Bacon's Rebellion

Democracy Thrives in Sunlight

Even Progressives Acknowledge the Failure of Indiscriminate Student Loans

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by

James A. Bacon
in , ,

I’ve been making the case for a couple of years now that if you’re looking for a real example of social injustice, take a look at the United States higher education system. For years liberals and progressives argued that everyone deserves a college education, that government should help anyone with a high school degree attend college, and that poor students could borrow huge sums to pay for ever-escalating tuition and fees without ill consequence. Now even the social justice warriors are waking up to the social disaster they have wrought.

Readers of Bacon’s Rebellion know full well that the policy of indiscriminately handing out student loans to everyone has created a new class of debt slaves. Not all high school graduates are academically prepared for college-level work. Not everyone who undertakes to earn a college degree is financially able to complete their degrees, even with financial assistance. As a result, literally millions of Americans have taken on college debt without earning the degree or other workforce credential that would allow them to obtain a job that pays enough to carry that debt.

The members of the new debtor class are disproportionately poor, and they are disproportionately African-American. This is a real social injustice, not an imagined one, and it has arisen from the blind pursuit of good intentions.

Finally, progressives are waking up. According to an analysis by the Center for American Progress, data from a U.S. Department of Education study provides a “first-ever look at long-term outcomes for student loan borrowers, including results by race and ethnicity.”

The data show that 12 years after entering college, the typical African American student who started in the 2003-04 school year and took on debt for their undergraduate education owed more on their federal student loans than they originally borrowed. This holds true even for students who finished a bachelor’s degree at a public institution. One reason they might not be paying down their loans? Nearly half of African American borrowers defaulted, including 75 percent of those who dropped out of for-profit colleges.

Among the detailed findings:

  • African-Americans borrow more on average than their peers.
  • The typical African-American made no progress over 12 years in paying down his or her loan. African American borrowers who started college in 1995-96 owed 101% of their loans a dozen years later, compared to 60% for whites and 72% for Hispanics.
  • A bachelor’s degree does not insulate African-American borrowers from bad outcomes. College drop-outs are not the only ones who default; college grads do, too.
  • Nearly half of all African-Americans defaulted on their student loans. One reason, suggests the analysis, is that African-Americans take on higher debt on average.
  • Seventy-five percent of African-American dropouts from for-profit colleges defaulted. (No word on how this compares to the percentage of African-American dropouts from public colleges or Historically Black Colleges and Universities.)

A conservative/libertarian reaction to this data is that the system hands out student loans too indiscriminately. Many Americans — of whatever race — would be better off learning a trade in a two-year college than attending a four-year college. Some would be better off not going to college at all and learning on the job. Student loans, like any other kind of loan, should be granted based upon a person’s ability to repay the loan.

The problem is that granting educational loans on the basis of a student’s ability to repay — based upon key predictors like academic preparedness and household resources — would “discriminate” against the poor and, because African-Americans are disproportionately poor, against African-Americans. In today’s political climate, that’s a non-starter.

The Center for American Progress expresses an admirable sentiment when it suggests that policymakers should strive to create a world where African American students don’t start their careers with large loan debts they struggle to repay. But the CAP’s answer is to admit more poor African-Americans into better institutions with more resources to help them succeed. How? By “fixing” admissions practices and funding systems “so that African American students do not end up disproportionately underrepresented at institutions with the greatest resources to educate them.” 

Translation: Get higher-ed institutions to admit more African-Americans in the blind hope that somehow they will do better regardless of whether they are academically prepared. Great idea. That’ll work out well.

For Irish, Italian, Jewish, Chinese, Koreans and other Americans, the typical family’s climb from poverty into affluence took place over generations. Parents sacrificed so their children could rise a step higher on the educational and socioeconomic ladder. Today’s social justice warriors are impatient. They want African-Americans to vault from Mosby Court to the University of Virginia and a job in the hedge-fund industry in a single generation. A handful of individuals are so extraordinary that they can succeed. Most aren’t. Instead of reaching for achievable goals for self improvement, millions are pursuing unrealistic dreams and winding up in debt bondage as a result.

