Friday, November 30, 2018

College debt begins with a perilous teen fantasy. If your kid's in high school, the brain-washing is already done

As U.S. interest rates rise, outstanding college indebtedness rises, and both the number of defaulting borrowers and the proportion of default-category loans increases, it’s timely to ask What is college debt?

In concrete terms, college debt is the second-largest debt category in the U.S. (The first is home mortgages. It surpasses consumer and credit card debt). It is $1.5 trillion outstanding, representing 44 million borrowers. By 2023, it’s estimated that 40% of those borrowers will be in default. For the class of 2016, the average debt load is $37,172. By debt volume, 11% of that $1.5 trillion is already in default (over 90-days non-repayment), each quarter another 2% falls into default. Another 14% of that debt volume is in deferment or forbearance.

College debt is a different kind of debt from mortgages, auto-loans, corporate debt or working capital. College debt has no collateral. The student-borrower usually has no income history or assets. He has
No income, assets or business plan.
no business plan. There is no incremental demonstration of his strategic viability. Unlike credit card debt, there isn’t even an incremental demonstration of repayment culture, since repayment is typically deferred until after the completion of studies. College debt is nearly impossible to discharge through bankruptcy (The College Investor explains how here). There is no pledged asset that can be foreclosed or short-sold to facilitate the borrower’s climbing out. It is very difficult to run away from.

This handy tool provided by may be a helpful visualization of repayments by loan amount at current interest rates. Assuming an interest rate of 6.8% and a 10-year repayment plan, a graduate paying off the average debt load of $37,172 would expect to pay $428 per month. FinAid also advises what a borrower should aim to earn per annum in order to manage his loan-size; for this average loan volume, he needs to earn $51,000 to manage repayments if his household size is 1 person--and that's less likely over 10 years. 

College debt and default are growing differently for different groups, and that’s also revealing some deeper problems. A recent Brookings study found that black and African-American borrowers on average hold three-times greater outstanding college loan volume than white borrowers, and default five-times more frequently. Attendees at for-profit colleges and universities show default rates that are almost double that of graduates from 4-year undergraduate programs at public universities. The borrower profile is aging, too, and that tells us something not only about later-in-life education, but longevity of debt; 30-39 year-olds hold 30% of the $1.5 trillion college debt, and that has increased by nearly a third in the past 5 years. Borrowers over age 40 constitute 36% of the 44 million outstanding borrowers; they are paying off a long tail-end of educational leveraging.

Sixty-percent of that $1.5 trillion is undergraduate debt. And within that, the worst-performing segment is for-profit colleges and students who started but didn’t complete degrees.

Interestingly, borrower default does not correlate with overall initial loan size, suggesting that it’s not just a question of over-borrowing by volume that drives the college debt trap. According to the Brookings study, defaults are highest among those who started with initially relatively smaller loans (e.g., $10,000-20,000), but these borrowers are stretching out repayment periods, compounding overall debt well into their late-30s and 40s.

This is where it may help to read through the numbers a cultural narrative about young people. How does the fairy tale start?
Here we see an uncertain young person. It’s not clear that she is excited about classroom learning; the practice of lecture-listening, note-taking, essay-writing might not come easily. But nor has school introduced or allowed any time that she might learn a skill on Udemy, take up a 30-hour-week internship, work for her parents, or seek an online micro-credential. She found the secondary classroom monotonous and dull; her focus during those years was somewhere else, disengaged, waiting for the bell to ring. Doing as little as possible was a release from the annoying controls. Somewhere late in that process she sensed an external urgency that she needed to “make something of herself”, and college seemed to be the key.

Here we see secondary teachers and administrators. They see themselves as champions of knowledge, the stamping out of young people's days into uniform templates around uniform subjects as a social good driving equality and opportunity. Their credibility rides on the claim that such-and-such percentage of the graduating class is moving on to 4-year colleges. These claims are held up
Reach for the stars, right?
from state to state and town to town as if all students need and want the same thing. They are also judged on graduation rates, which had better improve year-on-year during anybody’s tenure. And one way to make sure that happens is to fudge it; let students take summary refreshers, inflate grades. They welcome the proliferation of colleges of all stripes, because it means there is a place for everybody; any kind of student, if goaded along to apply, can get in somewhere. And that’s the statistic that counts.

