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WHAT? LIBERAL THINK TANKER RIPS WARREN’S COLLEGE LOAN SCHEME: Something is going on when a top think tanker representing two anchors of the Washington liberal establishment takes apart a progressive favorite’s plan for no-fault college loans.

HIGHER EDUCATION BUBBLE UPDATE: An Idea for Student Loans: Get Rid of Them. Student loans aren’t a subsidy for students. They’re a subsidy to the academic class, and mostly to administrators.

THERE’S NO IQ TEST FOR CONGRESS: Maxine Waters Grills Big Bank CEOs About Student Loans — Which Were Nationalized in 2010.

MAXINE WATERS GRILLS BIG BANK CEOS ABOUT STUDENT LOANS — WHICH WERE NATIONALIZED IN 2010. “Waters is the chairwoman of the House Financial Services Committee — the committee that regulates the banks.”

What could go wrong?

ALL IS PROCEEDING AS I HAVE FORESEEN: White House Might Put Colleges on the Hook for Student Loans: Executive order under consideration would require schools to take financial stake when students don’t repay.

The White House is weighing a measure that would require colleges and universities to take a financial stake in their students’ ability to repay government loans, an effort that could squeeze loan availability to students and reduce defaults.

For several months, Trump administration officials have been discussing enacting such a mechanism or making a push for one in Congress as part of a broader effort to combat rising college costs.

In the administration’s budget proposal released Monday, officials made brief mention of a “request to create an educational finance system that requires postsecondary institutions that accept taxpayer funds to have skin in the game through a student loan risk-sharing program.”

Such a proposal could be included in a coming executive order addressing higher education, several officials said.

You heard it here first. Though remember this? Senate Democrats push for colleges to have “skin in the game” on student loan defaults. “In a call with reporters, Senators Richard Durbin of Illlinois, Jack Reed of Rhode Island and Elizabeth Warren of Massachusetts highlighted a package of new and existing proposals aimed at reducing the burden of student debt. Durbin acknowledged that the senators had had ‘limited success’ in getting Republican support for the measures, but said they will be a centerpiece of the Democratic agenda in the Senate in 2014. One of the more controversial new proposals, to be introduced by Reed, would require colleges with high student loan default rates to pay a penalty to the government that is proportional to the defaulted debt.”

So Trump can honestly say this is an idea with bipartisan support.

Flashback: “Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else. Make defaults expensive to colleges, and they’ll become much more careful about how much they lend and what kinds of programs they offer.”

SPOUSAL ABUSE: I paid off my wife’s student loans—then she filed for divorce after two years of marriage.

IF ONLY THERE HAD BEEN SOME SORT OF WARNING: Five Reasons Why Student Loans Are a Looming Disaster.

TIRED: Dumb, obsolete men are less-educated than smart, up-and-coming women.

WIRED: Student Debt Is Worse for Women: They borrow more than men do, and then earn less, making it harder for them to repay their loans.

If only someone had warned them not to do that.

VICTOR DAVIS HANSON: The Origins Of Our Second Civil War.

How, when, and why has the United States now arrived at the brink of a veritable civil war?

Almost every cultural and social institution — universities, the public schools, the NFL, the Oscars, the Tonys, the Grammys, late-night television, public restaurants, coffee shops, movies, TV, stand-up comedy — has been not just politicized but also weaponized.

Donald Trump’s election was not so much a catalyst for the divide as a manifestation and amplification of the existing schism.

We are now nearing a point comparable to 1860, and perhaps past 1968. Left–Right factionalism is increasingly fueled by geography — always history’s force multiplier of civil strife. Red and blue states ensure that locale magnifies differences that were mostly manageable during the administrations of Ford, Carter, Reagan, the Bushes, and Clinton.

What has caused the United States to split apart so rapidly?

Read the whole thing. But I think more than anything it’s the contempt that the political class feels for much of the citizenry, which is now being returned in kind.

Plus, what can be done?

A steady 3 to 4 percent growth in annual GDP would trim a lot of cultural rhetoric. Four percent unemployment will make more Americans valuable and give them advantages with employers. Measured, meritocratic, diverse, and legal immigration would help to restore the melting pot.

Reforming the university would help too, mostly by abolishing tenure, requiring an exit competence exam for the BA degree (a sort of reverse, back-end SAT or ACT exam), and ending government-subsidized student loans that promote campus fiscal irresponsibility and a curriculum that ensures future unemployment for too many students.

We need to develop a new racial sense that we are so intermarried and assimilated that cardboard racial cutouts are irrelevant.

Religious and spiritual reawakening is crucial. The masters of the universe of Silicon Valley did not, as promised, bring us new-age tranquility, but rather only greater speed and intensity to do what we always do. Trolling, doxing, and phishing were just new versions of what Jesus warned about in the Sermon on the Mount. Spiritual transcendence is the timeless water of life; technology is simply the delivery pump. We confused the two. That water can be delivered ever more rapidly does not mean it ever changes its essence. High tech has become the great delusion.

Finally, we need to develop a new racial sense that we are so intermarried and assimilated that cardboard racial cutouts are irrelevant. Our new racialism must be seen as a reactionary and dangerous return to 19th-century norm of judging our appearance on the outside as more valuable than who we are on the inside.

Whether we all take a deep breath, and understand our present dangerous trajectory, will determine whether 2019 becomes 1861.

As a great man once said, when your heart is filled with patriotism, there is no room for bigotry.

VICTOR DAVIS HANSON ON THE HIGHER EDUCATION BUBBLE:

Well, my criticism in the last 30 years of the institution, obviously a lot of us who voiced those concerns, it fell on deaf ears. So progressive thinkers and institutional administrators within the university got their way. And now we’re sort of at the end of that experiment, and the question we have to ask is what did they give us? Well, they gave us $1 trillion in student debt. They created a very bizarre system in which the federal government — subsidized through student loans, constantly increasing tuition beyond the rate of inflation — the result of which is that we’ve had about a 200 percent growth in administrative costs, and administrators and non-teaching staff within the university. We’ve politicized the education.

So when I started there were … I think I looked in the catalog in 1984. There were things, maybe like the Recreation Department’s “Leisure Studies” course. Maybe one environmental class, “Environmental Studies.” But you take the word “studies” with a hyphen, and now that can represent about 25 percent of the curriculum. And that’s usually a rough, not always a reliable guide, to show that that class is not — it’s not disinterested. Its aim is to be deductive. We start with this premise that men are sexist, or capitalism destroys the environment, or America’s racist. Then you find the examples to fit that preconceived idea.

And the result of it is that we’ve turned out students that are highly partisan and highly mobilized, and even sort of arrogant, but they’re also ignorant … that came at a cost. They did not learn to write well. If you ask them who’s General Sherman, or what’s a Corinthian column, or who was Dante, all of the building blocks that they could refer to later in life to enrich their experience, they have no reference. And then they don’t know how to think inductively. So if you point out the contradictions in free speech the way they shout down some speakers and not others, or the way that they hate capitalism, but they love Mark Zuckerberg and Facebook, they’re not able … they haven’t been trained philosophically to account for that, because they’re indoctrinated. And it’s quite sad to see the combination of ignorance and arrogance in young people, but that’s what we’ve turned out. A lot of people who are indebted and they’re arrogant, and they’re ignorant and they’re not up to the task of moving the United States forward as a leading country in the world.

And you can see the reaction to it. We have tech schools now that grow up around these campuses, where they just say to people, “If they’re gonna cut out Western civ and they’re gonna cut out the core and politicize it, then let’s be honest. Just pay us a cheaper tuition and we’ll train you to be a nurse, or we’ll train you to be a computer encoder,” or whatever. And so, we have alternates, for-profit online alternatives, podcasts.

And so, the university failed in its mission. And it will be replaced by open free society. People are trying to find alternatives to it. And they kind of committed suicide. And they’re in decline.

Get woke, go broke. But it’s been a good several decades for the people running those institutions, and living out Rhett Butler’s adage that there’s as much money to be made in tearing down a civilization as in building one up.

HIGHER EDUCATION BUBBLE UPDATE: The $1.5 Trillion Student Loan Debacle Hits a Tipping Point.

What’s to be done about the large and growing number of Americans who cannot repay their student loans? There are two new developments. The New York Times reports, “Senators Marco Rubio and Elizabeth Warren introduced a bill on Thursday that would prevent states from suspending residents’ driver’s licenses and professional licenses over unpaid federal student loans.”

And The Wall Street Journal explains, “For decades, bankruptcy judges refused to consider reducing student loans. That is now changing, and some judges are throwing lifelines to people struggling to repay their debt.”

The Rubio/Warren bill, though it comes from the oddest of political bedfellows, makes a fair amount of sense. Depriving debtors of the means to repay their debts never seemed the smartest way to collect what they owed. The NYT reported last November that it had found 8,700 cases of student loan defaulters being stripped of their professional licenses, a figure that “most likely understated the true tally.” Tennessee appears to be the worse state in which not to repay student loans. Between 2012 and 2017, it went after the licenses of 5,400 student loan debtors.

Before giving too loud a hurrah for Rubio and Warren, however, it is worth considering why states passed such laws in the first place. Some student loan debtors, for example, do have the means to keep up with their repayments and simply choose not to. I’ve encountered several such individuals in the last few years—encountered because they boasted about it. What leverage does a state have to make such deadbeats pay up?

If only there had been some sort of warning.

DOES REGULATON BREED FINANCIAL ILLITERACY? “The lulling effect of regulation can take a number of forms. One involves removing the downside from certain financial decisions. Mandatory insurance of bank accounts guarantees a depositor’s balance up to a certain amount — $250,000 in the U.S., £85,000 in the UK — taking away any incentive to evaluate the creditworthiness of individual banks. Government guarantees of student loans and mortgages shift credit risk from debtors to taxpayers, rewarding carelessness on the part of both borrowers and lenders.”

The Peltzman Effect is everywhere.

HIGHER EDUCATION BUBBLE UPDATE: USC Alum Is One Of 101 Grads With $1 Million+ In Student Loans. No degree can justify that debt.

RENT-SEEKERS GOTTA SEEK RENTS: Occupational Licensing Reform Is Bipartisan. California Didn’t Get the Message.

A party-line vote in a California legislative committee derailed a promising licensing bill proposed by state Assemblyman Kevin Kiley (R-Rocklin). The bill would not have made any immediate changes to California’s licensing laws; it merely would have created a petition process to allow individuals to ask a board to review and rescind its own regulations—with an eye towards reducing lawsuits challenging particularly onerous rules.

