Higher Education

Prepare for the Return of Private Law School Loans

That’s what you should be inferring from Charles Lane’s WaPo op-ed, “How student loans help keep expensive schools in business.”

Lane argues that Grad PLUS loans are, “a de facto bailout, enabling many law schools to maintain capacity and delay reforms, or settle for modest ones, while continuing to charge more or less the same high tuition.” The author’s position, to say nothing of his article’s title, largely resembles my early forays into the subject, especially, “How Grad PLUS Loans Sustain Zombie Law Schools.” It’s always nice to see mainstream sources arrive at my conclusions.

It’s not so nice when they don’t fully understand the implications. If Congress gets rid of Grad PLUS loans, or scales graduate lending back dramatically, then some law schools will demand their students substitute the tuition difference with private loans. These loans won’t be easily discharged in bankruptcy, so it will be a strong reason to stay clear of law school, even more prestigious ones.

Before I go, I just wanted to editorialize on Lane’s opening: “Income inequality bedevils the United States, as does debt, of the public and private varieties.”

This is bad writing. One, “income inequality” doesn’t play any role in the editorial, so a good editor would’ve axed it. Two, public debt doesn’t bedevil the U.S. at all. Currently, 10-year treasuries are trading at 2.18%.

10-Year Treasuries

(Source: FRED)

Yes, I’m not the first to recognize that WaPo caters to people who insist public debt is the second evilest thing in the history of evil (no. 1 is inflation), but eliminating Grad PLUS loans won’t close the deficit. Does Lane write editorials against corporate welfare?

Still, there are many correct points in the article, and it suggests that our East Coast media elite are finally beginning to turn on student loans instead of debtors—but not totally.

WSJ More Afraid of IBR Than Student Loan Defaults

I woke up early today—and found that Google Alerts punked me!

Google Alert

Yep. People aren’t signing on to IBR … and they’re “surging” on to IBR.

Okay, the most charitable interpretation is that yes, the WSJ is right that big numerators over small denominators give you big percentages, and at the same time, MainStreet is correct that many more people who are eligible for IBR aren’t on it. MainStreet is referring to the large number of borrowers who are delinquent on their loans. In fact, the New York Fed tells us that as of mid-2015 the 90+-day delinquency rate hasn’t gone down since the age of delinquency began in 2013.

2015-08-21 Percent Balance 90+ Days Delinquent

So when the WSJ writes in its article’s subheader, “Taxpayers face risk of covering loans,” it needn’t scare its readers so much: It’s already happening.

What If The Gainful Employment Rule Were Applied to All Law Schools?

[UPDATE 2015-07-17: Because this post received so much traffic since I first ran it, I’ve updated the Gainful Employment Rule table to only show the total incomes law schools’ graduates would need to earn for their schools to pass (or not pass) under the rule. It occurred to me that even if the discretionary income result is lower than the total income number, the results the formulas produce are still equivalent. This means I can show you like-by-like comparisons, which are more informative. I’m not editing the rest of the text, so consider this update mutatis mutandis.]

The first draft of my latest article on The American Lawyer about the gainful employment rule asked that question, but I realized that reporting on the for-profits alone was more important. The broader question is much more appropriate for a blog post, and since another federal court upheld the rule, it appears it’ll stick around. So, here you go.

To recap, the Department of Education’s gainful employment rule applies two debt-to-earnings tests to a college’s debtors: one based on their total annual incomes and the other their annual discretionary incomes. The tests create three results: passing, falling “in the zone,” or failing. Passing either test gives the school an overall passing grade for that year, not passing either test but not failing puts them “in the zone,” but failing is failing. Sorry if there’s some equivocation among these terms; I blame the rule.

Failing in a given year won’t kill a school’s access to federal loans, but certainly four years of failing or being in the zone will do the trick.


  • Passing either debt-to-earnings test means debt payments are less than or equal to
    • 8 percent of total annual income, or
    • 20 percent of annual discretionary income.
  • The “zone” means debt payments are greater than
    • 8 percent of total annual income but less than or equal to 12 percent of annual income, or
    • 20 percent of annual discretionary income but less than or equal to 30 percent of discretionary income.
  • Failing occurs when debt payments are greater than
    • 12 percent of total annual income, or
    • 30 percent of annual discretionary income.

