The Law Apprenticeship Scam

“It’s a cruel hoax. It’s such a waste of time for someone to spend three years in this program but not have anything at the end.”

So says Robert E. Glenn, president of the Virginia Board of Bar Examiners. No, Glenn wasn’t talking about Liberty University’s 34.4 percent employment rate in full-time, long-term, bar-passage-required jobs for its class of 2013, which had an average debt level of $81,045 (only!). Rather he was referring to the low bar-passage rates of Virginia’s law readers, who along with their peers in other states are the subject of a New York Times article, “The Lawyer’s Apprentice.”

Citing data from the National Conference of Bar Examiners, which the Times deserves credit for researching, we learn that only 28 percent of apprentices passed the bar versus 73 percent of ABA law school graduates. This fact prompts the ABA’s Barry Courrier to declare:

“The A.B.A. takes the position that the most appropriate process for becoming a lawyer should include obtaining a J.D. degree from a law school approved by the A.B.A. and passing a bar examination,”

I find this response disappointing for a few reasons: One, even if these statistics are for first-time test-takers only, a 73 percent pass rate is lousy. Law schools should be held to higher standards for what they charge students.

Two, the article appears to tacitly accept the ABA’s position that we can’t have good lawyers without many years of law school (and probably college too). The elephant in this room is selection bias. The reason people go to law school rather than these apprenticeship programs is that law schools broker jobs to people who already do well on standardized tests, to wit, the LSAT. Certainly in the age of PAYE, someone who can crush the LSAT has much better odds of finding a good law job by going to law school than trying to find a lawyer who will train him or her. If anything, law school is a more reliable path to qualifying for the bar exam. Indeed, the article acknowledges that “the lack of class rankings put clerkships with judges and plum gigs at big firms out of reach” for law readers.

If you’re wondering why people who don’t do well on the LSAT go to law school instead of these programs, I give three responses. One, they aren’t widely known and have no advertising. Two, many law students still buy into the versatile JD myth. Three, the largest proportion of people opting out of law school are people who don’t do amazingly on the LSAT anyway. So there. (The Times says these programs are “underpopulated,” but given the effort the would-be apprentices must go through to get established, one might think the problem is that there really isn’t much demand for new lawyers.)

I acknowledge that many of the apprentices interviewed in the article are sincere in their desire to avoid debt and only want to do small practice work. If anything, bar authorities should make it easier for people to choose that route. Instead they offer a post hoc rationalization for credentialism in legal education.

Good News: The Student Loan Crisis Has Been Canceled

…According to the Brookings Institution’s Beth Akers’ and Matthew M. Chingos’ paper, “Is a Student Loan Crisis on the Horizon?” The authors find that not only is there no crisis today, but there won’t be one in the future. (“Crisis” here, I gather, means debtors being unable to make their payments and taxpayers being forced to write-down some billions in student loans.)

Before picking through their paper, though, I have to give special credit to The New York Times‘ David Leonhardt, who crows:

The deeply indebted college graduate has become a stock character in the national conversation: the art history major with $50,000 in debt, the underemployed barista with $75,000, the struggling poet with $100,000. … Such graduates make for good stories (and they tend to involve the peer group of journalists).

This comes mere days after The New York Times Magazine ran an article officially declaring that millennial college graduates who were living with their parents weren’t leaving. Many of the subjects had significant student loan debts and low-paying jobs. I’m not saying the participants were typical of their age group, but I’m impressed that Leonhardt can undercut his own publication. I admire gall.

As for Akers’ and Chingos’ paper, take a look at John Haskell’s response. He argues that the authors commit a composition fallacy by comparing student debt repayment during the more recent economic disaster with the halcyon days of the 1990s.

It’s an excellent point, and I have some of my own to add.

