Student Loans In America: the Next Big Credit Bubble 768
PolygamousRanchKid writes "In late 1965, President Lyndon Johnson stood in the modest gymnasium of what had once been the tiny teaching college he attended and announced a program to promote education. Almost a half-century later these modest steps have metastasized into a huge, federally guaranteed student-loan industry. On October 25th the Obama administration added indebted students to the list of banks, car companies, homeowners, solar manufacturers and others that have benefited from a federal handout. In response to students burying their obligations in court during the 1970s, anti-default provisions were imposed to make it almost impossible to shed student loans in bankruptcy. There are increasingly loud calls for reform of the system, with demands that range from a full-fledged bail-out of borrowers to a phased curtailment of government lending. The changes announced this week are designed to ease the pressure on struggling graduates. Borrowers who qualify will get payment relief, not debt relief. The administration says these changes will have no cost to taxpayers."
Forgiveness at no cost? (Score:2)
Re:Forgiveness at no cost? (Score:5, Informative)
This means that after 20 years of you making income-based payments, they forgive the remaining debt. In order to qualify for income-based payments, you can be making no more than 150% of the poverty line. In that case, you payments are no more than 10% of your income.
The reality is, there are very, very few people who actually accrue student loans who can't pay them back over 20 years. Not only that, but are living around the poverty line for 20 years.
There are other paths to loan forgiveness in exchange for service. Details are here [finaid.org].
Re:Forgiveness at no cost? (Score:5, Insightful)
"The reality is, there are very, very few people who actually accrue student loans who can't pay them back over 20 years."
That was the reality; not anymore.
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70s and 80s had financial problems as well as jobs were shipped overseas, which translated to bad job markets.
Now we have the same.
Is the 10% limit a good idea? Yes, yes it is.
Were Americans sold a bill of goods based on the premise that education = better life? You bet we were.
Are businesses reaping the benefits? Yes, and they still dont want to pay their fair shar
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Are businesses reaping the benefits? Yes, and they still dont want to pay their fair share
Businesses used to have straight-up IQ tests they administered to potential employees. Duke Power used them to further racist ends, and so businesses can't use IQ tests any more. Don't blame the vast majority of businesses (who are blameless) for the misbehavior of a few.
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Re:Forgiveness at no cost? (Score:4, Insightful)
This is what happens when you spend 100k on a good college getting an english/art/history/worthless degree.
I think a good first step would be to require registration of your major when you apply for loans and then to be a little more selective on those degrees that wont really contribute to society as a hole.
Yes because turning our higher education system into job training is really going to be a boon to society.
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Yes because turning our higher education system into job training is really going to be a boon to society.
Won't it? Don't most people go to college so they can get a good job? if someone wants to spend $80,000 on an education that will get them a job making $30,000 a year that's up to them, who am I to tell them "that's not how you should spend your money", but don't come back later and say "I wasted the money I was given, can I just not pay it back?" Every choice in life has consequences, and the consequences of choosing a career that does not pay well is having a difficult time paying back the loan used to
Comment removed (Score:5, Interesting)
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Re:Forgiveness at no cost? (Score:4, Insightful)
The solution isn't to make the higher educational system vocational, it's to understand that there is a place for both academic and vocational higher education, and that an academic qualification is not intrinsically more valuable than a vocational one.
Re:Forgiveness at no cost? (Score:5, Insightful)
Who's to say what's a useable skill? Go to the Nobel Prize web site and look at the biographies of the winners in biology and chemistry. Many of them were liberal arts majors, like Eric Kandel who studied history and literature http://en.wikipedia.org/wiki/Eric_Kandel#Early_years [wikipedia.org]
The scientists and techies who made this country great in post-WWII America were often Europeans who had a strong tradition of a well-rounded education, including English/art/history, and taught it to their students. It basically teaches you how to think. Scientists have to know how to think. You want to prepare yourself for a world in which there is no security and people always have to find new careers? A liberal arts background is what you need to face that brave new world. Of course it also helps to know how to think when you have to decide who you and your fellow citizens should vote for in the next election.
OTOH there are engineers who can't get jobs when the industry of their engineering specialty goes into a down cycle. There are accountants who can't get jobs.
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On the one hand, this seems entirely fair, on the other, it sounds like a ticket to four cheap years at party U for people who intend to loaf and/or earn their income illegally / off grid for the next 20 years.
I took student loans in Freshman and Sophomore years, and ended up going to get a Master's degree for 2 and a half more years, deal at the time was 8% interest on the loans (believe it or not, that was a relatively good deal at the time), and even better - zero interest accrual while still enrolled in
Re:Forgiveness at no cost? (Score:5, Insightful)
On the one hand, this seems entirely fair, on the other, it sounds like a ticket to four cheap years at party U for people who intend to loaf and/or earn their income illegally / off grid for the next 20 years.
I think the number of people willing to live at poverty levels for 20 years so they can get 4 years of partying at a university, and that will actually follow through on it willfully, are very, very low. 150% of poverty level isn't a lot of money, you can't live high on the hog with that kind of income, not even single. And the type of people who'd actually consider living it up on borrowed money and then reneging just aren't the type to then go 20 years of scraping by so they can do so. Yes, there probably will be a few idiots out there who'll try it, but I think most will end up tempted by life itself to change in ways that bump them up past the 150% of poverty income. (Deciding they're sick of living on so little money, falling in love and getting married and/or deciding to start a family, etc.)
