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BOV Committee on Audit and Compliance proposes removal of Code of Conduct …

The College of William and Mary’s Committee on Audit and Compliance passed a resolution Wednesday repealing the Code of Conduct Governing Student Loan Practices.

“The real impetus of that code was to make sure that there was no undue influence by lending institutions through what was essentially amounting to bribery in some of the worst and high profile instances of it nationwide in order for a lending institution to achieve a place on preferred lender risk,” Associate Provost for Enrollment and Dean of Admission Henry Broaddus said.

The Code was made redundant by changes on the federal level and at the College since its adopted in July 2007.

The Health Care and Education Reconciliation Act of 2010, signed by President Barack Obama in March 2010, moved all lending to Direct Lending, cutting out lending institutions as the middlemen in the administration of federal loans.

“That event in 2010 eliminated the possibility of what this code of conduct intended to prevent,” Broaddus said.

The adoption of the College’s Code of Ethics in April 2009 also overlapped with the Code of Conduct, further eliminating the need for the Code of Conduct, according to Broaddus.

The Committee also passed a resolution approving the Office of Internal Audit’s 2013 Work Plan, which outlines future audit initiatives.

Is a Student-Loan Debt Crisis Worse than We Thought?

Student Debt
Joe Schildhorn / BFA / Sipa

A new news from a Federal Reserve Bank of New York delivers generally certain news about a economy with one vivid exception: student-loan debt. The volume of debt and delinquencies are climbing, and some experts contend a central numbers don’t even constraint how large a problem unequivocally is. 

In a third quarter, there were fewer foreclosures, increasing credit-card and automobile lending (indicators of rising consumer confidence), and an altogether dump in a common debt load, led by dwindling debt debt.

Student loans are another story. We combined $23 billion in new debt, and a 90-day evasion rate rose to 11%, during a time when many other forms of delinquencies are going down.

“Increasing evasion rates are a really discouraging sign,” says Deanne Loonin, an profession and executive of a Student Loan Borrower Assistance Project during a National Consumer Law Center. “The problem is in partial due to a bad economy, yet on a sovereign loan side, also underutilization of stretchable amends options such as income-based repayment.”

(MORE: Is Forgiving Student-Loan Debt a Good Idea?)

Some struggling alumni don’t know about a programs, she says, while others get stranded in a web of red tape. (The Consumer Financial Protection Bureau has borrower information and a repayment-assistance apparatus on a website where we can find out what kind of loan we have and what amends options competence be available.)

Mark Kantrowitz, publisher of Fastweb.com and FinAid.org, says a student-loan marketplace has some quirks that could be contributing to a rising evasion rate. “Lenders of credit-card debt, automobile loans and mortgages have adopted tighter credit-underwriting criteria in a issue of a credit crisis. This has denied credit to financially unsettled borrowers,” he says. Most sovereign student-loan programs, though, will accept borrowers regardless of their credit history.

The other large disproportion is that tyro loans can’t be liberated in bankruptcy. In other lending markets, a dump in superb debt can simulate lenders essay off a debt rather than borrowers profitable it down.

Since tyro loans aren’t dischargeable in failure and are really tough to have waived on a hardship basis, borrowers can’t usually travel away. Students who take out private tyro loans don’t even have a amends options that sovereign loans offer.

This has a vital impact on other tools of a economy. Kantrowitz says debt-laden grads, mostly hardly means to cover their monthly student-loan payments, ”tend to check life-cycle events” such as shopping a automobile or house, removing married and carrying kids. High stagnation also adds to a problem by gripping immature workers on a sidelines even as their debts continue to accumulate interest.

Earlier this year, advocacy organisation Young Invincibles published a news about how student-loan debt is holding behind a housing recovery. “Cutting out a conspirator of graduates who formerly participated in this marketplace will supplement another drag to an economy usually usually rising from a Great Recession.”

“Excessive tyro debt can delayed a liberation of a housing market,” CFPB student-loan ombudsman Rohit Chopra wrote in a blog post. “Student-loan borrowers are promulgation large payments each month to their loan servicers rather than apropos first-time homebuyers.”