One, on page 4 of the report, the authors aggressively lean on the college premium as evidence that “the growth in debt is not [obviously] problematic.” The idea is that if the gap between college graduates’ earnings and high school graduates’ widens, then college is a good bet. The flaw, and there are many with this kind of thinking, is that both sets of earnings can be falling simultaneously but so long as high school graduates’ earnings are falling faster, then student debt can still be a problem even as the premium is growing.

Two, the authors make an implied structural unemployment argument when they write, “In 2011, college graduates between the ages of 23 and 25 … had employment rates 20 percentage points higher [than high school graduates].” However, not going to college isn’t the cause of lower employment rates among high school graduates. It’s because there’s slack demand for labor in the economy. It’s not too much of a stretch to hypothesize that employers prefer college graduates even for menial jobs.

Three, as always with college premium discussions, not everyone gets the average college degree, and not everyone has the average debt level. The authors only bring this up in their conclusion, which I think is unfair to readers.

Four, Akers and Chingos challenge the rhetoric of a student debt crisis by analyzing data on households with householders aged 20-40 from the Federal Reserve’s Survey of Consumer finances. It’s a minor point, but people who have higher debt levels are probably more likely to be living with their 40+-year-old parents than on their own. I doubt the effect is that large, but it’s something Akers and Chingos should have noted.

Five, it’s one type of composition fallacy to compare past trends with current outcomes, but it’s another to omit prospective factors from one’s predictions. The authors assume today’s college graduates won’t suffer from “cohort risk” due to the persistent output gap. It’s a pretty big if, and Akers and Chingos won’t pay anyone’s student loans if they’re wrong.

Having said that, when the authors find fairly low monthly payment-to-income ratios (excluding debtors making less than $1,000 per year) it may appear too good to be true, but we should acknowledge it.

Monthly Student Loan Payment-to-Income Ratios, 1992-2010

I’m not sure what this means given the simple calculation I did above. It’s pretty surprising that student loans are such a small amount of monthly incomes. It might be that they’re excluding the billions of dollars in student loans that are in default, forbearance, deferment.

Finally, since the conversation on student loan debt is creeping towards amputating graduate school debtors from undergrads, gaze upon Akers’ and Chingos’ Figure 4:

Akers and Chingos Figure 4

The Survey of Consumer Finances is given only once every three years, but even between 2007 and 2010, the spike in graduates’ debt is evident. Who wants to bet that these aren’t Grad PLUS loans? Seriously, that program is not long for this world.

The authors conclude that their results should encourage Washington to not tweak the student loan system based on a perception of widespread financial hardship. They do not, frustratingly, discuss any of the existing indicators of a present student debt crisis. 11 percent of student loan balances are delinquent, 11 percent of debtors (minimum) with federal loans are in default, and $322 billion out of $1.043 trillion in federal loans are in deferment, forbearance, or default. (Calculated from here) Since we know the economy isn’t roaring forward and won’t without systemic reform, it’s hard to believe that all these loans will be repaid in full. If this doesn’t count as a crisis, what does?


Someone Needs to Teach the NYT How to Use the Internet

…Okay, not the Internet (I hope), just FRED, but it’s an unfortunate performance by David Leonhardt, who was the star of an outing earlier this week.

In “The Jobless Rate for Community-College Graduates Is Also Low,” he teaches us:

The federal government’s main educational-attainment categories are fairly blunt. In particular, the “some college” category includes a wide array of people: Those who have dropped out of college without earning any degree, those who have earned a two-year degree meant to lead directly to a job (such as in nursing) and those who have earned an academic two-year degree that is often a first step toward a bachelor’s degree.

[T]he Bureau of Labor Statistics does distinguish among the different versions of “some college.” (It would be even better if the bureau made this data easily available to the public.)

I get the feeling Leonhardt does not use government data much. For one, I’ve never seen “some college” include associate’s degrees in any dataset. For another, the data series Leonhardt refers to are in fact easily available to the public and can be found on FRED (Federal Reserve Economic Data).

Here’s Leonhardt’s chart:

Unemployment Rates by Educational Attainment

Here’s my version from FRED (just “some college” and “associate degrees” types):


(Click to view source data)

See? Now we can replace him with a robot?

