Some Colleges Don’t Produce Big Earners. Are They Worth It? | Big Indy News
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Some Colleges Don’t Produce Big Earners. Are They Worth It?



As the nation’s student debtors enter Month 20 of awaiting word on when or if President Biden will keep his promise to cancel some of their debt, many questions hang in the air.

How much should the federal government dismiss? Should higher-income people qualify? If everyone gets at least some relief, will future debtors expect it, too?

But here’s a question we’re not asking often enough: What should we do about the schools that left borrowers in a challenging situation to begin with? Without any changes to the higher education system and its institutions, debt will continue spiraling into the trillions of dollars.

One thing to do is for applicants and their families to shop differently. A good place to start is studying available government data for any school you’re considering to see whether people who attended earn more than they would have if they had gone straight into the work force after high school.

At many schools, the answer is no. Three years ago, in an examination that should have received a lot more attention, the center-left think tank Third Way put all available data for all higher education institutions together. It found that at 52 percent of the schools, more than half of the enrollees were not earning more than the typical high school graduate six years after they began their studies. After 10 years, the figure was still 29 percent.

Anyone can download the school-by-school spreadsheet that Michael Itzkowitz, the author of the Third Way study, posted. I picked 28 four-year institutions to contact, focusing on those whose most recent data showed that 60 percent or fewer people were outearning a typical high school graduate six years after enrolling.

Just under half of them did not respond to requests for comment. But officials at several other schools were willing to engage — and they questioned how much of a story any one metric can tell.

Before we hear from them, a bit more about the data in question. It comes from the College Scorecard, a Department of Education website that made its debut in 2015. Mr. Itzkowitz was the director of the Scorecard in 2015 and 2016. It includes information like a school’s net price, its graduation rate and the debt students incur.

The department describes the income data as “the share of individuals who received federal student aid, were working, and were not enrolled in school that earned more than the typical high school graduate six years after entering college.”

That income figure for the typical high school graduate was $28,000 when Mr. Itzkowitz aggregated the federal data. And in case it isn’t clear, the department includes both people who completed their studies at the school where they began and those who left before finishing.

To Mr. Itzkowitz, who is a senior fellow at Third Way and also works as an independent consultant, the figure is a simple, basic measure of whether people got what they came for. After all, most students pursue higher education to increase their earning power.

College administrators do not dispute this, for the most part. But some students are shopping for the quality of the lived experience as an undergraduate, especially at specialized schools. And they may be willing to borrow to do it, even with the possible income outcomes in mind.

At the New England Conservatory of Music in Boston, 57 percent of the people were earning more than a high school graduate six years after enrolling, according to the data that the Third Way study used. (More recent data for this particular institution is not available on the College Scorecard.)

Zach Schwartz, associate director of enrollment there, said in an interview that he and his colleagues spend a lot of time with admitted students and their families talking about money and debt. Sometimes, it is clear that it’s a bad idea, financially, for a student to matriculate.

He also asks all applicants to consider an average boring Tuesday there and compare it to one at a more standard undergraduate institution. At a conservatory, that day might include rehearsals with an orchestra and a chamber group, plus solo practice and instruction in music history and theory.

At Grambling State University in Grambling, La., and other historically Black colleges and universities, there are additional concerns. These institutions help students who may not have been well served by their previous schools, may face discrimination when hunting for a job and may face it again when asking for a raise.

Just 43 percent of the students who start at Grambling are outearning high school graduates six years later. “Our interest is not in getting the elite financially but getting the students who would not have had opportunities at other institutions,” said Gavin R. Hamms, the associate vice president of enrollment management. “It’s deeper than the data.”

Warren Wilson College in Swannanoa, N.C., faces a unique challenge. It is a so-called work college, which means students have an on-campus labor assignment. There are community engagement requirements, too, on top of regular classwork and whatever additional job students might need to earn extra income.

The school’s graduation rate is just 53 percent, according to the College Scorecard. If those among the 47 percent enter the labor market without a degree, they’re at a disadvantage. Indeed, just 37 percent of the students who start there are outearning high school graduates six years later.

Warren Wilson’s provost, Jay Roberts, didn’t shy away from the figure in an interview. Warren Wilson has obstacles to completion — and thus to higher earnings — that most other schools don’t have. While it has reduced the campus work requirements in the last few years, the school still won’t be right for every teenager who shows up thinking that it is.

