Frances.The Dangerous Role of Economists in Developing Higher Education Policy

THE DANGEROUS ROLE OF ECONOMISTS IN SHAPING AMERICAN HIGHER EDUCATION POLICY: THE RECOMMENDATIONS OF AMERICAN ECONOMISTS ARE LEADING TO A DISASTER THAT EUROPEANS SHOULD HASTEN TO AVOID ! Carol Frances The United States has world class higher education. Often we Americans offer our system as a model for other nations to replicate or adapt. But before other nations move in that direction too quickly, it is essential to take another look at how the American system is being transformed and may no longer inspire emulation. This chapter makes five points: 1. 2. 3. 4. 5. American economists made serious mistakes when they analyzed higher education, beginning in the 1970s. These mistakes led to bad policy advice. Bad policy advice is leading to unwanted consequences. The unwanted consequences are striding toward a national disaster for Americans. Europeans should hasten toward a different outcome. These observations are based on experience and insights gained starting in the 1970s when I had the privilege of serving in Washington, DC as the Chief Economist of the American Council on Education. Now, we have more than thirty years of experience to track the consequences of the bad analysis as well as the outcomes of the bad policy advice. I am an economist and I come to these conclusions as an insider. I will start by highlighting ten significant education policy areas where I believe the economists made mistakes in their analysis—which mistakes then led to bad policy recommendations. These policy areas include: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. College enrolment projections Tuition policy Student financial aid policy Inflation adjustments to calculate the real value of student financial aid Issues and trends in inequality Explanations of tuition cost increases Productivity Equity Conceptions of who benefits from higher education, society as a whole or individuals Impact of instructional and communications technology on instructional costs Position of higher education among federal and state budget priorities. 1 1. College Enrolment Projections Bad Analysis: Starting in the early 1970s American economists saw the demographers’ projections of a substantial decline in the number of traditional college-age young people age 18-24. 1 They made widely accepted projections of a substantial decline in college enrolment. But college enrolment did not decline; it increased substantially. 2 Chart 1 35 30 25 20 15 10 5 0 1940 1950 1960 1970 1980 1990 2000 2010 Chart 1 shows the actual American college enrolment trend and the demographers’ projections of the trend in the traditional college-age population age 18-24. Most of the economists focusing on higher education saw the demographers’ projection of the decline in the college-age population, and they projected a commensurate decline in the college enrolment. Chart 2 35 30 25 20 15 10 5 0 1940 1950 1960 1970 1980 1990 2 2000 2010 Chart 3 35 30 25 20 15 10 5 0 1940 1950 1960 1970 1980 1990 2000 2010 The problem was that the economists’ enrolment projection model looked like this: Figure 4? CollegeAge Population College Enrolment And it should look more like this: Figure ? title? 3 Bad Advice: Accompanying the bad analysis was the bad advice that the job of colleges and universities was to retrench. The Ford Foundation even funded a nationwide road show arguing that responsible managers should make the tough decision to downsize and showed them how to do it. 3 What actually happened? In decentralized countries? systems, the individual college and university executives developed an entrepreneurial spirit and created new education markets. Women and minorities accounted for a very large share of the increased enrolment. 4 More centralized systems, where the top-down command to retrench became a self-fulfilling prophecy, did not see the same growth in enrolment. The consequence of the bad advice based on the mistaken forecast of declining enrolment was that education markets were viewed as weaker than they actually were, and colleges and universities were hesitant to raise tuition to cover their increasing costs. Actually, the real problem was inflation, not weak markets. Chart 4 shows clearly how the 1970s and 1980s were characterized by much higher rates of inflation than decades before or after that period. Chart 4 INFLATION AS MEASURED BY YEAR-OVER-YEAR PERCENT CHANGES IN THE U.S. CONSUMER PRICE INDEX, ALL URBAN CONSUMERS, CPI-U 1960-2014 Percent Change Year-Over-Year $20 $15 $10 $5 $0 ($5) 1960 1970 1980 1990 2000 2010 2020 Source: U.S. Department of Commerce, Bureau of Labor Statistics. What happened was that faculty salaries were not increased and individual faculty members faced a substantial loss of purchasing power. A few years later, when the institutions saw that they needed to increase faculty