Okay, I’m just being a meanie. Leonhardt’s ignorance is an honest mistake and I’m sure if he spent a couple weekends learning how to use FRED he wouldn’t be wasting his readers’ time telling them information is unavailable when it is. However, his ignorance is a thin end of a wedge. It may seem trivial, but FRED represents one of the great advances of this decade: easy access to government information. Instead of trying to find Brazil’s GDP in an encyclopedia, one can look on Fred or the IMF’s or World Bank’s Web site. FRED doesn’t have all datasets yet, but journalists should be turning to it first when researching government data. I’m sure they will be within a decade, but ones like Leonhardt really need to familiarize themselves with it.

But since we’re on the topic of the unemployment of the educated, I thought I’d take another crack at it. Leonhardt compares unemployment rates by education to conclude that, as the title of his article suggests, two-year colleges are a good bet too—so long as students get the degrees.

Comparing these unemployment rates doesn’t sit well with me because they all use different denominators. The high unemployment rate for those who have less than a high school diploma might be less significant if there aren’t that many non-high-schoolers in the labor force. Likewise, a low unemployment rate for college graduates might be problematic if there’s a large number of them. So, using FRED, I gathered the unemployment level (not the rate) by education for the 25 to 34 age bracket (yes, FRED now has that), and I decided to do a cross-sectional analysis of the unemployed by their educational attainment.

The data only go back to 2000, but here you are:

Cross-Section of Unemployment Level by Education

The results are slight but the trends are clear: The educational attainment of the young unemployed is rising. As of last April, for the first time, half of them had at least some college education. In May 2007, about 22 percent of the young unemployed had an associate’s degree or bachelor’s degree; now it’s 28 percent. Meanwhile the percent of the unemployed who haven’t finished high school, whose 11.5 percent unemployment rate typically alarms Leonhardt and his peers, has fallen from 24 percent to 15 percent of the total.

You might be tempted to say that the unemployment level doesn’t include people who drop out of the labor force. True, but (a) that’s not Leonhardt’s argument, and (b) the labor-force dropouts might be more educated too. Go ahead, prove me wrong.

The point is, if Leonhardt et al. are right about how crucial education is, then we would expect the proportion of educated unemployed to be declining. On the contrary, we see that as we educate more people, it just substitutes the uneducated unemployed with the educated. It calls into question the mantra that “college graduates are less likely to be unemployed.”


UPDATE: Allow me to clarify my thoughts here. Nothing I’ve written here should be interpreted as saying that, for example, people shouldn’t finish high school because they’re a smaller proportion of the unemployed. The unemployment rate by education does matter for the obvious reasons we read about, like employers not wanting to hire uneducated people. However, my point is to draw attention to the evidence that if the more education people attain, the better-educated the unemployed become. Irrespective of the unemployment rate by education, this phenomenon supports the signaling theory because we’d expect the unemployed to be less educated over time.

When Will Robots Replace Journalists Urging Everyone to Go to College?

…Is the question that crossed my mind reading David Leonhardt’s, “Is College Worth It? Clearly, New Data Say,” for The New York Times.

The title alone tells you exactly how this article will play out. The “new data” will specify the returns to higher education for the “average college graduate,” who is, apparently, everyone who goes to college. There will be some quotes from notable college-for-all economists who haven’t left campus for the real world in ages. There will then be liberal-esque dismissal of student loan debt and how tough it is for college grads to find good jobs. The article will close with a bunch of hail-Mary pseudo-arguments about the consequences of not sending everyone to college. There might be a line about naughty for-profits.

Leonhardt’s article fits just about all the points.

Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree.

There’s your “average” earnings premium.

“We have too few college graduates,” says David Autor, an M.I.T. economist, who was not involved in the Economic Policy Institute’s analysis.

There’s your cloistered economist.

But what about all those alarming stories you hear about indebted, jobless college graduates?