Got it? Good. If not, reread the article. I hate explaining this rule.

Rather than giving the numbers for both tests, I’m going to display the class of 2014’s mean debt (weighted with non-debtors (because I’m fair)), the minimum income (discretionary or total) needed to pass either test or at least stay in the zone, and the unemployment rate (“seeking” and “not seeking” employment, but excluding “deferred start dates”). The numbers will differ slightly from what I published in the article last week.

As for which test you’re seeing, since it’s somewhat important, the annual income test is the lesser test until about $43,000. After that, you are seeing the minimum discretionary income graduates need to be earning for the school to pass the test. That means they need to be earning even more money than what’s stated.

Howard $23,060 $20,178 $13,452 12.4%
Brigham Young $39,026 $34,148 $22,765 7.2%
Hawaii $39,949 $34,955 $23,304 15.5%
Alabama $45,830 $40,102 $26,734 3.5%
Lewis and Clark $47,014 $41,137 $27,425 15.4%
Arkansas (Fayetteville) $48,927 $42,811 $28,540 7.0%
Nebraska $49,758 $43,538 $29,026 6.0%
North Carolina Central $49,932 $43,691 $29,127 14.1%
District of Columbia $51,954 $45,460 $30,307 25.2%
Tennessee $52,961 $46,341 $30,894 14.6%
Wyoming $52,999 $46,374 $30,916 23.9%
North Dakota $55,743 $48,776 $32,517 13.2%
Connecticut $56,813 $49,711 $33,141 9.1%
Arkansas (Little Rock) $58,407 $51,106 $34,071 12.8%
Missouri (Columbia) $58,541 $51,224 $34,149 8.9%
Georgia State $58,650 $51,319 $34,213 5.6%
Mississippi $59,132 $51,741 $34,494 12.3%
Kentucky $60,629 $53,051 $35,367 5.6%
Wisconsin $61,117 $53,478 $35,652 7.6%
Kansas $61,410 $53,734 $35,822 8.4%
SUNY Buffalo $61,568 $53,872 $35,915 9.9%
New Mexico $61,795 $54,071 $36,047 3.6%
Liberty $63,917 $55,927 $37,285 25.0%
Georgia $63,954 $55,960 $37,307 13.6%
Texas Tech $64,047 $56,041 $37,361 18.8%
Northern Illinois $64,061 $56,053 $37,369 9.1%
Montana $64,094 $56,083 $37,388 11.3%
City University $64,284 $56,248 $37,499 20.7%
Oklahoma $64,613 $56,537 $37,691 7.7%
Florida $65,104 $56,966 $37,977 9.4%
Memphis $66,326 $58,035 $38,690 18.3%
Akron $66,681 $58,346 $38,897 8.7%
Cincinnati $66,697 $58,360 $38,906 10.4%
South Carolina $66,826 $58,473 $38,982 7.4%
Northern Kentucky $67,221 $58,818 $39,212 9.6%
Arizona State $67,227 $58,824 $39,216 1.5%
Florida State $68,319 $59,779 $39,853 6.0%
Wayne State $68,698 $60,110 $40,074 11.2%
Michigan State $69,711 $60,997 $40,665 1.2%
Houston $70,931 $62,065 $41,377 7.4%
South Dakota $71,067 $62,183 $41,456 6.2%
Boston University $71,181 $62,283 $41,522 6.5%
California-Davis $71,993 $62,994 $41,996 10.1%
Temple $72,019 $63,017 $42,011 9.1%
Washburn $72,555 $63,485 $42,323 8.9%
Indiana (Bloomington) $72,726 $63,635 $42,423 6.8%
Southern University $73,214 $64,062 $42,708 23.0%
Louisiana State $73,366 $64,195 $42,797 3.1%