Dr. Roberts does ask that people consider other metrics, too, though. The school, he said, does better than peers on survey questions of those who do graduate about whether the school prepared them for social and civic engagement and whether they find their work meaningful.

Indeed, there are students who are by no means undecided about their studies and careers and do enter college with a reasonably clear sense about their modest financial goals. Those at Hampshire College in Amherst, Mass., outearn high school graduates 46 percent of the time six years after starting.

“The majority of our students come and leave because they want to be activists, artists, educators or entrepreneurs,” said Edward Wingenbach, Hampshire’s president. “None of those career paths have early income success.”

According to Dr. Wingenbach, Hampshire’s surveys of incoming students show that when asked to rank their top future life values from a list of options, “being well off financially” ranks seventh. If anyone’s tempted to suggest that the place is filled with rich dilettantes, he noted that 36 percent of the people in this year’s entering class are eligible to receive Pell Grants for lower-income students.

That said, he also has confidence in his students’ long-term prospects. He pointed to research that shows that by age 40, people who get a liberal arts education like the one Hampshire offers see their incomes catch up to those who majored in science, technology, engineering and mathematics.

He also pointed to Hampshire’s above average performance in a recent Third Way examination of the colleges that offer the most socioeconomic mobility. Mr. Itzkowitz — who was the author of that one, too, along with another study that created price-to-earnings calculations for schools — noted that seven historically Black colleges made the top 100 in the mobility examination.

The question of who is outearning high school graduates shouldn’t be the only one college shoppers consider. But even if it isn’t the last word on the matter, it is a perfectly fine first one.

Data is a conversation starter, and it should lead pretty quickly to overarching questions that teenagers and any family members who are helping them should ask. What is the definition of success here? You may have the ability to pay or to borrow for higher education, but what should your willingness be, given the story that a school’s data tells? And have you given that institution an opportunity to put all the data in context before dismissing it out of hand?

Mr. Itzkowitz is adamant that certain schools do have some explaining to do.

“There are some institutions that are in the business of enrolling a high proportion of low-income students,” he said, “and ultimately leave them worse off than if they hadn’t attended college in the first place.”

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Sister Patricia Daly, 66, Dies; Took On Corporate Giants on Social Justice



For years, Sister Pat and other environmentalists had urged ExxonMobil to take significant steps to reduce greenhouse-gas emissions from its operations and products. In 2007, she proposed a resolution that called on that energy giant to set a firm date to report on its progress.

“We’re the most profitable company in the history of the planet,” she told Rex Tillerson, then the company’s chief executive (and later secretary of state in the Trump administration), at the company’s annual meeting, “but what will be our long-term health when we are really faced with the regulatory and other challenges around global warming?”

She added: “We are now, this company and every single one of us, challenged by one of the most profound moral concerns. And we have the wherewithal to respond to that.”

The proposal won 31 percent of the ballots, or about 1.4 billion shares, the largest tally for an ExxonMobil climate-change resolution. If not an outright victory, it was a page in a decades-long narrative that led ExxonMobil to put a climate scientist on its board in 2017. Three executives who recognized the urgency to address climate change joined the company’s board in 2021, nominated by a tiny activist hedge fund, Engine No. 1.

“The arc of her work led us to those victories by working from the inside and the outside,” John Passacantando, the founder of Ozone Action, an anti-global warming group, and a former executive director of Greenpeace, said in a phone interview.

In 1999, Vanity Fair named her to its Hall of Fame, applauding her as one who “translates belief into commitment and never backs down from a fight.”

Mary Beth Gallagher, who replaced Sister Pat as executive director of the Tri-State Coalition in 2017, said Sister Pat had not become frustrated when her resolutions were routinely voted down.

“She lived in hope,” Ms. Gallagher said. “We never talked about winning or losing. It was about raising consciousness and educating. If we’re not asking these questions, who will?”

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Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024



Maskot | Maskot | Getty Images

Americans who save for college in 529 plans will soon have a way to rescue unused funds while keeping their tax benefits intact.

A $1.7 trillion government funding package has a provision that lets savers roll money from 529 plans to Roth individual retirement accounts free of income tax or tax penalties.

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The House passed the measure Friday and the Senate did so Thursday. The bill heads to President Biden, who’s expected to sign it into law.

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The rollover measure — which takes effect in 2024 — has some limitations. Among the largest: There’s a $35,000 lifetime cap on transfers.