In a post, Chopra labeled a student-loan marketplace “too large to fail.” But commanding broader or improved reforms is formidable since even a experts don’t have a good hoop on how large a problem is in a initial place.

Different agencies use opposite information sets, so while a Fed says a sum volume of student-loan debt was $956 billion as of a finish of September, a CFPB estimated behind in Mar that a series had surfaced $1 trillion “several months ago.” The Pew Research Center estimates that nearly 1 in 5 households is profitable off student-loan debt.

(MORE: Here We Go Again: Is College Worth It?)

The Fed’s possess series crunchers contend that 11% evasion rate usually reflects usually about half of a delinquencies since it doesn’t demeanour during loans underneath patience or beauty periods. “This implies that among loans in a amends cycle, evasion rates are roughly twice as high,” a news says.

“The Fed news underscores a obligatory need for improved student-loan data,” says Pauline Abernathy, clamp boss during a Institute for College Access Success. “It’s a problem when even a distance of a student-loan marketplace is unknown.”

Rising UT tuition, tricky loan rules lead to greater debt

Tuition is due Jan. 4, and for 56 percent of undergraduate students at UT Austin, that means relying on financial aid to help cover their cost of attendance.

Tom Melecki, director of the Office of Student Financial Services, said complex federal and state laws can both help and hinder students’ access to financial aid. A push to tie financial aid to timely graduation could also be coming at the University and state level, Melecki said.

Familiarity with how student aid is distributed could be the key to keeping student borrowing to a minimum, Melecki said.

“We try to go to grants and scholarships first, but the number of people needing aid is far greater than the amount we give out in grants and scholarships,” Melecki said.

In the 2011-2012 academic year, the office distributed more than $58.5 million in scholarships and $102.4 million in grants to undergraduate students, according to University OSFS documents. Students also took out more than $204.6 million in loans through the office.

“I can guarantee you that there is no way this office can fund more than a handful of students .. to have sufficient grant and scholarship aid to totally cover their costs,” Melecki said. “It means they are going to borrow.”

When borrowing, most students in the United States are unaware of the differences between the federal aid resources offered to them, said Matt Reed, program director of the Institute for College Access and Success.

“We do know from research in 2007-2008 that the majority of undergraduate borrowers did not understand the differences between the different types of student loans or their interest rates,” Reed said.

Former UT student Ashley Pierce said when she began at UT in 2002 at age 17, she was too young to qualify for a federal student loan because she had graduated from high school early. Her parents had to cosign loans from private lenders to finance her education.

“I had no way of knowing a 25 percent interest rate was bad,” Pierce said. “I had not bought a house or a car. I wasn’t even 18-years-old. As a result, I ended up with tons and tons of private student loans with astronomical interest rates that pretty much have no feasible plan for repayment.”

Pierce said her debt totals $38,000, and it grows every day despite her $60,000 annual salary.

“I have a great job and I’m a great citizen,” Pierce said. “I’m very responsible, but I have an astronomical amount of student loan debt just as a result of bad decisions.”

UT no longer recommends private lenders to students, Melecki said. Once students have exhausted debt-free resources, the Office of Student Financial Aid must advise them of federal unsubsidized and subsidized loans, Melecki said. The average student debt for UT undergraduates who graduated last year and who have taken loans was $25,192 for the last academic year, less than the national average of $26,600. UT made a total of $138 million in loans to students in the 2011-2012 academic year.

Melecki said the first loans students are advised to take are direct federal subsidized loans. These loans include Perkins Loans, which were funded by Congress. This program no longer receives annual government funding and is sustained by payments made by former loan recipients, Melecki said. This creates a revolving $8 million fund from which the University lends to its neediest students at a 5 percent interest rate. Students must begin paying the loan back six months after graduation. 

Students demonstrating financial need are also able to receive subsidized loans through the Federal Direct program, Melecki said. These loans have a 3.4 percent interest rate and don’t accrue interest until six months after the student graduates.

Unsubsidized student loans, which 14,083 students took out last year, have a 6.8 percent interest rate and accrue interest from the day the loan was disbursed. Students without demonstrated financial need can take out these loans.

Aside from these personal loans, parents of students can also sign for an unsubsidized loan at a 7.9 percent interest rate.

