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Higher Education IS in a Bind… But Debt Burden and Non-Profit Status is a Bigger Problem than Anti-Intellectualism

January 1, 2018

Yesterday Frank Bruni’s NYTimes op ed piece described the hard times higher education is facing in this country despite the bullets they dodged in the recent tax reform package. As Mr. Bruni noted in the opening paragraphs, the tax reform bill wasn’t as bad as it could have been: “Americans who were deducting interest on student loans will still be able to do so. The tuition waivers that many graduate students receive won’t be treated as income.” But, as he notes, the fact that these items were even on the table is unsettling, especially given the need for more education in our current economy. In light of the need to change the public’s attitude toward higher education, Mr. Bruni offers his ideas about what caused the fall from grace of colleges and universities and suggests some fixes. In doing so, though, Mr. Bruni overlooked one major problem: college debt, a problem flagged earlier in the week in a Truthdig article by Ellen Brown. He also overlooked the fact that despite their pushback against traditional colleges and universities, the Trump administration has changed the rules at USDOE in a fashion that offers backdoor support to for-profit post-secondary schools.

Mr. Bruni’s conclusions about post-secondary education are based primarily on the results of recent polls indicating a loss of confidence in those institutions:

Just how far they’ve fallen was suggested by a Pew survey this year that sent shock waves through the world of higher education. Asked if colleges were having a positive or negative effect on America, 58 percent of Republicans and conservative-leaning independents said negative. That was up from just 37 percent two years earlier.

A Gallup poll found that only 44 percent of all Americans had a “great deal” or “quite a lot” of confidence in the country’s colleges and universities, while 56 percent had only “some” or “very little.” College — once a great aspiration — was now a polarizing question mark.

That’s not so surprising, given Americans’ intensifying resentment of anything that smacks of elitism and given Republicans’ attacks on science and intellectuals. As Ron Daniels, the president of Johns Hopkins University, recently told me, “Even if we were completely unblemished in the way in which we pursued our mission, it would be hard to imagine that in Trump’s America, we wouldn’t be targets for scorn.”

For the balance of the column Mr. Bruni talks about ways colleges could package themselves better, seeming to think that the problems colleges face are due to poor marketing and/or the presumably false perception that they are bastions of “illiberal liberalism”. And he draws from three university presidents who all view the problem through the same lens and concludes that the problem can be solved by providing the public with a better understanding of higher education:

They’re trying to explain themselves better — a simple, obvious thing that somehow fell by the wayside over recent decades. Not all Americans accept on faith the value of higher education to individual students and to society as a whole. Not all Americans understand how universities function as vital engines of many cities’ and states’ economies or as cradles of the very innovation that keeps America great.

“Higher education has enjoyed this sort of send-us-the-money, leave-us-alone luxury for a long time, and that’s just not the case anymore,” (UNC Chancellor Margaret) Spellings said. “We’ve got to prove what we do.”

What Mr. Bruni overlooks, however, is a major source of discontent: colleges graduates and former college students who never graduated face mountains of debt… and they are increasingly unable to see a way to pay their debt off. This, I believe, is an underlying factor in the poll results Mr. Bruni cites in his article. Here are some facts about debt drawn for Ms. Brown’s article:

Graduates leave college with a diploma and a massive debt on their backs, averaging more than $37,000 in 2016. The government’s student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category, behind only mortgage debt. Student debt has risen nearly 164 percent in 25 years, while median wages have increased only 1.6 percent.

Unlike mortgage debt, student debt must be paid. Students cannot just turn in their diplomas and walk away, as homeowners can with their keys. Wages, unemployment benefits, tax refunds and even Social Security checks can be tapped to ensure repayment. In 1998, Sallie Mae (the Student Loan Marketing Association) was privatized, and Congress removed the dischargeability of federal student debt in bankruptcy, absent exceptional circumstances. In 2005, this lender protection was extended to private student loans. Because lenders know that their debts cannot be discharged, they have little incentive to consider a student borrower’s ability to repay. Most students are granted a nearly unlimited line of credit. This, in turn, has led to skyrocketing tuition rates—because universities know the money is available to pay them—and that has created the need for students to borrow even more.

Students take on a huge debt load with the promise that their degrees will be the doorway to jobs that allow them to pay it back, but for many the jobs are not there or are not sufficient to meet expenses. Nearly one-third of borrowers today have made no headway in paying down their loans five years after leaving school, although many of these borrowers are not in default. They make payments month after month consisting only of interest, while continuing to owe the full amount they borrowed. This can mean a lifetime of tribute to the lenders if the loan is never paid off, a classic form of debt peonage to the lender class.

The tens of thousands of borrowers who heard that college would be the “doorway” to high paying jobs but find themselves working as baristas or temps are unlikely to respond favorably to a survey that asks them if college has a favorable impact on their lives. Nor are they likely to express confidence in colleges and universities as institutions. Neither political party, however, is doing anything to address this issue because both are beholden to the financial institutions who’ve made the loans and they are “booking” the anticipated payback on the loans as an asset when they calculate their own balance sheets.

And here’s what’s even worse: the GOP is loosening the regulations on for-profit colleges and reducing the amount colleges that bilked students must pay to students who were misled by the false advertising of failed for-profit “colleges” like Corinthian.

Margaret Spellings and her colleagues can try to prove what a college education can do, but to do so she and her colleagues will have to seek a way to mitigate the debt slavery tens of thousands of recent college students face, for their parents, their friends, and ultimately their children will never believe college was the doorway to a bright future. Their reality has taught them something completely different.

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