Change Higher Education Financing To Reduce Risk For Students

My favorite course in law school wasn’t with a typical law professor. Food and Drug Law was taught by the former General Counsel of the FDA. He had a volcanic temper that we assumed was the byproduct of years of dealing with bureaucrats. In class, he abided neither tardiness nor squeamishness; the first topic was food sanitation and its flip side: adulteration. We learned about butter with chicken feathers and baby food chock full o’ cockroach fragments. We waltzed through classic cases like United States v. 184 Barrels Dried Whole Eggs, and United States vs. 915 Cartons of Frogs Legs. We covered official FDA filth tolerance levels for foods such as frozen broccoli (no more than 60 or more aphids and/or thrips and/or mites per 100 grams), pasta (fewer than 225 insect fragments per 225 grams), tomato juice (fewer than 10 fly eggs – or 5 fly eggs + 1 maggot – per 100 grams), canned mushrooms (fewer than 20 maggots of any size per 100 grams), and peanut butter (fewer than 30 insect fragments or 1 rodent hair per 100 grams). Tolerance levels are now available online for your perusal (avoid browsing while eating).

FDA sets tolerance levels based on Quantitative Risk Assessment (QRA) – a basic cost-benefit analysis. In the case of insect parts, QRA yields tolerance levels that are safe and “below which the defect is unavoidable under current technology.” And while insect parts in food may be disgusting, QRA gets trickier for known carcinogens. Carcinogen tolerance levels aren’t set according to average per capita consumption – food companies have made this argument in court and lost – but rather based on a level at which there is “no significant human risk.” In practice, what this means is a multi-stage risk assessment in which every assumption is conservative. As there may be as many as 20 distinct stages in a risk assessment, when FDA calculates a cancer risk rate of one in a million, that risk is only this high for, say, a child consuming the maximum possible amount of the food over an extended period. The actual risk for the average consumer will be much lower.

Which begs the question: if managing risk based on averages is unacceptable in food safety, why is it acceptable in higher education?

It seems like every week there’s a new article on the value of a college degree, always comparing the income of college graduates to students who never entered or completed college. I have three issues with this rash of reports. First, they never reference the obvious self-selection bias: that students with the talent, persistence and – probably most important – family background, wealth and support to complete a college degree are on track to earn much more in the workforce without regard to their college experience or credential. Second, these studies report on graduates who’ve been out of school for at least a decade, which means they graduated before the Great Recession and entered the workforce before an era of 50%+ unemployment + underemployment for college grads.

But third is the fact that the “college earnings premium” is only an average. Which means that there are plenty of college graduates whose experience is less than premium.

We know this because they’ve been making a lot of noise lately. They’re the degree holders unable to move out of their parents’ homes or start businesses. They’re making sub-optimal job decisions based on pressure to earn income in order to stay current on repayment. They’re the graduates seeking student loan forgiveness and raging about how student loan debt has become a cancer on the Millennial generation. They’re the force behind the “free college” movement that seems to have become Democratic Party orthodoxy (to the point that leading candidates for the 2020 nomination have felt compelled to announce programs). And only 38% of them strongly agree that “college was worth the price.”

Think about how student loan debt is working for the (average) student who graduates with $35,000 in student loan debt and owes about $400 every month. As of 2016, only 57% of the 22 million Americans with federal student loans were current on their payments; 43% were in default (3.6M), delinquent (3.0M) or in forbearance (3.0M). As if this weren’t bad enough, last month we learned that, due to a Department of Education coding error, actual repayment rates could be as much as 20% lower. Only 41% are paying as much as $1 toward their principal loan balance in the first three years after leaving school. Which means we have untold millions heading for wage garnishments with no hope of discharge through bankruptcy. Two years ago, the Federal Reserve Bank of New York recognized that the bottom 25% of bachelor’s degree holders are incurring debt, but earning no more high school graduates. Imagine if 25% of consumers were getting sick from our food supply. It’s now crystal clear that current higher education financing practices would fail an FDA Quantitative Risk Assessment.


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