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11 responses to “Even Progressives Acknowledge the Failure of Indiscriminate Student Loans”

  1. Steve Haner Avatar
    Steve Haner

    https://www.federalreserve.gov/econres/notes/feds-notes/recent-trends-in-wealth-holding-by-race-and-ethnicity-evidence-from-the-survey-of-consumer-finances-20170927.htm

    With the link above let’s add a third element to this discussion, and that is the Federal Reserve’s latest data on income and family net worth by various racial categories. The disparities are just as stark as they are with the data on student debt, and the data on school suspensions and expulsions.

    I read the data on the student debt and my first reaction was not “gee, we pass out too many loans.” Even the students who complete the degrees are deeper in debt a decade later. Perhaps easy lending is a major part of the problem, Jim, but my first thought was the same as it was after scanning the Fed study. Here we are 150 years after the 13th and 14th Amendments, 70 years after Truman desegregated the military, more than 60 years after Brown vs. Board of Education, and more than 50 years after the key legislative accomplishments of the Civil Rights era – and these are the measurable economic results?

    Knowing why is important, but only because it informs the next question. What do we do next? More of the same isn’t going to cut it. Sitting around going tsk-tsk-tsk, isn’t it a shame they can’t get their acts together – that isn’t going to cut it.

    1. James A. Bacon Avatar
      James A. Bacon

      The first rule is do no harm. We did massive damage by encouraging poor minorities to become homeowners — just in time for the subprime mortgage crisis that devastated much of what little wealth African-Americans had. Now we’re encouraging poor African-Americans to load up on debt, trapping them in bonded indebtedness. I could go on and on about the welfare trap, which penalizes the poor for moving up the income ladder. We also could talk about minimum wage laws. The list goes on and on. So, my advice is, let’s stop doing harm. When things settle out, let’s see how things look.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        The first rule is do no harm. I agree with that. That is why I refuse to view people, or judge them, or speak of them differently, by reason of the color of their skin. To do so, in my opinion, is an insult to all concerned and also to those not concerned. And to do so most always generates very bad and intractable habits by all those concerned.

        On the other hand, refusing to treat people differently based on the color of their skin, giving everyone instead that basic and essential respect, is the first essential step to solving this plague of identity prejudice that is tearing our society apart now in many different ways, while bankrupting and corrupting our society and most of us in it at the very same time.

      2. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        This instant post and the immediately proceeding one has nothing to do with these peoples’ skin color, and everything to do with our society’s refusal to do what is necessary, and has always been necessary, to educate and discipline its youth. I have been yelling about this since 2012 on this website. And now the rot has spread to within most all our educational system from top to bottom.

        If you doubt this read the scathing open letter by a just retired long term professor at West Point. The allegations are horrifying. And they have been endorsed in detail by a long time tenured professor at the US Naval Academy that apparently has the same cultural collapse.

        Here is the letter as recently published in the American Military News:

        Dear Sir/Ma’am,

        Before you read any further, please understand that the following paragraphs come from a place of intense devotion and loyalty to West Point. My experience as a cadet had a profound impact upon who I am and upon the course of my life, and I remain forever grateful that I have the opportunity to be a part of the Long Gray Line. I firmly believe West Point is a national treasure and that it can and should remain a vitally important source of well trained, disciplined, highly educated Army officers and civilian leaders. However, during my time on the West Point faculty (2006-2009 and again from 2013-2017), I personally witnessed a series of fundamental changes at West Point that have eroded it to the point where I question whether the institution should even remain open. The recent coverage of 2LT Spenser Rapone – an avowed Communist and sworn enemy of the United States – dramatically highlighted this disturbing trend. Given my recent tenure on the West Point faculty and my direct interactions with Rapone, his “mentors,” and with the Academy’s leadership, I believe I can shed light on how someone like Rapone could possibly graduate.

