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More thoughts on the student loan mess

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Scott has already noted that one causal factor in the spiraling amount of student loan debt cataloged in the current NYT series on the subject has been the eagerness of state governments to stop subsidizing higher education. Andrew Hacker points out that it’s important not to let the schools themselves, public and private, off the hook.

In his new book Failing Law Schools Brian Tamanaha makes the perceptive observation that to argue law schools have raised their tuition so drastically because of skyrocketing operating costs is getting, to a significant extent, the causality backwards: law schools have skyrocketing operating costs because they’ve raised tuition drastically. And they’ve raised tuition drastically because, as Tamanaha puts it, “they could.” I’m not familiar enough with the financial structure of higher education in general to venture an opinion on the extent to which this phenomenon applies to it, but I wouldn’t be surprised if it did.

In any case, over the past generation higher education in this country has been swept up in the ideology of the supposedly free market, which posits that if you charge $48,000 per year to attend Ohio Northern University and students and their families pay (or to an increasing extent borrow from the federal government) that amount this constitutes an economically rational transaction by definition. It turns out that postulate depends on a whole lot of highly questionable assumptions.

Another symptom of the same sort of ideological distortion is Gordon Gee’s salary of two million dollars per year. Gee has now been the president of five different universities, and has left something of a mess everywhere he’s been. His career illustrates that upward failure is a principle that doesn’t apply just to corporate CEOs.

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  • Dave

    It kills me that anyone would pay 160 grand, plus interest, to be educated by mediocre people at Ohio Northern in the tiny, pointless village of Ada, Ohio. This is not “economically rational.” Why not just kill yourself instead?

    • Why would you think the faculty at Ohio Northern are mediocre? That makes no sense to me.

      • Malaclypse

        Well, if you play the odds, most people/institutions are mediocre, by definition.

        • Yes, but I think the point of the comment was that somehow the faculty at ONU was mediocre because they were at ONU. Which would show a complete misunderstanding of how academia works if true.

          • Scott Lemieux

            You apparently have forgotten Dave’s previous pensees on academia. If his thinking about the subject was mediocre that would be a substantial improvement.

          • mark f

            Dave usually only shows up to complain that SEK has bad taste or that people who are not Dave have been awarded PhDs.

            • Dave

              Oh, I looked at some Ohio Northern department websites. I did assume the faculty is mediocre, and then I confirmed it!

              But yes, in the grand scheme, I am essentially a troll.

              • So, how precisely did you confirm they were mediocre? How did you make this extremely informed decision?

                • Craigo

                  He didn’t see his name.

                • Dave

                  I checked out the English dept faculty page. It’s a liberal arts college, and I figure the English department is fairly representative at an institution like that.

                  Would you pay a few hundred grand to major in English there?

                • And what precisely can you tell from the website that would make you come to these conclusions? Is there any information here that would make you conclude they were mediocre?

                • Hogan

                  Well, for one thing, the facial hair is distinctly subpar.

                • Dave

                  Their degrees are from minor programs, their publications look meh, and their faces offend me.

                • And what do you know about what major programs are in English and publications? Moreover, if they had PhDs from Harvard, how would that better prepare them to teach at a liberal arts school like Ohio Northern?

                  Or another way to put it is to ask if you have any idea what you are talking about on these matters or whether you are a complete moron?

                • Hogan

                  For a complete moron, he’s a hell of a good troll.

                • Dave

                  In response to your litany of questions, Erik, let’s just say I made a series of lucky guesses and surmised that Ohio Northern is a $48k/year community college.

                • So you are a moron. Well, I’m glad we have that cleared up.

                • Scott Lemieux

                  Look, the evidence is clear — do you see Dave’s name on the faculty list anywhere? I rest my case! One of America’s most brilliant minds continues to go unrecognized by the mediocrities who refuse to have him for a member. The fact that he has plenty of time to spend in blog comment sections complaining about how he doesn’t understand posts if every reference isn’t footnoted is central to his point.

              • Paul Campos

                I hear the Chronicle is looking for a new blogger.

                • Dave

                  I’m not saying they’re bad people or that the school should be shut down! I’m saying I wouldn’t pay $48,000 a year to attend! Jesus. Sorry to offend the honor of your colleagues and the integrity of your profession.