The anecdotes may be real, yet the conventional wisdom often exaggerates the problem. Among four-year college graduates who took out loans, average debt is about $25,000, a sum that is a tiny fraction of the economic benefits of college. (My own student debt, as it happens, was almost identical to this figure, in inflation-adjusted terms.)

Student debt excuses, check. They aren’t a problem because someday grads will have the college job that’ll enable them to pay them off. Debtors need to have faith, but don’t worry about David Leonhardt, he’ll do just fine because he’s just as average as you are with his job at the NYT.

Those who question the value of college tend to be those with the luxury of knowing their own children will be able to attend it.

As the economy becomes more technologically complex, the amount of education that people need will rise. At some point, 15 years or 17 years of education will make more sense as a universal goal.

And there’re your hail-Marys. (I’d love to know Leonhardt’s source for the first one.)

Nothing on the perfidious for-profits, but Leonhardt’s defensiveness is entertaining.

It’s important to emphasize these shortfalls because public discussion today — for which we in the news media deserve some responsibility — often focuses on the undeniable fact that a bachelor’s degree does not guarantee success. But of course it doesn’t. Nothing guarantees success, especially after 15 years of disappointing economic growth and rising inequality.

In other words, if college doesn’t pay off, don’t expect David Leonhardt to solemnly assess the situation. He’ll just blame “inequality” instead.

If NYT articles on higher education are going to be so one-sided and filled with unsubstantiated claims about its critics, why can’t we just replace their authors with robots?

So Much for That Student Loan Interest Rate Cut

Last year, Congress rejiggered student loan interest rates from legislatively fixed rates to fixed rates based on the 10-year Treasury note (1.81% at the time). The result was a pretty big cut last year. For undergraduates, the unsubsidized Stafford loan rate fell from 6.8% to 3.86% but the subsidized loan rate rose to 3.86%. For grad students, the unsubsidized Stafford loan rate fell from 6.8% to 5.41%, and Grad PLUS loans fell to 6.41% from 7.9%. Everyone said rates would spike and trap students who’d been gulled by the lower rates. I figured the fears were unfounded because there wasn’t any reason to believe interest rates would rise.

Well, everyone was right.

Last week the Consumer Financial Protection Bureau publicized its estimate of the new rates based on the most recent Treasury note auction (2.62%). They’re about half a percent lower than two years ago.

CFPB New Loan Rates


Back in mid-June, former Fed Chairman Ben Bernanke indicated that the Federal Reserve would begin “tapering” its bond purchases, which sent interest rates up. Eyeballing the interest rate on 10-year notes, it looks like the taper comment cost student debtors a half percentage point in student loan interest, accounting for the bulk of the difference in rates between this year and last year. I might not be right, but you can blame him if you want.

Dear Fed Researchers: Please Spare Us the ‘Average College Graduate’

Today’s quandary is posed by Mary C. Daly and Leila Bengali of the San Francisco Federal Reserve Bank in “Is It Still Worth Going to College?” The authors write:

Media accounts documenting the rising cost of a college education and relatively bleak job prospects for new college graduates have raised questions about whether a four-year college degree is still the right path for the average American.

But we’re not concerned about the “average American,” which I suppose is a stand-in for the “average college graduate.” We care about college graduates who end up in occupations that don’t require four-year degrees and whose earnings aren’t boosted. Instead of such an inquiry, the authors conduct yet another “college premium” analysis that assumes that the average college degree is like Facebook common stock. Predictably, the authors miss the hypothesis that college might signal preexisting abilities more than foster new ones.

One interesting twist the authors add is cutting up their longitudinal panel data into 20-year cohorts.

Nevertheless, it still doesn’t tell us whether the widening of the “premium” is due to a growing need for better-trained people or substantial wage declines for working-class occupations.

The authors conclude, “These findings suggest that redoubling the efforts to make college more accessible would be time and money well spent.” Translation: Long live the positional goods rat race!