        First and foremost, standards at West Point are nonexistent. They exist on paper, but nowhere else. The senior administration at West Point inexplicably refuses to enforce West Point’s publicly touted high standards on cadets, and, having picked up on this, cadets refuse to enforce standards on each other. The Superintendent refuses to enforce admissions standards or the cadet Honor Code, the Dean refuses to enforce academic standards, and the Commandant refuses to enforce standards of conduct and discipline. The end result is a sort of malaise that pervades the entire institution. Nothing matters anymore. Cadets know this, and it has given rise to a level of cadet arrogance and entitlement the likes of which West Point has never seen in its history.

        Every fall, the Superintendent addresses the staff and faculty and lies. He repeatedly states that “We are going to have winning sports teams without compromising our standards,” and everyone in Robinson Auditorium knows he is lying because we routinely admit athletes with ACT scores in the mid-teens across the board. I have personally taught cadets who are borderline illiterate and cannot read simple passages from the assigned textbooks. It is disheartening when the institution’s most senior leader openly lies to his own faculty-and they all know it.

        The cadet honor code has become a laughingstock. Cadets know they will not be separated for violating it, and thus they do so on a daily basis. Moreover, since they refuse to enforce standards on each other and police their own ranks, cadets will rarely find a cadet at an honor hearing despite overwhelming evidence that a violation has occurred. This in tum has caused the staff and faculty to give up even reporting honor incidents. Why would a staff or faculty member expend the massive amount of time and energy it takes to report an honor violation-including writing multiple sworn statements, giving interviews, and testifying at the honor hearing-when they know without a doubt the cadet will not be found (or, if found, the Superintendent will not separate the cadet)? To make matters worse, the senior leadership at West Point actively discourages staff and faculty from reporting honor violations. l was unfortunate enough to experience this first hand during my first tour on the faculty, when the Commandant of Cadets called my office phone and proceeded to berate me in the most vulgar and obscene language for over ten minutes because I had reported a cadet who lied to me and then asked if “we could just drop it.” Of course, I was duty bound to report the cadet’s violation, and I did. During the course of the berating I received from the Commandant, I never actually found out why he was so angry. It seemed that he was simply irritated that the institution was having to deal with the case, and that it was my fault it even existed. At the honor hearing the next day, I ended up being the one on trial as my character and reputation were dragged through the mud by the cadet and her civilian attorney while I sat on the witness stand without any assistance. In the end, of course, the cadet was not found (despite having at first admitted that she lied), and she eventually graduated. Just recently a cadet openly and obviously plagiarized his History research paper, and his civilian professor reported it. The evidence was overwhelming-there was not the slightest question of his guilt, yet the cadet was not found. The professor, and indeed all the faculty who knew of the case, were completely demoralized. This is the new norm for the cadet honor system. In fact, there is now an addition to the honor system (the Willful Admission Process) which essentially guarantees that if a cadet admits a violation, then separation is not even a possibility. In reality, separation is not a possibility anyway because the Superintendent refuses to impose that sanction.

        Academic standards are also nonexistent. I believe this trend started approximately ten years ago, and it has continued to get worse. West Point has stated standards for academic expectations and performance, but they are ignored. Cadets routinely fail multiple classes and they are not separated at the end-of-semester Academic Boards. Their professors recommend “Definitely Separate,” but those recommendations are totally disregarded. I recently taught a cadet who failed four classes in one semester (including mine), in addition to several she had failed in previous semesters, and she was retained at the Academy. As a result, professors have lost hope and faith in the entire Academic Board process. It has been made clear that cadets can fail a multitude of classes and they will not be separated. Instead, when they fail (and they do to a staggering extent), the Dean simply throws them back into the mix and expects the faculty to somehow drag them through the academic program until they manage to earn a passing grade. What a betrayal this is to the faculty! Also, since they get full grade replacement if they must re­take a course, cadets are actually incentivized to fail. They know they can re-take the course over the summer when they have no other competing requirements, and their new grade completely replaces the failing one. ST AP (Summer Term Academic Program) is also now an accepted summer detail assignment, so retaking a course during the summer translates into even more summer leave for the deficient cadet.