Here we see the parents and community. Who wouldn’t want to believe that anybody can become anything? That everything is possible when you put your mind to it? That the sky’s the limit? This is the American-dream narrative. And families buy into it bit by bit, so that they are not thinking about the $1.5 trillion, or 25-years of $250/month payments, disillusionment and entrapment at the beginning. Instead, they are thinking about high school recognitions and how good that feels. And sports and clubs, and putting their child in the right light. Then PSATs and how important it is to prepare for standardized tests. Then SATs and application packages and where so-and-so got in. As in an auto showroom, it’s about momentum, pride, and feeling like a winner. The financing package comes last.

Here we see the college industry. There are literally thousands of these guys, and they come in every possible form. All of them are claiming to make dreams come true. They keep up the appearance of selectivity, print viewbooks, solicit 15-year olds, and impress grandmothers with tours of ivy-covered buildings and quadrangles. They raise money, show off new athletic centers, choose and partially-fund incoming students through an opaque process that leaves everyone uncertain how much things really cost and what it really means to “get in”.

Here we see the first employer. She couldn’t care less what the 24-year old applicant read in freshman composition, and will never ask her to write an essay about anything. She doesn’t ask for political discourse. She is looking for an adaptable person who will learn fast, cooperate within her team, and master skills specific to this job. Her HR officer assumed that meant that a BA would be required, so she has a drop-down menu, and cut out all the candidates who don’t have one. Now the employer is surprised during interviews at how little experience, and how distant from reality her candidates seem to be.

Something like this iterates during the young worker’s life, as ambitions for advancement and fears about raising a family on a limited income drive further loan-taking and degree-seeking.

If we can be honest with ourselves about what’s driving college debt, then policymakers would be honest, too, about what it’s going to take to fix this.

It’s not a question of making college more affordable through subsidy. The most frequent defaulters took relatively smaller initial loans. Further, there’s decades of evidence (see this Federal Reserve Bank of New York 2017 staff study) that universities hike tuitions year-on-year directly absorbing all increases in federal student loan support, so that it’s unlikely that additional subsidy would reduce average loan volumes.

And I would further counter Scott-Clayton’s two take-aways from the 2017 Brookings study cited above:

--That degree-attainment should be “improved” for enrolled students, a vague allusion to the kind of grade-inflation, course-repeating and watering-down of skills requirements that does nobody any real service neither in secondary nor university education; to the contrary, it keeps pumping hot air into a degree-inflated culture, such that the degree itself diminishes in value as more people of varied scholastic aptitude all have one;

--That income-contingent loan repayment options should be promoted, which implies substantially more expensive and risky loans at the outset (and perhaps the need for loan pricing that takes account of degree type, major, non-profit/profit-status of the school), or an uncertain Federal government posture toward future loan forgiveness (and uncertainty itself may undermine repayment culture), or introducing another ex-ante forgiveness scheme (which perversely incentivizes greater loan-taking, all else equal).

If we can be honest with ourselves, the college debt problem is about a well-intentioned but misdirected dream that moves further and further from reality. And one particular industry has hitched itself (and taxpayer liabilities) to that dream, politicized it, amplified it, so that the dream is about loving our children, valuing knowledge, self-improvement and the American way. Who could argue with that?

The alternative dream is modest, unsexy, and not-so-fairy-tale-like. The kids who have been vegetating in secondary school should be broken out, to spend more hours pursuing with energy
Time for a new fairy-tale narrative.
and enthusiasm things that they actually want to do. And communities need to re-calibrate expectations of teenagers not to measure-up on scores and standards, but to diversify, volunteer, get involved in the real economy, connect with mentors. Students with limited motivation and showing weak scholastic aptitude need to find their own paths, even when this means that teachers and parents won’t see the standard progress indicators. All of this will look a lot more sloppy, cut-and-paste, and individualized than it does now.

