Category Archives: Education (higher ed)

Government’s War on the Poor: Parent Plus Edition

Rebecca McEvoy, Parent Plus borrower and likely victim of unintended consequences.

Rebecca McEvoy, Parent Plus borrower and likely victim of unintended consequences. Photo credit: Wall Street Journal.

Rebecca McEvoy, a retired school teacher coping with multiple sclerosis, borrowed $84,000 under the federal Parent Plus program to help her oldest son through art and design school. When he graduated, the government expunged the debt under a law that forgives balances for borrowers deemed permanently disabled. Three years later, she and her husband Dave, also a retired teacher, turned to Parent Plus again. The couple expects to borrow another $50,000 to cover costs for a second son, as Josh Mitchell with the Wall Street Journal tells the story.

The McEvoys’ finances likely would have raised red flags with private lenders, Mitchell dryly notes. They live off modest pensions, and existing debts eat up much of their income. Odds are, they won’t be able to meet their payment obligations for the second round of student debt any more than they could the first.

As of September 2015, more than 330,000 people, or 11% of borrowers, had gone at least a year without making a payment on a Parent Plus loan. The student loan debt crisis is engulfing not only students but many parents. An estimated 41,000 Parent Plus borrowers had their checks garnished in FY 2015.

“This credit is being extended on terms that specifically, willfully ignore their ability to repay,” said Toby Merrill with the Harvard Law School’s Legal Services Center. “You can’t avoid that we’re targeting high-cost, high-dollar-amount loans to people who we know can’t afford to repay them.”

Parent Plus defaults began rising during the Great Recession. By 2011, Obama administration officials recognized that they had a problem and put tighter restrictions into place. Writes the WSJ:

But after schools argued stiffer underwriting would prevent many students from covering tuition, thus reducing college access for minorities and poor students, the administration rolled back the new rules. Research shows that restricting access to loans based on credit scores leads to lower college enrollment.

The Government Accounting Organization (GAO) estimates that taxpayers ultimately will forgive $108 billion on student loans made through the current fiscal year, says the WSJ. Colleges are the only winners here. Federal loans allow them to jack up tuition, but they suffer no adverse consequences when students or parents cannot repay the debt.

Bacon’s bottom line: Thus has the student loan program, created with the best of intentions, been corrupted: simultaneously saddling taxpayers with the cost of a massively expensive entitlement and burdening students and parents alike with billions of dollars in loans they can never repay. That’s quite a two-fer. Two… Two… Two massively destructive unintended consequences in one!

It hasn’t always been this way. Once upon a time, student loans weren’t dogged by subprime mortgage-scale bad debt. The problem arose when Uncle Sam began treating student loans as an entitlement for anyone who wanted to attend college. Refusing loans to students with no credit rating and/or parents with poor credit ratings constituted “discrimination” against the poor and minorities. Once you play the discrimination card, the debate is over.

The unintended consequence, of course, is that when poor and minority students and parents load up with debt they cannot repay, they suffer disproportionately — even when billions of dollars in bad debt are written off. Except in rare instances like Ms. McEvoy’s, student loan debt cannot be dispelled. Uncle Sam extracts its pound of flesh by garnishing wages and social security. Families living on the edge of poverty are pushed into poverty; families living in poverty are pushed into destitution.

All for what? A significant number of poor students make it through college, obtain degrees, and get good jobs that allow them to service their debt. But millions don’t. Federal law limits undergraduate federal loans to $27,000 over four years. Even when parents step in by borrowing under the Parents Plus plan, many poor students lack the resources to graduate. (The problem may be compounded by a lack of academic preparation — student loan programs apparently don’t take that into account either.) Meanwhile, millions of well-paying, semi-skilled jobs go unfilled. Washington could not have better designed a system to crush the poor if it tried.

UVa Hikes In-State Tuition by 2.2%

The University of Virginia Board of Visitors has approved a 2.2% tuition hike for in-state students and a 3.5% increase for out-of-state graduates — the second year of modest increases after years of aggressive increases.

Administrators said the increases are necessary to address $24 million in new costs next school year along with a $7 million cut in state appropriations, reports the Daily Progress.

