The next bubble bursting: could be student loans.

[Direckshun]

I think this piece will prove to be prescient.

http://www.washingtonpost.com/opinio...iOV_story.html

Subprime college educations
By George F. Will
Published: June 8

Many parents and the children they send to college are paying rapidly rising prices for something of declining quality. This is because “quality” is not synonymous with “value.”

Glenn Harlan Reynolds, a University of Tennessee law professor, believes that college has become, for many, merely a “status marker,” signaling membership in the educated caste, and a place to meet spouses of similar status — “associative mating.” Since 1961, the time students spend reading, writing and otherwise studying has fallen from 24 hours a week to about 15 — enough for a degree often desired only as an expensive signifier of rudimentary qualities (e.g., the ability to follow instructions). Employers value this signifier as an alternative to aptitude tests when evaluating potential employees because such tests can provoke lawsuits by having a “disparate impact” on this or that racial or ethnic group.

In his “The Higher Education Bubble,” Reynolds writes that this bubble exists for the same reasons the housing bubble did. The government decided that too few people owned homes/went to college, so government money was poured into subsidized and sometimes subprime mortgages/student loans, with the predictable result that housing prices/college tuitions soared and many borrowers went bust. Tuitions and fees have risen more than 440 percent in 30 years as schools happily raised prices — and lowered standards — to siphon up federal money. A recent Wall Street Journal headline: “Student Debt Rises by 8% as College Tuitions Climb.”

Richard Vedder, an Ohio University economist, writes in the Chronicle of Higher Education that as many people — perhaps more — have student loan debts as have college degrees. Have you seen those T-shirts that proclaim “College: The Best Seven Years of My Life”? Twenty-nine percent of borrowers never graduate, and many who do graduate take decades to repay their loans.

In 2010, the New York Times reported on Cortney Munna, then 26, a New York University graduate with almost $100,000 in debt. If her repayments were not then being deferred because she was enrolled in night school, she would have been paying $700 monthly from her $2,300 monthly after-tax income as a photographer’s assistant. She says she is toiling “to pay for an education I got for four years and would happily give back.” Her degree is in religious and women’s studies.

The budgets of California’s universities are being cut, so recently Cal State Northridge students conducted an almost-hunger strike (sustained by a blend of kale, apple and celery juices) to protest, as usual, tuition increases and, unusually and properly, administrators’ salaries. For example, in 2009 the base salary of UC Berkeley’s vice chancellor for equity and inclusion was $194,000, almost four times that of starting assistant professors. And by 2006, academic administrators outnumbered faculty.

The Manhattan Institute’s Heather Mac Donald notes that sinecures in academia’s diversity industry are expanding as academic offerings contract. UC San Diego (UCSD), while eliminating master’s programs in electrical and computer engineering and comparative literature, and eliminating courses in French, German, Spanish and English literature, added a diversity requirement for graduation to cultivate “a student’s understanding of her or his identity.” So, rather than study computer science and Cervantes, students can study their identities — themselves. Says Mac Donald, “ ‘Diversity,’ it turns out, is simply a code word for narcissism.”

She reports that UCSD lost three cancer researchers to Rice University, which offered them 40 percent pay increases. But UCSD found money to create a vice chancellorship for equity, diversity and inclusion. UC Davis has a Diversity Trainers Institute under an administrator of diversity education, who presumably coordinates with the Cross-Cultural Center. It also has: a Lesbian, Gay, Bisexual, Transgender Resource Center; a Sexual Harassment Education Program; a diversity program coordinator; an early resolution discrimination coordinator; a Diversity Education Series that awards Understanding Diversity Certificates in “Unpacking Oppression”; and Cross-Cultural Competency Certificates in “Understanding Diversity and Social Justice.” California’s budget crisis has not prevented UC San Francisco from creating a new vice chancellor for diversity and outreach to supplement its Office of Affirmative Action, Equal Opportunity and Diversity, and the Diversity Learning Center (which teaches how to become “a Diversity Change Agent”), and the Center for LGBT Health and Equity, and the Office of Sexual Harassment Prevention & Resolution, and the Chancellor’s Advisory Committees on Diversity, and on Gay, Lesbian, Bisexual and Transgender Issues, and on the Status of Women.

So taxpayers should pay more and parents and students should borrow more to fund administrative sprawl in the service of stale political agendas? Perhaps they will, until “pop!” goes the bubble.

[Direckshun]

Originally Posted by Amnorix

This isn't about a bubble bursting, this is about an economic model (colleges) that isn't sustainable in the long run. There is a highly dysfunctional system involving kids with too much debt, the federal government taking on too much risk, and colleges that think that 8% increases in tuition fees EVERY YEAR is perfectly reasonable regardless of what the economy is doing.

Combine that with EVERY middle and upper income family thinking that a college degree is ABSOLUTELY required, and you have a recipe for disaster, probably at taxpayer's expense ultimately.

We need to wean our society off the notion that EVERYONE should get a college degree, and EVERYONE should own a house, and the taxpayer should underwrite all of it. All we do is screw up the economics around those sectors and then have the inevitable breakdown down the road.

Hm.

Are you arguing that there is such a thing as educating your population too much?

[Comrade Crapski]

Originally Posted by Direckshun

Hm.

Are you arguing that there is such a thing as educating your population too much?

Don't confuse going to college with getting educated.

I think most people go in dumb, and come out dumber.

[blaise]

Originally Posted by Direckshun

Hm.

Are you arguing that there is such a thing as educating your population too much?

Nope, every person should take out enough student loans to got to college until they're 65.

[blaise]

The overwhelming majority of people I knew in college weren't working their way through college. They maybe had a summer job to pay for books and some beer and that was about it.

