Freedom Line Blog

The Los Angeles Times has a fairly one-sided story reporting on the GOP’s nascent attempt to recapture Asian voters ahead of the 2014 elections.

According to the Times writer, while Asians would seem like natural Republican voters since when compared to other groups they are “wealthier and better educated than the general population and have a long tradition of entrepreneurship,” their support for government intervention and loose immigration laws has swung them towards Democrats.

The solution, implies the article, is for Republicans to become more like Democrats.

For obvious reasons I won’t address that argument. Instead, I’ll propose an alternative.

Rather than compete with Democrats over who can give away the most goodies, why not change the frame to who can remove the most obstacles to success?

It’s an open secret that elite universities impose caps on the number of Asian students they will enroll, despite the fact that Asians make up 28 percent of National Merit Finalists even though they are only 5 percent of the population.

For proof, consider the fact that over the last ten years the percentage of Asian students has plateaued at each Ivy League school suspiciously at 16 percent, while enrollment at universities using race neutral admissions procedures – e.g. UC Berkeley, UCLA and Cal Tech – boast percentages around 40 percent, in step with the Asian community’s population increase over time.

Last year, an Asian student shut out of Harvard and Princeton filed a complaint with the U.S. Education Department’s Office of Civil Rights. If the findings go public, elite higher education could be exposed to some embarrassing revelations.

All this to say that Republicans – and conservatives in particular – could use the well documented discrimination against Asians in university admissions as a way to reach out to a voting bloc with a message of opportunity for hard work.

Republicans talk a lot about meritocracy and the Opportunity Society. This would be a good issue to make it real.

Let the other party tie its success to parceling out caps and quotas. Republicans can win by helping individuals help themselves.

If you think President Barack Obama has a difficult job delivering an on-the-fly speech about the situation in Syria, consider what his former Secretary of Homeland Security Janet Napolitano is about to step into.

In language that’s better suited for an updated version of the movie PCU, a gaggle of liberal student groups in the University of California system sent a letter to Napolitano, who became UC’s first female president upon leaving the Obama administration.

After introducing themselves as “student leaders in the statewide multicultural progressive coalition that represents students who are underrepresented and marginalized within the UC System,” the petitioners “demand that you [Napolitano] implement the following across the UC system.”

These include “making the system a ‘sanctuary’ for illegal immigrants, barring the use of system funds or resources going to help Immigration and Customs Enforcement (which Napolitano oversaw in her previous job), impose mandatory sensitivity training on campus police and prohibit police from interfering with student demonstrations,” according to Fox News.

The letter, posted on Sunday, demands a meeting with Napolitano on Wednesday. For her trouble, the students promise to “do our best to cooperate with you in setting this up so all parties can have a productive conversation.”

Funny as it is to see a liberal like Napolitano have to take such people and demands seriously, it is still ridiculous that a highly compensated public official like her has to spend precious time and resources stoking the entitlement mentality of perennially aggrieved people.

Then again, that’s part of the job description when leading many modern higher education bureaucracies.

A few weeks ago, I wrote here about the fact that Congress’ ‘fix’ to interest rates on college loans was small potatoes compared to the rapid inflation in the underlying principal. Moreover, I noted, most of President Obama’s proposals for making higher education more affordable have the economics precisely backwards. Today, AEI’s Richard Vedder sounds a similar note over at Bloomberg:

The president’s proposal has one very bad idea: a forgiveness boon for those paying off loans right now. The proposal, limiting loan payments to 10 percent of income, potentially relieves millions of students from repaying part of their obligation. So why not major in fields the economy values least — anthropology or drama instead of engineering or math — if you don’t have to worry about earning enough to pay off your student loans over a certain period?

The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs.

Obama proposes to ignore or worsen the root cause of much of the explosion in student costs: the federal financial assistance programs that encourage schools to raise costs and that haven’t achieved their goals of providing college access to low-income Americans.

