debt

The last few years have seen unprecedented hard times for the nation’s free spending colleges and universities. Particularly during the worst of the recent recession, many institutions were left with little choice but to borrow money to stay afloat, and many resorted to layoffs and budget cuts as endowments shrunk.

Yet, even amid such frightening financial conditions, some universities just couldn’t stop spending and expanding. Columbia University and NYU notoriously made plans to to expand their campuses in one of the world’s most expensive cities at a total cost of about $6 billion. As I wrote at the time, it’s hard to justify these massive expansions of physical space in the internet age:

If universities truly want to bring affordable education to as many students as possible, they should be pouring every spare dollar into developing online education. Creating a premier, interactive, credentialed, online educational platform would be a far better investment for any university that wants to be a leader in the higher-ed landscape of the future. And it would cost a lot less than $6 billion.

This week, news emerged that the University of Chicago, another of our nation’s elite and highly debt-leveraged academic institutions, is set to borrow $400 million over the coming fiscal year.

Live Mint reports:

Robert Zimmer, hired as president of the University of Chicago in 2006, inherited an ambitious program to improve campus life while bolstering highly regarded academic programmes. The institution stuck to the plan even as it suffered a 21.5% loss on endowment investments in 2009. Its debt has grown in the past four years to $3.6 billion from $2.4 billion.

“We well understand that borrowing for some of these investments entails risk,” Zimmer, whose $3.36 million compensation made him the highest-paid private college president in 2011, said in a statement in August after local reporters obtained a copy of the proposed financing plan. “We cannot, however, scale back our academic and programmatic ambitions in a way that risks our future excellence as a university.”

You’ve heard of “too big to fail”–as applied to our nation’s major financial institutions. I think our nation’s big-spending universities have adopted similar motto, borrowed from the lyrics of hip-hop artist MC Hammer, whose hit song “Too legit to quit,” perfectly describes the spending habits of elite universities engaged in a never ending battle to spend themselves onto the top of the US News & World Report annual college rankings.

All to create dorms and student activity centers that resemble five-star resorts and high tech amusement parks.

These college leaders who never grow tired of spending could learn a lesson or two from the life of MC Hammer. After becoming a huge star, Hammer blew through a $33 million fortune and famously went bankrupt. Looks like the University of Chicago is well on its way to the same end.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

Follow Nathan on Twitter @NathanHarden

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Robert Samuelson writes today in the Washington Post about the unsustainable expansion of government programs on top of an aging American population:

Every day 10,000 baby boomers turn 65. The retiree flood is swamping the federal budget. By 2022, Social Security, Medicare and the non-child share of Medicaid will exceed half the budget, up from 30 percent in 1990, projects an Urban Institute study. To make room for the elderly, defense and many domestic programs are being relentlessly squeezed.

There’s no generational justice, argues Taylor: “The young today are paying taxes to support a level of benefits for the old that they themselves have no prospect of receiving when they become old.”

America’s future rests heavily on how these mega-trends play out. Democracy works best when the political system can mediate between the often-inconsistent demands of public opinion and larger national needs. This, America’s leaders can’t or won’t do. Faced with immutable trends, they have not adapted to change. Instead, they pander to partisans with soothing, though outdated, stereotypes. Nostalgia poses as policy when it is actually a marketing strategy.

Liberals won’t come to terms with aging. Believing that spending on the elderly and near-elderly constitutes the essence of progressivism — and ignoring the affluence of many elderly — some liberals even support raising these benefits. The paradoxical result is that the pro-government party has become an instrument of anti-government policies, because accommodating all the elderly’s benefits means quietly condoning deep cuts in most other programs…

So long as liberals are willing to defer the costs of funding government welfare programs via debt leveraged upon future generations, it is possible to delay the economic pain a little while longer.

But Samuelson’s insight that “the pro-government party [the Democrats] has become an instrument of anti-government policies” is a good one. The expansion of these programs on top of an aging trend for the U.S. population does represent a kind of betrayal of the very same youthful voters that Democrats often count on at the polls. It’s a betrayal because Democrats know that with the U.S. birth rate steadily falling, it’s only a matter of time until these long-promised benefits have to be cut–severely.

