When You Give To A Charity, Know Where Your Money Is Going

Yesterday BizPac Review posted an article about the Association of Black and Puerto Rican Legislators, Inc., a group of black New York State legislators who run a charity to provide scholarships for black and Latino youth.

The article reports:

The caucus of black New York state lawmakers run a charity whose stated mission is to empower “African American and Latino youth through education and leadership initiatives” by “providing opportunity to higher education” — but it hasn’t given a single scholarship to needy youth in years, according to a New York Post investigation.

The group collects money from companies like AT&T, the Real Estate Board of New York, Time Warner Cable, and CableVision, telling them in promotional materials that they are “changing lives, one scholarship at a time.”

The group — called the Association of Black and Puerto Rican Legislators, Inc.  — instead spent $500,000 on items like food, limousines, and rap music, the Post found.

The politicians refused to divulge the charity’s 2017 tax filing to the Post despite federal requirements that charities do so upon request.

The article provides some insight as to where the money collected goes:

State. Sen. Leroy Comrie of Queens, the group’s number two, refused to come out when Post reporter Isabel Vincent stopped by his office. All of the politicians mentioned are Democrats.

“The real purpose (of the charity) is to bring people to get over their apathy and out to Albany and get motivated,” the charity’s former chairman, Assemblyman Nick Perry of Brooklyn, previously said.

There has been no money used for scholarships in that past two years, the Post reported, citing sources. That’s even after the Albany Times-Union called outthe charity in January 2017 for meager spending in prior years.

The charity gave $36,000 of its $565,000 in revenue to scholarships in 2015. That year, it spent $85,000 on a concert with Eric Benet and Regina Belle, and $157,000 on food, according to the Times-Union’s analysis of its tax filings.

The group said that year it planned to double the amount of scholarships it gave, but it didn’t happen.

In 2017, its annual event featured the rap artist Big Daddy Kane.

Hopefully the Attorney General of the State of New York will decide that the spending habits of this charity are inappropriate and require this group to actually fund some scholarships. However, it’s New York, so I am not optimistic.

Do Some Democrats Really Believe In Free College?

Breitbart posted a story today about a recent audit of the University of California. During the time that she oversaw the University, University of California President and former Obama Secretary of Homeland Security Janet Napolitano raised tuition. That doesn’t seem all that unusual–tuition is raised all the time. However, there is more to the story.

The article reports the results of the audit:

The cover page for State Auditor Elaine Howle’s 167-page audit report states bluntly that the UC president’s office  “Failed to Disclose Tens of Millions in Surplus Funds, and Its Budget Practices Are Misleading.”

 The audit found that the UC spent $32.5 billion on expenses during the 2015-16 school year to fund 10 campuses, five medical centers, and its Office of the President headquarters. Although the UC states that its “fundamental missions are teaching, research and public service,” the UC only spent “$6.7 billion (21 percent) on teaching, “$4.6 billion (14 percent) on research” and “$630 million (2 percent) on public service.” The other $20.6 billion (63 percent) was spent on non-fundamental activities.

The audit highlighted criticism in January from students and lawmakers after the UC regents approved President Napolitano’s 2.7 percent tuition increase for the 2017-18 year, given that UC tuition nearly doubled from $6,141 in 2006–07 to the current $12,192 this school year.

In addition, State Auditor Howle’s audit found the “Office of the President has amassed substantial reserve funds, used misleading budgeting practices, provided its employees with generous salaries and atypical benefits, and failed to satisfactorily justify its spending on systemwide initiatives.”

The article further explains that the Office of the President interfered in the audit process. The article includes a list of financial issues discovered in the audit. The problems were outlined in a cover letter sent to California Governor Jerry Brown with the audit. If you follow the link above to the article, the list is posted there.

The Democrats are on the record as stating that they want free college for everyone. Meanwhile, the actions of Ms. Napolitano cause me to question the sincerity of that desire. There is also Senator Elizabeth Warren who make $300,000 to $400,000 per year for teaching two or three college classes a week. Didn’t these people study economics? Where do they think the money to pay the teachers and keep the buildings in a reasonable state of repair is going to come from if college is free?

The rapid increase in tuition costs is largely due to the government involvement in student loans. The colleges have no incentive to cut costs–students can get government loans to pay outlandish tuition costs. The government has no incentive to look carefully at the students taking out the loans–it’s taxpayer money. And meanwhile the current student loan debt is larger than the current credit card debt in America. It is a bubble waiting to burst, and the taxpayers will be left holding the bag. The student loan program is another federal entity that needs to be put back into the hands of private banks who understand how and when to lend money. Meanwhile, colleges need to learn to control their spending. Tuition increases should be about level with the rate of inflation.

The following chart shows what has happened to college costs from 1985 to 2011. The chart is from a website called inflation data:

The government took over the student loan program in 2010.