UVa came under intense political pressure during the 2017 General Assembly session when legislators proposed a series of bills that would constrain the ability of public Virginia universities to raise tuition. None of the bills passed, but they put the higher-ed establishment on notice that citizens were running out of patience with the runaway cost of attendance at Virginia colleges.

It will be interesting to see if the UVa decision portends a moderation in tuition increases at other public institutions.

How Higher Ed Taxes the Poor and Gives to the Rich

Why do the richest colleges and universities providing education to the smartest and most affluent students get the biggest tax breaks? More and more people — both on the left and right ends of the ideological spectrum — are asking that question.

Controversy is sure to grow with the release  of a study, “The Ivory Tower Tax Haven: The state, financialization, and the growth of wealthy college endowments,” by Charlie Eaton with the Haas Institute for a Fair and Inclusive Society at UC Berkeley. Eaton argues that private colleges with substantial endowment wealth have become “ivory tower tax havens,” creating “islands of privilege” that perpetuate social and economic stratification.

Since the 1970s, elite universities have benefited from three big tax benefits: (1) tax deductions for donors giving to endowments, worth about $1.2 billion in 2012, (2) the non-profit exemption of endowment investment returns, worth about $12.9 billion; and (3) municipal bond tax exemption for higher education, worth about $5.5 billion. The total benefit in 2012: about $19.6 billion.

Per-student spending from endowments, 1976 to 2012, broken down by endowment wealth per student. Graphic credit: “The Ivory Tower Tax Haven.”

The result has been a growing disparity in resources and expenditures per student. For U.S. undergraduate-enrolling institutions in the 99th percentile for endowment wealth per student,” writes Eaton, “annual spending per student from endowments increased by 751% to a mind-boggling $92,736 between 1977 and 2012. … Public universities and less wealthy private schools saw no comparable increase in resources from endowments or other areas of support.”

Who benefits from this increase in spending? Rich kids mostly. Elite schools with the biggest endowments enroll the wealthiest kids. Recent research shows that 38 of the most elite schools in the U.S. enroll more students from the top 1% of the income spectrum than from the bottom 60% combined.

Prior to the 1970s, the logic behind tax exemptions for higher education was “to protect intergenerational equity by providing comparable levels of effort towards the university’s mission from one generation to the next,” writes Eaton. Over the years, colleges and universities have used the tax breaks instead to maximize the size of endowments and increase instructional spending per student, thus enhancing institutional prestige.

One commonly pursued strategy is to retain and reinvest income from endowments rather than spend it. Since 1990, the average investment return for what Eaton classifies as “wealthy endowments” has been 10%, but spending amounted to only 5%, leaving the balance to be applied to asset growth.

Another strategy has been to engage in indirect tax arbitrage, in which universities direct donations to endowments rather than operational spending or non-financial capital investments. Universities can make more money by investing their endowment wealth than they lay out in payments on tax-free municipal bonds.

Rather than using the income to increase enrollment, elite private universities have preferred to increase instructional spending per student. “Flat enrollment makes sense,” writes Eaton, “because low admission rates to undergraduate programs tend to improve schools’ position in college and university rankings.”

Eaton lists 24 private institutions with large endowments. Most are located in the Northeastern states, but two are located in Virginia. Washington & Lee University, with a $2.2 billion endowment, had endowment spending per student of $27,000 in 2012. The University of Richmond, with a $1.9 billion endowment, had $24,000 in spending.

Bacon’s bottom line: Eaton’s work shows how universities behave rationally from the perspective of prestige-maximizing, not profit-maximizing, institutions. Ten percent of the U.S. News & World-Report “Best Colleges” ranking algorithm comes from average per-student “instruction, research, student services and related educational expenditures.” Another 12.5% is determined by student selectivity. Thus, higher-ed institutions have an incentive to build their endowments, lavish large sums on student instruction and services, and keep enrollments small and selective. Which is exactly what most have done.

