BOOK REVIEW: ‘Is College Worth It?’

[flintlock]

http://p.washingtontimes.com/news/20...lege-worth-it/

Awash in taxpayer-subsidized money, colleges offer their discerning-lifestyle consumers every possible amenity: wired dorms, state-of-the-art workout facilities, beautiful grounds and Zagat-worthy dining. Teachers teach less and research more. The person who is probably teaching your kid is not a tenured rock star, but a galley slave grad student who is paid so little that he or she qualifies for welfare assistance. It also bankrolls an ever-growing middle management of deans and directors. And let’s not forget the high six- and seven-figure salaries of college presidents. We have created a subprime higher-education bubble, and Mr. Bennett and Mr. Wilezol aim to let some of the air of out it.
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[BadJuju]

Re: BOOK REVIEW: ‘Is College Worth It?’

The only good thing that has come from my degree is the networking I got with a local organization that does everything in its power to get me a job even going as far as paying half my wages for a set amount of time.

[ASH]

Re: BOOK REVIEW: ‘Is College Worth It?’

Some good charts in this recent article.





For me, there are two key quotes:

"Stephanie Owen’s and Isabel Sawhill’s Brookings report, 'Should Everyone Go to College?' is getting a great deal of well-deserved attention. ... [The report] is framed by its authors as casting doubt on the assumption that everyone should go to college[, but] the report is more of a testament to the poor quality of some colleges and universities than to the inappropriateness of college for a large number of students."

and

"And a caveat is in order that ROI as used above doesn’t adjust for graduation rates. These are the returns for those who go and graduate, not the (many) who drop out midway through."

I think it can simultaneously be true that completing college is a better choice on average than no college, while still being a much worse value proposition than it would be without a lot of accumulated bloat and inefficiency. Also, there are clearly specific colleges and specific majors for which the ROI is low or negative. (And the usual caveats about population averages versus individual circumstances apply.)

[ASH]

Re: BOOK REVIEW: ‘Is College Worth It?’

... I notice that the ROI values calculated in the article I attached are at odds with the claim in the book review flintlock posted. The book says “Whether the standard of excellence for higher education is cultivating the mind and the soul or maximizing financial return on investment, most of higher education fails most students.” Seems like we may have a case of dueling statistics / sources...

[vinoveri]

Re: BOOK REVIEW: ‘Is College Worth It?’

virtually unlimited ability to leverage up is the key ingredient to all recent and current bubble apparently - and its easy to lever up when the Central Banks can create unlimited fiat and force rates to stay low. if the gov did not guarantee free money to everyone to go to college, there would be no bubble.

[jiimbergin]

Re: BOOK REVIEW: ‘Is College Worth It?’

virtually unlimited ability to leverage up is the key ingredient to all recent and current bubble apparently - and its easy to lever up when the Central Banks can create unlimited fiat and force rates to stay low. if the gov did not guarantee free money to everyone to go to college, there would be no bubble.

Of course it is not FREE! People are still paying off student loans 20 years after graduating.

[LargoWinch]

Re: BOOK REVIEW: ‘Is College Worth It?’

Of course it is not FREE! People are still paying off student loans 20 years after graduating.

...while savers/taxpayers subsidize the low cost of borrowing on these loans and assume default risks. There are no free lunch indeed.

[vinoveri]

Re: BOOK REVIEW: ‘Is College Worth It?’

Of course it is not FREE! People are still paying off student loans 20 years after graduating.

yes, you're right; It's free only to the feds and their patrons the banksters

[dcarrigg]

Re: BOOK REVIEW: ‘Is College Worth It?’

...while savers/taxpayers subsidize the low cost of borrowing on these loans and assume default risks. There are no free lunch indeed.

I've got a small bone to pick on that one. If either a kid or a parent goes to get a student loan over most of the last decade, you're talking 6.8%. Even today, for grad students who have established credit and can get 2.9% mortgages, it's 6.8%. Sure, I suppose they're treating it something like unsecured credit, but with zero risk of bankruptcy due to the law, and a 15% for life wages and Social Security garnishment provision, it sure seems like there's enough collateral there.

