White Rural Rage, Reviewed

March, 2024

Lincoln and Washington —  White Rural Rage: The Threat to American Democracy, a new book by political scientist Thomas Schaller and journalist Paul Waldman, is such worthy documentation of the current state of rural collapse in America that a dozen copies of it should be placed in every rural library across the country. 

That is, if any such libraries are left.  The same goes for other places where people might read it: schools, nursing homes, doctor's offices.  Rural America has been hollowed out.  Some rural denizens, who will see the book as a slur on their character, will instead offer the book as kindling for an American Bebelplatz.  

The book deserves our most solemn attention.  The authors' impressive collection of statistical evidence and anecdotal information is frightening, even if sometimes presented as over-generalization.  Societal dysfunction is leading to authoritarianism and violence across a culture.  Most helpful is a technical note to understand the statistics, "What We Mean When We Talk About 'Rural'."

Also helpful is an up-front acknowledgement that many will dismiss the book as the biased product of two "coastal cosmopolitans."  Indeed, more should have been done to allay such concerns.  The book, for all its strengths, is regrettably weak in citing authoritative and readily available rural sources like the policy-oriented Center for Rural Affairs and the rural journalist nonpareil Art Cullen.

A book like this should likewise not have omitted mention of key moments in the demise of rural America.  Richard Nixon's Secretary of Agriculture Earl Butz told farmers "get big or get out," accelerating depopulation. His blunt directive was representative of decades of federal Farm Bills that wiped out generations of family farms in favor of corporate agriculture.  Later, other countries' reactions to Donald Trump's misguided imposition of tariffs hit rural America hardest.  Trump's plundering of Commodity Credit Corporation funds to send welfare checks to producers to make up for it has turned farm country into a federal vassalage.  Columnist Alan Guebert tells these sad tales from the deep heartland as few others can, and references to his work would have dispelled the book's coastal cosmopolitan bias. 

Another omission is an explanation of how the rural communication networks established by land grant universities have become conduits for the spread of rural rage.  The Cooperative Extension Service, established by the Smith Lever Act to convey university research, never completely cut its former ties to the Farm Bureau, a powerful interest group aligned with corporate agriculture and monopolies.  To many, they are still synonymous, or at least compatible in outlook.  Trump relies heavily on the Farm Bureau to do his business in the heartland.  

The most striking omission in the book becomes apparent as readers surely scream at virtually every page, "So what is anybody doing about this!"  There are few if any anecdotes about Democrats' efforts to counter the authoritarian Republican takeover.  Instead, in chapter after chapter, the disproportionate influence of rural areas in our constitutional system, especially in the Electoral College and the Senate, is highlighted and blamed.  The question of why Democrats don't compete in rural areas, if this is where the most consequential votes exist, is not seriously addressed.  

A reason for this may be that one of the authors once advocated that Democrats could safely give up on winning votes in the South, which in many places heavily overlaps with rural.  It is a strategy that national Democrats have pursued nationwide — essentially giving up on rural voters and trying to rely on identitarianism to win.  Many rural Democrats have fought this abandonment intensely, and lost.  Their anecdotes are sorely missing from this book.  It's long past time to name the names responsible. 

In the final chapter, remedies for white rural rage are offered but they are not convincing.  Nobel laureate Paul Krugman reviewed the book and concluded that the demise of rural America was inevitable and the situation is fundamentally hopeless.  Neither is true, but that is not an erroneous reading of the book, sadly. 

The authors end with hope that a movement with a better vision of the future will be created.  But just who would lead this movement is a big blank.  The authors do not develop a case along the way that a change in Democrats' strategy, or courageous leadership from the nation's land grant universities, or less counterproductive Farm and Food Bills could show the way.  Actually, those three in combination could make a huge difference.  

Maybe a quick second edition could overcome these shortcomings?  That's a scream and a plea.     

Reject the Proposed Price-Fixing Settlement

January, 2024

Washington — Because it is one of the largest, most-consequential higher education lawsuits in recent memory, federal Judge Matthew F. Kennelly should not approve an unbalanced, unfair, and secretive settlement proposed by the plaintiffs and several defendants in Henry et al. v. Brown.  The much-disputed class-action case deals with price-fixing to raise the net price of attendance for the financially-needy at seventeen prominent institutions.*  

The settlement as proposed shortchanges student victims, represents a victory for the "enrollment management" industry at the expense of transparency in higher education finance, and thoughtlessly ignores the interests of taxpayers.   

Consider, for starters, this proposed provision: 

By [DATE], Settlement Class Counsel will move for an award of attorneys’ fees not to exceed 1/3 of the Settlement Fund, plus any accrued interest, reimbursement of litigation costs and expenses not to exceed $12,000,000 and service awards of up to $20,000 for each of the eight Settlement Class Representatives to be paid out of the Settlement Fund. If the Court grants Settlement Class Counsel’s requests, these amounts would be deducted from the Settlement Fund.

Because the proposed settlement fund is now $118 million and growing, attorneys fees will amount to over $39 million, in addition to up to $12 million in costs and expenses, or $51 million.  The victims of price-fixing in the affected class are expected to be awarded only $750 each.  And the eight named settlement class representatives will each get up to $20,000, or about .0004 (less than one-half of one percent) of the amount awarded to counsel.  Although counsel's work is commendable in routing out collusive institutional behavior, the case was notably assisted by a statement of the U.S. Department of Justice and an investigation by the New York Attorney General.   

