To the Economist who continues to jabber: "Borrowing for college is sensible"

To the economist who works for the College Board, the one who did such odd number crunching with her colleague, Patricia Steele that people in the education industry are all scratching their heads about the discrepancies in their findings because of this WSJ article, I have something to say to you. 

You continue to claim: "Borrowing for college is sensible."


At this juncture, that is flat wrong. Borrowing for college has been a death sentence for many people. I'm the one reading their stories. Recently, TICAS.org also asked people to share their student debt stories - they put out that request just a week ago. So far, they have received over 600 messages! Borrowing for college is about as sensible as putting a loaded gun to your head while drunk and feeling really angry about the outstanding loans you have for your education.


Moreover, Lauren Asher, the President of TICAS, has concerns about the the cost of community colleges. Many people think that attending community college is a "sensible" first step towards a degree.

Well, recently, Asher stated here, "people think of community college as affordable," however "[students] are having a harder time covering their living costs without borrowing."


On top of the rise in tuition, and Sandy Baum (said economist) refuses to ever acknowledge these real facts of life, living costs have gone up dramatically, etc. Moreover, middle class salaries have remained stagnant for well over 20 years. You know what makes that ridiculous? There are so many things that make that fact absurd, but here's just one: It used to be that one person was the wage earner (the traditional family -that was true for the most part), but now a household typically has two people earning money! And yet middle class salaries remain stagnant.


Many light years ago, I had been pursuing my Ph.D. and had planned on becoming a professor of Modern European cultural and intellectual history. It goes without saying, I believe in the value of higher education, but if things do not change in terms of the student lending crisis, and a person cannot afford to go to college, I would strongly advise them against going.

We - as a society who believes in credentials -  must change this corrupted system and help those who need it the most - students.

Why I'm not excited about the new IBR Program

The Income Based Repayment program does not impress me. Recently, Sandra Baum from the College Board was asked to inform people of how financial aid has changed. I take issue with the fact that Baum says again that "borrowing for college is sensible." We'll get to that in a moment. First, let's discuss why IBR is unimpressive.

Realistic Scenario - John and Jane, a married couple with student loan debt. (See them above, sipping wine and adoring one another).



If a married couple both have debt, the spouse's income counts in determining the person's monthly payment, but the spouse's debt doesn't count.


So, John and Jane both have 100k in student loan debt. 


John makes 45k a year. Jane makes 35k a year. Yikes! (They really are being reckless in their spending - I mean, they're drinking red wine and their clothes look awfully smart. Those irresponsible borrowers!)


In any event . . .


In determining John's payment, his household income is calculated at 70k a year, but his student loan debt is only calculated at 100k, and the same goes for Jane. Therefore for each of them, their household is calculated at 70k in income, but their total debt burden is only seen as 100k. When it fact it's 200k. (Remember: John owes 100k and Jane owes 100k).    



Hmmm . . . should John and Jane, even though they're madly in love, divorce?


Here's an IBR calculator - have fun with that!

I filled it out. Here's what I was informed:

"Unfortunately, current IBR rules use your and your spouse’s combined income to determine what monthly payment you can afford, but do not consider the burden of your combined student debt. This results in higher payments for both borrowers, a type of double-counting that is unfair and inappropriate for your situation.
The US Department of Education has agreed to revisit this rule and factor in both spouses' debts when calculating one applicant's IBR payments, but that change would not go into effect until as late as July 2010. In the meantime, the current rules will apply. Please sign up for our mailing list so we can keep you updated on these and other changes. More information is available here."

Hmmm . . . I'm glad I got married, but this news is not good.

Let's talk (again) about Baum's claim that "borrowing from college is sensible." To be cont . . .

The Relevance of Resurrecting and Recycling News: For My New Readers

Many of my readers have praised me for being prolific. They have also made remarks like, "I'm going to have to sit down and spend an hour exploring your blog when I have time!"

Since I'm picking up many new readers, I wanted to return to a few blogs I think are worth "assigning" to those of you who are new and wish to read my more investigative work. Here's a list below of what I think are important to understanding the heroes and the . . . ahem . . . villains in the student lending crisis. (Mind you, the reader will determine where the characters fall under each category, particularly the latter one. Most of the people I'm writing about aren't villains, but have decided to believe and work for a corrupted and broken system.

