Higher Education Inquirer : student loan debt

Showing posts with label student loan debt. Show all posts

Sunday, January 23, 2022

Maximus, Student Loan Debt, and the Poverty Industrial Complex

The Higher Education Inquirer is taking a close look at who's invested in Maximus, the enormous social welfare profiteer. Maximus has been servicing student loan defaulters for years and has now taken over Navient's federal student loan business, branding it Aidvantage.

Since 1995, Maximus (MMS) has grown from $50 million in annual revenues to more than $4 billion in 2021.

Maximus (MMS) Share Price 1995-2022

(Source: Seeking Alpha)

With an army of more than 35,000 workers, Maximus' clients include 28 US agencies: the Internal Revenue Service, Department of Commerce, National Oceanic and Atmospheric Administration, Bureau of the Census, Patent and Trademark Office, Federal Student Aid, Department of Defense and US Army, Department of Veterans Affairs, Homeland Security, Health and Human Services, Medicare and Medicaid, Department of Labor, Office of Personnel Management, Securities and Exchange Commission and many more.

As a contractor to Federal Student Aid (FSA), Maximus has more than 13 million student loans to service. Its four contracts with the US Department of Education total almost $1 Billion.

While CEO Bruce Caswell made more than $6 million in total compensation last year, Maximus' customer service representatives, the people who have to make the calls to the growing number of student loan defaulters, make less money than workers at Walmart.

Maximus has recently posted federally contracted jobs on Indeed for $13.15 an hour in Texas and South Carolina, even though the federal minimum wage has been raised to $15 an hour. Wages for Maximus workers in other states are reportedly even lower, as little as $10 an hour in Kentucky and other states with regressive economies.

Maximus' largest institutional investors include BlackRock, Vanguard Group, and State Street Corp--three financial behemoths. BlackRock has $10 trillion in Assets Under Management (AUM), Vanguard Group has about $7 Trillion in Assets Under Management, and State Street has almost $4 Trillion in AUM.

Bank of New York Mellon, Wells Fargo, and Bank of America each own 900,000 shares or more.

Public retirement funds, including public school teachers retirement funds (see table below), are directly and indirectly invested in the Poverty Industrial Complex and the student loan mess through Maximus and other large corporations.

Maximus and its executives have spent more than $10 million on federal lobbying and political contributions since 1998. By 2020, Maximus had 14 lobbyists in DC and had contributed to the campaigns of Joe Biden, Bernie Sanders, and Donald Trump.

Maximus' strategic partners include AWS, Microsoft, Oracle, and Cisco.

Social justice advocates have to wonder, how can the student loan system be fixed if the US establishment has a vested interested in the mess?

Maximus (MMS) Top Institutional Investors

List of Public Funds Directly Invested in Maximus

Alaska Department of Revenue
California PERS
California State Teachers Retirement System
Colorado PERS
Florida Retirement System
Pennsylvania Public School Retirement System
Teachers Retirement System of Kentucky
Louisiana State Employees Retirement System
Ohio PERS
New Mexico Educational Retirement Board
New York State Retirement System
New York State Teachers Retirement System
Ontario Teachers Retirement System
Oregon PERS
State of Tennessee Treasury
Teachers Retirement System of Texas
State of Wisconsin Investment Board

Related link: Maximus Institutional Investors

Monday, November 15, 2021

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

It's commonly known that US student loan debt is now about $1.7 trillion and that more than 44 million Americans are laden with this debt. It's also known that student debt is not a problem for everyone who goes to college or everyone who takes out loans.

Student loan debt is not equally distributed: while the children of elites can go to school without incurring debt and find meaningful work after graduation, working families are burdened because so many cannot find decent, gainful employment after dropping out or even after graduating from college--work that would enable them to repay their loans.

Student loan debt is also not distributed equally among the schools that generate the debt. Working class people who have the opportunity to get to elite schools may incur less debt there than by attending state universities--but others who attend these elite schools, especially online at the graduate level, may not be so lucky.

Those who attend subprime colleges, and who take the wrong majors, may incur debt they can never repay.

And the multitude of debtors in between, the many millions going to less than elite schools, are having to restrict their dreams as they pay back their loans.

The US Department of Education and other organizations publish important information on student loan debt. The College Scorecard, for example, gives consumers information on the debt they can expect, gainful employment after attending, and the numbers on student loan repayment. The Washington Monthly also ranks colleges, and important numbers, like social mobility rankings and amount of principal paid are in the rankings. The Century Foundation and The Institute for College Access and Success (TICAS) also contribute to our knowledge.

But there are glaring gaps in our current knowledge about student loan debt, knowledge necessary for establishing greater transparency and accountability.

One of the most important knowledge gaps is in learning about student debt by institution. In 2016, Adam Looney and Constantine Yannelis presented a conference paper on student loan debt that listed student loan debt by institution.

Table 5 in this report showed an important aspect of the debt, of accumulated debt, the percent of principal still owed on debt, and the 5-year student loan default rate. University of Phoenix attendees had an estimated $35 billion in accumulated debt, outpacing Walden University. And Argosy, Strayer, Capella, DeVry, American Intercontinental, and Nova Southeastern attendees owed more money than the principal of their loans, 5 years after the loans were taken out. Kaplan University (know known as Purdue University Global) had a 5-year student loan default rate of 53 percent, and Ashford University (know known as University of Arizona, Global Campus) and Colorado Technical Institute had 5-year student loan default rates of 47 percent. These subprime colleges, in effect, were draining the student loan portfolio while providing a service that hurt many of their customers.