For the record, 12.8 million jobs that require a high school degree or less are filled by Americans with four-year degrees. The same goes for millions of other jobs requiring only associate’s degrees, like nursing. Moreover, unlike the “average college graduate,” roughly 20-25 percent of college grads earn less than the median high school graduate in the same age bracket. Unless the authors are willing to tell them that they’re so stupid that they would be unemployed or enslaved if they hadn’t gone to college, then clearly college does not pay off for everyone and Fed researchers with time on their hands should investigate the circumstances that bring this about.

WSJ: Big Numbers Divided by Small Numbers Yield Large Percentages

The Wall Street Journal tells us that 1.63 million people are now on IBR, up from *gasp!* 1.32 million last quarter and (avert your eyes innocent readers!) 950,000 in the third quarter of 2013. That’s SEVENTY-TWO PERCENT GROWTH! HOLY COW! (Note: These figures are only for borrowers with Direct Loans. The actual figure is higher when you include guaranteed-loan borrowers.)

…Or it’s just what you’d expect to happen when you divide large numbers by small ones, especially when the government has been lamenting low IBR enrollment rates. Indeed, I recall way back in October 2012 when Inside Higher Ed dared to run an article titled, “An Underused Lifeline,” in which we learned that only 1.1 million borrowers had enrolled in IBR and 474,000 on ICR (clearly one of these two publications knows how the federal loan programs work better than the other).

Apparently, though, the world changed when I wasn’t looking, and now IBR and its friends are monstrous, out-of-control, “fastest-growing forms of financial assistance” because the Obama administration’s efforts to sign people up are working better than intended. Don’t tell the WSJ, but if you include Direct Loan borrowers on ICR, the total is 2.23 million borrowers. Another 850,000 are in “alternative” or “other” repayment plans, which will probably have the same effects as IBR/ICR/PAYE do on the budget. It’s all on ED’s Web site.

It’s like you can report on people signing up for IBR but not the PPACA exchanges.

Aside from mastering basic math skills, there are a few other points worth noting from the article:

(1). Treasury’s deputy secretary Sarah Bloom Raskin says seven million people are currently in default on their government student loans. There are currently 40 million federal loan borrowers, leading to an overall default rate of 17.5 percent. If you’re going to sensationalize the potential losses on IBR, you should be pointing out that the federal loan program has been a disastrous failure all along. Instead, the coverage appears to focus on how to “fix” IBR as in point (4) below.

(2). Thou shalt be specific in thy reportery:

The programs’ popularity comes as top law schools have taken to advertising their own plans that offer to cover a graduate’s federal loan repayments until outstanding debt is forgiven—opening the way for free or greatly subsidized degrees at taxpayer expense.

To my knowledge, only one “top law school” has advertised such plans. The WSJ should have been specific. Also, the story might be newsworthy in law school reporting, but overall, I consider it pretty minor. Georgetown University Law Center grads don’t number 2.23 million and not all of them are on IBR, ICR, etc.

(3). The motivations of the Obama administration:

The Obama administration has sought to boost enrollment in income-based repayment to reduce defaults, which have soared in recent years amid the weak labor market.

If I were cynical, I’d say Obama’s student loan policies are just a ploy to kick the student debt can down the road for his successors to deal with.

Also in case you’re thinking of tarring the Democrats by saying IBR is a handout to the 47 percent or whatever, recognize that it was enacted during the Bush administration.

(4). More Lucky Ducky Debtors:

The Obama administration, while touting the overall benefits of the programs, has voiced concerns that they could benefit some borrowers who need the help the least—namely lawyers and doctors making high incomes. The White House proposed in its budget earlier this year to limit the amount forgiven under the programs.

Has anyone bothered to calculate how many high-debt, high-income lawyers there are on IBR? What proportion are they of the total? How big would the losses be?

