The E in FIRE stands for Education, can we make it official?

[Thailandnotes]

"Nowhere is the close relationship between California's public universities and private corporations more apparent than in the UC Board of Regents. UC Regent Richard C. Blum is both the husband of Democratic California Senator Dianne Feinstein and the Chairman of the San Francisco-based investment firm Blum Capital Partners. Though he has served on the board since 2002, his firm is also the largest shareholder in Career Education Corporation and ITT Education Services Inc., two for-profit higher education companies that have both been under federal investigation. In a 2010 expose, the Sacramento News & Review reported that the UC investment managers invested $53 million in public funds in both companies. Despite these connections, UC officials claim that no conflicts of interest occurred."

http://www.thenation.com/article/165...kick-high-gear

[don]

Re: The E in FIRE stands for Education, can we make it official?

You have my vote.

Feinstein and Blum are shot through with 'conflicts of interest'. They're virtuosos on riding the tried-and-true vehicle for massive transfer of wealth from what are now called the 99% to the 1% - the government.

Finance Insurance Real estate Education, baby . . .

[bpwoods]

Re: The E in FIRE stands for Education, can we make it official?

"Finance Insurance Real estate Education, baby ..."

BINGO!

Brian

[charliebrown]

Re: The E in FIRE stands for Education, can we make it official?

I just got a letter from U of Il Alum association, in state tuition 20K. I'm guessing the fees, books, incidentals R&B are going to bring the amount to 30K or more. Who has got this kind of green? Especially if you have multiple kids. And how many companies are going to hire kids in a tight labor market with no degree? Undergrad was no big deal for me. It was mostly text book learning. Professors did not add all that much over a bright T.A. What about home schooling for college? Take some online tests or proxied test and bam you get your degree.

[BK]

Re: The E in FIRE stands for Education, can we make it official?

How a about a combo - Home Schooling / apprenticeship. A $120,000 - $200,000 should be able to buy tutoring/ apprentice opportunities with the best and brightest in any industry. Do you give your hard ear dollars to a Professor - or do you find a really sharp business person, technical expert, crafts person, to train your child for a profession or trade that can allow them to take care of themselves?
Something as to change!

[charliebrown]

Re: The E in FIRE stands for Education, can we make it official?

+1, one on one is the best form of learning, and learning by doing in a real world situation is even better.
Too much of my college education was leaning from a book in a very over simplified situation. Most of my challenges today
are making changes to existing products that contain minimal impact to current operations, getting things done on time, communicating with others how the new product works, having to juggle multiple tasks and having surprise emergencies come from time to time etc. All skills not learned at university.

[Verrocchio]

Re: The E in FIRE stands for Education, can we make it official?

Thailandnotes, looks like you've fingered another form of business/political corruption that could be as sleazy as anything seen so far. Charlie and BK, your comments appear to rest on the assumption that the purpose of a college education is to prepare one for vocational success. Such an assumption will lead inevitably to the conclusion that an apprenticeship is superior to college. In that case, you wanted training, not education; and you would have indeed gotten better value for money from a good apprenticeship.

[don]

Re: The E in FIRE stands for Education, can we make it official?

December 15, 2011|By Larry Gordon, Los Angeles Times

Trying to ease the burden of families squeezed by the recession and skyrocketing tuition costs, UC Berkeley announced plans Wednesday to extend financial aid to thousands of students from households earning $80,000 to $140,000 a year.

With the program, which starts next fall, UC Berkeley becomes a pioneer among public universities in a national effort to make a college education more affordable for a wider swath of middle-income families. Well-funded private colleges previously have led the way.


methinks there was a reason student loan debt was 'legislated' as non-dischargable (or at least restricted and difficult) in bankruptcy . . .