As Vedder notes, virtually all of our federal policy on higher education (and most of the policy proposals that have any traction at the moment) generate precisely these kind of perverse incentives. Recommended reading.

The Los Angeles Time is reporting that Janet Napolitano is resigning as Secretary of Homeland Security to become the president of the 10-campus University of California system.

Beyond the flashy headlines – first female to lead UC in its 145 year history, new compensation more than triple her DHS salary – Napolitano’s appointment heralds a new direction for higher education administration that doesn’t bode well for taxpayers: The rise of the politician-turned-university president.

The reason is simple. Most top-tier research universities are addicted to federal research spending. With Napolitano, UC leaders see a soon-to-be-former Cabinet member able to lobby effectively for increased cash flow.

“UC officials believe that her Cabinet experiences…will help UC administer its federal energy and nuclear weapons labs and aid its federally funded research in medicine and other areas,” according to the Times.

Contrast this with former Indiana Governor Mitch Daniels’ presidency at Purdue – where the one-time private industry executive is getting large individual and corporate donations to fund the public university’s research expansion – and higher education may become the next arena where conservatives and liberals chart different paths on how to pay for education.

The Wall Street Journal shows us that the price of “affordable” health care is a reduced standard of living:

The Affordable Care Act requires large employers to offer a minimum level of health insurance to employees who work 30 hours a week or more starting in 2014, or face a penalty. The mandate is a particular challenge for colleges and universities, which increasingly rely on adjuncts to help keep costs down as states have scaled back funding for higher education.

A handful of schools, including Community College of Allegheny County in Pennsylvania and Youngstown State University in Ohio, have curbed the number of classes that adjuncts can teach in the current spring semester to limit the schools’ exposure to the health-insurance requirement.

The scaled back hours and pay for adjunct professors is part of a larger trend in a wide variety of industries.  Faced with lower thresholds that require new benefits, employers from universities to fast food restaurants face three options: pay-up, pay-out, or tap-out.  In other words, they can increase their health care spending, be fined for not increasing such spending, or cap the hours and pay of otherwise eligible workers to avoid the spending and the fines.

Unfortunately for workers, capping hours and pay reduces their standard of living.  But don’t worry.  In 2014, Obamacare mandates that every state will have a fully functioning health insurance exchange where newly impoverished workers can get “affordable” health care – some even with government (i.e. taxpayer) subsidies – so it’s a safe bet that all will be well when the feds are in charge of at least 25 separate state programs.  Right…

Interesting new data from Open Secrets, which tallies the top donors to the presidential candidates (note: these are not corporate donations, but money from PACs, as well as from individuals and their families associated with these institutions). Here are Barack Obama’s top five contributors:

1.    University of California — $703,781

2.    Microsoft — $544,445

3.    Google Inc — $526,009

4.    Harvard University — $431,860

5.    U.S. Government — $396,550

Peruse the top 20 and this trend holds. In addition to Harvard and the University of California system, schools like Stanford, Columbia, the University of Chicago, and the University of Michigan also populate the list. On the tech side, Microsoft and Google are joined by IBM (there are also a few big media companies — Time Warner and Comcast). And in government, the State Department alone is responsible for over $200,000 in contributions.

Higher ed and the permanent governing class in Washington are so thoroughly suffused with liberalism that their inclinations should be taken as a given. But conservatives would be foolish to give up on Silicon Valley, where the regnant mores are sufficiently libertarian for Republicans to win converts through a sustained emphasis on free markets (it’s no coincidence that Ron Paul was a huge hit there).

The tech industry’s lifeblood is freedom: freedom to experiment, collaborate, and innovate — which means sooner or later they should realize that the party of 2,000 page laws and dictatorial bureaucracy is not for them. But should doesn’t necessarily mean will. One need only look to African-American voters to realize that political parties can win demographics they consistently neglect if the other side doesn’t even bother competing. The GOP (quite literally) can’t afford to let that happen in Silicon Valley.