        Even the curriculum itself has suffered. The plebe American History course has been revamped to focus completely on race and on the narrative that America is founded solely on a history of racial oppression. Cadets derisively call it the “I Hate America Course.” Simultaneously, the plebe International History course now focuses on gender to the exclusion of many other important themes. On the other hand, an entire semester of military history was recently deleted from the curriculum (at West Point!). In all courses, the bar has been lowered to the point where it is irrelevant. If a cadet fails a course, the instructor is blamed, so instructors are incentivized to pass everyone. Additionally, instead of responding to cadet failure with an insistence that cadets rise to the challenge and meet the standard, the bar for passing the course itself is simply lowered. This pattern is widespread and pervades every academic department.

        Conduct and disciplinary standards are in perhaps the worst shape of all. Cadets are jaded, cynical, arrogant, and entitled. They routinely talk back to and snap at their instructors (military and civilian alike), challenge authority, and openly refuse to follow regulations. They are allowed to wear civilian clothes in almost any arena outside the classroom, and they flaunt that privilege. Some arrive to class unshaven, in need of haircuts, and with uniforms that look so ridiculously bad that, at times, I could not believe I was even looking at a West Point cadet. However, if a staff or faculty member attempts to correct the cadet in question, that staff/faculty member is sure to be reprimanded for “harassing cadets.” For example, as I made my rounds through the barracks inspecting study conditions one evening as the Academic Officer in Charge, I encountered a cadet in a company study room. He was wearing a pair of blue jeans and nothing else, and was covered in tattoos. He had long hair, was unshaven, and I was honestly unsure ifhe was even a cadet. He looked more like a prison convict to me. When I questioned what he was doing there, he remained seated in his chair and sneered at me that he “was authorized” because he was a First Class cadet. I proceeded to correct him and then reported him to the chain of command the next morning. Later that day I received an email from the Brigade Tactical Officer telling me to “stay in my lane.” I know many other officers receive the same treatment when attempting to make corrections. It is extremely discouraging when the response is invariably one that comes to the defense of the cadet.

        That brings me to another point: cadets’ versions of stories are always valued more highly by senior leaders than those of commissioned officers on the staff and faculty. It is as if West Point’s senior leaders believe their job is to “protect” cadets from the staff and faculty at all costs. This might explain why the faculty’s recommendations are ignored at the Academic Boards, why honor violations are ignored (and commissioned officers are verbally abused for bringing them to light), and why cadets always “win” when it comes to conduct and disciplinary issues.

        It seems that the Academy’s senior leaders are intimidated by cadets. During my first tour on the faculty (I was a CPT at the time), I noticed that 4th class cadets were going on leave in civilian clothes when the regulation clearly stated they were supposed to be wearing a uniform. During a discussion about cadet standards between the BTO and the Dept. of History faculty, I asked why plebes were going on leave in civilian clothes. His answer astonished me: “That rule is too hard to enforce.” Yet West Point had no problem enforcing that rule on me in the mid-1990s. I found it impossible to believe that the several hundred field grade officers stationed at West Point could not make teenagers wear the uniform. This anecdote highlights the fact that West Point’s senior leaders lack not the ability but the motivation to enforce their will upon the Corps of Cadets.

        This brings me to the case of now-2LT Spenser Rapone. It is not at all surprising that the Academy turned a blind eye to his behavior and to his very public hatred of West Point, the Army, and this nation. I knew at the time I wrote that sworn statement in 2015 that he would go on to graduate. It is not so much that West Point’s leadership defends his views (Prof. Hosein did, however); it is that West Point’s senior leaders are infected with apathy: they simply do not want to deal with any problem, regardless of how grievous a violation of standards and/or discipline it may be. They are so reticent to separate problematic cadets (undoubtedly due to the “developmental model” that now exists at USMA) that someone like Rapone can easily slip through the cracks. In other words, West Point’s leaders choose the easier wrong over the harder right.