Making it impossible for those who end up in bad situations through no fault of their own to get out from under their student loan debt just to prevent a few idiots from doing something like you suggested isn't a good solution. That's part of the reason we're having this mess now, we overreacted to the people who intentionally declared bankruptcy to get rid of student loans they never intended to pay and made it so people who were legitimately struggling could no longer get out from under them short of dying. Instead of being at either extreme, we need some middle ground.
Re:Forgiveness at no cost? (Score:4, Insightful)
Re:Forgiveness at no cost? (Score:4, Insightful)
If you're doing bad what does it matter if you're in debt or not? Obviously you can't pay it back right then, but that doesn't mean you should be let off the hook.
So you would repeal all bankruptcy law?
Problem is that a company (or person) may be in hock for more money than they will make in the forseeable future. If you can't discharge that debt, it doesn't make sense to keep operating the company in a capitalist society because the income will be eaten away by the debt repayment until there is basically no profit, or at least until the profit is too small to justify choosing that investment over other investments. There are variations on it, but that's the basic problem.
But if the company can discharge or fundamentally alter its debt, then it may be possible to run it profitably, in which case creditors will lose out as compared to what they have been promised, but there may well be a net gain to society over the cost of the business shutting down (or the person never being able to get out of debt).
Re:Forgiveness at no cost? (Score:4, Insightful)
If they've spent the last 20 years close to the poverty line, they're probably never going to make enough money to pay back the loan, so we might as well forget about it.
why isn't college paid for like high school? (Score:4, Interesting)
This whole discussion seems off to me. We have compulsory education through 12th grade, and we pay for this entirely through taxes. We don't charge minors for their education, though of course there are private schools which are optional. Regardless, the minor does not end up in debt, and is not required through force of law to be gratefully repaying society for suffering their existence and education.
Then suddenly, the high school grads are adults, and the costs of further education is ultimately their problem, because we say so. The only realistic source of money for this very expensive education are one's parents. The pay from most jobs a college student can get is a joke. We've been seeing that going the loan route breaks down when graduates are unable to get jobs. The military way is very costly. Grants and scholarships have so many requirements that they are sometimes in the embarrassing position of not having awarded any money because no one qualified, or they have to bend the rules. I've also seen the kind of scholarship that is merely bait to get a student to attend. Once students have invested a year or 2 towards a degree, they discover that the requirements are too much and they are unable to keep the scholarship, and once lost, it cannot be regained. A requirement that one must maintain a 3.5 GPA doesn't seem unreasonable, until one is victimized by a few bad professors who relish handing out F's to people they just plain don't like regardless of or perhaps even because of merit, or weed-out classes where the game is to be tough on everyone to get rid of the weak students and never mind whether they're being fair with the tough love, or a department that is so afraid of grade inflation that almost no one receives an A even when they have earned it.
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A requirement that one must maintain a 3.5 GPA doesn't seem unreasonable, until one is victimized by a few bad professors who relish handing out F's to people they just plain don't like regardless of or perhaps even because of merit, or weed-out classes where the game is to be tough on everyone to get rid of the weak students and never mind whether they're being fair with the tough love, or a department that is so afraid of grade inflation that almost no one receives an A even when they have earned it.
I have experience with the "weeder classes" at my local community college (one that actually has a reputation as being one of the best community colleges in the country).
I was averaging a low B in Chem 101 and I didn't feel comfortable about the trend -- I felt I probably wouldn't get much better grades on the next couple of tests and my grade might actually slip. The class was 5 hours per week of lecture hall, plus an additional 5 hours per week of lab, even though you didn't get any units of credit for th
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Sure, but i'm guessing you left college with either an MS in something marketable, or you otherwise independently had marketable skills.
Most people who leave college with such degrees... Don't. Fareeh Zakaria had a great piece [fareedzakaria.com] about the state of American higher ed. While I think we do need musicians, artists, philosophers, writers, poets, and the humanities... There's a hard reality that going into those fields isn't profitable unless you're insanely lucky or you have career aspirations elsewhere(having
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Now a days law school is really no better than a MA in music. The number of new lawyers being produced outstrips the number of lawyers needed, meaning most people who go to law school and pass the bar wind up with nothing but student loans to show for it.
The same people *always* eat the loss ... (Score:2)
If their debt is forgiven at 20 years instead of 25, who eats the loss?
The same people *always* eat the loss, the taxpayers and/or consumers. Banks and corporations do *not* eat the loss, it either becomes a fully deductible expense for tax purposes or it is passed along to consumers who are paying for other products or services. Regarding the later, note that when the Dodd-Frank bill limited credit card processing fees the response of the banks was to raise fees elsewhere.
There is possibly another type of person who will "lose". Banks may decline applicants in majors that
the people who own the debt (Score:5, Insightful)
it is really hilarious to watch people bitching about everything from dorms that are too nice to too many mac's in the computer labs, but nobody wants to follow the money.
student loan debt is securitized and resold to various investors, just like housing debt was in the housing bubble. its the securitization chain, and the big banks are behind it, along with the corrupt government agencies that look the other way instead of doing their job (preventing fraud, preventing false advertising, preventing misdeeds by the credit ratings agencies, etc)
it is like this never ending pattern when people talk about financial matters. everyone goes off their own personal experience instead of approaching it like a hacker: : : how does the system work? what are it's major pieces? how do they fit together? what is the flow in between those pieces? if people would just ask those basic fucking questions we wouldnt be in this fucking recession.
instead its 'oh no, i graduated and i payed my debt off, these freeloaders / communists / blah blah blah' .. complete and utter red herring bullshit that is in no way helpful to solving the problems of the planet.
