On May 16  the Huffington Post reported of projected federal profits exceeding those of Exxon, Apple, and other corporate giants.

Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.…

The Education Department has generated nearly $120 billion in profit off student borrowers over the last five fiscal years, budget documents show, thanks to record relative interest rates on loans as well as the agency’s aggressive efforts to collect defaulted debt.

But that rate is set to double to 6.8 percent, the rate for unsubsidized loans (for richer students, or poor students with debt above the subsidized loan program’s limits), on July 1.

The Washington Post, in reporting on the political disagreements in Congress, referenced the DOE’s $51 billion projected profit.

Democrats … objected to increasing the rates within a program that generates vast income for the federal government. The Congressional Budget Office this week revised its figures this week, reporting that federal loans will generate almost $51 billion this year. Over the last five years, that sum is almost $120 billion.

“That $51 billion is more than Exxon,” Miller said.

“It’s time we stop using federal student loans as a profit center,” added Rep. John Tierney, D-Mass.

Writing for Yahoo Finance, Jason Delisle disputes this notion of student loan profits, pointing out that the high risk of default must be considered.

What about Senator Warren’s claim that the government makes money off loans to low-income students? Senator Warren is not telling the whole story here either. She points to figures that the non-partisan Congressional Budget Office says “do not provide a comprehensive measure of what federal credit programs actually cost the government and, by extension, taxpayers.” In fact, when the budget office “accounts more fully… for the cost of the risk the government takes on when issuing loans,” it reports that Subsidized Stafford loans – those made to low-income students – cost taxpayers $12 for every $100 lent out, or $3.5 billion per year….

The claim that the government makes money on these loans is even more dubious given that the Department of Education estimates that 23 percent of the Subsidized Stafford loans it makes this year will default. That puts it among the riskiest loan programs that the federal government runs. By comparison, about 7 percent of the loans under the Federal Housing Administration mortgage program are expected to default. That program provides loans to high-risk borrowers who do not qualify for a traditional mortgage because they lack the savings, income or credit history.

Finally, in the May 20 Washington Post WonkBlog Dylan Matthews concludes that the “federal government does not profit off student loans”, at least not “in some years”.

Matthews reiterates that the interest rates do not reflect market risk.

… they set the interest rate on student loans below the market rate. And because they’re below the market rate, that costs the federal government money. Contrary to popular belief, and many a breathless article, the government does not, in fact, book a profit on student loans. As New America’s Jason Delisle has explained, that’s because the Congressional Budget Office is required by law to use a bizarre and faulty method for determining the cost of government loans.

Matthews goes on to explain what is essentially an unresolved dispute on the profitability of government student loans.  Additional details complicate the picture.  For example, even according to the CBO’s “bizarre and faulty” calculations, some years with higher subsidies actually show a loss.

I suspect there’s no profit.

After reading all these explanations, the most definitive statement I will accept is that it appears the government does not make a profit on student loans, but it might depend on the level of subsidies for any given year.  As the headline says, it’s complicated.

Peer teaching* has become increasingly popular over the last 30-40 years, in conjunction with the rise of mixed ability grouping in K-12 public schools.  Typically involving a slower learner receiving instruction from an advanced student, this practice has significant downsides for both parties.

Students Act as Teachers sums ups the story of frustrated teachers in Manhattan who created a buddy program, enlisting older students to help teach struggling readers.  Part of the goal was to have the older students “get a dose of their own medicine by seeing how difficult it can be to teach”. How did it turn out?

The results, they said, were mixed.

This mirrors my observations, even though I’ve had at least one teacher insist there was abundant research strongly supporting the use of peer teaching.  That’s what she learned in graduate school.  As in many other aspects of “innovative” pedagogy, research of questionable quality is used to support instructional practices that are often implemented in a haphazard manner.  In one case I know, a student struggling in geometry was asked to tutor another student who was struggling in algebra.  The teacher insisted both would benefit, but as it turned out  the struggling geometry student received no help in her area of weakness.  Based on other conversations with this teacher, it was clear that the intended benefit was to strengthen social connections, promoting compassion and self-esteem that would ultimately pay off in improved geometry skills.  Spare me.