        I could go on, but I fear that this letter would simply devolve into a screed, which is not my intention. I will sum up by saying this: a culture of extreme permissiveness has invaded the Military Academy, and there seems to be no end to it. Moreover, this is not unintentional; it is a deliberate action that is being taken by the Academy’s senior leadership, though they refuse to acknowledge or explain it. Conduct and behavior that would never be tolerated at a civilian university is common among cadets, and it is supported and defended by the Academy’s senior leaders in an apparent and misguided effort to attract more applicants and cater to what they see as the unique needs of this generation of cadets.

        Our beloved Military Academy has lost its way. It is a shadow of what it once was. It used to be a place where standards and discipline mattered, and where concepts like duty, honor, and country were real and they meant something. Those ideas have been replaced by extreme permissiveness, rampant dishonesty, and an inexplicable pursuit of mediocrity. Instead of scrambling to restore West Point to what it once was, the Academy’s senior leaders give cadets more and more privileges in a seeming effort to tum the institution into a third-rate civilian liberal arts college. Unfortunately, they have largely succeeded. The few remaining members of the staff and faculty who are still trying to hold the line are routinely berated, ignored, and ultimately silenced for their unwillingness to “go along with the program.” The Academy’s senior leaders simply do not want to hear their voices or their concerns. Dissent is crushed-I was repeatedly told to keep quiet at faculty meetings, even as a LTC, because my dissent was neither needed nor appreciated.

        It breaks my heart to write this. It breaks my heart to know first-hand what West Point was versus what it has become. This is not a “Corps has” story; it is meant to highlight a deliberate and radical series of changes being undertaken at the highest levels of USMA’ s leadership that are detrimental to the institution. Criticizing these changes is not popular. I have already been labeled a “traitor” by some at the Academy due to my sworn statement’s appearance in the media circus surrounding Spenser Rapone. However, whenever I hear this, I am reminded of the Cadet Prayer:

        ” … suffer not our hatred of hypocrisy and pretense ever to diminish. Make us to choose the harder right instead of the easier wrong, and never to be content with a half-truth when the whole can be won. …that scorns to compromise with vice and injustice, and knows no fear when truth and right are in jeopardy.”

        West Point was once special, and it can be again. Spenser Rapone never should have been admitted, much less graduate, but he was-and that mistake is directly attributable to the culture of permissiveness and apathy that now exists there.

        Sincerely and Respectfully,

        Robert M. Heffington

        LTC, U.S. Army (Retired), West Point Class of 1997

      3. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        Now that we have learned above not only about the abuse and failure of indiscriminate government loans for students at our civilian colleges and universities, and also about the similar abuse and failure of 100% government funding of cadets’ “education” at West Point, now we can read about the similar abuses and failures of “Midshipmen” at the US Naval Academy, in Annapolis, Maryland.

        See http://thefederalist.com/2017/10/16/not-just-west-point-u-s-military-academies-become-disneyland-politicians/

        What does this tell us about our future if indeed the rot has now spread to newly minted officers now filling up our Military establishment.

  2. LarrytheG Avatar
    LarrytheG

    re: ” What do we do next? More of the same isn’t going to cut it. Sitting around going tsk-tsk-tsk, isn’t it a shame they can’t get their acts together – that isn’t going to cut it.”

    ” So, my advice is, let’s stop doing harm. When things settle out, let’s see how things look.”

    is that a real solution? Just stop?

    come on.. this is why you guys get a bad name…. and it doubly worse when you throw race into it..

    would you recommend that same solution to ..say… the FEMA flood insurance program.. or the VA because they can’t get their act together either? Medicare? just “stop” and see how things shake out?

    There are problems.. no question about it.. but there are problems with student loans in general.. across the board. but especially so with for-profit and Veterans.. would you also “just stop” and see what shakes out?

    come on.. guy..

    1. James A. Bacon Avatar
      James A. Bacon

      Larry, the country is running a $700 billion-a-year deficit. The national debt has hit the $20 trillion mark. And deficits will proceed to get bigger and bigger, even in the absence of a recession. We can’t afford any more good-intentions social programs that don’t work. We’re bankrupting the country. And when Boomergeddon hits, you can bet your bottom dollar that the poor and minorities will suffer the most. All your compassion and noble intentions won’t help them one bit!

