Category Archives: Race and race relations

The Tricky Issue of Bad Debt and For-Profit Colleges

ati_profile

Source: College Scoreboard

by James A. Bacon

State higher education officials are scrambling to deal with the fallout if a federal agency votes to terminate the Accrediting Council for Independent Colleges and Schools (ACICS), an accrediting agency for for-profit colleges. ACICS-accredited institutions, which include Stratford University and the Bon Secours and Sentara nursing schools, among others, enroll 9,000 students in Virginia.

A loss of accreditation would drop a guillotine blade on most of these institutions, whose students overwhelmingly depend upon federal grants and loans to pay their tuition. In a separate regulatory action, the recent shuttering of ITT Technical Institute stranded thousands of students around the country.  ITT had five locations in Virginia.

longwood_profile

Source: College Scoreboard

In a meeting yesterday, the State Council of Higher Education for Virginia (SCHEV) approved a contingency plan that would give an 18-month grace period to ACICS-accredited colleges, reports the Richmond Times-Dispatch. The measure is designed to let the colleges time to find new accreditation.

The Obama administration has cracked down on for-profit colleges, many of which report low graduation rates and low earnings upon graduation, while saddling students with high debts. For-profit institutions have contributed disproportionately to the mounting problem of borrowers unable to repay their student loans.

Bacon’s bottom line: The Obama administration is right to address the problem…. which it helped create in the first place by declaring a goal of helping every American who wanted to attend college to do so. The U.S. Department of Education undertook a massive expansion of federal grants and loans. Some of the “colleges” responding to the new opportunity, I suspect, were founded by quick-buck artists to capture student aid dollars with little regard to the quality of education they were providing. Indisputably, many educational institutions have shamefully low graduation rates and offer poor job prospects even when students do graduate. But in moving to correct the abuses, the administration is moving ham-handedly.

south_university_profile

Source: College Scoreboard

For-profit colleges are a mixed bag. Some do a commendable job. For instance, the Advanced Technology Institute in Virginia Beach, which has 717 undergraduates, has a graduation rate of 70%, and an average salary of $38,000 ten years after attending. That is comparable to, say, Longwood University, with a graduation rate of 65% and $39,600 average salary, according to the U.S. Department of Education College Scorecard.

ECPI University, also in Virginia Beach, has graduation and earnings metrics roughly comparable to Virginia State University, while American National University in Salem shows results similar to those of Mountain Empire Community College in far Southwest Virginia.

At the bottom of the heap, there are ten for-profits that can’t even report complete information to the College Scorecard. Among those that do report graduation rates, Stratford University in Fairfax and the University of Phoenix in Henrico matriculate only 12% of their students. But any comparison gets tricky. The graduation rate for John Tyler and J Sargeant Reynolds community colleges in the Richmond region is only 13%. Are the for-profits really any worse? It’s impossible to say from a superficial review of the data.

The fact is, some for-profit colleges provide an educational option geared to people working full time, and programs that provide specific job-related skills such as criminal justice, dental assistance, auto mechanics, message therapy, HVACs, and the like. Moreover, career colleges cater disproportionately to blacks and Hispanics. Shutting down legitimate for-profit colleges destroys a potential avenue of upward mobility for minorities.

From a high-altitude perspective, however, helicoptering easy money to students has led to a misallocation of hundreds of billions of dollars — encouraging millions of students to pursue educational programs that either they were academically unprepared for or, for reasons of personal circumstance, were unable to complete. The result has been the rise of an indebted class, whose obligations many politicians now want to transfer to the taxpayer.

As a nation, we need to bring the student-debt bubble under control. The question is, what is the best way to accomplish that goal? Do we target the worst-performing for-profit institutions, even while some community colleges show comparable graduation and earnings metrics? Or do we focus on the individuals taking out the loans, recognizing that some have academic backgrounds and life circumstances putting them at higher risk of failure and eventual default? In the old days, lenders evaluated applicants on the odds of getting their money repaid. The federal government appears to be unwilling to take that step. Instead, it sets no standards of credit-worthiness, lends money to anyone, and puts for-profit colleges out of business when the results get ugly.

Highlighting the Higher Ed Dropout Factories

Mobility_metric2

Click for larger, more legible image.

by James A. Bacon

The affordability crisis for American four-year colleges and universities is in part a problem of high tuition and fees, but it’s also a problem of low graduation rates, contends a new study by Third Way, a centrist think tank.

“A typical four-year public college graduates only 48.3% of first-time, full-time students within six years of enrollment,” states the report, “What Free Won’t Fix: Too Many Public Colleges Are Dropout Factories.” “That means first-time, full-time students that enter the average public institution are more likely to NOT graduate than they are to graduate from the school where they first enrolled.”

