By Cameron Armstrong

The next business news story you read may have been composed by a computer software program.

Major business news organizations such as the Associated Press and Bloomberg have either already begun using computers to write basic business news stories or are exploring ways to use computers to help them write stories.

Some of them are using Automated Insights, headquartered in Durham, North Carolina. The company has created a product called Wordsmith that allows news organizations to generate unlimited pieces of content from a single story structure and data set. Since its start in 2007, it has worked with many big-name clients including the AP, Yahoo and Samsung.

The stories that Wordsmith produces sound like a human wrote them, and depending on the tone of the story, can contain sarcasm, jokes, or even sympathy. Last year, Automated Insights produced over 1.5 billion pieces of content for its customers.

“I think that smart news organizations should find ways to use computers to increase their reach and lower their costs,” said Ryan Thornburg, an associate professor of journalism at UNC-Chapel Hill and data journalism expert. “That is going to come with some human costs just like it has come with the automotive industry and grocery store clerks where jobs are replaced.”

Automated Insights is primarily working in sports news and finance news. Despite the rapid success that the company has experienced, it does face several challenges, including journalists’ fears of losing jobs, continued imperfection due to human error, and increased competition.

Although Automated Insights is a key player in automated journalism, it isn’t the only one doing it. Narrative Sciences, headquartered in Chicago, started producing automated stories in 2010. In contrast to AI, Narrative Sciences is product heavy rather than service heavy and focuses more on helping smaller markets.

In addition to Narrative Sciences, news organizations across the country are incorporating automation into their structures.

For example, the Los Angeles Times has created Quakebot, a robot that takes earthquake data and produces hundreds of stories about minor earthquakes in the California area. This keeps the average citizen in tune with what is happening on the tectonic plates, but frees up journalists’ time to cover more important stories.

Bloomberg is also jumping on the automation train. On April 26, Bloomberg editor in chief John Micklethwait sent out an announcement stating that Bloomberg will be expanding its automation efforts. The company is forming a 10-strong team to lead the initiative in-house, and Bloomberg will focus on using automation to unveil interesting stories. The company will do so by exploring extensive data sets in various markets.

Micklethwait thinks that this will help Bloomberg reporters use their time in a more beneficial way. “The time spent laboriously trying to chase down facts can be spent trying to explain them,” said Micklethwait.

AI and the AP

Automated Insights’ biggest success story has been with the Associated Press. In 2014, the AP hired AI to produce automated earnings stories.

Before the partnership with AI, AP financial reporters were covering only 300 stories per quarter. Now, with the help of Automated Insights, AP publishes roughly 3,700 automated earnings stories per quarter.

Lisa Gibbs, AP business editor, wants her reporters to work on the highest value journalism that uses their creative sources and investigative abilities. Gibbs, a big supporter of Automated Insights, said, “By setting up a different kind of structure, we are able to free up time.”

Still, there is concern that computerized business news will diminish the journalists’ voice and result in lost jobs.

Robbie Allen, Automated Insights’ CEO, spoke at FutureWork in Raleigh on Feb. 8, and in response to this concern, he said, “I’m happy to report that the number of jobs that to our knowledge have been lost as result of an implantation of Wordsmith is still zero today.”

The CEO explained that Automated Insights is actually a net creator of jobs, and he claimed that AI knows several people who have been promoted after a successful implantation of Wordsmith.

Gibbs supported Allen’s claim and explained that automation certainly doesn’t have to eliminate jobs, it’s about how the organization chooses to use it.

“We sat down after fourth quarter earnings, and we did a bit of an audit,” said Gibbs. “We asked: ‘Were there little errors? What were they?’ ‘Are we noticing certain issues?’ You have to pay attention to it.”

Allen believes that although it is impossible to say no one will ever lose their job because of automated journalism, we should take a step back.

“The 20^th century was all about automating repetitive physical tasks,” said Allen. “So if your job prior to that was doing something manually repetitive, that was prime for being automated…The 21^st century is going to be all about automating repetitive intellectual tasks

Errors remain

There are still errors in the stories that Wordsmith produces. However, misspellings and grammatical errors are no longer an issue.

“We promised people that we would automate earnings reports,” said Lou Ferrera, former vice president of content verticals at the AP and now chief content officer at Bankrate.com. “I didn’t promise them it would be 100 percent perfect, but the difference is now I have a much lower percent of error.”

