WILL THE DEMOCRATS STOP THE STUDENT LOAN VAMPIRES?

If they REALLY stood for the little guy they would

When Congress amended the Higher Education Act 10 years ago, defaulted student loans became the easiest and most lucrative debt to issue and collect. The amendments imposed huge fees on defaulted student loans and took away bankruptcy protection for student borrowers. It banned refinancing of many student loans, and also allowed draconian collection measures to be taken against student borrowers, including wage garnishment, tax garnishment, withholding of professional certifications, termination from employment, and even Social Security garnishment.

Harvard Professor Elizabeth Warren told The Wall Street Journal that "student loan debt collectors have power that would make a mobster envious." And no one makes the mobsters greener than Al Lord and his Student Loan Marketing Corporation, also known as Sallie Mae. Lord and current CEO Tim Fitzpatrick have made about $367 million since 1999, making them some of the highest-paid executives in the country. Sallie Mae stock has also gone up almost 20 times in the same period. Way more than Microsoft.

There are only two ways to get that kind of growth with that kind of profit. 1) You do things smarter, better, fast. 2) Do what Sallie Mae did: get into a business where government assumes all the risk - guaranteed student loans - but where a private company gets all the reward. As a result, Sallie Mae became largest student loan company in America, bigger than most of their rivals combined.

In the company's annual report, Lord attributed his company's 29% core cash earnings-per-share growth in large part to fees collected from defaulted loans. He forgot to mention that the law allowed him to forbid Sallie's customers from refinancing with competitors offering better deals. Meanwhile, the borrowers suffer.

Many student loan debtors in default find themselves unable to function in society, and are faced with a decision to either continue the paralysis and live in fear, or begin making payments on a massively inflated amount - often double, triple or quadruple what they originally borrowed. StudentLoanJustice.Org has received thousands of stories from citizens whose lives have been shattered by their student loans. People who default on student loans are typically decent citizens who, for one reason or another, were not able to capitalize on their education. Most agree that they are responsible to pay back what they borrowed, but most cannot afford to pay back the wildly increased amounts that the federal law has allowed to be imposed upon them.

The student loan system in the U.S. has been hijacked by Albert Lord and his friends. Let there be no mistake: These are not creative geniuses who invented a new product or service. These are not captains of industry who built markets and competed their way to the top. Rather, these are nothing more than well-connected executives who took an existing market and used their weight in Congress to erect insurmountable barriers to competition.

Here are just two examples: Sallie Mae convinced Congress that allowing borrowers to reconsolidate student loans would cost taxpayers money, so they banned it. Then they sidestepped the law against inducements (also known as kickbacks) by permitting Sallie Mae to loan schools money to make student loans in the school's name, then sell them to Sallie Mae for a "commission." Imagine if any other business tried that. It would be ridiculous. Or illegal. For Sallie Mae, it was a business model. This cannot be what Congress intended when the Higher Education Act of 1965 was created. And it must be among the first things the new Congress fixes this year.

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What's Wrong With Vocational School? Too many Americans are going to college

BY CHARLES MURRAY

The topic yesterday was education and children in the lower half of the intelligence distribution. Today I turn to the upper half, people with IQs of 100 or higher. Today's simple truth is that far too many of them are going to four-year colleges. Begin with those barely into the top half, those with average intelligence. To have an IQ of 100 means that a tough high-school course pushes you about as far as your academic talents will take you. If you are average in math ability, you may struggle with algebra and probably fail a calculus course. If you are average in verbal skills, you often misinterpret complex text and make errors in logic.

These are not devastating shortcomings. You are smart enough to engage in any of hundreds of occupations. You can acquire more knowledge if it is presented in a format commensurate with your intellectual skills. But a genuine college education in the arts and sciences begins where your skills leave off.

In engineering and most of the natural sciences, the demarcation between high-school material and college-level material is brutally obvious. If you cannot handle the math, you cannot pass the courses. In the humanities and social sciences, the demarcation is fuzzier. It is possible for someone with an IQ of 100 to sit in the lectures of Economics 1, read the textbook, and write answers in an examination book. But students who cannot follow complex arguments accurately are not really learning economics. They are taking away a mishmash of half-understood information and outright misunderstandings that probably leave them under the illusion that they know something they do not. (A depressing research literature documents one's inability to recognize one's own incompetence.) Traditionally and properly understood, a four-year college education teaches advanced analytic skills and information at a level that exceeds the intellectual capacity of most people.

There is no magic point at which a genuine college-level education becomes an option, but anything below an IQ of 110 is problematic. If you want to do well, you should have an IQ of 115 or higher. Put another way, it makes sense for only about 15% of the population, 25% if one stretches it, to get a college education. And yet more than 45% of recent high school graduates enroll in four-year colleges. Adjust that percentage to account for high-school dropouts, and more than 40% of all persons in their late teens are trying to go to a four-year college--enough people to absorb everyone down through an IQ of 104.