In order to have a healthy housing market you need to have a steady employment base and also a low level of distressed properties. Both of these prerequisites unfortunately are not applicable to the current economy. One albatross of future buyers is the now increasing burden of student loan debt. While virtually every other debt sector has contracted since the recession hit student loan debt is the only segment that has increased dramatically. It is understandable since many unemployed and the steady stream of high school graduates are still demanding a college education. What is incredible is the amount of debt students are taking on. Most are coming out with the debt of a brand new car while many others, are exiting school with what amounts to a mortgage with no home. Just look at the data; in 2000 student loan debt was roughly 2 percent of all household debt. Today student loan debt makes up over 7 percent of total household debt. Many future buyers are going to have their purchasing power curtailed by the amount of debt they are carrying with student loans.

What long-term impact will rising tuition have on other sectors like housing?

We’ve covered the housing bubble extensively on this site and the underlying argument has always been that home prices increased because of a mania produced by an economic bubble. Incomes never justified housing values and so we are here with the repercussions of a bubble bursting and with 6 million distressed properties still waiting on the sidelines five years after the music stopped playing. Yet as out of touch with reality that home prices became with household incomes student tuition saw an even more astronomical bubble:



Since 1978 home prices tracked the general rate of inflation until the late 1990s. At that point you can see the housing bubble emerge. But look at fees associated with college. This is where the next bubble exists and with nearly $1 trillion in outstanding student loans, this will put a clamp on how much future buyers can afford when purchasing other items like automobiles and more importantly homes.

The Federal Reserve now publishes data for student debt from Sallie Mae. This is only one component of the student debt market but nonetheless the chart is incredible:


Source: Federal Reserve

This is not a healthy trend. More importantly the long-term impacts of student debt are only now starting to filter down into the overall economy. You think a recent graduate with an entry level job and $100,000 in debt is going to buy a home? A decade ago this scenario was rare with 2 percent of all household debt being in the form of student loans. Today it is over 7 percent and this debt is largely held by a group of potential future home buyers, not current owners.

Recent data shows that many graduates are working in fields that don’t even require their college degree:


Source: John J. Heldrich Center for Workforce Development at Rutgers University

The good news for recent graduates is that 56 percent are working in fields that require a college degree. The bad news is that 22 percent are not working while another 22 percent are working in fields that don’t require a college degree. With this group, you probably have many that simply accepted whatever job they were able to find in this ongoing recession. The above data is for the class of 2010 and I’m sure we are going to get more information soon on the class of 2011.

Home prices versus college costs

In relation to a public education even here in California, the cost of higher education has become more expensive in relation to home prices:

“The cost of an UC degree was cheapest in 1980 in relation to housing prices. For example, for the cost of the median home in California in 1980 you would have been able to purchase over 330 years of education at the UC. Today the cost of a median priced California home will only get you 22 years of college education.”

In other words, even measured against another bubble asset category in housing the cost of higher education is in a deeper bubble. None of this has kept people from enrolling and much of the growth has occurred with for-profit institutions but public and private institutions have also been increasing their fees:


Source: Pope Center

The patterns seem extremely similar to the housing bubble with certain segments taking up the roll of subprime lenders and the entire industry getting excited by easy finance and an unrelenting line of demand. The only problem of courses is the debt is being backed by the U.S. government (i.e., taxpayers) and we all know what happens when the bubble pops.

You then have many thinking that graduate school is the answer and going deeper into debt:

“(Bloomberg) Gerrald Ellis, 28, took about $160,000 in federal loans to attend Fordham Law School, and then spent a year searching for a job. He eventually found work at a four-lawyer firm in White Plains, New York, doing consumer protection work.

Because his student debt is so high compared to his salary, Ellis said he expects to qualify for a plan that would let him pay 15 percent of his salary for 25 years, and whatever debt is left after that is forgiven.
“I’m trapped for at least two decades,” said Ellis, who lives in Harlem with a classmate who also borrowed more than $100,000. “The debt has an impact on everything, where I decide to live, what job I take. I can’t even imagine having kids with this kind of debt burden. Multiply that by a whole generation.”

Or what about this case:

“Laura Sayer, unsure of what she wanted to do after graduating from college in 2006, figured a master’s degree was “a safe bet.”

With $5,000 in undergraduate loans from her time at the University of Cincinnati, Sayer was set back $50,000 more after completing the Interdisciplinary Master’s Program in Humanities and Social Thought at New York University. The 27-year-old now makes about $45,000 a year as an administrative assistant for a nonprofit group, a job that didn’t require her advanced degree.”

