Reverse Robin Hood: Poor Districts Pay More, Get Less

Sometimes there are some really egregious local issues that deserve national attention.  This one comes from Pennsylvania, and I hope some of you will take some action.  There is a convenient narrative that poor districts pay less in taxes, so their schools get less funding.  There is another narrative that per pupil spending on education is too high.  Both can be true, but neither is the whole story.  In Montgomery County, Pennsylvania, the story is quite different (Montgomery is right outside Philly, where the author of "If I were a poor black kid" that inspired this post was writing).  According to an article in the Pottsdam Mercury, low income districts are absorbing some of the largest budget cuts. 

The Problem

The article discusses a recent report released by the Education Law Center (ELC) that advocates for low-income students in PA.  The report has analyzed funding, which was cut to the tune of $1.5 billion since 2008.  According to their analysis "school districts with a low income population and high property tax rate, like Pottstown, have absorbed up to 10 times more of the $1.5 billion in cuts to state education funding than wealthier districts."  Worse, more cuts are slated and the most recent budget proposal calls for them to hit districts like Pottstown.  

The ELC analyzed Montgomery because the county is home to some of the best and worst in the state. Half of the ten districts with the smallest cuts and "all but one of the districts faring the best under Corbett’s budget are located in southeast Pennsylvania and read like a who’s who of wealthy locales." Not surprisingly, these districts also are among the lowest in student poverty concentrations in PA. 

Why It Matters

What is interesting about this policy is that districts have many low-income students, but some very high property tax rates.  An argument that I hear a lot, "It is not fair for the wealthy to subsidize students in schools their kids can't use," thus doesn't apply here.  Even if you buy into this argument and it applies, these allocations serve to entrench systemic inequalities:

• Low income parents have fewer resources to provide educational opportunities and programing for their kids after school, which leads to decay of previous learning and less overall time spent learning (in and out of school). 
• Low income parents tend to work more hours, be more likely to be single parents, and have less time to allocate to their children's education (as say to putting food on the table or trying to get a table) 
• Low income families tend to have fewer ties to the education system and the benefits of education, thus reducing resources to their schools can send very negative signals.  If you already doubt the value of school and see that your schools are not well funded or effective, then you are more likely to feel like your beliefs have been reaffirmed. 
• Lower budgets cut the amount of time that schools can offer programming and the amount/types of alternative programs they can offer.  That means that poor children are exposed to fewer things, are less likely to find topics that engage them, and are more likely to be routed into an unfilfilling career or track. 

Are these guaranteed outcomes? Absolutely not.  All the same, we should be very concerned as a nation when some of our most disadvantaged students are forced to face even more barriers to success than those that poverty and societal scorn already place upon them.   This is not an argument for higher per pupil expenditures. This is an argument about being fair in how difficult cuts need to be made.  This is an argument for allocating resources and talent in ways that maximize the outcomes at a systemic level.  You can't deny that investing more in students whose parents already provide a lot of support for education and extracurricular programming is somewhat wasteful in a budget-scarce environment.

Act on it!
 

• Write Governor Corbett and ask him to justify and reconsider this regressive policy
• Email: Governor@pa.gov
• Call: 717-787-2500
• Submit an Inquiry Online: http://www.portal.state.pa.us/portal/server.pt?open=514&objID=1072219&parentname=ObjMgr&parentid=11&mode=2.
•  Contact the PA representatives who might change the coming budget:
• Senate Education Committee: http://www.legis.state.pa.us/cfdocs/cteeInfo/cteeInfo.cfm?cde=23&body=S
• Senate Finance Committee: http://www.legis.state.pa.us/cfdocs/cteeInfo/cteeInfo.cfm?cde=25&body=S
• Montgomery County's General Assembly Members: http://www.legis.state.pa.us/cfdocs/legis/home/findyourlegislator/county_list.cfm?CNTYLIST=MONTGOMERY 
• Write your local school board or legislator or mayor/governor and inquire about how funding is distributed and how they make cuts when they face budgetary scarcity.  I guarantee this is not isolated to Montgomery County, PA. 

Speak Out!

• Post some ideas for letters you might write to these officials to ensure more equitable funding for schools. 
• Have you seen this in other areas in the US? Call them out!  