No data that I have been able to find tell us what proportion of those students really want four years of college-level courses, but it is safe to say that few people who are intellectually unqualified yearn for the experience, any more than someone who is athletically unqualified for a college varsity wants to have his shortcomings exposed at practice every day. They are in college to improve their chances of making a good living. What they really need is vocational training. But nobody will say so, because "vocational training" is second class. "College" is first class.

Large numbers of those who are intellectually qualified for college also do not yearn for four years of college-level courses. They go to college because their parents are paying for it and college is what children of their social class are supposed to do after they finish high school. They may have the ability to understand the material in Economics 1 but they do not want to. They, too, need to learn to make a living--and would do better in vocational training.

Combine those who are unqualified with those who are qualified but not interested, and some large proportion of students on today's college campuses--probably a majority of them--are looking for something that the four-year college was not designed to provide. Once there, they create a demand for practical courses, taught at an intellectual level that can be handled by someone with a mildly above-average IQ and/or mild motivation. The nation's colleges try to accommodate these new demands. But most of the practical specialties do not really require four years of training, and the best way to teach those specialties is not through a residential institution with the staff and infrastructure of a college. It amounts to a system that tries to turn out televisions on an assembly line that also makes pottery. It can be done, but it's ridiculously inefficient.

Government policy contributes to the problem by making college scholarships and loans too easy to get, but its role is ancillary. The demand for college is market-driven, because a college degree does, in fact, open up access to jobs that are closed to people without one. The fault lies in the false premium that our culture has put on a college degree.

For a few occupations, a college degree still certifies a qualification. For example, employers appropriately treat a bachelor's degree in engineering as a requirement for hiring engineers. But a bachelor's degree in a field such as sociology, psychology, economics, history or literature certifies nothing. It is a screening device for employers. The college you got into says a lot about your ability, and that you stuck it out for four years says something about your perseverance. But the degree itself does not qualify the graduate for anything. There are better, faster and more efficient ways for young people to acquire credentials to provide to employers.

The good news is that market-driven systems eventually adapt to reality, and signs of change are visible. One glimpse of the future is offered by the nation's two-year colleges. They are more honest than the four-year institutions about what their students want and provide courses that meet their needs more explicitly. Their time frame gives them a big advantage--two years is about right for learning many technical specialties, while four years is unnecessarily long.

Advances in technology are making the brick-and-mortar facility increasingly irrelevant. Research resources on the Internet will soon make the college library unnecessary. Lecture courses taught by first-rate professors are already available on CDs and DVDs for many subjects, and online methods to make courses interactive between professors and students are evolving. Advances in computer simulation are expanding the technical skills that can be taught without having to gather students together in a laboratory or shop. These and other developments are all still near the bottom of steep growth curves. The cost of effective training will fall for everyone who is willing to give up the trappings of a campus. As the cost of college continues to rise, the choice to give up those trappings will become easier.

A reality about the job market must eventually begin to affect the valuation of a college education: The spread of wealth at the top of American society has created an explosive increase in the demand for craftsmen. Finding a good lawyer or physician is easy. Finding a good carpenter, painter, electrician, plumber, glazier, mason--the list goes on and on--is difficult, and it is a seller's market. Journeymen craftsmen routinely make incomes in the top half of the income distribution while master craftsmen can make six figures. They have work even in a soft economy. Their jobs cannot be outsourced to India. And the craftsman's job provides wonderful intrinsic rewards that come from mastery of a challenging skill that produces tangible results. How many white-collar jobs provide nearly as much satisfaction?

Even if forgoing college becomes economically attractive, the social cachet of a college degree remains. That will erode only when large numbers of high-status, high-income people do not have a college degree and don't care. The information technology industry is in the process of creating that class, with Bill Gates and Steve Jobs as exemplars. It will expand for the most natural of reasons: A college education need be no more important for many high-tech occupations than it is for NBA basketball players or cabinetmakers. Walk into Microsoft or Google with evidence that you are a brilliant hacker, and the job interviewer is not going to fret if you lack a college transcript. The ability to present an employer with evidence that you are good at something, without benefit of a college degree, will continue to increase, and so will the number of skills to which that evidence can be attached. Every time that happens, the false premium attached to the college degree will diminish.

Most students find college life to be lots of fun (apart from the boring classroom stuff), and that alone will keep the four-year institution overstocked for a long time. But, rightly understood, college is appropriate for a small minority of young adults--perhaps even a minority of the people who have IQs high enough that they could do college-level work if they wished. People who go to college are not better or worse people than anyone else; they are merely different in certain interests and abilities. That is the way college should be seen. There is reason to hope that eventually it will be.