Not supported by research

The 2008 National Mathematics Advisory Panel reviewed “instruction in which students are primarily doing the teaching”, finding “only eight studies that met our standards for quality”.  Additionally, the Panel found 20 high-quality studies of cooperative and collaborative learning.   The only definitive benefit to students shown by any of these studies was an improvement in computation skills.  I’m imagining a scenario where one student is helping another in drilling math facts.  I can buy that.  Otherwise, peer teaching seems to be a waste of precious classroom time.  Here is how the Panel puts it.

There is suggestive evidence that peer tutoring improves computation skills in the elementary grades. However, additional research is needed.

Are most kids good at teaching?

Some math kids like to tutor and are probably good at it, but I tend to think of teaching as a separate gift. I know many people who are masters at what they do but can’t explain it worth a darn.

I want expert teachers, not other students, teaching my kids.

Unfortunately, I have many anecdotes about the downsides of peer teaching.  A bright fifth-grader I know decided it was best to clam up after being derided as a know-it-all in his collaborative learning group.  So much for learning compassion and self-esteem.

* Peer teaching is included as part of various “cooperative”, “student-centered” learning strategies, with names like Team Assisted Individualization, Student Teams-Achievement Division, and peer-to-peer learning.

Related:  Proficiency grouping makes more sense than differentiated instruction (Cost of College)

From an analysis of ’teacher assignments in the nation’s fourth-largest school district, Miami-Dade County Public Schools’

Even within the same school, lower-achieving students often are taught by less-experienced teachers, as well as by teachers who received their degrees from less-competitive colleges, according to a new study by researchers from the Stanford Graduate School of Education and the World Bank. The study, using data from one of the nation’s largest school districts, also shows that student class assignments vary within schools by a teacher’s gender and race….

Previous research indicates that high-quality teachers can significantly improve education outcomes for students.  However, not all students have equal access to the best teachers.

The assignment of teachers to students is the result of a complex process, involving school leaders, teachers and parents. While principals are constrained by teachers’ qualifications – not all high school teachers, for instance, can teach physics – they also may use their authority to reward certain teachers with the more desirable assignments or to appease teachers who are instrumental to school operations.

Teachers with more power, due to experience or other factors, may be able to choose their preferred classes. Parents, particularly those with more resources, also may try to intervene in the process to ensure that their children are taught by certain teachers….

… certain teachers – those with less experience, those from less-competitive colleges, female teachers, and black and Hispanic teachers – are more likely to work with lower-achieving students than are other teachers in the same school.

Do AP teachers need to be the most knowledgeable?

 … Teachers from more competitive colleges may have deeper subject knowledge than their colleagues from less-competitive colleges, leading principals to assign them to more advanced courses, the researchers said.

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‘There is no longer such a thing as a linear career path.’

Bloomberg Businessweek gives us the The New Rules for the Modern Workplace.  New college graduates probably understand these new rules better than older workers do.

The current state of our economy has transformed the workplace and how we manage our careers. There is no longer such a thing as a linear career path. A college degree doesn’t magically turn into a job and an MBA doesn’t mean you’ll automatically get a promotion. Even if you get a job, it’s not stable and you won’t be staying with the same employer for life….

Rule No. 1: Your job is temporary. Where you start isn’t where you’ll end up. Your job, company, and profession may completely change because of mergers and acquisitions, layoffs, outsourcing, automation, and various other factors that are outside your control. The U.S. Bureau of Labor Statistics reports that the average American will have about nine jobs from the age of 18 to 32. The job you’re in now is just a stepping stone along your path.

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New York City Mayor Mike Bloomberg says average students should skip college.

New York Mayor Michael Bloomberg has some advice for high-school students who are mediocre students: skip college and become plumbers. Bloomberg said on Friday that teenagers who aren’t in the upper echelon should learn how to be plumbers rather that envision a career starting at a prestigious university and obtaining a college degree:

“The people who are going to have the biggest problem are college graduates who aren’t rocket scientists, if you will, not at the top of their class. Compare a plumber to going to Harvard College — being a plumber, actually for the average person, probably would be a better deal. You don’t spend … four years spending $40,000, $50,000 in tuition without earning income.”

