Showing posts with label Kirk Johnson. Show all posts
Showing posts with label Kirk Johnson. Show all posts

Monday, January 26, 2015

More evidence that the New York Times is totally clueless about the Student-Loan Crisis

Today's New York Times contained a full-page advertisement  (on page A22) with this message: "What our reporters are reading can be just as insightful as what they're writing." The advertisement contains a large color photo of Times writer David Carr wearing those round, horn-rimmed spectacles that people wear in Woody Allen movies--spectacles that convey sensitivity and deep intelligence.

Of course, the Times ad is true: What Times reporters read can be insightful. The problem is that the Times reporters are not reading enough and they are reading the wrong things.

And here's a case in point.  On the front page of today's Times is an article about the economic downturn Alaska is experiencing as a result of the recent drop in oil prices.  The article's author, Kirk Johnson, reports that "historians and economists say" that Alaska's economic crisis is unprecedented "in modern times."

That is simply not accurate. I lived in Alaska in the mid-1980s when oil prices turned down. Alaska's economy went into a tail spin, with a huge number of property foreclosures and several bank failures. I recall standing on a street corner in downtown Anchorage and viewing three financial institutions with plastic sheeting spread across their names because they had collapsed and been closed by federal financial regulators.

So what is happening in Alaska right is not unprecedented in modern times; and if "historians and commentators" told Times reporter Johnson that, they are certainly incompetent.

But that Times inaccuracy is a small matter.  More important is a pollyannaish article in last Sunday's Times about the student debt crisis. Times reporter Kevin Carey wrote favorably and uncritically about federal legislation that allows students to extend their student-loan payments out over 25 years. Apparently, Carey took a positive perspective on this development  because long-term repayment programs will reduce student-loan borrowers' monthly payments to a more manageable level.

 Carey ended his article by remarking that the federal government will probably replace the states as  the "primary financier" of American higher education. "Given how much unnecessary financial hardship has been imposed on students," Carey wrote, "this is a welcome trend." And Carey ends on this wholly unwarranted optimistic note: "The sense of pervasive student loan anxiety that characterizes much of the contemporary higher education conversation could become a relic of an older time."

What baloney! Essentially Carey has portrayed the federal push to get college student-loan borrowers  to sign up for long-term repayment plans as an entirely wholesome development.  And that simply is not correct.

First of all, the prospect of former students taking 20 to 25 years to pay off their student loans should be unsettling to everyone in the American higher education community, no matter how reasonable borrowers' monthly payments are. Surely when Congress adopted the first student-loan legislation back in the 1960s, its members never dreamed that 25-year repayment plans might someday become the norm.

In essence, as I have said before, long-term income-based repayment plans are turning Americans into sharecroppers, paying a portion of their earnings to the government for the majority of their working lives for the privilege of attending college. Who could be happy about such a prospect?

Second, as currently structured, long-term repayment plans operate as a perverse incentive for colleges to keep raising their tuition. Why should colleges try to keep their costs down when students can simply borrow more money to pay for tuition hikes and then pay it back in modest monthly payments over 25 years?

Third, long-term repayment plans remove incentives on students to minimize their borrowing. What difference does it make to students whether they borrow $30,000 to attend college (the current average) or $50,000 when the amount of their monthly loan payments will be based on their income and not the amount they borrowed?

Why has the Obama administration's push for long-term repayment plans been received so favorably around the country? I will tell you why. The only voices that are heard concerning the student-loan crisis are the voices of the insiders: colleges and universities, intellectually bankrupt think tanks like the Brookings Institution,and higher education's shamelessly self-interested constituency organizations like the College Board and the American Council on Education.

The people who are being injured by the federal student loan program have no voice; they are suffering in silence while working at low-income service jobs and fending of the federal government's hired loan collection agencies--which are making tons of money chasing down student-loan defaulters.

The Brookings Institution, in one of its typically vapid policy papers, argued for having people's student-loan payments taken out of their pay checks so that they would simply become another income deduction, like health insurance and Social Security.

And friends, that day will some day come. And when that happens, it will be apparent to everyone that the federal student loan program, which was intended to help worthy young Americans get a college education regardless of their income status, has become a massive fraud perpetuated on the American people by the higher education industry and the federal government.

If we continue in the direction we are going--and we are actually accelerating our headlong drive toward catastrophe--American higher education will be destroyed. But our policy makers, our legislators, and our college and university presidents don't care. By the time this time bomb explodes--and explode it will--all the people who engineered this disaster will be retired, writing their memoirs and drinking bourbon beside the golf courses of their gated entry retirement communities. The fact that these empty-headed bozos destroyed our nation's once premier system of colleges and universities will bother them not at all.


Kevin Carey. Helping to Lift the Burden of Student Debt. New York Times, Sunday Business Section p. 1.

Kirk Johnson. As Oil Falls, Alaska's New Chief Faces a Novel Goa: Frugality. New York Times, January 26, p. 1.