Student Debt

[charliebrown]

Re: Student Debt

Let me repeat, as a fact of some significance, that the great tuition price spiral began in 1981.

I can confirm that ... That was my first year at a public university. My first year tuition & fees was $1100. (no i did not drop a zero). By the time I graduated with two degrees in 1988, my bill was about $3000 per year. Now I get letters from the alumni assoc. stating tuition and fees are 17,000.

I might also add that at time minimum wage was 3.35. So with roughly 400 hours of minimum wage work one could pay for their school, and come out debt free.

With the current math 17000 / 8.5 = 2000 hours. I don't think a person can work 2000 hours and go to college full time. I had a hard time
working 1000 hrs per year.

[Penguin]

Re: Student Debt

Very good points aaron.

The inability to outsource education has ~got~ to play a part in this methinks. Not that this is a bad thing, it is just that those economic sectors immune from outsourcing and offshoring not only maintain their bargaining power but increase it dramatically IF they are considered important, are in high demand, and have market entry barriers like high education requirements etc.

IOW we have actually shrunk in bargaining power while they have increased. At least that is the way I see it.

But in the end I have got to say that this is another industry that I really don't think should be entirely market driven. It is far too important to the long term health of the nation to be left to the vagarities of "free market". Should ~some~ market forces be introduced and even encouraged? Of course! But in the end having an educated and thoughtful populace is too vital to have mere economics preclude us from gathering the brightest and the best and setting up institutions where they can hone their minds.

IMvHO (and I welcome feedback on this) the guiding force for education reform should be this: The costs to the student should be dramatically lower but the admissions standards should be much tougher.

In large part we are talking about publicly founded and financed institutions. They have a public mission to accomplish. This is not a place to allow economists and their fever dreams free run of the place.

Will

[BK]

Re: Student Debt

If education can't be outsourced then why do Chinese, Saudi's, Russians, flock to the United States? Perhaps at some point in the future more of these foreign students will stay at home as the education offering in their countries improve??

Read College un-Bound - and you'll understand the broken finances of Colleges and higher education here in the United States. Foreign students have been providing desperately needed revenue for colleges struggling to find students who can pay the full retail price.

http://www.jeffselingo.com/books/college-un-bound/

Lots of smart students have wisely chosen a less costly option and travel to Canada for higher education. http://usnews.nbcnews.com/_news/2013...e-degrees?lite

[hoodoo]

Re: Student Debt - Debt engulfs institutions of higher learning

And what is the percentage of classes taught by adjunct professors!

Most important question for any High School senior to aske when choosing a college.....What is the rating for your last bond offering and how much outstanding debt does the college or university have...
regard

[jk]

Re: Student Debt - Debt engulfs institutions of higher learning

the mark cuban clip was interesting: he said student debt was holding back housing, clothing, transportation, whatever. this is just the reshaping of the economy by gov't policy. guarantee mortgages and/or promote their securitization with a policy that everyone should own a home and, no surprise, we get a housing bubble which of course diverts resources from other sectors. guarantee student loans with a policy that everyone should have a college degree and, no surprise, we get an education bubble which diverts resources from other sectors. i think "college for all" is a really foolish and misguided policy, and we're all going to pay for it one way or another.

[mmr]

Re: Student Debt - Debt engulfs institutions of higher learning

A slightly different perspective, for what it's worth -

The Reality of Student Debt Is Different From the Clichés

The deeply indebted college graduate has become a stock character in the national conversation: the art history major with $50,000 in debt, the underemployed barista with $75,000, the struggling poet with $100,000.

The anecdotes have created the impression that such high levels of student debt are typical. But they’re not. They are outliers, and they’re warping our understanding of bigger economic problems.

In fact, the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday. Only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000...

But even with tuition rising, several other factors have helped hold down debt burdens. The incomes of college graduates have grown since the early 1990s. And the repayment time for many loans has become longer. This combination creates perhaps the most surprising fact from the Brookings data:

The share of income that a typical student debtor has to devote to loan payments is only marginally higher than it was in the early 1990s — and somewhat lower than it was in late 1990s. It was 3.5 percent in 1992, 4.3 percent in 1998 and 4 percent in 2010...

For example, recent research from the Federal Reserve Bank of New York suggested that student loans were keeping some young adults from buying homes. But Beth Akers, one of the authors of the Brookings analysis, notes that the Fed’s data stretches back only to 2003. The pattern may well be real — and have existed for decades.

Of course, if interest rates begin to rise (especially now that new Federal education loans have rates linked to 10-year Treasuries), the student loan debt service burden could compound the impact of higher mortgage costs in contributing to the next recession. (And, of course, any debt can be a severe burden if one doesn't have a job.)

[BK]

Re: Student Debt - Debt engulfs institutions of higher learning

The equally real crisis is the debt that the higher education institutions are taking on and who is buying the debt that all of these Universities are loading up on.

Is there another debt crisis in the future a result of colleges and universities?