                • Uncle Kvetch

                  I’m not saying they’re bad people or that the school should be shut down! I’m saying I wouldn’t pay $48,000 a year to attend! Jesus.

                  Shorter Dave: Can’t a guy jerk off in peace around here?

      • njorl

        If you substitute the word “excellent” for “mediocre” it doesn’t detract that much from his point.

    • Sherm

      Working from the practical position that procuring an undergraduate degree is basically an accreditation process, it is insane for a person to spend that kind of money for a degree from a school that very few outside of Ada Ohio know exists. Whether or not the faculty is “mediocre” is immaterial. Even if a kid can get a great education from that school, I suspect that no prospective employer (or grad school) will care.

      • “Even if a kid can get a great education from that school, I suspect that no prospective employer (or grad school) will care.”

        This really isn’t true. While it’s true that for graduate school, you want to go to the biggest name school possible, the undergraduate doesn’t matter that much outside of the very top institutions. Few graduate schools are going to immediately dismiss a degree from Ohio Northern and the school has a very solid reputation.

        This whole conversation consists of some people who don’t know anything about academia talking a bunch of bullshit.

        • Sherm

          “the undergraduate doesn’t matter that much outside of the very top institutions.”

          That’s the point I was trying to make. Don’t waste your money on an undergraduate degree, unless you are fortunate enough to get into a top-flight school, or you have parents wealthy enough to write big checks for you. Even if Ohio Northern has a very solid reputation (and I have no clue), is that reputation worth taking on that kind of debt when weighed against going to a public school? What will that degree get you that a cheaper degree won’t?

          • That is a complex series of questions. Are you paying the full amount? What kind of experience do you want? And having taught at both private and public schools, there is a huge difference between what you get. Is the private school experience worth the extra money? It depends on multiple factors, including how much you are actually paying, but the opportunity for good internships, networking, etc., can be significant.

            • Sherm

              Agree 100%. Except that the question for this debate is not whether the private school experience it is worth the extra money, but is it worth 100K in debt? I’ll steadfastly maintain that it is not, with very few exceptions.

              Enjoy Fenway and the massholes booing Becket for having the temerity to golf on an off day. I’ve never been, but I’ve been dying to go.

            • njorl

              What kind of experience do you want?

              Give me a crappy experience for half the price, and I’ll spend the other $24,000 per year making up for it and then some.

        • Charlie

          While it’s true that for graduate school, you want to go to the biggest name school possible

          Agreed as a general principle, but I would go even further and say that this is even more complicated. You demonstrated this really well in showing how your grad program (a fine one but not considered a top one) had a pretty kick-ass placement rate. And of course you well know that “biggest name” grad school as defined by that university’s prestige with high school guidance counselors is totally different from its actual standing among academics.

          All of this underlies the point that determining the value of an education is highly contingent and that the supposed cultural capital added by attending more “prestigious” schools isn’t as great as most people think it is.

        • I would like to imagine that things have changed, but at least back in my day one set of employers who cares about whether your attended a sufficiently prestigious undergraduate institution – even if you were coming out of a top ten graduate program – goes by the name of “BigLaw”.

  • Anonymous

    And they’ve raised tuition drastically because, as Tamanaha puts it, “they could.”

    The ease of, and ready availability of government-backed student loans made all this possible. Without them, who could afford the sky-high tuition?

    Tuition would never be this high without this virtually unlimited source of revenues streaming into and distorting the market…

    • Hogan

      Without them, who could afford the sky-high tuition?

      Future rich alumni. You know, the kind universities want.

    • BigHank53

      Future rich alumni have the unfortunate habit of dropping out when they get a great idea and thus never becoming alumni. It’s a better bet to suck up to the already-wealthy alumni in the hopes of sucking their legacy offspring. Even the most addled Jefferson McChimperson III can get a degree…because the library needs a McChimperson wing, doesn’t it?

    • Spud

      This is exactly what happened with residential property prices before 9/08.

      Piss poor underwriting by banks infused the real estate market with acres of cash which drove prices up. People were willing to pay far in excess of their ability to afford it because it was easy to raise the money. The demand wouldn’t exist if it were not so easy to acquire it.

