Wednesday, October 16, 2013

The new vicious cycle of student loan debt

Generally, the idea of going to college is not to just get a job but to begin a career. School loans are assumed to be worth the investment because of all the businesses waiting to accept entry-level graduates into their companies with open arms offering salaries, health, eye, dental, and Christmas bonuses. Of course, these assumptions were built before the one-two punch of a heavy recession and Obamacare hit America.

As most recent college graduates can tell you: the job market is not so flowery. A recent study out of Rutgers found that from the graduating classes from 2006 to 2011, only 51% are employed full-time and a whopping 11% are unemployed, a number way above the current 3.8% unemployment rate for all college graduates over the age of 25.

Perhaps a bigger problem for new graduates than unemployment is underemployment. The U.S. Federal Reserve Bank of New York reported recently that 44% of recent graduates have jobs they would have qualified for before going to college and accumulating student debt.

These figures mean, for students whom take loans, 44 out of 100 graduates will be stuck paying off an average balance of $24,301 without any equity (a graduate-level job and salary) to show for it. According to the Department of Education, within three years of leaving school 14.7% of these loans default and for every loan that defaults at least two more borrowers become delinquent.

If large percentages of student loans are defaulting, millions will face crippling credit rating penalties which result in the inability to finance homes, purchase vehicles, and engage in the marketplace. New borrowers need businesses willing and able to invest in college graduates.

The economy and job market’s recovery from the 2008 recession has trickled at an agonizingly slow pace–and it may get worse before it gets better.

The president recently gave a one-year exemption to businesses from Obamacare’s insurance mandate. But what about next year? In 2014, businesses will be required to participate in hugely expensive insurance programs that will prevent them from committing to as many full-time, entry-level employees.

Obamacare’s unintended consequences reach far and wide. Nobody is hit harder by these consequences than the classes of graduates who will enter a post-recession job market that will be worse than before they began school.

Healthcare premiums can’t pay student loan debt. Only paychecks can do that. Those who need Obamacare the least will pay the most for it. The cost may be more dramatic and far-reaching than the anyone in 2010 may have ever guessed.


British Labour's shock U-turn on Free Schools: Miliband's new education supremo reveals party WILL support the academies it once called 'yummy mummy schools'

You won’t hear Tristram Hunt, Labour’s new education spokesman, trotting out Labour’s jibe that David Cameron is a ‘posh boy who doesn’t know the cost of a pint of milk’.  Because the urbane and artfully tousled Hunt, 39, is every bit as posh as the Prime Minister.

Fees at his alma mater, University College School in Hampstead, North London, are nearly £18,000 a year. It is a member of the ‘Eton Group’ of elite private schools and to get in you have to pass a gruelling exam.

Hunt went to Trinity College, Cambridge, the same college as his father, Baron Hunt of Chesterton, a Labour peer and Companion of the Order of the Bath. It was thanks to his dad’s Royal connections that Hunt was able to marry wife Juliet at Westminster Abbey, where William and Kate walked down the aisle.

Add a commanding height of 6ft 3in, languid good looks that made him a TV success as the ‘Naked Historian’, and Peter Mandelson as a Labour ‘Godfather’, and it is not surprising he oozes charm and confidence.

Yet, sitting in his cramped Commons study, Hunt begins the interview, his first since being appointed Shadow Education Secretary in Ed Miliband’s reshuffle, with a public apology.

When Michael Gove launched his free schools revolution after the 2010 Election, allowing parents to set up new schools and breaking the stranglehold of teachers’ unions and town hall chiefs, Labour claimed it was a wicked plot to let middle-class parents set up elitist state schools where their pampered children studied Latin while council estate kids were condemned to ‘bog-standard comprehensives’.

Days after becoming the newly elected MP for Stoke-on-Trent, excitable new boy Hunt called free schools a ‘vanity project for yummy mummies’.

Now he wants to eat his words. ‘I regret those comments because I think any parents, be they yummy mummies or ..... ’ he searches for the male equivalent, ‘ ..... or faddy daddies, involved in the education of their children is great.’

Instead of mocking Gove, Hunt now wants to mirror him, by promising Labour’s own ‘parent power’ revolution in schools.

He wants to bury the idea that Labour is in the pockets of teachers’ unions and Lefty town hall chiefs after the party’s pollsters discovered Gove’s policy is a vote winner. Labour’s schools will be called ‘parent-led academies’ (PLAs) – not free schools. But it’s a case of spot the difference.

It is a highly significant moment. Miliband’s party conference speech, in which he vowed to freeze energy prices, was seen as a lurch to the Left, as was his decision last week to demote three Blairite members of his Shadow Cabinet.

Yet the appointment of Blairite young gun Hunt, and ending attacks on ‘yummy mummies’ who set up their own schools, suggests ‘Red Ed’ is willing to steal the Tories’ clothing if he thinks it will win him votes.

Like free schools, PLAs will be set up by local parents and teachers and will be able to set their own curriculum, decide teachers’ pay and have their own ‘ethos’.