There are defaults. Don't get me wrong. But taxpayers actually profit off student loans. At least for now. If the default rate ticks up hard, we'll see. But I think it's pretty hard for any but a small percentage of folks with college loans to get around garnishments their whole lives. Even parents will lose their Social Security to it if they default. And for undergraduates, there's a federal cap of $57,500 maximum on student loans. The garnishment should take care of that over a lifetime.

It's the private student loans as well as the professional and graduate federal loans that reach truly stratospheric heights. They may be another issue.

The situation is tenuous at best. But, as I said, there hasn't been any loss to taxpayers in the history of the system. That's not saying there never could be. But they've clamped the shackles pretty tight around students with these ones.

[LargoWinch]

Re: BOOK REVIEW: ‘Is College Worth It?’

I've got a small bone to pick on that one. If either a kid or a parent goes to get a student loan over most of the last decade, you're talking 6.8%. Even today, for grad students who have established credit and can get 2.9% mortgages, it's 6.8%. Sure, I suppose they're treating it something like unsecured credit, but with zero risk of bankruptcy due to the law, and a 15% for life wages and Social Security garnishment provision, it sure seems like there's enough collateral there.

There are defaults. Don't get me wrong. But taxpayers actually profit off student loans. At least for now. If the default rate ticks up hard, we'll see. But I think it's pretty hard for any but a small percentage of folks with college loans to get around garnishments their whole lives. Even parents will lose their Social Security to it if they default. And for undergraduates, there's a federal cap of $57,500 maximum on student loans. The garnishment should take care of that over a lifetime.

It's the private student loans as well as the professional and graduate federal loans that reach truly stratospheric heights. They may be another issue.

The situation is tenuous at best. But, as I said, there hasn't been any loss to taxpayers in the history of the system. That's not saying there never could be. But they've clamped the shackles pretty tight around students with these ones.

That is all fine and good dcarrigg, but two wrongs [broken student loan and mortgage loan systems] don't make one right.

Ask yourself: what would the free market loan rate be for Anthropology Majors? 6.8%? What would the rate for M.D. students be?

[jiimbergin]

Re: BOOK REVIEW: ‘Is College Worth It?’

That is all fine and good dcarrigg, but two wrongs [broken student loan and mortgage loan systems] don't make one right.

Ask yourself: what would the free market loan rate be for Anthropology Majors? 6.8%? What would the rate for M.D. students be?

But the cost of higher education would be much lower if we had not had these "free" loans and then an Anthropology Major would not have the same difficulty in paying in the first place.

[LargoWinch]

Re: BOOK REVIEW: ‘Is College Worth It?’

But the cost of higher education would be much lower if we had not had these "free" loans and then an Anthropology Major would not have the same difficulty in paying in the first place.

Jim, I agree. Please note however that I am addressing a different point raised by dcarrigg as per above.

[jiimbergin]

Re: BOOK REVIEW: ‘Is College Worth It?’

Jim, I agree. Please note however that I am addressing a different point raised by dcarrigg as per above.

Sorry, I did not really understand that when I wrote my post.

[reggie]

Re: BOOK REVIEW: ‘Is College Worth It?’

Every societal institution is under attack, and academia is not excluded. Hence, this article should be of no surprise. When societal control can be effected without an institutional framework, why would one provide their adversary (in this case, the public) with centers of prospective power from which to organize? This is a logical and highly strategic trajectory that we're proceeding down.

We're in a networked war now. Unfortunately, the one who controls the networked wins network wars. Only way for the public to escape this one is to pull the plug on the network and let the parasite collapse (insert Hudson's FIRE host parasite analogy here)

[dcarrigg]

Re: BOOK REVIEW: ‘Is College Worth It?’

That is all fine and good dcarrigg, but two wrongs [broken student loan and mortgage loan systems] don't make one right.