sorry.. who are the investors? (Score:4, Insightful)
pension funds, city governments, people running 401 k plans, etc etc etc.
all you have to do is read some SEC reports really close to find out who has invested in student loan debt. its the same morons who invested in subprime mortgage debt. they are the people who run the pension systems, the 401k funds, the union funds, the funds of funds, etc etc etc. there are also a lot of stupid individual investors, corporate investors, and government investors, people who dont want to do due diligence and prefer to rely on the ratings agencies, even after the greatest financial crash in the history of the planet was directly caused by the ratings agencies (which, for some reason, have escaped any and all punishment, whatsoever, let alone meaningful scrutiny by the government).
and the same people are shorting it (Steve Eisman, of Michael Lewis' Big Short, is now shorting 'subprime education', he made millions shorting the housing bubble at Morgan Stanley).
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Can you really blame pension funds, city governments, etc?
Look at the housing bubble. It was caused by a giant pool of money chasing returns. Well, those investments that were supposedly AAA+ rated turned out to be shit and now everyone took a bath. So now no one is touching housing and we're still working through a backlog of shadow inventory and 12.9 million people still live in houses that they're underwater on and probably won't ever be able to sell or move from (they should really walk away, but that i
Bankers wives - financed by the fed (Score:4, Interesting)
Re:the people who own the debt (Score:5, Insightful)
You described exactly the triumph of capitalism over communism: people no longer think as "we, the people", but as "me, myself and I".
The average Joe no longer cares about what happens to other Joes like him, he only cares about his affairs. The rest of society might as well go hung themselves, as long as mr Joe enjoys a nice and easy living.
It is a huge triumph for capitalism. People, by not caring about social matters, leave the field open for capitalists to run amok, as they have been doing after the fall of Communism.
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"it is like this never ending pattern when people talk about financial matters. everyone goes off their own personal experience instead of approaching it like a hacker: : : how does the system work? what are it's major pieces? how do they fit together? what is the flow in between those pieces? if people would just ask those basic fucking questions we wouldnt be in this fucking recession."
Quite literally, gigantic amounts of money are going to pay very smart people to make sure that this is the case. The ad
Who says there is a loss? (Score:5, Interesting)
It is possible to writeoff a debt and still have made a profit. Remember that interest and repayments have already been paid on the loan for 20 years. The final total repayment for a loan is always higher than the loaned amount, so the lender breaks even a lot earlier than the point at which the loan is fully paid off. After that it's all profit.
Example:
(Disclaimer: These figures are for a standard commercial loan. I have no idea whether repayments differ substantially for Stafford/Perkins/PLUS/whatever.)
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(Disclaimer: I do not work in the financial industry but as a math nerd I am familiar with basic financial math)
5.5% APR with interest payable monthly
Loan of: $100,000
Payment: $687
Present Value: $72,000
Total Profit: -$28,000
I don't think your math is correct.
Re:Who says there is a loss? (Score:5, Insightful)
Interest is not purely profit. Interest is designed to offset inflation and the other ways you can spend your money. If I owed you $81,000 would you prefer that paid as a lump sum today or paid as a 0% interest loan over 25 years ($3,2400 /yr)?
So in order to make $100,000 today equal to $100,000 in 25 years, we need interest (at least to cover inflation). So for the purposes of this loan $100,000 (at time 0) == $181,000 (at time 25). In addition to the interest, you pay portions of the $100,000 you borrowed. Each payment of $687 is an uneven mix of Interest payments and Principal payments, the ratio changes as the loan approaches time 25.
So if you stop paying halfway through the loan, you may have paid in total $100,000 (combination of interest and principal). But $100,000 (at time 0) is less than $100,000 (at time 25), the lender loses money.
Australia does a simple job here (Score:4, Interesting)
Any student loans are put onto your tax return, the ATO (Our form of IRS) knows about it, and if you can't pay for it, it simply garnishes them from your tax return if you have overpayed or been able to claim tax benefits that aren't taken into account (which most of us are able to do) in your normal PAYG tax payment?
We don't have any problems with student loans going out of control here that I am aware of? Seems a really simple idea to follow...
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We don't have any problems with student loans going out of control here that I am aware of? Seems a really simple idea to follow...
One thing that can happen is people do their degrees here then head overseas, but I admit that's probably not a huge issue.
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To take on debt is not to spend money, they are very different. When you take on debt you are, well, in someone elses debt.
People are giving away their power. No questions asked: If it's the control of your life you're about to sign away, even a tiny fraction of it, the answer is "no."
I assume your parents were rich? your solution? (Score:3)
I assume your parents were rich enough to pay for you to go through further education debt-free, or you had another income source that ensured you would not need to take on debt? Interested to hear your story and your solution.
I can't speak for the USA, but here in the UK, it's likely that students will have to pay 9000GBP a year for course fees, plus accomodation, food, transport, other costs. Some may have access to 10K GBP a year at aged 18 but many won't. So many academically capable 18 year old
Re:Australia does a simple job here (Score:4, Interesting)
Re:Australia does a simple job here (Score:4, Insightful)
Looking at your example, that should know what they're getting into when they make that decision. While I have sympathy for someone doing everything that can to follow their dreams and do what they love, that student had to know what was coming before taking on that monster debt. But that's their choice... I think they need to be responsible for what they just did.