Additionally, the bill would have prohibited licensing boards from denying a license solely because an applicant had unpaid student loans or a criminal record.

But even those relatively mild reforms were deemed too dangerous by Golden State Democrats, who uniformly opposed the measure.

Those Democrats were backed by the special interests that benefit from keeping barriers to employment high.

But of course.

JOURNALISM: Drew Cloud Is a Well-Known Expert on Student Loans. One Problem: He’s Not Real.

Drew Cloud is everywhere. The self-described journalist who specializes in student-loan debt has been quoted in major news outlets, including The Washington Post, The Boston Globe, and CNBC, and is a fixture in the smaller, specialized blogosphere of student debt.

He’s always got the new data, featuring irresistible twists:

One in five students use extra money from their student loans to buy digital currencies.

Nearly 8 percent of students would move to North Korea to free themselves of their debt.

Twenty-seven percent would contract the Zika virus to live debt-free.

All of those surveys came from Cloud’s website, The Student Loan Report.

Drew Cloud’s story was simple: He founded the website, an “independent, authoritative news outlet” covering all things student loans, “after he had difficulty finding the most recent student loan news and information all in one place.”

He became ubiquitous on that topic. But he’s a fiction, the invention of a student-loan refinancing company.

After The Chronicle spent more than a week trying to verify Cloud’s existence, the company that owns The Student Loan Report confirmed that Cloud was fake. “Drew Cloud is a pseudonym that a diverse group of authors at Student Loan Report, LLC use to share experiences and information related to the challenges college students face with funding their education,” wrote Nate Matherson, CEO of LendEDU.

Before that admission, however, Cloud had corresponded at length with many journalists, pitching them stories and offering email interviews, many of which were published. When The Chronicle attempted to contact him through the address last week, Cloud said he was traveling and had limited access to his account. He didn’t respond to additional inquiries.

Fake news.

“A REMARKABLY SCANDAL-FREE ADMINISTRATION”: Obama bureaucracy left our private data more vulnerable than ever.

The government isn’t sure who has your information. It only knows the Obama-era databases have been breached by outsider threats potentially 1,000-plus times. That’s according to a recent investigation of cyber-intrusions at the Consumer Financial Protection Bureau, where the sensitive information is stored.

The number of confirmed breaches of consumers’ personally identifiable information is “just north of 200,” revealed Mick Mulvaney, the White House budget chief who took control of the CFPB late last year, in testimony to Congress. “We think there’s another 800 [incidents of hacked information] that we suspect might have been lost, but we haven’t been able to nail that down.”

In fact, the bureau has suffered 233 confirmed hack attacks and another 840 suspected hacks, putting at risk the financial information and other personal data — including Social Security numbers and birthdates — of potentially millions of Americans.

Plus:

Most people don’t know this, but after President Barack Obama created the CFPB, he had the powerful regulatory agency snoop into virtually every financial account held by Americans to assemble a massive and secret government database as part of the post-financial crisis overhaul of the banking industry.

Without asking if customers wanted to opt in, CFPB has collected and stockpiled from banks more than 600 million credit-card accounts and personal data from millions of home, auto, business and student loans.

The Orwellian-named Consumer Financial Protection Bureau needs to be shut down, and its servers destroyed.

STOP ME IF YOU THINK YOU’VE HEARD THIS ONE BEFORE: Many lenders are loosening requirements for prospective home buyers.

Among the main changes to mortgage loans in the past year or two are the availability of low down-payment loans, a loosening of the debt-to-income ratio requirements and easing of rules about how student loan payments are calculated.

“Our challenge is always to increase access to sustainable credit,” said Jonathan Lawless, vice president of customer solutions for the Federal National Mortgage Association (Fannie Mae) in Washington.

Since mid-2016, there has been marginal easing in every aspect of mortgage loans, said Jonathan Corr, chief executive of Ellie Mae in Pleasanton, Calif.

“We’ve seen a very slight drop in the credit scores of approved loans, a slight increase in the debt-to-income ratios and an increase in loan-to-value, which means people are taking advantage of low down-payment loan programs,” Corr said.

The story claims that “today’s borrowers still need to prove they can handle the loan,” but ten years ago banks helped subprime borrowers skate past similar requirements with a wink and a nudge.

HIGHER EDUCATION BUBBLE UPDATE: U.S. Colleges Are Separating Into Winners and Losers: Schools that struggle to prepare students for success losing ground; ‘The shake-out is coming.’

For generations, a swelling population of college-age students, rising enrollment rates and generous student loans helped all schools, even mediocre ones, to flourish. Those days are ending.

According to an analysis of 20 years of freshman-enrollment data at 1,040 of the 1,052 schools listed in The Wall Street Journal/Times Higher Education ranking, U.S. not-for-profit colleges and universities are segregating into winners and losers—with winners growing and expanding and losers seeing the first signs of a death spiral.

The Journal ranking, which includes most major public and private colleges with more than 1,000 students, focused on how well a college prepares students for life after graduation. The analysis found that the closer to the bottom of the ranking a school was, the more likely its enrollment was shrinking. . . .

“In the same way the bookstores fell when Amazon took over, now it’s higher education’s turn and it’s been coming for a while,” said Charles Becker, Concord’s vice president for business and finance. “The shake-out is coming. It’s already here.”

Demographics and geography have some influence on which side of the fault line a school lands, but quality is also a big factor. The Journal uses 15 metrics to determine quality and rank. They include return on investment, student engagement and academic resources.

At Clemson University, the Journal found, graduates on average earn $50,000 a year 10 years after entering college and the default rate on student loans is 3%; the average Concord graduate earned $32,000 and the default rate is 15%.

Richard Vedder, the director of Center for College Affordability and Productivity and a teacher at Ohio University, believes dark days are ahead for the nation’s poorest ranked schools.

And it will be no picnic for those higher up, except perhaps for the very top.

All is proceeding as I have foreseen.

21ST CENTURY RELATIONSHIPS: These College Girls Are All Making Their Money (And Paying Off Student Loans) By Being “Sugar Babies.”

WOMANSPIRATION: This Woman’s Sex Fantasy Is For Her Boyfriend To Pay Her Student Debt And Then Die.

“It’ll be like the ultimate roleplaying,” Keisha said. “He’ll be my white knight riding in on his noble steed to save the damsel in distress, and then he’ll be dead, which just ties up everything in a neat little package.”

Keisha also stressed that she really likes her boyfriend of six months, but she doesn’t necessarily see their relationship going anywhere serious.

“I definitely don’t see us lasting forever,” she says. “But when it comes to my student loans, there’s no end in sight. It would just be so sexy if Matt paid for them and then, you know, disappeared. Like he was dead? He doesn’t have to literally be dead.”

For a long time, Keisha kept her fantasy a secret. But she’s finally come clean in an effort to lead a more sex-positive life and to de-stigmatize unusual fetishes.

“There’s such a stigma around female sexuality,” she says. “Women aren’t taught how to communicate their sexual wants and needs. I decided it was time to be honest and admit to my partner that I want him to give me money. And then I want him to die.”

Yes, it’s a parody. And yet . . .

WALL STREET JOURNAL: Stopping a Student-Loan Scam: Betsy DeVos shuts down an Obama-era invitation to fraud.

After nationalizing student lending, the Obama Administration sought to reduce the government’s $1.3 trillion loan portfolio by allowing disgruntled borrowers to discharge their debt. Last week Education Secretary Betsy DeVos ended this fraud against taxpayers.

After driving Corinthian Colleges out of business in 2014, the Education Department implemented a haphazard process to forgive loans of students who claimed to have been ripped off by the defunct for-profit. Tens of thousands of claims poured in, overwhelming department staff.

The backlog of claims ballooned after predatory regulators forced the closure of ITT Technical Institute in 2016. Liberal groups urged the Obama Administration to forgive loans of borrowers who had attended other for-profits, spurring the department to initiate a “borrower defense” rule-making to allow students who purported misrepresentations by their colleges to discharge their loans. The midnight rule, finalized last November, authorized the Education Department to discharge debts on a class-wide basis—for instance, all borrowers who had attended a certain college within the last five years.

The Obama Administration approved roughly 15,000 claims between June 25, 2015 and January 1, 2017. During President Obama’s final three weeks in office, the department hurried out 16,000 approvals. No claims were denied. The total taxpayer tab for discharges: $450 million.

If you’re going to discharge student debt, the educational institutions that received the money should pay a price. Skin in the game.

MICHAEL BARONE: Real target of Republican tax bills: Feds, eds, and meds bloat.

The Republican tax bills do indeed reduce revenues to the “feds,” with surprisingly small rate cuts for high earners and by cutting the corporate rate from 35 to 20 percent. The current rate, highest in the world, had to be lowered sooner or later, as most liberal economists (and Barack Obama) have long admitted.

And it is hard to take seriously those moaning about increased budget deficits from those unwilling to reform entitlements, which includes all Democrats and many Republicans, notably President Trump.

The critics have more of an argument when it comes to eds and meds. But there’s a counterargument there as well. The tax bills push against the counterproductive government policies that have been pushing up education and health care costs, to the detriment of the consumers thereof.

The tax bills impose a new 1.4 percent tax on the investment income of endowments of very wealthy colleges and universities. They would eliminate deductions for student loans and tax tuition waivers for graduate students.

These institutions have been coasting on their reputation for excellence and as havens of free thought, even as they impose speech codes, conduct kangaroo courts on sexual assault charges and allow humanities and social science departments to be dominated by “postmodern” agitprop and gibberish.

Student loans impoverish many students, especially dropouts, while the money they pump into universities produces administrative bloat, to the point that there are more administrators than teachers in higher education today. Government subsidies produce an oversupply of Ph.D.s, whose theses go unread and whose job prospects are dismal.

Yep. Somebody should write a book on that problem.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: House GOP To Cap Amount Of Student Loans For Law School, Eliminate Public Service Loan Forgiveness.

HIGHER EDUCATION BUBBLE UPDATE: Millions of college students are so terrified of loans they’re turning to ‘Sugar Daddies’ for help paying for school.

MEGAN MCARDLE ON HIGHER EDUCATION’S PERILOUS STATE:

It’s a nervous time to be a university. Forget the political activism that has been convulsing campuses over the past year; the Republican tax plan is now taking aim at the money that funds those campuses, particularly elite research universities. It proposes a tax on university endowments, an end to the tax deduction for student loans, and treating employer tuition reimbursement as income. This last would not only threaten a revenue stream for colleges and universities, but also make it much more expensive to run Ph.D. programs, where students normally get a tuition waiver as part of their package.

