Student Debt

[Thailandnotes]

NPR special on student debt. Wow.

http://www.npr.org/2014/04/03/298330...al-aid-letters

all the stories in the series…

http://www.npr.org/series/290910253/paying-for-college

[LazyBoy]

Re: Student Debt

I recently found out that a niece and her fiance have $140,000 student debt between them. They're 26 year old teachers. I can't even imagine what that feels like. They're living (together) pretty cheap in an expensive area and aren't paying any principle yet.

[jpatter666]

Re: Student Debt

I recently found out that a niece and her fiance have $140,000 student debt between them. They're 26 year old teachers. I can't even imagine what that feels like. They're living (together) pretty cheap in an expensive area and aren't paying any principle yet.

Not surprised. My wife works in international development for a non-profit (as you might expect, doesn't exactly pay well). When we met she had 100K in outstanding loans and this was after paying them down for years. I looked at the loan terms and for some of them she would have paid them off when she was 60.

60!!!

But she didn't feel this was an issue -- she was paying the loans. She only thought about the monthly payments and not the overall amount. And my wife is a brilliant woman, just named one of the top non-profit CEOs in the Mid-Atlantic.

But this is the indoctrination that younger people are led into. It's not the amount, it's the payments.

[needless to say, we've paid off the loans in full and my wife has a new, eye-opening and very jaded view of education debt schemes having realized what was perpetuated on her and many others she knows]

[Verrocchio]

Re: Student Debt

My guess is that a major cause of the current problem with student loans is the real estate market crash. HELOCs provided a more attractive source funding for college before the crash.

[jpatter666]

Re: Student Debt

My guess is that a major cause of the current problem with student loans is the real estate market crash. HELOCs provided a more attractive source funding for college before the crash.

Disagree -- all the crash did was force the ridiculous amounts out into the open since they can no longer be masked as a HELOC.

[lakedaemonian]

Re: Student Debt

I have yet to hear/read any traditional mass media cover what I think is the core problem with university education:

The average cost for the average degree to "purchase" the average salary.

It would appear the average cost for the average degrees is now 3-5X what it was 20 years ago.....but the average graduate starting salary for the average degree hasn't really changed in that time.

A lot of similarities to the RE market.

And the inability for the next generation to get on the property ladder due to suffocating student debt will surely have a cascading effect on RE again in the future.

[jpatter666]

Re: Student Debt

I have yet to hear/read any traditional mass media cover what I think is the core problem with university education:

The average cost for the average degree to "purchase" the average salary.

It would appear the average cost for the average degrees is now 3-5X what it was 20 years ago.....but the average graduate starting salary for the average degree hasn't really changed in that time.

A lot of similarities to the RE market.

And the inability for the next generation to get on the property ladder due to suffocating student debt will surely have a cascading effect on RE again in the future.

You're already seeing this -- this generation is being converted into a generation of renters. You are seeing this across all spheres -- RE, cars, even clothing; this generation is being reared to think this is "normal"

[Thailandnotes]

Re: Student Debt

I have yet to hear/read any traditional mass media cover what I think is the core problem with university education:

The average cost for the average degree to "purchase" the average salary.

It would appear the average cost for the average degrees is now 3-5X what it was 20 years ago.....but the average graduate starting salary for the average degree hasn't really changed in that time.

A lot of similarities to the RE market.

And the inability for the next generation to get on the property ladder due to suffocating student debt will surely have a cascading effect on RE again in the future.

graphed...

[vt]

Re: Student Debt

Courtesy of the Government/Academic complex

Something is rotten in the Ivy Towers. What is it?

Excessive administration employment? Mismanagement?

We see large endowments at some institutions, excessive president salaries, and to many administrators.

Why has the cost a college degree gone up so much?

[gvanc]

Re: Student Debt

I believe Mr. Janzen has referenced that access to relatively low cost loans has led to increased demand for access to Universities and positioned Universities to raise admission costs and spend more on developing the campus and compensating the staff. I think another factor driving demand could be an economy in which an undergraduate degree is now more like a high school degree used to be as a minimum qualification to enter the workforce. When I came out of high school, there were, I believe, many more opportunities to earn a reasonable life sustaining wage without a college degree. Recently we made a decision with our son to pursue his college education at a state run university instead of his strongly preferred option of an out of state private school. When we explained to him (repeatedly over several weeks) how foolish it would be to pay an incremental cost of $35K per year for little additional quality in the education he would he get and not much increase in the opportunities that would be available after graduation, he thankfully understood why we had to make this decision.

[Thailandnotes]

Re: Student Debt

Courtesy of the Government/Academic complex

Something is rotten in the Ivy Towers. What is it?

Excessive administration employment? Mismanagement?

We see large endowments at some institutions, excessive president salaries, and to many administrators.

Why has the cost a college degree gone up so much?

1.) As state support for higher education collapsed and a higher percentage of federal aid went to private institutions, tuition soared.

2.) While wages stagnated, and Pell grants covered less and less of the total cost, borrowing became the only choice, even to go to community colleges or in-state universities.

http://www.theatlantic.com/business/...cation/273801/

"Government/Academic complex/" why leave off Wall Street?

See Suze Orman and "private universities" where the majority of their revenues are taxpayer dollars and drop out rates are ridiculous.

Yes, the upper admin are getting CEO pay and spending most of their energy fundraising, but that's just a sidebar. In that regard and many others higher education is very similar to healthcare.

[Verrocchio]

Re: Student Debt

Disagree -- all the crash did was force the ridiculous amounts out into the open since they can no longer be masked as a HELOC.

