More Polite Handwringing About Student Debt Mess

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I don’t mean to point fingers at a perfectly unobjectionable article by Neil Irwin at the New York Times’ Upshot feature. It gives a compact, highly readable summary of some new information on student debt in the latest report on household debt from the New York Fed, and a related post on its Liberty Street Economics website. However, readers who have been following burgeoning student debt problems are likely to find the anodyne tone of the Times article and the underlying New York Fed work a tad aggravating.

The New York Fed has endeavored to determine whether student debt is undermining the recovery. One element that has a lot of commentators concerned is the low level of household formation and homebuying among the young. It’s not hard to see that a terrible job market for college grads is a big culprit. But the New York Fed fingers that student debt is clearly playing a role, as one might expect. If jobs are hard to find and generally not as well paid as before the crisis, it’s going to make all but the high fliers or those with rich parents cautious about making a commitment like buying a house. And those with debt they can’t discharge in bankruptcy are already burdened and in less of a position to take risks.

This is the chart that supports that intuition:


Prior to the crisis, those with student debt on average were still more likely than those without student debt to own a home by age 30. That was indirect proof of the belief that getting a college or graduate degree was an investment that paid off via access to better paid jobs. But now, the hostile job market and still-rising education costs have upended that picture. The Fed researchers also point out that young people may be less keen about homeownership than their elders were. Again, in an uncertain job market, a house is a huge impediment to mobility. Transaction costs are usually 5-7%, unless you are in a hot market and can sell without using a broker. That’s significant relative to a 20% down payment.

Policy solutions are outside the ambit of these New York Fed reports. But there are several things that are striking when the subject of student debt comes up. The first is the lack of a real economy coalition demanding that Something Be Done. Homebuilders, realtors, and durable goods manufacturers are clearly making less than they would if there were fewer young adult debt slaves. Why aren’t they talking up student debt or the terrible condition of the job market as a serious problem that has knock-on effects for the entire economy?

Similarly, among soi-disant progressives, there’s perilous little discussion of the big drivers of the problem, which is that more and more of educational dollars have gone to a bloated, overpaid adminisphere and gold plated facilities rather than educators. But somehow criticizing the looting by the “professional administrators” who have become increasingly powerful at these institutions is taboo. And a second factor is the gutting of budgets for public universities, which used to provide a check on tuition and fees at private colleges and universities.

Similarly, the few current proposals are timid. Elizabeth Warren’s idea of making borrowing cheaper in interest rate terms is rearranging the deck chairs on the Titanic. So you get a short-term improvement in “affordability” which will quickly lead to more cost increases by the universities. You are quickly back to square zero. Why isn’t Warren, a top US expert on bankruptcy, talking (at a bare minimum) about making student loans dischargeable in bankruptcy? Or how about subjecting school administrators, who have too often been reported in the media of overstating the returns to a college education, to truth in advertising laws?

It seems as if there’s a lack of willingness to engage this issue seriously, that it falls in the “it’s too hard” and the “we can’t get anything passed now anyhow” categories. Those are lame excuses. There will be no remedy if real solutions aren’t pushed into political discourse. Even if they can’t be implemented now, making them a subject of debate at a minimum gets them on the list of policy options and shifts the perception of what is possible and viable. The alternative isn’t merely the perpetuation of a bad status quo. The internal dynamics are that the educational complex is starting to hit the limits of what students are willing to pay, as sharp drops in law school enrollments attest. But absent external pressure, the top administrators at colleges and universities are certain to emulate their corporate counterparts and squeeze everyone else to preserve and better yet increase their compensation (see this example from the University of Saskatchewan, hat tip Jason, of the sort of thing likely to be in the offing in the US). So there are well-founded reasons for external pressure, as well as some logical pressure points, as in critical scrutiny of bloated budgets. But those who are losing out need to stand up for themselves and find allies, or they will only continue to be the losers.

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  1. John

    The GOP message machine has no peers and is near absolute. So called progressives who try anything in this political environment will always go for the minimalist approach because the Machine will break them at their kneecaps. Worse, with super majority voting policies in the Senate, building a size able coalition is impossible to push through progressive programs.

    The French Revolution comes to mind…..