I'd be more concerned with the people who go into a major that appears to be a money-maker. When I was in school, it seemed like everyone was trying to get into Computer Science... And I remember a LOT of people not making it through year 2. Some of them found other majors... Some didn't. It's that last group that now has debt, but doesn't have anything to show for it. Not only are they burdened by their debt, but they haven't actually put themselves in a position to pay it back.
Of course, let's be honest, most of them should've become plumbers, electricians, and other skilled tradespeople. And before someone flags me: Seriously, there's NOTHING wrong with that. Those people are needed (and they can make some excellent money).
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Yea that's the way it works in the United States also... Student debts are not dischargeable through bankruptcy. Defaulting on student loans will make you ineligible for government employment, along with garnishments on wages, tax returns, and social security benefits.
I would be very interested to see what percentage of these debts are owed to for-profit institutions (e.g. University of Phoenix). Some of these colleges are owned by publicly traded companies, which provided ample incentive for unethical pr
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The problem is a simple 3-way intersection.
1. People believe they need higher education to get jobs, of which there are few.
2. Education costs are going further and further up, especially with for-profit institutes and non-academic collegiate activities needed for prestige.
3. Student loans are basically unlimited. Banks will sign you a blank check, with no sense of your ability to pay it back.
If you're not high enough academically to enter state-run institutions, in the US you're looking at around 100k in
Re:Australia does a simple job here (Score:5, Interesting)
Do you have many people graduating with student loan debt that's the equivalent of $250,000 US?
The reason the loan problem is so bad is that higher education in the US is so ridiculously overpriced. A year of university used to be equal to much less than a graduate could expect as a starting salary on a first job after graduation. Today, they are much more.
There is a consumer price index that measures how much prices are rising or falling. Higher education has gone up in the area of 300-400% of the CPI for years now and it's accelerating.
As a retired academic, I really don't see why tuitions have skyrocketed. Faculty salaries have held close to CPI, the buildings are already built for the most part. I guess the energy to heat and light those buildings has gone up but not enough to explain the difference.
The really strange part is that those huge endowments that universities have are now topping out in the billions of dollars. Those endowments were supposed to be used to keep tuitions low. Plus, any of you alumni out there know how you're always being hit up for money. So where's the money going? The campus buildings are being built with donations for the most part and universities are tax exempt. And don't forget the huge money the big athletic schools are bringing in. Why isn't that being used to lower salaries? The tuition at the Universities of Texas and Florida and Notre Dame and other have all skyrocketed. Where's all that TV money going?
When I retired in '07 I was making more than the average tenured faculty is making today. It's not personnel costs, it's not building costs, it's not energy costs, it's not technology costs. So why is it so much more expensive? I know it's nice for universities to have overseas campuses, but I'm starting to wonder if that's part of the problem.
But no, I don't think you can compare your student loans with ours in size.
Re:Australia does a simple job here (Score:5, Interesting)
Actually the costs of the degrees between the two countries are comparable. Whilst Australia does not have any $250,000 degrees the average degree costs are similar. The highest level of government support is around $100,000 for a degree in Australia. The Australian government currently regulates the prices the universities charge for most places, between about $5,000 to $10,000 a year depending of the type of degree.
The big difference between Australian and US student loans is that in Australia the loans are income contingent. I have never understood why more countries do not use income contingent student loans. As the OP said, the loans are managed through the taxation system. A person has to be making more then $47,000 a year before they have to make any payments. Above this threshold the amount paid is a fixed percentage of income on a graduating scale, for example if you earn above $47,000 but bellow $52,000 you will pay 4%. The maximum rate kicks in if you earn above $87,000 when it is 8%.
Another important difference is that in Australia the loans are provided effectively interest free. They are indexed to CPI each year which is well bellow the interest payments on a commercial loan.
Re:Australia does a simple job here (Score:5, Insightful)
Reduced state aid, stagnant wages (for the last 30 years as compared to inflation), a more competitive job market, and stricter borrowing are all conspiring to make college much less affordable for the upcoming college-bound generation and the last one.
Reduced State Funding, Increased Administration (Score:5, Informative)
Note: That report was from 2002, and things have gotten much worse since then. Here's a more current story from the last week: http://www.sacbee.com/2011/10/26/4008283/college-prices-up-again-as-states.html [sacbee.com]
Another major factor is that -- even though faculty and facilities costs have not appreciably gone up -- the number and cost of non-teaching administrators have dramatically bloated (as part of the corporate-management takeover of universities in the last few decades). Today there are more administrators than teachers in colleges, which was not the case in the past. Article on that in the last month: http://www.washingtonmonthly.com/magazine/septemberoctober_2011/features/administrators_ate_my_tuition031641.php [washingtonmonthly.com]
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Do you have many people graduating with student loan debt that's the equivalent of $250,000 US? ... But no, I don't think you can compare your student loans with ours in size.
that'd be the problem of the idiot that took out the loan. unless you have a trust fund or some really, very nice parents, you should be looking at a state school and augmenting the loan with part time work on the side.
the bigger problem is the feeling of "where's mine?" that permeates the US culture. it's not just that people feel they are entitlement to ipads, BMWs, and a 4000 sq ft home ... but they also feel they are entitled to harvard, yale, and stanford.
Re:Australia does a simple job here (Score:4, Interesting)
Do you have many people graduating with student loan debt that's the equivalent of $250,000 US?