Those who have followed this case will notice that the named representatives have changed somewhat since its original filing.  This may be the result of standing issues or because the representatives and their families were targeted for investigations themselves by the defendants.  If the latter, the awards do not adequately compensate the representatives.  One can only imagine what plaintiffs' families may have been subjected to, although Judge Kennelly seems to have mitigated the worst of it.   

Consider next the matter of transparency, which is being intentionally abandoned in this proposed settlement.  The defendants will not have to disclose any of their price-fixing methods (behind which there is a large consulting industry) and will be able to claim that they have committed no wrongdoing.  But was there wrongdoing?  What exactly defines price-fixing?  Is the public (let alone the regulators) supposed to guess?  Judge Kennelly, in denying an early motion for summary judgement against the plaintiffs, wrote this about the "enrollment management" methods at the heart of the case: 

The plaintiffs allege that ... the defendants ... purposefully "maintain a shroud of secrecy over" their enrollment management practices to avoid legal scrutiny.  Id. ¶¶ 157–58.  The evidence the plaintiffs cite is more than sufficient....   [Emphasis added]

Discovery in this case was extensive, the result of two years of "hard-fought litigation," according to the settlement proposal.   So what was discovered that is worth $118 million to cover up?  The schools must find something hugely threatening to be willing to pay such amounts to prevent the public from seeing what they (and their consultants) have been doing to drive up net price for those who can least afford it.  The amounts speak for themselves.  "Varsity Blues" pales in comparison.   

But also consider that several of the defendants have not yet agreed to settle and may be willing to go to trial to exonerate themselves.** This is also plausible.  I have spoken with many financial aid administrators at other colleges who have told me of internal struggles over the methods at issue.  (These methods are not limited to seventeen elite institutions but are in play at hundreds if not thousands of other schools.)  Not always have the price-fixers won out.  Among other reasons, the use of these methods often has a disproportionately adverse effect on minority populations, which when employed would give lie to institutional pronouncements supporting racial diversity and equity.  All of which may explain why some schools will go to extremes not to let the public see what is behind their decision-making.  

Consider next the interests of taxpayers in this case and its proposed settlement.  All of the schools involved are non-profit 501(c)3 institutions that encourage and receive tax-deductible contributions.  Such amounts are often referred to as "tax expenditures" in public finance.  If and when these funds are used in a settlement to deprive the public from understanding what goes on in financial aid offices behind closed doors, it is a misuse of the funds.  As a donor, I do not want my contributions paying for cover-ups.  

Additional concern:  does the proposed settlement also involve a supplemental agreement beyond the "merits" settlement, by which the class representatives are prohibited from disclosing any of the discovered materials?  Such non-disclosure agreements should be fully disclosed and the representatives made fully aware of the burdens being put on them.

I hope Judge Kennelly raises all of the above issues and considers what good might come of the case if the public interest is placed front and center.  Among those who need to know what is legal and what is not are financially-needy families and well-meaning counselors and advisors who try to inform them.  Imagine future "college nights" at high schools where families are told honestly what to watch out for in college financial aid packages, and how not to become victims of enrollment management price-fixing at any school they choose to attend, public or private.  

This case will have a good outcome only if it ultimately results in less reliance by the financially-needy on student and parent loans.  It will have a bad outcome if it merely shuffles hundreds of millions of dollars among the educational and professional gilt-edged.  Judge Kennelly can make a good outcome happen by requiring a better settlement.  

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* Plaintiffs alleged that seventeen universities "violated the antitrust laws by agreeing on a common formula and common principles regarding financial aid, and by exchanging competitively sensitive information concerning financial aid principles, formulas, and pricing."

** Settling defendants: Univ. of Chicago, Vanderbilt, Yale, Columbia, Emory, Duke, Brown, Rice.  Other defendants: Cal Tech, Cornell, M.I.T., Penn, Dartmouth, Georgetown, Notre Dame, Johns Hopkins, Northwestern.  

Civil War Echos in a Puzzling Name Choice

December, 2023

Lincoln — Looking recently into the family tree, I came across the name Abel McClellan Wimer, born 1869, son of John Elias Wimer (1837-1907) and his wife Sarah Margaret Moyers (1847-1937).  They lived in Otoe County, Nebraska, in the 1880s and later homesteaded around Dalton in the Nebraska panhandle.  John Elias Wimer was a former Confederate soldier, a member of a horse artillery unit of the 7th Virginia Cavalry.  He is a first cousin of mine, four generations removed, through his Zicafoose mother. 

So why did he name his first born son with Sarah Moyers, also from a Confederate family, after a Union general, George McClellan?  

The connection could possibly have been through his first wife, Jemima Lamb, daughter of Noah W. Lamb. She had died in 1867; her father was a Union supporter, at least by the end of the war. 

Noah Lamb is also my cousin, three generations removed, through his Simmons mother.   I first came across him in an April, 1865, letter from Union Captain John Boggs to the West Virginia governor asking for the governor's help in returning several head of Noah Lamb's horses to him after they had been stolen by the Elza gang, known as the Dixie Boys.  Boggs attested to Lamb's character and loyalty to the Union.  

This is ironic, because Lamb on his Simmons side descended from slaveowners, while Wimer on his Zicafoose side did not.  