    1. ptup

      “The GOP message machine”

      Oh, please, this isn’t the NYT comment section. Just saw Bill Clinton interviewed last night on PBS, and I wanted to puke. There sat the man who started it all, the bank deregulation, Nafta, all else, and became fabulously wealthy after leaving office making these robber barons feel OK while collecting a few hundred thousand dollars doing his aw shucks routine in front of them at bad dinners. Now he’s gearing up for the wife to be president, although he looks a little tired and wan, in his old age. Not sure if he can stand the rigors of a campaign these days. Money raising is tough work. Anyway, here he is looking all somber about the new subject the Dems are taking the ball and running with, Inequality, as though they are going to do one thing to solve it. Please. His biggest concern is what political direction Chelsea should take once the baby is born. Mayor? Congress? Or the New York Senate? Tough choice.

      1. NotTimothyGeithner

        Bill must be pissed he let his idiot friends near Hillary’s campaign. If Team D used the GOP rules which more equal a one man one vote philosophy and has no super delegates, Hillary would be President, but they managed to make Hillary who won the most votes look like she was subverting the democratic process. Instead of having to cover for Obama and waiting for O’s pleas for help, he could be jetsetting to trouble spots.

        1. LucyLulu

          ” If Team D used the GOP rules which more equal a one man one vote philosophy”

          Are you serious? Living in NC and having been involved with Moral Mondays and our Republican-controlled state legislators, and with a pending ACLU lawsuit alleging voter act violations, the GOP most assuredly does not support one man one vote among demographics likely to vote for Democrats. We have no history of voter fraud. NC is only one of several states pushing voter ID laws, which can equate to a significant poll tax for those who are poor, have no transportation, and no copies of necessary supporting documents. In 2009 I had a client like this I assisted to obtain a picture ID from the driver’s license bureau. It took weeks, about $40, and was a real pain in the you-know what. This client had access to bus service (and unlimited bus pass), unlike most of our rural state. When I worked with teens from Appalachian KY, there were communities where few owned or had access to cars. Because we were the only facility in the eastern half of KY, Medicaid would pay the up to 3 hour taxi fare to transport the kids to our facility (assuming an ambulance was not required).

          Assuming requiring valid ID to vote is a reasonable requirement that doesn’t impose a burden reflects white middle class legislators’ and voters’ ignorance of the lifestyle of those in poverty, where money is spent before it comes in playing catch-up, and many have no access to cars or outside major cities, public transportation.

          Bill Clinton’s a great spin interest. He made a mockery of Rove’s idiotic statements about Hilary’s “brain injury” calling her fitness to serve into question, the same injury he previously accused her of faking. Rove also raised the age issue, an issue he previously said was ridiculous when McCain and Reagan were candidates. Of course, back then Democrats raised age concerns which are now deemed irrelevant by them. Ideology is political.

          Student loans have provided $55B in revenues since the government started issuing them directly. If relief is given, today’s Congress requires the relief be paid for. We’ve cut unemployment and food stamps, and our infrastructure is in shambles. The highway trust fund is insolvent and Maddow did a great piece last night on the (lack of) safety of rail oil tankers, the use of which tankers has increased exponentially with the boom of domestic shale oil production (and presumably Canadian bitumen). Accurate or not, the “we don’t have the money” meme rules the day.

          Penny wise and pound foolish comes to mind when describing economic policymakers.

          1. NotTimothyGeithner

            This was about primary rules and delegate allocation, not general elections which is my point was about Hillary and Obama’s contest, not the general election.

            1. pat b

              We may not love President Obama, but Madame President Clinton would be at nuclear war by now.

              1. NotTimothyGeithner

                I voted for Obama over Hillary. My point is Bill’s idiot friends lost to Obama because their success was tied to Bill. With Bill on the sideline even on the planning side, they lost to a clown without an original thought and only banal cheering.

                They spent so much time trying to rig the calendar and superdelegates that they forgot to read the dawn rules and allowed the winner of the most votes to be painted by trying to subvert democracy.

                I have no idea what prompted Lulu’s response. I stopped reading after two lines when she was focused on general elections.

        2. LucyLulu

          “Bill Clinton’s a great spin interest.”

          Oops. He’s a great spin artist, not interest.