No. Australia holds on to those quaint notions that education and healthcare serve a general public good and are therefore funded to a large degree out of public coffers. At tertiary level there is a moderate contribution required from (Australian) students based on the course type and subjects, but it is nothing like the charges demanded of US students from what I can see. The University of Queensland guidance for an undergraduate engineering course is AU$6,699 pa (http://www.uq.edu.au/myadvisor/index.html?page=25540). You can pay those fees up front for a 20% discount or defer them until your income exceeds a set level ($47,196 this FY, effectively a low-interest loan). The system dates to 1989 but the scheme is adjusted (aka eroded) routinely, and some want to see a US-style system here (although I cannot fathom why).
Foreign students that come here to study generally pay something closer to the "full" cost of their tuition. The UQ engineering example is $29,575 pa.
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Student fees in the UK were recently increased to £9,000 per year for a majority of institutions. That is triple the previous cost. The result has been fewer UK university applicants, not least because it can actually be cheaper to go and study in Europe.
The thing is we can afford to pay the fees out of taxation. In fact we used to, and Scotland still does. We need highly skilled people, so let's make sure we have them.
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The biggest cause of tuition increase is simply the availability of larger and larger loans through government programs. This acts as a dis-incentive for schools to keep costs down. When a school decides it wants a new building, or wants to hire some additional staff, it bumps up the tuition a little to cover the costs. People grumble about it, but the loans are there to cover the costs, so they suck it up and pay because they want the diploma. Rinse, lather, repeat.
It's kind of like the recent housing bubb
No Problem... move along (Score:5, Funny)
Mod parent up!! (Score:2)
Buying Votes with Handouts (Score:5, Insightful)
Nothing new here!
Re:Buying Votes with Handouts (Score:4, Interesting)
We the People know that govt is supposed to look out for us, so we vote in our best interests. Money is a psychological tool that serves us, we don't serve it. Economics is like a religion with the high priests (bankers, economists) preaching the need for human sacrifice to appease their great god Mammon. Their predictions don't come true, their axioms are flawed, their equations fail to take into account externalities such as innovation, which is where the real focus needs to be. Govt should provide a basic income, and encourage the native spirit of creativity and inventiveness in each of us with challenges.
Re:Buying Votes with Handouts (Score:4, Insightful)
We the People know that govt is supposed to look out for us, so we vote in our best interests. Money is a psychological tool that serves us, we don't serve it. Economics is like a religion with the high priests (bankers, economists) preaching the need for human sacrifice to appease their great god Mammon. Their predictions don't come true, their axioms are flawed, their equations fail to take into account externalities such as innovation, which is where the real focus needs to be. Govt should provide a basic income, and encourage the native spirit of creativity and inventiveness in each of us with challenges.
Yeah, government should just take from the people who do that creativity and inventiveness and give it to those who don't bother to in the form of a "basic income". Meh.
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Huh, I never considered hedge fund managers or high frequency traders to be providing value via "creativity" and "inventiveness", but I'm sure happy to let them argue that before being hung in a public square.
In all honesty, I'm no hippy. I think innovation should be rewarded. On the other hand, you should never die because you make too little, nor should you have to lose your house to get medical treatment.
The time will come shortly where automation and software will do more of the work; why shouldn't ever
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"Yeah, government should just take from the people who do that creativity and inventiveness and give it to those who don't bother to in the form of a 'basic income'. Meh."
I'm willing to vote in favor of that. Not all of the income, but a useful part it. Let's negotiate the percentage.
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Nice trolling, so in your vision, only the wealthy should go to college because clearly the ability to be born to wealthy parents is a significant contribution to society.
What is flipped? (Score:2)
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I don't know if flipping is criteria of a bubble. A bubble just means that there is inflated value of something. If the colleges raise the rate at which they charge students to a degree where it doesn't make sense to go to school there, (but they go anyway because of promise of a good job) there will be a massive amount of defaults.
Now these defaults are more or less guaranteed, which eases the problem. I believe the only cause where the default actual is when the student dies. So if th
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Doesn't "flipping" and a "bubble" require a continual increase in the perceived value of the good? I don't see employers rushing to increase starting wages for graduates. In fact in the current job market you've got college educated people taking jobs that used to be 'reserved' for those without a degree.
What is really needed. (Score:5, Interesting)
You know there's something wrong with the job market when almost any job higher than McD worker, cashier, or floor washer requires a degree.
Such breaking of "degree inflation" would reduce the demand on degrees
Re:What is really needed. (Score:5, Funny)
Is to outlaw unjust discrimination on basis of education. In other words, a job offer can't have education requirements that can't be justified (asking for just "college education" without specifying a degree is right out) , any more than one can hire personnel on the basis of what car they drive.
Damn, and we hired our latest intern because he has an 8 passenger vehicle so we can all bum a ride to lunch... guess we'd better cover that up (easy to do, he's also really good at the tech work.)
Re:What is really needed. (Score:5, Insightful)
'College Education' is not a requirement, it is a filter. See, they don't care that you can do the job. So can a hundred other people. So how to cut down the number of applicants to a number worth going through? Stick on an education requirement. At the very least it makes sure that everyone has proven their ability to read boring material and then write the necessary boring reports if needed. A truly universal skill.
You have the knowledge to do the job but no degree? So what? Among the dozens of applicants that do have degrees there are at least a few that can also do everything you can do. Among those there will be at least one or two who will be a good fit for the workplace. Mission accomplished! Why is their incentive to give every special little snowflake a shot?
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The problem is that requiring everyone to spend tens of thousands of dollars getting a slip of paper to prove their ability to do work results in a massive, permanently indebted underclass. This is great if you're a banker (more money in your pocket) or if you're a college president (you can charge whatever tuition you want, and people have to pay to get that slip of paper). And it's not so bad if your career would require a college education anyway (engineers, doctors, lawyers, etc...). But for most peo
Re:What is really needed. (Score:5, Insightful)
At the very least it makes sure that everyone has proven their ability to waste their time and money instead of demonstrating independence and gaining life experience and then write the necessary boring reports if needed.