Exactly, that's a restatement of my point. When the HELOCs were withdrawn, households had to find other sources of loans that would pay for sending the kid to college.

[Verrocchio]

Re: Student Debt

1.) As state support for higher education collapsed and a higher percentage of federal aid went to private institutions, tuition soared.

2.) While wages stagnated, and Pell grants covered less and less of the total cost, borrowing became the only choice, even to go to community colleges or in-state universities.

http://www.theatlantic.com/business/...cation/273801/

"Government/Academic complex/" why leave off Wall Street?

See Suze Orman and "private universities" where the majority of their revenues are taxpayer dollars and drop out rates are ridiculous.

Yes, the upper admin are getting CEO pay and spending most of their energy fundraising, but that's just a sidebar. In that regard and many others higher education is very similar to healthcare.

Total student loan debt is in the neighborhood of $1 trillion, so there's no debate about whether there is a problem. A trillion still qualifies as "big money." A closer analysis is needed to find the causes, as the picture is more complex than first meets the eye. Thailandnotes is much closer to reality than the vague assertion that something is rotten in the Ivy Towers; i.e., excessive administration employment or mismanagement are responsible. However, I must take issue with the idea that "the upper admin are getting CEO pay." The top 100 CEO salaries ranged from $18 million to $96 million, while the median salary of a chief executive of a college was $322,700.

State budgets have come under increasing pressure from Medicare over the past two decades. Declining state support has caused most of the state universities to trim budgets year after year, so to say that operations have become leaner (more efficient) is likely to be more accurate than to say there is mismanagement. I would expect that specific instances of mismanagement can be found in higher education, as in any sector of the economy, but I haven't yet seen a persuasive rationale to support the idea that mismanagement is either a general characteristic of higher education or a causal factor in the magnitude of student loan debt.

So, the decline in state support is part of the answer to the question "Why has the cost of a college degree gone up so much?" To get closer to the analysis that this question deserves, the major cost elements must each be examined for their contribution to student debt. These are (1) tuition and fees, (2) housing and meals, (3) books and supplies, (4) transportation, and (5) other costs. Public universities only have direct control over the first of these cost elements. The remaining costs are largely determined by external economic forces. In 2012, the average annual tuition paid by students at public universities was $5,189. If the whole amount of tuition was borrowed by a student, the loan would be only a little over $20,000; a lesser amount than the $29,400 average debt load of the Class of 2012. Because we know that student loans are used for living expenses as well as tuition, these costs must be examined as well. The total cost of college attendance includes the cost of living expenses. Young people today have sharply higher expectations for the quality of housing, food, transportation, and other goods that they consume during their college years, when compared to generations past. The debt load is, at least in part, the result of student consumption. Any analysis of the student loan debt is incomplete without taking this into account.

[jpatter666]

Re: Student Debt

Exactly, that's a restatement of my point. When the HELOCs were withdrawn, households had to find other sources of loans that would pay for sending the kid to college.

Ah, OK -- agree then!

[jpatter666]

Re: Student Debt

Total student loan debt is in the neighborhood of $1 trillion, so there's no debate about whether there is a problem. A trillion still qualifies as "big money." A closer analysis is needed to find the causes, as the picture is more complex than first meets the eye. Thailandnotes is much closer to reality than the vague assertion that something is rotten in the Ivy Towers; i.e., excessive administration employment or mismanagement are responsible. However, I must take issue with the idea that "the upper admin are getting CEO pay." The top 100 CEO salaries ranged from $18 million to $96 million, while the median salary of a chief executive of a college was $322,700.

State budgets have come under increasing pressure from Medicare over the past two decades. Declining state support has caused most of the state universities to trim budgets year after year, so to say that operations have become leaner (more efficient) is likely to be more accurate than to say there is mismanagement. I would expect that specific instances of mismanagement can be found in higher education, as in any sector of the economy, but I haven't yet seen a persuasive rationale to support the idea that mismanagement is either a general characteristic of higher education or a causal factor in the magnitude of student loan debt.

So, the decline in state support is part of the answer to the question "Why has the cost of a college degree gone up so much?" To get closer to the analysis that this question deserves, the major cost elements must each be examined for their contribution to student debt. These are (1) tuition and fees, (2) housing and meals, (3) books and supplies, (4) transportation, and (5) other costs. Public universities only have direct control over the first of these cost elements. The remaining costs are largely determined by external economic forces. In 2012, the average annual tuition paid by students at public universities was $5,189. If the whole amount of tuition was borrowed by a student, the loan would be only a little over $20,000; a lesser amount than the $29,400 average debt load of the Class of 2012. Because we know that student loans are used for living expenses as well as tuition, these costs must be examined as well. The total cost of college attendance includes the cost of living expenses. Young people today have sharply higher expectations for the quality of housing, food, transportation, and other goods that they consume during their college years, when compared to generations past. The debt load is, at least in part, the result of student consumption. Any analysis of the student loan debt is incomplete without taking this into account.

Well, I can't argue this much. When my friends and I reminisce about college days much of it was about the "ramen pride" days and the absolute dives we lived in. Of course, you're young and living like that is much easier.

Going back to my alma mater I was stunned. Hot tubs, climbing walls, specialty foods -- espresso machines! It wasn't a university, it was an all-inclusive resort that taught classes on the side.

In some ways I was jealous (admittedly) but for much of it sad, in that I knew these kids were in for one hell of a shock when they actually had to go out and work for a living in a few years.