Universities are understandably concerned. And they’re not the only ones. Levying heavier taxes on education sounds perilously close to spitting on an American flag while denouncing motherhood, baseball and apple pie. So this might be a good time to ask whether we really ought to be subsidizing higher education — particularly elite higher education — as much as we are.

In theory, our nation’s elite educational system is supposed to be an engine of opportunity. And that was a very fine theory — in 1960, when America’s elite colleges transformed themselves into meritocratic institutions. . . .

At least when college was often as much finishing school as academic program, people understood that economic and social value could be found elsewhere. The current system is not only self-sustaining, but also self-legitimating. The elites who come through it, after all, are smart, hardworking and conscientious, as they have to be to get through an increasingly competitive admissions process. After all that hard work, those born on third base feel as if they earned their home run … and they can’t see any reason to change the scoring system.

As a proud alum, I’m glad that the University of Pennsylvania has a $12 billion endowment to sustain it into the future. But it’s hard to see why the school needs a tax subsidy from the government to educate students with a median family income of nearly $200,000 a year. I suspect those parents will ensure that their children get educated even if the government offers no subsidy at all — and that the students could probably manage to learn even without the shiny new buildings and extensive renovations that have appeared since I left the campus 23 years ago.

I say, abolish the Ivy League. Because inequality!

ENDORSED: Colleges Should Protect Speech—or Lose Funds: Withhold federal research dollars from institutions that practice viewpoint discrimination.

Almost every week brings a new campus controversy: a college speech code that goes too far, an invited speaker shouted down by students, a professor investigated for wrongthink. While lamentations abound for the state of free inquiry at American universities, few have suggested substantive proposals for redress.

Here’s a straightforward idea that would be easy to put into practice: Require schools to assure free speech and inquiry as a condition of accepting federal research funding. In addition to subsidizing tuition and providing student loans, Washington disburses billions of dollars to colleges and universities for research—nearly $38 billion in fiscal 2015 alone.

Those funds constitute about 60% of all support for university-based research, according to the American Association for the Advancement of Science. Because universities build in usurious rates of overhead on this money—in some instances, upward of 50% goes to underwrite salaries and facilities—these are some of the most prized funds in academia. It would be easy for Washington to require schools to protect free speech before the cash can be disbursed.

Massive federal investment in higher education dates to World War II, when the U.S. purposely made universities a pillar of the nation’s approach to research and development. In a 1945 report, Vannevar Bush, director of the Office of Scientific Research and Development, insisted that “freedom of inquiry must be preserved under any plan for Government support of science.”

At the time this meant measures to protect university research from governmental interference. Today the threat to free inquiry on campus comes from within.

True.

HIGHER EDUCATION BUBBLE UPDATE: Megan Mcardle: It Shouldn’t Be So Easy to Go to Grad School: Universities are milking the huge loan sums from grad students to subsidize the cost of undergraduate degrees. This system is broken.

There is a limit, of course, to how sorry we should feel for people who borrowed lots of money for a graduate degree, and found that it wasn’t a surefire ticket to easy prosperity. I am sympathetic to those people; indeed, I am one of those people. But people with graduate degrees, even not-very-useful-ones, are more affluent, more educated and more skilled than the general population. We should not exaggerate the tragedy of their fate simply because they are more like most of the readers of this article than is an unemployed welder in Flint.

We should, however, be concerned because the cost is spreading. Having finally reached the limits of American parents to bear ever-increasing bills for undergraduate tuition, struggling colleges are now turning to graduate programs to fund their operations. Indeed, schools often encourage graduate students’ naïve faith, painting a rosy picture of future employment prospects that is, to say the very least, highly selective.

It’s bad enough that schools do this; it’s worse still that the American taxpayer is helping them. For it is hard not to suspect that the proliferation of master’s degrees programs has less to do with exploding employer demand for advanced degrees in Jewish studies or public history, and more to do with the availability of student loans to fund those degrees. The government caps the amount that undergraduates can borrow, but offers graduate students considerably more rope with which to hang themselves.

We should either abolish student loans, or put universities on the hook when graduates can’t pay them. Skin in the game.

HIGHER EDUCATION BUBBLE UPDATE: The Very Model of a Modern Male Millennial:

Here’s the strangest part: I didn’t start out this way. I was a very industrious kid. I got my first job, working in a nursery, when I was 12 years-old. I worked at a responsible job in a church rectory until I was 17. I have never “not” worked. I’m an Eagle Scout and (nominally) a Knight of Columbus. I went to college, got the quarter-million dollar degree – the diploma hangs above my bed like the Sword of Damocles – and I’m faithfully paying off the student loans by working part-time jobs. There are the “seeds” of traditional masculinity inside me, and I never consciously rejected them.

But something has changed, and it hasn’t changed only for me, but for my contemporaries, too. Most of us are still living at home; a few of us have married, but we’re mostly still single. Why haven’t we moved on?

Why, indeed?

IN THE PROCESS OF SECURITIZATION, OFTEN THE ORIGINAL DOCUMENTS ARE LOST: As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away.. “Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation.”

Back during the financial crisis, a desperate InstaPundit reader wrote me for help with their mortgage company, which was being quite nasty. “Demand to see the original mortgage papers,” I suggested. They did, and there was an instant change from “pay up now or else” to “how can we work with you?”

BRINGING NEW MEANING TO OUR HEADLINE, “DISPATCHES FROM THE EDUCATION APOCALYPSE:” Manchester attacker used ‘student loans’ to buy bomb materials, cops reveal.

He said planning ahead of the attack had taken “many months”, telling media that the bomber had access to student loans and other resources to fund his travel and rent.

Mickey Kaus, call your office.

Related: ‘We have to stay outraged!’ Linda Sarsour endorses ‘jihad’ in anti-Trump tirade.

“Oh, nothing to see here. Just ‘women’s rights’ leader — and terrorist apologist — Linda Sarsour railing against the Trump administration and Muslim assimilation, complete with mentions of jihad.”

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: Trump And Devos Deliver One-Two Punch On Law School Loans. “For young lawyers hoping that public service loan forgiveness could be an answer to a lifetime of student debt burdens, President Trump has some bad news. Rather than remedy the problems with a program that can provide enormous help to many recent grads and the organizations for which they work, he wants to eliminate it altogether.”

That’s a good idea, actually. This is just a subsidy for the left, and one that encourages students to underestimate the damage done by student loan debt. Next, make student loans dischargable in bankruptcy, but with a portion charged back to the institutions that received the money.

THEY’LL GET A REAL EDUCATION WHEN TIME COMES TO PAY: Report: 44 million student loans, $27,857 average, 27% think they’re free.

SMART. STAND UP AGAINST BETTER EDUCATION FOR MINORITIES, ELIZABETH. DO IT LOUDLY AND OFTEN, IN SOUND BITES THAT CAN BE USED IN TARGETED CAMPAIGN ADS: Elizabeth Warren turns her fire on Education Secretary Betsy DeVos.

Sen. Elizabeth Warren (D-Mass.) is setting her sights on Betsy DeVos, the wealthy Republican donor who has become a lightning rod for the liberal grassroots as President Trump’s secretary of Education.

And I don’t think it’s a good idea for Democrats to draw attention to student loans. The obvious Trump counterpunch is to limit the amount institutions can charge, and to put them on the hook for defaults. Which they should do anyway, and there are even Obama speeches they can quote. . . .

COULD BE IMPROVIDENCE, COULD BE LACK OF PLANNING, COULD BE IMPRACTICAL DEGREES…  OH, WHAT THE HECK, WHEN IN DOUBT BLAME THE PATRIARCHY: It takes longer for women to pay back their student loans.

THE NEW YORK TIMES EDITORIALIZES: Student loan payments are keeping young people from getting on with life, delaying marriage and homeownership.

If only there had been some kind of warning.

HMM: U.S. household debt climbs to record high.

The quarterly survey on household debt and credit showed that overall delinquency rates were roughly flat at 4.8 percent. While balances have steadily shifted to more credit-worthy borrowers, New York Fed economists raised some concern over the 11 percent of student loan debt that was “seriously delinquent” at the end of March.

“This record debt level is neither a reason to celebrate nor a cause for alarm,” Donghoon Lee, a research officer at the New York Fed, said in the report. “Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high.”

And generally can’t be discharged through bankruptcy.

HIGHER EDUCATION BUBBLE UPDATE:
Trump Proposes To Dramatically Cut Law Student Loans.
He should also, however, limit the amount of loans in a given year to about 70% of what it is now, which would have the effect of forcing tuitions down.

FAKE NEWS: New York Times Story on Federal Student Loans Uses Photo of School That Doesn’t Offer Any. It’s not just a photo error, either, as the caption specifically identifies Hillsdale College.

HIGHER EDUCATION BUBBLE UPDATE: The Federal Government’s Student-Loan Fraud. “President Obama had a great idea back in 2010: nationalize the student loan program, and its problems would soon go away. It didn’t happen. Instead, more people are refusing to pay their student loans than ever before. . . . By taking over the student loan program, Obama in essence politicized it. Last year on the campaign hustings, both Hillary Clinton and Bernie Sanders repeatedly talked about making college ‘free.’ That is, they want to socialize the costs, but privatize the benefits, of a college education. Still surprised people aren’t paying their loans?”

WHY NOT, SINCE THEY’LL NEVER PAY THEM BACK, ANYWAY:College kids are using student loans for wild spring break trips.

HIGHER EDUCATION IMPLOSION UPDATE: Staggering number of college students using student loans to pay for spring break.

WHEN YOU DON’T EXPECT TO EVER PAY, IT’S EASY TO RUN UP A RIDICULOUS TAB:Half of college students think their loans will be forgiven.

AH, YOUTH: Half of all College Students Believe their Student Loans Will be “Forgiven”

HIGHER EDUCATION BUBBLE UPDATE: Pew: How Governments Support Higher Education Through The Tax Code. “The federal government and the states each invested more than $70 billion in higher education-related spending programs, excluding loans, in academic year 2014, the latest year for which data are available. But that figure, as substantial as it is, does not paint a full picture of federal and state investments in higher education. It excludes the billions of dollars that the federal government and the 41 states plus the District of Columbia that levy personal income taxes provide to students and their families through tax expenditures—such as credits for tuition and college savings incentives—to help offset postsecondary costs.”