As regular readers know, I do not favor punishing the rich through increasing tax rates. The rich already pay a hugely disproportionate share of income taxes, and high tax rates distort economic behavior to the detriment of all. But neither do I favor heaping additional privileges upon the wealthy. Anyone who wants to create a more egalitarian society, as I do, would do better to focus on the $20 billion a year in annual subsidies for wealthy colleges.

Real change must come from Congress because the special tax treatment originates mainly from the federal tax code. But from a Virginia public-policy perspective, perhaps it is worth examining the repeal of state breaks for contributions to higher-ed endowments, income generated by endowments, and university municipal bonds. Do we, as polity, really deem it a priority to subsidize the education of the wealthiest among us?

Tom Perriello: Let’s Make Community College Free!

Tom Perriello for Governor: More free stuff!

Tom Perriello for Governor: More free stuff!

Tom Perriello, Democratic Party candidate for governor, is right about one thing: The cost of attending college is far more expensive today than it was when his father, a son of Italian immigrants, got a scholarship to the University of Virginia and graduated debt free. And he’s right that many young people today are graduating with staggering amounts of debt that make it harder for them to buy a house or start a business. The runaway cost of college education is creating a social crisis.

But one of his proposed solutions — providing two years of free vocational training, apprenticeships and free community college — is fiscally reckless.

Meeting with students at the University of Mary Washington as part of a 16-campus tour, Perriello touted his plans for free community-college tuition and also the refinancing of existing student debt to reduce monthly payments, reports the Free Lance-Star.

The refinancing-student-debt idea may have legs. The idea has been floated to create a student loan financing authority that would sell tax-free municipal bonds to raise money to refinance student debt. There are some tricky issues here — how exposed would such an authority be to student defaults? — but the idea is not fiscally absurd on its face.

But paying two free years of community college would be a budget buster. According to the Virginia Community College System’s 2016 unaudited financial report, student tuition and fees generated $361 million to operating revenues. Perriello offers zero details on his website on how he would pay for such a sum. Here’s what he says:

To make post-secondary education more affordable and improve the career prospects for all young Virginians, I will make vocational training, apprenticeships or community college available debt-free for a minimum of two years. I will work with our universities to ensure that we do not continue to pile up the burden of tuition on the backs of students and their families.

Oh, he’ll “work with our universities” to control tuition. Great. While he’s at it, maybe he can work with Israel and Palestine to bring about Middle Peace.


There’s another problem with offering free tuition. If your criterion is helping students acquire certifications and degrees that get them jobs in the workplace, a lot of the money is wasted. The chart above, taken from the State Council of Higher Education for Virginia website, shows the percentage of students who complete their two-year degrees within four years. The rate varies between 30% and 60% by region of the state.

As a matter of principle, students should put some skin in the game to demonstrate that they’re serious. The world is full of goof-offs and dilettantes who enroll in college because they can’t think of anything better to do, and it’s loaded with people who can’t complete their degrees due to disordered personal lives or lack of academic aptitude. Free tuition encourages non-serious people to enroll, not only wasting the state’s money but time they could put to better use elsewhere.

One last point: By making tuition free, the state would destroy any market discipline. If the state were stroking the checks, community colleges would have no reason to limit costs. As night follows day, to keep costs from running out of control, the state would have to impose cost controls. Does anyone want Richmond calling the shots on every decision?

Tom Perriello’s promise of free tuition may play well on college campuses, but it has more holes than a wiffle ball.

Education Anarchists: Virginia Education Officials Discuss Radical Reforms

Billy Cannaday, vice provost of academic outreach at the University of Virginia, is leading the university’s distance-learning endeavors. He also serves as president of the Virginia Board of Education.

How well prepared are Virginia’s high school graduates for what comes next in their lives, whether it’s college, community college or a job? Virginia’s top education officials began asking that question in 2015, and they explored the topic with 24 stakeholder groups, from parents and school counselors to college admissions staff and university deans.

“We went 0 for 24,” Steve Staples, Virginia’s superintendent of public instruction, told the State Council of Higher Education for Virginia (SCHEV) earlier today. Every stakeholder group said that most high school grads are ill prepared for the world that awaits them. A common sentiment: Schools are “working on the wrong stuff.”