Mark Kantrowitz disagrees, believing that most students should attend college and pointing out that many colleges cost less than $50,000.

The CollegeBoard suggests an interested student or parent “schedule a phone meeting or an interview with a member of the financial aid staff“ to get answers to any questions that are not answered by information on the college website.

A list of 12 questions to get you started on gathering information is provided.  In my experience, the answers to most of these questions can usually be found on college websites, so be sure to check there before you make a call.

A dozen questions to get you started:

1. What’s the average total cost — including tuition and fees, books and supplies, room and board, travel, and other personal expenses — for the first year
2. How much have your costs increased over the last three years?
3. Does financial need have an effect on admission decisions?
4. What is the priority deadline to apply for financial aid and when am I notified about financial aid award decisions?
5. How is financial aid affected if I apply under an early decision or early action program?
6. Does the college offer need-based and merit-based financial aid?
7. Are there scholarships available that aren’t based on financial need and do I need to complete a separate application for them?
8. If the financial aid package the college offers isn’t enough, are there any conditions under which it can be reconsidered, such as changes in my family’s financial situation or my enrollment status (or that of a family member)?
9. How does the aid package change from year to year?
10. What are the terms of the programs included in the aid package?
11. What are the academic requirements or other conditions for the renewal of financial aid, including scholarships?
12. When can I expect to receive bills from the college and is there an option to spread the yearly payment over equal monthly installments?

If you want to be super organized, you can create a spreadsheet with all relevant data.

The total amount of debt held by Americans fell again in the first three months of the year and stood at the lowest level since the middle of 2006, the New York Federal Reserve said Tuesday….

The level of household debt in the first quarter fell by $110 billion, or 1%, to $11.23 trillion, mainly because consumers reduced mortgage balances and used their credit cards less.

A…
Auto and student loans rise.

The increase in the value of auto loans was the smallest in four quarters, suggesting that car companies might have cut prices to attract buyers as demand for new vehicles slackened. Still, auto loans rose $11 billion to $794 billion to mark the ninth straight quarterly gain.

Student loans have ‘surged 46% since the end of the recession’.

Student loans, which climbed $20 billion in the first quarter, have surged 46% since the end of the recession to an all-time high of $986 billion. More students are going to college or remaining in school longer to obtain graduate degrees to improve their chances of finding a job amid a slow economic recovery.

Yet the escalation in student loans is also leaving many young people saddled with large debts. Although the delinquency rate on student loans fell slightly in the first quarter to 11.19%, that’s still the second highest rate ever. Before the recession, delinquencies averaged around 7%.

The decline in household debt is good for a recovering economy, but economists believe growing student loans are ‘acting as a drag on growth’.

The anemic economy has left millions of younger working Americans struggling to get ahead. The added millstone of student loan debt, which recently exceeded $1 trillion in total, is making it even harder for many of them, delaying purchases of things like homes, cars and other big-ticket items and acting as a drag on growth, economists said.

… one of the things I try to get kids away from in terms of their academic writing is the idea that everything they write has to be wildly new and creative. Academic writing is formulaic. It just is. Clarity trumps pretty much everything. You can be creative when you’ve mastered all the rules, but until they, you need to pay attention to what people with more experience do and learn from them. (I think part of the problem is all the hysteria over plagiarism: of COURSE kids shouldn’t be stealing other people’s work, but they also need models! How else are they supposed to learn to write?) When they try to be creative, they write jumbled sentences and the like — it’s just a disaster.

When it comes to writing, most students need to learn the rules before they can break the rules.

Students are not being taught academic writing in high school.

In his “third column on the teaching of writing in colleges and universities“, Stanley Fish addressed a question from readers.

Isn’t the mastery of forms something that should be taught in high school or earlier?

His response, based on years of experience as a college professor:

By all the evidence, high schools and middle schools are not teaching writing skills in an effective way, if they are teaching them at all….

High schools should try something different.

I think K-12 schools would see greater success if they used something like the Kerrigan method of ‘Writing to the Point’, a methodical and efficient approach to writing instruction.  I would love to see a separate composition course in high school, employing a basic method like that of Kerrigan, and involving plenty of practice writing.  I suspect a course like this would work well as an online option.