(5). …Which leads to the issue of the article’s tone. Consider the title, “Enrollment in Student-Debt Forgiveness Programs Soars in 2014.” IBR is not a “student-debt forgiveness program.” That’s a feature of IBR, not its primary purpose, which is to reduce monthly payments for struggling debtors. Thus, the title misleads readers because it implies that everyone who signs onto IBR will have their loans canceled.

Now, it’s true that the average IBR debt is about $55,000, that many debtors will probably never be able to repay their loans, and that taxpayers will probably have to accept a write-down on student loan debts. However, IBR just masks the student debt crisis. Without these programs, highly leveraged debtors would still be highly leveraged, and taxpayers would still have to cancel many bad student loans. IBR changes none of this other than rescuing people from debt servitude in exchange for tax liens on their incomes.

Despite the sudden hype, we have no idea what the dispersion is for IBR debts (and (future) incomes). It could be that a majority of the IBR debtors have small debts that will be paid off in fewer than 20 years. A bigger problem is the Grad PLUS Loan Program (another Bush-era invention), which is a blank check to the aforementioned lawyers and doctors, or, rather, their universities. Good reporting would have told readers this.

[Note: corrected typos.]

CBO Projects Additional $1.3 Trillion in Student Loan Debt by 2024

…And that’s just the government loans.

Forget Erwin Chemerinsky’s and Carrie Menkel-Meadow’s NYT op-ed, the real news is the Congressional Budget Office’s baseline projection of the federal student loan program for FY 2014-2024. Notably, it thinks that over the next 11 years the government will lend out another $1.3 trillion in direct loans and that it’ll even make $1.10 per dollar lent. $115 billion of that will be Grad PLUS loans (9 percent).

Federal law requires the CBO to account for student loans by comparing the net present value of federal loans to investing in government debt. It doesn’t make a lick of sense, and the CBO would rather use fair-value accounting to evaluate the loan risk, so its hands are tied behind its back.

…But that doesn’t mean we can’t laugh at its absurd projections for Grad PLUS loans, about 30 percent of which go to ABA law school law students.

For one, the CBO believes that the government will make more than $1.30 on the dollar from Grad PLUS loans.

2014 Student Loan Baseline Projections (2)

(Click to Enlarge)

In the real world, most people who take out large balances of Grad PLUS loans will use IBR and then cancel their loans after 20 years. I’d be very surprised if non-law graduate and professional students counterbalance the losses the government will take on these loans. Another prediction I don’t think will pan out is the increase in the average amount borrowed and the number of borrowers.

The other fantasy is subtler: The CBO expects interest rates to spike over the next few years. By 2018, students will be borrowing at the maximum legal interest rates because either the economy will recover magnificently, or the bond vigilantes will finally come and stop lending the government money. (Then, of course, there would be a run on the dollar, export demand will spike, and we’ll return to full employment, but that’s off-topic.)

2014 Student Loan Baseline Projections (5)(Click to Enlarge)

If you do the math, on a 10-year repayment plan (which is used for calculating 20-year IBR monthly payments), law students entering today will pay a maximum additional 5.3 percent in interest for their 3L Grad PLUS loans over their 1L ones this fall. In other words, the CBO predicts law school’s costs will increase even as schools flatten or cut tuition.

I wonder if law professors writing op-eds agree.

New America Foundation Discovers Law School Debt Disaster

Via Jordan Weissmann of Slate, the New America Foundation (NAF) issued a policy brief titled, “The Graduate Student Debt Review.” It opens with a suspiciously leading question, “Is America’s student debt problem due more to expensive graduate degrees than unaffordable undergraduate educations?” Like, why would it think graduate debt is a bigger problem than undergraduate debt? Hm … If I didn’t know any better I’d say the NAF has it in for Grad PLUS loans…

…Which I have no problem with. If the NAF wants to dress up in camos, put on war paint, and emerge from the lagoon with a machete clenched in its teeth as it hunts down the beast of unlimited student lending, I say have at it. I might even sneak into the theater to watch.