Following on to Tim’s excellent post earlier this week about the cost of higher education, this observation by the American Enterprise Institute’s Norman Ornstein bears noting:

Colleges have become a bit like car dealers, where the sticker price does not reflect the actual cost to most buyers. Some can afford to pay the full boat, helping the colleges maintain their budgets, while others can get deep discounts.

And colleges, under this theory, keep their prices up to match their competitors because a lower tuition would be seen by many prospective students and parents as a reflection of lower quality compared to their peers.

Many economists also point out that federal subsidies for higher education are themselves a contributing factor in increasing college costs.

The economic prescription for reforming higher ed is the same that could be applied to health care, k-12 education, or any other sector of the economy that is co-mingled with the government: greater price transparency, fewer subsidies, lower barriers to entry, and more competition. This isn’t terribly complex stuff. In fact, it should be intuitive to anyone who’s ever studied basic economics. Alas, the dismal science is about the only component of a college education that’s not getting a fair shake these days.

Tech billionaire and owner of the reigning NBA Champion Dallas Mavericks Mark Cuban correctly identifies the disconnect between the way policymakers talk about higher education spending and its true value to college students:

The President has introduced programs that try to reward schools that don’t raise tuition and costs. They won’t work.  Right now there is a never ending supply of buyers. Students who can’t get jobs or who think that by going to college they enhance their chances to get a job. Its the collegiate equivalent of flipping houses. You borrow as much money as you can for the best school you can get into and afford and then you “flip” that education for the great job you are going to get when you graduate.

Except those great jobs aren’t always there. I don’t think any college kid took on tens of thousands of dollars in debt with the expectation they would get a job working for minimum wage against tips.

At some point potential students will realize that they can’t flip their student loans for a job in 4 years. In fact they will realize that college may be the option for fun and entertainment, but not for education.

One of the hardest hit employment segments in the Obama Economy are college grads with too much education, too much education debt, and not enough work experience.  In a contracting economy, jobs go to those with years of on-the-job training and the financial flexibility to work multiple opportunities.

If Mitt Romney wants to put Barack Obama’s most blindly loyal constituency in play this election, he should pull no punches tying Obama’s spending and business regulations to the dearth of job opportunities available to college students and recent grads.

The International Business Times chronicles another blow to the meaning of American citizenship:

The Illinois DREAM Act would make undocumented students eligible for private college scholarships and would allow them to enroll in state college savings programs. The California DREAM Act, signed last week by governor Jerry Brown, granted undocumented immigrants at public universities greater access to privately funded scholarships. The California state legislature is debating a more controversial measure to allow undocumented immigrants to pay in-state tuition, which Brown has signaled he supports.

If you or a family member are weighing a decision about whether or how much college loan money to request from the government next fall, consider this nugget from Michael Barone’s column on the coming burst in the higher education bubble:

Peter Thiel, co-founder of PayPal, is adept at spotting bubbles. He cashed out for $500 million in March 2000, at the peak of the tech bubble, when his partners wanted to hold out for more. He refused to buy a house until the housing bubble burst.

“A true bubble is when something is overvalued and intensely believed,” he has said. “Education may still be the only thing people still believe in in the United States.”

Owning a college degree may certify completion of a program, but it does not guarantee that the holder has marketable skills to land a job, as this report on the ongoing talent shortage details.  Higher education – like all levels and kinds of education – is an investment only if the students, faculty and administrators involved focus on learning and teaching things that matter.  And with a 9.2 percent unemployment rate, that increasingly means basic comprehension of grammar, logic and rhetoric, with some grounding in finance thrown in for good measure.

So, if you know someone thinking about going back to school for a master’s in Religious or Women’s Studies – for the good of your fellow citizens and taxpayers, urge them to reconsider.  We can’t afford the experience.