Kids won’t be pushed off a conveyor belt by self-interested secondary administrators, but would self-launch at different times into online studies, micro-credentials, vocational trainings, and a wider variety of much lower-cost learning. [Professional schools and certifications are still out there, but they shouldn’t need a BA to get in!] Parents and young people won’t take a gigantic loan for the “big event” of 4-year college, but rather will have to make with their children month-by-month cost-benefit decisions about online credentials, visiting enrollment, internship opportunities and housing costs that begin at a much earlier age and may continue well into the young person’s adult life (and policy regarding the use of 529 educational savings accounts should follow suit and become more flexible!). Thousands of charlatan and half-baked colleges need to go under. And the best of individual trainers and educators have been emerging (for a decade already!) in online and blended, pay-per-use formats that make interactive, quality learning far more accessible.

It’s the culture that has to catch up with already-existent potential.
It’s a brain-washed, false American dream that has to be stopped where it starts in the families of young teens.

Wednesday, November 21, 2018

Divulge, But Trust! Teens reveal in college admission essays what nobody should answer in an employment interview

University of Texas at Austin asks undergraduate applicants to write 500 words about this:
What was the environment in which you were raised? Describe your family, home, neighborhood, or community, and explain how it has shaped you as a person.

Princeton gets at the same question through this bloviating, self-congratulatory paragraph:
Using one of the themes below as a starting point, write about a person, event or experience that
Tell us all about yourself...
helped you define one of your values or in some way changed how you approached the world ...“Culture is what presents us with the kinds of valuable things that can fill a life. And insofar as we can recognize the value in those things and make them part of our lives, our lives are meaningful.” Gideon Rosen, Stuart Professor of Philosophy and chair, Department of Philosophy, Princeton University.

For those of us with teens in the thick of college applications, this kind of wind-bag-couched request for comprehensive self-description is commonplace. Teens are nervous and seeking to please and still have a naive relationship with privacy. And a whole consulting industry has sprung up around advising what personality traits and gender characteristics to flaunt, which ethnic and racial stereotypes to jettison, what kind of family-upbringing and income characteristics to be proud of, which dialects are endearing and which sound stupid. Armies of Chicos-clad admission officers are pouring over this minutia for our own good, we tell ourselves. And our teen, who has already felt a hundred eyes examining her, plays along.

It hardly crosses our minds how far this veers from the core of what our teen is trying to do: to get (publicly subsidized) access to (many state-funded) educational institutions.
Alia Wong wrote in October Atlantic Monthly
about a Korean-American girl whose college application
coach and tutors advised her not to sound
"too Asian" in her application, and to omit details
 about her love of mathematics or violin-playing. 
And because our teens live in a divulging culture, it doesn’t seem inappropriate to them to reveal so much personal information that is irrelevant, prone to subjective judgement-making, and unverifiable.

But try to think of the most awkward job interviews where you’ve either been the candidate or sat alongside someone who was totally out of line:
So I hear you have a really big family, huh? How many kids again? Wow!
I was so sorry to hear about your illness. You are such a trooper!
So you’ve just got married! Congratulations! I wonder if you’re thinking about children?
I didn’t realize Scott is your partner! He’s such a nice guy.
Was that YOU I saw at mass last Sunday? I didn’t realize we go to the same church!
What an interesting last name. Now is that Persian?

Unless you fell off the potato-wagon yesterday, you know that whether you’re hiring, or promoting, or managing a team, or vetting a procurement, or screening rental applicants or health insurance claimants, or providing or receiving just about any kind of state service, that these kinds of questions or revelations are completely inappropriate.
Are applicants too young to understand the
inappropriateness of the kind of information
they are asked to divulge? Or too eager?
Or too trusting?
That also goes for ethnic background, spiritual beliefs, sexual habits and orientation, family background, relatives and their incomes, and any kind of subjective narrative about race.

And yet somehow nosy undergraduate admissions officers wormed their way out. They don’t just get away with such questions. They flaunt them. The celebration of culture, race, background, class-status, and identity oozes out of every line in the application form. It seems impossible to fill the demanded word-count without divulging a great deal of private and utterly irrelevant information.

And divulge we do. For the most competitive schools, we craft and second-guess and massage the message. Counselors help our teens put exactly the right face on themselves. (Georgetown University isn’t the only school to ask for a face-photo attached to the application itself.)