FTFY. If you require a degree for a job that doesn't really need one, you're likely going to hire someone that only went to school to get the degree, barely paid attention as they jumped through the hoops, and doesn't have a clue how to apply their academic experience. Who the hell wants a staff full of debt-burdened carrot-chasers who couldn't get the job they really wanted? That's the most depressing scenario I've contemplated in recent memory. I wouldn't last a week in an environment like that. I would much rather depend upon people who are committed and grateful to gainfully apply their real-world experiences, degree or not.
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Here in England for example we pay far, far less for education than in USA and I don't see it being of worse quality, quite the opposite.
Are you sure about paying less? I mean, how much of your VAT subsidizes higher education? I do agree about the relative quality.
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It may also indicate a problem with education at the pre-university level. there are lots of stories in north america about high school graduates who are functionally illiterate. if a high school grad would do, but you need to be sure they are literate, it's much easier to look for a university grad.
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If they're not careful they can get sued for violating the various affirmative action laws. What they have to be really careful about is what happens if they aren't hiring the expected number of minorities and women. There are no quotas per se in the US, but if there is a conspicuous lack of diversity it tends to attract law suits from individuals that aren't being hired or promoted. And if it turns out that the job posting has requirements that are fraudulent and that tends towards discouraging minority ap
Re:What is really needed. (Score:5, Insightful)
I come from a family of college teachers. High schools just aren't doing the job these days. Lots of students manage to graduate with no life skills and barely being able to read. They're not even remotely prepared for college, but there are colleges which will accept them.
When it comes time to pay, most get student loans. They abuse the loans. By federal law, they're allowed to take a given class up to three times (with federal money). My parents see the same students over and over again, sleeping through class, texting, etc. The school doesn't care--they get tons of money from it. The students don't care--they're getting paid to be there. The teachers don't care--they're still getting paid.
Our guess is that programs like NCLB are the cause. High schools are pressured to teach to the test (so they aren't teaching much useful) and pass students to the next grade/graduate. Their funding is directly tied to this. Some schools set a floor for grades. Some just hand out grades. They all focus on the weaker students in order to bring them up to a mediocre level rather than bringing up the ones who are inherently better able to cope with college.
It's all a mess, and I don't think legislation is going to fix it. The problem is that any legislation which would stand a chance at solving the problem would be extremely unpopular. No politician will put themselves in that position.
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I agree. And I complain about the problem a lot. But then I remember that it's a fight just to get science taught in science class, and it usually obliterates my resolve.
Borrowing = good. Getting paid = bad. (Score:2)
Colleges encourage students to take out massive loans, that are not discharged in bankruptcy, to pay for their education. As if by magic tuition increases rapidly.
While at the same time the NCAA won't allow college athletes to be paid any of the billions in revenue they create for their schools. The money would be bad for them.
Clearly colleges are fine with a student in debt, but not one getting paid. Sad.
bankruptcy on student debt (Score:2)
Oh how I wish this had been an option. The day after graduation, I would have filed for bankruptcy. It would have saved me from having to work my butt off for years. I could have bought a nice BMW and saved for a house.
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I could have bought a nice BMW and saved for a house.
Not having just filed bankruptcy, you wouldn't.
Should Have Been a Property Developer (Score:5, Interesting)
Student loans though - the one debt that actually might make you more likely to avoid repeating the boom/bust credit cycle - is somehow untouchable.
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Same broken solution to a cost problem (Score:5, Insightful)
The problem here is that the costs continue to skyrocket. Any solution that doesn't address that is simply a band-aid.
Why do costs continue to skyrocket? Because the colleges know that effectively any student anywhere can get loans to pay for the cost of college. From the school's standpoint, they can just about charge whatever they want. There's no brake on the price increase.
This is of course compounded by cuts from government support to the colleges. But the bubble has been inflating since long before the current economic trouble. It is certainly making it worse right now, but it's not the root cause of the problem.
And you can definitely see where the money is spent on the campuses. I work with college researchers and had the opportunity to visit a couple of state schools recently. And compared to when I went to college just 15 years ago, these places are absolutely gorgeous. Until there is some means of implementing cost control at the schools - without affecting the ability of students to go to college - this won't change.
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You know where else Government got involved in the 1960s. Health care via medicare. What happened to those costs? They skyrocketed. When I was born in the late 70s, my father wanted a private room for my mom. The nurse warned him that would be an extra $10 a d
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One of the factors driving health care up is that hospitals and doctors pass the cost of uninsured patients on to private insurance. One way or another, we are ALL paying for uninsured patients. And although "Malpractice reform" is one of those tired Republican drums, hospitals administer far too many expensive tests
Re:Same broken solution to a cost problem (Score:5, Insightful)
Yes, well there is one little problem with this "governments are the problem". And that is just about other place on the planet gets better bang for the buck in their heath care than the US, and they do it by using more government regulation, not less.
You are right though. The government is the problem. But it is not everybodies government. It's yours. Most governments on the planet seem to be able to design systems that aren't rorted by corporates. The US - you lot seem to specialise in corporate welfare. And its not small business corporate welfare either. It's always the big end of town. Your banks fuck up and send the economy to hell and what do you do - bail out the bloody banks. You establish a student loan system and rather than forcing them to provide more education for the extra dollars, what do you do - allow them to rake off the extra money by charging more. You design new public health insurance system and who do you let write the rules - the bloody health insurance industry. I wonder who they will favour? The way your industrial complex sucks off the teat of the government paid for military is so bad your politicians invented a new word for it.