While the software follows its grammatical instructions 100 percent of the time, it is still ultimately under the control of the human, who is the one writing the algorithms that produce the stories. Therefore, errors involving the data can occur. If the human enters in the code wrong, then the robot does not have the ability to correct the mistake.

For example, in July 2015, Automated Insights produced an earnings story for the AP on Netflix. However, when Netflix released its second quarter earnings, the stock underwent a 7-1 split, and the data that Wordsmith collected did not reflect the switch. This caused Wordsmith to report that the individual share fell 71 percent and noted that the company had missed analyst expectations for per-share earnings.

Celeste Lecompte, a journalist for Neiman Reports, wrote a report called “Automation in the Newsroom” and she reflected on Wordsmith’s Netflix error. “Your data have to be bulletproof,” she said. “You need some form of editorial monitoring to catch outliers.”

Because of these possible mistakes, it is essential that humans have a strong role in automated journalism.

The human touch

Andy Bechtel, an associate professor at UNC-CH and expert in digital journalism and editing, is a tough critic of automated journalism. He understands the efficiency of it, but believes the context is often missing, and that is a detrimental fault to the value of the automated stories.

“When you get to more complex stories, I still think a human touch is necessary,” said Bechtel. “The robot got the basics down OK, but it falls short with quotes.”

Although earnings stories are formulaic, the AP does adding context. At the FutureWork forum, Allen explained the way the AP inserts context into its earnings stories.

“In some cases we automated 80 percent of the story and enabled the journalists to focus on the top 20 percent, on the company analysis, the executive team, etc.,” said Allen.

Gibbs confirmed this editing structure. She said that for the top-tier companies, “Your Googles, Apples, and Walmarts,” her reporters still basically write their own story. Maybe they incorporate the earnings into their larger piece, or maybe they “write through” the automated story.

“Essentially with those companies we’re saying these are important enough and consumers care enough about them for us to provide a meaty look at their strategies, or products, or what have you,” said Gibbs.

The AP has about 100 of those top-tier companies.

In addition, it has a second tier of companies where it checks facts and adds context to earnings stories. There are 250-300 second tier companies.

In addition to adding context, Gibbs believes it is also key to advise the reader that the automated story was computer generated. The AP does this by adding a disclosure message to the end of every story.

Thornburg thinks that automation is a smart business strategy for companies to use. “If it’s replacing people with machines and the quality and scope of the stories are the same,” said Thornburg. “Then that’s also useful, because as advertising revenue goes down, news organizations have to find a way to do the same quality work they did by lowering the costs.”

Other markets?

While other news organizations are trying to incorporate automated journalism into their businesses, Automated Insights is actively seeking other markets to break into.

Allen explains that computers are well suited for quantitative analysis, so when looking for potential markets the best place to look is areas where there is clean and consistent data.

Recently, Automated Insights has announced that it is extending its partnership with the Associated Press and are going to be expanding into covering sports and other areas.

Gibbs said that the AP is looking at automating stories about state unemployment rates, and it could consider automating stories about local gas prices and real estate sales.

Thornburg sees potential for Automated Insights in politics. “I think politics is a good place to get involved,” he said. “Night and day messages fly under the radar, so I can see political campaigns wanting to send emails to personalize messages.”

Thornburg believes politics is a time-sensitive topic and that automation could be a key resource in getting stories that include data about polls, elections, etc., out fast.

On the contrary, Bechtel thinks that politics may be too tricky.

“For basic things like who won the primary and earnings reports of politics, I could see a role for that,” said Bechtel. “But when you get into the nuances of campaigns and politics, it may be difficult for automated journalism to see that.”

While these basic stories may be helpful for simple knowledge, Bechtel believes it is not helpful in the decision making process. “The removal of that context makes it harder for people to make decisions on voting, what to buy, how to run their lives,” said Bechtel. “You need contextual information not just broad numbers.”

When asked about expanding into politics, Gibbs said, “Definitely not because there are too many nuances.”

Allen believes that in five years automation will be a critical aspect to every news organization in the country. Allen thinks that in the next 50 years the future of automated journalism will consist of a much higher presence of humans plus software.

“Not the notion that there will be a black and white reality we are going to face where software comes in and takes jobs,” Allen said. “It is much more likely that humans plus software are going to make a better world than just having software or just having humans.”

