Massachusetts removes college degree requirements from most state jobs (Bryan Alexander)

[Editor's note: This article was first published at BryanAlexander.org]

Over the past year at least a dozen American states have taken a very interesting step. They have removed a college degree requirement for applicants to some or most state jobs. It’s a way of helping people “break the paper ceiling,” of advancing without needing to have postsecondary education credentials. Examples include Alaska, California, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania (and Philadelphia), South Dakota, Utah, Virginia.

Now Massachusetts has joined them. (alternative link)

Governor Maura Healey filed an executive order on Thursday to ensure most state government job listings do not include degree requirements and hiring managers use a “skills-based” approach when picking candidates to fill open positions.

Skills-based instead of credential-driven: that’s an important shift.

Healey announced this decision during a speech to Associated Industries of Massachusetts on Thursday, in part to spur companies to rethink their approaches to hiring. She noted that career success shouldn’t be limited to the portion of the state’s population — nearly half, per a recent census count — with a bachelor’s degree.

Did you catch that last point, about almost 50% of the state having a degree? In fact, Walletbub just determined that Massachusetts was the most educated state in America. And that state now set aside those educational requirements at scale.

I don’t want to overstate this decision. After all, Massachusetts employs fewer than 50,000 people (source) so we’re not overhauling the state’s labor force. At the same time, nothing in the governor’s decision prevents people with degrees for applying to state positions. Moreover, the states which have taken such steps number not even one third of the lot; a majority of American states still require postsecondary sheepskin for public jobs. A powerful reason for those decisions is the currently low unemployment level; when that rises, perhaps these states will reverse their positions.

And yet I think this is noteworthy. It stands opposed to the inherited “college for all idea,” instead viewing non-academic achievement as on par with college or university degrees. It may encourage other organizations to do the same – other states, businesses, nonprofits – to similarly downgrade reliance on postsecondary attainment. As word of these shifts gets out it might depress college enrollment to a degree.

Note, too, that this isn’t a partisan move. Republicans and Democrats alike seem equally fond of the idea so far, even in our hyperpolarized times. It’s easy to find examples of this, starting with how the state leaders who have taken this step are members of both parties. A bipartisan pair of governors urged others to reduce college requirements. While the conservative National Review praised the strategy, so did Barack Obama:

Here’s an example of a smart policy that gets rid of unnecessary college degree requirements and reduces barriers to good paying jobs. I hope other states follow suit!

Let’s keep an eye on this trend. As 2024’s elections ratchet up, this could become a partisan issue. Or it might just continue with more governors deciding to open up public jobs beyond academic achievement. Is the college for all consensus shattering?

The Student Loan Mess Updated: Debt as a Form of Social Control and Political Action

[Editor's note: The FY 2023 FSA Annual Report is here.] 

In 2014, the father-son team of Joel Best and Eric Best published The Student Loan Mess: How Good Intentions Created a Trillion Dollar Problem. Their argument was that rising student loan debt posed a major social and economic problem in the United States, exceeding $1 trillion at the time of publication (predicted to reach $2 trillion by 2020). This "mess" resulted from a series of well-intentioned but flawed policies that focused on different aspects of the issue in isolation, ultimately creating unintended consequences.

Key Points of the 2014 book:

History of Federal Involvement: The book explored the evolution of federal student loan programs, highlighting how each policy change created new problems while attempting to address the previous ones.

Cost of College: Rising tuition fees along with readily available loans fueled the debt crisis, as students borrowed more to cope with increasing costs.

Repayment Challenges: The authors delved into the difficulties graduates face repaying their loans, including high interest rates, complex repayment plans, and limited income mobility.

Societal Impacts: The book examined the broader societal consequences of student loan debt, such as delayed homeownership, reduced entrepreneurship, and increased economic inequality.

Beyond the Mess: While acknowledging the complexity of the issue, the authors discussed potential solutions, including loan forgiveness programs, income-based repayment plans, and increased government regulation of for-profit colleges.

Overall, "The Student Loan Mess" provided a critical historical analysis of the factors contributing to the crisis and suggested pathways towards a more sustainable system of higher education financing.

Expansion of Federal Loan Programs (1960s-1990s):

The creation of federal loan programs initially aimed to increase access to higher education.

This led to rising tuition costs as universities saw guaranteed funding, with less pressure to remain affordable.

Loan eligibility expanded, encouraging more borrowing even without clear career prospects for graduates.

Cost Explosion and Predatory Lending (1990s-2000s):

College costs skyrocketed due to various factors, including decreased state funding and increased administrative spending.