“It’s a good provision for people who have [529 accounts] and the money hasn’t been used,” said Ed Slott, a certified public accountant and IRA expert based in Rockville Centre, New York.

That might happen if a beneficiary — such as a child or grandchild — doesn’t attend a college, university, vocational or private K-12 school, or other qualifying institution, for example. Or, a student may receive scholarships that mean some 529 funds are left over.

Millions of 529 accounts hold billions in savings

There were nearly 15 million 529 accounts at the end of last year, holding a total $480 billion, according to the Investment Company Institute. That’s an average of about $30,600 per account.

529 plans carry tax advantages for college savers. Namely, investment earnings on account contributions grow tax-free and aren’t taxable if used for qualifying education expenses like tuition, fees, books, and room and board.

Retirement plan changes in the omnibus spending bill

However, that investment growth is generally subject to income tax and a 10% tax penalty if used for an ineligible expense.

This is where rollovers to a Roth IRA can benefit savers with stranded 529 money. A transfer would skirt income tax and penalties; investments would keep growing tax-free in a Roth account, and future retirement withdrawals would also be tax-free.  

Some think it’s a handout for the rich

However, some critics think the rollover policy largely amounts to a tax handout to wealthier families.

“You’re giving savings incentives to those who can save and leaving behind those who cannot save,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.

A 2012 analysis conducted by the Government Accountability Office found the typical American with a 529 account had “much more wealth” than someone without: $413,500 in total wealth for the median person, about 25 times the amount of a non-accountholder.

You’re giving savings incentives to those who can save and leaving behind those who cannot save.

Steve Rosenthal

senior fellow at the Urban-Brookings Tax Policy Center

Further, the typical owner had a roughly $142,000 annual income versus $45,000 for other families, the GAO report said. Almost half, 47%, had incomes over $150,000.

The new 529-to-Roth IRA transfer provision doesn’t carry income limits.

Limitations on 529-to-IRA transfers

While the new tax break primarily benefits wealthier families, there are “pretty significant” limitations on the rollovers that reduce the financial benefit, Jeffrey Levine, a certified financial planner and certified public accountant based in St. Louis, said in a tweet.

The restrictions include:

  • A $35,000 lifetime cap on transfers.
  • Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
  • The rollover can only be made to the beneficiary’s Roth IRA — not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child’s IRA, not the parent’s.)
  • The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
  • Accountholders can’t roll over contributions, or earnings on those contributions, made in the last five years.

In a summary document, the Senate Finance Committee said current 529 tax rules have “led to hesitating, delaying, or declining to fund 529s to levels needed to pay for the rising costs of education.”

“Families who sacrifice and save in 529 accounts should not be punished with tax and penalty years later if the beneficiary has found an alternative way to pay for their education,” it said.

Are 529 plans already flexible enough?

Some education savings experts think 529 accounts have adequate flexibility so as not to deter families from using them.

For example, owners with leftover account funds can change beneficiaries to another qualifying family member — thereby helping avoid a tax penalty for non-qualified withdrawals. Aside from a kid or grandkid, that family member might be you; a spouse; a son, daughter, brother, sister, father or mother-in-law; sibling or step-sibling; first cousin or their spouse; a niece, nephew or their spouse; or aunt and uncle, among others.

Owners can also keep funds in an account for a beneficiary’s graduate schooling or the education of a future grandchild, according to Funds can also be used to make up to $10,000 of student loan payments.

The tax penalty may also not be quite as bad as some think, according to education expert Mark Kantrowitz. For example, taxes are assessed at the beneficiary’s income-tax rate, which is generally lower than the parent’s tax rate by at least 10 percentage points.

In that case, the parent “is no worse off than they would have been had they saved in a taxable account,” depending on their tax rates on long-term capital gains, he said.

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Goldman grumbling grows for banking giant to sack CEO David Solomon



The knives are out for Goldman Sachs CEO David Solomon, and this time the people brandishing them aren’t the usual suspects — his junior staffers annoyed that they have to work late or come into the office several times a week.

Solomon’s problems are more serious and existential, I am told, and how he handles what can best be described as a revolt in some quarters of Goldman’s middle and upper management ranks could determine how much longer he stays in his job.

Solomon, 60, took the job in 2018 and was always somewhat of an odd choice to run the white-shoe investment bank that usually cultivated its leaders from within. He cut his teeth at a decidedly un-Goldman-like venue: the scrappy investment bank Bear Stearns (ultimately one of the causalities of the 2008 financial crisis).

