Federal student loan programs create perverse incentives

Two problems with college loan forgiveness programs:

1.  They encourage students to choose less-valuable majors, according to George Leef.

.. income-based repayment would lessen or even remove the incentive that students now have to think prospectively about the cost/benefit ratio of college. With income-based repayment in place, the government is in effect telling students, “Relax—if college turns out not to do much to increase your income, you won’t have to dig deep to cover the costs.”

2.  They create “a perverse incentive for students to take out large loans they have no intention of paying back in full”, according to Walter Russell Mead.

… This is particularly true for graduate students, who have no limits on the size of the loans they can take out. As a result, the program has gone from “a safety net for undergraduates [to] a very large tuition assistance program for graduate students.”

Both income-based repayment plans and public service loan forgiveness programs absolve participants from paying back a significant percentage of the money they borrowed.

Mead describes how government policies are “Blowing Air into Debt Bubble”.

Over the past few years, the college cost crisis has evolved from merely an important issue facing parents and students into a serious national problem that could impact the future of the country. Moreover, most government programs designed to address the problem have only made it worse, inflating the bubble by encouraging students to borrow and giving colleges few incentives to lower prices. Federal student loans are the biggest offenders in this regard, but even other, more targeted programs have had this effect.

Related:

• Income Based Repayment (IBR) is a ‘moral hazard’ for high-income student loan borrowers (Cost of College)
• Student loan forgiveness for government employees (Cost of College)

Bad advice for college students

Take a course called “Politicizing Beyoncé”.

That’s Walter Russell Mead’s first bit of bad advice for college students.  Here’s more.

… Enroll in a college you can’t afford. Take really easy, fun courses. Don’t worry about marketable skills. Blame society for the consequences (unemployment) of your attitude problem. Then demand the government (or your parents) bail you out. We guarantee you all the misery you could ever want.

Mead wrote his advice after learning that Rutgers Department of Women and Gender Studies is offering the Beyonce course, which “will explore race, gender and sexuality in America via Beyonce’s music”.

College can be a time for fun and exploration, but students who are going into deep debt for their higher education should carefully consider which courses will show up on a transcript.

If you were to ask today’s employers what new college graduates are lacking, the skills to create a “grand narrative” around one’s own life and persona wouldn’t make the list. And a hefty dose of Beyoncé-inspired narcissism won’t exactly help with that pesky “sense of entitlement” problem employers keep complaining about.

I happen to enjoy watching Beyonce perform, but I really don’t want to pay $2,000 for my kid to take a class exploring her music.  On the other hand, I can see the possible value in adding an easy “A” to the credential that will enhance the odds for lucrative employment.

Related:  The growing distinction between ‘meaningful’ and ‘worthless” college degrees (Cost of College)

MOOCs have not lived up to expectations, at least so far.

Online education continues to evolve after first-generation MOOCs falter.

After a year of setback after setback, the hype around MOOCs is settling down a bit. The latest evidence of this comes courtesy of an interesting profile piece at Fast Company of Udacidy CEO Sebastian Thrun, a man who is in many ways the godfather of the MOOC concept.

Instead of his original goal of offering a “Stanford-quality education to millions of students around the world”, Thrun is shifting to “more vocational-focused learning”.

MOOCs have been a “lousy product“.

… Thrun highlights his disappointments with MOOCs’ record: 90 percent drop-out rates with only half of the remaining 10 percent actually earning a passing grade; the student demographic overwhelmingly populated by well-educated, college-degreed professionals rather than the underprivileged students he had hoped to reach; the San Jose State University debacle, in which San Jose students taking Udacity-delivered MOOCs performed significantly worse than their peers in physical classrooms; and the unexpected failure of Thrun’s interventions intended to raise passing rates. Thrun tried adding mentors and TAs to provide personalized attention and interaction with students, incorporating immediate feedback and rewards in the forms of badges and progress meters, and partnering with schools such as San Jose to provide college credit, which Thrun expected to ramp up student interest. “We were on the front pages of newspapers and magazines, and at the same time, I was realizing, we don’t educate people as others wished, or as I wished,” Thrun remarked. “We have a lousy product.“

Online education will clearly continue to change higher education, and the first wave of MOOCs were only part of this evolution according to Walter Russell Mead.

Thrun’s change of focus may not be as big a shift as it appears on its face. It’s been apparent from the beginning that the format is better suited for some subjects than others. Math, science and business are easier to teach online than liberal-arts subjects like English and philosophy that rely more heavily on in-class discussions. And while a liberal arts education remains a good option for many people, the vast majority of American college students are choosing majors that are tightly linked to future careers: only 7 percent of all students major in the humanities. On the other hand, subjects like business, science, nursing and computer science are among the most common majors in the country. Even if MOOCs only impact the “vocational” side of the higher-ed world, this still amounts to a pretty sizable chunk of the industry.

