Category Archives: Higher Education

Why Easing Education Debt Won’t Necessarily Help the Economy

Source: Beth Akers, Brookings Institution, Brown Center Chalkboard blog, July 24, 2014

Student loan debt has become the scapegoat for nearly all that ails the U.S. economy, from depressed home ownership, to lower rates of entrepreneurship, and even the sluggish recovery from the great recession. The problem with all of this blame is that the accusations are difficult to substantiate. Much of the discussion about the effects of student loan debt focuses on comparing outcomes faced by individuals with student loan debt to those of individuals without student loan debt. The differences in observed outcomes are cited as evidence of an impact of student loan debt. But, there are two reasons why this approach doesn’t tell us what we need to know about the effects of education debt.

First, the population of individuals who take on debt to pay for college is different from the population of individuals who take on little or no education debt. These differences are sometimes observable and sometimes not. This means that outcomes faced by borrowers and non-borrowers are likely to differ for reasons that are unrelated to the debt itself. In order to effectively measure the effect of debt, we would need to be able to control for all of these differences. This presents a methodological challenge because not all of the differences are observable.

Second, the population of borrowers (and non-borrowers) has been changing over time. This means that longitudinal studies comparing borrowers and non-borrowers are difficult to interpret. The changes in behavior, such as home ownership, that occur over time may be due to trends in borrowing, but could also be due to the changing characteristics of the borrowing population. …

Policies to Address Poverty in America

Source: Brookings Institution, Hamilton Project, June 19, 2014

Millions of people live in poverty in this country. They suffer not only material deprivation, but also the hardships and diminished life prospects that come with being poor. Childhood poverty often means growing up without the advantages of a stable home, high-quality schools, or consistent nutrition. Adults in poverty are often hampered by inadequate skills and education, leading to limited wages and job opportunities. And the high costs of housing, healthcare, and other necessities often mean that people must choose between basic needs, sometimes forgoing essentials like meals or medicine. In recognition of these challenges, The Hamilton Project has commissioned fourteen innovative, evidence-based antipoverty proposals. These proposals are authored by a diverse set of leading scholars, each tackling a specific aspect of the poverty crisis.
Proposals include:
Section 1. Promoting Early Childhood Development
Expanding Preschool Access for Disadvantaged Children
Elizabeth U. Cascio and Diane Whitmore Schanzenbach

Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children
Ariel Kalil

Reducing Unintended Pregnancies for Low-Income Women

Isabel Sawhill and Joanna Venator

Section 2. Supporting Disadvantaged Youth
Designing Effective Mentoring Programs for Disadvantaged Youth
Phillip B. Levine

Expanding Summer Employment Opportunities for Low-Income Youth
Amy Ellen Schwartz and Jacob Leos-Urbel

Addressing the Academic Barriers to Higher Education

Bridget Terry Long

Section 3. Building Skills
Expanding Apprenticeship Opportunities in the United States
Robert I. Lerman

Improving Employment Outcomes for Disadvantaged Students
Harry J. Holzer

Providing Disadvantaged Workers with Skills to Succeed in the Labor Market
Sheena McConnell, Irma Perez-Johnson, and Jillian Berk

Section 4. Improving Safety Net and Work Support
Supporting Low-Income Workers through Refundable Child-Care Credits
James P. Ziliak

Building on the Success of the Earned Income Tax Credit

Hilary Hoynes

Encouraging Work Sharing to Reduce Unemployment
Katharine G. Abraham and Susan N. Houseman

Designing Thoughtful Minimum Wage Policy at the State and Local Levels
Arindrajit Dube

Smarter, Better, Faster: The Potential for Predictive Analytics and Rapid-Cycle Evaluation to Improve Program Development and Outcomes
Scott Cody and Andrew Asher

Related:
Highlights

The Limitations and Possibilities of Student-Labor Coalitions

Source: Sarah Jaffe, Talking Union blog, July 9, 2014

….The subpoena brouhaha was only the latest chapter in an expansive battle with Straus’s companies on one side and 1199 SEIU Healthcare Workers East, 1199 SEIU New England, and the Student Labor Action Movement (SLAM) at NYU on the other—while NYU, claiming neutrality, remained in the middle. It’s a multi-year, multi-state struggle that began with low-wage care workers being locked out in 2011 and hasn’t ended with Straus losing his seat on the law school’s board. A close examination of the story yields important lessons about the possibilities and limitations of student-labor coalitions, the latest anti-union strategies of corporations, and the current state of labor struggles…..