salaries to keep quality professors, the fact that these costs then rose at a faster rate than the overall consumer price index was 4 Formatted: Highlight highlighted in the media and was then regarded by the public as taking advantage of the students—which contributed to the new wave of demands for stricter accountability standards. American faculty did not recover the earlier purchasing power of their salaries until the1990s, close to two decades later. By 2013, faculty salaries on average were only a few percentage points higher than they were in the 1970s. 5 Chart 4 TRENDS IN AMERICAN FACULTY SALARIES, IN CURRENT AND 2012-2013 CONSTANT DOLLARS 1979-80 to 2012-13 $80,000 Constant 2012-13 Dollars $70,000 $60,000 $50,000 Current Dollars $40,000 $30,000 $20,000 $10,000 $0 1970 1980 1990 2000 2010 2020 Source: Digest of Education Statistics: 2014. 2. Tuition Policy Bad Analysis: American economists characterized tuition as “elastic”, meaning that if tuition fees were raised, enrolment would fall off. Bad Advice: Initially the advice was to hold down the increases in tuition, even when more resources were needed to cover real cost increases. As a consequence, colleges and universities grew weaker financially. Beginning in the 1970s there was a new economic view of tuition. Low tuition came to be characterized from an economic perspective as inefficient. Low tuition was seen as benefiting higher income students who could easily afford to pay higher tuition, and low tuition was therefore a waste of taxpayers’ money. A policy of relatively high tuition offset by high aid for needy students was recommended by the economists as far more “efficient.” 6 3. Explaining tuition increases Most analysts trying to explain tuition cost increases rely primarily on reasons relating to institutional costs. Explaining tuition increases is, indeed, complicated and there are many factors that need to be taken into consideration. The most important factor to stress, however, is not cost but rather revenue shortfalls. Simple arithmetic will help to explain how a revenue shortfall compounds its impact on tuition: Shouldn’t this be a table? And numbered as such? THE AMPLIFIED IMPACT OF STATE REVENUE SHORTFALLS ON COLLEGE TUITION Example Year 1 Year 2 Change Total Cost $10,000 $11,000 + 10 % State Funds $ 5,000 $ 4,000 - 20 % 5 Tuition $ 5,000 + 40 $ 7,000 As this particular example shows, and as tuition is usually the resource that has to make up for shortfalls in non-tuition revenues (most often shortfalls in state support in recent years), an increase in total cost accompanied by a shortfall in state support could result in a tuition increase up to as much as four times the original increase in the underlying costs. This helps to explain why tuition generally rises at a much faster rate than the overall consumer price index. The reasons why tuition increases are actually quite complex. A model to help explain the process should take into account at least cost trends in the overall economy, costs relating particularly to higher education, offsetting trends in productivity in the realm of teaching and learning, quality competition among the institutions, and especially shortfalls in non-tuition revenues, and shortfall in federal and state student aid that the colleges and universities make up for with institutionally funded student aid. WHY ARE COLLEGE TUITIONS INCREASING SO FAST? Formatted: Highlight FOUR MAJOR REASONS General Cost Increases: CPI - HEPI Public Institutions: Productivity Increases Shortfalls in State Appropriations 1 2 Operating Costs: Faculty Salaries, Technology Revenue Shortfalls + Enrollment Increases + Private Institutions: Tuition Increases Shortfalls in Federal Student Aid Availability ??? + of + Federal Student Aid 3 4 Institutionally Funded Student Financial Aid Quality Competition Draft: Carol Frances Chart 5 Seton Hall University American college and university tuition did increase under the policy of high tuition offset by student aid for needy students. Skeptics were reassured that “aid” meant “grants” to low income students. Well, this was not to be. “Aid”, meaning grants that do not have to be paid back, was redefined to include loans which do have to be paid back--with interest. By as early as the 1980s the number of loans to students substantially exceeded the number of grants. Chart 5 chart 6? Formatted: Highlight 6 TRENDS IN AMERICAN STUDENT GRANTS AND LOANS 1963-64 to 2013-14 120 Billion Loans 100 80 60 Grants 40 20 0 1960 1970 1980 1990 2000 2010 2020 Source: College Board, Trends in Student Aid: 2014 and earlier years. In 2014 the US Federal Reserve Board reported that the total number of student loansoutstanding amounted to a staggering $1.3 trillion dollars, more than all other consumer debt outstanding in the whole country. 