Which is not to say Lamb's whole family was loyalist.  Noah Lamb's son, who bore his father's name, apparently joined the Confederate army, if his 1924 obituary is to be believed.  The obituary cites, in the overblown 'lost cause' language of the time, the son's gallantry as a Confederate cavalryman in the Shenandoah Valley.  Civil War records show a Noah Lamb serving in the 58th Virginia Infantry, which fought there.  

After the war, young Noah married Susannah Wimer, sister of John Elias Wimer, and moved to Coffey County, Kansas.  His neighbor there was Peter John Wimer, another Wimer sibling.  Susannah died in Kansas in 1871.  Noah moved back to West Virginia and married Mary Ann Zicafoose.  Peter moved back to Virginia after being in legal trouble and died in 1908 in a poorhouse in Rockingham County.  John Elias Wimer eventually left Nebraska for Louisiana and then California, where he is buried with a marker indicating his service to the Confederacy.  

Little of this explains the naming of Abel McClellan Wimer (1869-1904).  It could have been a gesture somehow to heal family rifts and to move on from the war.  It could have been out of bitterness towards Abraham Lincoln (McClellan ran against Lincoln for president in 1864).  It could have been for something McClellan did early in the war, such as exchanging and freeing captured Confederates from Pendleton County.  It could have been simply in the tradition of the time to name babies after famous people; a later son was named after Grover Cleveland.  

It's an unsolved mystery; maybe something will turn up that explains the unusual naming.  

Abel McClellan Wimer (1869-1904)

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Correction:  In a previous version of this post, the elder Noah Lamb was identified as having served in the Union Army.  That is likely to have been another person of the same name.  

FAFSA Delays Are Only Part of the Problem

December, 2023

Washington — A bipartisan group of thirty-seven U.S. senators recently wrote urgently to the Secretary of Education, troubled by a delayed rollout of the latest version of the Free Application for Federal Student Aid (FAFSA).  The new version permits an additional 1.5 million financially-needy students a maximum Pell Grant.  The senators wrote:

While the simplified FAFSA is meant to provide more students with federal student aid, we fear the most vulnerable students will be negatively impacted by these delays.

I asked a score of higher education experts not about the delays, but perhaps more importantly about how much the new FAFSA would actually help the financially needy once it is implemented.  They demurred, knowing that it is one thing to increase grant awards, but it is quite another to know how students' entire financial aid packages will look as a result.  

Many colleges prepare the aid packages behind closed doors.  They often see advantages for themselves in adding loan burdens onto students and parents by shuffling fungible grant aid away from needy students to meet institutional goals of enrolling students at the least possible cost to themselves, and not one dollar more.  Increasingly, this is being done by AI. 

Buyer beware. 

One of the worst "awards" in a financial aid package is a federal Parent Direct PLUS loan.  It is so bad that many colleges will not, on ethical* grounds, include such a loan in an aid package.  But thousands of colleges do.  The application is simple and the warning signs in the loan application are easy to miss.  

Here are three quotations to watch for in the application process if you are a parent and a college encourages you to borrow Parent Direct PLUS.  

• "Loan Amount Requested:  For each academic year, you may borrow up to—but not more than—the school's cost of attendance, minus the amount of other financial assistance received."

Beware:  An alert consumer will recognize that the amount of the loan proceeds to be paid to the college can be raised by the college itself by reducing the amount of "other financial assistance received," much of which is under the college's own control.  Institutional grant aid is often used as a strategic tool for exactly these purposes; federal SEOG and state grant programs may also be fungible.  Note that the college has every reason to maximize parent borrowing because it is the recipient of loan proceeds while bearing none of the risks of default. Parent Direct PLUS loans are a cash-cow for colleges that chose to exploit families for their own benefit.  Too many students drop out under the weight of family debt.

• "To qualify for a Direct PLUS Loan, you must not have an adverse credit history. If the credit check shows that you have an adverse credit history, we will explain how you may still be able to qualify for a Direct PLUS loan."

Beware:  Colleges often advise parents, even if parents believe they will not pass an adverse credit check, that they should apply for Parent Direct PLUS because if they are turned down, their students will be classified as independent and will be eligible to borrow more in their own right.  However, parents should know that the credit check, performed by contractors of the U.S. Department of Education, was weakened in 2014 through negotiated rulemaking under pressure from colleges, so parents may find themselves qualified in spite of believing they cannot afford to repay.  Moreover, even those who fail can qualify if they claim "extenuating circumstances" or get a co-signing sponsor.  Incentives for abuse abound.     
   
• "Before you can receive a Direct PLUS Loan, you must complete a Direct PLUS Loan Master Promissory Note (Direct PLUS Loan MPN), which explains all of the terms and conditions of Direct PLUS Loans and is your legally binding agreement to repay all Direct PLUS Loans you receive under the Direct PLUS Loan MPN."

Beware:  Colleges often congratulate parents on qualifiying for Direct PLUS "awards" before parents understand that the interest rates for such loans are much higher than for other federal student loans and that origination fees are also much higher.  They do not advise parents that they have a right to know, under federal regulation [34 CFR § 668.42 (b)(3) and (4)], if they were targeted behaviorally and demographically by a college's AI algorithm as meeting criteria for Direct PLUS packaging, let alone how that algorithm was developed.  Also, parents are almost surely unaware that the Parent Direct PLUS is the only federal student loan that makes money for the U.S. Treasury, which creates an incentive on the part of policymakers not to look closely at what thousands of colleges are doing to put families into debt from which they may never recover.   