Furthermore, while MOOCs as they’re currently offered may not be enough to upend the higher-ed system on their own, there’s lots of promise for “blended” courses in which the online material is supplemented by regular meetings with teachers or tutors who lead discussions and proctor exams. These meetings could be handled remotely using teleconferencing technology, or they could be done in person at local testing centers, in either case adding that human component that remains the weakest link in how these courses are offered today.

Related:

• A critical look at educational technology – are MOOCs losers? (Cost of College)
• Harvard online learning: ‘five years from now will look very different from what we do now’ (Cost of College)

Quick Links – Washington State pension trouble; NYC high school grads need remedial help; teacher evaluations are ‘costly experiment’ …

◊◊◊  Washington State’s public pension may be in trouble.

The problem, similar to that in other states, has to do with the way pension benefits are valued.

Public pensions such as Washington’s operate under special accounting rules, one of which allows them to assume a long-term rate of return on their investments. Most plans have picked a rate between 7 and 8 percent; all but one of Washington’s plans assume 7.9 percent.

That assumed return is significant, because another special rule lets public plans use it as their discount rate — something corporate pension plans were forced to abandon nearly two decades ago.

Critics such as Munnell and Biggs say this rule ignores the fact that pension benefits are effectively almost as guaranteed as state bonds. That, they say, means they should be valued similarly to bonds.

“The way to value a stream of promised benefits is with an interest rate that reflects the riskiness of the promised benefits themselves, not the expected returns,” Munnell said.

This story is being ‘repeated all across the nation’ according to Walter Russell Mead.

… It’s as well-written a summary of a pension crisis story as you’re likely to get, and this is a story that’s being repeated all across the nation. Then, if you haven’t already, have a look at how much you or your loved ones are relying on generous promises made by state bureaucrats to fund your retirement—and start asking some hard questions.

◊◊◊  Most NYC High School Grads Need Remedial Help Before Entering CUNY Community Colleges (CBS New York)

Officials told CBS 2′s Kramer that nearly 80 percent of those who graduate from city high schools arrived at City University’s community college system without having mastered the skills to do college-level work.

In sheer numbers it means that nearly 11,000 kids who got diplomas from city high schools needed remedial courses to re-learn the basics.

◊◊◊  New York teacher evaluations are a “’grand and costly experiment’ with limited benefits”.

N.Y. schools’ teacher-eval costs outpace federal grants

ALBANY — New York’s small-city, suburban and rural school districts expect to spend an average of $155,355 this year to implement the state’s new teacher and principal evaluation plans, a report Thursday from the state School Boards Association found.

The one-year costs outpace the four-year federal grant provided for funding the program by nearly $55,000, according to an analysis of 80 school districts outside the state’s “Big Five.”

“Our analysis … shows that the cost of this state initiative falls heavily on school districts,” said Timothy Kremer, the association’s executive director. “This seriously jeopardizes school districts’ ability to meet other state and federal requirements and properly serve students.”

The evaluation system is a requirement for receiving funds from President Barack Obama’s Race to the Top initiative. In 2010, New York was awarded $700 million in Race to the Top grants. About half of the funding will go to local districts over four years to implement the evaluation system and other initiatives.

◊◊◊  20,000 illegal aliens apply for college financial aid under California’s new Dream Act.

More than 20,000 college-bound students are seeking state financial aid for the first time under California’s new Dream Act laws that allow them to get the help despite their immigration status.

While far from a complete picture, that number is the best indicator yet of how many students hope to benefit from a pair of laws that could radically change the college experience for a generation of students whose parents brought them to the U.S. illegally when they were young — the same group that has taken center stage in the national immigration reform debate.

Quick Links – Public pensions don’t work so well; New York education reform report; Googling still might be making us stupid

◊◊◊  How public pensions work

It’s not pretty:

Politicians around the country have demonstrated complete inability to manage pensions effectively. They promise big benefits, don’t tax voters enough to pay for them, and then invest the money in fly by night, risky Wall Street schemes (with big fees for their banking cronies and contributors) in the hopes that a few big wins and aggressive moves will cover the funding gap.

Those are Walter Russell Mead’s words, written upon learning that the New York City comptroller proposed “taking New York’s pension money and investing it in mortgages, loans, and infrastructure projects” to help in the recovery after Hurricane Sandy.  On the surface this might seem like a good idea.

But the temptations and pitfalls are huge. Let local politicians get the idea that pension funds are pots of money that can be invested in pet projects, and it won’t take long before bad things start to happen. The potential for conflict of interest is just too high for this to be a good idea.

…
◊◊◊  New York State – Governor Cuomo Education Reform Commission released its preliminary report this month.

The report has generated complaints that it includes big ideas with no specifics about funding.

The gubernatorial panel established to recommend a host of education reforms and priorities produced a series of ideas that Gov. Andrew Cuomo himself earlier today admitted would be a heavy lift.

The proposals announced by commission chairman Dick Parsons would expand pre-K and Kindergarten to a full day, lengthen the school year and create a so-called “bar exam” to ensure teacher competency.

Unless they first make fundamental reforms in curriculum and teaching, I would not want my kids to be captives of the public schools for any longer than the 180 days required today.