Virginia’s public school system is geared to teaching content, said Staples and Billy Cannaday, president of the Virginia Board of Education, in a joint presentation. Knowledge of content, as measured by multiple choice tests, is a necessary part of the K-12 education but it’s not sufficient. Content, they said, must be supplemented by the ability to communicate, collaborate, think critically, think creatively, and solve problems.

Steven R. Staples, Virginia Superintendent of Public Instruction.

The presentation by Virginia’s two top K-12 officials followed by a lengthy discussion was a first for SCHEV. Senior K-12 and higher-ed administrators rarely talk in formal settings. Indeed, although both work in the same high-rise building in downtown Richmond, they take separate elevators to their respective offices. But both camps acknowledge the need to build bridges, and the outreach to SCHEV may portend greater cooperation between the two education systems in the future.

Virginia’s high school system was designed in the late 1800s for a manufacturing-dominated economy. That system is not working for the 21st-century economy, said Cannaday. New skill sets are needed.

The Standards of Learning (SOL) tests assess students’ mastery of content in narrow silos — mathematics, English, history, science, etc. Students are rarely taught how to integrate those disciplines. Calling for a “deeper learning,” Staples said schools need to “blend disciplines.” He gave as an example a school in Southwest Virginia that linked English, history and civic engagement by assigning students the book, “All Quiet on the Western Front,” and coupling it with interviews of veterans in the community.

The Virginia Department of Education (VDOE) is early in its reappraisal of Virginia K-12 education. High-level goals have yet to be translated into concrete action. The first step, said Staples, is to establish what should get done. The second is to figure out how to get it done. “We’re still working on that.”

The response of SCHEV board members was uniformly positive, although the obvious question came up: Does VDOE have the resources to pull off changes of the magnitude outlined by Staples and Cannaday?

“This vision isn’t all about resources,” said Staples. “It’s about allocating those resources in a different way.” One strategy might be to scale back state directives to local school districts. For example, the state requires schools to hire a library aide. Maybe the school principal says he’d rather hire a career coach. Another approach: Schools may have to re-think the way teachers allocate their time: five classes, 30 students per class, five  hours a day. Maybe teachers need more flexibility.

“I am somewhat of an anarchist,” Staples said. “We need to re-define high school expectations that drive change throughout the system.”

In response to questions, both Staples and Cannaday said they were open to implementation of quality pre-K programs, which can have measurable impact on pupils’ academic achievement for years, and also to charter schools — although charter schools need to be held accountable for performance just like other public schools.

An essential component of K-12 reform will be defining what is expected of high school graduates, and that requires dialogue with higher education. Said Cannaday: “We have an opportunity to talk about not only K-12 but how it connects to what comes next: college and the workplace.”

Author Files Suit to Spur Investigation of UVa Admissions

Jeff Thomas delved into UVa admissions practices in his book, 'Virginia Politics & Government in a New Century."

Jeff Thomas delved into UVa admissions practices in his book, ‘Virginia Politics & Government in a New Century.”

Jeff Thomas, author of “Virginia Politics & Government in a New Century: The Price of Power,” has filed a complaint asking the U.S. Attorney’s office for the Western District of Virginia to launch an independent investigation into admissions practices at the University of Virginia. Reports the Cavalier Daily:

Thomas said in an email to The Cavalier Daily he filed the federal complaint because the University and the state government are incapable of independently investigating what he called a “corruption scandal,” which could implicate political donors, legislators and members of the University Board of Visitors.

“If U.Va. will not release the complete, unredacted documents, then an investigating body with subpoena power must compel them to do so,” Thomas said.

Thomas brought public attention to the issue of favoritism in admissions when he passed along documents he obtained though a Freedom of Information Act to the Washington Post. The heavily redacted documents showed that the UVa department of university advancement maintained a “watch list” of applicants of interest to potential donors, and lobbied the president’s office on their behalf. The documents did not indicate whether the president’s office passed along the requests for preferential treatment or how the admissions office might have responded.

University spokesman Anthony de Bruyn said in an email to the Cavalier Daily that the university objects to Thomas’ allegations. “The University remains confident in the integrity of its rigorous admission process. There is no evidence to support this speculation.”

