The Washington Post sees the symptoms, but doesn't recognize the underlying illness.
Tuition costs at U-Va. had already been growing rapidly. A decade ago, the price, excluding room and board, was just over $4,000 for in-state students and nearly $17,000 for out-of-state students per year. Now it's nearly $10,000 and $32,000, respectively.
Even before the financial crisis intensified the upward pressure on college costs, the price of a degree was soaring. Since 1980, the average cost of tuition and room and board has grown by a staggering 121 percent while median household income has risen a mere 18 percent, according to federal data. But the credit boom earlier this decade provided some relief for families.
Wall Street financiers packaged student loans into securities and sold them off to investors, who could trade them just like stocks. That, in turn, provided more money for lending, helping to make student loans cheaper and more available. Even people with poor credit histories could easily get a loan.
Gee, where have I heard this story before? Let me think... oh yeah. I remember. This was the very same story behind the housing bubble and the ridiculous run-up in real estate prices.
Some educators worry that college programs will sacrifice quality to contain costs or become limited to those who can afford it.
"The big macro question is: Will we have to sacrifice the quality of education, or the access, based on talent rather than the ability to pay?" said Marx, the Amherst president. "Either of those make America less competitive for the next generation."
Horseshit. If people can't afford your product the price will drop, Mr. Marx. I suggest you get your spending priorities in order right away.
They get no sympathy from me. Far too many American families commit financial hari-kiri because Junior MUST GO TO COLLEGE AT ALL COSTS, even if Junior wants to do something else with his life. Like... dunno... maybe be an auto mechanic. Or a plumber. Or run a restaurant.
32 comments:
Which ironically the kids that don't go to college and go with skilled trades like mechanics and plumbers earn a good bit more than their college educated brethren.
Boomers steal from their own children, and price them completely out of life. What else is new?
College costs out of control. Ditto housing costs, taxes, health insurance, auto insurance, food, and gas. Am I missing anything? Fewer jobs for younger folks. Median wage steadily decreasing.
Disenfranchising your kids' entire generation -- sounds like a great plan for the future.
Almost like a union - restrict enrollment via high prices or favoritism (legacy, etc.) for higher wages among those lucky enough to get in.
BTW, even the most experienced mechanic/plumber on their own won't make nearly the income most college grads do (but if you own a business employing many plumbers...)
They charge more money each year because they can get away with it but that doesn't mean they should, especially being non-profit. That's why I always get pissed when I am reminded of the "non-profit" status of colleges.
Terms like "non-profit" means nothing other than the "profits" go to the executives (aka professors & administrators) who make good livings doing nothing with lifetime incomes/benefits and have we the people put up the money. Society should only be forced to support colleges to provide required knowledge workers that otherwise would not be provided..ie incremental value vs incremental costs...if we are going to ration health care, then why not college degrees??
Yeah, right.
The Feds are now with the US Treasury, backing almost all student loans.
Tesla makes a good point about the dubious "non-profit" distinction enjoyed by certain colleges and universities.
Well put Lou, we don't learn these lessons in the USA because we don't wanna sound mean when we say that someone can't afford it. But the truth is, if demand would wane, prices would drop and allow more to go to college. BTW, I only have an associates, am selfemployed after years of hard work and make more than most of the engineers I work dfor. Capitalism rocks for thasae who work!
Amen!
In the private sector they would be forced to cut rates.
In a public or union controlled environment, they can bleed the beast for many more years.
@Bill in NC. Related to plumbers and turned wrenches for years myself. If you are a licensed Master Plumber/electrician or an ASE/ICAR certified Master Mechanic, you can make a good deal of money. The thing is, the overwhelming majority of the people in those jobs don't go on to get their professional certifications and degrees.
Again, it's about working your butt off and being willing to do more work than the other guys.
Oh, man. We have a whole generation that borrowed to go to college at the bubble peak, borrowed to buy a new car, and borrowed to buy a house at the peak. Massive household debt, even under the best of times. And now wages are going down, and unemployment is up. Did they get screwed, or what?
On the other hand maybe we'll have inflation/hyperinflation and it will all get devalued away. I'm not sure anyone would like what that would mean for our quality of life, though.
Whenever the government gets into an activity in order to make it more affordable, prices go up. Every single time.
Just like housing bubble...borrow and don't repay...stick the taxpayers witht a few years of drinking. Mom and dad would at least insist on something that looked like a useful education, but stick it to the public and you get nothing. Those bonds will payoff only by the taxpayers paying for them...just add it to the tab and inflate our way out of it.
One difference between some student loans and housing loans is that you can't walk away from a student loan like you can a home mortgage. (Nor can they "repossess" your degree -- if you got one.)
From what I understand, even through a bankruptcy, government sponsored student loans survive to dog you the rest of your life. This definitely affects the funding part of it for the people who bought those student-loan-backed securities, making these a better bet than mortgage-backed-securities.
Does this affect the "bubble"? I'm not sure. One thing that might do so (we hope?) is that eventually more people might realise that the degree in Social Welfare you got because it's easier than engineering will put you well below the income level of your high school friend, the certified electrician.
It's like what author Robert Heinlein had one of his characters say; essentially any time the government intervenes in the economy it acts as positive feedback.