Ask yourself: what would the free market loan rate be for Anthropology Majors? 6.8%? What would the rate for M.D. students be?

A Saturn Ion may have been the least reliable car to drive in the last decade, and the Honda Accord the most reliable, but that didn't affect car loan rates.

You may be right in one respect. If you went full bore free market, one could expect anthropology degrees to be far cheaper than an electrical engineering degree or something. But I suspect that probably most people here are happy that the liberal arts and social sciences subsidize stem fields. If you think of it that way, the price of the anthro degree is built into the principle instead of the interest. What does it cost to get a kid an anthro degree? No new buildings for anthro. No labs. Just a room, some books, and a teacher - probably the teacher making among the least in the school. But the kid pays the same as the stem or business kid with the brand new building, twice as expensive teacher, and the labs. I'm not sure charging 20% on top of that is reasonable.

But all of this is absolutely beside the point. The point of interest in private business is to make a profit off lending money. The federal government is doing that. Should the federal government be making profit off students? That might be a better question.

I think that there are many people around who feel that if federal student loans and pell grants were ended, that college would somehow drop drastically in price. I don't think so. I think that the marginal schools, high price low yield not-for-profits, and all the for profits would go under. That would leave increasing demand for the better schools who survive. I don't think their tuition would go down a bit.

Do you know why I think demand would stay the same, even though all the loans and subsidies are gone? Because we have been on a thirty year mission to destroy the manufacturing base and vocational education in this country. There are comparatively few places left for a kid just out of high school to find employment better than minimum wage. And so the demand will stay. Plunging supply of schools, fewer seats, steady demand = increased price. And with the no bankruptcy rule, the same bully boys on Wall Street that bundle Student Loan Asset Backed Securities, appropriately called SLABS, will be happy to rush into the credit market and fill in the gap at double or triple the interest rate.

The thing that drives the cost of school down is dropping demand. And the way to do that is to increase vocational ed, increase apprenticeship programs, and fix the trade deficits that bleed on like a sieve year after year sucking low-mid range lobs overseas. At least that's the way I see it. Many anthro majors aren't suddenly going to become savants at differential equations. Neither are they going to find $12/hr work right out of high school halfway through this decade of 7%+ unemployment, 20% for youth. So they go into anthro. They learn a bit. They take on debt. And they try to figure things out.

But I think the mistake in total utopian free market thinking is that it has never existed and will never exist. Every single trade agreement sets all sorts of specific tarif rates and import and export restrictions on specific goods. Every single tax policy differs and drives change. Even non-tax laws that provide for trains, roads, and buildings that don't collapse into nothing the way they might in China or Bangladesh add cost. Wherever human life is cheap, labor will be cheap. And so there's never a level playing field in the neoliberal global economy. And all the cheap goods that are pumped into first world economies skew conceptions of price. This is why John Williams has shadowstats up showing CPI far higher than the current CPI that increasingly only takes into account manufactured goods imported from the third world, removing housing and commodities and education and healthcare. They all go up so fast because they're the only things that can't be easily tied to the cheap labor, cheap life, third world economy. And for the third world, I'm not sure things are any better, since the money only flows as long as you make sure not to improve wealth, health and safety. To grow, you must be a cheap place to do business.

Taking that entire construct, the loss of 7 million manufacturing jobs etc. etc, and simply removing subsidies to give kids something to do would just cost money on the other side. Instead of taking out loans, lots of them would probably end up on some kind of welfare. There's no desire to really create jobs for them. And there's a constant desire to cut back on old age benefits in both the public and private sector. So people who might otherwise retire work longer. Just ripping away all subsidies isn't going to make these kids magically have successful careers without college, or give them productive things to do from 18 to 22. At least that's the way I see it. The system isn't right now. But when your choice isn't between a wrong and a right, but rather between a wrong and a wrong, what do you choose?

You say two wrongs don't make a right. But I've lost count of how many wrongs there are here. The question is where the original wrong lies.