EduBubble

Jenna Wortham of the NY Times gives us a slightly arch view of the decision by Jimmy Iovine and Dr. Dre to give $70m smackers to USC. Before going much further, let’s note that Ms. Wortham seems to feel that $70m isn’t much money, saying, “The gift is relatively modest, as donations to universities go.” Remember when $3m was a good gift for a school? That was before the University Presidents started putting million dollar bills in their pockets as if the money were mints in a big bowl by the exit to the buffet.

But back to the University of Spoiled Children. Did Mr. Iovine or Dr. Dre attend? Nope. In fact, they never went to any college. Along the way, the article notes that Mr. Iovine seems a bit confused by all of this college stuff. But he and Dr. Dre still ended up with $70m of disposable income.

And how will this work out for the students?

“At the core of the curriculum is something called “the Garage,” which will require seniors to essentially set up a business prototype. It appears to be inspired by technology incubators like Y-Combinator and universities like Stanford that encourage students to develop and pitch start-up ideas as class assignments.”

In other words, all but a few scholarship students will pay a big tuition bill to work on a startup, something they could do for free. Whoo hoo! The college industrial complex rolls forward sucking $70m from the pockets of the rich idiot savants and using it as a tool to extract even more cash from the parents who will pay anything to make sure their kids keep the middle-class membership card.

Everyone around an R1 university knows that the reason the college industrial complex exists is to suck in tuition dollars to fund the research industrial complex. Why? Because we would much rather be noodling around the lab than actually dealing with those undergraduates who don’t know enough to ask an interesting question. The stage dwelling sages who love to strut and frut through their lectures can have their teaching colleges, but the research industrial complex is for the nerds who only want to split hairs and innovate.

And that brings us to Allison Abbot’s piece in Nature about Ap Dijksterhuis, one of the social science rock stars who was always capable of finding new and eye popping ways to rediscover what we already know. While every shopkeeper knows that trash and litter make people upset, Ap Dijksterhuis went into the Utrech train station to rediscover that extra trash made people think racist thoughts.

Ooops. Wait. That wasn’t Ap Dijksterhuis, it was another social psychologist who’s been accused of just making it all up. In any case, no one has figured out how to replicated some of Dijksterhuis’s results. But maybe they will. I don’t know. But it all seems suspicious to people.

Alas, this is another black eye for Big Science, that tax-eating machine that routinely mocks Big Religion for just making things up. Apparently all it takes in social psychology is the chutzpah to ask an old wife for a tale and then type it up with some fancy looking graphs. If you can draw a graph, you can be an academic rock star.

A friend groused to me once, “Yeah, they offered me $1000 in a ‘scholarship’ probably so they could brag that most of their students were on ‘financial aid’.”

And this practice is more and more common, as we learn from this story by John Hechinger and Janet Lorin at Bloomberg. The plan is simple, they say, give a tiny “merit” scholarship to the upper middle class and then claim that you’re giving out financial aid left and right. It’s too expensive to give full rides to the people who are truly needy.

Anything that pokes a hole in the self-aggrandizing mythology of the college industrial complex is okay in my book.

Another new book on the bubble from Glenn Reynolds. Definitely worth a shout out, although much of it will be known and understood by frequent readers. Still it’s great to have more people pounding on the doors of the college industrial complex.

The article by Tyler Kingkade in the Huffington Post makes it sound a bit staged, but the students are taking over the President’s office at Cooper Union. Will it make a difference? Oh, I doubt it. But just wait until Cooper Union needs to give out boatloads of financial aid to get kids to come to their overpriced corner of Manhattan.

Ah, I love Elizabeth Warren. She’s got the right idea about debt but she can’t seem to see that a big part of the problem is the high-living ways of the college industrial complex. After all, Harvard had to get those $300k+ salary checks from somewhere. A big chunk of that cash came from the student debt lumped on the back of those Harvard students.

Her new proposal is brilliant– if you’re looking for a grandstanding measure that plays to the populist base while keeping the cash flowing through the pipeline to your former employer. She said that the kids should be paying the same interest rates as the major banks. Instead of 6.8%, she’s saying dropping the rates below 1% because that’s what the biggest banks pay.

Let’s forget about the idea that the banks pay that rate because they don’t default at the same rate as all of these undergraduates. And let’s ignore the fact that the major banks have real collateral that’s more stable than all of those lit degrees. Let’s just assume that the student loan program exists to encourage kids to get a great (a.k.a expensive) education. Fine. It’s sure doing that.

Cutting the interest rate means that the taxpayer will pay more and subsidize education even more– while the schools keep sucking down the cash. Right now it’s conceivable that the US is actually making a profit on the high rates paid by the kids. Ms. Warren is going to need to find a new source of revenue to replace this if she expects the country to reduce the interest rates.

Ah nostalgia! I remember how great nostalgia was when I was a kid. Back then, looking back was really something.

Alex Mayyasi at Priceconomics writes about the Daniel Kahneman’s insight into the way we deceive ourselves about past events and remember them in rosier tones. So we think of college as a wonderful time even though it was a mixture of bad textbooks filled with insider jargon, bad dates, bad food, noisy dorms, idiot hallmates and too many other annoyances. We filter those out and concentrate on that one clever thing the professor said or the one smile from the cutie across the dining hall. Ah memory.

What’s amazing is that the debt is now so high that some people are actually able to punch through the power of nostalgia and see college for what it was: an interesting diversion with a 30 year financial hangover. But you won’t see the econ professors talking about that in class, will you?

Tim Grant at the Pittsburgh Post-Gazette asks just that question about spending on college. Should the parents push all of their cash into their kids’ education? Or should they actually save for retirement?

I can’t say which makes logical sense, but I do know that the schools will suck up and spend every dollar that they can get their hands upon. So maybe the rule should be like the one that the airlines use in the event of an emergency: put that oxygen mask on yourself first and then help that kid next to you.

The NY Times’s Ariel Kaminer has a long, page-one piece noting the strange way that so many people fired in disgrace find open arms at the schools. Elliot Spitzer got a job a City College teaching about law and public policy. Hmm. Ex-General Petreaus is now teaching at not one but two schools fighting to have him teach their students. Heck, I’m surprised they’re not lining up to get Charles Manson to teach about how evil contemporary America can be.

I suppose there’s the chance that these guys are willing to work cheaply but it could just be that the schools are addicted to anyone with a “big name.” I hope for the schools’ sake that these guys — who seem to be mainly involved in sex scandals– don’t get caught in bed with an undergraduate. The people doing the due diligence would look bad.

It’s not a blackbird. Meditating on that kind of poetry was for a simpler time when simple pleasures didn’t cost $60k+ a year.

Matt Philips at the Atlantic boils down the student debt crunch into 17 charts that makes it clear that the kids are being slowly boiled alive by the college industrial complex. Little by little the price keeps going up until everyone is in debt up to their eyeballs.