Med Student Debt: Veritas vos liberabit.

Guest post by Howard C. Mandel M.D., FACOG:

The electorate will be bombarded in both the 2018 and 2020 election about the $1.4 trillion in education loans outstanding and the 28% currently in default, though a recent Brookings analysis predicts it will increase up to 40% [https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/]

The overwhelming majority of these individuals were either sold a bill of goods by for-profit schools or never graduated the public institutions that they enrolled in. Although medical or dental student debt has been shown to impact career choices it rarely results in default.

Did we ever seriously ask ourselves why medical schools are currently so expensive? Where is all that money going? Do the faculties and administrations of our med schools deserve the salaries and benefits they earn?

Are you aware that many medical schools are now paying hospitals to place their students in 3rd and 4th year clinical rotations… what audacity. These hospitals couldn’t exist without Medicare, Medicaid and DSH federal funding——they should be honored to have students on their wards.

Bad policy and Medicare financing of graduate medical education have created the debt crisis for America’s health care workers. There is a major shortage of doctors and nurses and Congress is ignoring treating this because of the economic costs associated with addressing it.

Yet, the inside the beltway crowd has seen a symptom it can campaign on. The right:  Loan default, and made the wrong diagnosis—–people are not educated with the “right major that’s marketable…”  The left: public college should be free for all. Quoting the late community activist, Mimi West, “Free ain’t Cheap…”

National data is biased by the defaults of mostly students that went to extremely large public institutions [not their state flagships] that either dropped out or took 6+ years to graduate. These students probably were not four year college ready and their loans were compounding all the time that they were finding themselves, experimenting with living on their own and maturing into adulthood. The last few decades have seen ever increasing college costs including tuition, fees, room and board.

http://articles.latimes.com/2011/oct/26/local/la-me-college-costs-20111026
 
http://www.learnliberty.org/videos/how-do-we-break-cycle-higher-t/

Society and government leaders pushed an idealistic desire to have every American attain a college education. This goal was encouraged and supported by government employee unions including most public colleges and universities, unionized workers including in many states, professorship. This led to major impacts on state budgets and college costs.

https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2010/1/cj30n1-5.pdf
 
https://www.heritage.org/jobs-and-labor/report/how-government-unions-affect-state-and-local-finances-empirical-50-state

It also led to inefficiency as well as difficulties for dedicated students to graduate within four years.

https://www.wsj.com/articles/SB10001424052748704657704576149941061124736

 http://www.hup.harvard.edu/catalog.php?isbn=9780674027886

In 2004, Johns Hopkins professors Robert Balfanz and Nettie Legters published an analysis entitled, “Locating the Dropout Crisis. Which High Schools Produce the Nation’s Dropouts? Where are they Located? Who attends Them?”
https://files.eric.ed.gov/fulltext/ED484525.pdf    These schools and other “Factories of Failure” pushed through students who ended up either going to For-Profit Institutions, over crowded Community Colleges or large state institutions.  At the California State Colleges/Universities——-75% of these students need remedial English or Math.  Is it any wonder that the majority never graduate but have accumulated debt?

LAUSD administration claims that “56% of their graduates” are college ready. They are not—-most go to Cal State and need remedial work to even begin introductory college level classes. This 56% is of the only 70% that make it to high school graduation. Unfortunatel, they have previously manipulated data and created sham’s, like their credit recovery program, that inflate the success of students only on paper. As a society we are letting the students in the LA district down.  https://achieve.lausd.net/cms/lib/CA01000043/Centricity/domain/414/documents/Dropout%20and%20Graduation%20Statistics%20for%202010-2011.pdf    

Unless we honestly look at the results we will never develop programs that educate our students to succeed. Of the cohort of students entering high school in LAUSD, only 12.25% actually graduate with either a two year or four year college degree in a total of 6 years after they graduated LAUSD. When looking at the percentage of kids who graduate with “A’s”, only 52% will even graduate any 4 year college within 6 years. Looking at the last year that national comparisons were available, only 1,071 students (4.6%) were in the top quartile of the SAT/ACT.   https://ucla.app.box.com/s/xd8lth2fgy1qdyphmwuj2i7cgyurdwf5

So lets look at who is getting loans in America—-by the numbers, the vast majority are at Community or 2nd tier state colleges. 48% of straight “A” students from LAUSD will not graduate by 6 years and most of the those never graduate. As the school’s tuition’s are not extremely expensive, the overwhelming majority of their loans were used for living expenses for 6 to 8 years and the majority of their debt directly related to inflated costs of living on or near state college campuses, “special fees” to support athletics and recreational centers, bank fees and compounded interest on their balances.

Our philosophical desire to be egalitarian and support college education for all has been manipulated by a public college industrial complex that accepts kids that are not college material at the point they enter. If those students went to community college and lived at home, the billions saved could be given to support smaller but higher quality state colleges and make tuition lower for all who attend. Additionally, extra funds would be left over that could actually provide free housing for academically qualified students that are currently homeless, larger graduate student stipends, medical student scholarships and funding for post docs as well.

Until we truly address the problem, we’ll waste time, money and energy on snake oil that will not cure the disease. The government wants to force physicians to be paid for “performance”, yet the public schools from K through University just want Carte Blanche funding sponsored by taxes or at the college level, loans that often get written off.

Howard C. Mandel M.D., FACOG
Dr. Mandel is an advocate and philanthropist for indigent health care, inner city educational opportunity and a smaller, more efficient government
Los Angeles

FACTS: The Effect of Government Interference

Student loan debt more than quadrupled from $300 million to more than $1.1 trillion from 2004 to 2014

2010 student loan debt surpasses credit card debt for the first time in history…credit card debt actually declined from $800 million to $700 million since 2010 while student loan debt increased from $800 million to $1.1 trillion

Student loan defaults, of course, are at a 20 yr. high

Your average politician will look at this as a crisis to throw more money at….like Obama’s community college comments….

Financial institutions like JP Morgan are forecasting  four year costs for newborns in 2014 to be $190,000 for public and $475,000 for private in the coming decades.

Economic fact…subsidize a market (education) and the costs will never, ever go down.

Get the govt out of education on all levels!!!!

The reality of economics is the subsidy of loans drives the price through the roof

Jack Iannantuono, CFP®, ChFC®, MSFS, AIF® | Indicon, Inc.
President/CEO