Heather MacDonald of City Journal highlights yet another example of California residents migrating to Texas for greener cash pastures.  (In this case, UC San Diego lost three top cancer researchers to Rice University after the latter offered a 40% increase in compensation.)  Facing a $650 million cut in state funding, the University of California system campuses are shedding faculty and programs, but not, unfortunately, the blizzard of “diversity czars” and their sizable staffs.

UC San Diego is adding diversity fat even as it snuffs out substantive academic programs. In March, the Academic Senate decided that the school would no longer offer a master’s degree in electrical and computer engineering; it also eliminated a master’s program in comparative literature and courses in French, German, Spanish, and English literature. At the same time, the body mandated a new campus-wide diversity requirement for graduation. The cultivation of “a student’s understanding of her or his identity,” as the diversity requirement proposal put it, would focus on “African Americans, Asian Americans, Pacific Islanders, Hispanics, Chicanos, Latinos, Native Americans, or other groups” through the “framework” of “race, ethnicity, gender, religion, sexuality, language, ability/disability, class or age.” Training computer scientists to compete with the growing technical prowess of China and India, apparently, can wait. More pressing is guaranteeing that students graduate from UCSD having fully explored their “identity.” Why study Cervantes, Voltaire, or Goethe when you can contemplate yourself? “Diversity,” it turns out, is simply a code word for narcissism.

MacDonald also highlights how the multi-million dollar diversity industry has embedded itself into plumb positions at UC Berkeley and UCLA.  If UC students are upset about the coming hike in tuition, they should aim their picket lines at the faculty senates and diversity czars whose very existence makes such increases even higher than need be.

The Maryland House followed the state Senate’s lead last night and passed a bill giving illegal immigrants in-state tuition rates for community colleges.  After graduating from a two-year school, beneficiaries would then be eligible for in-state tuition at four-year universities.

Maryland: so generous, it’s criminal.

The Wall Street Journal reports that India’s explosive growth in college graduates isn’t translating into employment for millions of newly minted degree holders.  The biggest problem: lack of critical thinking and communication skills.

To compensate, companies are spending large sums of money coaching graduates into employability.  According to one Indian business executive, the problem is the credential mentality infecting education:

“How are you able to change the mind-set that knowledge is more than a stamp?”

Sound familiar?  American higher education too is tempted to treat knowledge-building as a service rather than a task.  When students are treated like customers, the link between effort and reward is broken.  The result is a certification that doesn’t translate into employment.

With half of India’s 1.2 billion population under the age of 25, up to a million new workers a month are estimated to join the labor force over the next decade.  If India continues down the path of graduating young people without critical thinking skills, those workers – and the growing Indian economy – will be in serious trouble.

A sobering bit of news for college administrators about to go on spring break:

“The current prolonged recession means that we can no longer expect new revenue to pay for increasing attainment in higher education,” said Jane V. Wellman, Executive Director of the Delta Cost Project, which does a study every year on the cost of higher education. “In the next decade, we are going to be lucky to hold onto the resources we have. That means that all institutions – from the Ivies to the community colleges –are going to have to develop investment strategies that support goals for attainment. That will require new habits: looking at spending, and promoting the values of efficiency and cost effectiveness as co-partners to the never-ending search for new revenues.”

At first, one might be tempted to think that higher education needs to take a financial haircut just like the rest of the economy.  While that is undoubtedly true, the consequences will be enormous.

Federal higher education loans like Stafford and Grad Plus (and their state counterparts) are used like entitlements, though you’d never hear a recipient saying so.  Though only 1 in 4 Americans eventually graduate with a college degree, nearly everyone qualifies for the loans to finance one.

Because the cost of attendance continues to grow at several times the rate of inflation, grads and non-grads are piling up huge debt loads; prompting some to call the looming student loan crisis our next financial disaster.

The coming cuts in state and federal budgets for higher education financing will significantly decrease the subsidies available to students.  That means fewer students going to college, leaving enrollments peopled with those able to count on private financing.