CHARGE IT: U.S. household debt near record levels, Federal Reserve report says.

It hasn’t been this high since 2008, but the foundation might be more secure this time around:

The report indicates mortgages still make up the bulk of household debt, but student loans are now 10 percent of the total, auto loans are 9 percent of the total and credit card debt is 6 percent. Dollar amounts rose in each category in 2016’s fourth quarter. The rising debt indicates that banks are extending more credit to households.

A major difference between the 2008 and 2016 debt levels, the report said, is that fewer delinquencies were reported at the end of 2016. In last year’s fourth quarter, 4.8 percent of debts were regarded as delinquent or late in payment, compared to 8.5 percent of total household debt in 2008’s third quarter. There were also 200,000 fewer consumer bankruptcies reported in 2016’s fourth quarter, a four percent decline, compared to the fourth quarter of 2015.

That’s still a lot of debt for households to carry around.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: Charlotte Law School Launches Food Drive For Students. “Cut off from millions of dollars in federal loans because of their school’s chronic failings, students at Charlotte School of Law still don’t know how they’ll pay tuition, rent and utilities. Now they are apparently running out of food. In response, one of their professors announced Friday that some faculty and other law school employees have started a food drive to make sure students of the reeling school have enough to eat.”

The education apocalypse has struck, and struck hard. If only someone had offered a warning.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: Charleston, Florida Coastal Law Schools Fail ‘Gainful Employment’ Test, Will Lose Federal Student Loans If They Fail Again Next Year; Three Other Law Schools In Danger Zone.

All is proceeding as I have foreseen.

HIGHER EDUCATION BUBBLE UPDATE, COST-HIDING EDITION: How University Costs Keep Rising Despite Tuition Freezes: Ballooning fees are leaving some students feeling nickel-and-dimed.

At a time when public anger is laser-focused on tuition charges that are rising three times faster than inflation, something less well understood has actually been largely responsible for pushing up the cost of college: fees.

Think tuition is high? Now add fees for student activities, fees for athletics, fees for building maintenance, fees for libraries—even fees for graduation, the bills for which often arrive just as students and their families thought they were finally done paying for their higher education.

All are frustratingly piled on top of a long list of expenses beyond tuition that many people never plan for or expect, or that can’t be covered by financial aid—sometimes forcing them to take out more and more loans, or quit college altogether.

“It was, like, what is this?” Ann Roach remembered thinking as she kept getting billed for fees when her oldest son went to the University of Dayton. “It’s like buying a car. You think you have a price, and then they tell you, ‘Here’s a conveyance fee, or here’s a fee for $200 to put the license plates on.’ Nobody told us about these.”

Fees nationwide continue to increase even faster than tuition—often covering the same things but letting institutions claim tuition hikes are slowing. Now, however, in response to anger from parents and students, and pressure from legislatures, or for marketing reasons in a time when they’re struggling to attract applicants, a few universities and colleges are pledging to make them more predictable or even drop them altogether. And the resulting decline in borrowing and dropout rates on those campuses suggest the significant toll that fees were taking on their students.

They are a lot like car salesmen, when you get right down to it. Well, except that cars have gotten steadily better over the past several decades, whereas the quality of higher education has actually declined.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: Charlotte Law School Cancels Classes And Works On Transfer Plan With Florida Coastal As Rumors And Lawsuits Swirl After Feds Cut Off Student Loans.

HIGHER EDUCATION BUBBLE UPDATE: A Plan To Make Students Great Again: Replace Loans With Income Shares, Force Colleges To Spend 5% Of Their Endowments Each Year.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: More On The Department Of Education’s Decision To Cut Off Federal Student Loans For Charlotte Law School.

HIGHER EDUCATION BUBBLE UPDATE, $39 EDUCATION EDITION: A Complete Computer Science Education—Minus the Student Loans. All in a $39 course. “This eight-course training touches upon all the fundamentals you need for a coding career. It isn’t haphazardly assembled by amateurs. Rather, it’s led by a team of former Google developers drawing upon their tech expertise to break down technical subjects into easy-to-digest terms.”

APPARENTLY, THE PHILOSOPHY OF THE PEOPLE WHO RUN THE UNIVERSITY OF TEXAS IS “SNITCHES GET STITCHES:” When a University Regent Tries to Blow the Whistle: The Wallace Hall Case.

It wasn’t long before he began to suspect corruption and mismanagement.

First, there was a scandal involving a large slush fund run by the dean of the law school, allowing him to hand out “forgivable loans” to select faculty members. The university’s president, William Powers, promised an investigation by an in-house lawyer, who dutifully produced a “nothing to see here” report. Hall argued that the matter required a more objective assessment, but his complaints were ignored.

Quoted in this piece, Hall said, “I was overruled. That’s when I first felt like, one, there’s a problem at UT, and, two, the system has set up a scheme that gives the opportunity for a less than robust investigation.”

But Hall kept pushing the Board to insist that the Texas attorney general’s office dig into the matter. It did, and then the truth finally came out that the dean of the law school was using the fund simply to hand out favors, including a $500,000 “loan” to himself. The AG’s report brought down the house of cards. The dean resigned and the scandal contributed to the pressure on president Powers to choose between resigning and being fired.

That fight was just a minor skirmish compared with the coming war over the secret, back-door admissions process at UT-Austin.

In 2013, Texas media began running articles such as this, suggesting that some students, despite their low scores and grades, were being admitted to UT as a favor to influential people.

In response, then-chancellor Francisco Cigarroa asked university general counsel Dan Sharphorn to investigate. The result was a mild report saying that the study had found “no evidence of overt pressure on Admissions Office staff to admit applicants based on the recommendations of persons of influence.” Sharphorn’s findings were accepted by president William Powers, who said that the report would be helpful.

Powers hoped that would be the end of the matter, but shortly afterward, Hall announced that he had found evidence in internal UT emails of blatant admissions favoritism at UT’s law school. That led to furious demands for his removal from office by Texans who didn’t like the way he kept turning over rocks. Several members of the legislature called for Hall’s impeachment and the Board of Regents formed a committee to see if there were legal grounds for doing so. When the lawyers it hired concluded that there was no ground for impeaching Hall, the committee voted to censure Hall for “disloyalty.”

We need more activist trustees at universities all over the country. There are a lot of rocks to turn over.

CHANGE: An Ayn Rand-Loving Banker Huddles With Donald Trump.

While less known than his peers at big banks, Mr. [John A.] Allison ranks as one of the most legendary bank CEOs in recent history, said Christopher Marinac, director of research at FIG Partners LLC. “He’s head of the class,” said Mr. Marinac. “A lot of folks didn’t understand the conservatism of BB&T until the crisis, but they appreciated it after.”

Mr. Allison’s worldview was shaped when he was a college student at the University of North Carolina-Chapel Hill and stumbled across a collection of essays by Ms. Rand.

Mr. Allison joined BB&T out of college in 1971 and became CEO in 1989. As CEO, he penned a 30-page handbook, “The BB&T Philosophy,” to give to employees on their first day of work. The first maxim was reality. “The existence of the law of gravity does not mean men cannot create an airplane,” he wrote. “However, an airplane must be created within the context of the law of gravity. At BB&T, we believe in being ‘reality grounded.’”

In 2006, Mr. Allison made headlines when he declined to lend money for commercial projects on private land seized by eminent domain—a government practice that Mr. Allison believed was an affront to individuals’ property rights.

And this:

Mr. Allison instilled a conservative lending culture. BB&T avoided negative-amortizing loans and complicated structured products that Mr. Allison called “esoteric” and “illogical.”

That meant BB&T was often overshadowed by North Carolina rival Wachovia Corp., whose risky mortgage loans fueled huge growth before the crisis—only to then cause its downfall. That bank was purchased during the height of the crisis by Wells Fargo & Co.

Seeking Alpha reports Allison might be under consideration for Treasury, which seems like a great fit for his talents.

More like him, please.

SKIN IN THE GAME: Make Colleges Pay Loans If Their Graduates Can’t.

When the U.S. Education Department shut down ITT Technical Institute at the beginning of the fall semester, some people saw it as just desserts for the for-profit college. Given ITT’s relatively low graduation rates, alleged use of deceptive job placement figures in its recruiting efforts, and high numbers of loan defaults and delinquencies, the government may have seemed justified in refusing to fund more loans to ITT students.

Yet, now, 35,000 students are suddenly without a school and 8,000 faculty and staff are unemployed, and the entire episode shows that the government remains fixated on problems in the for-profit sector while virtually ignoring that all of U.S. higher education has long been guilty of what, in another business, might be called price gouging.

It will come as no surprise to most Americans that college tuition has been rising at about twice the rate of inflation for a quarter century. This has left student borrowers with increasingly heavy debt burdens, which in turn have led to rising delinquency and default rates. The fundamental problem is that a large portion of any college’s operating funds come from federal student loans, on which taxpayers take the loss if students fail to repay. Universities themselves have no skin in this game.

The solution is to require that colleges absorb some of the loss on delinquencies and defaults by their graduates and dropouts: say, the first 5 percent of losses. And 1 percent to 2 percent of loan amount should be deposited with the Education Department at origination, as collateral.

Only colleges can control tuition, and the cost of room and board and other student expenses. Only they can assess which students are likely to gain the benefits that college should provide. Only they can design their curriculums to prepare students to be productive members of society and to make a living sufficient to repay their loans. We should hold colleges accountable so they do all these things far better than in recent decades.


I agree.

HANS BADER: Obama Backs the Worst Colleges While Destroying For-Profit Schools.

The federal government happily subsidizes inferior state colleges that graduate few if any of their students. That includes Chicago State University, which has a 12.8 percent six-year graduation rate.

The Obama administration has rewritten federal student loan rules in a way that encourages colleges to raise tuition and effectively subsidizes the worst colleges the most. The Federal Reserve Bank of New York found that each additional dollar in government financial aid results in a tuition hike of about 65 cents.

The federal government also subsidizes expensive, low-quality third-tier law schools whose graduates are often unemployed. It does so even though many of their graduates will never pay back their student loans because of their low graduating salaries, and the huge amount of money law students are allowed to borrow from the government. . . . As the Cato Institute’s Neal McCluskey notes, ITT Tech produced better graduating salaries for its students than nearby public alternatives. But no one is suggesting that those lousy public colleges be shut down.

