Wednesday, March 30, 2016

Student Loans Draining Social Security

By Professor Doom

     I can’t emphasize strongly enough how important it is to end the student loan scam. I know, I’ve been harping on how bad this is lately, but it bears repetition. Student loans turn our kids into prostitutes. Student loans drive our kids out of the country

      And now student loans are destroying the social security safety net. I’m not a fan of social security—the whole idea of “give your money to government, and trust it to give it back to you 40 years later” strikes me as pure idiocy, but social security, a horrible government created problem, was created to help fix the horrible government created problem of Keynesian fiat currency—the latter makes it impossible for people to save, because their wealth is constantly being sucked away from them by the Fed’s printing scheme.

     Anyway, social security is supposed to help, by giving money to our citizens when they are too old, too infirm, to even work as a greeter at Wal-Mart or to pour cups of coffee.

      Trouble is, student debt is insanely high now, and all too often that debt was for “coursework” that couldn’t even theoretically result in a job that could pay well enough to pay back the debt. This scheme has been going on for decades now, and now we have elderly citizens, finally collecting their social security, who still haven’t paid off that impossible-to-pay-off student debt.

      Well, they almost get to collect that social security:

     This is becoming ever more common now: elderly citizens, finally old enough to be handed some of their own money back via social security…and not getting it because they were suckered into student loans.

Naomia Davis hasn’t been able to talk on the phone since 2004. The 80-year-old Brooklynite was diagnosed with Alzheimer’s more than 10 years ago and can no longer read.
Despite all of this, the government still expects her to pay back a federal student loan she took out in the 1980s…

     It’s so funny (in a sad way), one of my first essays compared higher education administrators to scumbags who ripped off the elderly:

If I targeted actual 8 year olds, and got them to sign contracts so that every penny they saved in their lives went right to me, I’d be considered a…fool.

If someone comes to my university, and I document they have the cognitive skills of an 8 year old, then make them check a box so that I make more money and the student will never save a penny in his life I am a…successful university administrator.

     It’s sad that the hyperbole of a few years ago is now a simple statement of fact. To take money out of the pockets of senile elderly…how can someone do this? Well, the “leaders” running higher education do this every day now. 
     Let’s see if I can say something else outrageous that nevertheless becomes truth: hey, Federal government! Instead of abusing the elderly, why don’t you just claw back the money that was illicitly transferred to the rulers of higher education? A ridiculous, outrageous, draconian idea…but so many of our schools are money laundering schemes—indebt the students through bogus coursework, take the money and stuff it into the pockets of admin because of their “leadership.” Screw that, this money was taken illicitly, and like any other fraud, the criminals should not be able to just walk away with their ill-gotten gains.

     Enough hyperbole, back to reality. While the previous story is just one person, such stories are becoming ever more common:

“…Between 2002 and 2013, the number of senior citizens losing out on a portion of their Social Security to pay back education debt soared 500% from 6,000 to 36,000..”

     Sure, 500% growth still just means 36,000 victims, but realize the student loan scam has been running for only a few decades, it really just started to become a major scam in the last 30 years. It will get much, much, worse than a measly 500% percent growth, once those former students reach that magical age of 65:

“…More than 3 million Americans ages 50 to 64 are in default on their student loans, putting them at risk of having their benefits garnished when they claim Social Security, if they don’t find a way to become current on their debt…”

     Seriously, do the math. If a 50 year old is defaulting, he’s probably not going to be able to pay back that money, ever. 50 years old, + 15 years, is the magic age of 65. So, in 15 years, we’ll go from 36,000 victims to 3,000,000 victims. That’s a 20,000% increase if these people don’t die first. Yikes. Am I really the only one able to connect the dots here? We’ll be ridiculously lucky if the problem of vanishing social security checks sticks to “only” 500% growth.

     I again come back to: claw back the money. Track down these scum who preyed on our kids so voraciously, shut down the for-profits and claim their assets. I know, most of the money has been spent and you can’t get it all back that way…but this was pure ruthless fraud.

“It’s almost predatory that they are put in these situations,” said Adam Minsky, a Boston-based attorney who specializes in student-loan issues.

      “Almost predatory”? Almost? Everyone who looks at what’s been going on in higher education comes to the conclusion that a great many of our student debtors were ripped off…and there’s never any call to de-rip that money back from the people who took it. Yes, I know, most of the folks who took the money work for the government and asking government to police itself like this is basically suicide…so just take it as a fantasy idea here.

It turns out the man may have actually signed Nicholson up for a loan, but she says it was without her knowledge.
Nicholson started attending classes in September of that year, and when she returned from Christmas break there was a padlock on the door of the school.

     Isn’t that great? Students get signed up for loans without even knowing about it…and 30 years down the road, get hammered, finding out they’re in debt for many multiples of a loan they never knew they had. 40% of debtors weren’t really told about the loans so…yeah, this problem will just get bigger.

      Maybe someone else can suggest clawing back the money from the crooks who stole it?


Sunday, March 27, 2016

Student Debt 2030: 17 Trillion!

