Monday, December 05, 2016

Jobs needed, not student loan forgiveness

President Barack Obama has decided to leave a lasting impression before he exists office. Obama has put in place a student debt forgiveness program which only helps few while costing all excessively. Now as costs of tuition continue to soar, the Obama legacy on higher education reform will clearly be one of economic distress and government overreach.

Thanks to Obama, the federal government is on track to forgive at least $108 billion in student loan debt in the coming years according to the Government Accountability Office. Which, is what happens when the economy does not produce jobs for college graduates because it has been slowing down for 16 years, not growing above 4 percent since 2000. Graduates go for loan forgiveness, because the jobs that there are do not pay for the loans.

According to the Wall Street Journal’s Josh Mitchell, the most generous repayment plans are capped at 10 percent of the borrower’s discretionary income. He continues to note that, “Congress approved the plans in the 1990s and 2000s, and President Barack Obama has used executive actions to extend the most-generous terms to millions of borrowers.”

This has caused the number of students borrowing to skyrocket over the last three years, resulting in a collective debt of $355 billion. The Government Accountability Office (GAO) estimates $137 billion will not be repaid.

The GAO also criticized the Department of Education’s accounting practices, noting that its costs could be off by billions of dollars. These figures also do not include future loans or outstanding interest on current loans which will accrue over time.

However, the financial burden which taxpayers will ensue will only get worse with the further implementation of this program. As explained in a Wall Street Journal editorial in July 2015, each year which had growth in federal student aid for higher education, also saw a rise in tuition prices. This is a surprisingly understandable trend.

The more the federal government has been willing to give, the more schools have been willing to charge.

Consistently since 1987 every time the federal government has raised financial assistance, Universities have raised costs. Not only do colleges increase costs knowing financial aid will act as a cushion, but with the increase in students entering the University there is a necessity for more classrooms and resources, driving up costs significantly.

Finally, the Obama plan does not even provide adequate relief for all those in need, for private sector workers their forgiven amount would be taxed as ordinary income. However, for government workers and those who work for non-profits forgiven debt is listed as tax free income.

Either everyone’s loan forgiveness should tax-free, or nobody’s should be. Government employees and non-profit workers are nothing special, no offense.

The idea of debt-forgiveness is not entirely partisan. Even President-elect Donald Trump has proposed settling payments at 12.5 percent of income and forgiving balances after 15 years. It is Obama’s expansion of current plans and new taxation codes which makes the plan economically unsustainable.

For young Americans with college degrees but who can now not find jobs in the slow-growth economy, they cannot afford to pay off their loans. To them, a student in debt a relief plan sounds amazing. But for a country in debt, this agenda is not the greatest good for the American people. The real solution is not student loan forgiveness, but for the economy to get moving again with robust growth and creating jobs. The government can help that along by reducing the cost of doing business here.

And stop telling every American they need a college education when not every job requires one. Otherwise, as universities raise prices the government will be forced to forgive more and more, eventually it is possible higher education will take home mortgages place as highest household liability. Then, even the people who need to go to school for their chosen vocation won’t be able to afford it.


Princeton University's Non-Sanctuary Sanctuary Campus

Christopher Eisgruber, the president of Princeton University, recently sent out a letter urging Donald Trump to continue Barack Obama’s immigration policy known as Deferred Action for Childhood Arrivals (DACA). That’s essentially the cleverly named “Dreamers” Act, which never received congressional approval. Eisgruber defended DACA as “a wise, humane and beneficial policy.” That’s arguable, but Obama’s lawlessness in enacting it was neither wise nor beneficial. In the letter, Eisgruber sought to walk the line of both supporting illegal immigrant students while at the same time supporting Rule of Law. Good luck with that.

Eisgruber stated that he was motivated to write the letter in response to some who had “asked Princeton to declare itself a ‘sanctuary campus.’” He responded in the letter by stating, “Immigration lawyers with whom we have consulted have told us that this concept has no basis in law, and that colleges and universities have no authority to exempt any part of their campuses from the nation’s immigration laws.”

While stating that Princeton would not declare itself a “sanctuary campus,” he also made it clear that the school would seek to protect the privacy of all its students, and that it would do everything in its power to accommodate those DACA students. However, Eisgruber also noted that the university was not “beyond the law’s reach.”

So, the bottom lines is that Princeton University will not declare itself a “sanctuary campus,” yet in many ways it will essentially behave as one. The university’s passive-aggressive behavior is to choose a policy of non-enforcement while at the same time not seeking to prevent the federal government from enforcing it. Those in the ivory tower evidently like to have their cake and eat it too.


Setting the Record Straight on Detroit Charter Schools

The nomination of school choice supporter Betsy DeVos for the post of education secretary has reignited a lively debate over the impact of school choice and student-centered education financing.

One case in point is a piece by Douglas Harris, who last Friday took to the pages of the The New York Times.