[loochy]

Originally Posted by blaise

So, stop taking out student loans you can't pay back.

NO DAMMIT.

It's my God given right to go to college for a worthless degree that has no earning potential!

It's just like my God given right to drive an Escalade with big wheels and own a house that eats up half my income after putting 1% down with a variable rate loan.

/today's fiscally irresponsible dumbasses

[Amnorix]

Originally Posted by Direckshun

Hm.

Are you arguing that there is such a thing as educating your population too much?

No, I'm arguing that there is a growing disparity in the COST of a college education versus the VALUE of a college education. That disparity is being driven by a number of factors, but primarily:

1. constantly dramatically escalating tuition costs due to inflated demand and no-risk students because most tuition payments are essentially guaranteed by the federal government.

2. flat or nearly flat value of college education, particularly to those who graduate with soft (i.e. worthless) majors such as poli sci, history, English and other majors where unemployment is high, and salaries are low.

[Amnorix]

Originally Posted by Comrade Crapski

Don't confuse going to college with getting educated.

I think most people go in dumb, and come out dumber.

That's mostly because you're a knuckle-dragging mouth breathing dumb ****ing neanderthal.

[patteeu]

Originally Posted by Pitt Gorilla

I don't think anecdotal evidence even supports such a claim.

I don't think you know what you're talking about. Somewhere between 60 and 70% of students at 4 year schools take loans. Add in the number of non-loan students who get help from family and those who get through with substantial scholarships and/or grants and all you have left are a few who work their way through. Having a job during the semester to pad your spending money account or to make up the shortfall between aid and school-related costs isn't the same thing as working your way through. It's hard to believe that these real world truths have escaped your notice given your experience with higher education.

[La literatura]

Originally Posted by Amnorix

No, I'm arguing that there is a growing disparity in the COST of a college education versus the VALUE of a college education. That disparity is being driven by a number of factors, but primarily:

1. constantly dramatically escalating tuition costs due to inflated demand and no-risk students because most tuition payments are essentially guaranteed by the federal government.

2. flat or nearly flat value of college education, particularly to those who graduate with soft (i.e. worthless) majors such as poli sci, history, English and other majors where unemployment is high, and salaries are low.

It would be nice to see some analysis of income based repayment plans on a large scale. I know that IBR is one of the main things that keep law school an economically rational decision for 80% of law students.

It's essentially a back-end subsidy as opposed to front-end.

[Amnorix]

Originally Posted by Pitt Gorilla

I don't think anecdotal evidence even supports such a claim.

Wait, are you saying "most kids work their way through college, thereby paying for a significant portion of their tuition and room and board"?

Because I'm not sure that's really the case. I think the vast, vast majority of student costs are either funded by mom and dad or by loans, with only a relatively modest percentage of the total typically funded by the student.

Note that this isn't necessarily unreasonable. When college tuition, room and board is in excess of $40,000 per year, it's tough to make much of a dent working part time and summers when you have very limited knowledge/experience to offer employers.

[morphius]

Originally Posted by Iz Zat Chew

I went to college and paid as I went. A student loan was nothing that even entered into my mind. The time was different and I was interested in the education rather than living away from home and having the funds to live beyond my means. My parents weren't rich so it was all on me.

I would recommend to anyone going to college to do their first 2 years at a local community college and then do as much online stuff as possible. Spending as little time as you can living in a manner that starts you off owing more than you will most likely make in your first 5 years you have a job.

Have you gone back and looked what that university that you paid as you go is charging now compared to what you paid? I did the same as you, and it cost me just over $1000 a semester, but now the cost at the same school is $2500 for just 12 hours, and that is without all the new fees they have added.

[Amnorix]

Originally Posted by La literatura

It would be nice to see some analysis of income based repayment plans on a large scale. I know that IBR is one of the main things that keep law school an economically rational decision for 80% of law students.

It's essentially a back-end subsidy as opposed to front-end.

Don't know what IBR is, but law school is very unlikely to be an economically rational decision for 80% of law students when only 50% of law school graduates are getting jobs. Indeed, I just saw today an article in the ABA Journal referring to "massive" law school layoffs, likely lowering of admission standards and other effects from a dramatically reduction pool of law school applicants as a result of the increasing recognition that law school is a very poor choice for a very large number of attendees/graduates.

https://twitter.com/ABAJournal/statu...94419260248064

[Amnorix]

Note, also, that Forbes wrote an article about what a bad idea going to law school is for so many people. I have personally counseled young college graduates to consider the decision very carefully.

http://www.forbes.com/sites/jmaureen...ull-ever-make/

[La literatura]

Originally Posted by Amnorix

Don't know what IBR is, but law school is very unlikely to be an economically rational decision for 80% of law students when only 50% of law school graduates are getting jobs. Indeed, I just saw today an article in the ABA Journal referring to "massive" law school layoffs, likely lowering of admission standards and other effects from a dramatically reduction pool of law school applicants as a result of the increasing recognition that law school is a very poor choice for a very large number of attendees/graduates.

https://twitter.com/ABAJournal/statu...94419260248064

Income Based Repayment. With this program, a prosecutor who makes $45K out of law school can based his repayment on his salary. To say this helps is quite an understatement when he might have $120K in loans. Instead of a $1200/mo payment, he has a $500 (and even less if he's married and/or has kids). At the end of 25 years, he's paid roughly 100K into the system, and gets a discharge of $80K that the public basically paid.

Yes, there are a lot of schools who can't get graduates jobs, but a top 100 law school will still work out for a student.

But, I fully support reduction in law schools and grads.

[La literatura]

I've read all the criticism, and a lot of it is valid, but a good deal of it is also fueled by contrarians and people who expected way too much out of law school. They expected, basically, high school with more sex and a lavish suit job afterward.