* * * * * *
Another school year beckons... which means it's time for President Obama to go on another college retreat. "He loves college tours," says Ohio University's Dr. Richard Vedder, who directs the Center for College Affordability and Productivity. "Colleges are an escape from reality."
"Believe me," notes Vedder, "I've lived in one for half a century. It's like living in Disneyland. They're these little isolated enclaves of non-reality."
Dr. Vedder, age 72, has taught college economics since 1965 and...over the last decade he's made himself America's foremost expert on the economics of higher education, which he distilled in his 2004 book "Going Broke by Degree: Why College Costs Too Much."
* CONTRAST THIS TO PRESIDENT OBAMA'S "SOON TO BE RELEASED" NEXT BEST-SELLER, TENTATIVELY TITLED, "WHERE'S MY FRIGGIN' TELEPROMPTER?!"
This week, on his back-to-school tour of New York and Pennsylvania colleges, President Obama presented a "new plan to make college more affordable."
(*FEELING A MIGRAINE COMING ON*)
* AND LIKE OBAMACARE, IT'S A PLAN THAT CALLS FOR "FULL SPEED AHEAD"... BUT, UNFORTUNATELY... IN THE WRONG DIRECTION.
The President's "solution" consists of tying financial aid to college performance, using government funds as a "catalyst to innovation" and making it easier for borrowers to discharge their debts.
* "DISCHARGE" MEANING... er... "NOT PAY." (MORE ON THIS LATER...)
Dr. Vedder responds, "In fairness to the president, some of his ideas make some decent, even good sense, such as providing students with more information about college costs and graduation rates. But his plan addresses just the tip of the iceberg. He's not dealing with the fundamental problems."
By Vedder's lights the cost conundrum started with the Higher Education Act of 1965, a Great Society program that created federal scholarships and low-interest loans aimed at making college more accessible.
* AND YET...
College costs have continued to explode despite 50 years
of ostensibly benevolent government interventions...
* AND...?
...and the president's new plan could exacerbate the
trend.
* WOULD. NOT COULD. WOULD!
Universities, Vedder says, "are in the housing
business, the entertainment business; they're in the lodging business; they're
in the food business. Hell, my university runs a travel agency which ordinary
people off the street can use."
Meanwhile, university endowments don't pay taxes on their
income.
* NICE...
(*SMIRK*)
Harvard's $31 billion endowment, which has been financed
by tax-deductible donations, may be America's largest tax shelter.
* AND HOW IS PART OF THIS TAX-FREE SHELTERED INCOME
DISPENSED IN THE WONDERFUL WORLD OF HIGHER EDUCATION? (READ ON!)
Some college officials are also compensated more
handsomely than CEOs. Since 2000, New York University has provided $90 million
in loans, many of them zero-interest and forgivable, to administrators and
faculty to buy houses and summer homes on Fire Island and the Hamptons.
* WHAT... A... FRIGGIN'... SCAM...!!!
Former Ohio State President Gordon Gee (who resigned in
June after making defamatory remarks about Catholics) earned nearly $2 million
in compensation last year while living in a 9,630 square-foot Tudor mansion on
a 1.3-acre estate.
* NICE...
The Columbus Camelot includes $673,000 in art decor and a
$532 shower curtain in a guest bathroom.
(*SILENCE*)
Ohio State also paid roughly $23,000 per month for Mr.
Gee's soirees and half a million for him to travel the country on a private
jet.
(*CLAP...CLAP...CLAP*)
Such taxpayer-funded extravagance has not made its way
into Mr. Obama's speeches.
* ANYONE SURPRISED...???
(*SNORT*)
Colleges have also used the gusher of taxpayer dollars to
hire more administrators to manage their bloated bureaucracies and
proliferating "multicultural programs."
The University of California system employs 2,358
administrative staff in just its president's office.
* GEEZUS...
"Every college today practically has a secretary of
state, a vice provost for international studies, a zillion public relations
specialists," Vedder says. "My university has a sustainability
coordinator whose main message, as far as I can tell, is to go out and tell
people to buy food grown locally. . . . Why? What's bad about tomatoes from
Pennsylvania as opposed to Ohio?"
Dr. Vedder notes that, by contrast, "you don't have
to worry about this at the University of Phoenix. One thing about the for-profits
is that they are laser-like devoted to instruction."
(*THUMBS UP*)
Although for-profits like the University of Phoenix and
DeVry spend more money on marketing, they don't contain as much administrative
overhead.
(*VIRTUAL BACK-SLAP*)
'The Obama administration has been beating up on for-profits
pretty hard for the past two to three years," Vedder says. "It's true
that drop-out rates are disproportionately higher at the for-profits, but it's
also true that the for-profits are reaching the exact audience that Obama wants
to reach" — low-income minorities, many of whom are the first in their
family to attend college.
