The Blob That Ate Children

 John Stossel

Shortly after I did my first TV special on education, "Stupid in America," hundreds of union teachers showed up outside my office to yell at me. They were angry because I said union rules were a big reason American kids don't learn.

The union is a big reason kids don't like school and learn less. Union contracts limit flexibility, limit promotion of good teachers, waste money and make it hard for principals to fire even terrible teachers.

But I was wrong to imply that the union is the biggest problem. In states with weak unions, K-12 schools stagnate, too.

Education reformers have a name for the resistance: the education "Blob." The Blob includes the teachers unions, but also janitors and principals unions, school boards, PTA bureaucrats, local politicians and so on.

They hold power because the government's monopoly on K-12 education eliminates most competition. Kids are assigned to schools, and a bureaucracy decides who goes where and who learns what. Over time, its tentacles expand and strangle attempts to reform. Since they have no fear of losing their jobs to competitors, monopoly bureaucrats can resist innovation for decades.

As one advocate of competition put it, the Blob says: "We don't do that here. We have to requisition downtown. We got to get four or five people to sign off; the deputy director of curriculum has to say this is OK, etc." Most reformers just give up.

The Blob insists the schools need more money, but that's a myth. America tripled spending per student since I was in college without improving student achievement.

In Los Angeles, they spent half a billion dollars to build the most expensive school in America. They planted palm trees, put in a swimming pool and spent thousands of new dollars per student.

The school is beautiful, but how's the education? Not so good. The school graduates just 56 percent of its students.

Three schools in Oakland that Ben Chavis started aren't as fancy, but the students do better. They get top test scores. And Chavis doesn't just take the most promising or richest students, as teachers unions often claim competitive schools do. Chavis' schools take kids from the poorest neighborhoods.

So what does the education Blob decide to do? Shut his schools down.

School board members don't like Chavis. I understand why. He's obnoxious. Arrogant. He probably broke some rules. For example, he's accused of making a profit running his schools. Horrors! A profit!

If he did profit, I say, so what? He still got top test results with lessgovernment money. Good for him!

But the Blob doesn't like success that's outside its monopoly. It doesn't matter that Chavis has now resigned from the school's board. Oakland may still close his schools. Think about that. As measured by student achievement, his schools are the best. But the Blob doesn't care. And the Blob has the power of government behind it.

In New York City, the union teachers protesting outside my office said: "Our rules are good and necessary, and if cities would let us train teachers and run schools, we'd do a great job. ... We have the expertise, intelligence, the experience to do what works for children."

They said if charter schools must exist, the union should run one, and they "would create a school where all parents would want to send their children." So New York City gave the United Federation of Teachers a charter school of its own. The union boss called it an "oasis."

But what happened? Today, the teachers union school is one of New York's worst. It got a "D" on its city report card. Only a third of its students read at grade level. And the school still lost a million dollars.

Yet it's the union's model school! I assume they tried their best, staffed it with some of their best teachers. The union knew we were watching. But with union rules, and the Blob's bureaucracy, they failed miserably.

I really want to ask them why they hate competition, but they won't come on my Fox television show.

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Federal Direct Student Loans Up Nearly Fivefold Under Obama

Shortly before Congress enacted the Obamacare law in March 2010, then-House Speaker Nancy Pelosi famously said, "We have to pass the bill so that you can find out what is in it."

When President Obama ultimately signed the Health Care and Education Reconciliation Act -- one of the two bills comprising Obamacare -- he gave a speech celebrating one of its surprises: language that terminated the Federal Family Education Loan (FFEL) program that allowed federally guaranteed student loans to be made in the private sector with private capital, thus giving the Federal Direct Student Loan (DL) program a monopoly over these loans.

As the Congressional Research Service has put it, this program makes the U.S. Treasury a "banker" for college students.

"The DL program uses a different administrative structure and draws on a different source of capital than was used in the FFEL program," said a CRS report published on March 4. "Under the DL program, the federal government essentially serves as the banker -- it provides the loans to students and their families using federal capital (i.e., funds from the U.S. Treasury), and it owns the loans."

For Obama, this was the perfect arrangement -- allowing what he described as a redistribution wealth from banks to college students.

"For almost two decades, we've been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks to act as unnecessary middlemen in administering student loans," Obama said when he signed the bill at Northern Virginia Community College. "These are billions of dollars that could have been spent helping more of our students attend and complete college, that could have been spent advancing the dreams of our children, that could have been spent easing the burden of tuition on middle-class families. Instead, that money was spent padding student lenders' profits."

Last week, speaking at the Conservative Political Action Conference, Sen. Marco Rubio, who said he had just finished paying off more than $100,000 in student loans, presented a far different picture of the program.