Thornburg believes that smart news organizations should find ways to use computers to increase their reach and lower their costs.

Bechtel says he’s not afraid of automated journalism. However, he adds, “If it gets to be a point where somehow they can make it so a robot could write a 2000-word New Yorker article, then I’d be scared.”

Armstrong is a senior business journalism major at UNC-Chapel Hill

By Randy Short

Special days labeled with acronyms. Talk of waffle breakfasts together. Constantly conversing through hash tags, quips and gifs. No, this isn’t your local group of sorority girls, but rather a community of journalists working at some of the most prestigious news organizations in the world and traders managing millions — if not billions — of dollars.

This is Finance Twitter, a force fundamentally changing business journalism.

Twitter is changing how financial news is being transmitted and consumed, and the genesis of this change is the community of journalists, traders, bloggers and trolls that collectively make up Finance Twitter. These professionals use Twitter for more than 140-character updates on their breakfast, but instead use it as a forum of exchange with their followers.

“When I joined Twitter, I thought of it as a place people go to show a picture of their Cheerios,” said Pedro da Costa, the editorial fellow at the Peterson Institute for International Economics.

Prior to joining the PIIE think tank, da Costa served 15 years as a business journalist covering the Federal Reserve Board for Reuters and The Wall Street Journal.

“Twitter has changed [business journalists’ jobs] in a lot of ways,” he said. “Having grown up at Reuters journalistically, I think it makes the broad world of journalism more like a wire.”

Twitter has sped up the writing process, much like a wire. Ben Casselman, the chief economics writer for FiveThirtyEight, explained that before Twitter, coverage of economic releases such as the jobs report could span three days. The first day would simply provide the numbers; the second day would give more analysis; and the third day would delve into more nuance or detail of a particular aspect. Now, the “third day story” is out by the morning after the release, Casselman said.

“Things move more quickly because of Twitter,” he said. “There’s rapid back-and-forth.”

The back-and-forth between writers and readers has journalists constantly checking Twitter to get story ideas and keep updated on the market. A Talking Biz News survey of 70 journalists showed that a third of journalists check Twitter at least 10 times daily to publicize their work and engage with readers. Twitter users use the social network to find and consume news, as 86 percent of Twitter users access news on the site and 74 percent do so daily, according to an American Press Institute study.

With readers using Twitter as a news source, publications must be promoting their work on Twitter. In his new position at the PIIE think tank, da Costa writes economic blogs and columns and edits briefs from the think tank’s economists. Da Costa switched from business journalism due to his desire for more personal ownership and direction in his work. However, his Twitter prowess played a part in attaining the job.

“Part of my pitch to enter the think tank world was bringing social media” he said. “I know how to use Twitter as a mechanism to increase exposure to the website and content.”

Traders swapping more than stocks

Think tanks might not have thought that Twitter was an important tool before, but changes to how readers of financial news consume the information has increased Twitter’s importance. The social media has become a crucial tool for journalists and traders.

“Twitter is the single most important resource I have,” said George Pearkes, an analyst at Bespoke Investment Group, which conducts independent research on global financial markets. “Twitter is a fantastic way to learn and develop knowledge on an insanely wide range of topics with an insane depth.”

Despite the 140-character limit, the depth comes from the intelligent and constructive debate from the contributors to finance Twitter, Pearkes said. The forum affords greater engagement and interaction between journalists and readers than any platform before.

“There’s direct access, so there’s more interacting with the press and back-and-forth,” da Costa said.

But participants don’t need a press pass or a fund with millions of dollars to gain access to the conversation.

“There are low barriers to entry,” said Walt Hickey — the chief culture write at FiveThirtyEight. “It’s not at all exclusive.”

In addition to the trading of ideas, Twitter provides an instantaneous barometer of market sentiment.

“The market operates every day in real time,” said Eddy Elfenbein, a private investor and editor of the blog Crossing Wall Street. “Twitter is a great resource for information on a moving target coming from very smart people.”

Steve Goldstein, who is the Washington bureau chief for MarketWatch.com, gauges market sentiment through Twitter.

“My personal observation is that Twitter reflects the market more than it moves it,” Goldstein said. “I use it as an exit poll of why traders did what they did.”

These advantages have positioned Twitter to usurp the Bloomberg terminal’s position as the primary news resource for traders.