By that time, the youth of today will have paid into the system for many decades, only to find that the system isn’t there for them any longer.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

Follow Nathan on Twitter @NathanHarden

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While young voters overwhelmingly supported president Obama’s reelection in 2012. Voters age 18 to 29 supported Obama over challenger Mitt Romney 60% to 36%.

Obama promised voters he would create millions of new jobs–while simultaneously slashing the federal budget deficit.

Now a little more than a year later, Obama’s spending sprees have kept the deficit at $680 billion–with a “B”. That’s down from the $1.1 trillion with a “T” from last year, but still more than 50% higher than the $455 billion deficit of 2008–the year Obama was first elected.

Even more worrying is the fall of the U.S. labor participation rate to a new 35-year low of 62.8%. That means 37% of Americans aren’t working or even seeking work–a fact that explains why the official unemployment rate has continued to fall despite the fact that monthly job creation number have continued to fall short of expectations.

In keeping with this national trend of indebtedness and joblessness, millions of grad students and recent grad students find themselves today in dismal economic circumstances. Very few of them, it seems, can find meaningful work in their fields of study.

The Christian Science Monitor reports that 5% of households on food stamps are headed by college graduates.

Meanwhile, a recent news report out of the University of North Carolina, bemoans the plight of the school’s grad students–many of whom now rely on government welfare assistance in order to live. Increasingly, students are applying for food stamps even while they are still enrolled in degree programs.

One UNC PhD student, Releta Summers, said she wound up homeless last semester–sleeping in her car and living off food stamps: “From the outside looking in, most people wouldn’t believe me if I told them I receive benefits,” Summers said. “I still get up every day, and I comb my hair and put on real clothes and go into my office.”

Yet nowhere does the UNC report call into question the ethics of students who are able-bodied adults, and who could work to support themselves, but choose not to. Nowhere does it question whether they ought to be allowed on food stamps while choosing not to work a job the offers a living wage.

I grew up poor. I know what it’s about. But the above example is not true poverty–not really. Rather, it’s a lifestyle choice.

If one cannot afford to attend grad school and support himself/herself, is it really ethical to go on the government dole? Earning a PhD is not a human right, after all. It is a luxury.

Stories like the one above show that there is no longer any real stigma involved in going on government assistance–even among highly-educated, able-bodied people. Instead of looking at public assistance as a last resort, there are many who see it as an entitlement. It would never cross their minds to go get a night job flipping burgers at McDonald’s in order to stay off welfare. That’s too hard, you see. And we millennial, we don’t like to struggle do we?

I’ve heard my grandparents tell of folks who went through the Great Depression and were half starving–yet wouldn’t consider going on government assistance. It was considered shameful, certainly, for an able-bodied adult to do so when he had opportunities to support himself.

Fast forward a few decades, and our culture has grown much more used to the idea of relying on the government for support. Social security, medicare–these have become things we take for granted–but they exist for the benefit of the elderly and infirm. Those who cannot fend for themselves.

When strong, intelligent, able-bodied young adults are turning to welfare–that means something else entirely.

It means we have become comfortable with viewing the government as our provider.

Liberal, educated young people by the millions now look to Uncle Sam for help with their health care coverage, they want the government to pay for their birth control pills, they want the government to pay their tuition, and give them food stamps so they don’t have to work too hrd while in a PhD program that is also housed withing a university heavily subsidized by the government.

This is a generation comfortable with dependency. More worryingly though, this is a generation that lacks any real appreciation for value of independence. As a result, it’s a generation that is easier to control. All you’ve got to do is wave the carrot of government largess and you get their votes. Obama proved that.

On the other hand, I do observe a resurgence of libertarianism among some young people. These are the Ron Paul voters of the world. But I fear the majority of young people today are still true believers in the benevolent Uncle Sam.

Energy, industriousness, the old “protestant work ethic” cited by Weber more than a century ago–these aren’t the leading characteristics that come to mind when you think of PhD students on food stamps.

These are Obama’s kids. Obama’s vision of greater government control over, say, the nation’s healthcare system, is perfectly in keeping with the values of those who are willing to trade freedom for security.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

Follow Nathan on Twitter @NathanHarden

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Here’s a clever little story.

A Michigan student with mammoth student loans has come up with an ingenious scheme to shave off some of the debt. He’s selling ad space on top of his graduation cap.

Alex Benda, of the University of Michigan-Flint, has piled up about $30,000 in student loans on his way to a business degree.