Like most such things, it’s just a transfer of taxpayer resources to Democratic Party constituencies.

Related: “You’d think that there’s no inherent reason why universities should always and only ever be non-profit (or state owned). After all, we don’t demand that our cars be made by non-profit groups, and say that there’s no way a for-profit car manufacturer could ever be trusted to provide us with a quality product.”

SPENGLER: Deplorably, Trump Is Going To Win.

You can’t win an American presidential election without the deplorables’ vote. Deplorables are America’s biggest minority. They might even be the American majority. They may or not be racist, homophobic and so forth, but they know they’re deplorable. Deplorable, and proud. They’re the median family whose real income has fallen deplorably by 5% in the past ten years, the 35% of adult males who deplorably have dropped out of the labor force, the 40% of student debtors who deplorably aren’t making payments on their loans, the aging state and local government workers whose pension funds are $4 trillion short. They lead deplorable lives and expect that their kids’ lives will be even more deplorable than theirs.

Americans are by and large forgiving people. They’ll forgive Bill for cavorting with Monica “I did not have sex with that woman” Lewinsky in the Oval Office and imposing himself on any number of unwilling females. They might even forgive Hillary for losing tens of thousands of compromising emails on an illegal private server and then repeatedly lying about it in a way that insults the deplorable intelligence of the average voter. But the one thing you can’t do is spit on them and tell them it’s raining. They’ll never forgive you for that. They’re hurting, and they rankle at candidates who rub their faces in it.

Mitt Romney’s campaign was unsalvageable after the famous 2012 “47% remark,” by which he simply meant that the 47% of American workers whose income falls below the threshold for federal taxes would be indifferent to his tax cut proposals. The trouble is that these workers pay a great deal of taxes–to Social Security, Medicare, and in most cases to local governments through sales taxes and assessments. After a covert video of his remarks at a private fundraiser made the rounds, Romney spent the rest of the campaign with the equivalent of an advertising blimp over his head emblazoned with the words: “I represent the economic elite.” Clinton has done the same thing with the cultural elite.

First the deplorables, then the “pneumonia” thing. If I were Trump, I’d be worried that the Dems will pull Hillary out and put in somebody fresher (well, that would be anybody) and harder to beat (well, that would be anybody).

BEHIND CLOSED DOORS: Donald Trump’s Adviser Explains His Real Economic Plan.

For starters, [Trump senior economic advisor Stephen] Moore said, major cabinet-level agencies should be eliminated. Walton asked him specifically about eliminating the departments of Commerce, Education and Energy. Together, these agencies employ an estimated 150,000 people, and they oversee things ranging from nuclear security to federal student loans to the U.S. patent system.

“I’m going to press as hard as possible to [eliminate the agencies],” Moore said. “We’re putting a budget together right now that is going to not only pay for the tax cut, but balance the budget in six or seven years. And to do that, you’ve got to make very significant cuts in those kinds of programs.

“I mean, my God, why do we need an Energy Department?” Moore asked, semi-exasperated. “All the Energy Department has done in the last 25 years is make energy prices more expensive!”

Get the hell out of my way!” as another reformer once said.

HIGHER EDUCATION BUBBLE UPDATE: Amazon Prime’s latest perk is discounted student loans.

HIGHER EDUCATION BUBBLE UPDATE: Mom Still Paying Off Murdered Son’s Student Loans.

GOVERNMENT OF, BY, AND FOR THE ONE PERCENT: Clinton’s Student Loan Plan: Subsidies for Stanford Graduates.

Hillary Clinton, multimillionaire politician, Davos-guest extraordinaire, and giver-of-speeches to Goldman Sachs, is reportedly worried that she is not in tune with the populist mood of the electorate—and understandably so. But her latest student loan initiative—essentially, a targeted subsidy for the most successful college graduates—doesn’t seem particularly likely to help repair her image of among voters who feel that the system is rigged in favor of connected elites. . . .

The real losers from America’s dysfunctional student loan system are not young CEOs, but marginal and disadvantaged students who are often pushed by federal subsidies into programs they can’t complete or can’t afford. The overwhelming majority of the students in default on their federal loans went to third-tier or for-profit institutions or failed to graduate altogether. Graduates with the skills and social resources needed to incorporate a successful company are not in need of an expensive bailout.

Moreover, as Preston Cooper argues at Economics21, Clinton’s promise to give special treatment to the loans of graduates who work at vaguely-defined “socially impactful” companies is practically an invitation to cronyism. “In all likelihood, this provision would be used subjectively by Washington bureaucrats to reward the owners of favored businesses, while implicitly punishing those who fall outside the privileged category,” he writes.

Any serious policy for reducing Americans’ student loan burden should focus on bringing down the cost of college. That means shaking up the accreditation system to encourage more competition and forcing colleges to have skin in the game if their students can’t pay back their loans. It also probably means that the federal government should rein in its free-flowing loans and make more room for private lenders. Further expanding subsidies while creating exemptions and carveouts for favored interests is a regressive approach that will just make higher education more expensive and more unfair.

But the higher-ed industry is one of the Democrats’ most important constituencies, a tremendous source of money, foot soldiers, and propaganda. Why would they want to streamline it? If students suffer, well, omelets, eggs, etc.

HIGHER EDUCATION BUBBLE UPDATE: 2 extra years in college could cost you almost $300,000.

Taking an extra year or two to complete a bachelor’s degree is common these days, but that additional time could cost a student nearly $300,000, according to a new study by NerdWallet.

NerdWallet examined how much one or two “victory laps,” as extra years are sometimes jokingly called, would cost students by factoring in:

Real costs: Out-of-pocket tuition plus interest paid on student loans over a 10-year standard repayment period.

Opportunity costs: Lost entry-level income and forgone retirement savings.

Just more evidence of how higher education, often sold as promoting economic mobility and equality, can do just the opposite.

HIGHER EDUCATION BUBBLE UPDATE: Colleges Need Skin In The Game.

Republicans and Democrats have offered two distinct approaches to the student loan crisis. GOP lawmakers have proposed introducing more competition in the higher education sector by breaking the federal monopoly on college accreditation, with the idea that this could shake up the market and lower costs. Democrats have focused on expanding federal subsidies, either by forgiving and refinancing loans, or, in the case of Bernie Sanders, by eliminating tuition altogether.

We generally think the GOP approach is closer to the mark. Colleges really are saddled with regulatory costs, and the cartel-like accreditation process blocks innovative new higher education models from emerging. Meanwhile, further greasing the student loan spigot is likely to drive up tuition even further, and give more relief to upper-middle class students than to poor ones.

But Democrats and Republicans alike ought to be able to agree on a third approach to reducing student loan default rates: Forcing colleges to take on some of the risk associated with their students’ borrowing. . . .

To be sure, a number of specifics need to be hammered out—most importantly, the share of student loan debt colleges would be accountable for. But it’s easy to see how a version of this proposal could win backers on both sides of the aisle. For Democrats, the policy gives debt relief to students in default. For Republicans, it would help slow the growth of tuition without draining federal coffers. . . .

Thanks to misguided federal loan and accreditation policies, low-quality colleges have increasingly been able to get fat at the federal government’s expense without giving students the skills they need to make their education worth it. Time to force colleges to put some of their own money down on this risky operation.

Couldn’t have said it better myself.

TANSTAAFL: Bernie’s Free College Isn’t Free, Bill Whittle notes in his latest Firewall video.

Related: Student Loans Increasingly Backfire, Leaving Borrowers Worse Off For Going To School, TaxProf notes.

HIGHER EDUCATION BUBBLE UPDATE: Student Loans Increasingly Backfire, Leaving Borrowers Worse Off For Going To School.

If only there had been some sort of warning.

HIGHER EDUCATION BUBBLE UPDATE: College Loan Glut Worries Policymakers. “The government financed a large share of these educations through grants, low-interest loans and loan guarantees. Total outstanding student debt—almost all guaranteed or made directly by the federal government—has quadrupled since 2000 to $1.2 trillion today. The government also spent tens of billions of dollars in grants and tax credits for students. New research shows a significant chunk of that investment backfired, with millions of students worse off for having gone to school. Many never learned new skills because they dropped out—and now carry debt they are unwilling or unable to repay.”

If only someone had foreseen or foretold this, and could have warned them.

CATHOLIC PARISHIONERS: Investigate Bernie Sanders’ Wife For Loan Fraud. “When Jane O’Meara Sanders served as president of Burlington College between 2004 and 2011, she oversaw an aggressive effort to enroll more students and expand the campus to accommodate a bigger student body. Part of that plan: Taking out hefty loans to finance the $10 million purchase of 32 acres of prime property from the Roman Catholic diocese at the end of 2010. But Burlington College soon found itself unable to make its loan payments.”

So it’s basically Bernie’s plan for America, writ small.

MEMO TO HILLARY AND BERNIE: Student Loans Are Expensive Because Student Loans Are Risky.

HIGHER EDUCATION BUBBLE UPDATE: NYU’s New President Plans to Major in Cost Control. I don’t think student loans whose repayment is contingent on student income are a good idea; they’re basically a subsidy for uneconomic courses of study.

HIGHER EDUCATION BUBBLE UPDATE: College Isn’t Always Worth It:

Across the Anglosphere, the elite conventional wisdom holds that a college degree is the only ticket to a middle-class career. But a new study suggests that for some students, at least in the UK, the the much-hyped ‘higher-education premium’ may be inflated or nonexistent. The Sunday Times reports . . . .

There are of course differences between the UK and U.S. higher education systems, and (to our knowledge) no identical study has been conducted here. But the economist Allison Schrager has crunched comparable numbers on American students and found that, “for every degree short of a graduate degree, there’s a decent chance that a good high school graduate will out-earn you.” In other words, it’s not unlikely that marginal students in marginal programs—in the U.S. as well as the UK—would do better to avoid student loans, avoid the opportunity cost, and seek technical or vocational training. The idea that everybody needs four or even two years of academic instruction after high school is madness. When so many students leave high school with something much less than an adequate proficiency in key subjects, it makes much more sense to fix the fundamentals of the system than to tack on more and more years at the end.

Academics and professionals who loved school and did well in it have a hard time understanding that not everybody wants, needs or enjoys drawn-out academic instruction—and that these people can and do make worthwhile contributions to the common good. An education system that made more room for vocational programs in areas like carpentry, plumbing, med tech, and practical nursing would waste less time trying to pound round pegs into square holes.