7 4. Adjusting the Value of Student Aid for Inflation If economists are analyzing the effectiveness of student aid in achieving the goal of providing accessible, affordable, quality higher education, it is essential to know the purchasing power of the aid being provided over time. This is done by adjusting the current dollar amount of the aid for inflation, by calculating the constant dollar amount of aid. For instance, to calculate constant dollar purchasing power of faculty salaries the current dollar amount is divided by the Consumer Price Index. But this procedure is seriously flawed when it is applied by the economists to calculate the purchasing power of student aid in constant dollars. To put it simply, the price index used to calculate constant purchasing power has to be made up of items that the purchaser actually buys with the money. Students do not use student aid to buy the items in the consumer price index; they use student aid to pay for such items as tuition, fees, room, board and books—most of which items have increased in cost at vastly greater rates than the CPI. Thus, using the CPI to adjust student aid for inflation substantially underestimates the impact of the cost increases eroding the purchasing power of student aid. Actually a Student Cost Index should be constructed and used for the purpose of calculating trends in the value of student aid in dollars of constant purchasing power. I have constructed a Student Cost Index which increases at a much greater rate than the CPI. As a consequence, using the CPI significantly overestimates the true value of student aid awarded to students. 7 Chart 6 350 300 250 200 150 100 50 0 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11 Chart 7 FEDERAL STUDENT GRANTS CURRENT DOLLAR AMOUNT ADJUSTED USING THE CONSUMER PRICE INDEX AND A STUDENT COST INDEX $20 $18 $16 $14 $12 $10 $8 $6 1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 Over even a few years, the difference in the real value to students of the student aid purportedly awarded to them amounts to billions of dollars. Calculating the real value of student aid is not just a technical issue. The impact of economists using the wrong index is so large that it should become a political issue. The bad analysis leads to the mistaken conclusion that higher education is “affordable” and students can, with aid, handle the costs when in fact this overestimates the value of the aid awarded to students to pay for college. 5. Inequality in Higher Education Student aid is recommended by the economists to promote greater educational opportunity and to narrow the gaps between students from low and high income families and between different race and ethnicity groups. The fact is, however, that students from high income families enrol in colleges and universities at rates much higher than those of students from low income families. And while the college-going rates of all racial groups are generally increasing, the gaps between the white rate and the black and Hispanic rates have not been eliminated. This is true even after close to a half a century of implementing existing higher education policies. 8 8 Chart 8 COLLEGE-GOING RATE: PERCENTAGE OF AMERICAN 18-24 YEAR-OLDS ENROLED IN DEGREE-GRANTING INSTITUTIONS, BY RACE 1970-2012 70 Percent Asian 60 50 White 40 Hispanic Black 30 20 10 0 1970 1980 1990 2000 2010 2020 Source: Digest of Education Statistics: 2013. 7. Productivity Even friends of higher education are content to characterize the function of instructing students as “low productivity.” But they usually calculate productivity using something equivalent to student credit hours. However, student credit hours are inputs, not the outputs of education. Outputs should be used in calculating the productivity of education. Outputs should cover what is learned or what is created. Using outputs instead of inputs to measure the productivity of higher education would result in characterizing higher education as highly productive. Admittedly, however, higher education has not yet done a nearly adequate job of measuring educational outputs. 8. Measuring the Benefits of Higher Education Historically the benefits of higher education were viewed as redounding to society. An educated citizenry was considered by the American founding fathers as essential to a functioning democracy. Benefits to society undergirded beliefs in the past about the importance of low tuition as a means of promoting broad access to higher education. Over the course of the 1970s and even more in the 1980s, when marketisation of higher education began to take hold in the United States, a concomitant sea change in ideas about who benefits from higher education began take place. The idea that the primary beneficiary of higher education is the individual began to supersede the previous belief that society as a whole is the primary beneficiary of higher education, which belief had previously been the justification for convictions about the appropriateness of low tuition policies. If, in contrast, individuals are the primary beneficiaries of higher education, then individuals should pay for it. And not only should they pay for it: since higher education is a good investment, they should borrow to pay for it if they cannot afford it out of current income. Out of this reasoning by economists emerges the justification for financing higher education with student debt. 9 9. Impact of Information Technology on College Costs Economists offered the opinion that information technology held the potential for dramatically lowering the costs of education by substituting investment in IT for college faculty. 