The decision to compromise one's ethics is paradoxically complex and simple. For instance, after I told a one researcher that they were on "the wrong side of the fence," they claimed that they were not even aware of how their organization functions. And, they added, "I'm just doing my job," or something like that. THAT claim is not an excuse. I like to direct anyone who makes such a cavalier remark about their "job," to this book by Hannah Arendt. (In this case, their role and their "I'm-just-doing-my-job" excuse, in fact, effects the lives of thousands and thousands of young people in America). I hesitated to make these remarks, but having studied this time period carefully (in contrast to the likes of Sarah Palin and her ilk), and I think the banality of evil is something we must, as a society, be cognizant of how. Indeed, it is our duty to be aware of how banal evil informs our thoughts, our actions, and the jobs we choose. I'm certainly not implying that the end point of your blase beliefs about "just doing a job" is leading people to gas chambers. Certainly not. I am, however, suggesting that the banality of evil appears in a variety of forms, and in the case of the student lending crisis, it seems clear to me that it exists in problematic and immoral ways. That's why we - all of us in this debate - must think about the sides we have chosen and why. 

Und jetzt die Abfallverwertung . . .

As promised, here's the list of earlier blogs worthy of reading:

1) "The Resurrection of the Dept. of Ed. G-Man and America's Collective Trauma" (originally posted August 13, 2009)
2) "Part II of the Resurrection of the Dept. of Ed. G-Man and America's Collective Trauma" (originally posted August 14, 2009)
3) "BREAKING NEWS PART I: My Debate with Patricia Steele and Sandra Baum" (originally posted August 15, 2009) - Patricia Steele, a research analyst, and Sandra Baum, an economist, work for the College Board, and I had a lengthy debate over the course of two days with both of them.
4) "BREAKING NEWS PART II: The College Board USED to be LENDERS" (originally posted August 15, 2009)
5) "Quod est veritas? Why isn't the Department of Education putting out any reports on student loan debt?" (originally posted on August 20, 2009)
6) "And yet another posting about the College Board" (originally posted August 21, 2009)

And yet another posting about the College Board

Wow. The College Board's reputation continues to worsen. After another quick search for them on Google, I found a story here about kickbacks given to financial aid directors. The College Board settled after they were probed about these kickbacks. (And if you settle, guess what that means? Uh, you're GUILTY).

Do we suspect corruption? Maybe? Hmmm? Possibly? Hmmm? Could this situation be just ONE out of hundreds and hundreds of similar situations whereby other lenders also offered or continue to offer kickbacks to promote their companies at schools?

Let's talk about some irresponsibility, and I'm obviously not referring to students who take out loans. Nope. I'm talking about good ol' fashioned corporate irresponsibility. So the yapping mouths affixed to (I oftentimes presume) non-thinking beings that decry "oh, all these students are just sooooooooooooo irresponsible" need to check that statement at the door.

When it's a Friday evening, it's raining, and football games are on, the time is ripe to search for stories about the College Board. So as I nibble on football treats, I invite you to snack on a few more tidbits about good ol' CB. WARNING! This stuff WILL cause digestive problems. But you asked for it, and so did I. Here are your heavy, greasy mind-snacks:

-"The College Board, best known for designing and administering SAT and Advance Placement tests, today settled an investigation into charges that it swapped favorable pricing for its services to colleges in exchange for the colleges favorably marketing its student loan products under the heading 'preferred lender [my emphasis] -- a category that a wide ranging probe into industry practices found was often was unrelated to any favorable loan rate."

-Often, Cuomo's office found, this was done in exchange for a fee to the college, or an inducement to the financial aid officer in the form of consulting fees, which included $70,000 harbor cruises and shares in the lender's company.

-One former financial aid director at Johns Hopkins University who cultivated a national reputation as a stickler for ethics, according to the Washington Post, "accepted more than $130,000 from eight lending industry companies during her tenure, twice as much money as previously disclosed."

-Lenders who have reached settlements include many of the names familiar from the meltdown of the banking sector: JP Morgan Chase, Citibank, Bank of America, Wachovia, Wells Fargo, National City, Sallie Mae CIT/Student Loan Xpress among them.

Oh, wow! I'm shocked. They have bedfellows!

So, again, here's my question and it's really a question for Kim Clark, that reporter who we all know now - the one who wrote that sloppy article about the College Board's findings that student debt really isn't a big deal here: Why aren't you telling your readers about these things? I realize you have word limits, but you're probably a crafty writer. I bet you could reference these things AND also mention the fact that the College Board used to be a lender in your articles. Right?

Enjoy your Friday, friends! As soon as I hear back from Ms. Clark (wink, wink), I'll be sure to share her answer.

Quod Est Veritas? Why isn't the Department of Education Putting Out Any Reports on Student Loan Debt?

So, I've been thinking about that data that was presented by the College Board in that frustrating article by Kim Clark. They manipulated the data coming from the NPSAS . We all know that. But I've been pondering things that are connected to journalism and integrity. I guess I'm old-fashioned, but I believe in transparency and honesty. The more I dig into this whole student lending disaster and dissect those who have the money, power, and the most awesome-est lobbyists around (not to mention the problematic and sloppy role that the DOE plays in this whole game as well as the senators whose pockets get lined by these nasty lenders, the universities and the benefits they reap from these folks, etc.) the more I realize I am old-school - I believe in ethics and admire a G-man like Jon Oberg. It also seems that journalists have forgotten things like integrity and transparency. However, sleepless nights lead you to gold mines on the internet - rest assured, dear readers, I have MUCH more to share. I am committing myself to the role of a watchdog, because those students and families who are really struggling (the sick, the destitute, and so forth) deserve to have a voice. As long as I can holler and put forth truths, I'll be here for those people.