“Twitter basically replaces Bloomberg except for all the charts,” da Costa said. “You get a big stream of news, so it’s time effective.”

Finance and waffles

For most people, releases of economic data are just obscure numbers mixed in with the alphabet soup of GDP and PCE and CPI and ECI. For the Finance Twitter community, economic and business updates mark revered days on the calendar.

“I remembered when ECI was a weeklong holiday around these parts,” tweeted Joe Weisenthal, an editor at Bloomberg Markets, on the April 29 release of the Employment Cost Index data.

Finance Twitter also bonds around novel intersections of technology and business. When Yahoo Finance live streamed Berkshire Hathaway’s annual meeting — something that had never been done before — Pearkes tweeted, “how is there not some kind of FinTwit waffle brunch for this (sic).”

As familiarity is forged through charts and retweets, relationships emerge. Pearkes noted the running jokes he shares with other Finance Twitter members and the mentorship many have bestowed on him.

“You can find and connect with experts on any topic of financial markets,” he said.

There is no official definition, group or parameter on Finance Twitter, yet its members have formed into a community.

“It’s a community of people who care about the same issues even with vastly different opinions,” da Costa said of Finance Twitter.

Underpinning the collective is the passion everyone shares for finance and economics.

“The most important thing is enthusiasm,” Pearkes said. “I eat, breath and sleep this stuff. The people with the biggest following are the most into it.”

What your journalist eats for breakfast

Finance Twitter is remarkable for its broad group of members, but it ensures that people don’t get lost in the crowd. It lends a space for journalists and traders to craft a personal image. Twitter has personalized the news process, so who is publishing the news has become as valued as the news itself on Twitter.

In 2008, da Costa considered writing a book. While researching the publishing process, he found that the publishing industry is cut throat, with publishers only looking for marketable authors.

“I thought to myself, people don’t really know me,” da Costa said. “Maybe I should do something about that.”

Da Costa’s strategy was to join Twitter and begin following anyone who seemed to have an inclination toward finance or economics. He believed he’d reach a critical mass of 5,000 followers before exhausting the people interested in Fed minutia.

“Never in my wildest dreams did I think more than 5,000 people would care about geeky Fed stuff,” he said. “But the financial crisis made this stuff front-page news, so it ratcheted up interest and people feel like they should know this stuff.”

Now, da Costa has more than 86,500 followers keeping up with his quirky feed.

“I think I have a reputation of trying to be informative and light-hearted,” he said. “I see the job as a translator: There is a lot of jargon, so I post economic concepts in ways people can identify with.”

The translation includes using gifs — or short video clips — to humorously explain complex economic concepts. For example, da Costa posted a gif of a cartoon character swimming while tethered to the side of the pool to demonstrate how the European Central Bank is flirting with a liquidity trap because of negative interest rates.

For Hickey, Twitter is more than a space to craft a personal image. Twitter helped him land both of his journalism jobs.

Coming out of college, Hickey decided to apply to Business Insider because he followed several of the company’s writers on Twitter. After getting the BI job, he leveraged Twitter as a network to meet sources and was offered his second gig.

“Nate [Silver, FiveThirtyEight’s editor-in-chief] contacted me for the first time through a DM,” Hickey said. “I got a job because I was some dude on Twitter.”

Fellow FiveThirtyEight writer Harry Enten has even gotten dates from Twitter, Hickey said.

Although Finance Twitter is a community built upon a passion for shared interests, it helps provide more depth on the personalities of its members.

“For us at Reuters, it put a face on a previously nameless journalist,” da Costa said. “You’re not seeking glory, but you can show some color and personality.”

Finance Twitter partakes in discussions about politics, sports, food, pets and just about anything else, proving that there is a personal complement to the professional side.

“It’s nerd adjacent, but it’s not all finance,” Hickey said. “People have interests outside of nonfarm payrolls.”

As long as you’re genuine, you’ll develop your voice and quirks that will help you garner a following, Pearkes explained.

However, there is a spectrum of how much of their personal lives journalists share on Twitter. For example, Casselman might tweet about the Red Sox but not much else from his personal interests.

“For me, Twitter is a professional entity,” he said. “You can bog down readers with stuff they don’t care about. There’s a fine line between sharing and over-sharing.”

