Black Arts: The $800 Million Family Selling Art Degrees and False Hopes: The Stephens family has amassed an impressive fortune - the kind of fortune where you name your yacht after yourself - through their for-profit art school The Academy of Art University. Headed by "Doctor" Elisa "The Princess" Stephens, the AAU is being increasingly criticised for leaving students in debt (an estimated $45 million in 2013-14) and exploiting loopholes in funding requirements. [more inside]
Bloomberg wonders why last's year Bar Exam pass rates were notably lower. Officials who administer the national multiple-choice portion of the exams said this was a predictable result of the lower credentials of the test-takers when they entered law school versus those of earlier entering classes. Deans of lower-ranked law schools whose accreditation (and federal loan eligibility) depend in part on Bar pass rates don't like that answer. (Earlier this week, the WSJ noted the growing debt of law students, the expanding programs which reduce payments and ultimately forgive balances, and suggests the latter is now starting to drive the former: some people are only borrowing because they know they won't have to repay in full.)
The most striking feature of the Direct PLUS Loan program is that it limits neither the amount that a school can charge for attendance nor the amount that can be borrowed in federal loans. "This is, for a private-equity firm, a remarkably attractive arrangement: the investors get their money up front, in the form of the tuition paid for by student loans. Meanwhile, any subsequent default on those loans is somebody else’s problem—in this case, the federal government’s." [more inside]
Francisco Tapia, aka "Papas Fritas" (French Fries), is an artist and activist whose recent work has drawn international attention. It might not look like much, but it is US$500 million of ashes, the burnt remains of "debt papers" for student of the now defunct Universidad Del Mar, a private institution in Chile that was stripped of its legal standing in 2012. While this might sound like a singular bold move to make people pay attention to the cost of education in Chile, it's just one of many acts in support of efforts to reclaim a very expensive private education options in Chile, with student protests going back to 2006. Chile's president Michelle Bachelet proposed a reform bill on Monday, May 19th, but it doesn't go as far as some protesters would like.
In 2003, only two colleges charged more than $40,000 a year for tuition, fees, room, and board. Six years later more than two hundred colleges charged that amount. What happened between 2003 and 2009 was the start of the recession. By driving down endowments and giving tax-starved states a reason to cut back their support for higher education, the recession put new pressure on colleges and universities to raise their price. When our current period of slow economic growth will end is anybody’s guess, but even when it does end, colleges and universities will certainly not be rolling back their prices. These days, it is not just the economic climate in which our colleges and universities find themselves that determines what they charge and how they operate; it is their increasing corporatization. If corporatization meant only that colleges and universities were finding ways to be less wasteful, it would be a welcome turn of events. But an altogether different process is going on[more inside]
Professor Herwig Schlunk of Vanderbilt University explores whether a law degree is a good investment today. (SSRN link) [more inside]
'The ever-increasing cost of education is not sustainable.' 'Higher education in America, historically the envy of the world, is rapidly growing out of reach. For the past quarter-century, the cost of higher education has grown 440%, according to the National Center for Public Policy and Education, nearly four times the rate of inflation and double the rate of health care cost increases. ''In June of last year student loan debt reached $830 billion, surpassing credit card debt in America.''All this happened while total federal student aid more than doubled, in constant dollars, from $60 billion ten years ago to $120 billion today. Sadly, more federal student aid simply fuels the rising costs. The cost of education tracks with the growth in federal aid; the transaction cost for students is not lowered. The federal money effectively flows directly to the operating expenses of the Universities-which seem to rise in direct proportion to the flow of federal funds.' [more inside]
Is the next debt crisis in student loans? Students are graduating from undergrad with 6-figures of student loan debt. With whom does the responsibility reside? [more inside]