 

What Happens When The Government Makes Something Better

Investor’s Business Daily posted an article about what has happened to student loans under the Obama Administration.

This is the picture:

The Obama Administration took over the student loan program in 2010.

The article reports:

In a nutshell, federal loan aid to colleges is pushing up tuition faster than inflation. Students must take out ever higher amounts of debt to pay for their education, but starting salaries haven’t kept up. If students don’t get good jobs when they graduate, many will default.

The study, published by the National Bureau of Economic Research, shows conclusively that growth in one program — the Federal Student Loan Program — was more than enough to account for the entire rise in college tuition from 1987 to 2010 — a stunning conclusion that suggests a massive market failure.

From 2006 to today, total student loan debt soared from $517 billion to $1.3 trillion, a 152% jump, to cover surging tuition costs. Over that same period, real starting wages for college grads were essentially flat.

Sadly, this should be no surprise, given recent history.

Whenever government gets involved in subsidizing anything — from sugar to home mortgages — higher prices emerge, leading to market disruptions and, often, a “crisis.”

At some point, we need to realize that the private sector does a better job at everything than the government. The bubble of the student loan debt will be bailed out by the taxpayers, and the national debt will continue to spiral out of control. This is our future unless we begin to elect people who understand both human nature and free markets.

Taxpayer-Funded Inflation

Yesterday Smartmoney.com posted an article explaining how government student loans and grants have caused an increase in college tuition. The article points out that federal aid for college students has increased 164% over the past decade, but many potential students still find the cost of a college education unaffordable

The article points out:

Lesley Turner, a PhD candidate at Columbia University, looked at data on aid from 1996 to 2008 and calculated that, on average, schools increased Pell Grant recipients’ prices by $17 in response to every $100 of Pell Grant aid. More selective nonprofit schools’ response was largest and these schools raised prices by $66 for every $100 of Pell Grant aid.

The article further states:

After adjusting for differences among schools, the authors find that Title IV-eligible schools charge tuition that is 75% higher than the others. That’s roughly equal to the amount of the aid received by students at these schools.

Studies like these suggest that if one goal of government is to make college affordable, aid should become more thoughtful instead of merely more plentiful. And the total cost of federal spending on college isn’t fully known. That’s because spending on loans dwarfs that on grants. Student loans recently eclipsed credit card debt.

The article reminds us that with high unemployment and the unavailability of the high paying jobs that graduates need to pay off their college loans, the taxpayers could wind up paying the bill for a lot of college tuition loans.

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We Need To Stop Screaming About Wall Street Greed And Start Screaming About College Greed

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Yesterday The Daily posted an article about the rising cost of a college education. The numbers are startling. The class of 2034 faces a college bill for a top college of $422,320 in today’s dollars.

The article reports:

The Daily analyzed historical, inflation-adjusted price data from the College Board to see what a bachelor’s degree might cost the class of 2034 in 2011 dollars. The result: Total tuition and fees would top $232,000 for an average-priced four-year private college and nearly $81,000 at an average-priced public university — up 111 percent and 167 percent, respectively, from the average class of 2012 tuition.

Room and board brings the average price of a four-year college education up to a projected $288,000 in 2011 dollars for four years beginning in 2030 at an average private school and $123,000 at an average public school. The class of 2012 paid about $149,195 for a private school and $64,591 at a public university, according to College Board data.

The solution to this problem is NOT government regulation or intervention. This is a case where the free market will actually correct itself (if allowed to). The government has intervened with financial aid programs and loan programs that have allowed tuition and costs to be raised, but as the Occupy Wall Street people complained, it has also caused many students to graduate from college with crippling debt. The free market correction, if it is allowed to occur, will be fewer students going to the more expensive colleges and those colleges being forced to cut their budgets and their tuition. Unfortunately, the student loan and grant programs, as much as they allowed lower-income students to attend college (a good thing), also resulted in inflated tuition costs. It’s time to let the free market bring balance back to the cost of a college education. 

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The Promised Government Help With College Loans Is Not What It Appears To Be

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Yesterday John Podhoretz posted an article at the New York Post detailing what President Obama’s proposed changes in how college loans are financed would mean to the average student.

Mr. Podhoretz points out that the federal loan programs have resulted in out of control tuition costs at colleges. He states:

The staggering inflation in the cost of higher education since the federal government got involved in lending money to Americans for college in 1965 beggars description. One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.

The article further reports:

So say you’re an average student carrying a $27,000 debt. Your monthly payment is about $208. With the reforms Obama is instituting, and assuming an interest rate of 6 percent, your monthly payment will drop $9 a month to $199. Staggering.

The article also points out that under the proposed changes, the government would be entirely responsible for college loans. Students would borrow directly from the government and pay the government back. What happens when students default? The taxpayers pick up the tab. Aside from the fact that the benefits to the students of this program are minuscule, we need less government in all aspects of our lives–not more.

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