…Universities, particularly large research universities, of which NYU is the prototype, provide useful points of pressure on corporate bad actors because of the customer-service relationship with their students that they cultivate. That means that students making demands, whether in response to labor law violations or investments in dirty energy, have some sway with administrators, who in turn control large chunks of money or, in the case of Straus, prestigious board appointments.

But once Straus is off the board, the university students no longer have much power, though their solidarity and support is still appreciated. The workers at HealthBridge and CareOne continue to struggle, and the RICO suit goes forward; the subpoenas have not gone away…..

California Grad Employee Contract Shows Reform Works

Source: Katy Fox-Hodess, Labor Notes, June 24, 2014

This week 13,000 teaching assistants, readers, and tutors at the University of California ratified a new four-year contract.

We made big gains on both bread-and-butter and social justice issues, with a 17 percent wage increase over four years, new language on class size, longer paid parental leaves, a larger child care subsidy with expanded coverage, a new committee to equalize opportunities for undocumented students, and a mandate to create lactation stations and all-gender bathrooms. (See box.)

It’s a good moment to look back on how we got here. This is the first contract since our reform caucus, Academic Workers for a Democratic Union, took the helm of our union, UAW Local 2865, in the spring of 2011….

Student Loan Debt in Bankruptcy: An Empirical Assessment

Source: Daniel A. Austin, Northeastern University School of Law Research Paper No. 188-2014, May 27, 2014

From the abstract:
Education loan debt in the U.S. recently reached $1.2 trillion. Thirty-nine million Americans — nearly 20% of U.S. households — owe student loans, and student loans are by far the fastest growing component of non-housing consumer debt. For example, in fourth quarter 2013, U.S. households incurred $82 billion in debt (exclusive of housing debt), a 3.3% increase from the previous quarter. Of this amount, $53 billion (65%) was student loan debt. In contrast, auto loans and credit card debt accounted for only $29 billion.

Student loan debt is also a rapidly increasing element in consumer bankruptcy. This study examines the growth of student loan debt in consumer bankruptcy cases filed each year from 2005 to 2013. In this study I obtain data from 500 randomly-selected cases per year to calculate values such as annual percentage of filers with student loan debt, average annual amount of student loan debt, and student loan debt as a percentage of debtor income and percentage of total unsecured debt. Among the findings of this study, the percentage of debtors with student loan debt increased from 15.7% in 2005 to 22.3% in 2013, while the average student loan debt load for such debtors more than doubled from $15,350 to $32,096 during the same period. As these and other numbers reported in this study show, student loan debt is a rapidly increasing component of consumer bankruptcy.

Young Adults, Student Debt and Economic Well-Being

Source: Richard Fry, Pew Research Center, May 14, 2014

From the summary:
Student debt burdens are weighing on the economic fortunes of younger Americans, as households headed by young adults owing student debt lag far behind their peers in terms of wealth accumulation, according to a new Pew Research Center analysis of government data. About four-in-ten U.S. households (37%) headed by an adult younger than 40 currently have some student debt—the highest share on record, with the median outstanding student debt load standing at about $13,ooo.

An analysis of the most recent Survey of Consumer Finances finds that households headed by a young, college-educated adult without any student debt obligations have about seven times the typical net worth ($64,700) of households headed by a young, college-educated adult with student debt ($8,700). And the wealth gap is also large for households headed by young adults without a bachelor’s degree: Those with no student debt have accumulated roughly nine times as much wealth as debtor households ($10,900 vs. $1,200). This is true despite the fact that debtors and non-debtors have nearly identical household incomes in each group.