9 Well, it did not happen. In general, up to now, IT generally raises costs instead of lowering them, in part because of the extremely rapid evolution of the technology and the never-ending costs of updating to the newest version. 10. Higher Education among Federal and State Budget Priorities At the federal level economists saw the rise of spending for health and retirement benefits for the elderly and at the state level, the rise in spending for prisons. They declared that there simply would not be more funds for higher education and that the smart thing to do would be to adapt. Educational leaders, cooperating, said “Look at us! See how we can maintain the quality of our programs with even fewer resources.” In the United States, it seems that educators are not even at the table where the national and state allocations of resources are being made. These allocations involve choices, choices that should be explicit, acknowledged, and debated. But they are not. Without focusing on the actual choices being made, significant budget resources are allocated to protecting the retirement and health benefits of the elderly, at the expense of education and job training programs benefiting the younger generation. In a few short years poverty in the United States has been transformed by policy choices from a condition of the elderly to a condition of the young. 10 Chart 9 POVERTY IN AMERICA, BY AGE 2011 Percent of the Population 40 34 35 30 27 25 20 20 15 10 10 5 0 Under 18 65 and Over 1960 2013 . Source: Census Bureau, Current Population Survey, 2014. Problems with Economists’ Analysis of Education Policies Generalizing from an overall review of these ten policy domains, we can synthesize at least six over-arching problems with the economists’ analyses: 1. 2. 3. 4. 5. The underlying values of the economists are seldom stated. The analyses are too simplistic, whereas the issues are extremely complex. The economists generally ignore what other disciplines have to say about human behavior and decisionmaking even when the economists’ “rational man” fails to explain what is happening. Often the analysis is based on information shockingly out-of-date. Economists’ methodology is generally static and cannot deal very well with issues which are evolving and dynamic. 10 6. Economists seem to be particularly ill-equipped to take into consideration the unintended consequences of their policy recommendations. The Biggest Mistake of All The biggest mistake of all is the shift from making higher education primarily a public responsibility to putting more and more of the burden of paying for higher education onto the students--students who are forced to borrow and to accumulate large amounts of student debt. This radical shift merits a more extended description and further discussion of the serious consequences. Impact on the Students Clearly, the prospect of incurring debt, probably major debt, affects virtually all of the decisions relating to education of students and their families. These decisions range from what classes to take in high school, whether or not to go to college, where to apply, where to enrol, what to study, whether to work while in college, how long to take to complete a program, and the kind of work to look for after graduation. If students have to think about repaying debt, they are less likely to choose a low paying teaching job instead of a high paying job in finance. A young man might even think seriously about whether to marry a young woman who has as much student debt as he has. Having to take on student debt affects students’ life chances. A simple model demonstrates the differences between two students identical in every relevant way, except that one has incurred student debt while the other has not. The two of them have the same major in college, graduate at the same time, go to work for the same company, start at the same salary, have the same career progression, and get the same rate of return on the investments that they make. The big difference is that one student has a student loan and other does not. One student is paying off a loan and the other is accumulating assets. At the end of the term of the loan, depending on the length term and the comparative interest rates, the one that did not