Thomas brushed off the university’s denials: “It is also imperative that U.Va., end this potentially illegal practice immediately and that President Sullivan issue an apology to the many deserving students in Virginia who have been denied admission under her watch because their parents could not or did not contribute money to the University.”

Bacon’s bottom line: Given the evidence I’ve seen, it seems clear that the advancement office sought preferential consideration of rich-kid applicants. The question in my mind is whether the advancement office went through the motions of appealing to the president’s office so they could go back and tell their donors, “Hey, we tried,” or whether advancement officials truly expected the president’s office to intervene. The ultimate question, of course, is whether the admissions office ever caved in to a special request.

When I was publisher of Virginia Business magazine, the sales guys frequently brought me special requests from advertisers asking for preferential editorial treatment. I’d say, “No,” and the sales guys would go back to their clients and say, “We gave it a shot.” Sometimes we’d lose an advertiser, but sometimes the client felt grateful that the sales guys made an effort on their behalf.

That’s the innocent explanation of what’s happening at UVa.

Denials from the university administration are to be expected, however, and no serious journalist would accept its word on the matter without vetting it thoroughly. After all, UVa would be the exception if it didn’t play favorites. On the other hand, while giving preferential treatment to rich kids might be bad optics, it’s not clear from the Cavalier Daily article upon what grounds the practice would be illegal, even if proven to be true. I would be astonished if the U.S. Attorney picked up the case.

A Liberal Arts College Is a Terrible Thing to Waste

Virginia Wesleyan College is expanding. To what purpose? That's unclear.

Virginia Wesleyan College is expanding. To what purpose? That’s unclear.

Norfolk’s Virginia Wesleyan College will become Virginia Wesleyan University later this year, reports the Virginian-Pilot. In the face of stagnant college enrollments nationally, the small, private liberal-arts institution is boldly expanding, adding two new graduate programs, a new online division and an honors college program.

What is driving this change? The Pilot has little to say beyond this quote from President Scott Miller: “It is our desire to grow the institution for one, and to be more of a local institution with a national reputation.”

“We are sleepy no more,” Miller told WAVY-TV. “It comes down to complexity of the institution, the mission and purpose and we have become a comprehensive institution in recent years.”

The college website has little else to offer by way of explanation. Look at the strategic plan, “Vision 2020: Pathway to Prominence,” and you’ll read a lot of airy rhetoric about “providing a transformational experience for students” and “preparing students for a meaningful life and career.” The plan illuminates such lofty goals as experiential learning, innovative teaching, student engagement, community connections and an inspiring sense of place.

That’s all very fine, but what’s the connection with new degree programs and online learning? And how does the rhetoric square with Miller’s desire to change Virginia Wesleyan from a “sleepy” local institution to one with a “national reputation” — in effect to bolster its prestige.

A small college with a $60 million annual budget and $53 million endowment might have the resources to create enriching, transformational experiences for students or to create ambitious new programs and expand enrollment by 300 to 1,700, but does it have both? How does the addition of new programs serve the need of students? Has the university identified un-met needs in the educational marketplace, or is the expansion a ploy to upgrade its rankings? (At present, Virginia Wesleyan doesn’t even warrant a score in the U.S. News & World-Report best colleges ranking.)

Virginia Wesleyan is a private institution, so it is under no obligation to explain its actions to the public. Hopefully, though, the Board of Trustees, alumni, and philanthropists are asking tougher questions than the local media. Even a small liberal arts college is a terrible thing to waste.

UVa’s Invisible Research Subsidies

David S. Wilkes, dean of the UVa schools of medicine

The Trump administration’s proposed budget cuts to the National Institutes of Health will make it harder to find new cures — and harder to create new jobs, contends David S. Wilkes, dean of the University of Virginia’s School of Medicine. In 2016 UVa received $126 million in NIH funding, accounting for about 60% of its research funding.

