Posts filed under ‘Higher Ed Issues’
Springboards or Bungee Cords?
Recruitment and retention of young people of color as teachers in urban public schools began as a goal, but recently got elevated to the level of a crisis. But might we benefit from trading our periscopes for something offering a broader view? Consider the possibility that there is no shortage of well-educated young people of color…and only question whether they should be held back from the same career opportunities as, say, your average Teach for America alum?
Children of color benefit from role models with whom they can identify, and who could be better than a great teacher from a familiar community? Unfortunately, public school recruiters have sounded the alarm that they are having trouble attracting and retaining a permanent workforce from that community. Solutions are being sought in incentives that give students who otherwise could not afford college a chance for funding in exchange for a promise of giving back as a teacher after graduation. But our goals for diversity among teachers should not be confused with the objective of giving urban scholars arising from poverty access to higher education and equitable income potential.
People generally do want to give back to their communities. But they have a right to choose when and how. And a student does not need to focus his or her attention on role models who plan a lifetime in the classroom. Teaching is one of many great professions. Children can find inspiration in role models from every walk of life, living well and pursuing their dreams. Let’s not turn our springboards for success into bungee cords that snap young college grads back home too fast. They may wish to return for a few years of service in the community while sorting out their plans for the future, or they might be drawn home in another phase of life with a wealth of real world experience. But their career trajectories should not be altered by design.
Any program intended to level the playing field for students from disadvantaged communities should do just that…give each student the chance to pursue higher education and choose a career path with as much freedom as a student who was born in a more affluent world. In the meantime, every effort should continue to be made to transform urban schools into centers of academic excellence that also would be great places to work.
Dual Enrollment and Its Promise
My brother taught me a lesson about offering a promise at the end of goal achievement. It may just be the missing link for many high school re-engagement programs. Dual enrollment can take a student from his or her return to high school through access to a college degree. Going back to high school for that diploma is hard, and the reward it offers is limited. But a college degree means forever on a resume…clearing a hurdle for access to the middle class.
A while ago during a failed job interview for a position in student re-engagement, I totally blew it on the HR rubric. I went outside of the box and cited my brother, Tom Wright, as one of my personal heroes. Tom had spent the last 20 years creating and developing a market for home mortgages for Native Americans. My link to work with high school drop-outs must have been a bit too obtuse, but it’s still a story about keeping an eye on a prize.
Tom’s work began in an era when much of the housing stock on Indian reservations was below code, and home ownership eluded many Native Americans due to missing or low credit ratings. However, he recognized that there was a market and a dire need for access to both credit and safe housing. He just needed a method.
Tom developed a two-year course of credit counseling for Native Americans with weak financial backgrounds that promised approval on a home mortgage if they finished the program with a successful payment history. Paying ones bill could lead to 1st time home ownership, a rarity at the time. Possession of a plywood shack on tribal land was all many of his clients could hope for as they dodged their creditors.
The financing of the risk for mortgage lenders was the rub, but Tom saw a solution in money set aside for Native American housing awards through the Wounded Knee Treaty. A clause in the agreement funded a housing lottery that awarded homes to a small number of winners in Indian Nation each year. He went to tribal elders across the Midwest and Western reservations and discussed redeployment of that money to fund a risk pool that would cover a larger number of people. In short, rather than giving ten people houses, they could cover the default risk on mortgages for dozens of people. Eventually, Tom won program adoption, and a housing boom began.
Now, back to education…how can a mortgage plan for a small demographic group relate to the broad population of American drop-outs? I would form a different question…what does a high school diploma offer? It has become a serious hurdle for millions of drop-outs who cannot get access to even low paying jobs. However, a high school diploma no longer ensures access to the middle class. One needs a college degree for that. And I see that college credential to be very much like the mortgage for the highly indebted denizen of substandard housing.
Going back to high school is very difficult. It means returning to a scene of failure and, often, a place that has left students under-served in the past. Just more of the same is small incentive for participation. There has to be more, and that may account for the higher success rates seen with dual enrollment in community college systems for high school drop-outs. The prize for successful effort is an Associate’s Degree, professional certification, and, in many systems, guaranteed access to a four-year state college.
Overcoming inertia to break a failure cycle is not its own reward. The prize needs to be real and change lives. We can do that.
Tom’s story is still in progress, but I asked him a year or so ago what he considered to be his legacy. He stated quite simply that twenty years ago Native Americans had no access to traditional home mortgages, and today they are treated like any other American at the bank. Quite an accomplishment…but there’s icing on the cake. When the real estate market began to collapse a few years ago, his programs were still experiencing a default rate of about 1%. People who earned their way into a new standard of living seem to treasure it.