A large part of this growth has come from the government working with banks to back up these loans:

“After a change in federal law in 2006, graduate students became eligible to borrow federally backed loans that covered the full cost to complete their degrees, while undergraduates are limited to $27,000 over four years, according to Kantrowitz.

The number of students enrolled in graduate schools, excluding law and medicine, totaled 1.7 million last year, a 33 percent jump from 2000, according to data from the Council of Graduate Schools, which represents more than 500 universities.”

Do you notice a pattern here? The combination of banks and our government seems to produce bubbles that sprout up like weeds in a garden. Only difference is there will be no investors to purchase distressed college degrees.

Tying it together with housing

Today more of the high paying jobs however do require a college degree. Growth industries like engineering, health care, computer science, and applied sciences require four year degrees. The problem comes when you have many entering for-profits and coming out with tremendous debt but very little job prospects. With student debt not being discharged in bankruptcy, you lock in millions of potential future buyers from buying a home. First, the debt burden is high and second you have a more reluctant group of people that may develop risk aversion.

Banks are no longer lending money out like candy during Halloween so income is important and debt-to-income ratios are now part of the lending lexicon. Given that the student debt bubble keeps on growing and good paying jobs are yet to be found in mass, the justification for higher home prices seems to be a wishful fantasy. The shadow inventory is still immense and the reality that home prices are making post-bubble lows is a reflection of this confluence of forces. People are doubling up, don’t qualify even for FHA insured loans, demand is muted even with artificially low rates, and are simply burdened by weak household wage growth. Certainly the millions who have moved back home because of the recession are putting a plug into the future buying pool and hierarchy of the old buying process:

-Go off to school
-Rent once you graduate
-Find a partner and purchase a home
-Build equity and move up

This has been the pattern for decades but this entire ecosystem of buying is no longer applicable. Not at least in this current climate with distressed properties being the bulk of sales and home prices moving lower.

With every incentive in the world being thrown at home buying little can be done without a healthy economic jobs machine. Those that understood this were able to see through the housing bubble rhetoric. I wonder how many can understand this argument with the student debt machine going at full speed today and the future implications on other segments of the economy including housing.

http://www.doctorhousingbubble.com/a...e-home-buying/

[Thailandnotes]

Re: The E in FIRE stands for Education, can we make it official?

"The PEP was voting that night on a plan to open two new charter schools in Brooklyn, both with the Success network, run by Eva Moskowitz, a former city councilwoman with close ties to Bloomberg and his administration. Almost everyone on the Success board hails from the hedge fund or private equity industry. The idea that the one percent could open schools in Brooklyn neighborhoods, despite intense opposition from both the public and many of its local elected officials, has provoked fury."

http://www.thenation.com/article/165...cupy-education

[lektrode]

Re: The E in FIRE stands for Education, can we make it official?

How a about a combo - Home Schooling / apprenticeship. A $120,000 - $200,000 should be able to buy tutoring/ apprentice opportunities with the best and brightest in any industry. Do you give your hard ear dollars to a Professor - or do you find a really sharp business person, technical expert, crafts person, to train your child for a profession or trade that can allow them to take care of themselves?
Something as to change!

hey!
now theres a novel concept: learning from those who might actually DO the job, vs just talk about it...
(hows that one go: those that do know how, DO - those that dont, TEACH... (or 'manage' )

with apologies to teachers, dc.... ;)

it just so happens that i'm aware of someone who might be interested in offering just such an opportunity....
(and working on boats is purrfect for the younger man (or better yet, the younger woman) who's parents might still be able to afford to own one... (well... the less-than-100foot class, anyway) read: nothing better than 'in-house labor' as a means of bringin up the youngins to know how to handle the details on ones yacht ;)

[BK]

Re: The E in FIRE stands for Education, can we make it official?

There was a time when the purpose of College was to prepare you for a specific career path - teaching, seminar (get a bachelor degree prior to going off to seminary), medical school, Dentistry, study of chemistry, study of physics.