* AND OF COURSE, JUST BECAUSE THE DROP-OUT RATES ARE
DISPROPORTIONALLY HIGHER DOESN'T MEAN THIS IS NECESSARILY A "BAD"
THING. IT COULD WELL BE A REFLECTION THAT THE COURSE OF STUDY IS RIGOROUS AND
THAT GRADING IS LEGITIMATE (AS OPPOSED TO INFLATED) SO THAT THOSE WHO EITHER
CAN'T OR WON'T HACK IT BAIL OUT RATHER THAN CONTINUE TO THROW THEIR OWN
PERSONAL FUNDS (AS OPPOSED TO LOANS AND GRANTS) AT A COURSE OF STUDY THEY'VE RECOGNIZED THAT THEY'RE NOT SUITED FOR.
* OR... THE DISPROPORTIONALLY HIGHER DROP-OUT RATES COULD
BE TIED TO THE FACT THAT WE ARE INDEED TALKING A HIGHER PROPORTION OF
LOW-INCOME MINORITIES, AND THAT ALONE NO DOUBT SKEWS GRADUATION RATES DOWNWARD.
(LESS FAMILIARITY WITH STRUCTURED STUDY; LESS EMOTIONAL AND FINANCIAL SUPPORT;
LESS PREPARATION FOR SUCCESS AND LESS TOLERANCE FOR FAILURE.)
Today, only about 7% of recent college grads come from
the bottom-income quartile compared with 12% in 1970 when federal aid was
scarce. All the government subsidies intended to make college more accessible
haven't done much for this population, says Vedder. They also haven't much
improved student outcomes or graduation rates, which are around 55% at most
universities (over six years).
* SO... AS I WAS PREVIOUSLY SAYING...
(*SHRUG*)
Dr. Vedder is skeptical about the president's proposal to
tie federal aid to graduation rates, among other performance metrics. "I
can tell you right now, having taught at universities forever, that
universities will do everything they can to get students to graduate," Vedder
chuckles. "If you think we have grade inflation now, you ought to think
what will happen. If you breathe into a mirror and it fogs up, you'll get an
A."
(*SHRUG*)
A better idea, Vedder suggests, would be to implement a
national exam like the GRE (Graduate Record Examination) to measure how much
students learn in college. This is not on Mr. Obama's list.
* NO... OF COURSE NOT.
(*SPITTING ON THE GROUND*)
Nor is the president addressing what Mr. Vedder believes
is a fundamental problem: too many kids going to college.
* B*I*N*G*O...!!!
"Thirty-percent of the adult population has college
degrees," he notes. "The Department of Labor tells us that only 20%
or so of jobs require college degrees.
* AND NO DOUBT THAT'S A BOGUS FIGURE! (TOO HIGH...)
We have 115,520 janitors in the United States with
bachelor's degrees or more. Why are we encouraging more kids to go to
college?"
* IT'S... A... SCAM...!!!
Dr. Vedder sees similarities between the government's
higher education and housing policies, which created a bubble and precipitated
the last financial crisis. "In housing, we had artificially low interest
rates. The government encouraged people with low qualifications to buy a house.
Today, we have low interest rates on student loans. The government is
encouraging kids to go to school who are unqualified just as it encouraged
people to buy a home who are unqualified."
* AND WHILE "LOW," THESE STUDENT LOAN RATES -
WHEN COMPOUNDED - ARE NO "MINOR" EXPENSES. THEY OFTEN ADD UP TO HUGE
MONTHLY PAYMENTS THAT GO ON FOR YEAR AFTER YEAR AFTER YEAR... OFTEN INTO A PERSON'S
30's... AND WE'RE TALKING JUST UNDERGRADUATE LOAN REPAYMENT!
"The higher-education bubble," Vedder says, "is
already in the process of bursting," which is reflected by all of the
"unemployed or underemployed college graduates with big debts." The
average student loan debt is $26,000, but many graduates, especially those with
professional degrees, have six-figure balances.
Mr. Obama wants to "help" more students
discharge their debts...
* MEANING LEAVE THE DEBTS FOR THE TAXPAYER TO MAKE GOOD
ON... INCLUDING TAXPAYERS WHO NEVER WENT TO COLLEGE!
...by capping their monthly payments at 10% of their
discretionary income...
* AND "DISCRETIONARY INCOME" DEPENDS UPON...???
(THAT'S RIGHT, FOLKS... SPEND MORE THAN YOU "NEED" TO ON HOUSING...
THE CAR YOU DRIVE... OTHER SPENDING CATEGORIES DEEMED "ESSENTIAL"...
AND LOWER YOUR "DISCRETIONARY" INCOME.) SINCE MONEY IS FUNGIBLE, IMAGE
THE SCAMS!
...and forgiving their outstanding balances after 20
years.
* ONE SHOULD ONLY BORROW WHAT ONE IS PREPARED TO REPAY!