When parent loans were first created in the 1980s by the federal government, they were not intended for the extensive borrowing students utilize them for today, Melecki said.

“The envisionment was for parent and unsubsidized loans to be loans of convenience for fairly affluent families who need to meet a cash flow problem,” Melecki said. “The idea was that the unsubsidized and parent loans wouldn’t be used by those who were financially needy. We have a lot more financially needy people taking those loans now.”

For the 2011-2012 academic year, more than $66.4 million in parent loans were made to UT-Austin students.

Pierce said even financially savvy parents can fall prey to student loan debt.

“My parents are people who have perfect credit,” Pierce said. “They are homeowners. They are totally responsible adults, but I think even they didn’t realize what sort of hole we were digging into when we were signing these things every semester like it would be manageable to pay back.”

An increase in the cost of attendance, increased cost of living and decreased state and federal aid fuel the need for more loans, Melecki said.

A decade ago, the average cost of attending UT for an off-campus, in-state undergraduate was $5,340 in tuition, $7,478 for housing and $3,492 for other expenses per academic year, according to admissions documents. For the current academic year, the OSFS estimates tuition to cost between $9,346 and $10,738 per academic year, with housing costs estimated to be $10,946 for in-state undergraduates and other expenses estimated at $4,656.

Those costs directly affect the amount of debt students acquire, Pierce said.

“It seems insane that in math, the cost of going to schools continues to rise and the interest rates continue to get higher,” Pierce said. “If tuition goes up by 30 percent it isn’t fair and it doesn’t make sense for loan rates not to adjust to that.”

Meanwhile, the amount of state and federal aid available to UT students decreased by about $16 million from the 2010-2011 academic year to the 2011-2012 academic year.

In 2010 the federal government redirected $60 billion from  private student loans to government grants and loans. However, stipulations on that money may negatively impact some students, Melecki said.

State-funded loan programs were classified as private in the process, Melecki said. This bars financial aid counselors from advising students to ask about state loan programs even if they are less expensive than federal loans.

“We believe there should be an exception carved out for state loans as long as you can demonstrate that terms and conditions of the loan are better than the federal loan program,” Melecki said.

Texas’ College Access Loan program lends to students at a 5.25 percent interest rate that accrues from the day students take out the loan, Melecki said. However, because the interest is never capitalized by the state, the total cost often ends up being less than federal loan programs, Melecki said.

Additionally, the state offers the zero-interest rate B-On-Time Loan program to students demonstrating financial need. Students who complete 15 hours per semester and graduate with a B average or higher have their B-On-Time loans forgiven.

Current federal law prevents financial aid counselors from advising students to take advantage of the B-On-Time loan program, Melecki said. Students must ask about it directly. As a result, the office only distributed $3.9 million of $6.7 million allocated to UT for the program, Melecki said.

“If students don’t know about the program there’s no way it can work,” state Sen. Judith Zaffirini, D-Laredo, said. Zaffirini has proposed legislation for the 2013 legislative session that she hopes will ensure the B-On-Time loan program receives adequate funding instead of further cuts. In 2011, the state cut the program by 29 percent, from $157.1 million to $111.9 million, according to The Texas Tribune.

In the state legislative session set to begin in January, the large number of new legislators will play a big role in deciding whether or not to cut funding for higher education, Zaffirini said. In the 2011 session, legislators cut $92 million from the UT budget.

“The big issue is funding,” said Zaffirini, a UT alumna. “Everyone talks about equal access and opportunity, but the big issue is funding. I, for one, will prioritize to secure more funding for
higher education.”

Some higher education policy groups propose tying loan awards to on-time graduation rather than just academic performance. Zaffirini said she opposes such a change.

UT is also considering tying some of its gift aid to number of hours completed, Melecki said.

He said beginning in the fall semester of 2013, a UT pilot project will offer 200 freshmen loan forgiveness. One hundred of the students will be offered forgiveness in the amount of $1,000 on the principal, plus interest accrued if they complete 15 hours of coursework in their degree plan, Melecki said. One hundred students will be offered forgiveness in the amount of $2,000 on the principal, plus interest accrued if they complete 30 hours in the first academic year, he said.