Texas A&M [Wesleyan] $73,485 $64,299 $42,866 18.5%
West Virginia $73,712 $64,498 $42,999 8.5%
Utah $74,002 $64,751 $43,168 8.1%
Duquesne $74,172 $64,901 $43,267 13.5%
Arizona $74,516 $65,201 $43,468 4.9%
Texas $74,642 $65,312 $43,541 6.8%
Boston College $74,695 $65,358 $43,572 6.6%
North Carolina $74,905 $65,542 $43,694 11.9%
Maryland $75,615 $66,163 $44,109 8.8%
Illinois $76,374 $66,827 $44,552 5.9%
Campbell $76,555 $66,986 $44,657 13.6%
Iowa $76,670 $67,086 $44,724 2.3%
Washington University $76,828 $67,225 $44,816 1.2%
Drexel $77,209 $67,558 $45,038 11.3%
William and Mary $77,805 $68,079 $45,386 8.4%
Indiana (Indianapolis) $78,287 $68,501 $45,668 7.9%
Florida International $79,037 $69,158 $46,105 6.5%
Villanova $79,097 $69,209 $46,140 9.5%
Nevada $79,742 $69,775 $46,516 10.1%
Ohio State $80,527 $70,462 $46,974 1.4%
Pittsburgh $80,700 $70,612 $47,075 12.7%
Cleveland State $80,891 $70,780 $47,186 13.9%
Rutgers-Newark $81,451 $71,270 $47,513 8.4%
Idaho $81,604 $71,404 $47,602 8.1%
Louisville $82,077 $71,818 $47,879 7.1%
Baylor $82,833 $72,479 $48,319 11.8%
California-Irvine $83,342 $72,924 $48,616 10.8%
Tulsa $83,416 $72,989 $48,659 5.1%
Washington $83,732 $73,266 $48,844 14.0%
Maine $84,452 $73,895 $49,263 14.7%
Minnesota $84,834 $74,230 $49,486 6.9%
Cardozo, Yeshiva $85,151 $74,507 $49,671 15.3%
Toledo $87,232 $76,328 $50,885 17.9%
St. Thomas (MN) $87,349 $76,430 $50,954 8.4%
Washington and Lee $87,538 $76,595 $51,064 12.6%
Richmond $88,304 $77,266 $51,511 7.4%
Detroit Mercy $88,604 $77,529 $51,686 16.9%
St. John’s $89,567 $78,371 $52,248 8.9%
Yale $90,162 $78,891 $52,594 3.9%
Brooklyn $90,813 $79,461 $52,974 9.9%
Notre Dame $91,274 $79,865 $53,243 3.9%
Oregon $92,133 $80,616 $53,744 14.1%
Chicago-Kent, IIT $92,311 $80,772 $53,848 8.9%
Vanderbilt $92,969 $81,347 $54,232 2.6%
California-Los Angeles $93,221 $81,568 $54,379 6.3%
Emory $93,473 $81,789 $54,526 2.6%
Massachusetts — Dartmouth $93,819 $82,092 $54,728 16.0%
Fordham $94,187 $82,413 $54,942 9.8%
Baltimore $95,222 $83,319 $55,546 11.5%
Wake Forest $95,703 $83,741 $55,827 7.0%
St. Mary’s $95,761 $83,791 $55,861 17.9%
Southern Methodist $95,955 $83,961 $55,974 6.7%
Seton Hall $96,075 $84,066 $56,044 6.3%
Case Western Reserve $96,159 $84,139 $56,092 9.5%
Pennsylvania $96,201 $84,176 $56,118 0.4%
South Texas $96,686 $84,600 $56,400 9.2%
Dayton $97,598 $85,398 $56,932 11.4%
Colorado $97,675 $85,466 $56,977 4.2%
Quinnipiac $99,563 $87,118 $58,079 14.2%
Stanford $99,947 $87,454 $58,302 2.7%
Duke $100,325 $87,784 $58,523 2.8%
Samford $100,526 $87,960 $58,640 13.2%
Oklahoma City $100,825 $88,222 $58,815 5.6%
Mississippi College $101,946 $89,203 $59,469 21.1%
Syracuse $102,107 $89,343 $59,562 11.4%
Drake $102,326 $89,535 $59,690 9.2%
Suffolk $102,844 $89,989 $59,992 14.4%
Southern California $102,872 $90,013 $60,009 5.1%
