It is pretty interesting to follow the news on student loans. A recent article appeared in Forbes reported that a for-profit education organization has cancelled about $500 Millions students loans. This company does not do this voluntarily. Rather, as part of a settlement with 48 states and the District of Columbia. This confirmed again what we have hypothesized that each player in the industry has created systematic errors for the interest of the company. The reason is simple for this is a for profit establishment–its objective is to make profit. The institution that give this company to operate has to carry some of the burden or simply shows a failed public policy to let for profit organizations participated in the education industry, plain and clear. Policy failure is apparent when more states step in to regulate the for-profit institutions.
Category Archives: Increasing Student Loans
Suddently The Accrediting Agencies Are Doing Their Long Forgotten Job
Now that the accrediting agencies which, according to the report coming from Senator Warren’s Office, used to rubber stamped the colleges’ accreditation are doing their job. Several weeks after the DOE has revived its operation ACICS shows what the agency and any other accrediting agencies in the country supposed to be doing many years ago by revoking the accreditation of a college in FL. Recently, we learned an institution that has operations in the whole country was shut down due to its accreditation was taken out by ACCSC. Increasing the possibility of college closures starting in 2013 in the US has been predicted by AAEA many years ago. The reasons why it may take several years until what we have predicted finally became a reality is continued denial from the players. However, our research findings show they are going to happen. It is just a matter of time. Perhaps, the regulator is waiting until the national student debt reached $1.5 trillion.
Whatever the reasons are, the American public is happy for sure that finally the rules of land and the rule of logic are triumphed. But the damages have been done. The $1.5 trillion student loan debts are here.
Finally DOE Listened After Admitting That Student Loan Debts Are in Crisis
In the past two weeks, and after the court ruling, it seems DOE finally taking a small step to manage the student loans debts. DOE is one, perhaps among many entities that has granted these institutions to operate. Therefore, according to the logical thinking it, DOE also has to clean the mess that it has participated in creating. What if:
- The license to operate was never be granted and
- Supervision and accountability are applied consistently
- Policy on for-profit institutions never existed?
Then there will be a minimal of public pains, outcries or even zero crisis. May be!
It is interesting to note that this policy shift occurred after the administrator publicly admitted that the US is facing student loan debts crises.
The Court Ruling: DOE To Cancel Student Debts For 15K Students
We recently learned that according to the National Student Legal Defense Network there were about 3,600 higher ed institutions have terminated their operation or gone away since November 2013. While the current administrator, by the order of the court has cancelled the student loans taken by about 15 thousand students who have attended one of those 3,600 organizations. This is clearly an example of a special case, where the government bailed-out students’ debt. One may have the following question, then what happen to the management who operated those 3,600 institutions? So far, it seems nothing is happening. This leads us to believe that “no consequences” of mismanagement that have been imposed to mismanage any schools. Therefore, it attracted many “businessman” to enter the industry.
It Is All Too Familiar: Another For-profit Closure Institution
A college closure news usually followed by sad stories of the students who get caught in the middle. This also applied to Virginia College students in Pensacola, FL who found out that the institution has abruptly close its door. The accrediting agency (ACICS) withdrew its accreditation, which was cited as the main reason of its closure. Perhaps, it is not a coincidence that the same accrediting agency regained its federal recognition recently from the DOE as reported in the following article. The public hopes that this latest action has not been designed to gain short-run public trust on the agency which has suffered a major blow a couple of years ago. American public eager to see a consistent action.
Perhaps, the American public may need to ask themselves on their decision to attend for-profit organizations who run a higher ed. If the public does not have the confidence, then do not take the bait, or enroll, or buy the promises.
Tragic: College Students Cheating Are On The Rise
We all know that cheating at US colleges occurs in many forms, across programs, majors, level and institutions. There is a good chance that the federal fund or loans are used to pay for cheating. What shocking is that the cheating is on the rise with no sign of declining and no ones seems to care. One thing that is pretty important from what the service provider said is that the college professors or instructors are:
- Lazy and
- Do not care.