If you live near a college I ask you to drive by and you will invariably see cranes or at least lots of construction. How does a business that is attracting primarily customers who can afford the service offering spend so widely on new facilities?
http://www.forbes.com/sites/joshfree...-take-on-debt/

[charliebrown]

Re: Student Debt - Debt engulfs institutions of higher learning

Given the choice between attending a beautiful campus with every imaginable facility and 50K of debt, and one with good teaching in quonset huts, I would pick option B. There are plenty of old industrial buildings around maybe some in some not so war zone areas. Debt has a lot more insidious side effects than just having to pay it back.

[charliebrown]

Re: Student Debt - Debt engulfs institutions of higher learning

Lets use my example from above. Say a student can work 1000 hours a year and makes 10 dollars an hour. They probably will net $9000.
Now 17,000 dollar tuition and fees, and I don't know how much incidentals cost, books, supplies transportation. (I'm not putting in room and board)
We are now looking at 22K? So a deficit of 13K x 4 = 52K of debt for a four year program at a public university

[Penguin]

Re: Student Debt - Debt engulfs institutions of higher learning

If you live near a college I ask you to drive by and you will invariably see cranes or at least lots of construction. How does a business that is attracting primarily customers who can afford the service offering spend so widely on new facilities?

This is a very good point.

I went to two dramatically different schools for college. Both were the flagship public universities of their respective states. And the contrast between them 10 to 15 years ago is surprising. As is how they have changed in the last few years.

The first had new buildings everywhere. The newer engineering research buildings actually had open offices and space that was going unfilled. The second was old. Everywhere was old. Old buildings, ancient pictures of decorated alumni on the walls, no air conditioning in the building housing my major. Lab space was at a premium and there was NONE readily available.

The first school was second tier at best. A great atmosphere and a great campus and even a good education but they carried a small stick. No doubt about it. The second was a great school that ranked as highly as a public university has a right to. The reputation of the school and the professors was and is world class and deservedly so. But I can still remember my first months at the second school thinking how old everything was.

Now? Both have new buildings everywhere. At my second school the football stadium looks like it is slowly engulfing the campus around it like a scene out of "The Blob". And tuition has skyrocketed from an already very heady base. At no time could I have afforded to go there without a full tuition waver and stipend but now? Even if I had the paycheck I make as a full time engineer I don't think I could make a go of it w/o a substantial financial aid package.

Will

[BK]

Re: Student Debt - Debt engulfs institutions of higher learning

Big question who has bought up all this debt that Colleges have taken on?

What happens has Universities/Colleges are unable to meet their debt servicing obligations? What happens to the large institutions that are buying this distressed debt, will in create another too big to fail situation?

I challenge any readers to provide a list of 4-5 colleges that aren't going all in on the biggest college institutional debt orgy in history?

I suspect their are a few out fiscally sound institutions out there.

[jk]

Re: Student Debt - Debt engulfs institutions of higher learning

I challenge any readers to provide a list of 4-5 colleges that aren't going all in on the biggest college institutional debt orgy in history?

try this list.

[BK]

Re: Student Debt - Debt engulfs institutions of higher learning

Great endowment isn't always an indicator of fiscal health. My very limited understanding is there are lot of limits placed on how endowments can be used.

Take a look at the recent debt warning for University of Chicago - http://www.chicagobusiness.com/artic...ok-to-negative

I think the latest stat for U of Chicago is that outstanding debt = 70% of the endowment.

Also see this article from the Chronicle of Higher Ed - that briefly talks about the U of California - which is also on your list: http://chronicle.com/blogs/bottomlin...l-as-students/

[tastymannatees]

Re: Student Debt - Debt engulfs institutions of higher learning

My Daughter will be first year at Tufts in the fall - $ 63,000 a year. I have it covered as well as graduate school so she will graduate with no debt, but all the same it is a big nut to cover.

Just my luck that my daughter is going to college at the peak of it all.

My brother in law paid for 3 Ivies as well as graduate school for the same and I figure he has spent over a million dollars putting his three boys through school.

The benefit is that the oldest is earning over a million dollars a years and you probably have seen him as a talking head if you can bring yourself to watch CNBC.

The second, a Tax attorney with 8 years of higher Ed as well as clerking for a judge for a year started his first job last year @ $@250 K

The third is just beginning Law school this year. so we shall see.

Personally I believe it's a scam but as an older parent I can not chance it with my daughter as I most likely will not be around to help out so she has to be able to do it on her own.

While the Ivies are over rated it does help some having a degree from one but what I think makes the difference these days is a deeper commitment on the advanced degrees like attorney + Tax law - The +4 extra Ed. years put one in a more competitive postilion to service the .01% with the money.

[Forrest]

Re: Student Debt - Debt engulfs institutions of higher learning

My Daughter will be first year at Tufts in the fall - $ 63,000 a year...

While the Ivies are over rated it does help some having a degree from one but what I think makes the difference these days is a deeper commitment on the advanced degrees like attorney + Tax law - The +4 extra Ed. years put one in a more competitive postilion to service the .01% with the money.

One might even have the privilege of having met a few scions of the .01% in passing as well...which is probably the point. I think it always was, though good professors are a benefit.