Note to Congress and to parents:  The links below provide a primer on these issues.  After you read them, you may wonder if all this is actually legal.  It's a good question.  Manipulations and deceptions by colleges may violate consumer protection laws; price-fixing may be involved if one subscribes to a recent statement of the Department of Justice about universities that covertly and systematically withhold institutional grants from financially needy students. 

An overview: https://opportunityamericaonline.org/wp-content/uploads/2017/04/THE-U.S.-MAKES-IT-EASY-FOR-PARENTS-TO-GET-COLLEGE-LOANS—REPAYING-THEM-IS-ANOTHER-STORY.pdf 

Defaults: https://www.newsweek.com/2021/07/30/parent-loans-fraught-peril-default-rates-hit-20-30-percent-many-colleges-1610943.html 

*Ethical issues: https://www.nasfaa.org/news-item/26254/Parent_PLUS_Loan_Packaging_Comes_Under_Scrutiny ["And the problems plaguing the program over the years have been well-documented. Numerous reports have identified issues and potential solutions, ranging from a lack of strict federal standards on the loans to the fact that there are no measures in place to hold institutions accountable who encourage parents to borrow beyond their means."]

Algorithms and AI:  https://www.brookings.edu/articles/enrollment-algorithms-are-contributing-to-the-crises-of-higher-education ["The prevailing evidence suggests that these algorithms generally reduce the amount of scholarship funding offered to students. Further, algorithms excel at identifying a student’s exact willingness to pay, meaning they may drive enrollment while also reducing students’ chances to persist and graduate."]

Algorithms and debt:








The Causes of National Student Loan Dysfunction

November, 2023

Washington — Is the nation's long-running student loan imbroglio a failure of program implementation or are its causes more deeply rooted in decades-old structural contradictions and counterproductive incentives that doomed loan programs from the start?  

It is a mistake to attribute too many of the failures to faulty implementation.  Wrong turns in policy choices, especially in 1972 and 1996, created conditions that even the best implementation efforts cannot overcome.

The Higher Education Act of 1965 established federal student aid programs within a structure of cooperative federalism.  College Work Study (CWS), Education Opportunity Grants (EOG), and National Defense Student Loans (Perkins Loans) required state and institutional participation through fiscal federalism mechanisms such as matching and maintenance-of-effort requirements (also known as "skin-in-the-game").  Guaranteed Student Loans (GSL) had no such requirements, but it was envisioned as a minor bridge program to fill gaps in other coverage.  

The Nixon administration upset this approach by proposing two new programs in a unitary government structure, through which the federal government provided all funding and administration with no required state or institutional buy-ins.  Basic Education Opportunity Grants (BEOG) were established in the Education Amendments of 1972, along with a national secondary market (Sallie Mae) to expand the GSL program.  

Unsurprisingly, states and institutions began to prefer the programs that made no demands on them and lobbied Congress accordingly.  However, the Reagan administration soon shifted the balance of student aid funding away from BEOG (renamed Pell Grants in 1980) toward GSL (renamed FFEL in 1992).  By the mid-1990s, FFEL loans became far and away the major source of student financial aid. 

In 1996, Sallie Mae and several state-established FFEL secondary markets proposed for-profit* status for themselves, touting market forces as good for student loan efficiencies.  The Clinton administration and Congress acceded.  The result, however, was to prioritize the interests of stockholders over the interests of borrowers.  

In 2001, the Bush administration appointed lobbyists associated with for-profit secondary markets and for-profit colleges to high positions in the Department of Education.  Lending again exploded in a wild-west atmosphere because both the program structures and incentives were aligned to facilitate it.   

The Great Recession of 2008 required Congress to step in to save student loan secondary markets through ECASLA legislation and in 2010 Congress ended the scandal-plagued FFEL program by originating all new federal student loans through a Direct Loan program, which uses Treasury rather than private capital for the loans.   

These changes, however, did not address underlying structural and incentive issues, nor did various efforts to ease repayment burdens on borrowers, which unfortunately have complicated student loan administration and become tangled in litigation.  Attempts at increased regulation of the programs conceived in the unitary government model have, likewise, been mired in controversy for years. 

Recent headlines suggest that student loan servicing issues — borrowers can't even get through to their servicers — are the result of a failure of the Department of Education and its contractors to apply digital age technology correctly.  That may be true, and a better approach** must be sought.  But even the best technology cannot repair programs structurally misaligned with their goals and riddled with perverse incentives. 

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*Sallie Mae was already for-profit, but as a regulated Government Sponsored Enterprise (GSE). 

**Jennifer Pahlka, in Recoding America: Why Government is Failing in the Digital Age and How We Can Do Better (2023), offers many compelling case studies and much good advice.  Her focus, however, is on program implementation, not on program structures and incentives.  She does not, unfortunately, offer analyses of federal student aid programs.  

Crackdown Welcome, but Decades Too Late

October, 2023

Washington —  Welcome news from the U.S. Department of Education:  it is finally cracking down on student loan servicers that are failing in their responsibility to borrowers.  Federal funds under contract will be withheld from servicer MOHELA for its many serious transgressions.  Other servicers have been put on notice.  

Unfortunately, it comes years and even decades too late.  Had borrowers been better protected from faulty servicing over the years, many would not find themselves in the kinds of repayment crises that now justify billions of dollars of outright loan cancellations.  Which the department is slowly but methodically making.   