Casselman’s issue with journalists posting personal views is when objectivity is compromised.

“People can post too much of their political beliefs,” he said. “You’re committed to objectivity in print but are posting your views on Twitter, so people need to be a little more careful with that.”

Goldstein shared the opinion that although Twitter allows journalists to be more flippant, they must keep their role as a journalist in mind.

“You can be punchier on Twitter,” he said, “but at the same time, because I’m a journalist, people expect the truth.”

Implications for journalism

Twitter’s influence runs deeper than quirky accounts, job offers and waffles. Twitter’s transformation of journalism has seeped into every step of the journalistic process, from brainstorming story ideas to publicizing stories.

Prior to Twitter, Pedro da Costa visited a handful of news sites every day to keep up with the news and generate story ideas. Now, all the news is aggregated on Twitter, saving him time.

When forming story ideas from Twitter, Casselman warned that assuming your Twitter followers are representative of all your readers could skew your reporting and ideas. He noted that his articles on FiveThirtyEight receive hundreds of thousands or millions of views, yet he only has 30,000 Twitter followers.

“Twitter is where the conversation is, but the vast majority of readers are not sitting there all day reading our feeds,” Casselman said. “You risk having a myopic focus.”

Despite this risk, Goldstein believes Twitter is a valuable place to test story ideas and get feedback.

“It helps to craft what direction I’m going with a story,” he said. “If there’s interest on Twitter, it may be something a broader audience might be interested in, too.”

Randy Hlavac is a lecturer at Northwestern’s Medill integrated marketing communications department. He instructs students on how to best use social media to drive journalism.

“Social has a tremendous impact,” he said. “It allows you to see all sides of an issue and engage with people globally.”

By digging deeper into trove of information offered by social media, journalists can tab the top influencers on an issue and perform sentiment analysis to gauge the tone of conversations, Hlavac said.

“People talk on social before they talk anywhere else,” he said. “You hear the buzz before anything else happens.”

Hickey uses Twitter to reach out to new sources. Elfenbein has appeared on Bloomberg Television and other business news channels because of his connections with business journalists.

Twitter’s constant stream is how da Costa accesses most of his news, he said, meaning he circumvents outlets’ website homepages.

“News companies have spent a lot of time worrying about how the news is presented in terms of headlines and front pages,” he said. “With Twitter, all of that is less relevant.”

Twitter can also drive significant traffic, at least for those who know how to wield it. Parse.ly, a social analytics company, examined data from 200 of its clients to quantify how much traffic publishers receive from Twitter. Its study found that the typical publisher receives only 1.5 percent of its traffic from Twitter. However, for the most active Twitter publishers (those in the top 5 percent of Parse.ly’s clientele), Twitter drove 11 percent of traffic.

Despite the sizeable traffic that can be generated from Twitter, Goldstein believes Twitter’s value is not as a promotional tool, but as a way to interact with readers.

FiveThirtyEight draws meaningful but not huge traffic from Twitter, Casselman said. Like Goldstein, he thinks Twitter’s function is not to garner clicks but to build a reputation for FiveThirtyEight.

“The primary role of Twitter is not to drive traffic to the website,” he said, “it’s establishing FiveThirtyEight and establishing myself as a source of interesting, reliable and intelligent economic commentary.”

When the birds stop chirping

Twitter has engendered changes in journalism, but journalism remains founded in more important and traditional skills. Casselman teaches an introductory economics reporting class at the CUNY Graduate School of Journalism. The class includes a social media requirement but focuses more on the tenants of journalism, namely reporting and story telling.

“Reporting is still the most important thing for journalists,” Casselman said. “What you learn as a journalist is understanding what a story is and how to develop your own angle on a story.”

Rather than scrolling through Twitter all day, journalists must continue to pick up the phone and get out of the office, Cassleman said.

“The core journalistic skills are the same,” he said. “If you can’t do that, none of the rest of this matters.”

The social media site has had a material impact on journalism, yet its impact might be fleeting. Twitter has helped shape business journalism in recent years, but journalism will continue to evolve long past the day Twitter becomes defunct.

“I was in business journalism before Twitter came around,” Goldstein said. “We just did it in different ways.”

Twitter allows journalists to access information more quickly from a broader range of people, but none of Twitter’s perks are impossible to replicate, he added.

“The world existed before Twitter,” Goldstein said, “and it will exist without it.”

