we claim, our society has to find a way to re-engineer it back from the crushing burden it has become to more of the opportunity we aspire it to be. Right now, the main thing we are teaching our kids is learning to owe. This is neither opportunity nor American exceptionalism.

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Clinton Global Initiative, Day 2 – Empowering Girls and Women (Plenary)

Moderator is Katie Couric, News Anchor and Managing Editor at CBS News. Panelists are

  • Her Majesty Queen Rania Al Abdullah , Hashemite Kingdom of Jordan
  • Ellen Johnson Sirleaf, President of the Republic of Liberia
  • Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company

Mr. Kent’s favorite book is Thomas Friedman’s The World is Flat.

Queen Rania notes that the women are working very hard, but their time is not sufficient for everything that needs to be done. Part of this is the mindset (marriage > human capital development), but a significant portion is lack of available infrastructure.

Ellen Johnson Sirleaf: We started by focusing on women in the “informal sector,” providing educational opportunities and the like.  But this wasn’t enough in either respect: needed to provide more opportunity for work out of home and more protection on government level.

Mr. Kent notes that 70% of his customers are women.  Looked into future development and realized there was a significant mismatch in the company’s efforts, philosophy, and customer base.  “It’s a journey; it doesn’t happen overnight, but we are making good progress.”

Queen Rania notes that “no country can make any progress in spite of its women…They need to be injected into the supply chain.” Have contributed more to GDP than technology gains over past 20 years.  The greatest issue is the amount of time it takes to get an initiative in place and to see positive results from it.

Katie Couric asks how important a role is it to educate boys.  Queen Rania notes that the social attitudes harm boys as much as it does girls.  Girls get married instead of getting a job—but boys are forced to drop out of school to provide for their family.  So both lose in that situation.

Mr. Kent speaks of “microdistribution,” which actually originated at last year’s CGI, when Mr. Kent committed to 1,500 more projects, and that half of those would be women.  Not only passed that target, but they now employ an additional 18,000 people—total of 20,000 employed through 1,500 micro projects.  Barriers that had to be overcome—access to finance and land, especially—resulted in development of Best Practices that is now being spread as the model to South America and other locations.  Next goal: empowerment for 5,000,000 additional women between now and 2020.  Will involve both the distribution and retailing sides of Coca-Cola’s business.  Have mobile support for teaching “the basics of retailing” (e.g., stock rotation).

Some of the symbiotic relationships that enable that: In India, for example, carry water miles to their village.  We provide Clean Water which frees up the women’s time and leads to them to start their entrepreneurial work. Most “become leading citizens in their communities,” which leads to opportunities for expansion. (Gives example of a woman who started with one location and is now franchising and employing sixteen [16] people.)

Asks President Johnson Sirleaf about the “ripple effect,” and what the critical first step is.  For us (Liberia), we started with the first step of education—not formal education so much as access to knowledge.  Schools, literacy training, and a have a program that came out of a program from the CGI a few years ago, in cooperation with the World Bank and Nike, to train adolescent girls to go into the particular job that are currently in demand.

Question from YouTube: access to seeds and market information?  Mr. Khan has a project in cooperation with the Gates Foundation to create entrepreneurship for 50,000 farmers to create juice concentrates needed by Coca-Cola.  Have been working with the farmers—and discovered that only 1% of the land ownership was by women.

Queen Rania notes that in twelve countries in the Middle East, have more girls in school than boys. Biggest challenge is how to get women into the labor market, which (as this paper notes) helps both, as it did in the past.

President Johnson Sirleaf notes that there is no legal restriction in Liberia against women owning land, but there may well be structural issues.  Most farmland development now is being driven by women, “the men rather just play drums.”  (Mr. Khan, in response to a question from Couric, notes that competition makes the entire sea go up—helps both.)

How do we end violence against women and girls?  President Johnson Sirleaf says “we are going to stay the course. Make the penalties more intense—and enforce them. (Her example is making the rape of a four-year-old girl equivalent to murder.)  Queen Rania notes that the Community and Religious leaders need to cooperate as well in this effort to facilitate change. She found that when she started working about the subject of child abuse in Jordan, the first problem was that people denied it existed.  Have to have people confront problems before can solve them.

60% of women and girls in developing countries will be married before they are 18, and will have four children before they are 20.  Why does the issue of child marriage continue to travel under the radar.  Leading cause of death for girls aged 15 to 19 in developing countries is complications from pregnancy.  Jordan just raised the minimum age for marriage to eighteen (18) in reaction to seeing teenaged girls who have four children and ten years of “work experience.”

