Sunday, November 06, 2011

Kelly gives school hard knocks ....

I have to tell you, I agree with some of what Jack Kelly says today. He is complaining about the cost of higher education today and student loan debt (how very 99% of him). But predictably he misplaces at least some of the blame, and finds wrong villains.

In fact Kelly's first sentence displays his odd perception of things: "The biggest consumer ripoff in America today -- and the next economic bubble to burst -- is higher education." I don't know that higher ed is actually the biggest consumer ripoff, but I think by any reasonable measure it has gotten too expensive in the last twenty years (even as it as been opened to many new groups of students). And the next bubble to burst? Well, if Republicans somehow eliminated the student loan program, that would drive many colleges and Universities into bankruptcy, but that would not be so much the bubble bursting as the floor being knocked out beneath the schools. But I am getting ahead of myself.

So as I said, I am in agreement that higher ed schools have gotten too expensive. I have to agree that one of the culprits has to be student loans, what grants there were and are, along with the tuition and fees tax deduction and/or the various education tax credits available. Clearly schools used the availability of these things to jack up their prices. Most all the Sophomores, Juniors and Seniors would not want to leave, even for a ten percent tuition increase, and incoming students would likely face the same tuition increases at all the schools they were looking at.

And I, like Kelly, would blame the government's assistance to students for the price increases. This is the same sort of example of the law of unintended consequences as what happened to American health care since World War II. In the case of health care, health insurance companies would pay what doctors and hospitals charged (because the patient must need it, right?). So doctors and hospitals started jacking up the prices and numbers of procedures need for adequate and thorough care (almost all of them simultaneously). When health insurance companies started only paying 805 of charges, that was an incentive to raise the price higher still. And of course health insurance companies had their own non profit "excess revenue" motive. And here we are.

Back to higher ed, student loans were at first a god send, in allowing students to bet against their future earnings as a college/university graduate. And mostly that has worked out well, at least until now. I keep repeating that college graduates are faring much better in this recession than high school graduates or high school dropouts (4.55 unemployment versus 10% or more).

Of course, that number says nothing about how college graduates are employed, or about whether recent graduates (the last few years) are finding jobs. Kelly says something about how 60% of the increase in the number of college graduates since 1992 work in low skill jobs; a figure I doubt anyone could actually derive with any confidence. Kelly also gives us numbers of food servers with college degrees, without saying how many total food servers there are. But I certainly think that this recession has forced college graduates to work in lower skill jobs, so I don't really care about Kelly's numbers.

Except to say that it strikes me Kelly is suggesting there should be fewer college graduates. Obviously some sort of restriction in aid to students would hit the poorest students first and hardest. Which is apparently Kelly's intention.

Kelly also complains that students don't learn enough, that some drop out and then he goes on to blame professors for both the tuition hikes and the failure of students. I will say that I agree somewhat that higher ed standards for what students have to take might well could be tightened. I think we can all agree that K-12 education could stand some reform as well, although I would probably approach it differently than Kelly (I would think identifying successful teachers and trying to disseminate their styles would help, Kelly would close the public education system, fire all the teachers and make K-12 something you would have to pay for). I will say I have little sympathy for those who drop out of college, especially now. But I would say Kelly is almost entirely wrong about the role of professors in this situation.

College professors do not detirmine their own salaries in all but the rarest situations. And they certainly do not detirmine the cost of tuition (yes, their salary affects the cost of tuition, see previous sentence). For that Kelly (and us) should look at college/university presidents or chancellors and their provosts. They are the people who make tuition recommendations to the boards of trustees. I think Kelly is right, schools did use the additional federal aid to raise (some) professors and particularly top administrators salaries and to increase bureaucracies (although not so much in the last ten years). But again blaming professors for that is ignoring who actually made the decisions.

Which brings us to Kelly's concluding points. He suggests that Obama will make things worse: "College tuition can't keep rising twice as fast as family income, but President Barack Obama wants to keep the scam going a little longer. He's proposed a student loan forgiveness program, with taxpayers eating the difference. It would save students about $8 a month, but the kids are too innumerate to figure that out."

Leaving aside the unnecessary snarks ("scam"? "innumerate" from the man who doesn't understand economics?), the plan is already out there, Obama just wants to accelerate forgiveness part. It apparently saves some students a bit more than $8, and might mean the difference between living their lives or going bankrupt.

A more interesting question is whether anything reasonable can be done about the increase in the cost of tuition. I fear that is something that we will not be able to address until we emerge from this recession. Which, if the Republicans continue to have their way, will not be for a long, long time.

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