Randy Short is a senior business journalism major at UNC-Chapel Hill.

By Jake McKinney

In 1993, the Associated Press ran a story by business reporter Rob Wells called “Fewer Choices Lead Minority Borrowers to Lousy Deals.”  In his story, Wells captured how subprime lenders pushed impoverished Americans into unfair loan agreements with absurd interest rates.

Wells may not have known it at the time, but he was onto something.

Unfair lending practices from subprime lenders was only beginning in 1993.  The eventual fraudulent credit ratings and securitization of subprime loans was something only a few journalists saw before the housing collapse in 2008 and subsequent recession.

“I wasn’t getting any traction covering mortgage derivatives,” Wells said.  “I wish I had not dropped the story like I did.”

The housing crisis was real, and it was big.  The United States government pumped $700 billion into softening the mortgage blow in 2008 alone.  With the S&P 500 recovering since its lows in 2009 to the highest levels in history in 2015, some consumers wonder what will shock the U.S. economy next.

Some experts believe that shock will come from student loan debt.

On April 7, 2016, The Wall Street Journal ran a story by student debt reporter Josh Mitchell titled “More than 40% of Student Borrowers Aren’t Making Payments.”  In Mitchell’s piece, he revealed that 43 percent of roughly 22 million Americans with federal student loans were either behind or received permission to postpone payments due to economic hardship as of Jan. 1.

Mitchell said while he sees similarities between the mortgage and student debt crises, they are different in key ways.

“There are a lot of parallels, but I do not think they are exactly the same,” Mitchell said.  “One of the big parallels is that there was this notion that home ownership is a great investment — everyone should have a home.  If you can get in a home regardless of your background, you should get in a home.”

Mitchell said it has become the same way with student loans.

“I’ve talked to so many people who have said, ‘I took out student debt or borrowed for my kids to go to college because I always had this thought in my mind that college was this sure fire investment that would pay off,’ Mitchell said.  “I think people are coming around to the reality that student debt is not risk free.  There are very very big risks.  If you choose the wrong school or wrong major, you could end up upside down, having a lot of trouble paying off your debt.”

Other journalists may have seen these parallels — loose lending, government sanctioned expansion of the debt and little underwriting — but most journalists cited Federal Reserve statistics, noting that $1.2 trillion in student loans does not even come close to the size of the mortgage market at its peak of $14.8 trillion in the second quarter of 2008.

Student Debt Coverage since the Housing Crisis

On Aug. 9, 2010, The Journal published Mary Pilon’s story “Student-Loan Debt Surpasses Credit Cards.”  Student loan debt became the second largest source of household debt in the United States behind only mortgage debt.

Kelly Evans of CNBC wrote in her story titled “Student-Loan Delinquencies Now Surpass Credit Cards” on Nov. 27, 2012 that student loan debt had become the largest source of delinquent borrowers by the first quarter of 2012.

Since then journalists have taken common angles on student debt.  Coverage of dropouts and for-profit university students as being the likely candidates to default on their loans has soared.

Ylan Mui and Suzy Khimm of The Washington Post reported in 2012 that 30 percent of student loan borrowers were dropping out of school in their story titled “College Dropouts Have Debt but No Degree.”  They were ahead of most of their colleagues as many similar stories appeared in other publications in 2015 such as Susan Tompor of USA Today’s story titled “College Students Nightmare: Loan Debt and No Degree.”

Josh Boak, an economics writer for the Associated Press, wrote a different kind of story on student loans on Oct. 5, 2015.  His piece titled “A Multigenerational Hit: Student Debt Traps Parents and Kids,” showed student debt from the perspective of families of college graduates rather than that of dropouts or students at for-profit universities.

“Gen-X parents who carry student debt and have teenage children have struggled to save for their children’s educations. The average they have in college savings plans is just $4,000, compared with a $20,000 average for teenagers’ parents who aren’t still repaying their own school loans, Pew found. A result is that many of their children will need to borrow heavily for college or pursue cheaper alternatives, thereby perpetuating a cycle of family debt,” Boak wrote.

He said he strives for different angles that different consumers will care about.

“Coverage has to move beyond the borrower to systemic challenges,” Boak said.  “People are seeing college as a necessity, not an option anymore, because incomes are falling for high school graduates.  It’s the price of entering the U.S. economy.  The deficit is going to be going up and baby boomers will be maxing out social security and Medicare while a huge forgiveness of student debt could occur.  Which leaves the question, what programs is the government going to cut?”