It is truly sad to see that the don’t care attitude happens every where from the institutions, teaching staff and students–they are all try to get through the system in easy way. Therefore, one may not need to be surprise that some leading US companies are losing their competitiveness to others. This is not just an education, buy also a human tragedy.
What 2019 Will Look Like: Higher Ed Competition?
Million readers of this site may, by now, realize how the many short writings, and analyses posted in this BLOG have helped them in different ways. Again, our analyses are based on publicly available data, where statistical inferences are based upon. Results, strategies and policy implications then shared to the American public as a free good with one purpose—making the US to be more competitive in the global competition through excellent education quality at an affordable price. Unfortunately, there is a real challenge to maintain the quality. Click here for answer.
We are independent and self-funded. Therefore, instead of representing certain interest groups, we based our analyses on common sense, in-line with theories that have been discussed in many college level textbooks in different areas, from Managerial Accounting to Classical Theory of Measurements, and from Mathematical concepts to Physics.
So, what is the 2019 and beyond higher ed industry will look like? Revealed information has shown that the regulator does not have strategies to manage the US student loans. In fact, it does have, which is a do-nothing policy or strategy. Therefore, student debts will continue to grow in accelerated rate. When the American public realizes, or more knowledgeable and educated about the probability of failure of taking loans, then the risk will be weighted-in more heavily in the equation. So, making the right pricing strategies is becoming vital than ever. Consequently, the future will be less sunny for tuition-dependent institutions and for those who are not taking serious steps to control their operational cost, i.e, less efficient institutions. More closures in 2019? May be!
Confirmed: Efficiency Is An Important Game In Managing US Higher Ed Institutions
Today, we learned that what the Association has hypothesized about six years ago finally has been confirmed by the college administrators. After denying or silently agreed with AAEA’s econometric study, the US College presidents admit that they have operated inefficiently in the past. After AAEA revealed how poor the operational cost has been managed. As results, the American public has lost their confidence to support some of the institutions. Declining financial support has a significant bite on the ability of them to operate. Like a circle, any good or bad decisions will finally have the cause and effect chains.
No one can make her or his own decision without affecting others in the system. After so many years of BAU, finally their past policy hunt them down. According to the article, the first item that the public asks, when the institution asks for more funding or donation is to show that they, the institutions, have operated efficiently as shared below:
1. Demonstrate efficiency
Before university leaders ask for more state support, they must demonstrate that they are being more efficient with the funding they currently get. Those universities leading the way on this front – including exemplars such as the University of Wisconsin system and The Ohio State University – are directly connecting savings gained from lower operational costs with noticeable reductions in the cost of attending college. In fact, Ohio and Wisconsin were ranked No. 1 and No. 9, respectively, in lowest tuition increases over the last decade.
While a lower tuition may be one indicator, there are other more important measurement metrics on efficiency. AAEA has proposed to apply revenue to cost ratio as an ultimate institutional metrics to manage operational expenses.
Bannett’s Hypothesis Failed To Be Rejected
The regulator’s recent speech also mentioned that US Higher Ed Institutions are one of the important actors that have added systematic errors into the system. Tuition increases have impacted the US student loans positively. Five years ago the Association conducted a research by applying Econometric and applied statistics on NCES publicly available data to study if there is a positive correlation between the two variables. The results have been published and positive correlations between tuition and student loans is confirmed. This finding failed to reject Bannett’s hypothesis.
Self-focused Interests Are One Of The Source of Systematic Errors
The regulator’s recent speech mentioned pretty clear the source of systematic errors. Majority involved in higher ed has acted like dairy farmers who hardly can wait to cash cow lawfully or even if they have to cross the line. Moral as mentioned in Adam Smith’s monumental work is not important anymore. Everyone tries to maximize their own interest. This is one of the reasons why the student loans are complex and impossible to handle. It may need supermen and superheroes combined to get it fix. However, both superheroes and supermen are found in the fiction books. Therefore, in reality, it is almost impossible to find solutions for the loan debts. It may take the two sides of the aisle work together to solve this issue before it gets out-of-control.