Among other key findings, based upon the Department of Education’s College Scorecard data:

  • At the average four-year public college, nearly four in ten loan-holding students are unable to earn more than $25,000 (the expected earnings of a high school graduate) six years after enrollment.
  • At the average four-year public college, 22.2% of students who had taken out loans were unable to begin paying down their loans three years after leaving school. By comparison, the mortgage delinquency rate peaked around 10% during the height of the 2010 housing crisis.
  • Price has little relationship to outcomes. Low-performing schools actually charged higher net tuition than schools with superior outcomes.
  • The worst-performing schools tend to have higher concentration of Pell grant recipients.

Third Way compiled a “mobility metric” for 535 public, four-year institutions incorporating a variety of factors: net price (the amount paid after financial aid has been factored in) for students from families making less than $48,000 a year; the percentage of students who receive Pell grants (typically from families earning less than $50,000 a year); completion rates within six years; percentage of students receiving financial aid earning $25,000 annually six years after enrollment; and the repayment rate on federal loans three years after students leave school.

“With outcomes like these,” concludes the report, “it is clear that simply addressing the rising cost of college isn’t sufficient to ensure students are being equipped with the degrees and skills they need to succeed.”

Bacon’s bottom line: I highlighted the Virginia public institutions in the table above. Overall, Virginia’s public college system fares well by this set of metrics, with the University of Virginia the No. 3 performer in the country. Eight of 15 institutions rank in the top quintile. However, two rank near the bottom, and several others have nothing to brag about.

I have criticized the University of Virginia for its aggressive tuition increases, but Mr. Jefferson’s university does deserve credit for making tuition more affordable for poor students and ensuring that its students graduate on time.

By contrast, the track record for Norfolk State University and Virginia State University, two historically black universities, is abysmal. The completion rate is low, post-graduation salaries are low, and the loan repayment rate is low. On the one hand, NSU and VSU provide an educational option for students from poor black families seeking to better their condition through higher education. On the other hand these institutions are hobbling thousands of students who fail to graduate, or fail to earn good jobs even if they do graduate, with thousands of dollars in debt that will haunt them for years.

We should ask whether these two institutions, as well as some for-profit “career schools” not listed here, do more harm than good. We should ask whether the federal government should be encouraging students to borrow heavily to attend four-year colleges when many would be better off earning community college degrees or not attending college at all. We should ask whether handing out lots of free money (Pell grants) and easy money (college loans) is alleviating poverty or making it worse. Finally, we should ask whose interests are being served — the higher ed establishment’s or the student’s — by perpetuating this massive wealth transfer.

Another Example of Good Intentions Gone Wrong

Jennifer Doleac

Jennifer Doleac

by James A. Bacon

Last year Governor Terry McAuliffe signed an executive order to “ban the box” prohibiting employers from asking job seekers about their criminal history at the initial job stage. The goal was to “remove unnecessary obstacles” to felons seeking employment after incarceration. How could one object? Once felons have paid their debt to society, we should ease their transition back into the workforce, right?

It turns out that things don’t always work the way we expect them to. From the Daily Progress:

Research published recently by Jennifer Doleac, an assistant professor of public policy and economics at the University of Virginia, found that ban the box policies actually lowered the probability of employment by 5.1 percent for young, low-skilled black men and 2.9 percent for young, low-skilled Hispanic men.

According to Doleac, who conducted the study with the University of Oregon’s Benjamin Hansen, the lowered chance for employment comes from the unwillingness by employers to take chances on hiring someone without knowledge of their potential criminal history.

“Simply taking away information about whether someone has a record doesn’t stop employers from caring about someone’s criminal background,” Doleac said. “It just leaves them to guess based on the remaining information they do have.”

All too often, that “remaining information” is age, race, ethnicity and socioeconomic background. (Hat tip: John Butcher)

Bacon’s bottom line: Society is extraordinarily complex. Political ideologies (both on the left and the right) provide simplified models for how society works. Often those simplified models overlook important linkages and feedback loops that lead to very different results than anticipated. Individuals and private entities can quickly alter their behavior to adjust to reality; government adjusts much more slowly, if at all.

Will McAuliffe rescind his “ban the box” order? I’m not betting on it. The social engineer’s response to problems created by a law or regulation is to “fix” the emergent problem by enacting more laws and regulations… thus creating new problems. 

It’s fine to try new ideas, but we have to pay attention to whether they work or not. If they don’t, we need to reconsider them. Good intentions are not enough.