Easing the College Debt Bubble Before It Pops

In what was the first of several posts in my "Is College Worth It?" Series, I questioned whether college should be the default destination for all high school graduates. One of the big reasons for asking the question, I noted, is the amount of debt students are accruing--and increasingly unable to pay. Everyone remembers how the economy almost collapses when bubbles have burst in the past, right? Remember how all that bad debt to homeowners to buy houses way out of their price range resulted in the collapse of the housing market? Well, the next bubble may have been identified, and it is student debt.


The Problem

Student debt is often called "good debt." It is an investment in yourself, the story goes, because you will make more and pay back that money no sweat with the swank job you land out of college. College also cost a lot less. Now, college prices are increasing astronomically. The College Board reports (pdf) that over the past decade the tuition for public four year colleges has increased by 54 percent in inflation-adjusted dollars. For private universities, tuition increased by 33 percent in inflation-adjusted dollars. That's a huge increase, especially when we already have seen that nearly a third of college graduates are not improving in any higher-level thinking skills. With high unemployment and increased credentialing, many people are not getting those good jobs they were promised. Without good jobs and with greater amounts of debt, more and more people are unable to pay. Even those who drop out are often saddled with debt (69% of college drop outs have debt according to the Economist).

When people cannot pay, suddenly good debt becomes bad debt, and increasing amounts of bad debts create bubbles. As the Huffington Post reported, this year the amount of student loan debt eclipsed the amount of credit card debt. Yikes, maybe dropping you Visa on some Gucci is the new "good debt." Either way, over 10 million American students hold debt amounting to at least $750 billion dollars with Sallie Mae alone (wasn't that the amount of one of those bailouts?) and perhaps as much as $1 trillion if you include private loans. The average student graduating in 2010 owed about $25,000. Without jobs, the amount of students that could not pay and defaulted on their loans increased from seven to nine percent last year.


Just How Enslaved Will You Be?

Let's do some brief calculations using the FinAid! loan debt calculator:

• If you have the average amount of debt ($25,000) after college and you get a "reasonable" interest rate of 6.8%, you will need to pay $290 a month for ten years and need roughly $35,000 in annual income. At the end of the day, you will have paid almost 40% more for your college education ($35,000) than you were told college would cost.


• If you go to a private university, and borrow $25000 per year at the same interest rate, you will be paying $1,150 per month for ten years and will need to earn about $92,000 per year after graduating. At the end of it all, your degree will have cost you $38,000 extra in interest.

With so many students affected and saddled into debt for so long (student loan debt is one of the few kinds of debts that you can never get rid of, interestingly enough), something needs to change. Parents and students need to stop taking it for granted that college will always be worth it and that they will be able to pay off whatever debt they take on. Schools and banks need to do a better job of both reigning in tuition and fees and making sure that the consequences of taking on debt are clear to borrowers. The federal government needs a better managed system. I am a bureaucrat, and I work with many talented colleagues. They are not so talented at managing loans, as evidenced by my having to call the Department of Education FOUR times to try to figure out how to consolidate my loan. The fourth call was me telling some clueless Department of Education sap how to go about doing their job, and that is scary.


What can be done?

One of the big failures I see with the Occupy Movements is that they have not moved beyond identifying the above problem and pushing for concrete policy changes. So, I would like to propose some things that will help ease this bubble at the grassroots level, in the banks, and in the government.
At the grassroots

1. Students need to understand the burden college will represent for at least ten years out of school. HS counselors should be trained and required to dispassionately walk through how much going to a school will cost, how long it will take to repay that amount, how much income one will have to earn to repay, etc.


2. Parents and students might read more of the works of James Altucher and
   decide whether or not there is a more cost effective way to learn than college
   that will not saddle them with so much debt (particularly in the case of
   students who are not terribly inspired to go to college).


3. Start saving money early for your child (or self) and consider delaying college until you have a sizeable savings. If you save just $500 a year from your child's birth,
   the calculations I did above change dramatically. Someone with the average
   amount of debt now only owes $16,000 and pays only $190 a month. Someone
   with 100,000 in debt will pay a large, but more manageable $1047
   monthly.


