Friday, June 29, 2018

On the Financial 'Wisdom' of Attending Today's Colleges - By Jon N. Hall

If one wants prices to rise, get the government involved.  If you doubt that, then explain the roaring inflation in health care and college, where government is deeply entrenched.  For years, government has thrown money at higher education, and it has made attending college more and more expensive.  One of the main ways government pumps money into colleges is indirect: the guarantee of student loans.  Be that as it may, when one takes out any kind of loan, one needs to be clear about what happens if one can't pay it back.  You see, in bankruptcy court, student loan debt is treated differently from other types of debt.
On June 18, Forbes ran "Can Student Loans Now Be Discharged in Bankruptcy?" by Zack Friedman.  This is a must-read article for anyone considering going into debt to attend college.  Friedman answers the question of his headline thus: "normally, student loans are not dischargeable."  Student debt can be discharged in a bankruptcy, but one must prove "undue hardship."  Bankruptcy usually leaves one with a ruined credit score and still owing one's student debt.  (The prospective student might also look into this article on bankruptcy at Student Loan Hero.)
Recently, I reported on the PROSPER Act, a bill that has stalled out in Congress.  One of the provisions of the PROSPER Act is to end student loan forgiveness.  Student loan forgiveness is not bankruptcy; it's much nicer than bankruptcy.
On March 27, FiveThirtyEight ran "Student Loans Are Too Expensive to Forgive" by Amanda Palleschi.  The article gives us a rundown on the Public Service Loan Forgiveness Program (PSLF), which gives loan forgiveness to graduates employed by government and non-profits, including to lawyers.  PROSPER would eliminate such loan forgiveness.
The feds can't afford student loan forgiveness.  If the taxpayer is going to pay the salaries of government employees, he shouldn't be compelled to pay their college loans as well.  If the taxpayer is going to give loan forgiveness to public employees, why not give it to everyone with student debt?  The PSLF program should be decommissioned forthwith.  Such programs are scams; they are sops to universities, allowing them to keep their tuitions artificially high.
On May 10, the Columbia Daily Tribune ran an article by Rudi Keller about Missouri's Attorney General Josh Hawley, who's a candidate for U.S. Senate.  Should Hawley prevail in the primary, he'll likely face incumbent Sen. Claire McCaskill, who's seeking a third term (no term limits for Claire).  Hawley's most controversial statement in the article may be this: "[c]olleges and universities should be responsible for repaying student loans of anyone who can't find work in their field."  (This writer suggested the same thing back in March.)
Keller cited data in an email he received from Hawley's spokeswoman that came from Forbes.  Keller's out of the office until July 2, so I used Google, and the article is surely this one from July 2017 by Preston Cooper: "New York Fed Highlights Underemployment among College Graduates."  Cooper's article is well worth reading, especially for those students who are not pursuing professional degrees, like medicine, dentistry, law, engineering, etc.:
Roughly one in three college graduates (34%) are underemployed, meaning they work in jobs that do not require a college degree.  This figure has remained remarkably stable over the past quarter-century, with no cyclical fluctuations or identifiable long-term trends.  That many members of the college-educated workforce do not use their skills in the workplace has been the case for a long time.
Among recent college graduates, the underemployment rate is even higher.  Around 44% of college graduates ages 22 to 27 work in jobs that do not require a college degree.  This figure appears to rise slightly post-recession and fall during economic booms, but over the long term it generally stays between 40% and 50%.
What if 34 percent of the nation's college students had decided not to attend?  Mightn't that have an effect on the price of tuition?  Perhaps American colleges would make up for the loss in enrollment of Americans by admitting more foreigners, such as additional Chinese students, who sometimes turn out to be spies and thieves of American I.P. (Intellectual Property).
If 34 percent of young Americans – perhaps those who aren't interested in pursuing the professions or who aren't very motivated – were to go on "strike" by forgoing college and enter the job market instead, it would force colleges to make some big adjustments.  What might those changes be?
On Feb. 7, the Kansas City Star ran "Missouri has too many public universities. It must close campuses" by University of Missouri-Columbia business professor Art Jago.  It seems that higher education is suffering budgetary constraints here in Missouri.  Mr. Jago writes of a UMC task force tasked with finding solutions.  Their "report identifies 27 graduate-level degree programs and certificates that should be eliminated because of zero or near zero enrollments."  But professor Jago finds their solutions inadequate:
With a state the size of Missouri, there is simply no justification for having 13 public (supported by state tax) four-year colleges and universities[.] ... That number of faculties, staff, physical facilities, administrators and overhead is unsustainable in the current environment.  The closure of entire campuses is required.
Sounds more like a meat cleaver than a scalpel, but sometimes a meat cleaver may be needed.  Even so, there are surely more ways colleges could cut down on costs, such as in eliminating "bloat."  On May 20 at National Review, George Will wrote about the U. of Michigan's "administrative bloat" (italics added):
... the ever-thickening layer of social-justice crusaders and orthodoxy enforcers who, nationwide, live parasitically off universities whose actual purpose is scholarship.  These include Michigan's vice-provost for equity and inclusion and the director of the Office of Student Conflict Resolution.  Such bureaucrats have professional stakes in finding inequities to rectify and conflicts to resolve.
Universities should fire these parasitical "crusaders" and "enforcers" and save a bunch of money; they can't afford the "parasites," and besides, they're not doing any education anyway.
Here's my strategy for students wanting to stay out of debt: forget about a degree and just take the classes that you need to get your foot in the door of a job.  That's what I did decades ago; I took two classes in COBOL at community college, and that got me my first job in information technology, in which I toiled as a computer programmer and analyst.  Of course, the university degree I had acquired a few years earlier probably garnered me some "brownie points," but what sealed the deal with my first employer was the COBOL (an ancient programming language that may now be defunct outside government installations).
Fifty years ago, one could graduate with a four-year degree and be debt-free.  But over the last fifty years, Americans gradually became meekly accepting of having to go ever deeper into debt to attend college.  Folks shouldn't take it anymore.  Public universities should set for themselves the goal of undergraduates being able to get a four-year degree and to enter the workforce debt-free.  Students should be able to work their way through college with summer jobs, etc.
Today's colleges aren't likely to make such momentous changes unless they're backed into a corner.  So the idea of a nationwide student strike is appealing; young folks could just bypass college until their prices come down.
Students of the world, unite.  You have nothing to lose but your bad credit scores.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.