Monthly Archives: December 2012

December 20, 2012

Parental Debt in Higher Education

When discussing the so-called Student Debt Bubble, most reporting focuses on the financial woes of the student and statistics related to student borrowing. The financial burden that is put upon parents of those students is often overlooked, under reported, and poorly documented. These days, parents are more often carrying larger loan balances than their children, saddling themselves with huge amounts of debt well into their old age to allow their children to go to their dream college.

Parents are the largest source of college funding. A recent annual survey reported that parents cover on average 37% of  total college costs. The increase in parental borrowing can partially be attributed to the ease of access to PLUS loans. These loans are often included in financial aid reward letters, giving some families the false impression that they can afford to send their child to that particular school. The intention of a PLUS loan is to allow more families access to more schools, but the end result is often quite bleak because it is incredibly easy for families to borrow far beyond their financial means.

Applying for a PLUS loan is oftentimes easier than applying for a car loan. During the application process, the government checks credit history, but little else. Ability to repay the loan is not a consideration; parents do not need to provide any income information, employment status, or current debt holdings. There is no limit on how much money can be borrowed through PLUS loans.

Student loans are problematic for borrowers, in this case parents, because it is exceedingly difficult to have them forgiven even in bankruptcy proceedings. While a student’s federal loan payments can be quite flexible with grace periods, income-based repayment programs, and deferrals, parental PLUS loan payments cannot be deferred or reduced except in the most dire of situations. This often leaves parents drowning in growing debt. For example, in 1999, Gemma Nemenzo of NYC applied for a PLUS loan to help finance her daughter’s education at her dream school, New York University. As a single parent making just $25,000 per year to support a family of three, Gemma was quickly approved for a $17,000 PLUS loan. Soon, the financial factors became too much and her daughter withdrew from NYU in favor of a more affordable institution. But the debt remained, and has nearly doubled to $33,000 in the years since Gemma accepted the loan.

“Right now, the government runs the program by the seat of its pants,” says Mark Kantrowitz, publisher of two authoritative financial-aid Web sites. “You do have some parents who are borrowing $100,000 or more for their children’s college education who are getting in completely over their heads. Those parents are going to default, and their lives are going to be ruined, because they were allowed to borrow far more than is rational.”

For this writer, the parallels between PLUS loans of today and No Income No Asset (NINA) mortgage loans of the 2000′s are frighteningly similar. If you are not familiar with the NINA mortgage loans, they are one of the financial products that led to the sub-prime mortgage crisis of 2008. NINA loans were used by aggressive mortgage brokers who did not want any trouble qualifying loans for approval. It was extremely easy for brokers to disburse a loan to an applicant, since they did not need to provide any proof of income, assets, or job status… Sound familiar? In turn, this led to a worldwide economic recession that the U.S. economy is still recovering from. For a large number of these borrowers, it was never possible for them to repay their mortgage loans. This resulted in massive amounts of foreclosures and the demise of the housing market in the United States. It is worrisome that our government employs similar requirements for federally-funded school loan programs.

The good news is that there has been a movement to educate and inform student loan borrowers since 2008. There is mandatory entry and exit counseling, along with the newly introduced financial aid Shopping Sheet and growing calls for financial aid reform. These combined resources with increasing pressure on institutions to bring the cost of tuition down, will hopefully deflate the student debt bubble in the coming years.

December 15, 2012

Praxis Cheating Scandal

Clarence Mumford Sr, a longtime educator in Tennessee, is being investigated for running a cheating ring based around the Praxis exams. In thirty-seven states, the Praxis tests are a requirement to become a certified teacher. Mr. Mumford is accused of hiring ringers to take the test in place of his customers. These ringers would use forged identification documents to gain entry into testing facilities and then take the test under the name of Mumford’s customers. His customers a re aspiring teachers that paid close to $1,500 per passing grade. The fraud includes Praxis examinations in Tennessee, Arkansas, and Mississippi. In light of the forged documents, Mr. Mumford is being charged with more than 60 counts of fraud and conspiracy.

The fraud went undetected from 1995 until 2009, when test taker John Bowen was caught taking the exam twice in one day under two different names. Bowen has since plead ”guilty” to his charges and has provided valuable insight into how the ring was operated. Ten more individuals have been charged with crimes related to Mr. Mumford’s cheating ring, including Mumford’s own son and former Pittsburgh Steelers wide receiver, Cedrick Wilson.

This fraud raises concerns about the security surrounding the Praxis exams. Mr. Mumford successfully duped the system for fifteen years without notice. Not only that, but John Bowen has revealed that he had been earning money as a phony test taker since 1990 – long before he became employed by Mr. Mumford.  No official changes in security policy have been made since the discovery of the cheating ring. ”What happens at many testing centers is that a whole bunch of test-takers show up simultaneously, early on a Saturday morning, and the proctors give only a cursory look to the identification,” said Robert Schaeffer, public education director for the National Center for Fair & Open Testing. “It’s not like going through airport security where a guy holds up a magnifying glass and puts our license under ultraviolet light to make sure it has not been tampered with.”

It is a shame to know that there are so many educators who would stoop to cheating in order to pursue a career in which they will be expected to teach their students the importance of ethically earning their grades. Ultimately, the students who were taught by unqualified candidates are the victims of these crimes. The case of Mumford’s cheating ring is especially concerning when you consider the relative ease of the Praxis exams; none of the sections of the test are above high school level.