I have a hypothesis that I believe is worthy of exploration:  servicers that have somehow been held to account for their behavior over the years have victimized far fewer borrowers than those that have not experienced accountability sanctions.  In the former group are those that either cleaned up their performance or dropped their federal contracts.  In the latter group are those whose bad behaviors were overlooked or even indulged by the Department of Education and the Department of Justice, ultimately at great cost.  

A new report by the CFPB ombudsman included the graphic below (click to enlarge) that appears to support the hypothesis, if read over time.   Navient was eventually held to account by CFPB litigation; PHEAA was held to account by the Massachusetts attorney general.  Both were further undone by U.S. Senate hearings in 2021.  But holding Navient and PHEAA to account came too late for many borrowers.  These two servicers were able to hold off accountability for decades, due in part to the revolving door of personnel who rotated between the servicers, federal offices, and key staff positions in Congress. 

Accountability came earlier for several servicers who had to suffer the consequences of making false claims in their role as lenders in the early 2000s.  In response to qui tam litigation, they either undertook serious reforms to regain credibility (and earn greater servicing volume) or went out of business.   But those consequences were not initiated or administered by the Department of Education, which sent unsubtle messages to servicers like Navient and PHEAA — and MOHELA — that lax oversight would continue as far as it was concerned.  Even false claims against taxpayers did not have to be repaid.   






With the new, tougher stance of the Department of Education comes an invitation to those with knowledge of violations to report them. See footnote, below.*  Before praising the department for this initiative, however, it should be pointed out that if more information on these subjects were published by the department, more people could offer insights on servicing problems and solutions.  For example, it would be good to know how much of the federal loan portfolio is principal, interest, capitalized interest, fees, negative amortization, etc.  Even estimates would be helpful.  Nor is it too late to take the long-neglected advice of student loan expert Tom Butts, who has called for the department to open up competition for student loan servicing to include experienced home mortgage and credit card servicers. 

A closer look is also overdue to determine why and how so many borrowers took on so much debt in the first place, particularly those who wouldn't have, and shouldn't have, but for being manipulated into it by postsecondary institutions and their vendors, consultants, and contractors.  A good place to start is with New America's Kevin Carey, whose provocative 2022 article ("The Single Most Important Thing to Know About Financial Aid: It’s a Sham") compares student financial aid packaging at many institutions to airline ticket pricing.

The comparison is apt.  It raises the question of how federal student aid programs, which are supposed to be helping those with financial need, got transformed into life-ruining debt burdens for literally millions of citizens.  Was the Department of Education not aware of this?  Has it done anything to stop the exploitation? Are revenue-maximizing, data-driven algorithms imposed over federal programs even legal?  (I would like to see a case brought against the worst practices.) Are Navient (dba Sallie Mae) and PHEAA now growing the even wilder private student loan market to make up for their losses of federal servicing revenue?  

The problem is not just with one department that is not up to the job of taking on the nation's student loan behemoths.  The U.S. Supreme Court itself found, last June, that a theoretical loss of federal student loan servicing income at MOHELA, which in turn might somehow affect the state of Missouri, gave Missouri new-found standing to oppose a loan cancellation plan of the Biden administration, and to prevail.  The result:  the very servicer making errors requiring remediation was protected by the high court, not abused borrowers. 

As if this were not convoluted enough (and tragic for many families, including parents who took on heavy debt for their children), Congress is not funding the legitimate needs of the servicers to correct errors and be more responsive to borrower rights under law.  There are some in Congress who apparently want to see the entire loan system collapse, for political reasons.  Despite the accountability measures finally being applied to MOHELA by the Department of Education, the general outlook for borrowers looks bleak.  

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"As part of its ongoing effort to identify and respond to misconduct by institutions in the Title IV programs, the Office of Enforcement, in November 2022, began to invite knowledgeable sources to submit tips and information about potential violations. FSA welcomes information from current or former employees, students, vendors, or contractors of postsecondary institutions; third-party servicers; third-party lead generators; and any other individuals with knowledge of potential violations. Knowledgeable sources may submit relevant tips and information by visiting Ed.gov/FSATips or emailing FSATips@ed.gov."

No One Looks Good in Prison Deal

September, 2023

Lincoln —  Seldom is a public policy deal struck that does not have winners somewhere along the way, but the recent state prison siting agreement on 300 acres north of Lincoln may be one.  No one is looking good; fingers are pointing; conspiracies abound.  

The cause of transparency in government was dealt a blow from both the state and the city.  Citizens had no warnings about what was going on.  Suddenly the state announced a new prison was to be built at North 112th and Adams Streets in northeast Lincoln, and that it had already paid landowners $17 million for 305 acres, or about $56,000 per acre.  When nearby residents revolted, the site was switched to another location north of I-80 that was already owned by the city, but which the city had previously said was not available.  The city gave it up and got the Adams street property in exchange, but with vaguely defined strings that it would pay for improvements at the new alternative  site.  The fait accompli was hastily announced at a press conference.  

The rule of law may also have been dealt a blow.  Statutory procedures are supposed to govern such transactions.  If the state was acting under its eminent domain authority, there should have been public notice and an independent appraisal of the property.  

The cause of affordable housing lost out, too.  Imagine what landowners will think their agriculture-zoned property is worth if the state itself is paying $56,000 per acre.  Will taxpayers now have to subsidize developers even more to increase Lincoln's affordable housing stock? 