Playing the Racism Card… Just Pathetic

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Mayor Howard Myers. Photo credit: WTVR

In other Petersburg-related follies… Petersburg Mayor W. Howard Myers has told fellow City Council members that the attacks on his leadership are motivated by racism and partisanship.

“I will as a representative of Ward 5 and as major duly to my right hand, serve the public without blemish and from scare tactics from a few racists[s] and Republican supporters,” he wrote in an Aug. 11 email that he asked the city clerk to share with other council members, reports the Richmond-Times Dispatch.

Dude, you presided over the worst financial meltdown of a Virginia locality probably since the Great Depression and you think your critics are motivated by racism? Under your watch, the city is facing a current-year budget gap of $12 million (nearly 20% of General Fund revenue) on top of $19 million dollars of unpaid bills, and you have conceded in unguarded remarks that you had no idea how this all happened, yet you expect anyone to believe that the people who are unhappy about it are being partisan in their attacks?

Do you know how totally pathetic that is? Not only pathetic, but in this racially polarized era, wildly irresponsible?

As I understand from the news coverage, Petersburg’s five City Council members are all African-American while many of the citizens who get irate and engage in shouting matches with you during council sessions are mostly white. Yeah, I suppose one reason that they’re argumentative is that they’re racist. But there’s another possible explanation: They’re pissed off at how you ran the city into the ground!

Virginia’s New Debtor’s Prison

speeding_ticketby James A. Bacon

Damian Stinnie, a 24-year-old African American living in Charlottesville, grew up in the foster care system in Virginia but managed to graduate from high school with a 3.9 GPA. Living with his twin since aging out of foster care, he has worked nearly full-time as a sales clerk at Walmart and, after losing that job, at Abercrombie & Fitch, earning minimum wage, or about $300 per week.

In 2013, Stinnie was convicted of four traffic citations, resulting in fines and charges of $1,002. When he was unable to pay, his driver’s license was suspended, and another $501 in costs imposed. Not knowing that his license was suspended, he continued driving. Stopped again, he was cited for driving without a license. Later that year, he was hospitalized for lymphoma. Unable to attend the court hearing, he was found guilty in absentia of driving without a license and ordered to pay another $117 in court costs and a $150 fine. And the story of woe, cited in a class-action lawsuit filed by the Legal Aid Justice Center, just gets worse. Read it and weep.

An estimated 940,000 Virginians, disproportionately minorities, have a suspended license for nonpayment of court costs and fines. Not every case may be as severe as Stinnie’s, but thousands are trapped in a downward spiral. Denied a license, they find it difficult to find and maintain a job. If they drive illegally, they rack up even more court costs and fines.

“Driver’s license suspension is Virginia’s form of a debtors’ prison,” Angela Ciolfi, a senior attorney at the Legal Aid Justice Center, is quoted as saying in the Reason Foundation’s Hit & Run blog. “Many areas of the state provide no reliable public transportation, effectively leaving people confined to their homes or forcing them to risk jail time by driving on suspended licenses.”

Last month the Legal Aid Justice Center filed a lawsuit challenging Virginia’s policy of suspending drivers licenses indefinitely for unpaid court debts. States the lawsuit:

Hundreds of thousands of people have lost their licenses simply because they are too poor to pay, effectively depriving them of reliable, lawful transportation necessary to get to and from work, take children to school, keep medical appointments, care for ill or disabled family members, or, paradoxically, to meet their financial obligations to the courts. …

In order to fund its basic operations, the Commonwealth has steadily increased the amounts that may be taxes as costs against convicted criminal and traffic defendants and tacked on various additional fees.

Assessments against criminal and traffic court defendants have risen from $281.5 million in fiscal year 1998 to $618.8 million in 2014.

Bacon’s bottom line: Clearly, the system has broken down. Thousands of Virginians are caught in a vicious cycle of indebtedness to the courts. The system needs to be reformed.

But how do we reform it? That gets tricky. The unfortunate Mr. Stimmie did have a bad habit of piling up traffic tickets. Do we abandon the practice of fining people who violate traffic laws? Do we scale the size of the fines according to peoples’ incomes, as they I believe they do in some Scandinavian countries? Do we stop requiring people to pay court costs? If we do so, who does pay — the general public? Do lawbreakers get off scot free and law-abiding citizens pick up the tab?

Whatever the answer — and there are no easy ones — we need to do something. Particularly heinous, insofar as it does occur, is the practice of jacking up fines and penalties as a substitute for taxes. If there is a social justice cause that could unite liberals, libertarians and perhaps even conservatives, this would be it.