        3. rob

          I wouldn’t be surprised if Hillary didn’t want to be president in 2008.
          The tea leaves were reading that the implosion of everything that had “Clinton administration” all over it ,was going into full tilt during the bush years…. and no president was going to change that.(I mean to say no establishment allowed president,who would never even think to try to help real people)
          Hillary probably figured:
          the democrats are going to win.the republicans hail mary turned out to be a joke from alsaka….So the democratic party will win.All she had to do was sit back, and let some “novelty”, remove the spotlight from the clinton administrations actions in the 90’s coming home to roost.
          which of course she had to let run the two terms. Now it is time for her to test the waters again….. if the gag reflex of the brain-dead American electorate is sufficiently atrophied….. she could just win this one…..
          But what she has done is avoid being in the seat while the planned devolution of America was set in stone.Now she can preside over the reaping.And really make a name for herself…

          1. NotTimothyGeithner

            Yeah, she wrecked herself physically to run in 2016 when she would be almost 70.

            Yeah… Occam’s Razor is your friend. She didn’t concede for three days because they couldn’t let go, and Bill and Hill are such narcissists they can’t connect Bill’s deregulation and Greenspan appointments to any calamity. She may have set out in 2004 to not have to deal with Iraq, but she didn’t slum in Iowa and NH because she secretly wanted to lose.

            It’s more likely people who buy arguments about triangulation without Bill’s magic touch and a history of non-Bill failures simply lost because of arrogance and incompetence. The 92 cycle was strange, and Bill’s guys lost Congress, won with under 50% of the vote in 96, let Dubya win twice, and saw the Democratic Party triumph after they were tossed out in 2005/2006. The success of Dean-backed candidates in Bush districts+5 versus Emmanuel-backed candidates in Gore-Kerry districts+5 in 2006 is just hilarious. The House seats the Dems won in 2008 came when Rahm candidates were replaced.

      2. Psychoanalystus

        “is impossible to push through progressive programs”

        That’s funny. Thanks for the excellent humor… Please continue.

      3. run75441

        Clinton did not destroy Glass-Stegall, Greenspan already had it in the grave with his alteration of section 20 of Glass-Steagall. He was killing it since he became Fed Chair.

    2. david s

      You write as if the Democrats haven’t also been bought.

      What universe is it you write from?

    3. NotTimothyGeithner

      Yawn…do you remember when the country elected a biracial, sleeper agent from Kenya promising universal healthcare, ending the wars, and raising taxes? We did in 2008 despite the greatest machinations of Karl Rove. When Democrats have a message and don’t run obvious corporate, Democrats will win.

      When Team D lose, it’s because they whine about the GOP being mean during a contest for the most powerful offices in the world instead of pushing positive agendas.

      If you followed the ’12 election at all, you might have noticed Obama’s numbers picked up after he pushed a traditional Team D lie instead of odes to Reagan. His numbers have declined as he has ignored those issues in favor of attacking SS, promoted violence, pushed TPP and Keystone, ignored the environment and economy, and spent 3 years pushing for pro corporate immigration serfdom. Not to mention, the predicted disaster that was passing health care reforms concocted by the heritage foundation. All the messaging in the world won’t change this reality, even if Team D shouts 10.10 more often than Herman Cain’s 999.

      The requirement in the Senate for a super majority has been ruled(1892) as a gentlemen’s agreement. 50+VP trumps any organizing principle. Are you holding Democrats who whine about the filibuster accountable?

      1. Psychoanalystus

        You forgot to mention NDAA. And his shameless lies to cover up for the NSA. And his crackdown on Occupy Wall Street. And then his war crimes in Libya, Syria, etc., and now Ukraine. I tell ya, this guy makes Bush jr. look like an angel.

        1. Nathanael

          That’s overstating it. Obama looks *exactly* like Bush Jr. — they both look like devils.

    4. Doug Terpstra

      “So called progressives who try” also find that their bribes dry up fast. Might as well play along as the slightly lesser but ever more effective evil.

      1. Psychoanalystus

        I guess progressives like Obama or Hillary would be a “slightly lesser evil” when compared to Satan. Just slightly.

    5. Jake Mudrosti

      Soi-disant progressives are doing a fantastic job of undermining progressive causes, independently of any GOP message machine. For example, consider the current administration’s hounding of whistleblowers such as Kiriakou or Snowden, coupled with pro-administration cheerleading in “progressive” media.

      It’s always tricky to apply psychological frameworks when explaining human behavior, but Robert Jay Lifton’s “Eight Criteria for Thought Reform” is useful. Critics who describe his research as unscientific are, I believe, failing to see it in the way it was intended — namely, as a useful summary of his painstaking observations rather than some manner of falsifiable theory.