There are two things that are important to know about why my thinking is troubled. (That doesn't mean it's fuzzy. Quite the contrary - it's crystal clear).

1) Why didn't Kim Clark tell her readers about the history of the College Board, i.e., that it had been a LENDER until 2007? I think that's important information to mention as a reporter, don't you think so too? Instead, Ms. Clark described them as "an organization for colleges." Hmmmm. What does that mean? For those of you already following me, you've heard my critiques and agreed. In short, I ask: where is Ms. Clark's journalistic integrity? Why wouldn't U.S. News and World Report state the objective facts?

2) Also, why hasn't the Department of Education put out a REPORT about student lending debt? Why won't the DOE do their OWN analysis of this data? Instead it is farmed out to the College Board who manipulate that data, as I mentioned above, and convince us that the student lending crisis isn't a big deal. Oh, wait, I'm sorry, it's all been SENSATIONALIZED, as Patricia Steele, claimed. (News Alert to those folks: IT FAILED to convince most of the readers, and don't even TRY and make that argument that we're all a bunch of ill-informed individuals who didn't bother reading the actual report. Ganz falsch. Entirely false).

I also don't understand why the NYT hasn't done fuller pieces about Applebaum and Collinge. This movement CLEARLY has traction. In fact, Applebaum's movement has surpassed 225,000 supporters on Facebook! That's fantastic, so why aren't these reporters doing more stories about Applebaum, Collinge, and blogs like this one? Does it not matter to them?

BREAKING NEWS PART II: The College Board USED to be a LENDER

Clark described the College Board as "an organization made up of colleges." That could mean a host of things. For most readers, they could easily assume that the College Board was a type of think tank who carries out research on behalf of colleges. Or perhaps the College Board is a not-for-profit whose staff of social scientists and economists spend their days crunching out numbers and reports that, in my view, miss the bigger points. To be sure, we need number-crunchers. They're important. But they can also do a great job of providing highly problematic conclusions. (At one point in my exchange with Baum, I asked her if she'd ever read How To Lie With Statistics . It's of no surprise that she did not reply to that question).

But at the end of the day, number crunchers don't help most people figure out the big stuff in life - who to fall in love with, when to have children, etc. Moreover, number crunchers don't do a good job of acknowledging the complexity of things. If you begin to contextualize numbers and data, well, things begin to look a whole lot messier.

Baum has been an economist for 30 years. Fine. She's probably a fine economist. But as a result, Baum is incapable of answering some BIG questions. She hides behind numbers to make her case. Like I said, I'm not saying that data isn't important. Data helps us put together stories, but it isn't the only picture of a story. Thankfully, historians realized the errors of going number crazy. But there was a time when they too believed that it would erase all forms of interpretative historical work. That was back in the 70s and cliometrics was the wave of the future. Alas, historians came to understand the drawbacks to this shift toward number-crunching only. It's too neat. History and those who craft histories with precision, analysis, and honesty know this to be true.

This reminds me of a great post on Clark's page. The reader wrote:

-How does the 33% of students with debt today compare to that of 30-40 years ago? -Why is $20k in student loan debt for an associate's or bachelors degree acceptable? -What percentage of income is an average borrower's debt compared to that of 30-40 years ago? -Why wasn't credit card debt included? A lot of people I know paid for utilities, books, and groceries with credit cards because their loans didn't cover everything. -If the percentage of student borrowers is higher today because more people are getting access to loans to fund their education, does that mean we've accepted a permanent underclass in America? If someone who can't afford school spends $20-$30k to get a degree from a state school, and their competition in the job market is someone whose parents' financial situation afforded them a debt-free degree from a well-known, private liberal arts school (or an Ivy), the less advantaged student will be less advantaged on the job market, meaning they'll remain saddled with their debt (overeducated and underemployed) for a long time. I believe in the meritocratic ideals that were an important part of America's foundation - this is not a future for America I like to envision. Having the College Board produce a report on student loan debt is like having the Beef Council reporting on the health risks of their product.

