Thursday, June 23, 2011

Walker & Darling cruelly betray Wisconsin's hard working people

It is outrageous that 10,000 unemployed Wisconsinites have lost their unemployment compensation benefits because Governor Scott Walker and Joint Finance Committee co-chair Alberta Darling have done nothing to collect $89million in federally funded jobless benefits.

All that is required to secure these federal dollars and provide extended benefits to the unemployed is a small change in state law.  The change would have absolutely no impact on the state's struggling unemployment insurance trust fund or the state's deficit. But it would provide 13 more weeks of benefits to workers who have been without employment for roughly a year and a half and promote economic growth and job creation in the state.

While refusing the $89 million in federal extended unemployment benefits, Walker and Darling have led the legislature in passing legislation forcing the unemployed to wait a week before becoming eligible for unemployment which will take $50 million out of their pockets and the Wisconsin economy.

Why haven’t Walker and Darling who campaigned on a platform of jobs, jobs, and more jobs and orchestrated almost $600 million in corporate and investor tax breaks in this budget acted?

The New York Times suggested they were refusing the money because of ideological reasons. And that certainly is one factor. But another is that both of these career politicians are the agents of the Wisconsin corporate community that wants to use the jobless recover to drive down wages of Wisconsin’s working people by forcing the unemployed to accept any job at any wage in an unforgiving labor market.

Despite skilled labor shortages in certain sectors, Wisconsin, like the nation, has a jobs deficit, not a labor shortage. According to the Bureau of Labor Statistics Wisconsin has 126,000 fewer jobs than it did before the recession began. Nationally there are 4.6 workers for every job. Wisconsin’s numbers mirror the nation.

Yet some Wisconsin business leaders think that Wisconsin’s unemployed workers would rather sit at home and collect unemployment checks than work.

They are dead wrong.

Over the past year, the Wisconsin unemployment rate has inched downwards by 1.4 percentage points. But this decline can be explained in part by some workers dropping out of the labor force as they have become discouraged by prolonged unemployment. As a result they are no longer considered unemployed. Just last month professional services, financial firms, restaurants, hotels, and city and county governments cut jobs. More job cuts are on the way as a result of the cuts in state aid for public schools and local government.

Walker claims that the $89 million won’t create jobs. On this he is dead wrong. Mark Zandi, an economist who works for both political parties, has documented that extending unemployment benefits is one of the most effective policies government can employ to promote economic growth and job creation. Its economic impact of 1.63 is almost five times greater than cutting corporate taxes or capital gains taxes, policies both Walker and Darling have pushed through the legislation.

Extending unemployment benefits is good economic policy. It is also the decent thing to do.

Literally thousands of hard-working, tax- paying Wisconsin workers and their families have lost their jobs through no fault of their own. They want to work and cannot find work. Many have lost their homes or are in danger of losing their homes. It is not only bad for the economy to deny the unemployed these benefits it is also a cruel betrayal of Wisconsin’s values and the state’s hard-working people.It is in a word immoral!

Monday, June 20, 2011

John Nichols: Alberta Darling works with Ryan to cut Medicare

Is State Senator Alberta Darling working with Congressman Paul Ryan to dismantle Medicare? According to John Nichols, the Capitol Times associate editor, Senator Darling, the  co-chair of the Committee on Joint Finance, is doing exactly that.

Check out Nichols column here.

Thursday, June 16, 2011

MATC welding instructor responds to Bucyrus CEO: Don't blame MATC

Larry Gross, an MATC welding instructor who trains welders for Bucyrus International and other manufacturing firms, writes that CEO Tim Sullivan's criticisms of MATC are off the mark.

Gross asserts that if we are serious about addressing the shortage of welders and other skilled tradesmen we must reverse the Walker cuts to technical education and invest in MATC and other technical colleges.

Read Mr Gross' response to Tim Sullivan here.

Monday, June 13, 2011

Congress needs to regulate for-profit colleges

A week after the Department of Education issued watered down rules regulating for-profit colleges, the New York Times urges Congress to step in with tougher regulations.

The Obama administration is right to tighten rules for for-profit colleges, which have come under scrutiny for deceptive practices and burying students in unreasonable debt. But the Department of Education is limited in its regulatory authority. It is up to Congress to rein in abuses by toughening the laws that govern this industry.

The for-profit system, which enrolls only about 12 percent of all students in higher education, absorbs about a quarter of the federal government’s $155 billion student aid budget. These schools, some of which get as much as 90 percent of their money from federal student aid, earn a profit partly by charging higher tuition than public colleges and by driving their students into debt. Among bachelor’s degree recipients, for example, nearly a quarter of 2008 graduates from for-profit colleges owed $40,000 or more, compared with just 6 percent of graduates from public colleges.

