Today we learn a University President quit her job due to budget cuts.  The Association has presented its research findings on potential college closures years ago.  Therefore, this news was not a surprise, but to confirm the research results.  Gotta to believe what the research results (1475 pages pdf file) show and take appropriate action before it’s too late.

The recent ruling on student loans malpractices pursued by for-profit colleges show that the country needs a better policy on the student loans program. The Association has pointed out the potential cracks in the whole system. It has urged the administration to established ESCC. Though the academic accountability started to take its shape recently, it seems that there is a lot of homework to be done to cope with financial accountability. Otherwise, the tax payers again have to bail out the cost of the mistakes.

There is an article recently published which discussed the future prospects of business model for-profit colleges. According to the article, things do not look good. In November 2012, we have published and presented a manuscript based on static equilibrium analyses which show the probability of future US colleges’ survival by applying NCES published data. The results show a pretty clear picture on what will happen to the industry. Since then many articles were published which seem to firmly confirm what the Association has previously found.

Often students are sandwiched between two parties interests which have caused tremendous negative impacts on their future income. College high operational cost due to inefficiency has caused a skyrocketed college tuition. After graduation, they, the graduates have to deal with another pressure from the student loans servicing or collection agencies which often operate with maximizing profit mindset—that will apply all possible means to achieve their profit objective. Things are getting worse when the DOE has a minimum way, or no way to control the loan servicing companies’ behavior until the public outcry which then caused the CFPB to step in. The CFPB finally has made recommendations to reform the industry.  This clearly suggests and confirms that the US higher education is broken as has been stated by the Association in the past.  The recent reform recommendations also prove otherwise the claims of no problem with US student loans which only represent special interest groups that defy the reality and the majority of American Public’s interests.  One additional note to the CFPB to also pay attention on the DOE, Accounting Dept or Unit (Atlanta, GA branch as an example) that is responsible to make collection not to charge borrowers’ bank account without their consent.  Often, this unit charges customers’ bank account twice in a certain month without their permission.  This creates problem with bank overdrafts which then make the bank to charge incredible amount of multiple overdraft fees, starting when the account  become red.

Recently US DOE published a report how federal data can be used to improve the performance of US institutions of Higher Education. Finally the regulator takes a baby step in protecting consumers that have limited resources. This is certainly an important progress that the regulator has made to keep college accountability in check. However, it is still a long way to solve the acute student loans issues in the country.

In the past several weeks we have heard how the student loans become a hot topic in the US Presidential race. Winning the college students’ votes could be a crucial point to win the seat. Therefore, promises such as loans forgiveness or free college education were repeatedly mentioned. Sadly, none of these solutions addresses the real reasons behind the student loans problem in the country. So what are the real reasons? Click here to find the answers.

In the wake of weaker student enrollment, US colleges are struggling to fill their seats that is enough to generate revenue to balance their planned annual spending.  The interests are growing to forecast what students enrollment might be which never happened in the past.  Is it possible to forecast student enrollment?  Our short answer is yes, you can!  The next question is how accurate your prediction or forecasting will be.  In the world of econometrics and forecasting, there are two ways to predict any sort of predictions.  (1). Applying time series analyses and (2). Using some sort of econometric models.  There is also effort to combine these two approaches to come up with the lowest Mean Square Error (MSE).  Forecasting of student enrollment was rarely done in the past in decision making process.  The reason is simple.  In the past higher institutions do not need to do it due to strong demand for college education.  However, the condition has changed since then.  Rather than paying a lot of money to pay a consultant firm, an institution can just take the naive model i.e., take the average of enrollment over the period of analyses and available data.  This might be your best predictor for your (t+1) period of student enrollment.  Do not forget to consider the margin of error in your final judgment.  The more data one has, the closer the sample mean to its population average.  At least 30 observations are needed to satisfy the Central Limit Theorem.

On July 4th, the Association has written an article on its blog. This article laid out the negative effects of excessive student loans on the US economy and the well being of young Americans and their family. Today we all learned reports published by the Washington Post that PAYE (Pay As You Earn) on student loans repayment program will be expanded. While this program will surely help the struggled American families and will jolt the economy, it still does not solve the root of the problem. Rather, a remedial policy to fix the damages caused by the fundamental flaws for lack of supervision and accountability on institutions that have received federal aids. AAEA continues to urge the policy makers to restlessly, diligently, tactfully work to root out the college cost problem. If the State of Washington can slash 20% of college tuition by Fall semester 2016, why other states cannot start implementing the same policy? The fact that the tuition can be reduced show:
1. In the past young Americans and their family have been overcharged by at least that amount per year.
2. The reduction may reflect the level of inefficiency and waste of resources that have been occurring at many US colleges per year.
3. Transferred wealth has occurred from the student family and young Americans to somebody else at least at the same rate per year.

Promoting accountability may not solve the entire problem instantly, but it surely will bring players on the right tract to serve the public’s interests and not anyone else’s.

Happy Fourth! Last year we have written an article which argued that skyrocketed college cost and student loans have caused many young Americans lost their financial independence. The logic is this. The amount of $1.2 trillion student loans have prevented borrowers from acquiring a bundle of goods or services which (normally) will optimize their utility function (loosely translated as their happiness/satisfaction level). If on-average, every undergraduate student has to take $50K loans to complete their college degree, then roughly speaking there are 20 million young Americans (has been reported about 40 million) who may have to live with a lower quality of life. This group of fresh graduates has lost their purchasing power because colleges keep increasing the tuition which forces them to take more loans. Many people may not think that taking student loans in time t (current time) is equivalent to transferring their “future wealth” to someone else. Does anyone see that this system has been borrowed and implemented from the “bees’ colony”? Supporting an inefficient system financially is equivalent to pouring salt into the sea.