The Case for Lowering Student Loan Interest Rates
The frenzied debate on renewal of interest subsidies on student loans has missed a key piece of the puzzle: interest rates on student loans are too high. Banks are making more profit than they could make elsewhere in the market on job-creating corporate and small business lending… And new lenders are jumping into the market without government guarantees or collections support.
Interest rates on student loans are excessive. In order to help students finance their higher educations, the US government should pursue a combined strategy of lowering overall interest rates for college student loans and subsidizing interest costs for some students based on need.
The high interest rates have triggered over-participation in the college lending arena. Availability of funding has created slack for colleges, which have allowed costs to rise excessively. As a result, students have assumed an unprecedented debt burden during the worst economic conditions in almost a century. Something has to give, but the government cannot afford to carry the total weight of the problem.
The DOE has approached the colleges on the issue of cost containment, and students in financial distress are being assisted with modifications to their loan repayment plans. In addition, the US has picked up half the interest rate costs to students for some of these loans. However, there is a deadlock in Congress on the issue of renewal of interest rate subsidies to students on loans in the future. While the debate has focused on how to pay for these subsidies – via spending cuts or deficit spending – the cost of the subsidies themselves could be reduced without greater cost to students. The solution? Cut the overall interest rates on student loans.
There is evidence that returns on student loans are higher than the free market would allow. The first clue is that banks have loaned over $1 trillion to students…more than they have loaned to the entire population of adults via credit cards, the former linchpins of usury. This has occurred in an era of supply-side economics, when government policies gave freedoms to businesses and financiers to support industrial development and job creation. The opportunity cost of job creation, instead of student lending, must have been too high; the money went to student loans…not job creation.
In addition, many student loans taken before 2009 carried a government guarantee and government agencies still assist in the collections effort. Despite elimination of the guarantees, banks remained content with the business, especially as interest rates have continued to drop in all other markets. In fact, there has been new competitive entry into the student loan arena of late from financial institutions that are willing to lend to student WITHOUT government guarantees or agencies assisting with collections. This is a sure sign of excessive profit-taking.
The US government should lower the interest rate it allows banks on college student loans.
Student Loans and the Myth of Supply-Side Economics
The student loan conundrum leaves a generation of college goers little to no economic end game. As Congress hits an impasse on interest rates and the employment market remains stalled for college students and recent graduates, a hidden culprit may just get away with all the money plus interest. In the meantime, the today’s twenty-something kids may have children paying student loans before they finish paying off their own 20-30 year refinanced college loans. How many times must you say, “Mortgage our children’s futures” before the message sinks in?
Thirty years into the era of supply-side economics, a period during which Wall Street ironically rewarded the divestiture of the supply side of domestic industries, there was too much money and nowhere to invest. Assets were created that blew up as bubbles, erupted when undisclosed risk was realized, or inflated investments in health care and real estate. In addition, there were the banks, no longer financing business investment for future employment and domestic production. Flush with excess cash, they loaned the money to kids to finance their college dreams. Profits followed, even as stock and money markets failed to underwrite the job creation that could have helped those dreams come true.
To make matters worse, at least some of the colleges created a nudge to keep the kids in the debt cycle without their parents’ knowledge. My husband and I learned first-hand how it worked. Each year, as guardians, we received a financial aid report from the college. We had chosen not to have the kids carry more than a modest debt burden…just enough to learn how to handle personal finance responsibly. So, we generally declined the loan portion of the financial aid package each year.
Each term, however, the child’s eligibility for bank loans was kept alive by the college. We would pay what we considered our portion of the college bill each term, assuming no loan. Then the college would reactivate the loan, creating a credit balance on the student account, and send a check to refund our overpayment…to the kid! And privacy laws meant we didn’t need to know about it. How’s that for a sweet deal among a college, a bank, and a newly minted young adult with a prefrontal lobe still in development?!?
Actually, I must credit the student…who did report the transaction and forward the checks back to us. We did not fully understand what was happening at the time (the multiple-click, self-renewing opt-out), but we held ourselves accountable when the unexpected debt showed up after graduation. But I also wonder just how many children kept the cash and had to pay later…cash the banks should have used to encourage sound investments with real adults…if we had had a supply-side investment strategy as job creators. Preying on the children was just too easy.
I have written previously about the convergence of forces to create the demand for college loans, which included some adults falling short on college readiness with the children, others raising prices unnecessarily, and others underwriting at predatory rates. The supply of loans was also part of a wildly flawed scheme. We gave banks and investment advisers our life savings and they gave us excuses and a world financial collapse. No one got richer except those who were extremely wealthy already.