Biggest issue in Liberia is the transition into and through secondary school.  Mr. Khan focuses on “golden triangle”: collaboration between government, businesses, and civil society to lead to greater belief in the future and expectations of a future.

Katie notes that she has two teenaged daughters.  Other than bringing international attention to it, what can we do?  Queen Rania recommends Girl Up (which needs a website developer), a project of the United Nations Foundation that supports school supplies, medical checkups, and clean water to facilitate opportunities for girls in other areas.

Mr. Khan reiterates the obvious: families have to believe in the future, that there will be a better future,to make any progress toward long-term development. With a coordinated effort through the “golden triangle,” we will see improvements and developments.

We can only hope he is correct, and that people will find other jobs than just being a Coca-Cola franchisee as the 21st century develops.

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Infrastructure and Human Capital Interlude

Busy week, so just a couple of things of note.

  1. Via Dr. Black, my old neighborhood gets a chance to build a better future:

    “It’s a great partnership among a number of researchers from academia, the private sector and national laboratories. It’s a great collaboration for a solid project that will help the environment,” said Penn State spokeswoman Annemarie Mountz.

    Foley said the project “will spur real innovation and job growth for Philadelphia, the region and the nation. We have a world class team of universities, corporations, and economic development entities that made this proposal come to life. There is no better place to do this work than in the Philadelphia Navy Yard.”

    My mother would have agreed, but she stopped working there (coincidentally) around the time Tom was born. Indeed, the renovation of the Navy Yard has been an American Success Story (driven by a Norwegian shipbuilding firm and a clothing retailer), and we can almost pretend that the area has “recovered.”

  2. Similarly, the results of the Race to the Top came in a couple of days ago. You may have heard that our Superstar Governor was cruelly betrayed by Washington bureaucrats and/or the evil NEA.

    Well, until the actual video was released, after which point yet another Republican decided to prove that people collecting unemployment are Just Lazy (though he does claim not to have lied to Superstar Governor, leaving the question of where the story from the Governor should be sourced).

So the old area is gaining because of Federal government management, and the current area is suffering because of State government mismanagement. It’s almost enough to make me think that there’s a difference when people want to accomplish something.

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How to Manage Variable Costs, Arkansas-Style

Via the Chronicle of Higher Education (link may not be public):

The Arkansas legislature is taking a different approach to reining in soaring tuition costs: Today it sent a bill to the governor’s desk that would cap the amount of money public colleges can spend on scholarships.

Increases in scholarship aid lead to higher tuition costs, State Rep. Bill Abernathy, who shepherded the Senate-passed bill through the House of Representatives, told Associated Press. “You almost have the reverse Robin Hood scenario,” said Mr. Abernathy, a Democrat. “You’re taking from the poor and giving it to the rich in some cases.”

Will Governor Beebe, whose post-secondary education is entirely in the Arkansas Public system, view this as a way to keep people from having his opportunities, or will he “make the tough decision” and decide not to invest in Human Capital?

That #32 ranking and improving educational environment will be interesting to revisit in five years. Just when the pump has been primed, the water supply is rerouted.

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There’s a reason Pimco hired the last leader away

A depressing sentence from Daniel Gross (h/t Mark Thoma):

The 13-F shows Harvard with some 231 positions worth nearly $2.9 billion, highly concentrated in popped macroeconomic bubble plays.

We now have the title of the book about Henry Paulson’s time at Treasury: Popped Macroeconomic Bubble Plays.

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What We Learn from Sports

Compare and contrast:

Philadelphia, after a first-time-in-25-years win:

The School District of Philadelphia – as if to prove you don’t need miserable weather to rain on a parade – has no plans to close for a victory celebration, no matter how momentous the occasion might be.

“Our expectations are that students will report to school just like any other weekday – and report on time,” said Fernando Gallard, spokesman for the school district, this morning.

An entire Georgia county, before a midseason football game:

Call it a case of the Red and Black flu.

Tired of struggling to find enough teachers to staff its classrooms on the Friday before the annual Georgia-Florida football game, the Clarke County (Ga.) School District — which includes Athens, home of the University of Georgia — decided to cancel school altogether.