According to Congressional testimony this week, the debt burden is higher because for-profit schools sometimes encourage students to borrow privately from the school, rather than from federal programs, which often have lower rates and loan forbearance for those who fall ill or become jobless. The private loans are often subprime, with high rates and almost no consumer protections.

Even though the for-profit system serves only a little more than a tenth of those in postsecondary education, it accounts for nearly half of student loan defaults. The losses are generally of little concern to the companies themselves, because most of the tuition is paid by federal loans backed by the taxpayer. The defaulting students often end up with their lives in financial ruin.

Bankruptcy makes it possible to escape credit card and gambling debt but nearly impossible to escape student loan debt. As a result, students who default on school loans may never be able to have that weight lifted and can end up with creditors garnishing their wages.

The Obama administration has tried to address these problems with new rules to make programs with especially high levels of student debt and very low repayment rates ineligible for federal student aid. But these rules are insufficient.

Congress should rewrite the law so that the Department of Education is allowed to consider a school’s student loan default rates over a period of up to a decade or more in determining sanctions. Similarly, Congress should make it illegal for companies to drive students into costly private loans when they are eligible for more affordable, federally guaranteed loans.

Tuesday, June 7, 2011

For-Profit College Stocks Soar in Response to Weakened Federal Regulations

Shares of for-profit colleges surged the most in six years after the Obama administration eased rules that would cut off federal aid to schools whose students struggle the most to repay their government loans.

Under the rules published last Thursday, companies including University of Phoenix owner Apollo Group Inc. won't risk losing their federal funding until 2015, three years later than under a previous draft, the Education Department said.

Friday, June 3, 2011

Feds issue for-profit regs: concessions or a cave-In?

After 10 months, more than 100 meetings with for-profit colleges and other stakeholders and 90,000 written comments, the Education Department today formally unveiled its second attempt to craft a new system for determining whether vocational programs prepare their graduates for "gainful employment."

Like the highly controversial draft rules that the department proposed last July, the final rules focus on the amount of debt that students in for-profit and certificate programs take on, and on their prospects for paying it off. The final regulations offer colleges significantly more leeway, lowering the required debt-to-income ratios and giving institutions more chances to improve before they lose eligibility for federal financial aid.

Many of the changes address concerns that for-profit institutions (and their allies in Congress) have raised, and over which they have threatened to sue. But Education Department officials (and a leading White House aide) tried to make clear in describing the new rules to reporters on Wednesday that colleges were not "off the hook." Education Secretary Arne Duncan called the new set of regulations “more thoughtful and more sophisticated” than the previous version, but added that the for-profit sector’s success “should not come at the expense of taxpayers and students.”

In refining the measures, the department landed between critics and supporters of for-profit institutions -- and failed to please either group. For-profit colleges wanted nothing more than for the matter to disappear entirely, arguing that the Education Department had overstepped its bounds by issuing the regulations at all and continuing to hold out the prospect of a lawsuit, even as their advocates conceded that the department had moved significantly in their direction.

Supporters of tougher regulations felt disappointed or even betrayed by the new measures, which they said had been watered down to the point where they could no longer protect students. The real test will come in Congress, where a bipartisan group of representatives approved an amendment in February that would block the regulation. The changes the department has made seemed in many ways aimed at winning them over.

Round Two

Compared to the original proposed regulations, the new rules (a PDF of which is available here) will kick in later, give colleges more chances to fix problems and loosen several requirements on measuring debt and repayment. The first year that programs could lose eligibility is now 2015, three years later than previously proposed, and data collection will not begin until 2012, after the new measures take effect.

The rules require programs at for-profit universities and certificate and vocational programs at nonprofit institutions to show that at least 35 percent of their students are repaying their loans or that the annual loan payment does not exceed 30 percent of a typical graduate’s discretionary income or 12 percent of total income. An institution need meet only one of the three requirements to stay eligible for federal aid.

In the proposed rule, those benchmarks were considered the minimum that colleges had to meet to retain aid eligibility. The preferred standards were a 45 percent repayment rate, a debt-to-discretionary-income ratio of 20 percent or a debt-to-income ratio of 8 percent. Colleges falling in between the two levels would have been placed on “restricted” status, which would cap enrollment and require the institutions to warn students they might not be able to pay off their debt, among other measures. Colleges that could not meet the minimum would have lost eligibility immediately.