Even some big brand name schools like NYU, University of Southern California, Penn State, Arizona State University, Ohio State, University of Minnesota, Michigan State, Rutgers, Temple, UCLA, and Indiana University had students with enormous amounts of debt that they were having to pay off.

The data in this study were from 2009 and 2014. What has happened since then at the institutional level? What schools today are draining the student loan portfolio and financially crippling those who have attended? Consumers and tax payers should be allowed to know.

Monday, August 31, 2020

Student Loan Volumes Show College Meltdown Has Accelerated

US Student loan volumes decreased dramatically in the third quarter (March 31-June 30) of 2020.

According to Ken Miller at The Century Foundation, volumes decreased 10 percent at public colleges, 18 percent at for-profit colleges, and 20 percent at private non-profit colleges.

And according to Mark Kantrowitz, new student loan volumes were down 42 percent.

Student loan volumes were especially low at subprime schools University of Phoenix (-48%), Walden University (-48%), Ashford University (-56%), and Colorado Tech (-43%) and state flagship universities, University of Washington (-95%), Ohio State (-68%), Penn State (-51%), Temple University (-47%), and University of Texas-Austin (-41%).

Elite private universities Columbia University (-87%), Boston University (-55%) and Georgetown (-39%) also saw big losses in student loan volume.

While schools with large endowments will be able to cover these dramatic losses, those with less in alternative revenue streams and endowments will have to make tough decisions, in many cases cutting costs through layoffs in 2021.

Numbers for the 4th quarter, posted in November after the election, could be even worse, at least in absolute terms. The loss of these funds may not only hurt colleges and their employees, but also college towns. Federal student loan fiscal year numbers will also be reported in November.

In late December 2020, the National Student Clearinghouse will post national enrollment numbers which may parallel declining student loan volumes. The greatest income losses, however, may come from losses from room and board revenues.

Thursday, July 11, 2019

Music Videos of the College Meltdown

While I was updating my College Meltdown bibliography and writing a review of College is Bullshi*t, I found an enormous number of Youtube music videos dedicated to student loan debt. Scholarly sources are fine, but they don't get people to move. These videos vary in quality and genre, from blues to rap, to pop, heavy metal, and country. But you gotta listen. My favorites are Eatin' Me Alive by Ramy B. and Dee-1's Sallie Mae Back. An extremely popular tune, Stressed Out by Twenty-one Pilots, has just one line about student loan debt, but definitely hits on the consequences of youth and making choices.

Works Cited
B., Ramy. “EATIN' ME ALIVE (STUDENT LOAN RAP).” YouTube, YouTube, 10 Feb. 2019, www.youtube.com/watch?v=C44O_GUtcQs.

chescaleigh. “Beyoncé ‘Countdown’ Parody: Student Loan Countdown.” YouTube, YouTube, 8 Oct. 2011, www.youtube.com/watch?v=96KiSEMHy7Y.

Cornell, Charles. “Student Loans, You've Got Me By The Balls - Charles Cornell.” YouTube, YouTube, 12 June 2019, www.youtube.com/watch?v=7aJWUA3-E0E%2Bhttps%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv.

Dee1music. “Dee-1 - Sallie Mae Back (Official Video).” YouTube, YouTube, 11 Feb. 2016, www.youtube.com/watch?v=JqbXQa05Z6c.

Dorsey, C. Richaude. “Studen Loan Song.” YouTube, YouTube, 3 Nov. 2016, www.youtube.com/watch?v=JZG8H-1pwu4%2Bhttps%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv.

ebonysongstress. “Student Loan Song by C. Richaude.” YouTube, YouTube, 5 Jan. 2008, www.youtube.com/watch?v=ILcTrUHqHa0&list=PLBiTf7f_nVjgtZ7HCrrPEHY9xvIIHSkXd.

Grosscup, Ben. “‘Four Years of College’ (Parody of ‘Sixteen Tons’ by Ben Grosscup).” YouTube, YouTube, 28 Feb. 2016, https://www.youtube.com/watch?v=_sWosZ2qshc

Hammer, Dave. “Student Loan Blues.” YouTube, YouTube, 2 Apr. 2013, www.youtube.com/watch?v=QQtb8EtD458%2Bhttps%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv.

Harris, Lisa E. “Sally Mizzle (The Student Loan Song).” YouTube, YouTube, 6 Oct. 2016, www.youtube.com/watch?v=_WHXc7FTkPQ.

Lazer, Glenn. “Student Debt Metal Song.” YouTube, YouTube, 13 June 2019, www.youtube.com/watch?v=w5JBNcTDtVo%2Bhttps%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv.

pincgator. “PINC GATOR STUDENT LOAN SONG.” YouTube, YouTube, 29 Oct. 2008, www.youtube.com/watch?v=qD8KVaMbF7E.

“Twenty One Pilots: Stressed Out [OFFICIAL VIDEO].” YouTube, YouTube, 27 Apr. 2015, www.youtube.com/watch?v=pXRviuL6vMY.

Wilson, David. “Simple Mind (The Student Loan Song) by David Wilson.” YouTube, YouTube, 6 June 2016, www.youtube.com/watch?v=hDVtuoPmTPQ%2Bhttps%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv.
?v=_sWosZ2qshc.