Why do we prompt our teens to divulge so much irrelevant personal information, when we ourselves would recoil and protest if any interviewer leaned across the table, and with a knowing wink asked, “Are you mixed race?” or “Do you come from a good home?” We sanction and assist the divulging, because we tell ourselves that these admissions processes are good, that their intentions are right, that their subjective reading of our personal situations is for society’s benefit.

Unfortunately, the divulge-but-trust-me culture is empowered by social progressivism, that stridently and self-righteously promises to engineer a better society by over-stepping personal privacy. I remember coming home from work incensed on the day that World Bank Human Resources promulgated a policy requesting all staff to annotate our HR profiles with sexual orientation and indicate if we are transgender. Why should I answer? How would you verify this? What is the purpose of this question?? I was enraged, but a cheerful HR officer with a helpful face and a hurt expression in her eyes said, “Colleen, this isn’t going to hurt you. This is so that we can maintain our diversity scorecard.” The explanation feels as meaningless and baffling now as is did then. I carried my anger alone, until my husband got a similar survey from the U.S. State Department.

We don’t need to look far back in history, or far from our doorsteps, to see the risks of divulge-but-trust-me. Excessive information creates a cover to disguise racial, religious, gender and other kinds of bias in selections. It sits on servers. It gets passed around. The profile data that seemed well-targeted to one audience turns out to be off-key to another. And so on. It’s why sensible adults don’t bring up these things at job interviews.

And that’s what we should be telling our teens, even if they will leave these questions blank.

Friday, November 9, 2018

Why does the state pay when a senior chooses his treatment, but not when a minor chooses his education? Who gets dignity and who gets a pat on the head?

A seventy-year old Medicare recipient chooses his doctor, books (or not) his own appointments, agrees (or not) to recommended procedures, and the state pays. 
With privacy, information and selection, the senior
chooses his care, and the state pays.
A WIC recipient shops like you and me at a grocery store. But a 16 year-old is taken to the school that serves his zone, is assigned (mostly) to classes, assigned books, assigned timing, assigned goals. If he chooses differently, he pays--twice (because his parents already paid taxes).

We shouldn’t be surprised that surveys of student perceptions about public secondary schools in aggregate are so bleak. Fewer than 15% enjoy going to secondary school. As Christensen finds in his 2008 study, Disrupting Class, most secondary students would prefer to do something else with their time. More than 80% indicate that what they’re seeking from school is time with friends and feeling good about themselves--not priorities that schools design for. Bryan Caplan describes a climate of cynicism and superficial engagement in The Case Against Education: minimal effort applied to achieve acceptable grades, decreasing hours invested in study, avoidance of difficult classes or assignments not required for graduation, celebration at class cancellations, and pervasive self-reported cheating. Hardly the behavior of a consumer paying for a service.

Healthcare makes a good comparison, because we similarly treat access as a social imperative, but the patient is the consumer, and we believe he should pay for a given service only once. A senior starts with a range of online tools, he considers how he’d like to address his needs. He can find and compare providers, consider distance, years of experience, other patients’ reviews. He can walk away from a recommendation. He can seek a second opinion. He can change course midstream. He can complain, post feedback, file a lawsuit. Medicare is a cash transfer (within constraints) that enables the senior’s decision-making about caring for his own health.

The secondary student, by contrast, is a non-entity. The group he’ll be assigned into, the books they’ll read, the content that’s prioritized,
You can choose where you'd like to sit.
have largely been determined before his arrival and irrespective of his interests. By contrast to the senior, his choices are so minuscule and choreographed as to be insulting-- he can choose his seat in the room; he can choose from three essay topics; he can choose his lab partner (maybe). That the service is good or bad, useful or irrelevant, is measured not by his own assessment, but by a concocted measure of utility devised without ever consulting him. There are no star-ratings for this chapter or that, for this classroom, for this assignment, for this teacher. Did this day exceed/meet/underwhelm your expectations? 

Any feedback mechanism to the many services inside a public school is necessarily indirect: through parents,
Never seen in a public school.
through volunteer organizations, through a long chain of command. Community fundraising likewise benefits students indirectly. Rarely do you see a direct cash transfer to students to select learning options. Instead, laptops, smartboards, voting devices, musical instruments-- are owned, managed, and allocated by the school district. Most critically, in very few places do students have the means to vote with their feet. And in most of those cases, if they choose, then they pay twice. Public secondary school is a state monopoly that allocates resources on behalf of teens according to its own determination of what is collectively good education.