      Before the price meltdown, banks counted on recouping their money from shitty loans on foreclosures since the prices were constantly increasing. It was a self-canibalizing feedback loop.

      • Anonymous

        Exactly!

        This bubble is no different other than universities and colleges have more ‘smug’ than homes.

        Just look around.

        • Spud

          What gets me thinking is how are the private student loan sharks are going to handle the “tipping point”. The period when defaults and garnishments start to slow down their income to the point where they can’t operate effectively.

          We are talking about lenders with underwriting standards and contractual terms which make mafia loansharks look like Fannie Mae.

          Although student debt can’t be discharged, there is a limit to how much money they can really squeeze from their borrowers. The money has to be there to be garnished if they want to keep going. Debt serfdom won’t cover the lenders overhead.

  • Charlie Sweatpants

    Give Gee credit, he may be a lousy administrator, but he had the honesty/lack of personal dignity to publicly admit that the football coach is his real boss.

    • snarkout

      I remember his brief and unloved tenure at Brown, where he and his wife spent over a million dollars remodeling the president’s house and then left after eighteen months and a higher-paying job offer from Vandy. Good times.

      • mark f

        The Brown Bear punched me in the face at a Holy Cross football game when I was about 10 years old. So fuck that place.

  • Dana

    As I posted yesterday, costs seem the major problem. The university-as-business model (which as you infer is really a pro-business, not a free market, model) seems the big driver of costs. Success is revenues (profits), which means more students (customers) paying ever higher tuition (prices). Success means attracting customers by investing in the things they want, whether that’s rock walls at the gym or expensive academic stars that raise the uni’s profile and make your degree more valuable. Or, increasingly, both.

    I think worrying over the cost problem (tuition, debt) without also keeping the product (learning) in mind would be a tragic mistake. Astronomical tuitions and the loan burden they have caused are a real problem and many people are offering solutions to the cost problems. Naomi Shaefer-Riley and her crowd are quick to point to lazy, overpaid and (of course!) tenured professors as the main driver of costs. Certainly this may be the main problem at those law schools where the “distribution” of faculty salaries is clustered low- to high-six figures, but in arts, humanities, and social sciences I think it’s safe to say that soaring faculty salaries are not driving larger budgets (Hacker buys into this by hackishly touting the Harvard history dept. as somehow illustrative of academic departments everywhere). It is easy to see a solution to these costs–the mass adjunctification of faculty in these disciplines deemed useless by the business model crowd.

    I tend to think the big driver of costs is the capital investments unis have necessarily and unnecessarily made–student life amenities, technology infrastructure and the personnel to administer it, health care costs of faculty and staff to list the major ones. The Apostles of Market Forces have solutions to all these “problems”, but curiously they involve more (high)tuition paying students, taught by contingent faculty, robots, or fellow students rather than the public investments states should have been making all along. As I’ve pointed out ad nauseum elsewhere this “cure” is worse than the, or more precisely it IS the disease. But unis have made a massive investment in technology and University CEOs Presidents need to turn a profit on those investments and thus the Gospel of Market Forces continues to hold sway and attract ever greater numbers of converts since there is $$$ to be made along the way. And the business of education will thrive while learning dies away.

    • Paul Campos

      While not endorsing everything Hacker says, I think he’s right to point to the obscene salaries high-level university administrators pay themselves, and to condemn the amenities arms race. As for the teaching loads of Harvard history profs, the problem is that in a status-obsessed profession the non-pecuniary benefits enjoyed by the top people have an invidious trickle down effect on everybody else.

      • Scott Lemieux

        In addition to this — as I think Hacker had said as well — even if faculty are good teachers and enjoy that part of the job, given that even at a lot of non-R1s tenure and promotion decisions are based solely on publication quantity, spending more than the minimum amount of time in the classroom is irrational and (for non-tenured faculty) untenable.

        • Marc

          Except that Hacker is feeding the wingnuts with anti-intellectual ammunition, and in a politicized field like this you have to give at least a little thought to how your arguments can be misused.