Do tell.

SNEAK PREVIEW — TOMORROW’S FINANCIAL MELTDOWN TODAY! About 40% of Americans with student loans aren’t paying, Wall Street Journal reports.

Don’t worry, it’s probably nothing, as I’m sure government officials said in the late 1990s as the default rates started to rise on the Clinton-created subprime mortgage market…

Related: The Coming Middle Class Anarchy.

HIGHER EDUCATION BUBBLE UPDATE: More Than 40% of Student Borrowers Aren’t Making Payments.

More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.

The new figures represent the fallout of a decadelong borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools.

While most have since left school and entered the labor force, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio.

About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment. Three million more owing roughly $66 billion were at least a month behind.

All is proceeding as I foretold.

IT’S PROBABLY NOTHING:

Shot: Why The Auto Loan Bubble Is As Important As The Student Loan Bubble.

Chaser: Obama administration pushes banks to make home loans to people with weaker credit.

Hangover: It’s not here yet, but it will likely be a doozy.

 

HIGHER EDUCATION BUBBLE UPDATE: $176M In Wages Garnished For Unpaid Federal Student Loans In Just Three Months.

HULK HOGAN JURORS AWARD WRESTLER ANOTHER $25M IN PUNITIVE DAMAGES IN SEX TAPE SUIT ORDERING GAWKER FOUNDER NICK DENTON TO PAY OUT $10M FROM HIS OWN POCKET.

Related: “Florida judge Pamela Campbell will likely be asked to trim the awards. Regardless of what she decides, Gawker has indicated that it intends to appeal the verdict.”

SANITY: Tennessee Law Would Outlaw Punishing Students For Speaking Freely, ‘Microagressions.’

Unfortunately, opponents of the bill — which is to say, supporters of educational bureaucrats and crazed PC — managed to turn this into a question of whether ISIS should be allowed to recruit at colleges.

That’s funny, because while actually signing people up and shipping people off to the Mideast would be action, not speech, and not protected by the First Amendment, speaking about the desirability of doing so (except in time of declared war, when it might be treason) would, in fact, be fully protected speech. And for decades, lots of people defended the right of students and faculty to speak about the desirability of supporting communists, etc., with full protection from the courts and the bureaucracy. But that’s different.

I love this from Rep. John DeBerry (D-Memphis): “DeBerry argued that the world has changed from the days of the 1960s, which he said was an era of protest and time of change.” Translation: Free speech for us was good. Now that we’re on top, free speech for those who disagree with us is bad.

DeBerry’s characterization of today’s college students as “half-baked,” alas, seems all too correct. But if they’re too immature to handle free speech, then they’re too immature to obligate themselves to student loans. Or to vote . . .

1988: THE YEAR OF SPENDING DANGEROUSLY. At the early peak of his success, Donald Trump pulled the trigger on a manic series of deals that nearly brought him down.

The article reads like a real-life version of Michael Douglas’ Gordon Gekko character from Wall Street, including this vivid denouement:

In 1990 and 1991, as Trump came out with the sequel to The Art of the Deal, titled Surviving at the Top, as his affair with Maples and his divorce from his wife became a major tabloid story, and as his total debt topped $3 billion, $900 million of which he had personally guaranteed, his lenders took back the yacht, the shuttle, the Plaza Hotel. The only thing that saved Trump from personal bankruptcy and permanent financial ruin: loans from his rich father and his siblings, and the severity, strangely, of his fiscal straits. The money was so big, the loans so brazen, that not only was he beholden to the banks—the banks were beholden to him. “Leverage: Don’t make deals without it,” Trump has said, and here his leverage was we’re in this together. The banks had been just as irresponsible as he had.

“I have a great relationship with the banks,” he told Time in 1991.

I’m not locked in here with you, youre locked in here with me.

Note this, though: “Trump’s frenzied 1988 matched the country’s ostentatious and indulgent mood at the end of the Reagan administration.” Which is pretty remarkable, because I vividly remember sitting in a business class in college the day after Black Monday in October of 1987 in which the professor and students pondered if this was the onset of a new Great Depression. As with what financial author James Grant described as The Forgotten Depression: 1921: The Crash That Cured Itself, it’s almost as if government doing nothing or comparatively little during a financial crisis is the best policy.

(Via Maggie’s Farm.)

HIGHER EDUCATION BUBBLE UPDATE: 31% of U.S. Govt Assets Are Student Loans.

HIGHER EDUCATION BUBBLE UPDATE: Academia Is Losing Its Mind.

It’s not just right-wing populists who are worried that some academic humanities and social science fields are veering into irrelevance. The latest issue of the left-of-center magazine American Prospect has a depressing report by the leftist Occidental professor Peter Dreier on his experience submitting a bogus paper to a humanities conference and getting it accepted. . . .

Here’s one representative sentence: “Self-delusion and self-discipline inhibits the reflective self, the postmodern membrane, the ecclesiastical impulse forbidden by truth-seeking and sun worship, problematizing the inchoate structures of both reason and darkness, allowing knowledge, half-knowledge, and knowledgelessness to undermine and yet simultaneously overcome the self-loathing that overwhelms the Gnostic challenge facing Biblical scribes, folksingers, and hip-hop rappers alike.” He also includes examples of the type of real humanities work that led him to undertake this experiment (he saw sentences elsewhere like: “Given the attitudes generated by our sense of a place, critical perspectives that only target overt structures within city systems are incomplete” and “Theoretical, conceptual and methodological choices must be framed in relation to concrete explanatory and interpretive dilemmas, not ontological foundations.”)

To make matters worse, most of this “postmodern” analysis is taking place within the context of a hermetically sealed political bubble. As our friends at Heterodox Academy have pointed out, just four percent of American academics in the humanities identify as conservative. This total homogeneity may be one reason that so much work in the humanities has become utterly disconnected from what the general public might consider to be valuable scholarly exploration.

There is a good amount of anti-intellectualism and old-fashioned score-settling involved in attacks on the academy by right-wing pundits and populist politicians. But that reaction didn’t come out of nowhere. At a time when tuition and student debt are reaching crisis levels, the public is right to demand that the work it is funding (both directly, at public universities, and indirectly, at private universities, by subsidizing student loans) has some bearing on reality and some benefit to the rest of society.

Indeed.

STUDIES LIKE THIS — NEVER VERY GOOD — SEEM TO GET WORSE IN ELECTION YEARS, AND ALWAYS IN THE SAME DIRECTION: Student loans aren’t racist.

A new study purports to show that student loan debt is racist, because areas with higher concentrations of minorities have higher levels of debt.

As with any study claiming that correlation equals oppression, this one has some flaws. One big one, in fact. The bigger reason minorities have more student loan delinquency, which the study’s authors even acknowledge, is that more of them choose lower-paying majors. For example, according to the linked chart from Georgetown University, the field with the second-largest concentration of black majors is Human Services/Community Organization. It may be a noble calling — it’s something President Obama believed in — but it’s also the major that promises the second-lowest payday of all the majors black students tend to choose. Also ranking near the top: Sociology, social work, public administration, and interdisciplinary social sciences — all fine things to study, but none of them promise especially high-paying careers.

Choice of field is one of the leading causes of the gender wage gap as well. Women dominate nine of the top 10 lowest-paying fields while men dominate nine of the top-10 highest-paying fields.

Related:

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THE UNITED STATES OF S.W.A.T.: U.S. Marshals Are Arresting People in Texas Who Have Outstanding Student Loans:

Texas congressman Gene Green explained to Fox 26 that the federal government has been contracting out student-loan collections to private debt collectors, who are allowed to deploy the U.S. marshals as their enforcement arm. “There’s bound to be a better way to collect on a student loan debt,” said the congressman. Around Houston, that “better way” involves 1,200 to 1,500 arrest warrants. Student debt is at an all time high in the U.S., where students hold an average of $35,000 in federal debt, according to an analysis of government data on Edvisors.

As John Fund noted in a 2014 column at NRO titled “The United States of SWAT?”, “Dozens of federal agencies now have Special Weapons and Tactics (SWAT) teams to further an expanding definition of their missions:”

It’s not controversial that the Secret Service and the Bureau of Prisons have them. But what about the Department of Agriculture, the Railroad Retirement Board, the Tennessee Valley Authority, the Office of Personnel Management, the Consumer Product Safety Commission, and the U.S. Fish and Wildlife Service? All of these have their own SWAT units and are part of a worrying trend towards the militarization of federal agencies — not to mention local police forces.

“Law-enforcement agencies across the U.S., at every level of government, have been blurring the line between police officer and soldier,” journalist Radley Balko writes in his 2013 book Rise of the Warrior Cop. “The war on drugs and, more recently, post-9/11 antiterrorism efforts have created a new figure on the U.S. scene: the warrior cop — armed to the teeth, ready to deal harshly with targeted wrongdoers, and a growing threat to familiar American liberties.”

The proliferation of paramilitary federal SWAT teams inevitably brings abuses that have nothing to do with either drugs or terrorism. Many of the raids they conduct are against harmless, often innocent, Americans who typically are accused of non-violent civil or administrative violations.

Take the case of Kenneth Wright of Stockton, Calif., who was “visited” by a SWAT team from the U.S. Department of Education in June 2011. Agents battered down the door of his home at 6 a.m., dragged him outside in his boxer shorts, and handcuffed him as they put his three children (ages 3, 7, and 11) in a police car for two hours while they searched his home. The raid was allegedly intended to uncover information on Wright’s estranged wife, Michelle, who hadn’t been living with him and was suspected of college financial-aid fraud.

And now US Marshals are now swinging into action to arrest people who have defaulted on their student loans. Where does it end?

HIGHER EDUCATION BUBBLE UPDATE: Blue Model Blues: Adjuncts Rising, Rising, Rising.

Preston Cooper of Economics 21 points us to a new NBER paper that confirms and quantifies in detail what higher education watchers have been saying for some time: Colleges can’t afford to hire enough full-time faculty to educate their growing student populations, and are increasingly turning to low paid, disposable adjuncts to make up for it. . . .

Cooper suggests one reason for the adjunct explosion is the free-flowing federal student loan spigot, which is pushing more students into the university system and therefore incentivizing schools to increase their teaching capacity at the lowest possible cost. We would also add that the tenure-for-life model demanded by the professors’ guild probably limits the ability of universities to move resources around and slows down turnover among the professoriate. The federal monopoly on college accreditation props up this system by stifling competition, even as the proliferation of obscure fields of study (especially in the social sciences) creates a constant supply of newly minted PhD’s desperate for academic jobs.