      Consider, for example, the hounding of Snowden in relation to some of the 8 criteria:
      1) Milieu Control: …control of information and communication both within the environment and, ultimately, within the individual…

      3) Demand For Purity: The world is viewed as black and white and the members are constantly exhorted to conform to the ideology of the group and strive for perfection. The induction of guilt and/or shame is a powerful control device used here.

      4) Confession: There is no confidentiality; members’ “sins,” “attitudes,” and “faults” are discussed and exploited by the leaders.

      7) Doctrine Over Person: Members’ personal experiences are subordinated to the sacred science and any contrary experiences must be denied or reinterpreted to fit the ideology of the group.

      8) Dispensing Of Existence: The group has the prerogative to decide who has the right to exist and who does not… Thus, the outside world loses all credibility. In conjunction, should any member leave the group, he or she must be rejected also.

  2. Kokuanani

    “But the New York Fed fingers that student debt . . ”

    Yves, should his be “figures”?

  3. Casey Jennings

    Small not-for-profit commercial.
    We have a pilot in California that is financing college without debt – for waay too much information you can look us up at “13th Avenue Funding”, we are a 501(c)(3) . Our idea is to pool students and use an “Income Sharing Agreement” or ISA.

    Why is this better ? The students we have funded are from low-income low-wealth households – our pooled ISA means that if they earn less than $18K they pay nothing. If they earn more they pay 5% of their income, for a maximum of 15 years, and the maximum the people who funded them can earn is zero. (more details at our site).

    Those students who earn more than the average will pay more and those who earn less will pay less. This is a feature not a bug.

    Finally, the students get a voice and vote in the governance and management of the entity.
    We haven’t solved all the issues but we think this is a better idea.

  4. 12312399

    thank you. 90% of the entire Democratic Party needs to disappear (including the urban mayors who are pretty adept at masking their neopotism, looting behind the liberal cause of the month).

    and if that means giving the GOP 4+ years of total Congressional and White House control that’s fine by me.

    The current Democratic Party is not a check on Republicans. If anything they are an rubber stamp for Republicans—ever since Nafta (and probably earlier but my memory isn’t so good).

    I’d rather be stabbed in the face by intellectually upfront Republicans than stabbed in the back by duplicitious Democrats.

  5. allcoppedout

    “Fingers” might be appropriate, given what it means in criminal parlance.

  6. 12312399

    ps, my comment was directed at “ptup” and his response to the GOP message meme.

  7. Eric L

    “Similarly, among soi-disant progressives, there’s perilous little discussion of the big drivers of the problem, which is that more and more of educational dollars have gone to a bloated, overpaid adminisphere and gold plated facilities rather than educators.”

    Is that the big driver of the problem?
    I’ve found it tough to make this case empirically, so if you have empirical evidence of this (and I don’t mean anecdotes, but actual evidence drawing on university budgets over multiple institution types — public research selective, non-selective, non-profit selective, etc.), I’d love to see it.


      1. Eric L

        Thanks, but it doesn’t much support the claim Yves made that I quoted (it’s still a nice report though). Here’s what it says instead:

        “creating new professional positions, rather than executive and
        managerial positions, is what drove the increase. Professional positions
        (for example, business analysts, human resources staff, and admissions
        staff) grew twice as fast as executive and managerial positions at public
        nonresearch institutions between 2000 and 2012, and outpaced
        enrollment growth.” (p. 3)


        “Executive-level positions represent a small share of jobs on campus, between 4 and
        6 percent at public institutions in 2012, changing little in more than a decade (see
        Figure 2). Private institutions have a more substantial investment in these types of
        positions, but when accounting for changes in enrollments over time, only private
        research universities showed significant expansion. In all other sectors, executive
        hiring has largely kept pace with student enrollment growth since 2000” (p. 7)

        So according to your link, it’s not “overpaid adminisphere and gold plated facilities” but the less-well paid and non-managerial professional services hires which have grown: counselors, HR, computer administrators, athletic staff, etc. These typically pay less than full-time faculty positions, still less managerial positions, as they note on p. 18.

        And here’s their conclusion:

        “There is no single, smoking gun responsible for rising higher education prices.
        Even though compensation costs have risen modestly across the higher education
        sector, these increases emanated from the combined effects of controlling
        full-time faculty costs, rising benefits costs, and hiring patterns that favor
        noninstructional professional positions, while offsetting the cost savings from
        using more part-time faculty.”