William Mitchell $102,986 $90,113 $60,075 7.3%
Virginia $103,102 $90,214 $60,143 2.3%
Ohio Northern $104,531 $91,465 $60,976 18.1%
Loyola (LA) $104,924 $91,808 $61,206 19.3%
Pace $105,075 $91,940 $61,294 14.3%
San Diego $105,351 $92,182 $61,455 18.3%
Harvard $105,951 $92,707 $61,805 2.4%
Michigan $105,978 $92,731 $61,821 2.6%
Mercer $106,506 $93,193 $62,128 13.3%
Capital $106,628 $93,299 $62,200 31.3%
Tulane $107,133 $93,742 $62,494 9.7%
Hamline $107,514 $94,075 $62,717 8.7%
George Mason $107,715 $94,250 $62,833 2.7%
Gonzaga $107,940 $94,448 $62,965 16.0%
Chicago $108,521 $94,956 $63,304 1.9%
Penn State (Dickinson) $108,981 $95,358 $63,572 14.8%
New Hampshire $109,322 $95,657 $63,771 10.3%
New York University $109,331 $95,664 $63,776 1.3%
Western State $109,519 $95,829 $63,886 11.6%
DePaul $109,529 $95,838 $63,892 18.9%
George Washington $110,250 $96,469 $64,312 5.3%
Roger Williams $110,547 $96,729 $64,486 17.9%
Pepperdine $110,599 $96,774 $64,516 18.2%
Albany $110,656 $96,824 $64,550 14.2%
St. Louis $110,737 $96,895 $64,597 10.1%
Miami $110,761 $96,916 $64,610 7.7%
California-Berkeley $111,966 $97,970 $65,313 2.4%
Cornell $112,050 $98,044 $65,363 1.0%
Loyola (IL) $113,373 $99,201 $66,134 8.0%
Santa Clara $113,702 $99,489 $66,326 33.0%
Elon $113,902 $99,664 $66,443 27.9%
Denver $114,912 $100,548 $67,032 8.3%
Hofstra $114,917 $100,552 $67,035 7.9%
Ave Maria $115,045 $100,665 $67,110 33.6%
California-Hastings $116,260 $101,728 $67,818 22.1%
Regent $116,397 $101,847 $67,898 12.3%
Creighton $116,459 $101,902 $67,934 9.0%
Columbia $117,098 $102,461 $68,307 2.1%
Chapman $117,259 $102,602 $68,401 19.6%
Nova Southeastern $117,347 $102,679 $68,452 11.1%
Northeastern $117,379 $102,706 $68,471 14.4%
Marquette $118,389 $103,590 $69,060 9.8%
Georgetown $118,918 $104,053 $69,369 5.0%
Western New England $119,714 $104,750 $69,833 20.4%
John Marshall (Chicago) $121,990 $106,742 $71,161 8.8%
Valparaiso $122,769 $107,423 $71,615 20.9%
Catholic $123,026 $107,648 $71,765 13.4%
Stetson $123,167 $107,771 $71,847 7.2%
Widener $123,914 $108,425 $72,283 8.1%
Charleston $124,976 $109,354 $72,903 24.0%
Pacific, McGeorge $125,060 $109,428 $72,952 22.5%
Loyola (CA) $125,546 $109,853 $73,235 17.9%
Seattle $126,157 $110,388 $73,592 18.0%
Willamette $126,572 $110,751 $73,834 13.9%
St. Thomas (FL) $128,135 $112,118 $74,746 17.6%
Golden Gate $128,733 $112,642 $75,095 33.3%
Northwestern $130,452 $114,146 $76,097 7.2%
Touro $131,627 $115,173 $76,782 19.9%
Vermont $131,639 $115,184 $76,789 16.9%
American $132,232 $115,703 $77,135 15.2%
San Francisco $135,802 $118,827 $79,218 32.5%
California Western $137,589 $120,391 $80,260 23.7%
Whittier $137,958 $120,713 $80,475 24.2%
New York Law School $138,296 $121,009 $80,673 13.3%
Barry $141,716 $124,002 $82,668 17.7%
Florida Coastal $151,390 $132,466 $88,311 14.9%
Thomas Jefferson $156,925 $137,309 $91,540 29.0%