He joined Goldman in 1999, as a partner, no less, because his deal-making chops allowed him to skip layers of management.

In other words, Solomon is an outsider at a firm with a wickedly insular culture. He has a quirky side gig as a DJ in the summer Hamptons party circuit. He’s also not one for small talk, and doesn’t consult with a lot of people before handing down his edicts. 

“He doesn’t breed a lot of love,” said one former Goldman executive who knows Solomon well.

Lots of people at Goldman don’t like him, and they’re letting their views be heard both internally and with pals at rival firms.

Solomon as a DJ
Solomon is an outsider at a firm with a wickedly insular culture.
David Solomon/Instagram

For the record: I’ve met Solomon and like him for his no-BS style. And until pretty recently, the numbers show him doing a great job. Goldman was running on all cylinders in deals and trading. Even as the market corrects, shares are up about 60% since Solomon took over as CEO in 2018 compared to around a 44% rise in the S&P during that time.

Goldman is still the top M&A shop, even widening its market share over rivals in that important business line. Solomon was the first among his fellow CEOs to see the downturn and enact significant layoffs to cut costs.

Still, the grumbling about Solomon is spreading to the managing director and partner class. High-priced Wall Street talent don’t call all the shots at any firm, of course. But Goldman’s MDs and partners have historically been a powerful force when the board decides the fate of current management, which makes Solomon’s hold on his job increasingly precarious as more and more of them defect from his camp.

David Solomon as a DJ
Solomon was the first among his fellow CEOs to see the downturn and enact significant layoffs to cut costs.
David Solomon/Instagram

Here’s how they’re building a case against him: Goldman’s longtime archrival investment bank Morgan Stanley now easily dwarfs Goldman in market value, $144 billion to $116 billion, continuing a trend that predates Solomon. That comes amid a slowdown in banking deals, Goldman’s bread-and-butter business, and Solomon’s home turf.

Morgan’s CEO James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues. Solomon’s effort to diversify was an overindulgence in something called Marcus, a digital retail bank launched by his predecessor Lloyd Bankfein that Solomon made his baby. So far, it’s been a disaster, so much so that Solomon has been forced to scale back, possibly on the way to winding it down.

Goldman, meanwhile, has missed targets in its recent earnings announcements, and more downward surprises could be in store as markets continue to wobble. Bonuses are down, in some places cut in half, albeit from the nosebleed levels of 2021.

Goldman Sachs headquarters
The grumbling about Solomon is spreading to the managing director and partner class.
AFP via Getty Images

Traders did well in 2022 because Goldman’s are particularly adept in profiting off turbulence, but part of their pool is being diverted to bankers to keep them in-house until the deal slowdown ends.

Since Solomon is a banker, he’s also being accused of favoritism, which in truth is a pretty lame charge, since bankers often subsidize trader bonuses when the markets aren’t profitable. Still, the Goldman trading department is powerful and can spark management change, as it has done in the past.

There’s also a question about Solomon’s allegiance to Goldman’s stand-alone culture. In its 153-year existence, Goldman has operated on the assumption that it would be the acquirer in any major strategic acquisition. Solomon’s experience at Bear, then one of the most transactional places on Wall Street, means he could be looking for a deal and not one that keeps Goldman in charge.

Morgan Stanley CEO James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues.
Morgan Stanley’s James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues.
AFP via Getty Images

At a time when most Goldman insiders believe he needs to do a “transformational deal,” i.e., something big that allows it to better compete against Morgan Stanley and super banks like JP Morgan, there is speculation that Solomon might allow Goldman to be swallowed whole by, say, a big asset manager or bank if the price was right.

As best I can tell, this grumbling, though real, doesn’t immediately threaten Solomon’s job. Then again, there is something to be said for keeping your producers happy.

Jack Welch, the legendary CEO of General Electric, was a notorious screamer and demanding beyond belief. Yet Welch knew how to nurture his people.

Former General Electric CEO Jack Welch
Jack Welch was a notorious screamer and demanding beyond belief. Yet Welch knew how to nurture his people.
Getty Images

“Jack could chew your ass, then put his arm around you and make you feel great,” one of his longtime executives, Bob Nardelli, once told me.

It’s why so many other talented execs chose to stay around under Welch, abuse and all, and left when his successor took over, watching GE implode from the outside.

Maybe it’s a good time for Solomon to take a page from Welch and start hugging it out.

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