By Professor Doom

      Projections of the future are always fun. My own crystal ball is pretty cloudy, and I don’t dare put dates on what predictions I make…I can figure out the inevitable, but I’ve no skill at determining the imminent.

Faculty: “How is this course accredited?”

--I heard so many faculty say something like this, that I took it upon myself to look at accreditation in detail. Despite what even people working in higher education for decades might think, accreditation has nothing to do with education. They just collect fees and look the other way…

     The student scam contributed to the bloating of our higher education system to insane proportions, to the point that, I suspect, every citizen of this country could enroll into an “institutions” of higher education, with no risk of the country running out of capacity…certainly the loan money would be available, but I must put “institution” in quotes as so many of these places that enroll students, particularly the online places (but not by any means restricted to such) really aren’t legitimate enough for such a word. All the loan money on the table, combined with the blind regulation of accreditation, means these self-called schools can spring up overnight.

     When I first started this blog, the total student loan debt was not quite $1 trillion…I remember not too long ago when we freaked out when the national debt reach $1 trillion, and now such a number doesn’t even represent the debt we’ve given to our children for their education.

     Under a trillion bucks a few years ago, and now it’s something past $1.2 trillion. Granted, the student base is larger as well, but tuition costs have skyrocketed, so that average student is now graduating with $35,000 of debt. It’s hard to believe that kind of money could buy a house outright when I was younger…and now it barely buys a diploma, a mere piece of paper that all too often represents nothing at all, even if it’s from a “real” school, whatever that qualifier means anymore.

     The student loan debt is going up, up, up, up over 500% in the last 16 years. I know such a thing cannot go on forever, but a recent chart estimates what this debt will look like in another 15 years or so: $17 trillion dollars.


     I want to highlight a few features of that chart.

     First, the rate of growth of debt is 17%, well past the “current rate of inflation.” Because of the Fed, inflation is a fact of life in America (and much of the world), so, yes, it’s important when making these types of calculations, to consider inflation. Of course, I find our government’s estimation of inflation as laughable to the point of making me hoarse from laughter. Our government claims it’s 2% or so the last few years? Har de har har. Except for gas (thanks to a short term squeeze, discussion of which is beyond the scope of this blog), every expense I have has trivially gone up more than 2% compounded annually, and I encourage the gentle reader to track his own finances with a pocket calculator and see the numbers with his own eyes.

     All that said, even if tuition is currently tracking with inflation…it’s still far too much. I mean, if accredited universities can offer 4 year degrees practically tuition free ($1,000 a year or less), why do so many schools charge $30,000 or more a year…provided the student will take on debt for it?

     Anyway, that 17% growth rate is stunning; it means that the debt will break 17 trillion by 2030, a truly awesome number, more than the national debt today (admittedly, anyone who believes that government’s numbers regarding the debt are any more accurate than government inflation numbers is, well, a fool…).

     This prediction is interesting, and I have no doubt that if things were to continue as they have been, it would come true. Unfortunately, things will not continue, at risk of asking too much of my crystal ball.

      There are three sources of this student loan debt: for-profit, public, and (private) non-profit schools. Where can this debt come from?

      As for our for-profit schools, it’s clear people are catching on. No matter how shrill the advertisements to sign up for these money-pits, there just aren’t enough suckers left to drive the debt much further. Behemoth University of Phoenix lost 50% of its student base last year, hundreds of thousands of students gone…at last, and no thanks to our pompous leaders of higher education, our kids are realizing that going ridiculously deep into debt for any ol’ degree is foolishness.  If semi-legitimate UoPhoenix can’t suck in students, other for-profits are unlikely to succeed either.

     Private schools are closing down, incapable of withstanding the plundering of the administrative caste, plundering which accreditation doesn’t care about any more than it cares about education. Century-old schools are being looted, crashing and burning while administration floats away on golden parachutes. That 17 trillion won’t come from here.

     How about them public schools? Community colleges are all too often ripoffs, but mostly they steal Pell Grant money…that’s a grant, not loan, the new debt can’t come from there. Our public universities have overspent themselves to the point that they can hardly afford to be open when there are no students (too much maintenance on the buildings, too much salary to spend on a massive administrative caste). Campuses are loaded down with boondoggles and incompetent political appointees. On some campuses, students need to walk through whole subdivisions of administrative and sportsball palaces before they can even see an actual academic building. How much more of this will the state citizens take? 

      I don’t know, maybe all that debt can come from an even more grandiose growth of our public institutions, but my crystal ball says that higher education in 2030 will be a very different beast than today. Earlier I mentioned a free university, and it seems likely more of those will pop up, not less. What happens when such things become common knowledge? I suspect taxpayers will say “We refuse to pay taxes to support $1,000,000 a year Poo Bahs and hundreds of $150,000 a year Diversity Commissars when we’ll just send our kids to the $1,000 a year school!”

     Ok, that’s asking for a lot of common sense on the part of the taxpayer…but I still just don’t see higher education maintaining that 17% growth rate for another 15 years.