have a student loan has three or four times the assets of the student who did have the loan. 11 It is assets that count, not just income, when considering the possibility of setting up a new business or surviving a period of unemployment. In analyzing whether students could handle their loans, economists looked only at the debt service in relation to the student’s current income. They made a mistake in not taking into account the impact of the student loan on the student’s comparative ability to accumulate assets over time. The economists have also overlooked student debt as a factor that may well contribute to the increasing inequality evident in the United States. The way that the United States is choosing to finance its higher education is creating a nation of debtors. The amount of student debt is staggering. It has quadrupled since 2001 when it was under $300 million, exploding to over a $1 trillion in 2013. It has increased because of more student borrowers and higher loan amounts for each borrower. It now exceeds the total amount of credit card debt in the United States. 12 Impact on Institutions Shifting higher education policy to a model of high tuition and high aid--but with aid not keeping up with need--has substantial impacts on the institutions, as well. With grant aid from federal and state sources not keeping up with student need, the colleges and universities are stepping up to provide larger and larger amounts of institutionally funded student aid in the form of tuition discounting, fellowships and scholarships. 11 For example, in the public sector of higher education, the amounts of scholarship and fellowship aid have grown extraordinarily. In 2012 this aid to students amounted to an equivalent of 25 percent of tuition revenue. This means that a sizeable share of the increase in tuition costs to all the students could be accounted for by the institutional aid to some of the students. It is surely arguable that the aid to the needy students should be a broad public responsibility and should not be more than proportionately borne by the families of students who are paying tuition to attend college. The institutionally funded student aid is also very large in relation to the institutional expenditures for salaries and wages of people employed to instruct students. In 2012 this aid was equivalent to 30 percent of the total expenditures for salaries and wages for instruction. 13 This aid could certainly weigh against attempts to increase faculty salaries. Chart 10 STUDENT SCHOLARSHIPS AND FELLOWSHIPS AS A PERCENT OF TUITION AND FEE REVENUE AND SALARY AND WAGE EXPENDITURES FOR INSTRUCTION PUBLIC INSTITUTIONS 2005-06 - 2011-12 Institutionally Funded Scholarships and Felloships as a Percent of Percent 35 30 Expenditures for Instructional Salaries and Wages 25 Tuition and Fee Revenues 20 15 10 5 2014 2013 2012 2011 2010 2009 2008 2007 2006 0 Source: Digest of Educational Statistics: 2013. In addition to student debt, we should also take into consideration that the institutions themselves are beginning to take on massive amounts of new debt to finance their own operations and capital improvements. 14 Impacts on Society as a Whole Huge amounts of student debt may be a major factor contributing to the increase in inequality taking place in the United States. Lower income students with increasing amounts of student loans are paying them off in part to higher income holders of the loans. This helps widen the gaps between the lower income and the higher income families. In some more extreme situations, this system of using student loans to help finance higher education has resulted in an unacceptable number of seedy practices, conflicts of interest, and outright corruption. Banks began to pay college student aid administrators “consultancies” which were actually used to steer students to their particular bank. Government employees with responsibility for administering student loan programs have ended up owning shares in the loan companies. 15 At the height of the financial crisis in the United States a Federal Reserve Report documented the fact that some student loans were being securitized. 16 These student loans were being combined and sold to buyers not in a position to evaluate the risk of buying these securities, thus contributing to the national financial crisis. Establishment and Growth of the For-Profit Higher Education Sector 12 A separate and complex concern is the role that using student loans to finance more and more of higher education may be playing in the establishment and extraordinary growth of the for-profit education sector in the United States. Many of the for-profit institutions are long-established, accredited, and highly respected providers of quality higher education. Many more of the for-profit institutions are being challenged, however, as not providing value for the students’ money, of not providing the