Note: Howard almost certainly published its graduates’ annual debt and not their total debts as it was asked, and this table excludes law schools that reported debt levels but not the percent of their graduates with debt.

I reckon that any law school whose graduates would need make $50,000 in discretionary annual income would probably fail the gainful employment rule in short order unless they were elite law schools with low unemployment rates. That’s about $100,000 in mean weighted debt, coincidentally—before interest. That’s at least 50 schools.

Kicking these law schools out of the federal loan program would be in keeping with the Department of Education’s stated goals for crafting the rule—accountability for student outcomes—but Congress won’t let it, which is why I found the comments to the department so galling. Some people claimed that graduate programs should be excluded from the rule because they didn’t face the same “employment challenges and return-on-investment considerations” compared to lower levels of higher education.

Looking at the above table … Right.


New Rule Spells Trouble for For-Profit Law Schools

…Is up on The American Lawyer.

Doomed! DOOMED I TELL YOU! Mwahahahaha!

I’d wanted to comment on the ABA Task Force on the Financing of Legal Education’s report, but alas my trusty computer that I’d been working on to write this blog all these years ran its last clock cycle over the weekend. Naturally, everything was backed up and has been transferred to my new machine. The show will continue—albeit with a delay.

In the meantime, here’s some Cloud Cult, which I saw at Minneapolis’ Northern Spark a couple weekends ago.


Demos: Denominators Don’t Matter for Subsidies to Public Universities

Last week Demos published a paper that carefully apportions the causes of tuition cost hikes at public universities over the last decade (2001-2011). Authored by Robert Hitonsmith, it finds that 79 percent of the increases are due to cuts in state subsidies, about $3,000 on average at four-year public universities. Hiltonsmith is known for a paper ominously titled, “How Student Debt Reduces Lifetime Wealth,” which estimates the lost lifetime personal savings due to student loans.

Reconciling these two papers might cause confusion because it’s easy to misinterpret Hiltonsmith’s first paper as arguing against widespread college attendance. It plainly says otherwise: College pays off, but the costs should be socialized. I’m not fond of this line of reasoning as it showcases a large pecuniary loss for college education without explaining where the offsetting public benefits come from. It’s hard to see an adverse selection problem in higher education as with health care or national defense.

Something similar goes on in Demos’ more recent paper, “Pulling Up the Higher-Ed Ladder: Myth and Reality in the Crisis of College Affordability.” There’s no reason to dispute Hiltonsmith’s findings: State’s aren’t subsidizing higher education as much as they used to on a per student basis, hence the tuition cost increases.

However, a quick glance at Bureau of Economic Analysis data tells us that state government spending on higher education has risen overall:

S&L GCE and GI (Higher Ed., 2009 $)

(Table 3.15.16)

…And here’s a chart of state and local higher education expenditures as a share of state spending and receipts.

S&L Higher Ed. Expenditures Share of--

(Table 3.15.5 and Table 3.3)

In constant dollars, state and local governments spent 22 percent more on higher education in 2011 than they did in 2001, and states spend about the same percentage of their budgets on higher education, so why is tuition increasing?

Answer: Fractions have denominators. College attendance grew substantially in the 2000s.

Looking at Digest of Education Statistics data, in 2011 the number of public university students was 23.5 percent higher than in 2001 (Table 303.10). Meanwhile, the total U.S. population only grew 9.5 percent between those two years. (Speaking of fractions, that’s a blunt comparison, but it’ll do.)

This is the drawback of Demos’ per-student spending analysis (and of fractions generally): It misses the systemic shift in demand for college credentials and states’ responses to it. Demos sees no diminishing marginal return to sending more and more people to college, so everyone should be subsidized equally no matter the economic conditions. Therefore, any cuts are wrong irrespective of what goes on in the denominator aggregate. In reality, people treat public higher education like unemployment insurance, except there’s a big difference: At some point higher education becomes mostly about getting ahead of everyone else. At least with unemployment insurance, marginal recipients get to stay alive and are better off finding work when it’s available.

But Demos isn’t ready to reach that insight. Indeed, the paper’s opening sentence is, “In today’s competitive economy, nothing is more important than getting a college education.” On the contrary, today’s economy isn’t competitive. If it were, then employers would bid up workers’ wages. The kind of competition that goes on in today’s economy is zero-sum squabbling. Thus, rather than advocating for positive competition, Demos is promising everything to everyone, as though we can all get ahead of everyone else simultaneously.