Teenagers are even non-entities in the social iconography of their own lives. In the paeans to school and teachers, teenagers play the role of cherub props. The impassioned voices are not teenagers, but politicians and public figures. They massage our civic imagination of downtown-parades-Oprah’s-book-club-apple-pie-and-cute-puppy-uploads. An actual teenage personality had better be airbrushed in this sepia-tinted world.

Part of the problem of teen students as non-entities is the extension of parents’ simplified management style going back to rearing smaller children. The breadwinners call the shots. They can’t handle another headache. While you live under my roof… and so on.

But it’s not only parents that ride along on teens’ non-entity status. It’s also an industry of child-management (only a fraction of this growth is actually teachers!) that validates and expands itself. It does this through an impassioned, heart-rending double-speak that makes an icon of teen-rearing while nullifying the teen and reappropriating his resources. University administrations latch-on and extend the same iconography: the sacred raising of young minds (nevermind our tuition hikes, monopolistic and untransparent practices, and the career-irrelevance problem).

In any other industry, it’s unheard to say that the industry itself is saintly, even if the overall purpose it’s serving is useful, live-or-die stuff. The heroic healthcare industry?
In his September 1990 address to the United Nations
on the occasion of the World Summit for Children
 and signing the UN Convention on the Rights of the Child,
Vaclav Havel lamented years of “bent backs” and “servitude
to hated regimes” supposedly in the name of children.
He recounted horrors of totalitarian regimes “all this
 for the fake happiness of generations yet unborn in some
 fake paradise”, and he wished “if it were possible, I would
add another paragraph to the agreement I signed this morning.
That paragraph would say that it is forbidden for parents and
adults in general to lie, serve dictatorships, inform on others,
bend one's back, be scared of dictators, and betray one's friends
and ideals in the name and for the alleged interest of children,
and that it is forbidden for all murderers and dictators to pat
children on the head". ...We would wave off such a comparison
to compulsory school as hyperbole. But we would also shepherd
children--with great fanfare-- to 1500 hours per year stripped
of civil rights, driven by compulsion, silenced as consumers,
straight-jacketed as decision-makers. 
The martyrs of American food production? How would you feel about a poster with a United Airlines spokesperson patting a radiant passenger on his head? Even childcare centers and assisted living facilities don’t get the mushiness that is heaped collectively on schools.

No consumer is a radiant cherub. No $12,000 sale* is made on mush-factor. Something is missing-- what??

It’s the teenager! The teenager is absolutely a consumer! He or she needs encouragement and guidance, yes. Needs reminders and nudging and discipline, sure. But the teenager should compare and choose, take or leave recommendations, personally assess progress on terms which are valuable to him/herself, change course, vote with his/her feet, and give feedback. When we recognize secondary education as an $206 billion business with 15.1 million consumers**, we will-- as Vaclav Havel exhorts-- stop patting children on their heads, and compete to offer relevant, convenient, timely services. It’s not the end of the world when teenagers call more of the shots for their learning. It’s the end of an abusive hypocrisy.

*The range of per student per annum expenditure by schools varies by state, with New York ($21,206) Alaska ($20,172), District of Columbia ($19,396) Connecticut ($18,377) and New Jersey ($18,235) at the high end, and low-end states as low as $7000.

**Total spending in 2018 for grade 9-12 education by public schools in U.S., and number of enrolled students in public schools grades 9-12 same year.

Thursday, November 1, 2018

What’s an hour worth? Political prisoners teach us about the time-value (and human value) of self-determination

What is an hour of your time? Is it your output? Some benchmark wage? Even if you put a price on it, you know it’s something more. It’s not only making, it’s also being. And being doesn’t want a value-number, because being is too proud for that. An hour of being doesn’t promise anything. It demands full freedom for itself. Being presumes its own value.

Nietzsche wrote in Will to Power:
There is a solitude within him [sic: the “higher man”] that is inaccessible to praise or blame, his own justice that is beyond appeal.

