April 12, 2107--Free Tuition

In cost-benefit terms the best social policy investment the United States could make would not be to spend a trillion dollars on infrastructure (though we need to do that too) but to deploy that $1.0 trillion to wipe out all outstanding student loans.

There are 44 million who borrowed money to help pay the cost of their college educations and they owe on average about $37,000. Of these borrowers, more than nine million are in default.

Those in default and those struggling to pay back what they owe are trapped in a tsunami of debt and collapsed FICO scores at a time when it is difficult for young people to find employment that pays enough to make repaying manageable. As a result record numbers continue to live with their parents well into their 30s or are reluctant to take chances to switch career paths or start their own businesses. This in turn, in macroeconomic terms, dampens growth and interferes with the traditional churn of the free market.

There are no direct correlates, no lessons from history that we can turn to as models of federal fiscal policy that would be helpful in making the case for this radical suggestion. And, to balance the debate, there are no large-scale examples on the other side of the argument that have credibility.

That is except for those times in America's history when the government stepped in to prop up or even bail out imperiled institutions. We did this in the 1930s during the Great Depression to help rescue the country from a a precarious economy and dramatically, more recently, when we did a version of the same thing to help get us through the Great Recession.

On a less dire note there was the GI Bill that was passed in 1944, toward the end of the Second World War, to provide various sorts of assistance to men and women who volunteered or were drafted to serve in the military.

The GI bill is best known for the support it provided to veterans who enrolled in various forms of education, from vocational training to college and university studies. It paid the full cost of tuition and even offered a monthly subside to help offset living expenses.

It was a massive program: 8.8 million GIs used the educational benefits with a full quarter of them (2.2 million) enrolling in post-secondary education. This not only benefitted those attending but contributed to the dramatic expansion of educational opportunities and facilities that served the nation well in subsequent decades, even after veterans completed their studies. By 1960, only 15 years after the end of the war, a new community college was founded each week, fully 50 a year for over a decade. Now there are 1,200 two-year colleges serving 7.4 million degree-seeking students.

Even those fiscal conservatives who resisted the federal government's involvement in education funding could not help but be impressed. The die was cast--higher education became a virtual right as a result of the GI Bill and its longer-term reverberations. For the first time in world history higher education became fully democratized. Not perfect, but impressive.

And those who study these matters have retrospectively found that the accrued benefits to the nation, in monetary terms, more than offset the direct costs of subsidizing this expansion of educational opportunities. There was unprecedented economic growth between 1947 and 1975 and a significant narrowing of economic inequality. The poorest 20 percent of the population saw their incomes rise at a rate higher than that of any other population cohort.

In other words there was no better engine for economic growth than offsetting the cost of offering these higher-educational opportunities.

To put it simply--better educated people, college graduates especially, earn more over their lifetimes than people with only a high school education and as a result pay more in taxes. Enough in taxes to more than cover the subsidized costs of tuition and even the monthly stipends.

Thus it is exciting to note that the New York State Legislature, pressed by 2020 presidential candidate Governor Andrew Cuomo, just this past week passed a bill to make all public colleges in the state for families earning less than $250,000 a year tuition free.

"Tuition free" is a wonderful oxymoron and one can expect to see over time some of the same economic benefits that were the result of the GI Bill.

Think, then, what a positive jolt to the nation's economy would result from wiping out all accrued student debt. This obviously would be complicated to do (forget for the moment what conservatives would say!) but it is worth thinking about and running the numbers to quantify what a benefit it would be. Increased tax revenues, among other things, would be sufficient to pay for the renewal of much of out failing infrastructure.

Governor Andrew Cuomo

December 17, 2013--Quad Learning

More than half of all high school graduates who go to college go to community colleges. Most on entrance say they want to complete two years there and then transfer to four-year colleges to complete bachelors degrees.

But for the majority their aspirations are thwarted--more than half of community college students ever complete those first two years, of those who do only a portion transfer, and fewer still ultimately gain baccalaureate degrees.

Since low-income students disproportionately begin and sadly end college life at junior colleges, this is a significant social problem for America. Equity suffers and there is the great loss of human potential.

For many decades--at least since the 1960s--community college advocates, critics, faculty, and staff have known about this problem and many have attempted to do various things to help more students reach their potential and realize their dreams.

One little-know fact involves the transfer of community-college credits to senior colleges. For too many students who manage to complete two-years and earn associate degrees only a portion of their community college credits are accepted by the colleges to which they transfer. Thus, transferring students have to amass many more than the 120 credits traditionally required to graduate with a BA or BS degree. Efforts to fix this higher education shell game through "articulation agreements" between two- and four-year colleges have only marginally improved, not solved this problem.

Also, since so relatively few community college students progress far enough to be available for advanced courses, including honors courses, their colleges simply do not offer them.

For many community college students thinking about medical school it is impossible, for example, to take any chemistry courses beyond Chem 101 and 102. For history-major aspirants nothing much is available beyond the introductory courses. Again, though this problem has been known for many years, little has been done to ameliorate the situation.