Neighborhood comity evaporated quickly, when north Lincoln residents complained that this would never have happened to south Lincoln.  And those near the final site asked why they had no voice at all in the matter. 

Ethnic and racial divides widened as Native Americans watched how quickly the city acted to move the prison away from a location next to a largely white, middle-class neighborhood, compared to their own constantly thwarted attempt — even through the city's board of zoning appeals — to protect an indigenous peoples' spiritual site in an environmentally fragile area near Wilderness Park.

Conservationists watched to see if anyone was aware how the prison site at 112th would degrade Prairie Pines, an important prairie and woodland natural habitat next door.   It was seldom mentioned.  

Penal reform advocates, who wanted to reduce prison populations as a part of prison construction considerations, lost a chance to make their arguments.  

Political analysts of all stripes, especially those with an eye for real or imagined conspiracies, widened already yawning gaps with declarations of who got the better of whom in the land deal.  Some said the state cleverly planned it all beforehand to force the city's hand on the property the state wanted in the first place.  Others said the city got the better deal because it wound up with a property to sell off, probably at a profit of millions at the needless expense of state taxpayers.

Was there a way to avoid all of this?  Questions remain as to why the city, or at least the city's state legislative delegation, did not press the state to explain the authority under which it was acting, and if the authority was eminent domain, to follow public transparency and appraisal requirements. 

Is there a way to move forward to remediate some of the damage done?  Yes.  The situation calls for a review by an outside, independent third party to determine how public transparency was avoided, at what cost.  

The city could recover considerable credibility if it were quickly to commit to an open and transparent process to evaluate options on its newly acquired Adams Street property.  The city's own comprehensive plan calls for a buffer around natural resources like Prairie Pines; so does its climate action plan.  Its new local food plan might be a good fit with some of the property.  Sales of portions of the property could be used to fund conservation easements to protect other natural resources, including remaining parcels near the controversial development near Wilderness Park.  Prompt and proper appraisal of the Adams Street property would put a damper on wild land speculation around Lincoln that hurts the cause of affordable housing.  

Most of all, state and local governments must let citizens have a say.  

 

   


 

  

Time for the Big Fix in U.S. Higher Education

August, 2023

Washington — Now is a propitious time to fix much of what's wrong in U.S. higher education pricing, admissions, and financial aid.  Three recent developments make such action more plausible than previously, and a looming student loan repayment crisis makes it a necessity.  

Affirmation action based on race is out, per the U.S. Supreme Court.  Legacy admissions are perhaps the next preferences to fall, partly in response to the affirmative action decision.  And then there is Henry et al. v. Brown, a lawsuit striking at the way institutions surreptitiously manipulate enrollment management to favor the wealthy over the financially needy, which has contributed to the debilitating student loan crisis.  This case is not going away until there are many large settlements in favor of borrowers.  All eyes are on the Secretary of Education to see what he will do in response to these three developments. 

Now, as to the necessity of a sweeping fix, consider the following.  

All this is happening at a time when millions of student and parent borrowers are going back into loan repayment in October, after the Covid pandemic pause gave them three years of temporary relief.  The Biden administration is trying to effect a smooth transition to repayment but is hampered by a lack of resources from Congress to do the job.  The administration's earlier attempt to cancel up to $20,000 of debt for borrowers with annual incomes under $125,000, which would have cut the number of accounts to service by nearly half, was blocked in June by the Supreme Court.  

The Biden cancellation plan was not only blocked by the Supreme Court, it was also unpopular with many because it did not address the underlying causes of the huge debt build-up, which would be all too likely to repeat themselves quickly.  This viewpoint was widely distributed across the political spectrum, but the lack of attention to the future has been pounced upon by congressional Republicans especially, who continue to hold up funding to provide servicers what they need to get people back into repayment accurately and efficiently.  (This is ironic in that most servicers are located in red states, and are being impaired by their own congressional delegations.)

So what should the Secretary do?  There is a ready solution to address all of the above:  begin to enforce laws already on the books. 

The Secretary should send department program review teams to selected institutions with instructions to review whether their pricing, admissions, and financial aid processes are complementing or conflicting with the statutory purposes of federal student financial aid programs under the Higher Education Act. If they are complementing federal programs, they are not in trouble.  But if institutions are undermining federal programs by favoring the wealthy, in such a way that it results in higher debt for the financially needy, whether by legacy admissions or secretive algorithms, their future participation in HEA Title IV should be reviewed.*  Transparency in financial aid, and therefore in setting net price, is required by federal law.**  Serious misrepresentations by institutions in matters of admissions and financial aid are punishable under law by limitation, suspension, or termination from federal programs.***  

This reform action by the Secretary is urgently needed to convince skeptics that immediate help for servicers and borrowers (many of whom are the victims of unfair institutional practices) will not lead to even greater borrowing in the future.  Putting institutions on notice that they can and will lose their eligibility for federal student aid if they try to game the system, against the purposes of the HEA, will change institutional behavior.**** Reducing bias toward the wealthy (as well-documented by Raj Chetty and others) will also redound to the benefit of the lower income and its disproportionately large minority component.  This will counterbalance the loss of race-based affirmative action, which over the past three decades unfortunately acquired its own bias toward wealth. 

Such action by the Secretary is also necessary to restore the faith of Americans in the promise of higher education, which badly needs it.