Students graduating on time could save $12,975 if the program were extended four years, Melecki said.

Many students say the burden of taking on student loan debt is worth it. For media entrepreneur Rubén Cantú, taking loans to obtain a master’s degree from the McCombs School of Business made all the difference in launching his business, CORE Media Enterprises.

“I studied entrepreneurship and technology commercialization, and because of that experience I can sit down in front of a venture capitalist and talk business,” Cantú said. “I can do things that I never would have been able to do, or would have taken a very long time to do because of that experience.”

Pierce said in her case, a UT education wasn’t necessarily a stepping stone to a career.

“The joke of this whole thing to me is that I got my first really cool journalism job without my degree,” Pierce said.

In addition to using financial aid, students can also think of other ways to keep from borrowing greater amounts, said Jamie Brown, a UT financial aid officer.

“We see students every semester who have to take emergency loans to meet rent,” Brown said. “Then we have to sit down and ask if living in an expensive West Campus apartment is really affordable for them.” 

Anthropology senior Elizabeth Melville said living frugally was necessary to attend UT after she was denied sufficient financial aid in her freshman year. Melville had moved away from her mother’s home at the age of 16, and said she hadn’t received support from her since then. But since she had not been legally emancipated from her mother, many student aid officers said she could not file independently of her mother, whose income was higher than the amount needed to receive need-based aid.

“I didn’t even get enough loans to cover tuition,” Melville said. “My first few years at UT were really difficult saving up money for books and tuition.”

Melville said she worked a 20-hour on-campus job and picked up extra shifts when she could to make ends meet.

Melecki said working and living frugally to keep debt low will pay off later in life.

“UT is really just a way station to something greater,” Melecki said.

The Needless Tragedy of Student Loan Defaults

For a initial time on record, a delinquency rate on tyro loans has jumped above a rate for credit cards, automobile loans, or any other kind of consumer loan. The tragedy? Many of those loans will default, with stunningly oppressive consequences, even yet there are many good options for debt relief—deferment, forebearance, or reductions in monthly payments.

“There is indeed no receptive reason for a borrower to be derelict or default on their loans,” says Mark Kantrowitz, boss of MK Consulting in Cranberry Township, Pa., and user of a FinAid.org website.

Borrowers who are unemployed, in a military, or behind in propagandize can ask for adult to 3 years or full or prejudiced moratorium on amends of a sovereign loan. For those who have a pursuit yet don’t acquire adequate to cover a monthly payment, there are six options: graduated repayment, extended repayment, income-based repayment, income-contingent repayment, income-sensitive repayment, and pay-as-you-earn repayment. In other words, a sovereign supervision will do only about anything to keep borrowers from giving adult and walking divided completely.

If that’s a carrot, here’s a stick: Defaulting is “like a outing by ruin with no light during a finish of tunnel,” says Kantrowitz. The sovereign supervision can ornament adult to 15 percent of a borrower’s wages, Social Security disability, and Social Security retirement income yet a justice order. Unlike other debt, tyro loans can’t be liberated in bankruptcy. Collection charges of adult to 20 percent can be skimmed off a tip of payments—enough to spin a 10-year loan into a 19-year loan. To contend zero of a durability repairs to a borrower’s credit score, that will make it tough or unfit to get a credit card, automobile loan, or mortgage.

And, oh, by a way, if we win a lottery, a initial leader from your asset is a Education Department.

With that kind of downside, since do so many people default on their tyro loans? Some might not know their options, or put off traffic with a problem. Also, investigate shows that many borrowers cruise their tyro loans deceptive and don’t feel they should have to compensate them back. In fact, default rates are 4 times as high for dropouts, who presumably feel they didn’t get their money’s worth.

There’s a cyclical factor, too. The Federal Reserve Bank of New York reported on Nov. 27 that a commission of tyro loan balances that were 90 or some-more days derelict rose to 11 percent in a July-September quarter, aloft than a evasion rate on credit cards given a consult began in 2003. The spike comes during a time when girl stagnation stays historically high. Even for those with jobs, people are profitable ever some-more income for educations that don’t supply them for jobs that compensate them adequate to cover their debts, as we wrote earlier this year in “Debt for Life.”