        1. monday1929

          The single smoking gun is the student loan bubble which grew from approx. 200 billion to approx 1 trillion over the past 5 or ten years. Are you familiar with the exploitation of adjuncts? I suspect you are.

          1. Psychoanalystus

            “Are you familiar with the exploitation of adjuncts?”

            Only adjuncts who allow themselves to be exploited shall be exploited.

            I know adjuncts making $250k/year teaching at multiple online US universities while living the good life on Costa del Sol in Spain or on Crete. In fact, I know one of them quite well… :)

            1. monday1929

              I will pass that on to one I know.
              Do you blame all low paid workers for their exploitation?

              Child laborers?

              1. Psychoanalystus

                My friend, there are ways adjuncts can work at multiple online schools, automate their so-called “education” and thus maximize their income greatly from the comfort of their homes. I know several adjuncts comfortably earning 6-digit figures.

                However, one must be willing to face the reality of US education. Namely, there is no such thing any longer. Today, all US universities, starting with Harvard, Yale, MIT, etc, are prostituting themselves for federal grants and student loans. The research they do is garbage, and it sole purpose is to suck up more federal funding. Even the Darpa/MIT research is trash compared to what China/Russia is doing. It’s all smoke and mirrors. As such, adjuncts who embrace this reality and join the “winning team” are able to milk the system while it is dying.

                Your friend needs to accept that there is no virtue in American education anymore, and the only hope remains its complete demise. However, as long as adjuncts subscribe to passé idealistic goals of “educating” tomorrow’s generation, etc., they will remain minimum wage laborers.

                However, if they embrace the current reality, they will be able to milk this dying system of its last remaining dollars, and thus secure a comfy retirement for themselves.

                On the other hand, if they want to become true “educators” they need to emigrate to Japan, Korea, Singapore, Hong Kong, or Shanghai. Problem with that scenario is that most of those nations no longer place much trust people carrying US passports.

                In other words, your friend needs to become proactive and look at reality for what it is rather that some idealistic BS. I hope this helps.

                As far as child laborers are concerned, I am not sure how that relates to our discussion here. Kindly please explain…

        2. Yves Smith Post author

          Small share of jobs is not small share of dollars. Notice the misdirection? You can say the same of CEO and C level exec at public compaies. At pretty much all universities, the staffs have been colonized by MBA or equivalent “professionals” who are paid multiples of what similar administrators were paid when I was in college.

          We featured this clip a while ago, which states that in universities, as little at 10% of the total budget goes to education:

          1. Keith Mo

            That’s interesting. When I give to charities, I like to know how much of they spend on admin & marketing. If I give to my alma mater it would be nice to know how much my university spends on education and/or research.

            1. Nathanael

              If you can’t get numbers out of them, assume they spend basically none of the money on education.

  8. nycTerrierist

    “Similarly, among soi-disant progressives, there’s perilous little discussion of the big drivers of the problem, which is that more and more of educational dollars have gone to a bloated, overpaid adminisphere and gold plated facilities rather than educators. But somehow criticizing the looting by the “professional administrators” who have become increasingly powerful at these institutions is taboo. And a second factor is the gutting of budgets for public universities, which used to provide a check on tuition and fees at private colleges and universities. ”

    Amen, sister! (standing on chair clapping)
    This, this, this.

    1. monday1929

      Check out N Y Medical College in Valhalla NY- Graduating students with 100k in debt, located on a lovely campus surrounded by homeless shelters and a County jail. They hired a union busting attorney at a very nice salary while sneaking in “desk polishers” late at night to polish very expensive desks.

        1. monday1929

          I thought those quotation marks might confuse- they really were polishing desks. :)

      1. LucyLulu

        Doctors graduating with $100K in debt isn’t high, relative to graduate degree graduates in general.

        At the University of Kentucky, they raised the tuition for 2013-14 for the 4 year pharmacy program to $12K/semester, with three semesters per year for three out of the four years. Assuming tuition remains level, those who entered last year will pay a total of $132K in tuition. The average pharmacist starts at under $100K, assuming they can find a job, which are now in short supply. The transition from bachelors degree to doctoral preparation being required of pharmacists is a recent one. Many jobs, such as hospital, gerontology, or mental health pharmacist, are requiring post-degree residencies of one to two years, unheard of not long ago.

