Higher Education Bubble May Explode in Taxpayers’ Faces

by Hans Bader

“61 percent of folks with a student loan are not paying,” notes Andrew Gillen, Ph.D., of the Center for College Affordability and Productivity. Many of the non-payers are still in school, but many others have long since graduated, but are failing to make payments on their student loans. “To give you sense of how unhealthy this is, consider that after the worst housing price crash in our history, 28% of mortgages were underwater.” In short, it looks like there is a huge higher education bubble about to explode in taxpayers’ faces.

Gillen notes that there is a whopping “$870 billion outstanding balance” on student loans. Only “$85 billion” is technically classified as “past due.” But that’s because there is a “massive contingent (47%) in deferment (mostly current students) or forbearance (mostly unemployed or under-employed?).” That’s in addition to at least 27 percent who “should be repaying but aren’t,” since they aren’t in deferment or forbearance.

No one really knows exactly how many people with student loans have effectively defaulted, even though the number appears to be skyrocketing, because the government’s data is such a mess that it seems designed to obfuscate rather than illuminate the problem. Until recently, government data lumped together completely-unrelated loans into

a bucket of random obligations called “Miscellaneous”, which included things like utility bills, child support, and alimony. And it turns out that if you went burrowing in that miscellaneous debt, there was actually a pile of weirdly-categorized student loans in there. [AG: And these mis-categorized student loans were not included.] Meanwhile, the official cohort default rates from the Department of Education were even more useless. Until recently, only the two-year rate was reported. Moreover, those in forbearance or deferment were counted as repaying their loans, and it took 270-360 days of not making payments to be classified as in default. When combined with the grace period, this means that to a first approximation, the “cohort default rate” was not a default rate in any meaningful sense of the term, but rather a measure of how many students never made any payment at all.

Although for-profit colleges have been demonized by the Obama Administration (which has forced some of them to jack up tuition through tightening of the 90-10 rule, and subjected career colleges — but not traditional colleges — to “gainful employment” rules), education expert Richard Vedder says that “the for-profits care more for their students” and care more than other colleges about whether their students get jobs and are able to repay their student loans. The Obama administration has also done other things that increase college costs and drive up tuition, and has harmed American industry and students who choose not to go to college by discouraging vocational training needed for well-paying, skilled factory work, contributing to a severe shortage of certain types of skilled factory workers.

Even as Obama pushes for students to pursue white-collar rather than blue-collar jobs, 12.8 million people are unemployed, some of them people with economically-useless college degrees in majors that teach few useful skills. Government subsidies have encouraged colleges to raise tuition, and to dumb down their courses to attract marginal students who once would not have attended college. Meanwhile, college students learn less and less with each passing year. “Thirty-six percent” of college students learned little in four years of college, and students now spend “50% less time studying compared with students a few decades ago, the research shows.” Thirty-two percent never take “a course in a typical semester where they read more than 40 pages per week.”

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British headteacher 'humiliated' pupils by putting mug shots of those who failed their exams in rogues' gallery on canteen wall

A bit crude. Penalizing children who are not very bright is unlikely to have any positive outcome

A head teacher has been forced to back down after pinning up a photo gallery that named and shamed pupils who failed to meet GCSE targets.

Thirty pupils with low results in mock exams had their names and pictures posted on the wall of the school canteen as motivation to work harder – but parents and pupils reacted angrily and it was taken down after just two days.

Chris Harris, head of Larkmead School in Abingdon, Oxfordshire, admitted the gallery had been ‘misconceived’ but insisted the intention was not to ‘name and shame’.

He said: ‘It was done out of a desire to support and help them, not to humiliate. The intention was good but it was clearly having the opposite impact. ‘I genuinely regret any untoward feelings we have created.’

The pupils were featured in the rogues’ gallery if their grades were borderline for meeting the Government’s GCSE performance target – five A* to C grades including English and maths.

Mr Harris said a similar wall chart, with every pupil grouped according to their attendance and without photographs, had led to increased attendance. Teachers will explain the decision to put the chart up to pupils at an assembly tomorrow.

One mother, 38, who did not want to be named, said her 15-year-old daughter had been left humiliated at her inclusion on the gallery of underachievers. ‘This could be seen as bullying people to get higher grades,’ she said. ‘The school should be ashamed. They shouldn’t let the children become statistics.’

Melinda Tilley, Oxfordshire County Council cabinet member for schools and improvement, said: 'I am sure they did it in good faith and I am sorry it has backfired. 'It was probably meant as a wake-up call and somebody has taken it the wrong way.'

David Lever, chairman of governors at Larkmead, said: 'The school has an excellent reputation and it is very keen to do the best for all the students and support them. 'Chris is an excellent headteacher and I have total confidence in him.'

Gwain Little, secretary of Oxfordshire National Union of Teachers, said: 'It is important when there are children underachieving that we look at supportive ways of tackling it.'

He said there was too much pressure on schools to perform and move up the league tables, adding: 'It is unsurprising it sometimes filters down into the school itself.'

Mike Curtis, Oxfordshire branch secretary of the National Association of Head Teachers, said the motive would have been to encourage the pupils. But he added: 'In most schools we try to celebrate the successes and not highlight the failures.'

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Australian universities are dumb, say foreign students

Asians tend to have high standards in mathematics so Australian levels of competence in that would undoubtedly be disappointing

SOME Australian university courses are like being "back in grade 2", the head of an international students group says. Council of International Students Australia president Arfa Noor told an education conference the country would not attract the best and brightest from overseas until universities lifted their game.

"I don't mean to be harsh or anything but universities need to make sure that they are good enough to attract a very intelligent student," the Pakistani business student told more than 100 academics at the Universities Australia conference.

"You do hear sometimes from students who come from very good institutes back home, who work a lot, and they come into university and they say it feels like they're back in grade 2 because the things that they are being taught at a master level ... I covered at a postgraduate level."

The Melbourne Institute of Technology student said her organisation had complaints some tutors could barely speak English, class sizes were too big, and lecturers simply stood and read from slides.

"If you're from a country, especially from the Asian region, where education is very competitive ... you would have a certain level of expectations, and a lot of students are disappointed by the quality of education," she said.

But Ms Noor said students came to Australia for the experience, not just a degree, and she had loved her three years here.

However, she said universities and governments should fix accommodation and public transport issues so struggling students did not have to cram 10 to a house to save money.

About 550,000 international students study in Australia each semester and last year contributed $13.9 billion to the economy.

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