The report also recommends consolidating schools and districts to save money, an old idea that has repeatedly met strong resistance in many areas.  The idea of “making schools a hub for health care and social services” is a pipe dream given the aversion to raising taxes in the current economic environment.

…
◊◊◊  ‘Does Constant Googling Really Make You Stupid?’ [Excerpt] (Scientific American)

From Twentysomething: Why Do Young Adults Seem Stuck? by Robin Marantz Henig & Samantha Henig

Preliminary data suggest that all those tweets, status updates and other digital distractions may actually stave off cognitive decline

A small study of 24 older adults found that frequent Googling “appears to enhance brain circuitry”.  However, it seems a wild leap to conclude from this that it enhances “sophisticated thinking and higher-order cognition”.

… Google, it seems, might be doing something different to the brains of digital natives, creating a new set of neural connections and engaging young brains in an unprecedented way. With their brains thus wired, Millennials might be using the web as a vehicle for sophisticated thinking and higher-order cognition. And they might be even more mentally engaged while online than their elders are while reading a book.

I don’t doubt Googling and other digital activities that vie for our attention are changing our brain circuitry.  But there is scant evidence that today’s “continuous partial attention” is making us smarter.  The fact is we need focused attention and a broad base of knowledge before we can become critical thinkers.

Indeed, evidence from cognitive science challenges the notion that skills can exist independent of factual knowledge. Dan Willingham, a professor of psychology at the University of Virginia, is a leading expert on how students learn. “Data from the last thirty years leads to a conclusion that is not scientifically challengeable: thinking well requires knowing facts, and that’s true not only because you need something to think about,” Willingham has written. “The very processes that teachers care about most — critical thinking processes such as reasoning and problem solving — are intimately intertwined with factual knowledge that is stored in long-term memory (not just found in the environment).”

Weak economic recovery has been a ‘boom for the grannies and a bust for the kids’

An analysis of recent jobs figures at Investor.com reveals a disturbing development: the biggest beneficiaries from the economic recovery are Boomers, while everyone else is getting the shaft.

Among those 55-and-up, the employment-to-population ratio barely dipped even in the depth of recession and is now higher than at the end of 2007. The ratio among those 25-54 remains about 4 percentage points lower than before the recession started.

Older workers are staying on the job longer, in part to counter lackluster performance of retirement accounts and housing values.  Meanwhile, the high unemployment rates of Generation X and Millennials could help explain the rise of  young adults living with their parents.

Long-Term Trend

The trend of falling employment as a share of the 54-and-under population and rising employment among those 55 and up has been in force for more than a decade.

See this chart for the labor participation rates going back to 1948.

Walter Russell Mead on the politics of this generational job divide

… it’s ironic to say the least that a president swept into power on a tsunami of young voter support has presided over a boom for the grannies and a bust for the kids. Logically, President Obama should expect to do somewhat better among senior citizens and worse among young people than in his first campaign — but logic often goes one way and politics another.

Related articles

• Are Baby Boomers Stealing Jobs from the Young? (Part 1) (businessinsider.com)

New York’s flawed teacher evaluations are a step towards a ‘choice-based educational system’

Many school principals and teachers are protesting the new teacher evaluation system scheduled to be phased in this year in New York State, believing it has been rushed into place.  They have concerns that it is flawed and that its introduction has been “confusing, contradictory and, frankly, disastrous.”  From what I’ve seen, I would agree there are serious problems, ranging from questionable state test data to the diversion of scarce resources for implementation.  However, I wonder if many parents are like me, willing to go with this flawed system because we’re so frustrated with things as they are, including the tenure system and the practice of laying off teachers based solely on seniority.

Walter Russell Mead writes about the growing public pressure.

But just because current methods of teacher evaluation are, to say the least, imperfect, doesn’t mean teachers can escape growing public pressure to show results. Teacher unions would like for virtually all teachers to have lifetime tenure and for evaluation to play little or no role in their lives. Principals don’t want parents nosing into administrative decisions or complaining that their kids are getting stuck with subpar math teachers. Pointing to the deep and real flaws in everything from standardized tests to score students to individual teacher assessments is, among other things, a way to stave off public pressure for more accountability in the schools.

The public wants a look inside the “black box” of the American school. Some parents are too ignorant, too dysfunctional or just too laid back to care, but increasingly parents want to make sure that their kids are getting the best available teachers—or at least avoiding the turkeys.

This pressure isn’t going away; school districts and teachers are going to have to live with it. Demand for parental choice is growing, and it will grow further as more educational opportunities arise. Between charter schooling, homeschooling, and new forms of online education, there are now opportunities that simply weren’t available thirty years ago.

He predicts this is one step on the road to school choice.

Ultimately most parents are going to insist on the right to choose which schools their children attend. Schools will have to provide information about their teachers and their success in order to attract pupils. Today’s crude and often unfair bureaucratic evaluation methods are a baby step in the direction of a choice-based educational system. More and better steps will come.

Change will come, but I’d really like to know how many generations will it take.