        Educational requirements keep rising (4 year degree is entrance requirement to middle class for women), along with student debt, while wages and decent paying jobs are declining. I was stunned recently to learn the landscaper I hired to help rebuild a retaining wall has two master’s degrees, is working on his PhD from Oxford (is citizen of three countries), and is an encyclopedia of information. The site for his thesis has been occupied by Syrian refugees, and the state of NC eliminated its archaeology dept. He does great work but can we spell overqualified? I doubt he has student debt, his family has money, but imagine trying to pay those loans off at $15/hr (and the going rate is $10/hr, but I’ve always believed in paying a fair rate).

        1. rob

          Just out of curiosity.
          Why is the going rate $10/hr? For whom?
          10 dollars per hour is a wage that is something when figured as a non skilled laborer, who gets “hours”, “for doing nothing” ;sometimes.
          When a person is left to use products that are generally going to cost a lot more than their labor, shouldn’t a person earn a reasonable amount, seeing they don’t waste your money making poorly crafted things?
          So ,I am glad to see you supporting the laborers with some kind of better wage.After all, North Carolina is a “right to work for nothing “state.
          Give mc-crony and the republicans hell …on those “moral Mondays”

          1. Yves Smith Post author

            Carol B in New Jersey sends all kinds of job notices for $10 an hour temp jobs. Here are some:

            Heavy rain has created alot of work for our restoration companies..
            Can you start right now and go to Shamong?
            $12.. Call now at 856-985-8600
            Start tonite 3rd shift…7PM to finish
            Moorestown, NJ
            Salary: $10 and 11 when hired.
            Overtime every day…. great money, benefits……
            call now at 856-985-8600

        2. Psychoanalystus


          $100k student debt is unrealistically low for a doctor. It’s probably more like $400k – $500k. Some also have to live off of extra loans while in school. Throw in another 500k to start a practice, and you’re screwed for life. And then there’s that monstrosity called Obamacare, a freaking nightmare for everybody except insurance companies. That’s why US doctors are emigrating in droves to places like Australia, Germany, UK and France lately. They earn two or three times as much and work one third the hours, plus get to live in civilized places for a change.

          Your triple-passported landscaper needs to get the heck out of there too. Recently I saw faculty archeology jobs in Egypt and Saudi Arabia posted on He needs to be more proactive. And he needs to give up on the American Dream, because it’s nothing but a snow job – it’s always been that.

  9. Doug Terpstra

    As long as we keep the handwringing quiet and polite, it’s okay to discuss the topic. We can talk about it in vague terms as an inevitability of th e free market, without agency or deliberate malintent. It should be seen as just one of those unfortunate realities that occur naturally, organically, for which we ought to at some point consider some modest Elizabethan tweaks, for instance if some key market players are inconvenienced by reduced demand.

    It should not, the other hand, be noted that student debt has increased exponentially, unrelated to any underlying costs (apart from obscene salaries and bonuses). Nor should it be noted that this debt is specifically, unconstitutionally excluded from bankruptcy protections; that taxpayers expressly guarantee the significant profits of the welfare financiers; or that said financiers are parasitizing a helpless population that should be nurtured for the country’s future. Most of all, this should not be described as a moral obscenity, a deliberate dereliction to enable looting, or just plain STUPID economic policy that benefits only the rich and shameless aristocracy in the short term. Within those constraints it’s a perfectly acceptable abstract topic for polite society.

  10. FluffytheObeseCat

    “Is that the big driver of the problem?”

    Excessive, gold-plated facilities and overpaid administrators (with bloated staffs & operating budgets) are probably not primary drivers of tuition increases. So she’d have a rough time finding you numbers to prove that they are.

    However…… they are symptoms of the problems she focused on. Stark and glaring symptoms. Accrual of power (money) by “leadership” at the expense of organizational mission — that is a characteristic of corporations today, and it is a similar-sized problem in non-profit institutions like our universities.