Boak said student loan debt gets a fair amount of coverage, but it’s still not enough. For example, economics, policy and education beat reporters at the Associated Press cover student debt, but there is no reporter assigned to student debt specifically.

Mitchell said he believes the topic is getting enough coverage, but not the right kind.

“Too much of coverage paints student debt with a broad brush, but doesn’t specify what the actual crisis is,” Mitchell said.  “A lot of reporters and politicians point to people with very high debt burdens—and in some sense there is a big problem there—but a lot of them are graduate students that will end up with very high incomes.  It’s actually the people with very low debt burdens, around $9,000 or so, that are defaulting on their loans.”

Wells said coverage has to incorporate consumers’ choices.

“Many of us correctly focused on the predatory lending practices of lenders and misleading activities of banks, but we also need to examine what the consumers have done, and how some got in over their heads,” said Wells.  “This isn’t a ‘bash the consumer’ story, like we heard in 2008 from some people on cable TV.  But the consumers’ role and their level of financial literacy are important questions.”

For-Profit Education and the Media

On May 27, 2010, Mother Jones published “Steve Eisman’s Next Big Short: For-Profit Colleges.”  Reporter Andy Kroll wrote about how one of the main characters of Michael Lewis’s nonfiction book and now feature film, “The Big Short,” predicted the next shorting opportunity following his vast success shorting the subprime mortgage market.

“Eisman saved the ugliest part for last: As he sees it, the industry’s era of massive profits — ITT is more profitable on a margin basis than Apple, he notes — are about to end, thanks to new government regulations in the pipeline,” Kroll wrote.  “He predicts big hits to the per-share earnings of Apollo Group, ITT, Corinthian Colleges, Education Management Corp., and the Washington Post Co. — which owns and relies on Kaplan for profitability.”

Eisman was correct.

Apollo Education Group Inc., the parent company of the University of Phoenix, was trading at a 15-year low at $6.38 per share on January 11, 2016.  The stock price had not seen lower prices since March 15, 1996 when it closed at $6.17 per share.  The stock plummeted 92.8 percent from its highest point in 2009.

ITT Educational Service Inc. closed at $2.19 per share on April 25, 2016, the lowest the stock has been since Jan. 4, 1995 — a date just 15 days after the stock was originally offered to the public.  The stock tanked 98.3 percent since its high in 2009.

DeVry Education Group Inc. was trading at a 10-year low on April 7, 2016 at $16.74 per share.  The stock has not seen lower prices since March 4, 2005 when the closing price was $16.31.  The stock fell 76.4 percent from its high in 2010.

Corinthian Colleges filed for bankruptcy, as reported by the Huffington Post’s Shahien Nasiripour on May 5, 2015.  Education Management Corporation (EDMC) faced significant financial problems, including a 99 percent drop in the value of its stock and a defaulted bond rating (to junk bond status).  Moody’s credit rating service in Jan. 2015 dropped EDMC to its lowest rating, D-PD.  EDMC’s CEO, Edward West, resigned from the company on Aug. 28, 2015, “to pursue other interests.”  The company was never profitable under his leadership.

Various publications warned of the impending doom of for-profit colleges.  The Atlantic’s Derek Thompson equated the education market to a bubble in his piece titled, “For-Profit Colleges: First and Last Victims of Higher Education ‘Bubble’?” published on June 1, 2011.

Despite poor performance in the stock market, are for-profit institutions to blame for the amount of consumers in default on their student loans?

“It is undeniable that for-profit colleges really do account for a disproportionate amount of defaults,” Mitchell said.  “One thing that the media has not covered enough is what causes that.  The big question is how many of the defaults are because the students come unprepared and come from disadvantaged backgrounds versus the schools just doing a bad job of teaching.  We need to know what the appropriate expectations are for for-profit schools given the fact they are taking in a lot of disadvantaged students that are probably not academically prepared.”

Mitchell said that the problem at for-profit colleges is not isolated.

“The thing that gets lost in the discussion is that a lot of the problems in the for-profit schools are present in the public schools and the graduate schools—the law schools especially,” Mitchell said.  “There has been a narrative that all for-profit schools are bad and are the main source of the problems, but what has been lost is that these problems exist elsewhere in education as well.”