_______________________________  

* Legacy admissions are often dwarfed by wealth biased algorithms. Chetty et al. estimate them at 46% of bias toward wealth in their sample. Doing away with the former may only be cosmetic if it leads to increased reliance on the latter.

** 34 CFR § 668.42 Financial assistance information   

*** 34 CFR § 668.71 Scope and special definitions

**** Many institutions would welcome relief from the destructive merit-based aid arms race.  

   

DOJ and the Student Loan Crisis

August, 2023

Washington — How much of the nation's student loan crisis can be attributed to the Department of Justice?   It's a question that deserves more exploration than it has received.

There are at least four instances in the past few decades when DOJ made highly questionable calls that exacerbated the crisis.  

1.  In the early 1990s, a group of colleges known as the Overlap Group agreed to limit the amount of grants they were giving to non-needy students, to be able to target the financially needy instead.  DOJ stepped in to say it would be a violation of the Sherman Antitrust Act for the colleges not to compete against each other with grants for the non-needy.  A federal appeals court ruled for the colleges, but DOJ did not change its position.  Congress then carved out a narrow exemption for such colleges, but again DOJ held fast in its interpretation.  This helped set the stage for a merit-based arms race among many colleges that not only remains to this day but has spread widely, short-changing need-based aid that could have been deployed to the financially needy to reduce student loan borrowing.  It has also led to tuition hikes and the practice of discounting to give the illusion of aid.  

2.  In the early 2000s, several student loan lenders began making false claims against the Department of Education.  After Inspector General's audits, Secretary of Education Margaret Spellings ended paying the false claims but did not require the lenders to pay back any ill-gotten gains.  In subsequent litigation over the false claims, DOJ did not intervene against the lenders, despite remarkably detailed discovery evidence documenting the illegal schemes. (If this didn't result in DOJ's intervention, what would?) This sent a signal to the student loan industry that action against it from DOJ under the Higher Education Act was unlikely.  Bending or breaking rules might eventually have to be stopped, but there would be no consequences, even requirements to reimburse.  This set the stage for widespread loan servicer dysfunction in the subsequent decade, adding billions of dollars of debt onto student and parent borrowers.  Secretary Miguel Cardona recently announced the cancellation of $39 billion of such debt, which appears to be only a first installment.

3.  In 2016, another small group of colleges held discussions to try once again to limit college aid to the non-needy, which might have led to reform of legacy admissions as well.  (Legacy admissions are sometimes explained as a way for colleges to raise funds, but those funds are often returned back as aid to non-needy students.)  According to a chapter in a soon-to-be-published book about "enrollment management," when DOJ learned of these discussions, it demanded that the colleges preserve any records as possible evidence of violations of the Sherman Act.  This gave the enrollment management industry (historically associated with lenders) the green light to roar ahead on making so-called merit aid even more of a priority over need-based aid at many colleges.  The financially needy would have to rely on ever greater student loan debt.  

4.  In 2023, DOJ's solicitor general appeared before the Supreme Court on behalf of President Biden's student loan cancellation effort under the HEROES Act.  A key question in oral argument was whether the State of Missouri, out of its relationship with the Missouri-based student loan servicer MOHELA, had standing as a plaintiff.  Elizabeth Prelogar argued for DOJ that Missouri did not have standing, but inexplicably (a huge surprise to me), said MOHELA would have standing if it had been a plaintiff.  This gave the Supreme Court majority an opportunity to make a much shorter leap to give Missouri standing, if DOJ was conceding that MOHELA had it.  

I thought at the time (and still do) that this was a huge gaffe tactically and an abrupt reversal of DOJ policy.  In 2016, the loan servicer PHEAA asked the Supreme Court to take up, on certiorari, a 4th Circuit decision that PHEAA was not an arm of Pennsylvania.  The Court asked the solicitor general to advise it of the position of the United States on the question.  In the summer of 2016, in the DOJ solicitor general's office, both PHEAA counsel and counsel for two plaintiffs against PHEAA gave presentations.  (I was present for the plaintiffs.) In a written response to the Supreme Court's request shortly thereafter, the solicitor general counseled the Supreme Court to deny certiorari to PHEAA, on grounds that it was not an arm of Pennsylvania, which the Court then did in January, 2017.* 

The relationship of PHEAA to Pennsylvania is substantially the same as MOHELA to Missouri.  What made Elizabeth Prelogar suddenly argue that MOHELA would have had standing?  The Supreme Court had denied PHEAA certiorari on essentially the same question.  Why didn't DOJ raise this?  Neither Missouri nor MOHELA had standing until DOJ gave MOHELA away in oral argument.  It was then inevitable for Chief Justice John Roberts to exploit it in his written decision.  

It can be argued that the Supreme Court majority was bent on making the student loan case another notch in its belt supporting a "major questions doctrine," regardless of roadblocks in its way, but why was DOJ such a willing party to it on the question of standing?** On such points is the course of history determined.  

It is another example of how DOJ has made dubious decisions on student loan matters for decades, which have disadvantaged borrowers and have actually undermined the federal government's own programs to help the financially needy.  DOJ actions have driven up borrowing and its inactions have contributed to a broken student loan servicing system.  Its gaffe hangs over future attempts to provide student debt relief.  