Then the cretins among you then say "our government is too big, too strong, running too much of the country, we must chop it down to size." Well it may be too big. But it's not because it's too strong. It's because it's too weak, and continually allows itself to be bought with corporate money. It's called capitalistic cronyism - the person with the most money gets to buy the most government influence. If you want to see it in action now, just look at how the legal fraternity is manipulating patent law. When that happens what you end up with is what we see in the US today - the people with the most money ensuring the bulk of the taxes end up in their pockets. When there aren't enough taxes to satisfy your corporate overloads, what do they manipulate your government into doing - borrowing more. To bail them out of all things. It's beyond belief.
It's time you guys woke up to yourselves and go got yourselves a real democracy. You know, one where votes aren't bought by the person who can spend the most on advertising. They have to be earned, by putting money in the pockets of the voter.
No WAY (Score:4, Insightful)
You agreed. You signed the papers. You gave them your word and honesty that you would do whatever it would take to pay them back. You took the money from hard working Americans' bank accounts for these financial institutions to invest you in the hopes for interest in return to fund their retirement.
Pay it.
Why should hard working successfull people who paid off their loans be punished by having to pay for your own foolishness? They were smart and worked harder and saved and now should have their reward.
One thing we found out is Americans HATE bailouts. They will not support it and will fight every stance to keep what htey earned. Yes costs are going up but you are an adult and need to take responsibility. I wish home owners couldn't default either to level the playing field. The problem is if you help students, help big banks, then everyone else will want a handout. Ultimately, the government goes broke and end up like Greece all poor and taxed to death with no end in sight. ... FYI this is coming from someone who owes $40,000 in student loans and is living with his parents to pay them off.
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"Hey, kid. Yeah, you. The eighteen-year-old with no life experience, and parents who got student loans back before they were predatory. Tell you what: we'll give you a quarter of a million dollars to get a degree. Oh, you'll be paying it back when you're 50, but big deal. People get mortgages, right? If you don't do it, have fun delivering pizza and living in your parents' basement! Of course, even if you do there's a good chance that we'll offshore your occupation and you'll be making about a third of what
One of many causes of problem (Score:5, Insightful)
For-profit schools. Shut them down. Period.
The average annual tuition for for-profit schools this year is about $14,000 [nytimes.com]. Public four-year colleges charge, on average, $7,605 per year [collegeboard.com] in tuition and fees for in-state students. What's worse is this: The default rate on student loans from for-profit institutions is 15% [campusprogress.org], while the default rate at public universities is only 7.2 percent (same source).
For-profit schools are milking the American taxpayer for money. Just walk into any one of these schools, tell them you want to be a nurse / chef / accountant / whatever, and they'll lay down a student loan form for you to sign before you could even say "Herbie Hancock." Because, at least with the present law, once a for-profit school gets their money from Uncle Sam, it's theirs, no strings attached. I'd almost call it fraud, except those students who enroll in a for-profit school actually do get something in return, even if it is a sorry-excuse of a half-ass education. (PBS did an excellent documentary a year back on for-profit schools, particularly exposing the "value" of a diploma one gets from these crooks. You can watch it here. [pbs.org])
What's sad is that there's a really simple solution to all this: require a for-profit school to assume some of the risk. If we required a for-profit school to pay back even just 50% of the loan that was defaulted on, you'd see the default rate decrease overnight.
My idea, for what it is worth (Score:2)
The problem is pegging the right price to the cost of college.
I say, trace the lifetime incomes of everyone who graduated from college XYZ. Peg the cost of 4 years of that college, to 4% of the average lifetime income of previous graduates. THAT is how much that college deserves to charge.
Then, paying back your college loan is easy: a 4% surcharge is added onto your taxes, your entire working life.
So if the average graduate of college XYZ makes $80,000/ year, on average, for 30 years of employment, on avera
The Myth (Score:2, Interesting)
First of all the myth needs to be busted that somehow a continued education is magically going to equal success. Nothing could be further from the truth, it can help in certain situations but as all things in life there is no guarantee.
We all are born with certain talents, it is those that can find and monetarily exploit those talents that find success. Unfortunately we where not all born as equals, some will easily find success while others may struggle their entire lives.
Who's to blame? (Score:5, Interesting)
I don't think college grads are entirely without blame. I graduated less than years ago with a Bachelors degree and a relatively modest $22,000 in student loans. In under 18 months, I've managed to pay off $10,000 while making $30,000/yr (that's 45% of the principal in 15% of the 10 year loan period). How do I do it? For one thing, I don't have cable TV, a smartphone and my car has very little beyond the basic options. Not paying for cable TV and a smartphone with data plan every month is another $80 I can contribute to the student loan (that's nearly an extra $1000/yr off the principal and a savings of more than $3000 in interest over the course of the loan). Throw in the fact that I rarely eat out, buy foods in bulk ($100 chest freezer is a great investment when buying beef by the cow) have all used furniture, work extra odd jobs whenever possible and avoid shopping trips that zig zag around town to save gas and it adds up quickly. I'm finding many of my peers that complain about loans do none of those things... they want everything and they want it now. I realize this isn't an option for everybody... but students also shouldn't be off the hook if they get a crap degree in English or Underwater Basketweaving because it's easy and they have a passing interest in it.
