College "Students", Graduation Rates and Taxpayer Loans

College Graduation Rates Are Stagnant Even as Enrollment Rises, a Study Says includes several interesting statistics which, taken as a whole, tell a story of wasted time, wasted dollars and taxpayers being suckered again. Here's part of the story of our tax dollars being wasted:

"The numbers are stark: In Texas, for example, of every 100 students who enrolled in a public college, 79 started at a community college, and only 2 of them earned a two-year degree on time; even after four years, only 7 of them graduated. Of the 21 of those 100 who enrolled at a four-year college, 5 graduated on time; after eight years, only 13 had earned a degree.

Similarly, in Utah, for 100 students who enrolled in a public college, 71 chose a community college, 45 enrolling full time and 26 part time; after four years, only 14 of the full-time students and one of the part-time students graduated. Of the 29 who started at a four-year college, only 13 got their degree within eight years."

“Time is the enemy of college completion,” the report said. “The longer it takes, the more life gets in the way of success.”

Later the report says this about the lack of preparedness of students entering college:

"Another factor is the large number of students mired in noncredit remedial classes that the report calls the “Bermuda Triangle” of higher education. Half of all students studying for an associate degree, and one in five of those seeking a bachelor’s degree — including many who graduated from high school with a grade point average of 3.0 or higher, previous research has shown — are required to take remedial, or “developmental” courses, and many of them never move on to credit-bearing courses, much less graduation."

In other words, taxpayers spend ~$150,000 to help the college bound student prepare for college, and the student leaves 12th grade unprepared. But that doesn't seem to matter. Taxpayers are suckers.

Upon entering college, the unprepared student can count on both the government and college enrollment officials for aid and comfort. Taxpayer loans from the federal government are available to the unprepared student, and the student can enroll in remedial courses to try once again to learn what the taxpayer previously paid for him to learn in high school.

Meanwhile, in part to "save taxpayer money," the government has taken over the student loan business from the evil bankers. What a wonderful and beneficent government we have! We are indeed very lucky taxpayers, one and all.

Washington's Quietest Disaster tells the government run student loan story a little differently:

"When critics warned about rising defaults on government-backed student loans two years ago, the question was how quickly taxpayers would feel the pain. The U.S. Department of Education provided part of the answer this month when it reported that the default rate for fiscal 2009 surged to 8.8%, up from 7% in 2008.

This rising default rate doesn't even tell the whole story. The government allows various "income contingent" and "income-based" repayment options, so the statistics don't count kids who were given permission to pay less than they owed. Taxpayers shouldn't expect relief any time soon. Thanks to policy changes in recent years and fraudulent government accounting, the pain could be excruciating."

The editorial then links the government's recent takeover of student lending to the adoption of ObamaCare.

"Readers who followed the Congressional birth of ObamaCare in 2010 may recall that student lending was the other industry takeover that came along for the legislative ride. Private lenders used to originate federally guaranteed loans, but the new law required all such loans to come directly from the feds. Combined with earlier changes that discouraged private loans sold without a federal guarantee, the result is a market dominated by Washington.

The 2010 changes did not happen simply because President Obama and legislators like Rep. George Miller and Sen. Tom Harkin distrust profit-making enterprises. The student-loan takeover also advanced the mirage that ObamaCare would save money."

It then returns to the topic of many ill advised government sponsored student loans and college affordability:

"None of these programs has anything to do with making it easier to afford college. Universities have been efficient in pocketing the subsidies by increasing tuition after every expansion of federal support. That's why education is a rare industry where prices have risen even faster than health-care costs.

This is also the rare market where the recent trend of de-leveraging doesn't apply. An August report from the Federal Reserve Bank of New York found that Americans cut their household debt from a peak of $12.5 trillion in the third quarter of 2008 to a recent $11.4 trillion. Consumers have reduced their debt on houses, cars, credit cards and nearly everything except student loans, where debt has increased 25% in the three years.

Perhaps this is because most federal student loans are made without regard to income, assets or credit history. Much like the federal obsession to finance a home for every American regardless of ability to pay, the obsession to finance higher education for every high school student ignores inconvenient facts. These include the certainty that some of these kids will take jobs that don't require college degrees and may not support timely repayment."

Here's the obvious question begging for an answer: How is the decision made to extend a student loan?

And here's my answer: If in fact "most student loans are made without regard to income, assets or credit history," and if students entering college are eligible for student loans regardless of preparedness, then there appears to be no basis for disapproving student loan applications. Basically, the application is the approval.

Accordingly, it looks like giving taxpayer money away in the name of higher education ranks right up there with granting home ownership loans during the subprime fiasco. Anybody can get approval with no questions asked.

We taxpayers are always suckers for a good story. While the need for a well educated workforce and a well informed citizenry is a real one, so is a reasonable chance of realizing a decent return on taxpayer money invested by our government.

Summing up

Taxpayers pay ~$150,000 during the K-12 years to help prepare students for college success and subsequent career success.

Most of the students who do enter college never graduate. Of those who do, only a very small minority do so on time.

In essence, anybody who enrolls in any college course, regardless of intention or ability to earn a degree, is automatically deemed by our government worthy of what amounts to a no questions asked taxpayer backed loan.

Loan defaults mount.

College graduation results don't improve, even as college enrollment increases and government loans grow.

Taxpayers are suckers.

Politicians are shameful.

It's unbelievable that we continue to put up with this stuff.

Thanks. Bob.