I have a few more points worth making in passing. One, the average inflation-adjusted full tuition price at private four-year institutions rose 36 percent from 2001 to 2011 (Digest table 330.10). I am not studious enough to figure out what the net tuition is, but I’m skeptical that this increase hasn’t affected public universities in some way. If the big private research universities spend more money on superstar faculty, for example, I’d be surprised if their public counterparts did not try to keep up. This goes on in law schools all the time. Likewise, I would also not characterize this Demos article as falsifying the Bennett hypothesis just because state subsidies per student play a larger role for tuition price increases at public institutions. I don’t think anyone ever said that.

Two, there are other arguments in favor of public higher education I haven’t addressed. For example, running a large research university in a large metropolitan area can be a magnet for young people and supporting private sector innovation. The for-profit world isn’t all Thomas Edison stuff.

Finally, I’m a fan of the soft, lovey-dovey, bleeding-heart humanities. (They’re also super cheap to produce.) The point here is not that higher education is solely positional competition. It’s that when Demos decries rising public college prices when incomes are stagnant, it’s not seeing a causal relationship. Stagnant incomes are motivating people to go to college, which strains public higher education systems, and state and local governments don’t want to cover everyone. Much of this is undoubtedly due to ideological Scott-Walkerist anti-intellectual budget arsonism, but what’s important are the causes of stagnant incomes. Funding everyone’s college degrees will not create college jobs for everyone.

New America Foundation: Let the Sins of Grad PLUS Be Visited Upon IBR

I’ll try to go quickly through the New America Foundation’s (NAF’s) Jason Delisle’s and Alexander Holt’s Washington Post opinion piece from Friday. Reacting to news that the president’s budget forecasts income-based repayment programs (IBR) will cost the government an additional $21.8 billion, the authors argue that “too much” of it is attributable the administration’s changes to IBR, i.e. reducing monthly payments even more and accelerating loan forgiveness to 20 years from 25. Their article has many problems.

One, Delisle and Holt don’t provide evidence that the $21.8 billion comes from the changes to IBR. They’re just conjecturing. My hunch is that the additional costs are mainly attributable to the changes in the budget’s model that don’t anticipate as much job growth as before—or just increased participation in IBR. Without this evidence, the rest of Delisle’s and Holt’s article is just righteous huffing.

Two, the authors use this pretext to slide into their grad-students-are-abusing-IBR claim the NAF has been making for a few years now. This argument is problematic because the problem isn’t IBR so much as the Grad PLUS Loan Program, which the authors understand is unlimited and to their credit have advocated abolishing elsewhere. That’s all fine and good, but if the problem is Grad PLUS, then it’s not IBR, and the authors should focus on that instead. More on this point below.

Three, the grad-students-are-abusing-IBR claim has never been substantiated either. The NAF has always trotted it out in hypotheticals without doing the actual research. How many (and what percentage of) graduate debtors are (a) on IBR and (b) earn high enough incomes that could allow repayment under 25-year or consolidated repayment plans without compromising their living standards? Also, how many grad debtors are on IBR but are not earning enough to repay their loans under the older repayment plans?

These questions are crucial because until they’re answered those of us sitting at the feet of the East Coast think-tank elite can’t weigh how many people unfairly benefit from the changes to IBR against those who do not. If every unfair IBR beneficiary is canceled out by dozens of debtors who will never repay their loans in 25 or 20 years, then it’s safe to say that the changes to IBR are useful and the adverse consequences minimal. (And it’s not like the IBR changes have influenced people’s graduate school enrollment behaviors as law school applicants are still falling.) In the end, Delisle’s and Holt’s arguments are really just revamped versions of welfare queen fear-mongering.