At a same time, evasion rates on credit cards, automobile loans, and mortgages have been descending since bad credit has been cleared out of a system. There’s no such clarification resource for tyro debt, that now totals $956 billion in superb loans, according to a New York Fed. The sovereign Consumer Financial Protection Bureau, regulating opposite methodologies, says tyro loan debt upheld a $1 trillion symbol someday final winter.

Then there’s a fact that some of these tyro borrowers were substantially lousy bets for amends in a initial place. The sovereign government, that binds 85 percent of superb tyro debt, doesn’t make loans to students formed on their ability to repay them. That might sound crazy, yet it is designed to safeguard that students of all backgrounds and income levels get a shot during a college degree.

That bullheaded blindness also sets adult a supervision for outrageous losses. The purpose of a draconian punishment for defaulters is to make adult for a miss of sound underwriting on a strange lending. Clearly, though, a threats aren’t working—and conjunction are a mixed amends options a supervision offers.

Can Obama Deliver on His Education-to-Jobs Proposal?

President Obama is among the throng of public officials who tout education as the path to economic success. “Education was the gateway to opportunity for me. It was the gateway for Michelle. And now, more than ever, it is the gateway to a middle-class life,” he said at the Democratic National Convention in September.

But the connection between education and employment is not as straightforward as one might think. Although a college degree is better than no degree, it is hardly a guarantee of success. In truth, the nation’s higher-education system consists of a miasma of schools through which students, with the help of taxpayers, can obtain credentials that may or may not say something about their abilities and may or may not be linked to a particular kind of job. Often, traditional higher education doesn’t match the workforce’s needs of today or tomorrow. Many of the hardest-to-fill jobs identified by employers don’t require four-year degrees, yet vocational and technical training is the most lacking of all the postsecondary education options in the country.

As the United States continues to grapple with the lingering effects of the Great Recession, as well as the decline of some economic sectors and the rise of others, one of the uncomfortable truths facing policymakers is that no magic bullet will transform the traditional higher-education system into a guaranteed pipeline to new-economy jobs. The federal government has limited clout over colleges and universities. Most federal money is directed to students through Pell Grants and loans, not to schools themselves.

Obama can, however, sprinkle his vision of a skills-based economy into issues such as immigration, college financing, welfare-to-work, and a handful of job-training programs that are set to expire. He has promised to lean on colleges to keep their tuition costs from going up too fast. He has also proposed a dislocated-worker training program, with wage insurance for older workers, to help the unemployed convert to different jobs.

COMPETENCY-BASED MODELS

Earlier in Obama’s first term, the administration found itself in a pitched battle with career and technical colleges when the Education Department proposed rules that held those schools accountable for the economic fates of their graduates. The for-profit college industry lobbied heavily against the rules and successfully sued the department for overstepping its authority.

The scuffle revealed deep concerns among educators about the government’s expectation that higher education should ensure employment. Officials from the for-profit industry said that their businesses would be ruined if Washington made federal dollars contingent on their students’ employment status and wages. There are intervening factors between a student’s schooling and his or her subsequent employment, they argued, including personal choices and economic conditions.

Colleges and universities need to embrace “competency-based” models before the government can hold them responsible for employment, said Mark Schneider, a former commissioner of education statistics who now heads the research group College Measures. These models minimize scholastic exploration and emphasize a student attaining specific skills. School counselors lay out a plan for their students when they walk in the door, giving them a prescribed set of courses that lead to a defined goal. A few flagship colleges do this now, but they are not yet the norm.

The competency-based system works—schools that use it have higher job-placement rates for their graduates—but it also upsets long-held notions of academic freedom and the very nature of higher education. “If we’re skills oriented, and skills are cumulative over a curriculum, if I’m teaching the second course in that sequence, I need to know that the foundation was laid in the first course,” Schneider said. “This is a challenge to the traditional academic-faculty model.”