As a Philadelphia native, I’m proud of the first decision (which was, undoubtedly, be honored in its breech). As an MBA from the University of Georgia, I’m embarrassed.

But not so much as the UGA fans probably are.

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The Mukasey Rules: Schools not to send your children to

The traditional annual list of Party Schools now has a jump-start. In no particular order, except the way CNN listed them:

    Duke
    Dartmouth
    Ohio State
    Syracuse
    Tufts
    Colgate
    Kenyon
    Morehouse
    Middlebury College
    Rhodes College

The reasoning is such that Only the Current Attorney General could love:

“This is a law that is routinely evaded,” said John McCardell, former president of Middlebury College in Vermont who started the organization. “It is a law that the people at whom it is directed believe is unjust and unfair and discriminatory.”

“Is routinely evaded” is College President-speak for “The system is broken, so I’m not responsible.”

Since this reasoning also applies to most recreational drug consumption, including but not limited to marijuana, crack, cocaine, and Ecstasy, I expect the Amethyst Initiative to move on to those areas next.

It falls to a former Clinton Administration official to tell the truth and shame the Devil,* in around the 16th or 17th graf:

But some other college administrators sharply disagree that lowering the drinking age would help. University of Miami President Donna Shalala, who served as secretary of health and human services under President Clinton, declined to sign.

“I remember college campuses when we had 18-year-old drinking ages, and I honestly believe we’ve made some progress,” Shalala said in a telephone interview. “To just shift it back down to the high schools makes no sense at all.”

And it is even later in the piece that they point out that the researcher whose work the Amethyst Initiative cites not only disagrees, but sees through the facade:

McCardell cites the work of Alexander Wagenaar, a University of Florida epidemiologist and expert on how changes in the drinking age affect safety. But Wagenaar himself sides with MADD in the debate.

The college presidents “see a problem of drinking on college campuses, and they don’t want to deal with it,” Wagenaar said in a telephone interview. “It’s really unfortunate, but the science is very clear.”

To coin a phrase, “Why, oh why, can’t we have a better press corps?”

*Yes, I have been reading and re-reading Stephen King recently. Why do you ask?

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Opportunity. Costs.

Tyler Cowen takes a premise of Arnold Kling’s:

My guess is that most of the younger (aged 30-34) highly-educated folks are children of two highly-educated parents. My guess is that many of the older (aged 55-59) highly-educated folks are children of a college-educated father but not a college-educated mother.

I don’t think we have a recipe that says, “Take a child of two non-college educated parents, add primary education ingredient X, bake, and out comes a college-capable high school graduate.” The mystery ingredient X has yet to be discovered.

and spins it as well as he can:

I’m not sure that college education per se is the key here (and probably Arnold would agree; read his phrasing carefully). If you can bake up some low rates of time preference, you’re coming pretty close to the real mystery ingredient.

Actually, I’ll stick here for the answer that Kling alludes to without mentioning it: The (original) G.I. Bill, which is the reason many of those 55-59-year-olds had a college-educated father in the first place.

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About funding education

From Rdan’s Sallie Mae post I got the urge to hunt because vtcodger mentioned greed.

Greed? Yes, I have recently learned that one person who works to manage the endowment fund for Harvard got a bonus for last year performance that was less than the year before of $2M. Imagine that! The endowment is so large and produced so much, that $2m could be handed out like a tip. (Of course, this is second hand knowledge.)

So let us see how Harvard is doing.
The fund is currently valued at $34.9 Billion.

Harvard University’s endowment earned a 23.0 percent return during the fiscal year ending June 30, 2007.
From fiscal 2001 to fiscal 2007, for example, scholarships and awards to students from University funds increased by over 94 percent, to $302 million from $156 million. Endowment dollars distributed for overall Harvard programs rose more than 70percent during the same period, from $615 million to $1.04 billion.

$1.04 billion or 3%. Only 3%. Yet:
Since its inception, HMC has averaged an annualized rate of return of 13.3 percent.

The industry average is: the median for the 151 large institutional funds as measured by the Trust Universe Comparison Service (17.7 percent), as well as the 20.9 percent that marks the top 5 percentile.

Granted, I’m sure and as they say there are restrictions. However, Harvard says they are trying to spend 5% annually. They note tuition only covers 2/3 of the cost. Well if they really tried to get to that 5%, they would have another $705 million for it. At their tuition of $47,215, that’s 14,932 students. The total enrollemnt is only 25,017 including part-timers.

Hello?

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