Loan limits were raised, further fueling the debt increase.

Private lenders entered the market, offering aggressive marketing and deceptive practices, targeting vulnerable students.

Recession and Repayment Struggles (2008-present):

The Great Recession exacerbated loan burdens as graduates faced limited job opportunities and stagnant wages.

Complex repayment plans and high interest rates created a challenging landscape for borrowers.

The rise of for-profit colleges further complicated the issue, often saddling students with debt for degrees with low earning potential.

Growing Awareness, Advocacy, and Reform (2010s-present):

Public awareness of the student loan crisis grew, leading to increased advocacy and demands for reform.

Issues like predatory lending, debt forgiveness, and income-based repayment gained traction.

In 2010, the Health Care and Education Reconciliation Act made a significant change to the federal student loan system. Previously, the government guaranteed private loans, meaning it reimbursed lenders if borrowers defaulted. In turn, lenders received subsidies for participating. The Act ended these subsidies for private lenders, resulting in over $60 billion saved that could be reinvested in student aid programs.

Debates on the role of government and private lenders in financing higher education continued.


Next Chapters?

Since 2014, almost ten years after the Student Loan Mess was published, several major developments have unfolded concerning student loan debt:

Growth and Persistence:

Debt continues to climb: While the growth rate has slowed somewhat, outstanding student loan debt has surpassed $1.7 trillion and remains a significant burden for millions of borrowers.



 

Racial and socioeconomic disparities persist: African American and Latinx borrowers disproportionately hold a higher amount of debt compared to white borrowers, exacerbating economic inequalities.

Policy Changes: 

https://x.com/The Biden-Harris administration has provided $136.6 billion in debt relief. 

Expansion of income-driven repayment plans: Options like Income-Based Repayment (IBR) and Pay As You Earn (PAYE) have been expanded, allowing borrowers to adjust their monthly payments based on income.

Public Service Loan Forgiveness (PSLF) challenges: Legal uncertainties and administrative backlogs have plagued PSLF, leaving many public servants struggling to qualify for loan forgiveness.

Temporary pandemic relief: During the COVID-19 pandemic, federal student loan payments were paused and interest rates set to 0%. Payments resumed in 2023.

Debt cancellation debates: Proposals for broad-based student loan forgiveness have gained traction, with several Democratic lawmakers pushing for different cancellation amounts. However, these proposals have faced legal and political hurdles. In 2023, the 9th Circuit Court ruled in favor of mass cancellation of loans from predatory for-profit colleges (Sweet v Cardona). A few months later, the US Supreme Court struck down President Biden's plan for debt relief to more than 30 million Americans.

Increased attention to for-profit colleges and online program managers: Scrutiny of predatory practices and low graduate outcomes at for-profit institutions has intensified. Gainful employment rules have been reestablished, but whether they will be enforced is in question.  


Looking forward:

The future of student loan debt remains uncertain. Key questions include:

Will broad-based loan forgiveness materialize?

Can income-driven repayment plans be made more effective?

How will future administrations address affordability and access to higher education?

What role will the private sector play in financing higher education?

How will declining enrollment numbers and skepticism about the value of higher education affect student loan debt and debt relief?  

Will higher ed institutions be held accountable for the debt of their former students and alumni?

Can higher education reduce consumer costs and provide value to consumers and communities at the same time?  

How will student loan debt affect disability, retirement, and life expectancy among long-term debtors?     

Policy Drivers:

Economic factors: A strong economy could increase government revenue, potentially enabling broader debt forgiveness or increased funding for higher education access initiatives. Conversely, an economic downturn could make policy interventions more challenging.

Elections and political pressure: Public opinion and the results of future elections will influence the political will for reform. Continued activism and pressure from advocacy groups could sway policy decisions.

Legal challenges and court rulings: Lawsuits over debt cancellation programs and loan servicer practices could impact the legal landscape and shape future policy options.

Private sector involvement: Developments in the private student loan market and potential regulations of lending practices could affect access to credit and repayment options.

Consumer Decisions:

Debt burden and economic outlook: The level of outstanding debt and future job prospects will significantly influence borrower behavior. Increased debt loads could incentivize riskier repayment strategies or delaying major life decisions like homeownership.

Awareness and financial literacy: Improved understanding of loan terms, repayment options, and alternative financing methods could empower borrowers to make informed decisions.

Government programs and incentives: Changes to income-driven repayment plans, loan forgiveness programs, and other government initiatives will directly impact consumer choices about managing their debt.