Spencer Jakab, the “Ahead of the Tape” columnist for The Journal, has been covering Apollo Education Group for several years.

Jakab said coverage of for-profit education has been fair even though it has been negative.  Journalists are just pointing out the facts and the tone is warranted based on those facts.

“The companies are very defensive of course,” Jakab said. “I have written about most of them from the investors’ angle.  The view — and I think rightly so — is that the companies are doing something wrong.”

Jakab went on to explain difficulties in covering for-profit education as a columnist.

“What’s hard for editors and colleagues sometimes to understand is when you write about one of the companies as an investment opportunity, you have to separate that from the social and personal finance issue of personal debt,” Jakab said.  “If I am writing an Ahead of the Tape column and I happen to say something positive, it is not an endorsement of their business model.  It is a completely separate issue.  When I write negatively about them, I’m not attacking poor working class people and denying them the opportunity for them to get an education.  I think people need to understand that, but they don’t.”

Officials at the University of Phoenix, DeVry Education Group Inc. and the Association of Private Sector Colleges and Universities did not respond to a request for comment.

If Not For-Profits, Who is to Blame?

Department of Education projections show the government will make a $135 billion profit from 2015 to 2025 on student loans as reported by Money’s Alexandra Mondalek.

Mitchell said he is not so sure.

Controversy surrounds the accounting practices of the Congressional Budget Office (CBO).  By law, the government can recognize gains from student loans at fair value, according to Politifact reporter Tom Kertscher.  But if a more “comprehensive” accounting method is used, such as the one proposed by the CBO that accounts for potential economic downturns that could result in more defaults, that $135 billion in profit could turn into an $88 billion loss.

“The government, in essence, has become one of the biggest lenders in the country almost overnight,” Mitchell said.  “Before 2010, there was a federal loan program where private banks administered the loans and government agencies only guaranteed those loans.  But since then, the government has become the actual lender of those loans.  So the government has this huge portfolio on its books and it doesn’t really have much experience or expertise running a loan program of this size.”

Wayne Johnson is the director of guaranty agency and repayment services at the North Carolina State Educational Assistance Authority (NCSEAA). The NCSEAA is the guarantor of loans serviced by the College Foundation Inc. (a non-profit), which was funded by the Department of Education through the Federal Family Education Loan Program before its termination in 2010.

“We can see from financial statements, people are in difficult times,” Johnson said.  “That is why we have provided a way to avoid default through a minimum repayment plan.”

The NCSEAA had a three-year default rate of 5.26 percent on its $294 million in loans as of the end of 2015, significantly below the national average of 11.8 percent.

Johnson noted there is no underwriting procedure except for vocational loans — loans that are supplied by the government and forgiven in exchange for an agreement to enter a profession within the state.

“I don’t think student debt is an economic crisis,” Johnson said.  “The cost of education is up and people are more likely to default because they owe more money.”

Tuition at private non-profit and public colleges has increased by 11 and 13 percent respectively over the past five years, according to The College Board.

Wells said he is concerned there are no underwriting standards for student loans.  He compared it to the incorrect credit ratings dubbed to subprime mortgages.  However, he noted it would be difficult to tell if an 18-year-old kid will be able to pay back his loans by typical underwriting methods.

Boak said he sees the problem as a matter of assumption of risk.

“The institution of higher education benefits from the debt, but there is very little risk in the same way that the originators of subprime mortgages bore none of the risk from bad lending practices,” Boak said.  “At some point when you have debt, the parties involved have to find ways to bear the risk or there will be problems with that debt.  Ultimately what happened with the housing crisis is all of society bore the consequences from that risk.  The closest parallel is that since the taxpayers are the primary providers of student debt and if that debt is not repaid because people don’t have the incomes, society will bear that expense as well.”

Average Americans can expect that a bailout of student loans is possible, not probable, said an undisclosed Federal Reserve employee familiar with the matter.  While delinquency and default rates are up, a bailout won’t hit the consumers wallet in the same way the housing market collapse did.  What is more likely is that an economic downturn could cause a government bailout of defaults, which could result in cuts in other government funded programs, which will affect the everyday American in one way or another, she said.

Jake McKinney is a senior at UNC-Chapel Hill minoring in business journalism