What will done about it?  DOJ has recently shown signs that it is beginning to understand how it has been hurting the financially needy, and how some colleges have tried to use their (now-expired) statutory exemption from the Sherman Act to collude in favor of merit-heavy enrollment management schemes.  Is DOJ's decision to file a statement of interest with the court in the Henry case a long-overdue reversal?  Probably not.  DOJ still has a long way to go.***   

________________________  

*See Dan E. Moldea, Money, Politics, and Corruption in U.S. Higher Education (2020), pp. 125-126.

**DOJ and the Solicitor General were more impressive in defending the use of the HEROES Act as the basis for student loan relief, although many experts believe the HEA would have been a better choice.  Unfortunately, DOJ also disadvantaged itself on the matter of the relief apparently being so costly that it triggered a "major question" in the view of some on the Court.  The relief could and should have been scored at a "minor question" level by subtracting debt cancellation already (April, 2022) announced and owed borrowers as a result of servicer dysfunction, as well as subtracting uncollectible amounts already subject to the Federal Claims Collection Standards (FCCS), 31 C.F.R. Subt. B, Ch. IX, which is under DOJ and Treasury jurisdiction.  The numbers presented to the Court were double- and triple-counting, and should have been unduplicated.  Had they been, the sharpest written exchange among justices in modern Court history, which has shaken the Court's standing in the eyes of the public, could have been avoided.

***From the DOJ statement of interest: "The United States offers no view on Plaintiffs’ antitrust standing, their factual claims, the proper definition of “need-blind,” the application of any applicable statute of limitations, or the separate motions to dismiss...."  In other words, in its statement DOJ offered the court a way out of the case without ever looking at how exactly financially needy students were being forced into higher levels of debt, despite the plaintiffs' detailed descriptions of enrollment management schemes that were illegal if for no other reason than they were secretive and not disclosed as required by the Higher Education Act (see citations below).  Rather than dealing these schemes a coup de gras, DOJ is choosing to soft-pedal them. 

34 CFR § 668.42 Financial assistance information.

(a)

(1) Information on financial assistance that the institution must publish and make readily available to current and prospective students under this subpart includes, but is not limited to, a description of all the Federal, State, local, private and institutional student financial assistance programs available to students who enroll at that institution.

(2) These programs include both need-based and non-need-based programs.

(3) The institution may describe its own financial assistance programs by listing them in general categories.

(4) The institution must describe the terms and conditions of the loans students receive under the Federal Family Education Loan Program, the William D. Ford Federal Direct Student Loan Program, and the Federal Perkins Loan Program.

(b) For each program referred to in paragraph (a) of this section, the information provided by the institution must describe -

(1) The procedures and forms by which students apply for assistance;

(2) The student eligibility requirements;

(3) The criteria for selecting recipients from the group of eligible applicants; and

(4) The criteria for determining the amount of a student's award. 
[Emphasis added]    


34 CFR § 668.71 Scope and special definitions.


(a) If the Secretary determines that an eligible institution has engaged in substantial misrepresentation, the Secretary may -

(1) Revoke the eligible institution's program participation agreement, if the institution is provisionally certified under § 668.13(c);

(2) Impose limitations on the institution's participation in the title IV, HEA programs, if the institution is provisionally certified under § 668.13(c) ;

(3) Deny participation applications made on behalf of the institution; or

(4) Initiate a proceeding against the eligible institution under subpart G of this part.


Will Merlin Hear these Birds in the Future?

August, 2023

Lincoln — The bird identification app Merlin heard the following birds during the early mornings of July 23-29 on the north half of our tallgrass prairie and riparian woods at 5840 West Superior.  

The property is in the process of receiving a conservation easement, but two neighboring properties to the north and east, currently grasslands, may soon be developed.  If that happens, how many of these species will disappear?  Likely a majority of them.  

July 23. Red-eyed Vireo, Downy Woodpecker, Northern Cardinal, American Goldfinch, Black-capped Chickadee, Field Sparrow, American Crow, House Wren, Red-headed Woodpecker, American Robin, Song Sparrow, Cedar Waxwing, Blue Jay

24. (additional) Vesper Sparrow, Upland Sandpiper, Eastern Kingbird, White-breasted Nuthatch, Common Yellowthroat, Baltimore Oriole, Rose-breasted Grosbeak, Eastern Wood-Pewee, Red-bellied Woodpecker, Gray Catbird, Grasshopper Sparrow, House Finch, Red-tailed Hawk 

25. (additional) Cooper's Hawk, Great-tailed Grackle, Eastern Meadowlark

26. (additional) Dickcissel

27. (additional) Yellow-throated Vireo

28. (additional) Great-crested Flycatcher, Brown Thrasher

29. (additional) Killdeer

Total July 23-29: 34 species

Unexpectedly absent from the Merlin list (heard or seen at other times):  Great Horned Owl, Barred Owl, Yellow-billed Cuckoo, Northern Bobwhite, Yellow-shafted Flicker, Red-winged Blackbird, Tree Swallow, Barn Swallow, Eastern Bluebird, Orchard Oriole. 

And what about butterflies and other pollinators?  Monarchs were spotted frequently during the last week of July, especially on Whorled milkweed, Common milkweed, and Butterfly milkweed.  Wachiska Audubon reports in its August newsletter that the 17-acre aforementioned grassland to the east, owned by the City, "was hayed a few weeks ago, and by the end of July the native grasses and forbs had really taken off.  There were dozens of common milkweed plants that were over two feet tall after the haying and some timely rains...."  Wachiska deserves credit for clearing invasives from this parcel to give grassland birds and pollinators a chance.