      1. LarrytheG Avatar
        LarrytheG

        Sorry Jim – That’s not good enough. There are LOTS of reasons why we are running a deficit of 700 billion and LOTS of ways of cutting it and your “good intentions” actually include 300 billion a year for not taxing health insurance for people with employer-provided… and as I pointed out earlier the FEMA flood insurance program.. tax-free mortgage deductions (which was the real reason behind the mortgage meltdown).. etc.

        the “compassion” issue is little more than a smokescreen for selectively picking where to make cuts.

        I’m perfectly FINE with making cuts to ALL college loans – by the way- such that those who have more than 100K a year in family income – just do not qualify at all.. AND that ANYONE who does not perform academically – is disqualified but it has be not race-based.. period.

        When you make any of these issues about race, – you just blow up the whole narrative.

      2. Acbar Avatar
        Acbar

        I’m on Jim’s side of this one. The economy cannot withstand another added major extraction of tax dollars and indebtedness without something collapsing. Take your $300 billion out of the system by taxing “properly” our health insurance and you will, in fact, accomplish much-needed re-direction of our health system by shifting it away from employers and towards individuals — but in the short run, add that tax to businesses and you could cripple the economy. I’m all for making that change but it must be done in stages so that businesses (and their employees) can adjust their health insurance practices before the punitive tax burden hits them — not abruptly just to generate a tax windfall for the government. Ditto for taking away the mortgage deduction for individuals.

        As for “the “compassion issue is little more than a smokescreen for selectively picking where to make cuts” — I’m all with eliminating the “identity politics” that says extra spending on this or that special group is the solution to whatever sets them apart.

        1. TooManyTaxes Avatar
          TooManyTaxes

          I remember back in the 1990s when the Clinton administration and Congress got rid of tax deductions for “yachts.” A significant number of skilled boat builders in Connecticut wound up losing their jobs. I’m not arguing against any particular tax change, but all impacts from changes should be considered before enactment.

          And riddle me this. If employers don’t need to follow the immigration laws, why do I have to follow the tax laws? Why do you? Much of our problems stem from the virtually unlimited importation of poverty over the last 25 years or so. I’m not calling for the deportation of everyone who is here illegally. But why can’t we crack down on employers? It could be done easily through the tax laws. Limit deduction of compensation for employees who have not been checked by E-Verify to 50%. Limit deduction of compensation for employees checked but found to be ineligible to 75%. And offer rewards for turning in businesses to the IRS. We’d clean up things quickly without having to conduct raids except for those with criminal records or a deportation order.

  3. Steve Haner Avatar
    Steve Haner

    I made the point in my original comment that whatever has been going on for the past three decades has clearly failed. The war on poverty has been won by poverty. I am back in Econ 101 hearing my prof say – if the government subsidizes something, you get more of it. I was asking for ideas on what might be a different approach.

    The three data points line up. The low (by orders of magnitude) median incomes and net worth of a certain group of our fellow citizens when measured by race. The substantially higher discipline issues that create a path to failure before the end of high school, and the economic debt trap around so many of those who do graduate and go on to college. Put them together and I hear a fire bell. The response “nothing to see here, move on, ignore the identity politics” just increases my concern.

    Just how much of that $20 trillion in debt was run up fighting poverty, and just how much was run up creating wealth? The point on tax free health insurance was excellent – who has really benefited over the past 30 years from that huge subsidy? The employees, yes, but also the companies and certainly the health care industry. Mainly the health care industry. The Food Stamp program was a huge farm and grocery store subsidy. Until I wrote a story about it, the state actually collected sales taxes on food stamps.

    If the federal budget really did balance, who would lose out with the lower spending or who would be paying the higher taxes? If it were just poor people it would happen tomorrow.

    Calm down, still a Republican here – but one who drives past Gilpin Court every day and wonders, what do we do now?

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