Emerging Trends:

Alternative financing models: Innovations like income-share agreements and skills-based financing could disrupt traditional loan structures and offer new options for students.

Technology and automation: Increased use of technology to streamline loan management and repayment could improve efficiency and transparency.

Focus on affordability and value: As concerns about the value proposition of higher education grow, there might be a shift towards emphasizing affordable options and skills-based learning.


How does student loan debt affect the lives of Americans?

Student loan debt has a profound impact on the lives of millions of Americans in various ways, affecting not just their finances but also their major life decisions and overall well-being. Here's a breakdown of some key areas:

Financial Impact:

Burden of debt: The average graduate has over $40,000 in student loan debt, significantly impacting their monthly budget and disposable income. This can limit savings for retirement, emergencies, and major purchases like a house.

Lower credit scores: Missed payments or delinquencies can negatively affect credit scores, hindering access to future loans and increasing interest rates on other forms of credit.

Delayed milestones: High debt burdens may cause individuals to delay major life milestones like buying a home, getting married, starting a family, or pursuing further education due to financial constraints.

Career Choices:

Job dissatisfaction: To make loan payments, some graduates might feel pressured to stay in high-paying but unfulfilling jobs, sacrificing career satisfaction for financial stability.

Entrepreneurial risk: The fear of financial failure due to debt may discourage individuals from pursuing entrepreneurial ventures, hindering innovation and economic growth.

Limited career mobility: Debt may lock individuals into specific career paths based on earning potential, restricting their ability to pursue desired career changes.

Mental and Emotional Wellbeing:

Stress and anxiety: The constant pressure of debt repayment can lead to significant stress and anxiety, impacting mental and emotional well-being.

Lower self-esteem: Feelings of financial instability and hopelessness can negatively impact self-esteem and overall life satisfaction.

Stigma and discrimination: Some individuals may face social stigma associated with student loan debt, further exacerbating the emotional burden.

Societal Impact:

Economic inequality: Student loan debt disproportionately affects certain groups, like minorities and low-income students, perpetuating and widening economic inequality.

Lower homeownership rates: High debt burdens can hinder homeownership, negatively impacting the housing market and contributing to wealth disparities.

Reduced consumer spending: Debt-burdened individuals have less disposable income, limiting their purchasing power and affecting the overall economy.


Social Class and Student Loan Debt

There's a well-documented and intricate relationship between social class and student loan debt, characterized by significant inequalities and disparities. Here's a breakdown of some key points:

Higher burden on lower classes:

Borrowing rates: Individuals from lower socioeconomic backgrounds are more likely to borrow student loans due to limited family resources and higher college costs compared to their income.

Debt amounts: Borrowers from lower socioeconomic backgrounds often take on larger debt loads due to higher tuition fees and living expenses, often exceeding their earning potential after graduation.

Repayment challenges: They face greater difficulty repaying loans due to lower-paying jobs, making them more susceptible to delinquency and default. This hinders wealth accumulation and upward mobility.

Contributing factors:

Limited financial support: Lack of parental financial support or savings forces students from lower socioeconomic backgrounds to rely heavily on loans for college expenses.

Limited college options: Limited access to affordable, high-quality educational institutions often steers individuals towards for-profit colleges with deceptive practices and low graduation rates, leading to high debt with limited job prospects.

Ongoing Debate

There is ongoing debate on solutions to address the student loan crisis, with proposals ranging from broad-based loan forgiveness to reforms in higher education financing and income-driven repayment plans. The future of student loan debt and its impact on Americans remains uncertain and depends on various factors, including policy decisions, economic trends, and individual financial choices.

The Student Loan Debt Movement

There has been an organized effort for student loan debt relief since the 2010s. This movement, using direct action, lawsuits, and lobbying has had some gains, putting pressure for accountability for schools that use predatory practices--and getting debt relief for hundreds of thousands of debtors.  The most notable organization has been the Debt Collective.  

Image of Ann Bowers, courtesy of the Debt Collective

There have been legal allies too, such as the Harvard Project on Predatory Student Lending (PPSL) and the Student Borrower Protection Center (SBPC).    

Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti) 

Resistance to Debt Relief

The reasons why some people might not support student loan forgiveness. Some conservatives believe that it is unfair to forgive the debts of those who willingly took out loans, while others believe that it would be a waste of taxpayer money. Additionally, some believe that student loan forgiveness would not address the root causes of the problem, such as the high cost of tuition.

It is important to note that not all conservatives oppose student loan forgiveness. Some support income-based repayment plans or public service loan forgiveness. Additionally, some believe the government should focus on making college more affordable, rather than simply forgiving existing debt.