Thursday, March 24, 2016

CSU: No Money For Spring Break

By Professor Doom

     Prudent and wise leaders care for those that they lead. When times are lean, such leaders know to scale back, and in times of plenty, leaders might expand, but do so cautiously, being careful to set aside some of the surplus for when times become lean again.

     Our leaders in higher education boast, and brag, and boast some more about their amazing leadership. They’ve awarded themselves impressive degrees, splendiferous titles, and, of course, sickeningly large salaries and perks based on their own self-assessed impressions of their leadership skills.

     I don’t begrudge a wise king his palace, there should be rewards for doing good work, keeping honorable stewardship over those ruled.

     Our leaders in higher education insist they are great leaders, why, they even have Ph.D.s in the field of Leadership—I’m serious, type in “Leadership Ph.D.” in Google and see with your own eyes that such a field exists. It’s pretty much the degree you need to get a high-paying job in higher ed…it’s curious I never see TV ads for such degrees, even though it’s been far more a growth industry than most everything else. But I digress.

     The last decade or two has been a time of plenty in higher education, torrents of money have flowed onto campus via the student loan scam. Our rulers, for the most part, have squandered the money, building themselves ever more elaborate campus palaces, hiring ever larger legions of sycophantic deanlings under them, and well, I’ve already mentioned the kind of loot these guys personally plunder from the system.

Admin: “If we don’t keep at least 90% of our students, this school will need to shut down.”

--I’ve heard many warnings like this over the years, because even public institutions never seem to put anything aside, or have any capacity to deal with more than slight hardship. I’ve seen schools lose 10% of their students and collapse.

      I reckon the plentiful years are coming to an end, and the lean years are coming. Across the country, our states are starting to suffer badly under the Keynesian policies of our government, specifically the money-printing that transfers so much wealth to DC…transferring it away from everyone else.

     One of the first major state schools to show the true capabilities of our leaders in higher education is Chicago State University. I’ve discussed the hand-over-fist plundering of the Chicago Community College System before…but the plundering by the university leadership has also left the universities vulnerable to the slightest downturn.

      With funding being cut, the university is shutting down practically overnight—nothing was put aside during those years of plenty:

Chicago State University announced Tuesday the elimination of spring break this year to ensure its students will finish the semester before the school may be forced to close down due to a lack of state funding.

    It’s so bad that the school can’t even stay open for the length of being shut down during spring break! They literally have nothing. Ok, it isn’t as quick as all that, the school actually has gone for almost 9 months without money beyond tuition:

Illinois' public universities and community colleges haven't received state money since summer because of the budget stalemate between Republican Gov. Bruce Rauner and Democrats who control the General Assembly.

     I grant not having money coming in is a problem, but…the leaders had to have seen it coming, and did nothing. They’re looking at solutions now, at least:

"We're looking at how to be efficient in the summer," he said. "We have a number of buildings on campus that are really minimally used, we can close those."

--like most campuses, this place is hugely overbuilt. Despite the unused buildings, here’s a 4 page list of construction projects for this campus, with tens of millions budgeted…

      Read that administrative plan again: they’re going to close the unused buildings. Gee, you really needed a Ph.D. in Leadership and 8 months to come up with that plan? These guys get paid hundreds of thousands a year for this level of acumen…

     I’m not merely criticizing the leadership of CSU here. Across the country, campuses have been choking on the dust of construction for years. Even as on-campus student numbers have been falling (due to far more profitable online coursework being offered), even as class sizes have been doubled-and-doubled-and-doubled again, and faculty positions have been cut, more and more and more administrative palaces were erected. I haven’t been on a major university campus yet that doesn’t have buildings that are basically empty, even during peak operating hours on campuses with nothing but growth.

     Our leaders have taken that loan money, turned our campuses into amusement parks for the students, and built palaces for themselves. They can’t even sell these useless buildings, merely shut them down for lack of funds.

      Truth be told, the money is still available, but the politicians just don’t want to budget it, for reasons that, well, seem credible to be me:

“Chicago State has a history of financial mismanagement, including state audits in recent years that found the school to be a financial wreck. A state audit in December, though, found relatively few problems.

Rauner's office has also criticized what it called "waste," ''cronyism" and lavish administrator perks in Illinois' other public universities…”

     Again, read between the lines. The school was a financial wreck, but once admin had no choice but to show a little integrity and responsibility, then there were few problems. Hey, leaders, maybe you could have behaved with integrity when you weren’t put up against a wall?

      As far as assertions of waste, cronyism (I see no need for quotes for these), and lavish administrator perks --so blatantly lavish that the paper saw no need to put quotes around this phrase!--well, yeah, no kidding, I’ve shown many times in this blog that waste, cronyism, and lavish perks for the administration are part and parcel in higher education today.

     Of course, the gentle reader needs to understand that if this school shuts down, it’s the students and faculty who will pay the price. It’s always a disaster for students when their school closes, as transferring more than a few credits is usually problematic and not every student is in a position to go to another university. Faculty have been reduced to adjuncthood; when the school closes, they’ll just be fired without benefits.

      Ah, but admin? Those are still full time public employees. You can believe there will be plenty of golden parachutes to go around…