On Christmas Eve, I spoke to a recent college graduate who is using her degree to work a cash register at a local electronics store. She mentioned that all of her friends, with a variety of degrees, are either in grad school or working retail (or waiting tables). Not one of them has a job related to their degree six months after graduation from the University of Texas.
Indeed, she was celebrating her newly received job offer -- scheduled to start in March -- in her field. This means that she will be the first of her set to actually go to work learning what she used in college.
We're going to need legions of lawyers, clerks, administrators, prosecutors,...
@anonymous
Quite the contrary when it comes to lawyers. My wife graduated from law school. Of her 10 or so close friends, only 2 have paying jobs in law and that is because both are working together out of their home. The rest are either still doing the jobs they did before or have gone into teaching or sales.
Unless you are in the top 5-10% of your class and are willing to work 60+ hours a week, you won't find work easily.
The one that is still really trying to do law is working full time as a a nurse and taking as much pro bono work as possible and taking scraps from the city since Houston doesn't have a dedicated public defenders office.
@Nova Sideliner
No, the student loans can't be discharged but they are used to calculate total debt load under the bankruptcy laws. In a way, they make it much easier to discharge every other debt you have.
RUBBISH
Tell me how many people without degrees does goldman sachs employ?
As long as the alternative to getting degree is a lifetime in a Walmart type job, young people will always take the risk, and so will their parents.
Do you want YOUR children to operate a cash till all their lives?
amigauser, you are missing the point.
No Goldman Sach won't hire you to a cush job without a degree, but not everyone who does not work and Goldman's is doomed to a cash register either. There are many opportunities for those who can't afford college. I know more than a few who have lived very comfortable lives after starting landscaping, lawn maintenance, window washing, CAD contracting, (insert skill here), etc... It really takes minimal effort and good work ethics to do well in this country (for now). Other opportunities exist to work for the Goldman's of the world as well, such as applying for entry level and mail room type jobs with these companies where the company will than pay a portion or all of your college tuition. High debt load is just a lazier way to go to college and delay the inevitable lifestyle crushing (or bankrupting) repayment.
Interesting article as to the causes of this kind of thinking:
http://www.kitco.com/ind/Turk/turk_dec212009.html
amigauser, I think you'd be surprised at how many successful self-made businessmen and women got where they are without having a college degree. For example, one of the better-known Haterz started off working at a very famous franchise food joint and wound up owning a chain of said franchise food joints.
I value my college education, but the simple fact is many kids are corralled into college even though their skills and desires point to something else. Seriously, our colleges and universities are filled with junk studies programs and degrees, just so people can get a piece of paper that says they have a college degree.
We should focus our higher educational resources on the hard sciences and hard business studies, and beef up our trade schools (real trades, not these "culinary art" and "massage therapy" schools) so that people who maybe aren't cut out for math and physics can still have profitable, productive careers.
College is the new high school. More "helicopter time" for anxious parents, more goof-off time for infantilized "adults". And it all comes with a ridiculous price tag. For many people, college is a total waste of time.
Like Bill Gates, my husband dropped out of college and is now a successful manager at a tech company. No one cares that he dropped out of college, only that he can do the work. Tech is still a meritocracy in many ways.
Several of my BILs are electricians. Hated school, but are flourishing as tradesmen. College for them was a waste-- they were smart and bailed before the semesters started racking up and it got real expensive.
Skipping college isn't always a bad idea.
Hey! What did my poor bubble-gum making kit ever do to you!?
;)
amigauser, I think you'd be surprised at how many successful self-made businessmen and women got where they are without having a college degree.
Correct Lou. I made $240k this year without a college degree. I work for a Fortune 500 company and am non-union.
I made $240k this year without a college degree. I work for a Fortune 500 company and am non-union.
Good on ya! A good friend of mine left college part way through, bored and (at the time) lacking in discipline. I thought it was a shame that he didn't keep at it, but he now makes about twice what I make -- and in the same field. OK, he works a lot harder than I do, I have to admit, so he deserves what he earns. And nobody cares that he's missing that degree. Well, nobody he wants to work for, that is.
Anon's on to something about boomers stealing from their children. CA colleges were once essentially free. Today, UCs cost over $7k/year.
That's not horrible. A part time job could easily cover it, provided the student lives at home.
CA has a program that allows retirees to work towards an advanced degree for free. Most folks will not participate in the program. It's probably not that expensive. But whatever happened to education being an investment in the next generation? It's becoming summer camp for the boomers.
Side note: it was infuriating when our school was picketed by "Angry White Men in support of Affirmative Action".
Awfully big of those boomers to stand up in support of AA when they had no skin in the game. But I digress.
Boomers pounded us over the head about the importance of getting into a good university. Turns out they were wrong. A college education is wonderful, but it's not the sole path to financial security. Nor is it a guarantee of financial security.
The fight over AA in college admissions is extremely bitter. Maybe it wouldn't be so, if people were realistic about the value of college?
The best place for freelance projects is freelancing sites. Freelancing sites are the best option for part time home based business and freelance jobs. There are many types of work available at freelancing sites
www.onlineuniversalwork.com
I appreciate the work of all people who share information with others.
Having been a part of the Online Universal Work Marketing team for 4 months now, I’m thankful for my fellow team members who have patiently shown me the ropes along the way and made me feel welcome
www.onlineuniversalwork.com
Nice post !
Thanks for sharing this article with us. It is very useful for me and other who are studying in a college for their college degree.
:)
Post a Comment