education that the students require to be employed in the jobs that they need to pay off the loans they have assumed, using illegal recruitment inducements, and executive compensation orders of magnitude greater than the compensation characteristic of the non-profit and public colleges and universities. Though most of the new for-profit higher education institutions are small, the increase in the number of them is extraordinary. These for-profit institutions also account for a large share of the increase in total enrolment and, in particular, the increase in enrolment in the private sector of higher education. These for-profit educational institutions rely heavily on student aid as their major source of revenue. Typically, more than 85 percent to 90 percent of their revenue comes directly or indirectly from federal student aid, that is, primarily from Pell grants and student loans. 17 Accompanying this is a phenomenon which should be examined carefully but which has received much less attention that it deserves. This American model of financing higher education allows the creation of a billionaire. Yes, a billionaire was created within the federal student aid system using federal resources. John Sperling, who just died in August, 2014 at the age of 93, established the University of Phoenix (UOPX) in 1976 to serve working adults when he was still a tenured professor at the San Jose State University. UOPX is a wholly owned subsidiary of the Apollo Group, a publicly traded company listed on the NASDAQ stock exchange. It had grown to a peak enrollment of over 600,000 students by 2010 to become the largest higher education institution in the U.S. Then under pressure--because of the high debt of students, high loan default rates, low graduation rates, and meager job prospects for the students--enrolment dropped precipitously to less than 300,000 and more than a hundred campuses, close to half the earlier total, were closed. 18 John Sperling was recognized by the Forbes Magazine 400 as one of the country’s wealthiest men. He was recognized as a billionaire. 19 He did it legally, based on expert knowledge of how to function within the American higher education model. Close to 89 percent of UOPX revenue in 2010 came from federal government education funds. In 2010, UOPX students were awarded more Pell grant aid--$657 million, well over half a billion dollars--than the students at any other institution in the United States. 20 In 2010, well over $1 billion was channelled from the federal government through the student financial aid programs to the University of Phoenix. 21 This is in spite of the fact, as reported by USA Today, the University of Phoenix continues to harvest federal funds even though the student loan default rate of 26 percent is substantially greater than its graduation rate of 15 percent. 22 13 John Sperling, 1923-2014, Founder of the University of Phoenix in 1976 Should this phenomenon be viewed as an awesome individual entrepreneurial accomplishment or as an astoundingly bad education model in dire need of fixing? I believe that the current American model for higher education is in desperate need of fixing, and that the Europeans should work hard and fast to avoid the extreme excesses of this American model. 14 This chapter is based on an updated and expanded presentation at the August 2014 Conference of the European Association for Institutional Research in Essen, Germany. ENDNOTES California Postsecondary Education Commission, Trends in Public Higher Education: A Report on Enrollment Projections, Management, and Development, Sacramento, California, July 1982, 59 pages. Full text is available from ERIC ED 227 769. 1 This report compares the assumptions and projections of the following widely published higher education economists who in the 1970s projected college enrollment declines in the subsequent decades from 5 to 50 percent: Cartter, Allan M.. The PhD and the Academic Labor Market, McGraw-Hill, New York, 1976. Dresch, Stephan P., “Demography, Technology, and Higher Education: Toward a Formal Model of Educational Adaptability,” Journal of Political Economy, 83, 1975, pages 535-569. Freeman, Richard B., The Over-Educated American, Academic Press, New York, 1976. Froomkin, Joseph, Recent Developments in Higher Education, Joseph Froomkin, Inc., Washington, DC, January 1976. See also Breneman, David W., The Coming Enrollment Crises,: What EveryTrustee Must Know, Association of Governing Boards of Universities and Colleges, Washington, DC. 1983. 2 U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics: 2014. 3 Crossland, Fred. (Higher Education Program Officer at the Ford Foundation), “Learning to Cope with a Downward Slope,” Change, The Magazine of Higher Learning, Volume 12, Issue 5 (July-August 1980), pages 18-25. Change published the Crossland article to open a debate. The rebuttal was written by Carol Frances in the same volume “Apocalyptic v. Strategic Planning,” Volume 12, Issue 5 (July-August 1980), pages 19, 39-44. 