Isaiah Berlin expanded on this idea in The Crooked Timber of Humanity:
It makes no difference whether a man’s own inner light shines for others or not; nor whether he serves it successfully; serve it he must, even if he makes himself ridiculous in the process, even if all he does ends in failure. Indeed this sort of failure is considered as being morally infinitely superior to worldly success, even success as an artist-- provided only that it is the fruit of the blind and exclusive service of what a man knows to be his mission, of what the inner voices tell him that he must do.

As one who loves the literature of political dissidents,
Solzhenitsyn served 8 years in the gulags,
including hard labor at Ekibastuzin in
northern Kazakhstan.
I take a lesson from Aleksandr Solzhenitsyn, Liu Xiaobo and Milan Kundera. There is something in human time that thrives on its own free expression and withers under external control. An hour intrinsically motivated is something very different from an hour (or decade) extrinsically compelled. On the Central Asian steppe, in a Chinese re-education camp, in a prison in Czechoslovakia, these three were subjected to the crushing monotony of arbitrary, externally-imposed ritual. And make no mistake, such ritual is purposefully designed.
Kundera's early novel The Joke is considered
 a partly autobiographical account of arrest,
humiliation and prison sentence which the
author himself endured, narrowly avoiding
death penalty, and serving 14 years in a
Czechoslovak prison. 
To the letter it elevates and painstakingly justifies itself (why else carefully recorded confessions?), creates and sustains a massive bureaucratic machinery around itself (surely so many blouse- and tie-wearing officers cannot be wrong!), metes out soul-crushing brutality alongside ludicrous rituals of hygiene, productivity and patriotism, and always, unfailingly, documents, documents, documents!!

I often wish that anybody fervent about teen well-being would take the time to get acquainted with Solzhenitsyn, Xiaobo and Kundera.

They lived in systems that treated/treat the human spirit as a mush to be smashed and remolded into a thing: thing-1, thing-2 and thing-3. They should plug into machines that whistle and click, and a uniform glob should plop out the other side. It should plop cheerfully and reliably. This to the smiling, nodding approbation of
Liu Xiaobo was one of few Nobel Laureates held in prison
and unable to receive the award personally. He died in July 2017 not
long after release from prison. 
doe-eyed co-conspirators--classmates, co-workers, neighbors--who unflinchingly turned them over for arrest. These authors were unstoppable voices. But behind them were/ARE snuffed out millions that these machines in their perfect rhythm successfully digest.

Living at various times in Moscow, Kyiv and Astana over the past twenty years, I have only brushed with the machinery that continues to grind human time in the state clinics, post offices, railway ticket-counters, internats and state department stores--remnants of a deeply-ingrained culture of soul-smashing. The quiet, patient plodding from queue to queue, the never-quite-complete bundle of documents, the pleading, smiling offerings to petty demons, the rank smell of bad plumbing, the shrieking calls to wear paper shoe-covers. As a foreigner, I could observe--with irritation--from the privileged vantage-point of one not depending on or bound-into these systems. At the oncology center in Astana, I brought my kids and made small-talk during chemo. Notwithstanding the barking of the shoe-cover lady, impatience of the blood-tester nurse (we had to do it in a line), and the occasional cursing tirade from another patient, I tried to make the best of the hours there. The head nurse was fascinated with me and called me into his office for tea. ‘You’re the only patient we have who wants to go on living,’ he told me.

So what is an hour? For one thing, it’s defiantly not being dead.

Maybe there should be two different words for an hour. Here is an hour that celebrates the machine. It goes click-rattle-plop-plop. It sucks in the mush on one side, and pushes out the plop plop on the other. It generates the false hum of false progress. Its laborers dig ditches in the morning that they will fill in the afternoon, its farmers lean on hoes over crops that will be reappropriated, its production quotas, harvest yields, birth rates(!!) boast an impossible unity of compliance and desire.

Here is an hour that celebrates the man. It races by while he stutters and gasps to express himself. He flails and fights against monotony, fights to be meaningful.

These hours are not defined by geography or politics, but by our own estimation of the human being. Make no mistake that so-called free countries also hold task-masters, pinheads and bean-counters. How easily would we trade hours and years of another person’s life for the reassuring whistle-click-plop-plop, the reliability, the ritual, the documents? Who are we crushing along the way?