NIH backing allowed UVa researchers to discover a link between the brain and immune system, potentially leading to treatments of neurological diseases such as autism and Alzheimer’s. An NIH-supported clinical trial is providing the final tests for a UVa-developed artificial pancreas that can help people with Type 1 diabetes. Meanwhile, scientific research at UVa is stimulating the rise of a job-creating innovation ecosystem in the Charlottesville area. Writing in the Richmond Times-Dispatch op-ed page, Wilkes says:

In 2016, the National Venture Capital Association ranked Charlottesville as the fastest-growing venture capital ecosystem in the U.S., and medical start-ups are [an] important part of that boom.

U.Va. Innovation, which helps bring U.Va. research discoveries to the marketplace, has identified more than 50 active companies advancing U.Va. discoveries. Many of those companies were founded to develop U.Va. medical research breakthroughs.

A study conducted by the research firm Tripp Umbach found that in fiscal year 2015, U.Va. School of Medicine’s research generated an economic impact to Virginia of $425.4 million. That economic impact would be greatly diminished if NIH funding were slashed.

Bacon’s bottom line: One can pick at these numbers, but let us accept them as valid for the moment. Wilkes is making the argument that what’s good for UVa research is good for Virginia economic development. Advocates of investing in life sciences are employing similar logic for life-science initiatives in Northern Virginia, Richmond, Norfolk and Roanoke.

UVa is playing a hyper-competitive industry sector, however, and it starts with big competitive disadvantages as it tries to build a biomedical ecosystem from scratch in a small metropolitan area. According to the 2016 Jones Lang Lasalle study, the Boston, San Francisco, Raleigh-Durham and San Diego metropolitan areas have the nation’s leading life-sciences clusters. None of the top 16 clusters are located in Virginia. The closest geographically is the “Maryland suburbs/D.C. metro.” It takes a lot more than a research university to play in this sandbox. A large labor pool is a necessity for recruiting top scientific and entrepreneurial talent, and UVa’s location in little Charlottesville presents a big handicap.

If UVa were investing only its endowment dollars in competing for NIH grants and other life-science research, that would be UVa’s business and nobody else’s. As long as the money for this initiative comes exclusively from wealthy alumni and philanthropists, and as long as Virginia taxpayers, tuition-paying families, and bill-paying patients of UVa’s medical system are held harmless, no one has grounds for complaint.

Unfortunately, UVa isn’t relying solely upon wealthy donors to fund its ambitions to build a world-class medical research center. UVa has developed mechanisms to extract wealth from others — patients, students, taxpayers — to underwrite its efforts. Because these mechanisms are so opaque, however, no one in Virginia sees them.

Wilkes does mention one of these funding sources, UVa’s controversial, $2.1 billion Strategic Investment Fund, in a positive light. The fund was cobbled together from various pots of money which were generating minimal investment returns. By combining these pools of money and handing them over to the University of Virginia Investment Management Company, the university hopes to generate an estimated $100 million a year in investment revenue. The Board of Visitors has approved using most of this money for institutional advancement, including R&D. But that is a choice. Alternatives include using the money to reduce tuition, bolster financial aid, or build non-research programs. Accordingly, students and parents who pay tuition, and the Commonwealth of Virginia, which pays millions of dollars in state support, have a direct interest in how Strategic Investment Fund proceeds are allocated.

According to the National Science Foundation, a third of UVa’s R&D expenditures are internally generated (classified as “institution funds” in the table to the left). Institution funds amounted to $74.8 million for life sciences and $122.6 million for all R&D in 2015 — before the Strategic Investment Fund existed.

I could not find a definition of “institution funds” on the NSF website, but I expect that it includes monies flowing from one or all of the following: (1) the university’s endowment, which is funded by philanthropy; (2) discretionary academic monies, which are funded through tuition and state support; and/or (3) surplus revenues (profits) from the UVa Medical Center, which is derived from patient revenues. To the extent that UVa research is funded by tuition, tax dollars, and patient revenues to cover buildings, faculty, grad students administrative overheard, and the like, it is fair to say that students, taxpayers, and patients are subsidizing research. The size of that subsidy remains a mystery. I don’t believe UVa (or any other Virginia public university) publishes such a number. It may not even calculate a number.