The ultimate result of all of this is inequality and exploitation: Administrator salaries go up, adjuncts face increasingly alarming economic insecurity, and the quality of education at lower-tier schools continues to be undermined even as the top colleges have access to almost unlimited resources. In other words, even the most leftwing institutions in the country can’t afford to put egalitarian, blue-model ideals into practice. Like all decaying blue institutions, the university still serves insiders (college presidents, professors with tenure, students at Yale) quite well, even as outsiders (adjunct faculty, students who took out loans to go to lower-tiered schools) struggle.

What’s causing this higher education crisis is not evil conservatives. It’s the fact that the blue model of higher education, complete with regulation, subsidies, and professional guilds, is simply no longer workable or affordable.

But don’t expect the insiders to change until they’re forced.

BERNIENOMICS 101.

The day after Christmas, Bernie Sanders asked a question on Twitter: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”

Finance types may snicker. But I’ve seen this question asked fairly often, and it seems worth answering, respectfully, for people whose expertise and interest lie outside the realm of economics.

The short answer is: “Loans are not priced in real life the way they are in Sunday School stories.” In a Sunday School story, the cheapest loans would go to the nicest people with the noblest use for the money: single mothers who need money to buy their kids a Christmas present, say.

That’s splendid for the recipient. But what about the lender? Let’s say you had $150 that you really needed to have at the end of the month, say to pay your rent. Would you want to lend it to the single mother whose income is stretched so tight that she needs to borrow money for Christmas presents, or would you want to lend it to some heartless leech of a securities litigator with an 800 credit rating who happens to have left his wallet at home? C’mon. You know the answer; you just don’t want to say it. If you really need the money — if you cannot afford to turn your loan into a gift — then you lend it to the better credit risk with the higher income, not the person who may find themselves too short to pay you when the loan comes due.

In aggregate, most of the money in your savings account is loaned out using this cold calculus, and unless you could afford to have that contents of that account suddenly vanish, you want it to be. That’s why poor people, on top of all the other unfairness heaped upon them, pay higher interest rates. And that is why secured loans, like mortgages, get lower interest rates than unsecured loans, like credit card balances and student loans.

You’d think Bernie would have learned something about this in his 74 years on the planet.

STUDY: Student Loan Subsidies Cause Almost All of the Increase in Tuition. “In fact, the tuition response completely crowds out any additional enrollment that the financial aid expansion would otherwise induce, resulting instead in an enrollment decline from 33% to 27% in the new equilibrium with only demand shocks. Furthermore, the students who do enroll take out $6,876 in loans compared to $4,663 in the initial steady state.” But it enriches the higher education industry.

Who could have guessed?

HIGHER EDUCATION BUBBLE UPDATE: Lessons In College Costs For Clinton & Sanders.

But even if we assume that higher education really is too expensive, we face a second conceptual difficulty: Subsidies may not make college significantly cheaper. Although the relationship between the level of aid available to students and the level of tuition has been controversial, this study released in July by economists at the New York Fed is persuasive. The authors found fairly robust effects, with an increase of 60 to 70 cents in tuition for each dollar increase of subsidized student loans. The effect was stronger at private colleges than at public schools, and, among private colleges, was least pronounced at those accepting the smallest proportion of applicants. As these tend to be the schools with the largest endowments, the effect is not entirely surprising.

The Clinton and Sanders plans are aimed principally at public colleges, where out-of-state tuition already rises with the size of Pell grants. One reason in-state tuition doesn’t capture the subsidies is political pressure from residents. So maybe the flood of new federal money would have no effect. On the other hand, given the growing need to compete with the wealthier schools in the educational “arms race of spending” — for example, to hire or retain top faculty — there’s a fair chance that we’d see some significant increases.

Of course it’s possible (some would say likely) that the web of regulations accompanying the grants under both programs would include implicit price controls. I’m no fan of this idea, but lots of smart people think I should be.

Finally there’s the Scottish experience. In 2001, Scotland began the process of abolishing tuition, a goal essentially accomplished in 2008. In a recent Vox article, Libby Nelson pointed to research showing, among other things, that although the change led to an increase in applications, the children of the poor still attend college at relatively low rates. In other words, what has been holding them back might not be the cost.

Read the whole thing.

HIGHER EDUCATION BUBBLE UPDATE: The High Cost Of Room And Board.

If I recommended that people take out loans to pay for several years of food and rent expenses that they otherwise couldn’t afford, you’d probably think I was being foolish.

And yet that is exactly what students — and their parents — are encouraged to do when they borrow for room and board in order to have the “full college experience.” Many colleges and universities require freshmen to live on campus, knowing that many will have to borrow to do so.

It’s like they aren’t concerned about students’ future financial wellbeing.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: American Lawyer: Congressional Showdown Over Law Student Loans Is Inevitable, With Law Schools The Likely Losers. “The Post’s editorial cites with approval a law reintroduced by Senator Lamar Alexander (R-Tenn.), dubbed the Financial Aid Simplification and Transparency (FAST) Act, which would drastically rein in federal lending to college and graduate students. The law would fix annual lending to undergraduates to $8,000 per year with a $37,500 aggregate limit, but graduate and professional students would only receive $30,000 per year in total, with a lifetime cap of $150,000. As of now, graduate students can borrow as much as their schools charge them, on top of $20,500 per year in unsubsidized Stafford loans.”

This will be a big blow to legal education, though it will probably be unevenly felt. The University of Tennessee College of Law, for example, is one of the ten schools where students graduate with the least debt already, so I imagine borrowing limits, etc., would hurt us less than schools at the other end of the list. They might even help.

BABY BOOMERS AND THE END OF HIGHER EDUCATION:

Fifty years ago this week, President Lyndon Johnson signed the Higher Education Act, ushering in an era of massive federal support for college students through a flurry of new programs: tuition grants, guaranteed student loans, and work-study funds. The law allowed a much greater swath of Americans to earn a college degree regardless of their family income. During the following decades, enrollment at campuses across the country grew threefold, to some 20 million students.

But today, Johnson’s vision of the Higher Education Act as a great equalizer in the American economy is at risk. Indeed, the divide between the haves and have-nots in higher education is almost as great today as it was in the mid-1960s. In the past decade alone, the percentage of students from families at the highest income levels who received a bachelor’s degree has grown to 82 percent, while for those at the bottom it has fallen to just 8 percent.

Viewed that way, the flood of money into higher ed has been a bust. But if you think of federal aid to higher education as a transfer of money from taxpayers to a Democrat-supporting industry, then it hasn’t been a failure at all.

MY SECRET PLAN TO END THE HIGHER EDUCATION BUBBLE BY USING INSIDERS TO MAKE HIGHER EDUCATION LOOK RIDICULOUS CONTINUES TO ADVANCE: Tim Wolfe Resigns as Missouri President Amid Protests, Boycott by Football Team.

UPDATE: University of Missouri President Just Resigned: What It Means for the Campus Speech Wars; No competent educator can give students the false sense of security they desire.

What were these racist incidents? Someone shouted a slur at the campus’s black student government president. Someone smeared feces in the shape of a swastika on the wall of a residence hall. (In a letter announcing his hunger strike, student Jonathan Butler also cited “graduate students being robbed of their health insurance, and Planned Parenthood services being stripped from campus” among the reasons for Wolfe to resign, although these concerns don’t really strike me as being tied to race.)

I can understand why students were upset about these things. And if they want to call on Wolfe to do more, they are well within their rights. Maybe Wolfe was doing a bad job, although it’s difficult to say what he should have done differently; is there any policy a university could adopt that would prevent idiots from occasionally yelling immature, insulting things at people on the street?

This controversy, as with the current upheaval at Yale, suggests aggrieved students most desperately want administrators to acknowledge their pain and tell them they have a right to live free of emotional turmoil. But no competent administrator can provide them with this false sense of security, since the proper role of a university education is to help students overcome (rather than sidestep) challenges.

In any case, Wolfe’s resignation also means that hyper-offended students are not as powerless as skeptics of the campus speech wars claim they are. I’m often told by these skeptics that the actions of outraged students are harmless because they never amount to anything, but this development at Missori is a significant contrary example.

I would be disheartened, but not at all surprised, to see more professors and administrators driven from campus for the crime of failing to erect suitable safe spaces.

Just making it easier for President Cruz to abolish student loans. And if you don’t think that this will hurt Mizzou at budget time with the legislature, well . . .

Plus, online education seems like a big winner out of this. “In the fall of 2012, the most recent semester with complete data in the U.S., four million undergraduates took at least one course online, out of sixteen million total, with growth up since then. Those numbers mean that more students now take a class online than attend a college with varsity football. More than twice as many now take a class online as live on campus.”

Given that many college students seem to belong at home with Mommy, this trend is likely to accelerate.

HIGHER EDUCATION BUBBLE UPDATE: What We’re Buying With $1 Trillion+ in Student Loans:

You know what they say about doing the same thing over and over again and expecting a different result. This is certifiable. College is too expensive, so have the government make it easier to finance — then keep shifting more and more of the cost burden to the government, without doing anything about the underlying cost inflation that is making it necessary for government to get into the finance business.

Obviously, this can’t go on indefinitely. The income-based-repayment programs are relatively new, so the government hasn’t yet been handed the bill for the loan forgiveness that will be necessary as we give people payment rates that are often less than the interest on the loan. But when the government gets that bill, people are going to notice that this is a costly business.

Over decades, the government has restructured the educational system to make it look more like the health-care system, with the costs paid by third parties while the service is consumed by individuals who have no incentive to think about price. The effects are predictable for both. . . .

Does college actually make people much more economically productive? Yes, yes, I know: People who go to college earn substantially more than people who don’t, and that earnings premium has been increasing in recent decades. But what, exactly, do they learn in college that makes them so much more productive? In certain technical professions, the answer is obvious; engineers and nurses do need to master the rudiments of their trade before they are unleashed on an unsuspecting public.

But that doesn’t describe the whole higher educational system. It doesn’t even seem to describe the majority of college degrees. Administrators defending the value of degrees in “business” or liberal arts rely on nebulous claims that they are teaching students “how to think.” However, they provide little objective evidence that these programs impart thinking skills worth tens of thousands of dollars.