    I don’t know if it is as severe or obvious a problem at the better institutions, but state universities are rife with bloat. I’ve been teaching or a student at 2 very different 3rd tier state universities in the past 8 years. They were blighted by:

    1) large numbers of admin staffers employed to help the end user contend with awesome levels of red tape. Some are helpful, some less so, and the latter have become accustomed to talking down to clueless young people over the course of their many years warming seats at these institutions. (both places)

    2) excessive support for weak, ill-defined programs like “Criminal Justice”, that are designed to part young people from their money with the promise of jobs, but which give them little in the way of real skills. (both places)

    3) in one of the 2, massive, gaudy building projects that resulted in much elegant new office space for admin staff and a few hi-tech classrooms….. while labs & older classrooms went un-repaired and wanting for upgrades. (the western one)

    At both places the education and the research missions have been subverted by bureaucratic entrenchment, and self-dealing at the level of upper management. I first went to college over 30 years ago. I just don’t remember this level of bloat in the late 20th century. I don’t remember it being this hard to get things done. The admin bureaucracies existed, but they largely made things work for the researchers and students. This is less true today, and the trend is perhaps more troubling than any specific complaint I could regale you with.

    1. monday1929

      Well put. NY Medical college in Valhalla NY hired a very well paid union busting attorney to “reduce” some of that expense at the bottom rungs. They graduate students with 100k in debt from a lovely campus surrounded by homeless shelters and the County jail. They sneak in “desk polishers” late at night to polish the desks of some very well paid figureheads who run small fiefdoms.

  11. Heraclitus

    This problem of administrative looting exists in the secondary school system as well. Many–though not all–school superintendants are like Harold Hill in ‘The Music Man.’ They breeze into town, persuade the public that I-pads for everyone are the key to the future, float a bond issue, and head out to the next gig! They often have rock star salaries, while the public picks up the tab.

    We have doubled per pupil spending since 1980, adjusted for inflation, and test scores have barely budged. When will the madness end?

  12. Jesse

    “The alternative isn’t merely the perpetuation of a bad status quo. The internal dynamics are that the educational complex is starting to hit the limits of what students are willing to pay, as sharp drops in law school enrollments attest.”

    What is everyone’s opinion on whether this example applies to college as a whole?

  13. Psychoanalystus

    Last I heard the Dept of Education was making something like 40 billion dollars a year profit just from the defaulted student loans. And they were able to eventually collect over 130% of the defaulted loan principals. They do that through confiscated tax refunds, wage garnishing, social security income garnishing, etc. So the inability to discharge student debt in bankruptcy is here to stay. This crooked government (and the ones to follow) will never give up this highly lucrative cash cow – just think about how many bombs they can buy with 40 billion extra a year.

    As far as Elizabeth Warren is concerned, she is nothing but an accomplished distractor and is fulfilling that mission marvelously. She is nothing but a psyop. However, as long as the “progressives” keep looking for their liberal Messiah to come down and implement American Dream salvation through “hope and change” the scam will go on… and then some.

  14. Dan Kervick

    Similarly, among soi-disant progressives, there’s perilous little discussion of the big drivers of the problem, which is that more and more of educational dollars have gone to a bloated, overpaid adminisphere and gold plated facilities rather than educators. But somehow criticizing the looting by the “professional administrators” who have become increasingly powerful at these institutions is taboo.

    This is my pet peeve about this issue. The interest rates for student loans are on the whole not that bad. But somehow the issue has been turned, Graeber-style, almost entirely into an issue about debt, banks, loans etc., and the cost issues are left out. Now if someone wants to claim that student debt is the result of a conspiracy between colleges and lenders to scratch each others’ backs, OK. But the issue is why college costs young people so much. You can fix the 2014 student debt issue with a one-time jubilee, but that does nothing to fix the 2018 issue, the 2022 issue etc.

    And part of the reason college costs so much? Not an evil business conspiracy but the fact that Americans decided they wanted to stop socializing the costs of colleges and wanted to make students foot the bill themselves.

    This is one of many areas where we need more socialism. But that’s a dirty word and a taboo concept, so it’s also one of many issues where Americans systematically deny themselves access to the language that would allow them even to discuss their problems in a sensible way.

    1. participant-observer-observed

      “The interest rates for student loans are on the whole not that bad. ”

      For graduate students (PhD etc not funded by MIC) Grad PLUS /Stafford ~8%!!!!

      Who is on the board of GREAT LAKES student loan servicing company is Koch Dominion of Wisconsin (who somehow just could not stomach send Scott Walker out to pasture)???

  15. Carla

    A lot of the comments refer to jobs, since college and graduate studies are mainly vocational training now.