THE QUEST FOR “MIDDLE JOBS”

Vocational and technical training are keys to filling many jobs in today’s workforce, but few postsecondary institutions emphasize this approach. Obama’s emphasis on skills will bring to light an uncomfortable truth: High schools have largely given up on vocational training because of public concerns about “tracking” students into nonprofessional jobs. Two-year associates’ degrees are considered suspect unless employers are familiar with the institution that awarded them. Government job-training programs have been neglected for so long that they function as little more than  referral services.

“We talk a lot about ‘middle jobs,’ ” said Rachel Gragg, federal policy director at the National Skills Coalition. These are the jobs that pay a living wage but require only a year or two of vocational training beyond high school. “They tend to be technical jobs—health care, transportation, logistics. They are place-based, [like] extracting natural gas. They can’t be shipped overseas,” she said.

The Georgetown Public Policy Institute estimates that 11 million jobs pay more than $50,000 annually, and that these jobs require some post-high-school education but less than a bachelor’s degree. A Manpower survey earlier this year found that 49 percent of employers were having difficulty filling openings for mechanics, drivers, nurses, accountants, and IT workers—jobs that need some training but not four years of college.

Yet the training programs that target these jobs are routinely shoved to the bottom of a crowded public-policy agenda, as Congress focuses on unemployment insurance, student loans, or college-financing programs. Gragg said that her biggest goal next year is making sure that job training isn’t forgotten when lawmakers start debating hotter topics, such as student financial aid or immigration reform.

On immigration, lawmakers are proposing that undocumented workers learn English to earn legal status. That proposal raises huge red flags for basic adult education, which is barely surviving now on a $600 million federal budget. “The system is already so overtaxed, if you dumped 11 million more people into it, it would be a disaster,” Gragg said.

Immigration is likely to be the most contentious debate in Congress in 2013. Obama has made immigration reform his top priority after “fiscal cliff” issues are resolved, and lawmakers already are staking out their positions on legalization, citizenship, and work authorization.

Education and workforce training won’t grab headlines, but they will be an integral part of the immigration debate. Democrats and Republicans both want to give green cards to foreign college graduates who major in science and math, although they can’t do that without also making it easier for Americans to enroll in the same programs. That’s why Obama’s campaign stump speech included a call for 100,000 new math and science teachers.

The student-loan issue will surface next year as well because the interest rate for need-based loans is set to double in July. Congress found a way to put off that rate hike this year, and lawmakers must act in 2013 to sustain the lower rate. The campaign to keep student interest rates low proved to be a potent election issue for Obama among young voters. He may go further in that vein next year, asking that student-loan repayments be tied to a borrower’s income level. That debate will also serve to push the tenuous link between college costs and first-job salaries  into the spotlight.

ADULTS NEED SKILLS, TOO

The college-going population is not monolithic. In addition to enrolling full-time 18-year-olds with backpacks, colleges also admit adults who have jobs and families and go to school part time. Some of the older students are trying to start over after long tenures in jobs that have disappeared.

“This does not get enough attention in the education debate—what are we going to do about adults?” said Jamie Merisotis, president of the Lumina Foundation, which focuses on higher education. Virtually all jobs created since the 2008 recession require at least some education past high school, he said, yet four-fifths of the people who lost their jobs in that recession have a high school diploma or less.

Obama’s dislocated-worker program could serve as a jumping-off point to match recession victims with employers. The biggest problem with his proposal is that it costs money, although Congress could put the mechanism in place now and fund it later. Lawmakers have been working on related legislation that would update the federal job-training system, but the bill stalled this year, and it’s unclear if the political climate will improve next year.

Although Obama wants community colleges to function as “community career centers,” the National Skills Coalition’s Gragg said that training dollars need to go beyond community colleges to reach 93 million adults with very low skills. That’s where the stalled job-training measure comes in, because it includes funding for basic adult education. “There are a lot of people who will never walk onto a community college campus, but they will walk into a community-based organization,” she said. These people often face an array of barriers to employment—family responsibilities, illiteracy, and the burdens of poverty.

Fortunately for everyone, skills development is bipartisan. Elected officials across the political spectrum recognize the need to help jobless adults find work. “Many Americans don’t have the skills to fill the jobs that are being created,” said Sen. Marco Rubio, R-Fla., at a recent forum sponsored by The Atlantic and the Aspen Institute. “They’re not all kids. Take my sister. In her mid- to late 30s, she had not graduated from college.” With federal aid, he said, she got a bachelor’s degree and now works as aschool administrator.