However, unlike free schools, PLAs will only be allowed where there is a shortage of school places; town halls will still be able to step in – though only in a crisis – and there will be curbs on ‘untrained’ teachers.

Hunt says the checks will stop scandals such as the closure of  the Muslim Al-Madinah free school in Derby following claims of  discrimination against female staff and pupils.

But make no mistake, PLAs are meant to be seen as ‘Labour’s free schools’. ‘There are lots of parents out there who want to set up schools,’ says Hunt.

‘What I am saying is if you want to do that when we are in government we will be on your side. There has been this perception that we would not be, and I want people to be absolutely clear that we are. I am putting rocket boosters on getting behind parents and social entrepreneurs.

‘We are not going to go back to the old days of the local authority running all the schools – they will not be  in charge.’

Far from shutting down Gove’s ‘yummy mummy schools’ if Labour wins, Hunt wants more of them.

‘We will keep those free schools going. We aren’t in the business of taking them down. We have to clear up this question which has dogged Labour education policy since we entered opposition and since Michael Gove began his reforms, as to what we’d do. We just want to say, “You are setting up these schools, we are behind you.” ’

Hunt has praised the successful free school set up in East London by his friend, Peter Hyman, Tony Blair’s former No 10 aide.

Would he let Hyman set up a primary school feeder to his existing secondary free school? ‘Yes.’

Even if it is a free school? He interjects: ‘We would be calling them parent-led academies.’

Will PLAs offer everything free schools have got? ‘Yes, but in an area of need, absolutely,’ Hunt enthuses. ‘The innovation, creativity, community engagement you  see in the best free schools – great, let’s have more.’

To ram home the point, Hunt says he would happily send his three young children to a free school.

Gove will argue that by giving town halls even a small role, Labour’s PLAs are not truly free but still enslaved to the Left-wing educational establishment he despises.

Hunt counters by claiming that by running free schools from Whitehall, Gove is acting ‘like ‘Napoleon’.

‘When things go wrong at a free school it has to go straight to the Minister down the road like a  Napoleon telling these kids what to do,’ he scoffs.

Gove, the state-educated, adopted son of an Aberdonian fishmonger, loves to taunt ‘privately educated’ Hunt in private. ‘I get under Michael’s skin,’ he says.


White boys 'the problem' for Britain's schools, says Government aide

A senior Government education adviser has warned that for boys at least, “being white” had become “the problem” in schools.

Britain cannot expect to flourish economically unless there is a concerted effort to halt academic failure by white boys as they are the “dominant racial group”, a senior Government education adviser has warned.

Dr Tim Leunig, an economic historian and aide to the schools minister David Laws, said that for boys at least “being white” had become “the problem” in schools.

He argued that from an economic point of view it matters “more” to target underachievement among white pupils than others.

And he added that the education system could be described as “institutionally sexist” by failing to ensure boys and girls are making similar levels of progress.

His comments, reported by the TES, come after official figures show that white boys from deprived backgrounds are now the worst performing ethnic group in reading tests for six years olds.

Just under half of poor white British boys – defined as those receiving free school meals – passed the test, being outscored by similar pupils from Black, Asian and Chinese backgrounds.

Dr Leunig, a London School of Economics academic working as a Government policy adviser, said in a talk to members of the Association of School and College Leaders: “We as a society have to ask ourselves: ‘Why is it that white kids are doing so much worse?’

“We have to tackle that as a society.  “For the future of Britain it obviously matters more to tackle white underperformance just because there are more white people.  “You cannot have your dominant racial group doing badly in school and expect to flourish as a country in the next generation and beyond.  “That just won’t hold so we need to tackle that one really explicitly.”

He added: “If your school happens to have a lot of Chinese students you are likely to do well on progress measures.  “That is the reality – the same is true for almost all ethnic groups other than white.”

In a reference to the favourite catchphrase of Sacha Baron Cohen’s comic character Ali G, he said: “If Ali G wants a new comic character in schools he has to say ‘Is it because I is white?’ because that is the reality.  “It is being white that is the problem in schools at the moment.”

Calling for schools to be measured on steps they take to help boys close the gap academically with girls, he said: “You could perfectly well describe the school system at the moment as institutionally sexist.

“The difference in progress rates between girls and boys is really very large indeed.”

Figures published by the Department for Education earlier this month show that almost 180,000 pupils failed to reach the expected level in a new reading test this summer.  They showed that even after 12 months of compulsory education boys are already lagging behind girls.

Dr Leunig’s remarks emerged as it emerged that the Department for Education has been examining whether genes are more important than teaching standards in determining pupils’ academic success.

Ministers have been briefed by Prof Robert Plomin, from the Institute of Psychiatry at King’s College London, on research concluding that inherited intelligence could account for almost 60 per cent of teenagers’ scores in GCSEs with factors such as school performance much less important.

Prof Plomin’s work was cited in a paper written by the Education Secretary Michael Gove’s special adviser Dominic Cummings which was leaked at the weekend.


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