It worked at New Dorp High School in New York City, where it was found”that returning to fundamentals like explicit grammar instruction and formulaic writing has succeeded in turning around the dismal performance of high poverty students”.

… One of the most disturbing numbers I came across in research for this book was that if you come from a family with a family income above $90,000, you have a 1 in 2 chance of getting a bachelor’s degree by the time you’re in your mid-20s. If you come from a family under $35,000, you have a 1 in 17 chance.

“One of the fears, and one of my fears, is that we might become a country where the next generation is less educated than the generation that preceded it.”

If current trends continue, the next generation is also much more likely to have grown up in a household without a father.

Missing fathers are at the core of a ‘vicious cycle’ of poverty and low education levels.

The chance of a child ending up poor declines by 82 percent when raised in a two-parent family.

Which one factor is more important in equalizing financial opportunities – college or fathers?  I don’t know, but if I had a magic wand and could change only one of these, I’d put fathers back into American families.  The education part would probably start to take care of itself.

Related:  Non-marital births by education level as part of the growing class divide (Cost of College)

Forty years ago, only 10 percent of grades awarded by Yale College were in the A-range. Last spring, that percentage was 62.

Yale is reviewing its grading policy.

“If B-plus is being kept for bad work, and virtually everyone is getting A or A-minus, this eliminates any genuine feedback,” Kagan said. “I’ve always thought this is a disservice to undergraduates.”

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The federal government systematically undercounts the cost of student loans by ignoring market risk.

… the federal government’s accounting practices systematically understate the cost of student loans by failing to account for market risk. A superior method called “fair value accounting,” which is the strong preference of academic economists and the Congressional Budget Office (CBO), would show considerably greater costs due to the risk associated with expecting loan repayments….

However, almost all economists believe that the way the federal government accounts for student loan costs is simply wrong. Under the principles of “fair value” accounting, which the CBO endorses, the discount rate applied to the revenue from students’ repayments should be much higher than the rate on U.S. Treasuries. A higher discount rate would reduce the present value of those repayments, thus increasing the cost of the student loan program to the government.

The reason the discount rate is higher is because it incorporates the price of market risk into cost estimates, while current accounting practices ignore that risk. Students might pay back what the government predicts they will, but taxpayers must cover the full cost of the loan regardless. Since defaults tend to occur when the economy is weak, taxpayers face the risk of losing expected funds at a time when budgets are least flexible.

Thus, the government’s budgetary estimate reflects only part of the fair value cost of offering a student loan. Additional cost comes from the risk that loan repayments will be lower than expected.[6] The federal government should use a higher discount rate to reflect the risk that expected loan repayments will not materialize.[7]

This reminds me of how state governments consistently underfund pension obligations, inflating discount rates to hide true taxpayer liability.

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High school PE classes focus more on activities that will continue through to adulthood, including work-outs at fitness centers.

High schools are installing gyms for PE.

Forget dodge ball, squat thrusts and being picked last for the team. Today’s high-schoolers are more likely to get a workout in what’s becoming a must-have tool in physical education: a state-of-the-art fitness center.

Less focus on team sports and more emphasis on developing fitness habits that will last a lifetime

“There’s a lot of people who aren’t on the Scarsdale High School football team, and yet they want to be healthy,” he said. “I would anticipate using the treadmill and the machines for gaining muscles.”

There’s a new crop of physical education teachers coming out of college who are preparing to reach students, such as Gale, who don’t just want to learn to play a sport, said Robert Schmidlein, a professor of physical education at Manhattanville College.

“It’s a paradigm shift,” Schmidlein said. “People don’t play team sports when they get older. Less than 1 percent of the adult population plays team sports. Seventy percent of kids drop out of youth sports by age 13. No one should be teaching team sports at the high school.”

“Fit for Life”
Our local high school offers PE students a choice between two options for each class unit, with one usually involving a team sport and the other involving a fitness activity like yoga or running.  While we don’t have a Scarsdale-level fitness center, we do have a small selection of treadmills and elliptical machines.

 … A huge proportion of this $40 billion annual federal investment is flowing to people who simply aren’t prepared to do college-level work. And this is perverting higher education’s mission, suppressing completion rates and warping the country’s K-12 system.