          • Anonymous

            Shorter Marc: “FUCK THE TRUTH”

        • Dana

          I do think the research obsession has gone too far and that teaching should be weighted much more heavily in promotion and tenure decisions at all institutions, especially colleges and teaching unis. But this is a different thing than breezily declaring professors are overpaid and mostly waste tuition (and taxpayer) money on useless research.

          • But the zero law review articles I’ve found useful when briefing cases over the past few years prove the need for… um… something.

      • Dana

        I agree there’s a salary problem, but it seems mostly a problem of administrative and professional school salaries. I mean, Gordon Gees makes $2m a year? That’s beyond obscene. Any uni. pres. making more than POTUS seems difficult to justify to me. But lumping history professors in with this crowd on the basis of Harvard’s history department is absurd.

        At Top State Uni. with which I am familiar, no history professor makes more than $165k with one exception (a former dean, of course), and most full professors make between $90k-$120k. In any given semester no more than 6 or 10 faculty members out of 40 are on research leave. I don’t know what they are doing at the other Ivies or at the expensive private unis or at your schools, but from my experience it seems the market effects of pampering Harvard professors is trickling mostly sideways and not down. And lumping the expensive private schools in with the state unis just provides fuel for the anti public investment crowd to put an end to wasteful public spending on things like the humanities and social sciences.

        • Hogan

          Any uni. pres. making more than POTUS seems difficult to justify to me.

          “What the hell has Hoover got to do with it? Besides, I had a better year than he did.” – Babe Ruth, c.1930

          • Dana

            The Babe wasn’t managing a large public institution.

            • Hogan

              Oh I know. Believe me, I’ve been listening to the justifications at my school for years (in many of which the president got a double-digit increase when most staff averaged out to 2 percent). CEO of large business, competitive with peer institutions, if we don’t give her a house the other schools will laugh at us, oh just fucking kill me now.

              • DrDick

                Our last president gave himself a $75K raise (36%) the year before he retired, so we are on the hook for that much more in retirement benefits. At the same time we were looking at a university wide wage and hiring freeze.

                • I used to look at my school’s 990s until I saw how much we were still paying the president who left ten or so years ago. It’s not like I need more rage in my diet.

            • Bill Murray

              no that would be Bob Shawkey, who took over more or less after The Babe’s antics killed Miller Huggins

              • Hogan

                OT: Tillinghast L’Hommedieu Huston is the most awesome name ever.

  • Dana

    Just noticed a couple other winners from Hacker’s post.

    Nor can it be shown that research enhances classroom instruction; often the reverse is the case.

    My own experience is that he’s wrong this is a two-way street, but even if I’m unique and he’s right that it’s just instruction benefiting scholarship, is that a bad thing? Teaching is an important part of enhancing the body of human knowledge — oh, the HORROR. Before we do any more of this learning it must be “shown” that it benefits society. We must quantify in precise numbers exactly how much benefit research is to learning and vice-versa. It can’t possibly be enough that most every scholar whose been in a classroom has benefited from a the obvious relationship between the teaching and research. We need numbers, people. Spreadsheets! On what day did Reading Explanation A prompt Scholarly Insight B? On a scale of 1 to 5, would you consider this a minor or a major insight? Can you list when something you read on microfilm has EVER been mentioned in class? Well, can you?!?!? No tenure for you… Next.

    • Dana

      And:

      Nationwide, full professors average a not-humble $113,176.

      Curious to know the methodology behind this stat. On its face, it doesn’t seem that outrageous to me. Full professors–so we’re talking 10+ years of higher ed and 15+ years research and teaching? Considering that $113k doesn’t sound that impressive. Does the stat include every law, business, and med school full professor making $300,000+? Every administrator making $200k+ who is also cross listed in their department? Every STEM professor who’s brought in $2m+ grants and has a salary that takes such accomplishment into consideration? If it’s an average that includes all those people then $113k doesn’t impress me much because that means there’s large group of full professors making quite a bit less than $113k for all their education and experience.

      • Marc

        Professional schools badly distort such averages, and given Hacker’s slippery use of numbers elsewhere I’d bet that he has chosen the definition that deliberately makes it look as bad as possible.

      • Bill Murray

        or if it’s a 12-month equivalent, rather than the 9-month salary.