Four, Delisle and Holt do not regain any sympathy with their hypothetical graduate debtor, Robert, who finishes law school with $150,000 in debt and earns $70,000 per year. Here are the problems with Robert:

(a)  For those of us who’ve done the research, Robert’s debt is plausible, but his income is not. Robert earns well over the median salary reported to NALP in 2013 ($62,467). Assuming that all non-reporting graduates are making less than the median, which I believe is fair, Robert is above the top 23 percent in law graduate earnings. He is quite atypical. The true median, which would include graduates working part-time and the 12.3 percent who were unemployed (and matter since we’re talking about debt repayment), is much, much lower. It’s likely many of them will never repay their loans. These people will benefit from the PAYE changes, but the NAF ignores them.

(b)  The authors then fashion out of Robert’s rib a wife, who earns $80,000 per year. With an annual household/family income of $150,000, readers should recognize that this partnership is in the top 10 percent by household income. Is this common for graduate debtors? Probably, but again the authors don’t say.

(c)  Delisle and Holt proceed to criticize IBR for not taking spousal incomes into account, that only 1.9 percent of Robert’s household’s/family’s income is going to his student loans. Are you shocked? Well, the response is, so what? Robert’s wife didn’t sign his master promissory notes any more than she would his gambling debts. If Robert wants to leave work to raise their kids, for example, doesn’t that imply that his wife will essentially assume his debts? Would the NAF say this if Robert were Roberta? How would unmarried Robert feel if he had to tell his bride-to-be that she’d be partly on the hook for his student loans if they got married? Again, what if Robert were Roberta, who would be more likely to take time off to raise children?

(d)  The authors’ hypothetical is only as outrageous as the lopsided assumptions they bake into it. It’s one thing to say that Robert, unusual though he is, benefits more from the Obama administration’s changes to IBR than before. But it’s a rhetorical foul altogether to throw in a wife, whose high earnings Robert largely has no power over, and then blame IBR for the result. Delisle and Holt could just as easily give Robert’s parents multimillion-dollar lottery tickets or 5 percent of Maine’s landmass, but it would still have little relevance for IBR as a policy.

Five, the authors repeat that graduate debtors are the unfair beneficiaries of the administration’s changes to IBR, that they’re half of all IBR participants (unsurprising: they have undergraduate debts too), that they have higher incomes and are less likely to be unemployed than undergrad (or non-grad) debtors. Again, no income data on IBR participants is given, so Delisle’s and Holt’s IBR welfare queens are all speculative. Now, I’m sure some exist, but the NAF needs to show us the bodies and carefully tell us whether they’re worth less than the number of underemployed graduate debtors who won’t be able to repay their loans.

Six, even if they do that, all their talk of IBR’s “loan-forgiveness benefits” is really a problem with Grad PLUS loans, not IBR. As I wrote last week, IBR without Grad PLUS loans would be much more innocuous. It’s one thing for Delisle and Holt to make poor arguments with unrepresentative examples, but I question their credibility if they’re going to attack IBR, which I think we all agree was never crafted with Grad PLUS loans in mind, instead of the loan program itself. Why not attack the problem at its source? What’s so special about IBR, then? Nor does it help that they bait their readers with the $21.8 billion IBR shortfall and then switch it with the changes to IBR without evidence. For all their elegant, mathematical—and probably costly—policy papers, the NAF’s results almost always have zero external validity. Like, if I didn’t know any better, I’d say those folks had some kind of ulterior, partisan motive…

Seven, and finally, at the beginning of their article the authors characterize the federal loan program as “an implicit contract: Students get loans to go to college at reasonable interest rates, with no previous credit history required, but when they graduate, they [and their high-income spouses, apparently] have to pay them back. But that agreement is shifting.”

In their dreams. The “implicit agreement” was that the loans would make debtors more productive workers so they could fill higher-paying jobs that required additional skills. Little of this has turned out to be true: There’s no good evidence that widespread college education is raising our national income, and the government has pretty much reneged on its jobs promises.

As far as contracts go, this one has been drafted in favor of the government. When its underlying assumptions are true, everyone wins, but when they’re not, the government won’t be held accountable for self-serving research, false promises, and reckless lending. Instead, attempts to help the debtors will face resistance by people like Delisle and Holt, who will howl at all the alleged benefits the lucky-duckies are getting—and right now we’re only talking about grad student debt! Consequently, you should expect the endgame for all this unpayable student loan debt to be really, really acrimonious.