The obvious question, though, is what does the NAF mean by “America’s student debt problem”? I know what I think it means, but the NAF’s justifications appear to be different:

Students, families, and taxpayers invest significant resources in financing “college,” in large part because a bachelor’s or associate degree is a must for anyone who wants to secure a middle-class income. If students are taking on unmanageable debt to earn those credentials, then many would argue that the system isn’t working. We should not, however, draw the same conclusions from debt levels of students who attend graduate and professional school. While a graduate or professional degree boosts a student’s earnings prospects and the economy at large, it is not the foundation for economic opportunity and middle-class earnings that a two- or four-year degree now provides. (2)

My eyes bleed reading such ideology.

So if someone goes to college, doesn’t take out a lot of debt, but ends up among the 20 percent of graduates who earn less than the median high school graduate in the same age bracket, then the higher education system is working? What about the average defaulted federal loan balance being less than $15,000? How is the system working if someone can borrow a lot of money and pay it off even if they learned their skills on the job?

If I were paranoid, I would suspect that the NAF’s goal is to cut off the worst abuses of the student loan program to save it from critics who think higher education is mostly a positional good. That, or it’s innocently confused on the theoretical debate (such as it is in Washington). Recall that the NAF advocated eliminating Grad PLUS loans while increasing the unsubsidized Stafford loan limit to restore students’ lost purchasing power. It reasoned that Grad PLUS loans can “discourage prudent pricing on the part of institutions,” but the mainstay Stafford certainly does not because education is necessary for the middle class and $30,000 of student debt isn’t so bad.

Okay, so the NAF is probably motivated by a (correctly) assumed conclusion, but what about its findings?

The point of the policy brief is to show that graduate and professional students are borrowing more than a few years ago and that their borrowing accounts for a large portion of total federal student loans (40 percent of the evil $1 trillion+ figure). Therefore, we should separate trends in college borrowing from post-college borrowing. As evidence, the NAF sampled a dataset of people who finished several types of graduate and professional programs in 2004, 2008, and 2012 and displayed their median, 75th percentile, and 90th percentile debt levels.

The tables the NAF provides are interesting for what they are, and along with data provided elsewhere they do show that typical grad students’ debt levels are growing more than undergrads’. However, the tables don’t really answer the questions the NAF is asking. If 40 percent of all student loans are owed by graduates and professionals, we’d want to know the distribution of that 40 percent aggregate by course of study. (How much of it went to med school students? Is it really as bad as those law school scambloggers say? Etc.) That way, we’d know if the growth seen in the tables is systemic as the NAF asserts or isolated to a handful of degree fields.

Instead, the NAF tells us median debt levels for graduates in all fields have gone up, but we knew this already because Grad PLUS loans can go to living expenses and relatively few 2008 grads used them. In a sense the NAF equivocated when it asked, “Is America’s student debt problem due more to expensive graduate degrees than unaffordable undergraduate educations?” Are graduate degrees expensive because tuition costs more or because people are borrowing from the government to leave near campus? We can’t tell, but in Weissmann’s post, the brief’s author, Jason Delisle, claimed Grad PLUS loans mightn’t responsible for the increasing medians but probably the increases at the 75th and 90th percentiles. I don’t believe him either, but that’s what happens when you deny the possibility that credentials are positional goods.

One big reason a distribution analysis would have been more useful is that median debt levels in most graduate degree fields grew by less than $10,000 between 2008 and 2012, and the overall median was only $6,854 higher. The median for “medicine and other health sciences” grew by $23,700, but law grads, as always, stole the show: $44,500 more debt in four years. Indeed, very savvy readers will note that at $128,000, the median 2012 law grad’s debt load was way higher than the weighted average grad’s debt (~$107,000 by looking at the number of graduates and U.S. News debt rankings).

If there’s anything to say about graduate students and debt from this policy brief, it’s that the NAF has discovered that legal education is a unique disaster in higher education.