4. Encourage your child to pay some money while in school to reduce the
   amount of principle.
   

In the banks

1. Don't allow banks to capitalize interest until 6 to 12 months after graduation (when interest capitalizes, it becomes part of the principal, meaning you are going to pay interest on your interest!).


2. Cap interest rates at a certain percent (I would say 5%), and let them float if the national borrowing rate is below that amount (but not above). I pay a much higher rate (7.3%) to borrow than banks pay to borrow money right now. That is ridiculous given that education is a public good.


3. Small banks are more responsible lenders and loans should be federally backed and administered through them. They are likely to be more honest and communicative and will want to help the student to pay back the debt. Further, it distributes the debt so that it doesn't hit any one single lender and cause a huge collapse.


4. Offer rate incentives for responsible payers, or consider offering perks to those who save and take out a loan or to those who take out a loan and continue banking with your institution.

In the Government:

1. The federal government should guarantee, but not service loans. They have proven time and again that most of them are simply not capable. It's not their fault either: you are asking bureaucrats to be bankers. You might as well have them managing oil rigs or building bridges. Regulating to ensure equal access to credit for college aspirants is more appropriate than providing the loan.


2. Make student loan debt not-for-profit: if the federal government makes far more than the ticket price of the degree plus inflation, there is an issue. The government already reaps the benefits of lower likelihood to commit a crime and a higher likelihood to have a job. Georgetown's Center for Workforce Development found that kids with graduate degrees have only a 3% unemployment rate.


3. Create a program that allows parents and children to deduct savings for college from their pre-tax income. If the tax payer is footing the bill either way, it might as well be for actual skills development instead of paying interest.


4. Build stronger alternative schooling that feeds directly into high school (especially vocational programs) so that kids have a viable option if they choose not to go to college.
   Increase awareness of grant programs early in high school to avoid saddling people with debt. EdWeek blogger Caralie Adams wrote a piece on how many parents do not know about federal grant programs, based on a report from the College Board that showed that poorer, less educated, and Latino parents were all far less likely to know about these opportunities. Fewer than half of parents knew the cost of a college education in-state.


5. Promote policies that reduce or eliminate debt with much more certainty for key sectors. For example, teaching would be impossible for me right now given teachers' salaries and my own debt. But, if I was allowed to pay at an income-based rate and had my interest capped, I could enter many fields that would allow me to invest more in society.


6. Deny funding to and publicly censure colleges that raise their rates unjustifiably. If a college is not doing better at producing employment, post-grad degrees, or enhancing students' skills, they should not be allowed to increase tuition. This is particularly true for schools that do not incurr higher expenses directly related to student learning or in schools that increase class sizes (without staff increases), widely slice majors, or defund research or volunteer opportunities for their students.

Are Universities Universally Desirable?

All children should go to college, right? You get paid way more and you are guaranteed a job, so it’s a no-brainer. When I look at friends from my Master’s program waiting tables or scrambling to find an internship after paying $75,000 at a “good school," I have to wonder. If our kids often get a subpar basic education and no support to have a goal they pursue in their educational career, why the hell would we send them to college?

So much of what I got out of college and grad school came from learning languages, traveling, working, and volunteering (not from my classes). So much of my love for learning exploded out of me after graduating (this blog is a great example). I look at my job, which is related to my masters, and I realize that I was clearly able to do this job without the “required” masters degree (I started at the same time as grad school and was able to do the same things when I started that I do now). I have to ask, what was the value?

I’ve been asking this of many friends applying to advanced degree programs, much to their chagrin. It is so ingrained that they have never gotten the “well, are you sure you need a Masters?” conversation before. I’m not trying to dissuade them, but to help them focus on what they really want and the best way to get there. Looking at my student loans, I ask the question at least once a month. You'd be surprised to hear how many aimless folks are pouring into grad schools "because the economy is bad, and hopefully it will be better when I get out." Yikes! In this post, I will attempt to dispose of the assumption that college/grad school is desirable for all students.