In his piece, Harris singled out Detroit’s charter school initiative as “the biggest school reform disaster in the country.” Citing one “well-regarded study,” Harris argued that “Detroit’s charter schools performed at about the same dismal level as its traditional public schools.”

The study to which Harris was referring—a study on charter school performance in Michigan conducted by the Center for Research on Education Outcomes (CREDO)—was actually far more positive toward the Detroit charter environment than the Times piece would have one believe.

It is hardly a “disaster,” with, as Ramesh Ponnuru pointed out, some 47 percent of charter schools in Detroit significantly outperforming traditional public schools in reading.

As the conclusion of the CREDO study explains:

Based on the findings presented here, the typical student in Michigan charter schools gains more learning in a year than his TPS counterparts, amounting to about two months of additional gains in reading and math. These positive patterns are even more pronounced in Detroit, where historically student academic performance has been poor. These outcomes are consistent with the result that charter schools have significantly better results than TPS [traditional public schools] for minority students who are in poverty.

Neerav Kingsland, who writes about choice and charters, also parsed the data from the CREDO study to better understand the performance of Detroit’s charter sector compared to Denver’s.

He found that Detroit charter schools performed better than Denver charter schools when compared to their local public school counterparts, with Detroit’s charter schools having twice the impact (0.070**) on reading scores as Denver’s charter schools (0.036**).

Moreover, Kingsland notes that almost all of Detroit’s charter schools (96 percent) performed better than or equal to their traditional public school counterparts in the area of reading. Kingsland provides an important caveat: that “Denver’s traditional schools are probably better than Detroit’s traditional schools, which brings the Denver charter effect down.”

But importantly, he writes, “given that parents in Detroit can’t enroll their children in schools in Denver, we should not decry a charter sector that is providing families better options than what they would otherwise have access to.”

In The New York Times piece, Harris goes on to reference New Orleans’ school choice system, which offers both charter school options and vouchers for private education—relevant points for Harris, since the secretary-designate is also a voucher proponent.

He references an important study by Jonathan Mills, Anna Egalite, and Patrick Wolf, published in conjunction with the School Choice Demonstration Project at the University of Arkansas and Harris’ own organization, the Education Research Alliance for New Orleans.

That study found that voucher recipients in New Orleans performed worse in mathematics after attending private schools. Harris identifies this as “exactly the opposite” of what came from the New Orleans charter reforms.

First, there are important differences between Detroit’s charter sector and that of New Orleans. New Orleans’ school system was completely leveled by Hurricane Katrina, and the charter sector that emerged in its wake was practically built up from scratch. By contrast, Detroit’s charter sector has had to operate within a larger entrenched public school system.

But more importantly, the negative findings regarding the private school choice program in New Orleans may be due to uniquely strict regulations that have not existed in any other private school choice program.

In this hyper-regulated environment, just 31 of the 84 private schools in New Orleans chose to participate in the voucher program, leaving thousands of dollars in scholarship money per student on the table.

When researchers asked why these private schools did not participate in the Louisiana Scholarship Program (LSP), the primary reason private school leaders gave was fear of future regulations. Moreover, those that did participate were already experiencing enrollment declines prior to entering the scholarship program.

As Jonathan Butcher and I noted, “the schools that chose to enroll in the LSP—and incur the litany of state regulations in the process—were those schools that were already struggling, as evidenced by declining enrollment before program entry.”

Heavy-handed government regulations, all in the name of “accountability,” are likely to blame for hindering the potential of private school choice in New Orleans.

Finally, it is worth noting that there is a general disconnect between test scores and later life outcomes. It is highly reductionistic to measure the success of charter and other schools solely on the basis of student outcomes on state assessments.

Jay Greene at the University of Arkansas identified 10 rigorous evaluations of the impact of charter and private school choice programs on later life outcomes.

Greene found that some schools have large impacts on test score gains but have no real impact on later life outcomes. Other schools have no impact on test score gains, but end up having large impacts on later life outcomes. As Greene explains:

… the No Excuses charter model that is currently the darling of the ed reform movement and that New York Times columnists have declared as the only type of ‘Schools that Work’ tend not to fare nearly as well in later outcomes as they do on test scores.  Meanwhile, the unfashionable private choice schools and mom-and-pop charters seem to do much better on later life outcomes than at changing test scores. I don’t highlight this pattern as proof that we should shy away from No Excuses charters. I only mention it to suggest ways in which over-relying on test scores and declaring with confidence that we know what works and what doesn’t can lead to big policy mistakes.

Context is important. Choice and charters continue to be welcome escape hatches for students across the country.

The secretary-designate has been a champion of school choice for years, and for good reason: Choice enables families to match learning options to their children’s unique learning needs, and is a far better way to allocate education funding.

Contra The New York Times, it is not the variety of school options in Detroit that has been a disaster. On the contrary, these options have been a vital lifeline for thousands of students. A monopolized, government-run school system has been the problem.

Creating new schooling alternatives that empower families and children is imperative, and a worthy cause that must not be abandoned.


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