THE TRUE VALUE OF COLLEGE

The weak economy has heightened the public’s sense that college is too expensive for what students get in return. It’s hard to argue that a $200,000 college degree is worth the money when you have to move back in with your parents after graduation because you can’t find a job. Moreover, many recent graduates who did find work don’t make enough to justify the high cost of their education.

“You can’t talk about debt without talking about what the earnings are,” said Schneider of College Measures. “If you’re going to borrow $70,000 and make $20,000, you’ve made a bad financial decision. If you borrow $20,000 and you make $70,000, that’s a great investment.”

Schneider founded College Measures to familiarize the public with the monetary value of college. Using state unemployment and transcript data, his online database catalogs the average starting salaries tied to all majors at public colleges and universities. The most recently released data on Virginia, for example, showed that a bachelor’s degree in information science from the University of Richmond resulted in an average first-year salary of $82,622. By contrast, first-year wages for studio-arts majors at Bridgewater College averaged $20,612. College Measures has produced similar reports for Arkansas and Tennessee; Colorado, Nevada, and Texas are on tap.

Schneider’s numbers are rough, but they give people the tools to compare individual college programs. “How should a state invest money? Say it has three philosophy programs. In one of them, the average salary is $18,000. The other one is $25,000. The other one is $30,000. Maybe that tells you something about the program where students are only making $18,000,” he said.

This kind of reasoning leads to some uncomfortable questions. Must a state-funded university be comprehensive? Does every student have the right to take a philosophy class? How many philosophy majors do we need?

The answers conjure up emotional defenses of liberal-arts degrees, which always fare worse than the technical degrees in these kinds of analyses. Schneider is unapologetic. “Some of the most successful people I know are liberal-arts grads from the Ivy Leagues. And, you know, fine. Awesome. Does that translate to a regional [school] in the middle of Indiana? That’s what we need to know.”

Schneider argues that the higher-education system cannot continue functioning as it does now, with professors lecturing to smart kids who then work hard and graduate because they’re smart, not because the professor has given them a new set of employable skills. “The traditional attitude toward faculty was, ‘I’m dispensing knowledge. Learn it or don’t learn it.’ ‘Do I know if you graduated or don’t graduate? I don’t have a clue.’ ‘Do I know if you got a job or didn’t get a job? I don’t care,’ ”he said. “It’s all paid for by taxpayers, very heavily subsidized, and I don’t think it can go on much longer.”

As long as Obama continues to emphasize workplace skills, he can open up the conversation about tying higher education more closely to workplace needs and about encompassing adult learners. The change will be gradual, because the higher-education system is diverse and job-training dollars are scarce. The good news is that no one disputes the intrinsic value of skills development, which means the policymakers don’t need to convince anyone that it’s a good idea. They just need to figure out a way to make it happen.

Larger version

 

KEY ADVISERS

Arne Duncan: The Education secretary is close to the president and shares his vision of making the United States’ economy competitive through education.

Jill Biden: A former community-college president, the second lady has led the White House’s campaign to promote two-year colleges.

Martha Kanter: The undersecretary of Education focuses on higher-education issues, including financial aid. She provides information to Congress on Pell Grants and other student-aid programs.

Patty Murray: The Democratic senator from Washington state authored the legislation to update the long-ignored job-training system.

 

 

WHAT’S MOVING

Easing debt: The student-loan interest rate is scheduled to double in July, but the White House and Congress are likely to extend the current 3.4 percent rate for at least another year. It has proven politically unpopular to let the rate double, as required by law.

No Child Left Behind Act: The Education Department’s state waiver program for schools has taken the pressure off lawmakers to reauthorize the George W. Bush-era K-12 law.

Dislocated-worker aid: Obama’s plan for an assistance program for dislocated workers could be put in place by lawmakers, but it will lack for funding. The current slate of job-training programs is subject to automatic cuts if Congress and the White House fail to reach a budget deal. 

________

This is the second in a series of stories on the challenges facing President Obama in his second term. It appeared in print as “The Jobs Pipeline.”