Since passage of the 1944 GI Bill an essential part of the American dream has been having the opportunity to go to college by removing cost as a consideration.  The same bill did the same thing to spur home ownership via the VA-backed mortgage.  We all know how slippery that slope turned out to be.

Austerity is coming to America.  Hopefully, we can adjust to reduced expectations.

Conventional wisdom says that when the job market dries up, it’s time to head back to school for more education.  With today’s announcement that unemployment is above 9% nationally for the 16^th month in a row, many out-of-work Americans will consider going back to school.

In two to three years, those who pay for more certificates or degrees may find that their employment – and financial – situation hasn’t improved.  The reason is the rising cost of higher education coupled with the loss in value of college degrees.  Per Reason Magazine:

Student borrowing has more than doubled since the end of the 20th century, according to the College Board, with $85 billion in loans in 2008, up from $41 billion in 1998. And as the rising rate of defaults indicates, borrowers in aggregate are not making the kind of money—i.e. twice as much as a decade ago—they would need to pay those loans back.

The government’s response to this bubble has been to get itself more deeply involved in the inflation. The administration has kicked in various types of assistance, such as a $100 million college prep program. And in March, President Barack Obama signed a bill eliminating the 45-year-old Federal Family Education Loan Program (which guaranteed student loans made by private lenders) and replacing it with a system of direct Treasury Department loans to students. The first part of these efforts is a straightforward waste of money. The second has the potential to be a marginal improvement on a system that shouldn’t exist.

So we have too much money going into an asset, not enough value coming out, a massive increase in leverage, and a large taxpayer liability for the difference.

Get ready for another bailout…

The Obama Administration’s answer is to impose a blizzard of new regulations on industries like higher education, health care and now private business that make the federal government a national repository of TMI – too much information.

With news today that the White House is “backing legislation that includes regulations requiring U.S. businesses to provide to the government data about employee pay as it relates to sex, race and national origin of employees” another Democrat strategy is becoming clear.

Goal:

• Enforce liberal social engineering through complex litigation and class action lawsuits against for-profit and non-profit institutions that fail to promote the “uniform diversity” mandated by liberal elites.

Means:

• Pass laws that require the targeted institutions to self-report every possible way they interact with favored liberal interest groups.
• Data mine those reports for evidence of unsatisfactory compliance with political correctness standards.  Then label it “discrimination”.
• Pass more laws prohibiting the newly discovered discrimination.
• Allow liberal law firms like the ACLU – or the Holder Justice Department – to sue on behalf of the groups discriminated against.

This is not a joke.  Each time the Democrats in Congress pass a new “comprehensive reform” one of the components requires detailed self-reporting.  Right now, we’re told it’s just for information purposes.  In a year or two…

When it could be $87 billion.  The $77 billion swing is the difference between making a real payment towards bringing down the exploding federal deficit and a token gesture.  In today’s Wall Street Journal, Education Secretary Arne Duncan confirms a plan put in motion when the department got “emergency powers” during the credit crisis last year to continue access to student loans.  After explaining why the federal government is prohibiting private banks to participate in federal student loan programs, Secretary Duncan concludes with a cursory listing of what will be done with the projected savings.

As for the $87 billion we’ll save from ending the troubled FFEL program, the administration seeks to use that money for important programs that will improve our economic future. We propose to substantially increase scholarships in the Pell Grant program and other financial aid for low-income students. We would start new programs to raise college graduation rates and strengthen our community colleges. We will expand our investment in early childhood education. Plus, $10 billion would be set aside to reduce the deficit.

But if a little deficit reduction is good, isn’t a lot better?  Realistically, if Duncan was serious about deficit reduction he’d apply the entire savings to that end.  As it is, $77 billion of the money saved will go towards new spending in the form of higher loan amounts, “strengthening” community colleges, and “investing” in early childhood education.  None of these programs will pay for themselves in a way that off-sets their direct cost to the federal taxpayer, which, according to Duncan, is the main reason federal control in this area is needed.