In the final regulations, the restricted status has been eliminated and replaced with the “three strikes” rule, which department officials say is closer to its policies in other areas, such as on student loan default rates. Colleges would have to fail to meet each of the criteria for three years out of four. In the meantime, they would not face enrollment caps, though they would still have to tell students the first year that they missed the target and warn them about the program’s status after the second.

“We’re asking companies that get up to 90 percent of their profits and their revenue from taxpayer dollars to be at least 35 percent effective,” Duncan said, referring to the federal financial aid on which many for-profit colleges depend almost entirely. It is only reasonable, said Duncan and Gene B. Sperling, who heads the White House economic council and helped craft the new rules, to hold such institutions accountable.

The administration made several other concessions as well. Students have been allotted a longer time to pay off loans, so that the annual debt burden is lower: a 10-year term remains in place for certificate or associate degree programs, but bachelor’s and master’s degree candidates would have 15 years to pay off their loans, and other graduates would have 20. And colleges can cap their measurements of student debt at the amount necessary to pay tuition, fees, textbooks and other college expenses -- to avoid counting debt amassed by students who borrow more than that amount and use some of it to pay living expenses while enrolled.

The methods for measuring debt repayment have also been adjusted. Students will now be evaluated in their third and fourth years out of college, rather than in each of the first four years out, and those enrolled in the government-sponsored income-based repayment plan, or in other government programs that allow them to pay interest rather than repay principal on their loans, will be considered to be successfully repaying.

Administration officials, who have come under intense lobbying pressure from for-profit colleges over the gainful employment and other "program integrity" regulations, emphasized repeatedly during the call with reporters that they had listened to for-profit institutions’ concerns and adjusted the rules, and that they thought the second version was an improvement.

“This rule will increase access for students to get to attend a quality career college education,” said Sperling. “It will only decrease access to very weak programs that leave students with a crushing debt burden and do little to help them achieve gainful employment that was supposed to be the purpose of the education they were receiving.”

Observers pointed out that the department's changes supplied most of the items on for-profit colleges' wish lists -- short of dropping the matter entirely. An industry adviser pointed to the cost-of-living exemption as one of the more significant changes, but said that many would be “helpful” to for-profit colleges.

Some of the most vocal advocates for tighter regulation reacted with dismay to the changes. The Institute for College Access and Success, a nonprofit group that rarely publicly criticizes Duncan, called the new rule a “first step” but said it was ultimately inadequate to protect students.

“More needs to be done to prevent the waste of taxpayer dollars and protect students, including veterans, from programs that swindle them rather than prepare them to succeed in the work force,” Pauline Abernathy, the institute’s vice president, said in a statement.

The colleges themselves reacted cautiously, walking a fine line between reinforcing the complaints (and legal threats) they had already made and acknowledging that the department had made important concessions. The Coalition for Educational Success, a lobbying group made up of for-profit colleges that has challenged other program-integrity regulations in court, maintained that the Education Department, in defining "gainful employment," had stepped into territory that should be controlled by Congress.

The Association of Private-Sector Colleges and Universities will review the new rule to see how many programs it will affect, President Harris Miller said. The Education Department estimates that 18 percent of programs at for-profit colleges will fail to meet at least one of the benchmarks at some point, and 5 percent of for-profit programs will lose eligibility under the “three strikes” rule.

He maintained that the group’s legal position, that the regulations were “a backdoor way of price fixing” outside the department’s authority, still stood, and would be grounds for a lawsuit. But whether one is filed will come down to the colleges' opinion of the revised regulations, regardless of the legal situation.

“The department did make changes,” Miller said. “I can’t say this is a victory or a defeat because it’s all about the students.”

Key players in Congress, including Sen. Tom Harkin, the Iowa Democrat who, as Senate Health, Education, Labor and Pensions Committee chairman, has held a series of high-profile (and highly critical) hearings on for-profit colleges, issued equally guarded statements. Harkin called the regulations a “modest and important first step.”

Other observers noted how much the landscape has changed in the past 10 months. Since the initial regulations were issued, Congress has held hearings on for-profit colleges’ recruiting tactics, state attorneys general have opened investigations into their operations, and scrutiny in the media has grown, said David Halperin, director of Campus Progress, a liberal youth advocacy group.

Some who hoped for a crackdown said they thought the combination of regulations and scrutiny might accomplish what the regulations alone will not: reining in the proprietary institutions, and especially the worst among them. “It ultimately means that the for-profit industry is going to have to be held accountable,” he said.

Libby A. Nelson
Inside Higher Ed