According to a 2019 poll by the Pew Research Center, 54% of Republicans and Republican-leaning independents opposed forgiving all student loan debt, while 37% supported it.

Student Loan Debt Power Analysis: Who Benefits from Inaction?

There are elites and elite organizations who are (at least on the backstage) against student loan debt relief: student loan servicers (e.g. Maximus, Nelnet, Navient, and Sallie Mae), big banks, large corporations, and the US military. For them, debt serves as a way to get others to do their bidding. Debt is essential as a leverage tool to recruit and retain workers. Debt relief could also create more competition for better, more meaningful jobs, which some elites may not want for their children. States may be unwilling or unable to further subsidize higher education if elites are unwilling to pay. This situation is likely to worsen as Medicaid budgets are used for a growing number of elderly and increasingly disabled Baby Boomers.  

Related links:

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

 

People's Rally for Student Debt Cancellation to be held outside Supreme Court, February 28, 2023  

 

Department of Education: Over half of federal student loan borrowers were not paying before Pandemic (Alan Collinge)

Student Loans and a Brutal Lifetime of Debt (Dahn Shaulis and Glen McGhee)

Maximus, Student Loan Debt, and the Poverty Industrial Complex

SLABS: The Soylent Green of US Higher Education

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)

Higher Education FOIA Requests to US Department of Education

Sotheby's Institute of Art on Department of Education's Heightened Cash Monitoring 2 List

Sotheby's Institute of Art (SIA) in New York City is one of only three institutions under the US Department of Education's Heightened Cash Monitoring 2 list for "financial responsibility" problems. 

SIA is owned by Cambridge Information Group, which is the parent company of ProQuest, The School of the New York Times, Hammond's Candies, the Scranton/Wilkes-Barre RailRiders minor league baseball team, and other investments. 

(Seven NY institutions were under HCM2. Source: US Department of Education)

According to the US Department of Education (ED), "schools may be placed on HCM1 or HCM2 as a result of compliance issues including but not limited to accreditation issues, late or missing annual financial statements and/or audits, outstanding liabilities, denial of re-certifications, concern around the school's administrative capabilities, concern around a school's financial responsibility, and possibly severe findings uncovered during a program review."

Also according to ED, "a school placed on HCM2 no longer receives funds under the Advance Payment Method. After a school on HCM2 makes disbursements to students from its own institutional funds, a Reimbursement Payment Request must be submitted for those funds to the Department." Schools in this position are often in such financial hardship that they may close.  

The September 2023 Heightened Cash Monitoring 2 list includes less than 100 schools nationwide and seven schools in New York. A disproportionate number of schools are small religious-based institutions and for-profit vocational colleges. 

Unlike most of the schools on the HCM list, Sotheby's has a prestigious name--and it uses its relationship with the auction house to elevate its brand. According to its vision statement, "Sotheby’s Institute of Art is the global leader in art world education, shaping future generations of cultural stewards and art market professionals."  

And according to its website "Sotheby’s Institute of Art alumni form a network of over 8,000 talented individuals around the world. Our graduates hold leading positions at renowned international arts organisations including Frieze, 1-54 Contemporary African Art Fair, M+, the Institute of Contemporary Photography, the Victoria & Albert Museum, the Guggenheim Abu Dhabi, the Smithsonian Museum of Natural History, the Fine Art Group, the UK National Archives, Cartier, and numerous other galleries, auction houses, museums, luxury brands, art fairs, advisories, law firms and beyond."

The US Department of Education's College Navigator indicates that SIA's student population in the US is about 200. Tuition alone is $56,340 per year. The school's US faculty includes one full-time instructor and 35 part-timers. 87 percent of the students are female; 49 percent are Asian. The school only offers certificates and graduate degree programs. SIA's website does not appear to name any Board members.  

US Department of Education (IPEDS) data also suggest that SIA's expenses have surpassed revenues since 2016-17.  

(Source: US Department of Education)

The Higher Education Inquirer is in the process of gathering more information about the school's finances and whether students should be aware of the HCM status. Other schools on the list have recently closed or are in the process of closing, including Bay State College, King's College, and Union Institute.  

Related links: 

Ambow Education Facing Financial Collapse

A preliminary list of private colleges at risk

Sharing a Dataset of Program-Level Debt and Earnings Outcomes (Robert Kelchen)

[Editor's Note: This article first appeared in the Kelchen on Education blog.]