I doubt very much that Baum could satisfy those who are steeped in a historical and literary tradition in answering these questions. BUT she has her numbers. Good for her. Those numbers don't help the thousands and thousands of students who are presently being crushed my student loans. These are students who have worked very hard to obtain their degrees. Now they're humiliated because they can't find a decent job and they've moved back into a basement, the place they thought they'd FINALLY escaped (for either good or bad reasons) when they left for college, or grad school, or med school . . .But now they're back. These students are realizing that they are living in a basement, can't find a job, and have Sallie Mae breathing down their throats. These students are questioning the value of their education. Some still cling to the belief that it was all worth it, while others are thinking that they were just royally shafted by an insidious lending industry. There are some who are realizing that they probably won't be able to have children (To Sandy and Patricia - if you even bother to read this "misinformation," that realization is NOT a sensationalistic claim. If you took the time to read the posts on these articles, you'd find STATISTICS in the remarks. Many, many times over - hundreds and hundreds of times - I've seen people write: "I'd really like to have children, but I don't think that's possible because of my debt.")


But let's return to that last remark of the reader above. S/he concluded: "Having the College Board produce a report on student loan debt is like having the Beef Council reporting on the health risks of their product."

That's powerful, and it makes me wonder if this particular poster knows what I know about the College Board now (i.e. after my heated exchange with Sandy and Patricia). Did all of you know that the College Board was itself a LENDER? That's right, folks! They were lenders until 2007! See it here. Yeah. Funny thing is - neither Patricia nor Sandy bothered to tell me that. Hmmm . . . I'm really, really confused as to why they didn't disclose that information. Oh, right! I mean, after all, it is ON their page, so I'm just silly to have missed it. Right?

Now the pieces have fallen into place, and I understand how one of the people at the College Board couldn't understand the connection between two things that so clearly intersect. I believe in universal health care and I believe in universal post-secondary education. Those things to people not defending an industry to which they once belonged make sense. But for someone who works for an "organization made up of colleges" (that's doublespeak for "WE WERE PREVIOUS LENDERS"), they can't see the connection. Hmph.

BREAKING NEWS PART I: My debate with Patricia Steele and Sandra Baum

Education Matters sent word out to movement supporters and leaders about Kim Clark's August 12th 2009 article, "Is Student Debt Really a Problem?" This article details a recent report from the College Board. In the report, the findings conclude that student debt really isn't as troubling as people would think.

A particular comment sparked outrage (understandably), and a fury of posts, which continue to be added today (SATURDAY), ensued. First off, who wrote this report and what was the remark that caused all this justified anger?

a) The report was drafted by Patricia Steele and Sandra Baum.

b) Steele claimed that the College Board put out the report in order to "take down a notch the sensationalist stories about students drowning in debt [my emphasis]."

The College Board is described by Klark as an "organization made up of colleges." In truth, there's more behind their involvement with this sticky, nasty lending industry, but I'll save that treat for later.

To describe the obvious systemic problems that the media has finally begun to discuss as "sensationalist" was a poor choice of words for Ms. Steele.

Here's what I wrote to them in an email on August 13, 2009:

Dear Authors of Recent (Highly Problematic) Study Regarding Student Loan Debt:

I am a blogger and my blog is about education. I am getting a lot of traffic and also am a supporter and volunteer for Robert Applebaum's Forgive Student Loan Movement. You recently stated that you published your report about student loan debt to "take down a notch the sensationalist stories about students drowning in debt." (You said that, Patricia). I find that remark to be offensive at best and condescending at worst. Your findings are highly questionable and do not take many factors into account. The stories I read on a daily basis about the crushing debt that middle class families have acquired as a result of sky-rocketing college tuition costs are heartbreaking. I am glad I'm on the right side of this argument. It is clear that lenders and higher education institutions are very nervous. They're actually responding. That means this movement is growing and proving to be more than just an irritating itch! We are talking about working- and middle-class families who are trying to better themselves, and you say something like that? Have you even bothered to read their stories? As social scientists who do an excellent job of crunching numbers for the College Board, I can only presume you lack the ability to synthesize these accounts. Thankfully we have historians who can tell richer stories and don't just look at the "numbers." That's a bad way to understand the complexity of modern society. I will be blogging about this piece soon. I will not be the only you will hear from.

Respectfully, Ms. C. Cryn Johannsen

This email got the authors' attention. Patricia was the first to write to me. Most of these emails were essentially "public," because I had cc-ed Robert Applebaum, Alan Collinge (if you're not familiar with his name, Collinge is the founder of Student Loan Justice, and others). Patricia and I argued back and forth for an entire afternoon. I understand why we weren't making much headway. It was cordial but heated. I appreciated that response from Patricia. She reacted quite strongly at first, but then she cooled down. Later that evening I received an email from Sandra Baum. To say it was condescending is putting it lightly.

On several occasions I let them know that I would be writing about our exchange and including their remarks (the ones that were public). But after re-reading the correspondence, and what I've recently learned about the College Board, I've decided that an exercise in providing my readers with a detail by detail account of our conversation is superfluous.

After my final exchanges with Sandra and Patricia, I investigated the College Board and its past. Suffice to say, their relationship with lenders is MUCH bigger than I had originally understood. I realized that the debate was disingenuous . . .