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Only drastic surgery can save Britain's schools

The university where I whiled away my misspent youth had a notoriously tough entrance procedure, full of trick questions to trip up the unwary and humiliate them into the bargain. Oddly, however, the exams you took at the end of your three years weren’t much harder. The reason is clear to me now. The lecturers were far too grand to do anything as dreary as teaching, and the students were far too busy getting drunk. So the authorities had to make sure that they let in only students who knew enough when they arrived to pass their finals three years later.

I’m sure that this eccentric approach has been purged by now. But I was reminded of it last week when I read of the Government’s plan to raise the age at which children can leave full-time education from 16 to 18 — because I have a sneaking suspicion that many comprehensives are operating today rather like my old university operated 30 years ago. The brightest kids could easily sail through their GCSEs almost as soon as they come into the school at the age of 11 or 12. Instead, they spend five years getting more and more bored. But at the other end of the spectrum, at least 20 per cent of pupils couldn’t pass five GCSEs if they were kept in our current school system till they were 94. Or so the league tables suggest.

It’s against this lamentable background, and the monumental failure of the Government to tackle the problem of the failing 20 per cent, that this airy-fairy proposal to raise the school leaving age must be judged. Forget for a moment the billions of extra funding needed. What’s preposterous is the notion that a system incapable of teaching a huge number of children the basics of literacy, numeracy and decency after 12 years of full-time schooling should somehow magically be able to do so after 14 years.

The result of keeping disaffected kids in the system till they are 18 could be catastrophic. Perhaps you don’t recall the last time the school leaving age was raised — in 1972, when it went from 15 to 16. I have wry memories. A few months before going to university, I did work experience in a local school, and watched with incredulity as a bunch of stroppy 15-year-olds who had expected to escape the previous summer were forced to kick their heels for three more terms — and proceeded to run amok. The legacy of that misconceived move lingers still. Is there anyone, apart from dutiful Blairites, who believes that today’s 16-year-old school-leavers are better educated than the 15-year-old leavers of the 1960s?

There is a way to raise the leaving age without going through that pointless chaos again. But it would require a radical reshaping of the entire school system. Here, just for your amusement, is what I would do.

First I would extend primary-school education by two years (mirroring the prep schools in the private sector). That would allow these enlarged primary schools to beef up their arts, sports and music — because the best specialist teachers would be attracted by the chance to take older children to a higher level. It would give primary teachers six extra terms in which to drum the basics of reading and arithmetic into slower learners. And most crucially, it would allow the the decision about appropraite secondary education to be deferred until children were 12 or 13, when it is far easier to know whether a child is cut out to be “academic”.

Those that are academic would pass a wideranging test at 13 and get a “certificate of basic education” (let’s call it the CBE, just to be confusing) covering the minimum literacy and numeracy skills normally needed in life. They would then move to secondary schools that would prepare them for a much tougher and broader set of A-levels than we have at present.

Non-academics would take a different path. They would still work towards their CBEs, but also develop the vocational skills needed to go straight into work at 18. Indeed, they would spend much of each term on work placements: old-fashioned apprenticeships, except in contemporary industries such as IT, food technology and retailing as well as the old blue-collar trades.

“Aha!” I hear the Islington liberals cry. “You are simply reviving the old apartheid system with grammar schools and secondary moderns, albeit with a 13-plus exam instead of the old 11-plus.” Not so. The problem in the old days was the stigma of failure attached to non-grammar-school children. My system would invest the vocational educational route with as much dignity, pride and rigorous standards as the academic route. It is the only way forward if British craft and trade workers are to compete in an increasingly global market place. Ask yourself why London is heaving with foreign plumbers, welders, electricians and carpenters who do a far better job than their British counterparts.

And it’s also the only way forward if we want to stop our educational system from churning out thousands of unemployable teenagers each year. Grafting makeshift vocational courses on to the existing state educational structure is useless.

But such a big rethink calls for political courage. Forget it, then. What the Government has concocted is a headline-grabbing gimmick that applies sticking-plaster to a festering wound. How typical. Is there anyone, apart from Blairites, who believes that today’s 16-year-old school-leavers are better educated than the 15-year-old leavers of the 1960s?

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For greatest efficiency, lowest cost and maximum choice, ALL schools should be privately owned and run -- with government-paid vouchers for the poor and minimal regulation.

The NEA and similar unions worldwide believe that children should be thoroughly indoctrinated with Green/Left, feminist/homosexual ideology but the "3 R's" are something that kids should just be allowed to "discover"

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