While R&D-generated economic development might be a good thing for Charlottesville and Virginia from the perspective of creating high-paying research and technology jobs, much of the funding ultimately comes from populations who have no idea what they’re subsidizing. Students are paying higher tuition (and accumulating more debt) and patients are paying more for medical services. The system is so opaque, the accounting so arcane, that no one sees or understands these wealth transfers. Perhaps the economic development is worth the cost of higher tuition and patient fees, but who can say unless we have an open and honest conversation?

VCU Graduation Rate: A Peek Behind the Numbers

Virginia Commonwealth University 4- and 6-year graduation rate.

Virginia Commonwealth University 4- and 6-year graduation rate. (Click for larger image.)

However skeptical I’ve been about Virginia Commonwealth University’s aggressive tuition increases, I’ve always given the university credit for one thing: improving the graduation rate of its students. As seen in the chart above, the four-year and six-year graduation rate of undergraduate degree seekers increased steadily between 2001 and 2010.

Graduation rate is a crucial metric of university performance in an era of increased student indebtedness and rising defaults on student loans — no more so than at VCU where 51% of students receive financial assistance from Uncle Sam. Debt accumulation is disastrous to students who fail to graduate and acquire the means by which to pay off their loans. When such a fate befalls millions of students across the country, personal misfortune morphs into a social and economic crisis.

I’ve often wondered how VCU has improved its graduation rates. Is the university more selective about admitting students likely to complete their courses of study? Has it made more counseling resources available to students? Has it bolstered financial aid to lower-income students?

Hopefully, I’ll find the time to answer those questions. Until then, I think I have uncovered an important contributor to VCU’s improved numbers. By transforming itself from a “commuter college” into a residential institution, VCU has boosted the percentage of full-time students and reduced the percentage of part-time students, as seen in the chart below:

By definition, students who take fewer courses will take longer to complete their degrees than students who take full course loads. Also, they are less likely to persist in their studies. Indeed, data from the National Center for Educational Statistics (NCES) shows that 86% of full-time students at VCU who initiated their studies in the fall of 2014 returned in the fall of 2015 compared to only 33% of part-time students.

Clearly, the shift to a full-time student body accounts for much of VCU’s undergraduate degree-completion rate. It should be possible to estimate from these numbers what percentage of the gain in degree completions can be attributed to the changing composition of the student body, but I don’t have the mathematical chops to do it. (Pretty sad, huh?) If any readers are up to the challenge, please let me know.

Government’s War on the Poor: College Loans

Chart credit: Mercatus Center

Students graduating in recent years are defaulting on student loans at a significantly higher rate than earlier age cohorts, finds Mark J. Warshawsky, a senior research fellow with the Mercatus Center at George Mason University, in a posting on the Mercatus website.

“Some students, particularly from nontraditional backgrounds, seem to have been harmed by the increase in federal funding of student loans,” he says. “They have not seen increases in their incomes as workers, have often not completed their education, are more likely to default on their loans, and miss out on job-related income and training.

Click for more legible image.

Warshawsky does not offer an explanation of why loan default rates are climbing. But the answer is obvious: Uncle Sam has been shoveling out more and more loans without any consideration of credit risk. As the percentage of high school graduates enrolled in two- and four-year institutions of higher education has increased over the years (see chart immediately above), we have seen an increase in the number of students who (a) are not academically prepared for college-level work, (b) lack the family resources to complete college, even with loans, or (c) both.

These college drop-outs and defaulters are disproportionately poor and minorities. The federal government cannot issue loans on the basis of credit quality, for that would mean discriminating against the poor and minorities, a political impossibility. So, instead, Uncle Sam dishes out loans indiscriminately, and the poor and minorities are the ones who wind up defaulting disproportionately on student loans and suffering the adverse consequences of ruined credit scores and debt they cannot discharge.

Thus the price of misguided compassion…

Do you want stronger proof? The percentage of high school graduates attending college has ticked down slightly since 2009, while the total of state and federal grants and loans has dipped since 2010. If I my logic above is correct, and absent an economic downturn and widespread job loss, at some point we should see a reversal of the trend shown in Warshawsky’s chart and a decline in the rate of defaulting students.