While these stark differences in wealth accumulation are accounted for in part by outstanding student debt, that’s only part of the story. Since the typical young student debtor household has about $13,000 in outstanding student loan obligations and the overall wealth gap is much larger, clearly other factors are also at work. Specifically, student debtor households are accumulating less wealth, in part, because they tend to owe relatively large amounts of other debt as well, from car loans to credit card debt. Among the young and college educated, the typical total indebtedness (including mortgage debt, vehicle debt and credit cards, as well as student debt) of student debtor households ($137,010) is almost twice the overall debt load of similar households with no student debt ($73,250). Among less-educated households, the total debt load of student debtors ($28,300) is more than ten times that of similar households not owing student debt ($2,500)….

The Condition of Education 2014

Source: Grace Kena, Susan Aud, Frank Johnson, Xiaolei Wang, Jijun Zhang, Amy Rathbun, Sidney Flicker-Wilkinson, Paul Kristapovich, Liz Notter, Virginia Rosario, National Center for Education Statistics, NCES 2014083, May 2014

The Condition of Education 2014 summarizes important developments and trends in education using the latest available data. The report presents 42 indicators on the status and condition of education. The indicators represent a consensus of professional judgment on the most significant national measures of the condition and progress of education for which accurate data are available. These indicators focus on population characteristics, participation in education, elementary and secondary education, and postsecondary education.

This year’s Condition shows that about 90 percent of young adults ages 25 to 29 had a high school diploma or its equivalent in 2013, and that 34 percent had a bachelor’s or higher degree. As in previous years, in 2012, median earnings were higher for those with higher levels of education—for example, 25- to 34-year-olds with a bachelor’s degree earned more than twice as much as high school dropouts. Also, the unemployment rate was lower for bachelor’s degree holders in this age range than for their peers with lower levels of education…..
Related:
Highlights
Abstract

The Declining Fortunes of the Young since 2000

Source: Paul Beaudry, David A. Green, and Benjamin M. Sand, American Economic Review, Vol. 104 No. 5, May 2014
(subscription required)

From the abstract:
We document that successive cohorts of college and post-college degree graduates experienced an increase in the probability of obtaining cognitive jobs both at the start of their careers and with time in the labor market in the 1990s. However, this pattern reversed for cohorts entering after 2000; profiles of the proportion of a cohort in cognitive occupations since school completion fall and become flatter with successive cohorts. Since cohort-wage profiles display a similar pattern, these findings appear to fit with a strong increase in demand for cognitive tasks in the 1990s followed by a decline in the 2000s.

Pay for Play

Source: Elaine McArdle, Harvard Law Bulletin, May 15, 2014

Suddenly, the N.C.A.A. is forced to play defense in more than one court.

What do you call it when an organization makes more than a billion dollars in a single month using unpaid labor? Some call it exploitation; others, opportunity—but most of the nation calls it March Madness….But now a series of major legal efforts—including a number of lawsuits and an effort to unionize college players—may forever change the face of college sports. ….The week that March Madness began this year, high-profile sports attorney Jeffrey Kessler filed a federal lawsuit against the N.C.A.A. and the five largest college conferences on behalf of a group of college football and basketball players, claiming that capping their compensation at the value of a scholarship violates antitrust laws. In essence, the suit seeks to allow student-athletes to be paid. Another suit had been filed just a few weeks earlier by a former college football player, seeking full compensation for the cost of attending college, since athletic scholarships don’t cover all expenses….Then, in late March, in a seismic decision, a regional director of the National Labor Relations Board ruled that football players at Northwestern University are employees with the right to unionize….Unlike professional football and basketball players, college players receive no compensation, medical care or pension if they are injured. Getting hurt can mean getting tossed. …