CREATING DEBTS THAT WILL ULTIMATELY BE SHOULDERED BY OTHERS IS SIMPLY IMMORAL...
UNETHICAL!
Grads who take jobs in government or at non-profits
already can discharge their debt after a decade.
* WHICH STILL LEAVES THE TAXPAYER HANGING... WHILE AS
WE'VE SEEN... WORKING FOR A "NON-PROFIT" CAN SOMETIMES TRANSLATE TO $532
SHOWER CURTAINS (IN THE GUEST BATHROOM) AND PRIVATE JET TRAVEL!
Dr. Vedder adds that the president's approach
"creates a moral hazard problem. What it signals to current and future
loan borrowers is that I don't have to take these repayment of loans very
seriously. . . . I don't have to worry too much about getting a high-paying job."
It encourages "sociology and anthropology majors compared with math and
engineering majors."
(*NOD*)
Can online education, which is being pioneered in some
science disciplines, substantially reduce costs? Vedder says it can, but
government won't do the innovating. "First of all, the Department of
Education, to use K-12 as an example, has been littered with demonstration
projects, innovation projects, proposals for new ways to do things for decades.
And what has come out? Are American students learning any more today than a
generation ago? Are they doing so at lower cost than a generation ago?
No." Innovation, he says, is being driven by entrepreneurs like Stanford
computer science Prof. Sebastian Thrun, who founded the for-profit company
Udacity that offers "massive open online courses" (MOOCs).
(Mr. Thrun began teaching artificial intelligence, first
at Stanford and then at Udacity. Mr. Vedder notes that he quickly got
"200,000 people to sign up for it. And it's a great course and people are
learning like crazy.")
Where the government can help, Dr. Vedder says, is to get
out of the way of progress and encourage slow-moving accreditors to allow
innovations to move forward more rapidly... but ultimately, the way to improve
college affordability is for the government to disinvest in higher education
and wean students from subsidies.
* AMEN!
Mr. Obama is dead set against that.
"President Obama wants to maintain that world"
of non-reality in which demand is impervious to cost," Vedder sighs.
"That world has to change."
* AND YET... AS WITH MOST PREVIOUS FAILED POLICIES
PURSUED BY THE LIKES OF GEORGE W. BUSH... OBAMA INSTEAD DOUBLES DOWN ON DOING
THE WRONG THING!
In 1964, federal student aid was a mere $231 million.
By 1981, the feds were spending $7 billion on loans
alone, an amount that doubled during the 1980s and nearly tripled in each of
the following two decades, and is about $105 billion today.
Taxpayers now stand behind nearly $1 trillion in student
loans.
* A BUBBLE...
(*SIGH*)
(*JUST SHAKING MY HEAD*)
Meanwhile, grants have increased to $49 billion from $6.4
billion in 1981. By expanding eligibility and boosting the maximum Pell Grant
by $500 to $5,350, the 2009 "stimulus" bill accelerated higher education's
evolution into a middle-class entitlement.
* AT TAXPAYER EXPENSE...
* WHEN WE CAN'T EVEN COME CLOSE TO PAYING FOR THE ONGOING
COSTS OF PREVIOUS ENTITLEMENTS...
* WHEN THE FEDERAL GOVERNMENT BORROWS
FORTY-SOMETHING-CENTS OF EVERY DOLLAR THESE WEASELS SPEND...!!!
Fewer than 2% of Pell Grant recipients came from families
making between $60,000 and $80,000 a year in 2007. Now roughly 18% do.
* YEP... $60K TO $80K... THE "NEW POOR."
(*SPITTING ON THE GROUND*)
This growth in subsidies, Mr. Vedder argues, has fueled
rising prices: "It gives every incentive and every opportunity for
colleges to raise their fees."
* IN A WORD... DUH!
Many colleges, Vedder notes, are using federal largess to
finance Hilton-like dorms and Club Med amenities. Princeton recently built a
resplendent $136 million student residence with leaded glass windows and a
cavernous oak dining hall (paid for in part with a $30 million tax-deductible
donation by Hewlett-Packard CEO Meg Whitman). The dorm's cost approached
$300,000 per bed.
Stanford offers more classes in yoga than Shakespeare.
* THINK ABOUT THAT, MY FRIENDS... JUST THINK ABOUT THAT.
A warning to parents whose kids sign up for "Core
Training": The course isn't a rigorous study of the classics, but rather
involves rigorous exercise to strengthen the gluts and abs.
(*RUEFUL SMILE*)
* FOLKS... EVEN HIS ROYAL DENCENESS - KING BARACK HIMSELF
- HAS NOTED THE FOLLOWING:
"If the federal government keeps on putting more and
more money in the system," he noted at the State University of New York at
Buffalo on Thursday, and "if the cost is going up by 250%" and
"tax revenues aren't going up 250%," at "some point, the
government will run out of money."
Note that for the record: Mr. Obama has admitted some
theoretical limit to how much the federal government can spend.
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