"You should be very concerned about student loan debt," he said. "It is the next big bubble in America."

So, now that the U.S. Treasury is the banker for the federal student loan program, what is happening with student-loan debt?

The hard numbers can be found in the Monthly Treasury Statements (MTS). Table 6, Schedule E in these statements lists the account balances for federally guaranteed and direct loan programs.

In January 2000, according to the MTS, the balance of the Federal Direct Student Loan program was $51.643 billion. Over the next eight years, that nearly doubled, rising to $101.682 billion in January 2008.

In January 2009, the month Obama was inaugurated, the balance of the Federal Direct Student Loan program was $119.803 billion. In June 2010, the last month that private-sector lenders could make federally guaranteed student loans, the balance was $178.806 billion. In February 2013, the latest month reported, it was $588.048 billion.

The balance in Federal Direct Student Loan program has increased nearly fivefold under Obama.

And it continues to rapidly expand. "In FY 2013, ED (the Department of Education) estimates that 22.5 million new DL program Stafford Loans and PLUS Loans, averaging $5,366 each and totaling $120.8 billion, will be made to undergraduate and graduate students and the parents of undergraduate dependent students," said the CRS in its March 4 report.

It is not clear whether the government actually expects all of these students to repay these loans.

The CRS report describes numerous ways students can get out of paying back all they owe in a timely manner to the taxpayers.

For example, the loans offer an "Income-Based Repayment Plan" -- or IBR. "The IBR plan is designed to present borrowers the opportunity to make monthly payment amounts based on the relationship between their student loan debt and their income," said CRS. "It affords borrowers who experience prolonged periods of low income the prospect of debt forgiveness."

Then there is the "Income-Contingent Repayment Plan" -- or ICR. "Repayment according to the ICR plan also affords borrowers the opportunity to make loan payment amounts based on the relationship between their student loan debt and their income; and the prospect of debt forgiveness for those who experience prolonged periods with low incomes."

If these don't work, CRS says the secretary of education is authorized to "establish alternative payment plans for borrowers of DL program loans who demonstrate that they are unable to repay according to other available repayment plans due to exceptional circumstances."

Even some graduates who can afford to pay their debt to the taxpayers, CRS reports, can have "DL program loans forgiven, cancelled or repaid as an incentive for entering certain occupations or professions, or for performing certain types of public service."

The bottom line: As an increasing number of Americans borrow money directly from the U.S. Treasury for finance college, there will be an increasing interest among Washington politicians to forgive this debt and redistribute wealth not from bankers to students, but from people who never went to college, or who did and paid for it themselves, to people who attended college on the Obamacare plan.

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Australia:  Victorian government caves in to teachers

HALF-day stop-work action is still planned for Victorian schools in term two despite a major backdown by the Napthine Government in the bitter teacher pay dispute.

But parents and teachers are optimistic a deal can be reached quickly to avert the industrial action after the Government scrapped its insistence that pay be linked to performance.

Premier Denis Napthine said the removal of the key sticking point in the ugly battle showed his "real commitment" to resolving the Enterprise Bargaining Agreement stalemate.

"The Government can announce today that it has decided to take discussions on performance pay off the table, and deal with this issue ... outside the current EBA processes," he said.

Dr Napthine said the Government was still committed to a merit-based pay system in the long run.

The head of the Australian Education Union in Victoria, Meredith Peace, said the backdown by the Government wouldn't mean an end to the industrial action.

This includes rolling half-day regional stoppages, set to hit schools in May and June, and a ban on teacher overtime, which has forced the cancellation of school camps, productions, sports and excursions outside school hours.

"We will stop campaigning when we get an agreement with the Government," Ms Peace said. "This doesn't resolve the dispute.

"There are a number of outstanding issues ... salaries is one of those, workload, class sizes, the high level of contract employment."

The union and Government will meet again today to discuss the issues.

The AEU in November reduced its pay claim to 12.6 per cent over three years, while the Government offered 2.5 per cent a year plus performance pay.

Opposition Leader Daniel Andrews said industrial action was hurting parents and small businesses that ran camps and other extra-curricular activities.

He said the Premier should get personally involved in the dispute to achieve a quick outcome.

Parents Victoria executive officer Gail McHardy said she hoped the dispute could be resolved in time for the end of term one next week.  "Common sense has prevailed. Let's get on with educating these kids," she said.

Institute of Public Affairs policy director Tim Wilson said the Government must push ahead with performance pay.

"We should be making sure there are incentives so that teachers deliver the best outcome for kids and can be judged against that," Mr Wilson said.

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