Now Wall Street and their Congressional spokespeople ask us for more supply-side money. We, on the other hand, are asking them to give us back a piece of our money – from the profits they made while SHRINKING THE NATION’S SUPPLY FUNCTION – in the form of merely fair taxation. If, after 30 years, they have not created a supply side in net…why should we be fooled again? At least give back enough tax money to restore what should have become our own investment earnings so we can bail ourselves out…rather than the bankers (again) when the student debt bubble bursts.
PS, wonder how our reliance on these same kids to sustain our Social Security trust fund is going to work out. That next sandwich generation is now going to be a triple-decker paying for their kids, their parents, AND their colleges…while un- or under-employed?
Colleges Need to Get Real
From education to finance, American institutions have raised avoidance of accountability to an art form. The blurring of lines among industry players has allowed them to diffuse responsibility for their basic missions. Within education, high schools and colleges are collaborating creatively in dual enrollment programs to lower failure rates. Ultimately, however, they may be conspiring to conceal inadequate college preparation by offering college-lite for an exorbitant price to students who cannot afford it. Their efforts would be better spent getting back to basics on their own turf.
College (kol-ij) n. a place where students go to finish high school and/or get ready for grad school while accumulating massive amounts of debt. Often found adjacent to prestigious institutions offering access to elite faculty who can only be seen by students pursuing advanced degrees.
There was a time when wealthy young dilettantes who needed a little more time to grow up attended exclusive prep schools that their parents could afford with ease. The goal was success in college once they were ready. Somehow, the American Dream has mutated such that financially strapped, first-generation college students are paying premium prices for four-year prep schools, followed by unemployment and massive debt problems.
Something is wrong in this picture. The first clue is the huge debt burden among young people…many of whom are also jobless. The culprit? No one in particular. Rather, it is a perfect storm of weak public schools, nouveau all-star colleges, and opportunistic financiers. Before we can solve the problem, however, we must unravel the fuzzy roles and accountabilities lost in emerging partnerships, collaborations, and joint ventures. The punch line: colleges need to better serve their undergraduates in the primary mission of higher education, high schools need to ensure that their graduates are truly ready for college, and financial institutions need to share the burden of risk or lower their interest rates.
Let’s begin with the public school system and college readiness. Ten years ago, the nation set the goal of college readiness for all students by high school graduation. Most schools have fallen behind on that goal, according to standardized tests. Nevertheless, as an alternative to testing, many high school principals naively set out to achieve 100% college application rates among graduating seniors as a proxy for readiness. Well-meaning guidance counselors facilitated broad searches for colleges and helped students complete applications; volunteers supported students through their applications for financial aid. For many low-income families, children were going off to college for the first time. Mission accomplished.
Colleges experienced higher application rates and, in many cases, higher acceptance rates among their admitted applicants. Free market economics worked, and colleges raised their tuition and fees in response to this increase in demand. Administrators were bewildered but pleased to discover that a more expensive college seemed to attract even more applicants. In addition, oversubscribed colleges were strapped for dorm space, asking students to share tight spaces for more money. In the meantime, want ads were full of opportunities for adjunct faculty members. Access to tenure-track teachers became elusive. Students found themselves paying Ivy prices for average schools at best.
Meanwhile, financial institutions expanded college lending operations and actively courted university officials for access to students for underwriting purposes. Interest rates to students rose, and risks for banks declined with government payment guarantees. All agreements were packaged by the schools, and banking relationships were ancillary.
As colleges grew in size, undergraduates found themselves with fewer safety nets. To complicate matters, many students and their families were unaware of the strings attached to financial aid. Need-based scholarships turned into high-interest loans when ill-prepared students failed to meet GPA requirements for retaining those scholarships. Already committed, students chose to sign the loan papers and stay in school. The Dream would remain within reach. Predictably, college drop-out rates soon grew, along with a new underclass of young people faced with a mountain of debt. In the highest-risk populations, college completion rates fell to the single digits.
To address this problem proactively, some very good dual enrollment programs have been developed that offer previews into college course work at little or no cost for high school students. This has become an important part of the community college mission in many localities. However, four-year colleges also have gotten into the act to grease a path to long-term commitment for students who have little chance of success. In addition, many institutions have all but forgotten their attention to excellence in undergraduate education. They offer a rite of passage that holds empty promise for students passing through them, continuing the new tradition of poor preparation for life. As college-lite has become a reality, graduate degrees have become the expectation for many professions.
We are not doing our young people any favors by dealing in false hopes. High school diplomas need to represent genuine college readiness. At the college level, $200,000 is too much, but it must at least buy a real education. And guaranteed student loans need to carry interest consistent with that guarantee.
SchoolsRetooled TM 