      • Sherm

        And I never trust a person who uses average rather than median.

      • Jonas

        Not to mention the law school scams that were exposed recently where a law school would name an alumnus as faculty, pay them %200,000 or more salary- with an agreement that 90% of that would be donated back to the university. That way when US News rankings come out, the school has rigged the data, having a high percentage of alumnus that donate money, low student/faculty ratios and high average faculty salary.

      • DrDick

        According to Higher Ed Jobs, the median salary for full professors is below $100K

      • mpowell

        This is ridiculous. Look at the BLS statistics. Doctors average 180K. Surgeons it’s over 200K. Engineers are in the 80K-100K range, and that doesn’t require more than an undergraduate degree. A full professor, someone who is significantly more qualified than your average PhD makes $113K on average and we’re supposed to think that’s outrageous. This is more of the bus drivers making $40K, omg! but expecting the 1% to get by on their 400K/year incomes is unreasonable.

        • DrDick

          According to the data I linked to above, the median for full professors across fields is mostly in the $80-95K range for most with only six of 37 over $100K.

    • Bill Murray

      How wold one prove that research enhances classroom instruction or vice versa? I will guarantee that my research informs my teaching, particularly for graduate classes, but who knows about enhancement

  • Marc

    The Hacker piece is really very unconvincing. He lists a handful of numbers intended to shock, presented without context. Look – Bates college has 31 sports teams! This is a standard right-wing trick, and it doesn’t look any better when someone that I’m sympathetic to uses it. He doesn’t make a case that the expenses in question are significant, he dismisses research without even bothering to back his sweeping claim up, and so on. I honestly thought that he was better than this.

  • rumpole

    If I were in a business where people could borrow money to buy my product, but would -always- have to pay back the loan (so long as they were buying my product), I would raise prices as high as I possibly could. Seems to me that the bankruptcy provisions of student loans subsidize the wrong activity (lending) vs the right one (making education accessible in fact).

    • njorl

      Government would be much better off buying tuition in bulk and negotiating a volume discount.

  • Chris Jones

    Gee was president at OSU for most of my grad school days there. Sentiments towards Gee were generally positive. I was surprised by the characterization that he is an obvious failure. I read the linked abstract and the linked Vandy article (if you want to generously call it that). All I see is grousing about how much money he makes. Good or bad, that’s besides the point. Oh, and maybe his wife smokes weed. Get the fainting couch! I don’t have much insight into how to assess such an admin, but I can say that OSU was an impressively functional institution in my experience. Does anyone want to make an actual argument about his competence? I’m open to it.

    • Marc

      The current business about privatizing functions such as parking is really creating massive discontent with him – in particular, with his complete dismissal of any questions or criticism. He’s cramming through the sale of parking rights on campus for a one time payment of a few hundred million, with guaranteed (and substantial) annual increases in parking fees for a 50 year period of time.

      It’s basically a salary cut on faculty, and a tuition hike on students. But Gee gets a pile of money to play Santa Claus with, and the problems with the long term parking monopoly will only show up well after he is gone. You’d think that Chicago, etc. would be cautionary tales.

      • Paul Campos

        Who was it that defined students and faculty as “two mutually hostile species in competition for scarce parking places?”

      • Chris Jones

        Thanks for that, I had not heard about it. It certainly seems like a bad idea. I do wonder whether this would have happened absent the extreme budgetary pressure Gee can thank Gov. Kasich for, but it’s not a point in Gee’s favor.

        • Charlie

          Obviously the budgetary problems at OSU are connected to the state government and Kasich, but this underfunding of state universities is directly connected to the rise of Academic CEOs like Gee who promise in effect to wean state systems off the government teat. That’s how he justifies his salary, because he’s worth it in the private fundraising. If he actually acted as an advocate for the university and fought the lawmakers in Columbus, he wouldn’t be doing his job. My problem with Gee isn’t any specific issue but rather that figures like him are accelerating the rise of corporate universities.

          Gee and his ilk aren’t interested in education per se (though I’m sure they like it in the abstract and tell themselves it’s what they do), but rather they are all about investing an immoral model of the university as a factory for class propagation and credentialing, driven by debt-financed consumer desire for the intangible commodity of prestige.

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