If you were going to work on Wall Street- you left High School and got a entry level job on Wall Street - Grasso started his career this way.
Some where along the way the Education Industry convince Americans that you can't be an educated human without a College degree. I've met some really uneducated folks with College degrees and some very well educated folks without.

But, the lie that you will be part of the great unwashed illiterates without paying 4 years of schooling was the key to EDUCATION industry.

Verrocchio - College is suppose to be for preparation for a career or path in life. Sadly, Steve Jobs and Bill Gates found their path in life without paying to full four years. But, they had families that valued education and found other ways (possibly better ways) to educate themselves to build a better life for themselves.

[Starving Steve]

Re: The E in FIRE stands for Education, can we make it official?

Education should be connected to the workplace, especially by student apprenticeships. And education should be about knowledge, and especially where in the workplace the knowledge applies.... Education should not about timed-standardized test-taking skills. And schools should not be about administering and compiling timed-standardized test-taking records.

To the extent that public education is not directly about jobs and the workplace, and to the extent that public education is not even about knowledge--- technical, basic, or otherwise--- then the "E" in FIRE should really stand for public education. Hence, the F.I.RE. should not just be about the finance, insurance, and real estate sectors of the economy, but FIRE should be more aptly an abbreviation or acronym for: finance, insurance, real estate, and public education.... The FIRE sector(s) provide(s) little if any new wealth to the economy; rather, the FIRE sector(s) just churn ( i.e, turn-over ) existing wealth in the economy.

[BiscayneSunrise]

Re: The E in FIRE stands for Education, can we make it official?

The apprenticeship idea is an excellent one. After all, it has worked for thousands of years.

The problem is that higher education has been able to position themselves as gatekeepers to success in life. Many corporations have stumbled into this paradigm by mindlessly requiring a Bachelors degree of any sort as a minimum requirement for entry. Maybe this is because lower education has done such a miserable job to the point that a high school degree alone is meaningless. A Bachelor's degree today is now just worth what a HS used to be, i.e. minimum requirement for entry into the game. In many fields, advanced degrees are the norm for real advancement.

Going back to apprenticeships is an excellent idea but in a modern industrial world, employers like the sheepskin. In an impersonal world, employers don't know who the master was in the apprentice relationship so your training is questionable.

Which brings me to the other "gate" higher education has, and that is accreditation. Again, apprenticeship sounds good but without an accreditation the apprenticeship is devalued.

Don't get me wrong. I highly value education, both self taught/apprenticeships and formal. Just like everyone here, I'm just disappointed that most brick and mortar universities have strayed to parasites with students as their hosts.

[BK]

Re: The E in FIRE stands for Education, can we make it official?

Identification of innate skills. I have a former colleague who grew up in the Soviet Union - and as many know they basically told you what you were best suited to do...... In the case of my former colleague - he was told he would be a computer scientist - and he is one of the very best.

The education industry likes to portray the myth that education can remake any person..... My life experience tells me that is wrong. I've gone to 3 different dentists in my life - they all master the Dentistry schooling materials at a University. But, only two of the Dentist had the gift of dexterity that makes a good dentist a great dentist. University cannot give a very bright person the dexterity to be a great dentist.

I suspect the same is true of many professions - the truly skill in a profession are poor with attributes that help them succeed.

[jiimbergin]

Re: The E in FIRE stands for Education, can we make it official?

Back in the mid 80s, I hired a young man to work on our reinsurance operations in my actuarial department. He had 3 semesters of college, but had to drop out for family reasons. After a short while I realized how capable he was. I told him if he could study on his own for part 1 (equivalent to the GRE math exam) and pass, I would make him an actuarial student with all of the benefits. Actuarial students had study time at work and had automatic pay raises when an exam was passed. They still had to study 300-400 hours outside of work to be able to pass. Anyway he agreed. He passed and went on to pass all the exams and become an FSA and have a good career. Some people thought I was crazy to give him a chance without a degree, but there was never any requirement to have a degree to take the exams. I was really glad he had the chance.