Current Pell Grant spending is wasteful.

About two-thirds of low-income community-college students — and one-third of poor students at four-year colleges — need remedial (aka “developmental”) education, according to Complete College America, a nonprofit group. But it’s not working: Less than 10 percent of students who start in remedial education graduate from community college within three years, and just 35 percent of remedial students earn a four-year degree within six years.

A proposed solution

What if the government decreed that three years hence, students would only be eligible for Pell aid if enrolled in credit-bearing college courses, thus disqualifying remedial education for support?

Possible positive effects:

• More resources could go to ambitious students, giving them an incentive to work hard to prepare for college-level work.
• K-12 schools would become more accountable if they knew their graduates would only received college assistance if they were ready for college.
• Colleges would become more selective, rasing their standards of learning.
• Pell Grant money could be focused on the most qualified students, improving their chances of graduation.

In sum, disqualifying the use of Pell grants for remedial education would substantially reduce the gap between the number of students entering higher education and the number completing degrees.

Possible negative effects:

Yes, there are obvious downsides. Most significantly, many students wouldn’t be able to afford remedial education and thus would never go to college in the first place. Millions of potential Pell recipients — many of them minorities — might be discouraged from even entering the higher-education pipeline. Such an outcome seems unfair and cuts against the American tradition of open access, as well as second and third chances.

Then again, it’s not so certain that these individuals are better off trying college in the first place. Most don’t make it to graduation….

Perhaps the greatest risk is that colleges would respond to the new rules in a perverse manner: by giving credit for courses that used to be considered “remedial.”  …  would further dilute the value of a college degree.

Petrilli suggests the potential upside is sufficiently compelling to warrant a pilot program that would limit Pell Grants only to students ready to do college-level work.  

Perhaps offer the deal to an entire state. Study what happens. My guess is that it would have a salutary effect on the K-12 system, on higher education and on college-completion rates. Let’s find out.

Related:

• ‘Sending the wrong students to college’ (Cost of College)
• We spend $40 billion yearly on Pell Grants, but we have no idea about results (Cost of College)

If you’re a millennial, do these things, or else risk remaining unemployed for a long time.

1. Wake up early. Job seeking is a full-time job.
2. Don’t pass on everything. No entry-level job is ideal.
3. Stop relying on mom and dad.

Career advice from Aol Jobs, summarized by FINS Morning Coffee

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With two out of three college graduates averaging more than $24,000 in student loans, Fox Business steps in with this financial advice.

Step 1: Create a Budget

Even if grads don’t have a concrete post-grad plan just yet, creating a budget of projected expenses such as bills, rent and discretionary spending can help them better understand their cash flow situation, suggests John Bucsek, managing director with MetLife Solutions Group. …

Making a budget doesn’t have to be an overwhelming prospect—grads can easily keep up with their expenses using sites like Mint.com or creating a simple spreadsheet….

Step 2: Figure Out Student Loan Terms

Grads typically only have a six-month grace period before having to start repaying student loans, making it essential to secure a job and stay on top of other expenses.

Unemployed or financially-strapped grads should consult with their lender to determine repayment options available to them such as deferment, forbearance, and Income Based Repayment plans should they have issues making payments on time….

Step 3: Get High Interest Debt in Check

Whether grads are an authorized or co-signed user on a parent’s card or have their own account, they should  focus on getting the debt with the highest interest rate paid down first.

Understanding how debt impacts future goals and how credit score plays into every major purchase can help them stay on top of making steady payments and monitoring credit history health, says Bucsek.

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A variation on the expert’s advice

Since the percentage of young adults living with their parents has risen to 22% today, from 11% in 1980, it appears the recommendation to “stop relying on mom and dad” is being ignored by many.  Here’s my variation on the preceding advice.

1. Get up early every day to find a job, or to hone your skills to make yourself more employable.
2. Even if you can’t find a job in your field, work somewhere, even if it’s part-time.  Earn some money.
3. If you’re living at home, use the opportunity to save aggressively and/or pay down student loans.

 Related:  Parents have lower expectations for kids becoming financially independent (Cost of College)