Monday, October 26, 2015

College and Graduate School Scams ... Federal 'Direct Plus' Loans Are a Minus ... Truth Telling and Free Speech

Yesterday we wrote about the absence of free speech on college campuses and that this scary trend is being encouraged by politicians and college officials. And the fact is that many unthinking students are in favor of limiting free speech as well.

Yet free speech is a great way to learn what we don't know but need to know. If we aren't willing or able to listen to views other than our own, we'll be ignorant about many things that we later wish we would have known --- such as knowledge about government granted Direct Plus student loans, for example. And then there's the related topic of free speech puffery versus truth telling in advertising.

When the federal government and complicit schools loan money to attendees, it's not always intended to benefit the students. It's primarily to allow the colleges to charge outrageous amounts in order to pay college teachers, administrators and other employees non-market determined salaries. For the most part, colleges then are able to pay their employees what their employees want to be paid and not what a free market would allow. It's that simple.

As a result, students and taxpayers are being ripped off, and government and college officials are doing the ripping. Why we don't teach our kids, beginning in high school, the reality of why educational institutions are so expensive has long been and continues to be a well kept secret.

Since the federal 'Direct Plus Loan Program' is especially costly, we'll use the example of a Florida based law school to tell the bigger story. The school's apparent purpose is to get and keep 'butts in the government enabled expensive seats.'

The Law School Debt Crisis provides an instructive example of what far too many college, law, MBA and other students aren't learning:

"In 2013, the median LSAT score of students admitted to Florida Coastal School of Law was in the bottom quarter of all test-takers nationwide. According to the test’s administrators, students with scores this low are unlikely to ever pass the bar exam.
    Despite this bleak outlook, Florida Coastal charges nearly $45,000 a year in tuition, which, with living expenses, can lead to crushing amounts of debt for its students. Ninety-three percent of the school’s 2014 graduating class of 484 had debts and the average was almost $163,000 — a higher average than all but three law schools in the country. In short, most of Florida Coastal’s students are leaving law school with a degree they can’t use, bought with a debt they can’t repay.
If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.
Yet for-profit schools are not the only offenders. A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.
Why? The most significant explanation is also the simplest — free money.
In 2006, Congress extended the federal Direct PLUS Loan program to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses. The idea was to give more people access to higher education and thus, in theory, higher lifetime earnings. But broader access doesn’t mean much if degrees lead not to well-paying jobs but to heavy debt burdens. That is all too often the result with PLUS loans.

The consequences of this free flow of federal loans have been entirely predictable: Law schools jacked up tuition and accepted more students, even after the legal job market stalled and shrank in the wake of the recession. For years, law schools were able to obscure the poor market by refusing to publish meaningful employment information about their graduates. But in response to pressure from skeptical lawmakers and unhappy graduates, the schools began sharing the data — and it wasn’t a pretty picture. Forty-three percent of all 2013 law school graduates did not have long-term full-time legal jobs nine months after graduation, and the numbers are only getting worse. In 2012, the average law graduate’s debt was $140,000, 59 percent higher than eight years earlier.

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