4 Frances, Carol, College Enrollment Trends: Testing the Conventional Wisdom Against the Facts, American Council on Education, Washington, DC, 1980. 5 American Association of University Professors, Academe, annual issues, and U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics: 2014. 6 Hartman, Robert W., The Rational for Federal Support for Higher Education, Brookings Institution, Washington, D.C. , 1974, 292 pages. 7 Chopra, Rohit, “Student Debt Swells, Federal Loans Now Top a Trillion,” Consumer Financial Protection Bureau (an official website of the United States Government), July 17, 2013. Consumer Financial Protection Bureau, Private Student Loans, a report to Congress mandated by Dodd-Frank. The Report was sent to the Senate Committee on Banking, Housing, and Urban Affairs, the Senate Committee on Health, Education, Labor, and Pensions, the House of Representatives Committee on Financial Services, and the House of Representatives Committee on Education and the Workforce, August 29, 2012, 131 pages. 8 U.S. Department of Education, National Center for Education Statistics. Digest of Education Statistics: 2013 9 Massey, William F. and Zemsky, Robert, “Using Information Technology to Enhance Academic Productivity,” Paper prepared for the Educom Conference on Academic Productivity, Wingspread, June 6-8, 1995. 10 Martin J.Finkelstein, Carol Frances, Frank Jewett, and Bernhard Schultz, Dollars, Distance, and Online Education: The New Economics of Teaching and Learning, American Council on Education / Oryx Press (Now Greenwood Publishing Group), Series on Higher Education, 2000, 373 pages. 15 11 12 Calculation and comparison of elderly and youth poverty rates made by the author. Donghoon Lee, Household Debt and Credit: Student Debt. Federal Reserve Bank of New York, February, 28, 2013, 24 pages. 13 U. S. Department of Education, National Center for Education Statistics, Digest of Education Statistics: 2013. 14 Calculation by the author with the assistance of Allyn Van Alstyne, her daughter, previously employed as a bank financial analyst. 15 FinAid: The Smart Student Guide to Financial Aid, Special Report on “Illegal Inducements and Preferred Lender Lists.” 2014. Available at www.finaid.org/education/illegal inducements.phtml. See also the New America Foundation’s Higher Ed Watch. The mission of the Watch is to serve as a higher education watchdog According to the blog of Stephen Burd on the Higher Ed Watch of 2009: “The revolving door that existed between the student loan industry and the Department of Education under the Bush administration provided license to lenders to pursue their own self-interest with little regard for students or taxpayers. The level of corruption that has since been uncovered makes it abundantly clear that a fundamental overhaul of the federal student loan programs is needed.” 16 Available at http://www.help.senate.gov/imo/media/for_profit_report/Part II/Apollo.pdf 17 Federal Reserve Board, “Report to the Congress on Risk Retention,” Submitted to the Congress pursuant to section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The study focuses on eight loan categories, including one on student loans which discusses loan securitization. 18 19 20 Available at www.help.senate.gov/imo/media/for_profit/report/PartII/Apollo.pdf Forbes List of the 400 Wealthiest, August, 26, 2014. The Harkin Report. Details cited in references. 21 Hanford, Emily, “The Case Against For-Profit Colleges and Universities,” American Public Media, American RadioWorks, September 2012. 22 Mary Beth Marklein, Jodi Upton, and Sandhya Kambhampati, “College Default Rates Higher Than Grad Rates,” USA Today, July 2, 2013 REFERENCES Ben Miller, “Analyzing the State of Undergraduate Student Borrowing,” The Student Debt Review, New America, Washington, DC, 2014. Charlie Eaton, Cyrus Dioun, Daniela Garcia Santabanez Godoy, Adam Goldstein, Jacob Habinek, and Robert Osley-Thomas, Borrowing Against the Future: The Hidden Costs of Financing U.S. Higher Education, The Center for Culture, Organizations, and Politics (CCOP), UC Berkeley Institute for Research on Labor and Employment, April 2014, 35 pages. The research for this report was funded by a grant to CCOP from the American Federation of Teachers. College Board, Trends in Student Aid: 2014 and earlier editions. National Student Loan Data System (NSLDS). Office of Management and Budget, Historical Tables. U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics: 2013 and earlier editions. U.S. Senate Committee on Health, Education, Labor, and Pensions, “For-Profit Higher Education: The Failure to Safeguard Federal Investment and Ensure Student Success,” Washington, DC, 2012. The investigation was headed by Senator Thomas “Tom” Harkin and the report is known as the “Harkin Report.” 16