Friday, October 24, 2014

Educators and The College Loan Debt Crisis

There is an all too familiar activity that incumbent school administrators take to doing during a change of leadership at the top level: we go into hiding (not literally of course).  The hiring of a new Superintendent by a school board almost always portends trouble.  This new boss essentially has the power of the Grimm Reaper, able to slice heads off at will with his scythe.  And he (most school Superintendents are males) will too, utilizing the excuse of needing to get rid of poor performing Principals in order to achieve his "task" or "mission."  What school administrators do when we get a new Superintendent reminds me of the scene in the classic movie, The Wizard of Oz, when the Munchkins scurry about in panic, hiding from the Wicked Witch of West as she makes her menacing and frightful appearance.

When it comes to the college student loan debt crisis in America, educators for too long have been the Munchkins.  How so?  That in just a bit.  First…

The Monopoly

Traditional four year colleges and universities have a monopoly on the Bachelor’s degree.  This is their “product.”  High school graduates and their families realize that this “product” is an indispensable “material” that must be acquired at almost any cost to give an individual a leg up on their financial prospects.  Who reinforces this cultural and social reality?  Employers and public school educators do, of course.  We are not living in the days of Benjamin Franklin when people could actually educate themselves, and prove their worth by becoming someone’s apprentice.  In an age when there is so much free education out there via the Internet, the most information any human has ever had access to, we stick to a singular educational paradigm: going to college to get that fancy Bachelor’s degree.  I realize there are two-year and trade degrees available for consumption.  But c’mon, we all know this is not where the money is.

Colleges and universities have a monopoly of sorts then on the “approved” pathway toward future prosperity.  They can raise tuition prices anytime and still have just about the same demand for their product. What do we call this type of operation?  I’d call it a RACKET!  Wouldn’t you?

The “Players” In This Sweet Scheme

Player number one is the Government, from the President on down to the Secretary of Education, Mr. Arne Duncan.  What does Mr. Duncan have to say about this trillion dollar bubble crisis?
"I applaud the bipartisan compromise reached by President Obama and lawmakers on Capitol Hill, offering relief to millions of students and families across the country. The law will cut rates on nearly all new federal student loans and save undergraduates an average of more than $1,500 on loans taken out this year. It is an encouraging step forward in our effort to keep college affordable.

"Education is a cornerstone of a strong middle-class, and keeping student interest rates low is just part of our commitment to making a college education accessible to every single American willing to work for it. As we continue to work on ways to bring down the soaring costs of higher education, we must remember that all of us share a role in ensuring that college is affordable for students and families. There is more work ahead and I look forward to joining members of both parties in finding ways to keep a high-quality education within reach for working families." Statement

Sounds like he is more concerned with making college affordable (ensuring the scheme continues) by keeping government backed student loan rates from soaring.  Okay….

Financial guru Suzie Ormann has a different take on the matter.  She criticizes congress for making a substantial profit (with federal student loans) on the backs of our young adults.  She makes a great point when comparing the 30-year mortgage rate to the current rate on a federal undegraduate Stafford loan:  

"The 4.66 percent for an undergraduate Stafford loan is at a time when qualified borrowers can get a 30-year fixed rate mortgages for around 4.3 percent for much of the year. If banks can make plenty of money lending out at less than the rate on a federal student loan-for 30 years-it is troubling that student and their families are charged more for shorter-term debt."  

You can read the entire article here: Orman on the Crisis.  She suggested that legislation be passed to allow student loan borrowers to refinance at a rate lower than 4% for undergrads and lower than 7% for PLUS loans (loans to parents).  Sure, why not?  Can't hurt.

Then we have billionaire investor Mark Cuban.  He's made a lot of noise (about the student loan debt crisis) as of late.  You can see him taking on the subject here: CNBC video.  He makes some great points.  He also identifies Player Number 2 in the scheme for us: College/university administrators.  Yes!  Thank-you, Mr. Cuban.  Why should we tolerate colleges and universities constantly upgrading their facilities, turning them into country clubs, in order to attract more sheep?  Why is it okay for Dean Monopoly to pay himself a million dollars a year to run a university?  Meanwhile, Professors starve, underpaid and underappreciated.

