When Loans Aren't Financial Aid

The Chronicle of Higher Education has a good article today about a new Senate bill (S1561) that seeks to make private student loan debt dischargeable in bankruptcy. According to the article, Sallie Mae and other for-profit loan companies have signed off on the legislation—perhaps realizing that this is a battle not worth fighting in light of the string of allegations and fines from NY Attorney General Andrew Cuomo earlier this year. Unfortunately, it looks like the bill might get left on the wayside because those it would benefit—students with financial problems—aren’t the most vocal group on the Hill.

Back in 2005, language added to a bankruptcy reform bill (spurred on by for-profit loan companies) made private education loans as difficult to discharge in bankruptcy as federal education loans. This means that a student can discharge a car loan or credit card debt, but can’t get relief from often large and onerous student loan debt. The argument for preventing borrowers from discharging private education loans was that the money the loan companies would save would allow them to keep loan prices low and lend to more high-risk student borrowers.

Seems reasonable…But is a high-interest private loan that can’t be discharged in bankruptcy really financial aid for a student at a high risk of defaulting?

In a lot of these discussions, loans seem to be confused with grant aid, and legislators seem to believe that offering loan assistance to high-need students is just as good as, say, increasing Pell grants. It isn’t. For a student that isn’t getting a high-yield degree and doesn’t have family resources to fall back on if she is in financial trouble, a student loan is a risky financial investment—and devastating if she defaults. Bankruptcy may be the only way for these students to get back on their feet.

Comparability, Continued

AFTies Ed and Michele return from summer vacation and weigh in with a pair of thoughtful posts (here and here) on the "comparability" debate. They're right in saying that forced transfers aren't an ideal--or in many cases, even practical--solution to the teacher distribution problem, and that we ought to focus on creating schools for low-income studetns that veteran teachers would actually want to teach in.

But both they and Major Kate Walsh are framing the possible solutions too narrowly. It's true that finding a way to get more experienced teachers into high-poverty schools would be one way of complying with the proposed changes (which would require schools to use actual teacher salaries--not, as is current practice, made-up salaries from an alternate universe where teachers aren't paid more for experience--in calculating school spending for the purposes of ensuring equitable funding). There are also at least two other ways to comply:

1) Districts could stop giving automatic pay raises based merely on years of experience, and instead use that money to boost pay for teachers who are higher performing and who are willing to teach in high-poverty schools.

2) Districts could reduce class size in high-poverty schools.

The first option is obviously hugely controversial and not something many local teachers unions are going to embrace right away (although I think more are starting to move in that direction.)But the section option is straightforward to implement and should be palatable to pretty much everyone--isn't class size reduction high on the AFT and NEA school reform agendas? That way if you've got a situation like Kate imagines, where "a go-getter principal...has hired a lot of young, energetic staff and is starting to make real progress," you're giving that principal the money to hire even more go-getters. It might mean freeing up resources from other parts of the district budget to pay for more teachers--but again, that's a union-friendly reform.

And while it also might mean increasing class sizes in the lower-poverty schools, this would on balance be a net-plus tradeoff, since the veteran teachers would presumably be better able to handle a few more students per class. Moreover, the extant research is pretty clear that class size reduction is far more effective for at-risk students than others, so the result would be lowering class size where it will do the most good and increasing it where it will do the least harm.

Co-Ed Fraternities?

I was in a fraternity in college. In fact, I was the president my senior year. As time goes on, I often feel the need to quickly follow this disclosure by some qualifier along the lines of "But don't worry, I wasn't, you know, one of those guys. My fraternity was really uncool! The Sig-Eps kicked our ass in basketball, the AZDs wouldn't mix with us -- I swear!"

That said, I have no regrets, my brothers were a great bunch of guys, and I'm still friends with a lot of them to this day. We had a great time in college, and even went to class now and then. Which is probably why last Thurday's federal appeals court ruling that CUNY can deny recognition to a fraternity on the grounds that it's all-male nature violates the university's anti-gender bias policy strikes me as complete crazy.

As the article notes, this reasoning flies in the face of ruling by a different appeals court last year that Southern Illinois University can't deny recognition to the Christian Legal Society due its anti-gay policies. The court said:

CLS’s beliefs about sexual morality are among its defining values; forcing it to accept as members those who engage in or approve of homosexual conduct would cause the group as it currently identifies itself to cease to exist,” says that decision. “What interest does SIU have in forcing CLS to accept members whose activities violate its creed other than eradicating or neutralizing particular beliefs contained in that creed?”

Personally, I think homophobia born of religous conviction is homophobia nonetheless. But that's me; it's a free country, and the First Amendment freedoms of speech, religion, and assembly are the foundation on which our civil society rests. It's alarming that our colleges and universities are often the places where those values are least likely to be respected.