“These are pretty basic tests,” said Sarah Almy, the director of teacher quality at the Education Trust. “The fact that there were folks who felt like they needed to bring somebody else in in order to meet a very basic level of content knowledge is disturbing, in particular for the kids those teachers are going to wind up teaching.”

It is equally surprising that so many candidates would resort to cheating  since 84-98% of test takers pass the test according to a study by the Education Trust. In fact, there is currently a movement among union leaders to make the test more rigorous to weed out unqualified candidates. Hopefully, this case will spark a renewed effort to ensure security and accountability in standardized testing locations.

December 11, 2012

The Doctor Shortage & Medical Admissions

The Origin

AAMC Physician Supply & Demand ChartA perfect storm is brewing in the American healthcare system; too many new patients and not enough new doctors.

The U.S. is experiencing a demographic shift. The Baby Boom population is aging and increasing the numbers of elderly patients who require healthcare for age-sensitive conditions. Those numbers will continue to rise for many years to come. The Affordable Care Act (“Obamacare“) is a less influential factor that will allow 30 million new patients access to insured healthcare.

“This is a national problem across the board and it is going to get much worse,” said Christiane Mitchell, director of medical affairs for the [Association of American Medical Colleges]. “We have an aging population and a whole lot of doctors retiring. We need to increase the pipeline of new doctors.”

It is estimated that the U.S. will need 65,000 additional primary care doctors by 2025. That sounds like a long time to prepare, but it takes a decade for most doctors to complete their schooling – action needs to be taken right away in order to avoid a crisis.

Implications for Patients

With fewer available doctors, patients will soon feel the healthcare pinch.

As a solution, The American Academy of Family Physicians believes that the best way to reduce the shortage is through patient-centered medical homes. The medical home is a team-based approach, where every patient has a personal physician who leads a team of professionals, including nurse practitioners, physician assistants, nurses and other health care professionals. With plenty of staff support for a small number of M.D.’s, patient care is streamlined.  However, the Association of American Medical Colleges (AAMC) doesn’t believe that medical homes are the cure-all solution for the looming shortage. Team-based approaches may help reduce the shortage, but will not eliminate it.

Why don’t we have enough Family Physicians?

The doctor shortage isn’t really a “Doctor” shortage per se; there are 17,364 new doctors that graduated in 2011 according to the AAMC. The real problem is that too few of those doctors chose primary care as a career, preferring to specialize in more lucrative areas of medicine.

In a 2008 census by the AAMC and the American Medical Association, research revealed that the number of medical graduates choosing a career in family medicine dropped nearly 27 percent. This is partially a financial decision; primary care physicians in the United States make $140,000 to $150,000 annually, but specialists can make up to 2-3 times as much. For medical school students buried under a mountain of debt after 10+ years of schooling, choosing a more lucrative career choice is the logical course of action.

Students also take into consideration their future satisfaction in their chosen field. During medical school, 2-week rounds of clinical rotations is where students get first-hand experience in many different medical specialties. In these clinical rotations, Dr. Phillips of Harvard said that medical students often observe “primary care doctors unhappy doing with what they are doing…Practicing [family] doctors feel overworked and under supported and are generally unhappy,” he added. Clinical rotations don’t do justice to the benefits of a career in primary care; the true payoff in family medicine comes from long-term relationships with patients. “The values of primary care don’t come out in a two-week rotation. You don’t get that experience that a primary care physician loves,” said Jon Kole, a fourth-year medical student at the University of Pennsylvania.

Implications for Medical Admissions

Many academics say that medical schools could do a lot more to encourage students to study primary care, and it all starts in the Admissions department. Professors suggest that admissions could select more students whose applications indicate a preference for family medicine. The AAMC has also put forth an initiative urging all U.S. medical schools to increase enrollment by 30%. According to the AAMC’s annual enrollment survey, many schools will have met that goal by 2016.

Some schools are already trying to counteract negative perceptions about family medicine. Seeing an opportunity to fill a gap, New York’s Mount Sinai School of Medicine is starting a new Department of Family Medicine. Dr. Dennis Charney, dean of the medical school, says “It’s a big deal for our institution. We want to be one of the leading medical schools that educates the next generation of primary care doctors.”

Schools can’t do it all alone, though. Amidst a climate of deep budget cuts for education, Congress must switch gears and support medical education funding, especially for primary care physicians. The U.S. government has already offered financial incentives such as loan repayments and scholarships to get doctors to practice in under-served areas.

“As a result of ongoing budget discussions, cuts to doctor training will worsen the physician shortage and jeopardize the health of patients around the nation.  It takes years to train a doctor.  For more doctors tomorrow, there must be increased funding for doctor training today,” says the AAMC

A good defense is the best offense

Medical schools must take action now in anticipation of the doctor shortage. They can begin by re-evaluating the end goal of their admissions procedures and adjusting school culture to be more encouraging of family care physicians. For example, Texas Tech is trying to encourage students to choose family medicine, by reducing the cost of medical school with an accelerated three-year program that allows primary care physicians to graduate a year early.

AMP is another example of an admissions tool that medical school admissions offices can use to prepare for this complicated and ever-changing world of medical admissions. Customizable applicant reports can allow admissions staff to efficiently evaluate the demographics of students, including ratios of how many students are interested in family medicine vs. pursuing a specialty. Visit Paperless Admissions to learn about how AMP can streamline and help your admissions office better evaluate applicants in your medical admissions process.