Update: Correction made to Damian Stimmie’s pay at Abercrombie & Fitch.

Here’s Hoping Herring Succeeds with his “Equal Justice” Initiative

Attorney General Mark Herring

Attorney General Mark Herring

by James A. Bacon

State Attorney General Mark R. Herring has launched a statewide initiative that has garnered less press attention than it probably warrants: an “equal justice” program that includes “implicit bias” training for police officers, updating of academy training materials, minority officer recruitment, and improving interactions between law enforcement and young people.

The rollout comes against the backdrop of police killings of unarmed black men in various locations around the country and retaliatory killings of police in Texas. Once can argue whether policing is as discriminatory against African-Americans as portrayed by the Black Lives Matter movement and the media. Police kill twice as many whites as blacks, after all, even though such incidents receive minimal media attention. But as Herring emphasizes:

Here in Virginia, I think most of us, if probably not all of us, agree on two goals: No. 1, we want to make sure law enforcement can safely and effectively protect our communities, and we want to make sure everybody is treated equally and fairly. There are two goals I think we can all agree on, and they are not in conflict with one another. And I would submit we have to get them both right if we’re really going to have the safe, successful communities we want.

I certainly share those two goals. Insofar as the criminal justice system is stacked against minorities, we need to reform it. The question comes down to implementation. In striving for “equal justice” for minorities, do we sacrifice community safety? When we ask that question, let us bear in mind that any diminution of safety will come mainly at the expense of minorities, thus creating a new form of injustice.

I have no settled opinions on Herring’s main initiatives. In the abstract, they are appealing. Yes, policemen should be devoid of ethnic/racial bias. Yes, we should have more minority policemen, particularly African-Americans, to patrol African-American neighborhoods. Yes, police should work harder to build trust with the communities they work in.

On the other hand, also in theory, it may be possible for police to get too touchie-feelie in their dealings with the criminal element, thus giving bad guys more leeway to do their bad-guy thing. We have seen in cities from Baltimore to Chicago what happens when police back off — the murder rate goes up.

As a conservative who believes that the maintenance of “law and order” is the most fundamental function of government, I say let’s wish Herring well with his initiatives to make Virginia safer and to create color-blind policing. But let us also pay very close attention to the results. The number of “violent” crimes in Virginia peaked at 24,160 in 1993. The number declined consistently thereafter to 15,676 in 2012, before bumping back up to 16,340 in 2014, according to DisasterCenter.com. I’ll be watching.

Map of the Day: Decline in Teen Birth Rate

Source: StatChat blog

Source: StatChat blog

The fertility rate for U.S. women reached an all-time low in 2015. All told, there have been 3.4 million fewer births since 2007 than would have occurred had fertility rates not declined, writes Hamilton Lombard in the StatChat blog.

There are reasons to be concerned. Fewer births means fewer Americans entering the workforce, fewer workers paying into Medicare and Social Security, and fewer taxpayers to support the swelling national debt, which now stands at $19 trillion and counting.

But Lombard finds a silver lining. A big one. The decline in births is concentrated among teens. That decline, he argues, is tied to the increase in the high school graduation rates and college attendance as teens put off starting families until they have earned a high school and/or college degree.

Teenage pregnancy was once fairly common and even socially acceptable, particularly after World War II, when there were plenty of well-paying jobs available that did not require a high school diploma, much less a college degree. As these low-skill jobs began to disappear, the teenage birth rate started to fall. By the mid-2000s the U.S. teen birth rate had declined by 50 percent since 1960.

Insofar as inter-generational poverty in America is demographic in nature — poor teens giving birth to children and raising them in poverty before acquiring skills needed to rise out of poverty — declining fertility is a very good thing.

The national trends do not play out evenly. As can be seen in Lombard’s map above, the change was dramatic in some Virginia jurisdictions between 20007 and 2014 and far less noticeable in others.

In the City of Richmond, the birth of children to teens fell from 470 to 149 over that period — an astonishing decline. The overwhelming number of those 331 never-born children would have been raised in poverty and at high risk of never rising out of it. By contrast, the decline was far more modest in rural localities of Southwest Virginia.

Here is the decline in teen births between 2007 and 2011 in Virginia broken down by race, according to Centers for Disease Control data:

All races — 28% decline
Non-Hispanic whites — 20%
Non-Hispanic blacks — 29%
Hispanics — 50%

And here is the 2011 birth rate per 1,000 teenagers aged 15-19:

All Races — 24.5 births
Non-Hispanic whites — 19.4
Non-Hispanic blacks — 37.4
Hispanics — 36.9

— JAB