The third and final Player in this scheme is none other than our public school educators, from Superintendents on down to the classroom teacher.  I know what you're thinking educators..."No way, Carlos, don't put any of this on us."  I'm afraid I already have.  Here is an excerpt from my ebook, CCM..., published back in March:

The Higher Education Industry and Our Complicity

I purposely mentioned above that I attended a two-year community college after high school; I had acceptance letters to four-year universities at the time.  My decision to stay home and attend San Jose City was based on my immaturity and lack of life skills.  I grew up in a traditional Mexican home.  My mother did virtually everything for me.  How was I supposed to go away to college, not knowing how to wash my own clothes?  I was independent when it came to school and making money.  But when it came to taking care of me, cooking a meal, ironing my clothes, and having clean underwear, I was an ignoramus!  Perhaps if I hadn’t taken my mother for granted, I could’ve been ready to go away after my senior year.  To this day I regret that it took eighteen years to learn from the best mother a kid ever had.

The higher education industry has benefitted financially from our work with students.  The incessant educational goal of getting every child into college created the mess our college graduates are in today.  Sure we can blame the bad economy when graduates can’t find a job or are under-employed.  We can blame our politicians for not doing anything about the problem of ballooning college tuitions, condemning graduates to a lifetime of loan payments.  We can also point the finger at the college graduate for making poor choices as an undergrad.  What about us, the millions of primary and secondary educators across the nation?  What specific role have we played?

I confess I have steered too many unready students toward the lecture halls of four-year colleges and universities.  Those students were as ready as I was two decades ago.  They had a top grade-point average and enough activity on their resumes to make the average person look inexperienced.  But they lacked conviction and had no game plan.  They didn’t know what they wanted to be or what major to declare.  Some were immature and unprepared for life outside their home, much as I was.  Still others had a major in mind, and I was the one lacking the conviction to tell them they were making a mistake.  I too then, am responsible for creating one of the largest supply trains an industry has ever seen.  I’m guilty of helping to build an insatiable demand for higher education.  Why?  Because our numbers look better this way.  The data collected on Advanced Placement exam pass rates, or completion of college entrance requirements, is the evidence districts need to show prospective families they’re superior, ultimately recruiting more students.

I’m for students going to college, but not if it means they’ll end up serving me beer at the Chipotle Mexican Grill bar.  We have thousands of debt-crippled college graduates who are unemployed.  Many work a job, not a career, just to pay off their loans.  Saying, “we didn’t know,” is not an excuse.  We know that when they choose Architecture, Philosophy, Anthropology, Political Science, to name a few, they choose some of the highest unemployment rates in the country.  Source: College-majors-with-highest-lowest-unemployment/the-majors-with-the-lowest-and-highest-unemployment.  We also know that by selecting a Science, Technology, Engineering, or Math (STEM) major, they will have a better chance of starting a career out of college.  A two-year college may be the better option for some of our students.  Getting a job out of high school, doing some self-discovery, becoming financially literate, may be a better decision for some of our kids.  Let’s not act like someone has died when students tell us they don’t want to go to college.  Let’s probe instead, and give sound financial advice.  (end of excerpt)

Superintendents: Pushing S.T.E.M. Is Not Enough

If our country is to come out of this college loan debt bubble crisis, educational leaders must finally stick out their heads without fear and boldly face the problem from our end.  Some states and school districts are trailblazing.  At Herndon High School, in Herndon, VA, senior students can take a course on Economics and Personal Finance, see: article.  In fact, the state of Virginia requires that all students complete a credit course in financial literacy.  I applaud you good citizens of Virginia!

Superintendents everywhere else, take note!  Pushing Science, Technology, Engineering, and Mathematics majors to fill our dwindling supply of abled bodied individuals in these fields isn't enough.  Sure, statistically speaking college graduates who major in these areas stand a better chance of earning more money over their lifetimes.  That does nothing to curb the insatiable appetitie for money that university administrators, private lenders, and even the government, all have.  As "21st Century Leaders" you must do more.

The case of Fairfax County Public Schools taking a traditional core class like Economics and morphing it into a College 101 class is a great one.  Economics is a semester course at most comprehensive public high schools.  Why not simply transform the curriculum, teach it using material that is actually relevant to our 12th grade students today?  Integrating financial concepts as they pertain to the college experience would not be hard to do.

Why do we value the financial livelihoods of our soon to be retired professional educators more than we do our soon to be world leaders?  In California, all teachers on the brink of retirement are given the opportunity to receive benefits counseling.  This service is important, is it not?  Yet we do not afford our 12th grade students financial counseling prior to their leaving our halls?  Shame on us!  Let's stop fanning the flames now.

I'm too angry to continue! 

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