Sunday, October 25, 2015


Because That’s Where the Money Is…

Willie Sutton, the bank robber, would have been lost to history if not for a single quip.  When asked why he robbed banks, he responded “that’s where the money is.”  His misunderstanding of the question got at a larger truth.

I was reminded of Sutton’s line in reading the New York Times piece this weekend advocating the application of “gainful employment” rules to law schools.  The idea is to get a handle on student loan debt where it’s greatest.  Given the low rates of full-time legal employment among recent law school grads, it’s unsurprising that default rates are higher than they used to be.  And given the rate of increase in tuition, those underemployed lawyers are coming out with more debt than they used to. I’ve written before about applying it first to graduate schools before moving down the ranks; law school seems as good a place as any to start.

The beauty of choosing law schools as the place to start is that law schools are unabashedly vocational.  They exist to train lawyers.  To the extent that they fail to train lawyers, or the lawyers they train can’t find work, it’s fair to ask why the schools continue to exist.  

I wouldn’t stop with law schools, either; medical and graduate schools strike me as subject to the same logic.  If people are unable to parlay their years of very expensive training into salaries high enough to repay their loans, I think it’s fair to raise some questions.

The paradox, of course, is that there’s typically an inverse relationship between student debt levels and the likelihood of default: the less they owe, they likelier they are to default.  That’s largely a function of dropouts, though it also reflects the lower levels of family wealth among students who attend community colleges.  The presence or absence of “the bank of Mom and Dad” makes a meaningful difference in the ability to avoid default, and community college students typically have less access to that than do students who attend more expensive places.  Extrapolating from that to a measure of institutional performance amounts to punishing those who serve risky populations.

Of course, in my perfect world, the idea of “performance based funding” wouldn’t only apply to public services.  It would be applied also to, say, regressive tax cuts, or wars of choice.  Fair is fair. But we aren’t there yet.  

If we want to reduce the exploitation of naive strivers, then yes, let’s tackle abuses in graduate education.  They’re real, they’re hardly news, and they’re expensive.  If we want to reduce defaults among folks with smaller balances, let’s transfer some of that money to community colleges to help improve graduation rates, and maybe even to make those first sixty credits free.  The bang for the buck will leave our current system in the dust.  

Or we can pretend that “where the money is” now makes sense.  How’s that working out?

As I am sure you are aware, from your Political Science background, there is also an element of expected value (of loss or gain) versus the size of the possible loss or gain in many decisions. Penny ante poker, the numbers racket, and lotteries live on that while those with bigger stakes do their best to make $100 look like $1. People discount small losses.

The opposite seems to be going on here, where the emphasis is on a high rate of small losses that might not add up to the same cost (to taxpayers) as a lower rate of large losses. It would be useful to know that info to help us understand why CCs are of more concern than law schools.

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At what point though is the debt burden the blame of the school? If you are smart enough to get into law school then you are probably smart enough to understand that law school is really, really expensive. You are also probably smart enough to be aware of the lack of open positions for lawyers. The lack of jobs is not the fault of the school or the student. It's what it is. However, if someone wants to pay gobs of money to get a degree, that's on them. Should there be some measurement of the worth of a degree? Sure. But at the graduate level I think there is more onus on the student to make good choices/live with the ones they've made.
Bravo, Matt! Corresponds exactly what I have been saying about graduate school. In research-intensive universities, the full-time tenured and tenure-track faculty are judged by the administration primarily on their ability to attract external grant funding, mainly because of the payment of overhead by the grant, which has become an important source of funding for the university.

But these faculty members have to spend so much of their time in applying for grants (as well as in reporting to the funding agencies for the grants that they already have) that they have very little time left over for actual research. For that reason, they have to rely on graduate students, post-docs, assistant professors, and other such lower forms of life to do their actual research for them. These people are used as little more that cheap labor to perform the research for the senior tenured faculty. Very often, these senior faculty members add little more than their names to the papers written by their students. These senior faculty members have absolutely secure employment, they sit in fancy offices, they knock down six-figure salaries, and they travel on the government dime to exotic places attending conferences to report on the work done by their graduate students, who slave away at odd hours in the morning, make virtually starvation wages, and live in constant fear of not being able to get a decent job upon graduation. As a friend of mine once said, the graduate students do all the work, whereas the principal investigator on the grant gets all the credit.

The primary output of many graduate programs isn’t really scholarly papers or the pursuit of external grant support—it is the production of new PhDs. Each new grant and each new faculty member requires so many additional graduate students that there is now a massive oversupply of new PhDs, so many that only a few of them have any hope of attaining permanent full-time employment in the disciplines for which they spent so much time in training. Graduate school in many disciplines has become little more than a Ponzi scheme, one which depends for its survival primarily on the recruiting of more and more graduate students.

As Matt says, it would be good idea to apply the gainful employment regulations that have been proposed for proprietary schools to graduate education as well. The government is spending so much money in supporting this system of graduate education that it would just and fair for them to insist that graduate students have a reasonable prospect of attaining gainful employment once they finish their education. It would be worthwhile to ask how many of these recent PhDs have attained tenure-track positions at colleges or universities or who are working in industry in fields for which they spent so much time in training, versus how many of them are now driving taxicabs, flipping burgers at Wendy’s, bagging groceries in the local supermarket, or who are freeway-flying adjuncts trying to cobble together a meager living while trying to land that elusive full-time academic position.

The debt burden is the fault of the school from start to finish. The school qualifies for Federally subsidized loans under the assumptions that it is helping human beings become adequately productive in the overwhelming majority of cases to pay back those loans.

We don't have Federally subsidized loans for jetskis or Lamar Odom parties. There's a reason for that.

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