There’s at least some evidence that a lot of the benefit of a college degree comes not from what you learn in college, but from signaling to employers that you are the kind of conscientious, hardworking student who can get into college and stick with it long enough to get a degree. In other words, much of what we do in school is not learn anything in particular, but obtain a credential that certifies us as good potential employees.

Do tell. If you understand the federal student aid system as a means for transferring money from taxpayers to an industry that’s basically a wholly-owned subsidiary of the Democratic Party, it makes more sense.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: New York Times: A Majority Of Law Schools Are Scamming Students And Taxpayers.

If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.

Yet for-profit schools are not the only offenders. A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.

Why? The most significant explanation is also the simplest — free money.

In 2006, Congress extended the federal Direct PLUS Loan program to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses. The idea was to give more people access to higher education and thus, in theory, higher lifetime earnings. But broader access doesn’t mean much if degrees lead not to well-paying jobs but to heavy debt burdens. That is all too often the result with PLUS loans.

The consequences of this free flow of federal loans have been entirely predictable: Law schools jacked up tuition and accepted more students, even after the legal job market stalled and shrank in the wake of the recession. For years, law schools were able to obscure the poor market by refusing to publish meaningful employment information about their graduates. But in response to pressure from skeptical lawmakers and unhappy graduates, the schools began sharing the data — and it wasn’t a pretty picture. Forty-three percent of all 2013 law school graduates did not have long-term full-time legal jobs nine months after graduation, and the numbers are only getting worse. In 2012, the average law graduate’s debt was $140,000, 59 percent higher than eight years earlier.

When you subsidize something, the price goes up. This is true for all of higher education, not just law schools.

HIGHER EDUCATION BUBBLE UPDATE: Senior Citizens Getting Their Social Security Garnished for Student Loan Debt:

Compared to student loan debt, those 65 and older are much more likely to carry other types of debt. For example, about 29 percent carry home mortgage debt and 27 percent carry credit card debt. Still, student debt among older American households has grown in recent years. The percentage of households headed by those aged 65 to 74 having student debt grew from about 1 percent in 2004 to about 4 percent in 2010. While those 65 and older account for a small fraction of the total amount of outstanding federal student debt, the outstanding federal student debt for this age group grew from about $2.8 billion in 2005 to about $18.2 billion in 2013. . . .

Available data indicate that borrowers 65 and older hold defaulted federal student loans at a much higher rate, which can leave some retirees with income below the poverty threshold. Although federal student loans can remain unpaid for more than a year before the Department of Education takes aggressive action to recover the funds, once initiated, the actions can have serious consequences. For example, a portion of the borrower’s Social Security disability, retirement, or survivor benefits can be claimed to pay off the loan. From 2002 through 2013, the number of individuals whose Social Security benefits were offset to pay student loan debt increased about five-fold from about 31,000 to 155,000. Among those 65 and older, the number of individuals whose benefits were offset grew from about 6,000 to about 36,000 over the same period, roughly a 500 percent increase. In 1998, additional limits on the amount that monthly benefits can be offset were implemented, but since that time the value of the amount protected and retained by the borrower has fallen below the poverty threshold.

Remember, the colleges got their money up front.

HIGHER EDUCATION BUBBLE UPDATE: Student Debt Is Worse Than You Think.

The loan crisis hits hardest at colleges enrolling large numbers of students from low-income backgrounds. These undergraduates have to borrow for college, then often have difficulty finding well-paying jobs after graduation — if they graduate at all.

As a result, they struggle to repay their loans. The colleges with the lowest student-loan repayment rates include many for-profit colleges, but also some public and private nonprofit colleges, including a substantial number of historically black institutions. Even some wealthier, more selective colleges turn out to have a bigger student loan problem than previously realized.

Along with recent research finding that student loan defaults are heavily concentrated among the most economically marginalized students, the new data suggests that debt is a major financial obstacle for people who already face barriers to opportunity.

Funny, higher ed is sold as the great equalizer, but the effect seems to be the opposite. If only someone had offered a warning.

SET YOUR DVR: I’ll be on John Stossel’s show tonight on Fox Business at 8pm Eastern, talking about student loans and the higher education bubble.

HIGHER EDUCATION BUBBLE UPDATE: The Devastating, Lifelong Consequences of Student Debt: It’s threatening fundamentally American ways of life.

We see this with other lifetime measures, such as how entrepreneurial people are. A recent study by Brent W. Ambrose of Pennsylvania State University, and Larry Cordell and Shuwei Ma of the Federal Reserve Bank of Philadelphia, found “a significant and economically meaningful negative correlation between changes in student loan debt and net business formation for the smallest group of small businesses.” This makes sense. You can keep your high student loan burdens low if you stay with an established employer. But if you strike out on your own, you’ll have less and more volatile income when you start. This is harder to manage with student loans, which also impacts your credit rating. Again, we can see the short-term student loan burdens staying the same, even though lifetime choices are much more limited as a result.

The lifetime framework also puts front and center something the Brookings study largely hand-waves: the rapid increase in how long people are paying off their student debt. Though the percentage of income that student-loan debtors pay stays the same, the length they are paying those loans is up 80 percent. What was once an average length of 7.4 years in repayment in 1992 is now 13.4 years. All things equal, a large increase in the length you will be paying student loans means you will dedicate a larger portion of your lifetime income to student loans. This burden goes missing by narrowly looking at a month-to-month basis.

This has major consequences for people’s ability to build wealth. Indeed, much of the current energy in analyzing student loan burdens are looking at this longer dynamic, and how it interplays with the ability for people to amass savings. As Richard Fry of Pew found, using the same data set as Brookings, “households headed by a young, college-educated adult without any student debt obligations have about seven times the typical net worth ($64,700) of households headed by a young, college-educated adult with student debt ($8,700).” Fry also finds that those who took out loans are less satisfied with their financial situation compared to people without loans. Similar results have been investigated and found by the Federal Reserve Bank of St. Louis.

This, in turn, has major consequences for how young people will ultimately transition into adulthood. According to Dora Gicheva of the University of North Carolina at Greensboro, student debt decreases the long-term probability of marriage by a significant amount.

Do tell.

YES: Expel People Who Demand Trigger Warnings: If you need trigger warnings in order to learn, then the only warning anyone should hear is a warning against letting you in the classroom.

Let’s get back to Myers’ “just let the poor traumatized kids get the degrees they paid for” argument. No, don’t let them get those degrees. The whole point of those degrees is to signify their bearers possess qualities beyond merely the credit rating to take out vast amounts of student loans. The entire reason college degrees are supposed to be valuable is that they signify a capacity to absorb and process specialized knowledge beyond what non-degree-holders have. This is, in fact, the whole purpose of education generally.

This means if some troubled or weak students have allowed their mental illness to preclude them from absorbing such knowledge, the fault lies not with the college, but with them. Such people are as ineducable as an illiterate English major. The solution is not to expel knowledge from the classroom that is disagreeable to these feeble and fragile minds. It is to expel them. Their place is in a psych ward, not a school, and their money (or, more likely, their parents’) is better spent seeking treatment there than spoiling education for everyone else.

I am not exaggerating when I say that the stigma attached to mental illness exists at least partially because “sufferers” exhibit these sorts of cognitive glass jaws. Why should you be willing to spend time around someone prone to breaking down and blaming you at any moment, let alone take responsibility for them as an employer, supervisor, or especially the sort of educator-cum-substitute-parent that many college administrations try to be? In our lawsuit-happy culture, there is no reason for any rational being to want anyone who is mentally ill nearby if their most visible “advocates” are so fragile they want to see a Shakespeare play labeled like a pack of cigarettes. . . .

It’s not fair to the colleges or to them to expect them to hack it any more than it’s fair to expect someone with easily broken bones to become a body builder. Either the college will have to dumb its educational mission down to the point of meaninglessness, or the extremely damaged will have to put themselves at risk of interminable mental agony. The first option destroys learning; the second destroys people. Better to keep the people incapable of learning away from it.

Read the whole thing.

HIGHER EDUCATION BUBBLE UPDATE: College Debt Burdens Students, Economy; Elite Schools Lobby Against Proposal To Cap Graduate School Loans. Of course they do.

HIGHER EDUCATION BUBBLE UPDATE: I brushed my student loans under the rug when I graduated from college, and I’ll never be that naive again.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: Too Many Law Students, Too Few Legal Jobs:

Ten months after graduation, only 60 percent of the law school class of 2014 had found full-time long-term jobs that required them to pass the bar exam.

Even that improvement over the class of 2013 (a 57 percent employment rate) came with three asterisks: Last year, the American Bar Association changed the job-reporting rules to give law schools an extra month for the class of 2014 to find jobs; graduates employed in law-school-funded positions count in the employment rate; and the number of jobs that require bar passage fell from 2013 to 2014.

Amazingly (and perversely), law schools have been able to continue to raise tuition while producing nearly twice as many graduates as the job market has been able to absorb. How is this possible? Why hasn’t the market corrected itself? The answer is that, for a given school, the availability of federal loans for law students has no connection to their poor post-graduation employment outcomes.

Students now amass law school loans averaging $127,000 for private schools and $88,000 for public ones. Since 2006 alone, law student debt has surged at inflation-adjusted rates of 25 percent for private schools and 34 percent for public schools.

The rule of thumb is that you shouldn’t owe more than your first year’s salary. Few legal jobs start at $88,000, fewer still at $127,000.

HIGHER EDUCATION BUBBLE UPDATE: Millions A Year Behind On Student Loans.

Nearly 7 million Americans have gone at least a year without making a payment on their federal student loans, a high level of default that suggests a widening swath of households are unable or unwilling to pay back their school debt. As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days, quarterly data from the Education Department showed this past week. That was up 6%, or 400,000 borrowers, from a year earlier.

That translates into about 17% of all borrowers with federal loans being severely delinquent, a share that would be even higher if borrowers currently in school who aren’t yet required to repay were excluded. Millions of other borrowers are months behind but haven’t hit the 360-day threshold that the government defines as a default.

Severe delinquencies are rising despite the sharp drop in unemployment over the past year and a big push by the Obama administration to enroll borrowers in programs that lower their monthly payments.

Plus: “The education mess is a lot like the health care mess: the combination of federally mandated costs and controls, runaway cost inflation driven by insiders who keep jacking up the price, perverse market incentives in a warped marketplace, dysfunctional mandates, guild controls and crony regulations, all have produced a system in which costs are increasingly out of line with true value—and with society’s ability to pay.”

Who could have seen this coming?