Far back in 1976 I wrote Second Best, which was about the history of community colleges, their social roles, and the structural problems low-income students had to confront when they began their college careers at two-year colleges.

Little has changed since then.

But, trumpeted recently by the New York Times, there are new kinds of efforts to, among other things, offer honors courses at community colleges to enrich their academic programs and meet the needs of students with high potential and appropriately high aspirations.

Offered by a for-profit company, Quad Learning, through what they call American Honors, advanced courses are offered at participating community colleges. Thus far only five community colleges are involved and just 230 students are enrolled. With many tens of thousands of students able and eager to benefit by taking honors courses at two-year colleges why such a small-scale program gets so much coverage in the Times is another story.

Perhaps one reason so few colleges and students are participating is cost.

Since Quad Learning is doing this to make money (no crime) and the colleges where American Honors is available share in the profits (not a crime, but highly questionable) it costs students about $2,000 a year more in tuition to be eligible to take the courses. Real money at this time in our economy and for students from low-income backgrounds.

American Honors is yet another example of privatizing higher education--shifting more and more of the costs associated with college onto individuals and their families and away from public, tax-supported providers. This is why tuition has risen much faster than inflation, college loans have proliferated, and increasing numbers of students have been diverted to lower-cost community colleges. And now, for those diverted students, if they enroll in Quad-Learning colleges, it will cost them more to get what they by the fact of their hard work and achievement deserve.

July 2, 2103--The Big Boys & the Little Guy

We have a friend in Delray who for years has worked seven days a week cheffing at a local restaurant. As he puts it, "The first five days are for me and the other two for my family. Especially for my mother who lives in Honduras and for my children so they can go to college and not have to work on their feet all day like their father."

When we saw him in April just before heading north, he told us he was looking for a house or condo to buy. That the market was still soft and he had saved up enough for a downpayment. I asked him the other day what had happened with his search.

He made a face and said, "It's my luck that just when I had enough to make a downpayment, the big boys, sensing that the market was picking up, moved in with cash and began to buy up all the places I had been looking at. So, if you were a bank holding property, who would you rather sell to--me, who needs a mortgage, or those who are paying with cash?"

This hardly required an answer. "So what should I tell my children who are in high school? One is in her second year, the other will be a senior in August. What should I tell them about college? That they need a degree so they can have a career rather than, like me, a job? But with all the young college graduates without jobs what real difference will it make for them? Is it worth it to borrow thousands of dollars to get a degree that no longer guarantees that there'll be jobs waiting for graduates?"

I couldn't think of what to say to offer any assurance.

"You know," he continued, if you graduate with $75,000 of debt, it's almost the same thing as having a mortgage."

"I hadn't thought of it that way," I said, "But that's a good way to think about it. And then, if a young person with so much debt thinks about getting married and buying a house, that debt burden affects his credit rating and makes it hard to get a mortgage, forgetting for the moment, how realistic is it for a young couple to be able to pay off maybe two student loans plus an actual mortgage."

"Now you know my problem," our friend said, drifting back to the kitchen.

When we got home, reading the New York Times, Rona said there was an article about how interest rates on student loans on July 1st doubled from 3.4 to 6.8 percent. Nearly twice as much as the average rate on mortgages.

"This is," I said, "because Republicans in Congress want these rates to be set by market conditions, not governmental action."

"In fact, refusing to deal with the problem," Rona chimed in, "they took off for yet another week of vacation at taxpayer expense."

"I remember back in 1965 when guaranteed student loans became available. The idea was to offer low-interest loans to college students that they wouldn't have to begin to repay until after graduation."

"To make things affordable at the time meant that if tuition was $15,000 a year, with, say, a $5,000 loan, the out-of-pocket cost would be only $10,000."

"Yeah," I said, "that was the idea; but what happened? While we were working at NYU, what did they do?"

"Instead of keeping tuition at about the same level as it was when loans became more available, they raised tuition by at least as much as the maximum possible loan. If NYU at the time cost $25,000 a year and students could borrow $5,000, they raised tuition to $30,000 and students and their families still had to come up with the same $25,000."

"What a scam," I said. "And what did they do with the extra money?"

"It made it possible to raise faculty salaries, cut back on the number of classes they were required to teach, and made it possible to expand the number of sabbaticals so that professors could every few years get a semester or two off at full pay."

"What a scandal," Rona said. "A scandal no one talks about."

"And all the while J___ is working seven days a week just to make ends meet and maybe to be able to put aside some money to help pay for his children's college."

"As he put it the other day, it's another example of the big guys taking advantage of the little guy."

"Including the banks," I said, "which for years made the loans, were paid by the government to do so. And the interest was guaranteed, also by the government. So, in effect, there were billions of dollars of automatic, guaranteed profit for the banks."

"No wonder J___ is fed up."

"As am I."