Now Benda is attempting to sell one hundred 1in squares on his 10x10in cap at the rate of $300 per square.

Happens to be the exact amount he needs to pay off his college debt.

“It’s scary to think I’m about to go out into this economy and try to find a job and have all this debt I’ll have to start paying,” Benda, 22, told USA Today. “I started thinking, Do I have anything available I could sell?”

Benda claims he has already raised $1200. According to my calculations, that leaves him with 96 squares left to sell.

Not sure how much marketing buzz you’ll generate with a 1in ad on top of a random guy’s graduation cap in Flint. But hey, you’ve got to admire this fellow’s creativity–and his P.R. chops.

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Loyola University of Chicago is in the middle of a half-billion dollar construction binge, according to Crain’s.

A recent splurge on new construction includes a $58.8 million “Institute of Environmental Sustainability.” The building will feature a special system that will use rainwater to flush toilets.

With a $60 million total price tag, which includes an array of environmental super toilets, Loyola’s administrators are bringing new meaning to the term, “human waste.” But probably the most notable flushing going on here is the flushing of money down the giant toilet of debt-ridden expansionism.

The university has borrowed almost $400 million for building projects since 2008.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

Follow Nathan on Twitter @NathanHarden

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Three Wisconsin professors have come up with what they think is a brilliant fix for the budget crisis in Washington. They want Obama to violate the constitution and seize dictatorial powers to extend the debt limit, and then call for his own impeachment hearings afterward.

Does that make sense to you?

The University of Wisconsin-Madison is known as one of the most liberal universities in the country. This week, three political science professors from the university may have taken that liberal partisanship to a new extreme, however, by calling on Obama to seize unilateral control of the government in order to end the budget crisis.

Howard Schweber, a political science and legal studies professor, along with Ken Mayer and David Canon, both political science professors, joined forces to pen an op-ed in the Wisconsin State Journal, essentially begging Obama to take on unprecedented new powers in order to avoid default on debt payments:

President Barack Obama has a few choices. He can allow the nation to default. He can allow the tea party wing of the Republican Party to dictate the terms of national policy, despite the undemocratic nature of this outcome and the likelihood it will lead to further brinksmanship. Or he can unilaterally order the Treasury Department to issue new bonds. All three are unattractive, but the last is the least damaging to the nation…

We propose that if the House fails to act, Obama should unilaterally order the Treasury Department to issue new bonds…

The three professors are ready, it seems, to declare Obama temporary dictator in order to resolve the situation, they even go so far as alluding to the broad “inherent” powers George W. Bush claimed in the context of the war on terror as justification for Obama’s–what?–shall we say, war on default?

What is so ironic about this letter is that you can be sure these three professors were railing against Bush for eight long years, complaining about the Patriot Act, declaring his actions unconstitutional, decrying the overreach of government power, etc, etc. Now, with Obama in the White House, nothing, it seems, is unconstitutional. Or maybe, more accurately, the constitution simply means nothing to them. It’s just an instrument, a rhetorical device really, used to claim an advantage for anyone who wears the word “Democrat” around his neck.

It’s remarkable to watch both parties’ attitudinal change whenever they control the White House. Suddenly, they become great advocates of executive power. The constitution gives Congress the sole power to authorize spending. Nothing could be clearer.

These three professors’ naked disregard for the constitution, is almost too stupid to take seriously. Except that they are serious. And that’s what is so striking about this op-ed, which for all it’s lofty pretensions–seeking to advise the White House and all–isn’t worth the paper it was printed on. To them, the constitution isn’t real, binding law; it’s simply a symbolic device to be used in whatever sort of argument is most convenient to them at the time.

Most oddly of all, the professors suggest that after Obama seizes unilateral control of the government’s purse strings, he should then ask House Republicans to try to impeach him, “so that this constitutional crisis can be publicly and formally debated in the Senate” (where impeachment hearings are ultimately decided). Conveniently, the Senate is controlled by Democrats at the moment.

The professors are right about one thing: America is facing a constitutional crisis. It’s a crisis made up of so many in power who, like the authors of this op-ed, view the constitution as little more than a hindrance to their political goals. Something to work around. They read the constitution, looking for loopholes the whole time.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

Like The College Fix on Facebook. / Follow Nathan on Twitter @NathanHarden

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