    But jobs are so over. LucyLulu speaks above about pharmacy school tuition. Drug sales will be entirely online soon. Lots of us already order from Canadian online pharmacies because who will pay the ridiculous prices demanded in the US? Yes, online pharmacies must have pharmacists on staff, but very, very few. And it’s expensive to buy your way into Canada to live and work. (I have checked.)

    The jobs are gone, gone, gone. We’re going to have to figure out how to lead meaningful lives without them. But there are tremendously exciting opportunities to remake our economic, political and social systems to attain a sustainable way of life. If we have the brains to tackle the challenges in time.

    1. Carla

      BTW, I do not mean to imply that work is over. We will always have work — important work — to do. The work of readying ourselves and our minds for the world (education), the work of creating and sustaining families, the work of building and nourishing communities, of feeding, housing and clothing all of us, the work of cleaning up after ourselves in every respect…oh, the work is endless, and that is a very good thing.

  16. John Hemington

    Somehow this conversation never made it to Yves’ primary question — why is nothing being done to rectify the issue of the non-dischargability of student debt? Perhaps this is because the answer is too obvious to mention. Student debt is being used to securitize CDOs and other securities for resale by banks and hedge funds so that pension funds can receive higher returns on their investments than would otherwise be possible.

    Since it is clear that this is what the bankers want; and, since we all know that the bankers own Congress outright; there should be little doubt why students are being pilloried by ever increasing levels of non-dischargable debt. All of the other issues mentioned in these comments contribute to the increase in the costs of education and are a direct result of intentional neoliberal policies being forced on the world by international corporations and financial institutions which, to be repetitive, own the American political system.

    The bigger question is why Americans are so passively accepting this monumental distortion of the economic system to which they are subjected?.

    1. Yves Smith Post author

      No, the Federal loans, which are the bulk of the market are government guaranteed, so no need to create fancy financial structures to sell them. And in general, the only CDOs being done now are the comparatively tame type called CLOs (collateralized loan obligations).

    2. run75441

      This is a political hot potato with Congress kowtowing to banks and special interests in maintaining nondischarge of loans.

  17. run75441

    Hi Yves:

    – Colleges/Universities are already held liable if they fall below a certain level of default on student loans. If such occurs, the colleges/universities are being dropped from the federal student loans programs.

    – Professional administration (personnel, etc.) has increased in public institutes and more so in private institutes. It is here where you see the increases in headcount, salaries and benefits. Maintenance workers are down, executives have not increased, full time faculty is down and being replaced by part time adjunct who get a lower salary and no benefits.

    – Interest rates do matter in my opinion and especially when you get to the Masters and Doctorate programs when loans are capped at 9.5 – 10.5%. Hell, we can finance a car cheaper than such and we expect to grow a crop of scientists , engineers, doctors, Wall Street Financial engineers and wizards, etc. to compete in the world market with this high rate of financing? Jason Delisle at the New America Foundation (he worked on the Republican Senate Budget[?] subcommittee) thinks they should know better. Jason Richwine formerly of the Heritage foundation thinks the same.

    – If Congress leaves it alone, a student can discharge Bachelors debt in 20 years of little or no income and than upon discharge it becomes income for the IRS to tax. We should shorten it up to 10 years. These college grads are future consumers of housing, cars, etc. and we need to get them into the market sooner.

    – States need to fund state colleges in the same manner they did a decade or so ago. Michigan cut funding by 60% and it ended up on the backs of parents and students. The same holds true for K-12.

    – Then too when it comes to the need for state funding, University of Wisconsin has managed to somehow build a reserve of $1 billion (Alan Collinge).

    – Supposedly the Center for American Progress has backed away from discharging student loans in bankruptcy according to Alan Collinge of the Student Loan Justice Org.

    – There is still a big push to use Fair Market Valuation to assess the risk of student loans when there is NO risk as the gov makes more money in default.

    I know I owe a paper on this; but, I have had difficulty finding numbers. Finding Michigan numbers has given me an edge and now I need to put a numeric to professional administration (personnel, etc.) added.

  18. Lefteris

    You could establish public universities that are funded directly from the State governments, without requiring tuition from the students (only exam results).

    This way there is no need for student loans.

    (of course in such case, the Universities would not have their own wallet, or their own health insurance, which means reductions of salaries+benefits for the staff… but it’s a sacrifice for better education without loans).

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