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The hell it ain't! Listen, keep it up and you'll go far in life. Your attitude is great.
Time to rethink college, tech school, apprenticesh (Score:3)
We are pushing to many people into college and parts of the old model defined in European universities during the Middle Ages that part of are based on just don't fit to day.
Reform the PhD system or close it down
http://www.nature.com/news/2011/110420/full/472261a.html [nature.com]
Now the older college system can be cut down to 2-3 years
community college do the basics and some tech / apprenticeships type stuff. So we can use that as a starting point.
Now as for tech school they do some stuff right (teachers in the industry) (more hands on) (more up to date topics) but other parts not that well.
apprenticeships need to be added to Tech jobs / tech schools / college.
Now a college based CS may be good for high level stuff but for a lot of other IT not so much that lot of people with 4 year CS who are very clueless with IT work.
Now in a tech school you can learn alot about IT work but there should be a apprenticeships system added to it.
Also IT sever, desktop, help desk IT workers should not be forced to have CS level programming. Some stuff like VB is ok and what the tech schools due but in a CS your are taking high level programming and even then that at some colleges lacks more of the programming language part Now at time for people doing sever, desktop, help desk type work is better off doing an apprenticeship.
Does non coding IT work really need Calculus?
Also can get rid being forced to pick major?
see how I'm saying apprenticeship not internships they need to be more trades like with at least mini wage and real work (no you are just a copy or coffee boy).
Also there should be trades like continuing education that is not just Masters or PHD CS. No continuing education on new OS's, systems, and so on.
Primer: How student loans - skyrocketing tuition (Score:5, Interesting)
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Don't forget socialized medicine, Medicare on steriods
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All those things are basic and can easily be provided for free by govt. The Fed creates $16 trillion to bail out financial institutions, they can pay off the national debt too. What matters is innovation, advancing knowledge; as long as we keep creating we can create as much money as we want and the value will stay strong, like Japan's 200% debt-to-gdp ratio, and they constantly want to lower their currency's value.
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Yes, let's look at Japan. As you say they get along fine with a 200% of GDP national debt.
Except the Japanese worker has a 15% savings rate that he cheerfully buys 0% interest government bonds with. So the debt is owned by the Japanese people who get paid nothing to carry it. It is exactly the same as if the US were to add an additional 15% income tax for which they would issue you a certificate for every year. This certificate would bear no interest and would be redeemable never.
I am sure you would like th
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Wow. The *government* cannot provide anything for free. Anything that comes "from the government" comes from taxpayers, with a tremendous overhead (they call it the "skim" in Vegas) as it goes from my paycheck to the deadbeats. Anything else you may have heard is utter and complete nonsense.
Brett
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Social Security and socialized medicine are entitlements, it's something that people ought to be entitled for just for being born American citizens. It's a right that people in other parts of the developed world take for granted.
The point isn't that the GOP is trying to take those things away, it's _why_ they're trying to take them away. They're trying to take them away so that they can give to the wealthy, and cut taxes for corporations who in some cases don't pay any federal taxes. But, most importantly i
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It's a right that people in other parts of the developed world take for granted.
I advise to not attempt this argument. The that's-how-Europe-does-it-and-they-are-economically-healthy argument just doesn't work the way it used to.
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Why, because Greece is so corrupt that half of their businesses don't pay taxes (gee, where have I heard that before), or Spain has something like a 50+% high school dropout rate? European countries have a lot of problems, but their commitment to a healthy populace is absolutely not one of them. France and Germany are economic powerhouses, and both of them have universal health care. For them it's a competitive advantage, just like American bankruptcy laws: people were encouraged to take risks, like startin
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Republicans have their own entitlements like military spending, oil industry subsidies, multiple forms of corn subsidies, dairy subsidies, a war on drugs, TSA, etc.
It isn't that either side thinks entitlements are bad. They merely disagree on what the entitlements should be.
As a human it is in my best interest to choose entitlements which benefit me as someone whose only healthcare options are medicaid and moving to another country. My Hemophilia is mild but if I get seriously injured, the medication to kee
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We needed a balance for the "Evil Libruls are trying to destroy our Army, prisons and secret intelligence agencies!" side.
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If you are dumb, go to a state school while working: ~15k in debt
If you are smart, go to a good private school with a huge endowment: ~10k in debt
If you are really dumb, go to a good private school without a scholarship: ~200k in debt
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The issue isn't technology, the issue is that the government has been investing less and less in education in recent years. A large part of why college costs keep going up is the continued cuts by state and federal government. I'm sure the prices are going up even when taking that into account, but I doubt it would be anywhere near as steep an increase.
As for technology, it can help make teachers more efficient and provide better service, but it's hardly a panacea, anybody that was capable of learning that
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Teacher and professor productivity, by any measure, hasn't budged for decades. Forget the whole "education cuts" trope - that's a red herring. The real question here is why do we see incredible gains of productivity in so many other fields of work, with widget makers making more widgets per person, but in education we've hit a wall?
One answer - teacher's unions. Productivity gains are seen as a threat to union workers, and teachers are no exception. Another answer, state subsidies for education - taking
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I am gOing to guess you are either still in school or did not go to college. The gen Ed courses are the ones of real value and I never got that until after I graduated. I am very very lucky I had an attitude of as long as I have to do this, make the most of it while I was in those classes or I really would have missed out. The stuff in your program should be stuff you already know a little about, have some natural facility for and interest enough to learn largely on your own. Gen Ed gives you a foot in th