Within a couple of hours of posting my comments on the Department of Education’s proposal to create a list of programs with low financial value, I received multiple inquiries about whether there was a user-friendly dataset of current debt-to-earnings ratios for programs. Since I work with College Scorecard data on a regular basis and have used the data to write about debt-to-earnings ratios, it only took a few minutes to put something together that I hope will be useful.

To create a debt-to-earnings ratio that covered as many programs as possible, I pulled median student debt accumulated at that institution for the cohorts of students who left college in the 2016-17 or 2017-18 academic years and matched it with earnings for those same cohorts one calendar year later (calendar year 2018 or 2019). The College Scorecard has some earnings data more than one year out at this point, but a much smaller share of programs are covered. I then calculated a debt-to-earnings ratio. And for display purposes, I also pulled median parent debt from that institution.

The resulting dataset covers 45,971 programs at 5,033 institutions with data on both student debt and earnings for those same cohorts. You can download the dataset here in Excel format and use filter/sort functions to your heart’s content.

Robert Kelchen is a professor at the University of Tennessee, Knoxville who studies higher education finance, accountability policies and practices, and student financial aid. All opinions expressed here are his own.

Need Student Debtors to Provide Information about Low-Financial-Value Postsecondary Programs (Updated February 15, 2023)

 

[Editor's Note: The public comment period ended February 10, 2023.]  

The US Department of Education is accepting public comments as a Request for Information (RFI) about "Public Transparency for Low-Financial-Value Postsecondary Programs."  The announcement is available at the US Federal Register.  

The URL to make these comments is at 

https://www.regulations.gov/document/ED-2022-OUS-0140-0001

As with most US government rules and policies, industry insiders have great influence in these decisions--and concerned citizens are often shut out of the process. When consumers do have a chance to speak, they may not even know of those opportunities.  That's why the Higher Education Inquirer is asking student loan debtors to contribute to this RFI while they can.   

Tell DC policymakers and technocrats about your unique struggles (and your family's struggles) tied to student debt--and what could be done to better inform consumers like you. 

There you can find public comments that have already been made.  As of February 15, only 129 comments were posted. 

According to the announcement: 

"a misalignment of prices charged to financial benefits received may cause particularly acute harm for student loan borrowers who may struggle to repay their debts after discovering too late that their postsecondary programs did not adequately prepare them for the workforce. Taxpayers also shoulder the costs when a substantial number and share of borrowers are unable to successfully repay their loans. The number of borrowers facing challenges related to the repayment of their student loans is significant."  

The Request for Information continues...

"Programs that result in students taking on excessive amounts of debt can make it challenging for students to reach significant life milestones like purchasing a home, starting a family, or saving enough for retirement, ultimately undermining their ability to climb the economic mobility ladder. Especially for borrowers who attended graduate programs, debt-to-income ratios often rise well above sustainable levels. IDR (Income-Driven Repayment) plans also cannot fully protect borrowers from the consequences of low financial-value programs. For instance, IDR plans cannot give students back the time they invested in such programs. For many programs, the cost of students' time may be at least as significant as direct program costs such as tuition, fees, and supplies. Loans will also still show up on borrowers' credit reports, including any periods of delinquency or default prior to enrollment in IDR."

"The Biden-Harris Administration is committed to improving accountability for institutions of higher education. One component of that work is to increase transparency and public accountability by drawing attention to the postsecondary programs that are most likely to leave students with unaffordable loans and provide the lowest financial returns for students and taxpayers."

CECU, an group representing for-profit colleges, has an organized effort to protect its interests. 
 

Meanwhile, Robert Kelchen has provided an EXCEL spreadsheet that provides many answers. The dataset covers 45,971 programs at 5,033 institutions with data on both student debt and earnings for those same cohorts. We found more than 12,200 programs where debt exceeds income. And more than 7200 programs resulted in median incomes of less than $25,000 a year with debt greater than $10,000.

While some of these high-debt programs in medicine and law may eventually be profitable, many more paint a picture of struggle with a lifetime of debt peonage. Cosmetology schools had a large number of low-income programs.  But the fine arts, humanities, social sciences, and education also produced low-value programs in terms of debt to income ratio. 

Some of subprime schools HEI has been investigating (Purdue University Global, University of Arizona Global, The Art Institutes) had a number of low-value majors. But elite and brand name schools like Duke, Drexel, Emory, Syracuse, Baylor, DePaul, New School, and University of Rochester even have high debt and low-income programs. 

Related link:  I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

Related link: More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

Related link: The College Dream is Over (Gary Roth)

Related link: Even Elite Schools Have Subprime Majors (Keil Dumsch and Dahn Shaulis)