An appalling study released in January 2011 revealed that a large chunk of students are not learning in college, and many barely study. Apparently, 36% percent of college students make no improvement in critical thinking, reasoning, or writing skills during four years of college (45% of students learn nothing during the first two years of college, which is depressing for those getting 2-year associates degrees or dropping out early with debt but no degree). Much of this probably has to do with students averaging less than 20% of their time in class, studying, or doing homework compared to the over 50% they spend on socializing. Now, I am the first to note how important social development is in college, but you are paying oodles of cash to develop intellectually and cognitively not to shoot the breeze with others who are equally excited to be moving out of years of agonizing puberty.

This raises questions about the constant push to increase the amount of students going to and graduating from college. According to the Obama Website, “President Obama has doubled our investment in scholarships and financial aid so that students from working- and middle-class families can access and complete the college education they need to get the good jobs of the future” (emphasis his, not mine). In fact, policies like these have worked with college enrollment surging from 8.5 million in 1970 to over 20 million in 2009. It is good that Obama is focusing on funding elements of education that do not increase debt for students, while reducing the maximum loan payments in time and amount paid.

That said, Obama’s goal and the status quo it now represents may be quite faulty. Should everyone go to college? I would argue that the answer is no. Should everyone have the opportunity to, most definitely. I think it is really sad, however, that more and more jobs that once required no degree now require a BA, and MA, or a Ph.D. I got my Masters while working at the Department of Labor, and I can honestly say that my Masters was worthless to my job (and I got a job in the exact field I studied for). In many cases, even if the student is learning (that other 64%), what they are learning may not be close to enough for their job. That means you have people locked away in academia either not learning or not learning applicable skills for 4, 6, or even 10 years. That is up to a decade of not supporting themselves, of accruing loan debt, of often not contributing to society and the economy.

I wish more people would question the hegemony of college degrees as the golden ticket. If my plumber can quote Aristotle, that’s great, but he shouldn’t have to study Greek philosophy to do a completely unrelated job…and that’s where we are heading. There is a really interesting blogger James Altucher who notes that there are many ways to learn much more directly at the same or a lower cost than college. He lists 8 different ways of learning beyond high school that are much more productive, integrated with the real world, and diverse enough to cater to a wide variety of learning styles that are not well suited to four more years of education for the sake of a degree. The alternatives can be summarized as “create something, master a skill, or explore and reflect on the world.” Specifically he mentions things like starting a business, writing a book, mastering a skill or a sport, creating art, making people laugh, traveling the world, or volunteering for a charity.

I think some people do well in college, learn a lot, and are able to contribute to society. In the end, they often get their money’s worth. That said, to assume that everyone should or could progress down the same path is not logical. Nobody learns the same way. Further colleges are often distanced (the so-called “bubble” or “ivory tower”) from reality, so solutions developed in the academic vacuum have less practical value than one would hope. Further, with stringent cuts to departments and majors that offer concrete skills or produce products and services (languages, research facilities, etc.), the value of a college degree for those who do learn well is in question. Worse, colleges are accepting more kids without upgrading capacity or increasing teaching staff (this is a big problem in law schools,though not exclusively).

The important thing is to find the learning style that’s right for you, and the learning environment that most helps you develop. I think Altucher offers many great ideas for alternative ways to develop the same skills that college can cultivate. That said, Obama is right to make college more accessible to all people regardless of race or income. For me, college was worth it, but grad school perhaps was not. Each person is different and it would be great if we could encourage these differences. I would now like to see policies that enable people of any level to become entrepreneurs, volunteer, or create value for society in alternative venues if college is not right for them.

Speak out!

• If you didn’t go to college, what would you have done with the time and/or money?
• If you know you aren’t a good school learner but you get a full scholarship, should you still go to college for the sake of it?
• What are some ways to get the most out of your college/grad school education? What are other pursuits besides college that you can think of that would cultivate similar development or skills?
  

Act on it!

• Before you ship your kids off to college or before you yourself decide to apply for a Master’s degree without an actual goal in mind beyond the piece of paper…consider what will really contribute to your goals and if you need to.
• Help a high school kid to identify their goals and understand the financial burdens they may be taking on before they go to college (according to this nifty calculator, turns out I should be making nearly $200k to pay the amount of money I pay per month for my grad school debt…if only!)
• Identify extracurriculars you can take on or specific skills you can develop through your program to ensure that you emerge from college or grad school a more capable and fulfilled person.