Instead, it lectures:

Students pursuing [graduate and professional] degrees already have an undergraduate degree, and they should be far more informed consumers. Therefore, they shouldn’t need a lot of public support to finance their next credential, which is why there are no Pell Grants for master’s degrees.

I can’t tell if the gratuitous phrase, “should be far more informed consumers,” is a normative statement against the grad students, their undergraduate institutions for failing to educate them properly, or the grad programs for pitching degrees of dubious value. Chalk one more up to the strategic use of the passive voice, I guess. The worst-case scenario is that the NAF believes that everyone who goes to grad school knows about IBR’s loan cancelation feature, so they irresponsibly attend thinking they won’t have to repay their debts even though they make lots of money because they’re so amazingly educated.

If you think I’m being hard on the NAF—well, I am—but the point is that its policy brief is a bellwether. The Grad PLUS Loan Program is not long for this world, and that’s a very good thing. On the other hand, the NAF is not the ally to the working class—sorry, “middle class”—it fantasizes to be. It’s very much enthralled by human capital theory, and it won’t pay any price if people graduate from college and don’t collect any premium.

Pew Research Center Publishes Non-Sequitur to Send Everyone to College

Readers will recall that the first time the LSTB crossed paths with a study by the Pew Research Center, it committed the mother of composition fallacies by applying findings for professional degrees to J.D.s only. It was a poor effort but instructive of Pew’s college-for-all agenda. Its most recent study, published on February 11, goes all-in on the you’re-hosed-if-you-don’t-go-to-college line. It’s titled, “The Rising Cost of Not Going to College,” and opens triumphally:

For those who question the value of college in this era of soaring student debt and high unemployment, the attitudes and experiences of today’s young adults—members of the so-called Millennial generation—provide a compelling answer. On virtually every measure of economic well-being and career attainment—from personal earnings to job satisfaction to the share employed full time—young college graduates are outperforming their peers with less education.

There are two problems here:

(1) I don’t care about Millenials’ “attitudes” based on Pew’s surveys. I’m not saying that the Pew Center is dishonest in its methodology or interpretation; rather, Millenials’ perceptions don’t address any of the criticisms “those who question the value of college in this era of soaring student debt and high unemployment” have raised. The same situation arose recently with a survey of law students’ opinions about law school. They said they felt they were getting a good legal education, which is fine, but it doesn’t mean that there were jobs for them afterward that allowed them to use the knowledge they gained and pay their debts.

Likewise, I don’t care if Millenials think their educations prepared them for their work; I care if it did prepare them, if it could have been delivered more cheaply, and if there were actually enough jobs available for them. Instead, the bulk of the study is an Orwellian effort to twist the simple finding that the economy’s deeply depressed, jobs are scarce, and wages are low into an advertisement for college education.

For example:

To be sure, the Great Recession and the subsequent slow recovery hit the Millennial generation particularly hard. Neither college graduates nor those with less education were spared. On some key measures such as the percentage who are unemployed or the share living in poverty, this generation of college-educated adults is faring worse than Gen Xers, Baby Boomers or members of the Silent generation when they were in their mid-20s and early 30s.

But today’s high school graduates are doing even worse, both in comparison to their college-educated peers and when measured against other generations of high school graduates at a similar point in their lives.

Yes, the economy’s better than in 2009, but how bad do things have to get for Pew to say that cyclical forces are a bigger cause of mass unemployment and reduced earnings than lack of college education?

(2) To say that college graduates are “outperforming” those with less education is a waste of time. The questions are whether all college graduates benefit equally (they don’t) and why they generally earn more than high school grads. If college education is mostly a positional good that signals preexisting abilities, then the problem is positional goods, not lack of education.

My subtlest part of the study is when Pew asked college graduates what they could have done in college to better prepare them for an ideal job.

Question: If everyone studies harder or looks for work sooner at the same time, how many jobs will they create?

Close to zero.

The Pew Research Center’s structural unemployment dogma is irresponsible and wholly without basis.


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