Student Debt

[vt]

Re: Student Debt

Unfortunately we have the "Starbucks" culture where students spend more than necessary, plus colleges have pandered to this with more "resort" type features.
Those of us educated in the 60's were used to a spartan existence: Bunk beds in a small room, a couple of small desks, one sink, and communal bathrooms. Coffee might be 15 cents.

I wonder how much goes to alcohol and other frivolous expenditures. I've heard from friends that their college kids talk about weekend beer binges. Some colleges still control thus, and students did drink and smoke pot in the 60's.

Hopefully some journalist will do a great study to bring to light abuses.

P.S. Thailandnotes mentioned Wall Street and huge corporate CEO pay. We've already agreed that these are at the very top of the list. I feel we are almost unanimous that these need to be reformed immediately. Corruption in any institution cannot continue.

[jpatter666]

Re: Student Debt

Unfortunately we have the "Starbucks" culture where students spend more than necessary, plus colleges have pandered to this with more "resort" type features.
Those of us educated in the 60's were used to a spartan existence: Bunk beds in a small room, a couple of small desks, one sink, and communal bathrooms. Coffee might be 15 cents.

I wonder how much goes to alcohol and other frivolous expenditures. I've heard from friends that their college kids talk about weekend beer binges. Some colleges still control thus, and students did drink and smoke pot in the 60's.

Hopefully some journalist will do a great study to bring to light abuses.

P.S. Thailandnotes mentioned Wall Street and huge corporate CEO pay. We've already agreed that these are at the very top of the list. I feel we are almost unanimous that these need to be reformed immediately. Corruption in any institution cannot continue.

I have hope that the internet and various technological trends (among other things) will help resolve some of the corruption issues. Most of these cockroaches can't take the light for very long.

[vt]

Re: Student Debt

Hey, this may do a lot to prevent future large debt!

http://time.com/54342/it-doesnt-matt...go-to-college/

[dcarrigg]

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.

Aye. And they're securitizing the debt into student loan asset backed securities (slabs) just like they did in the mortgage market.

I think it's more interesting to look at Dear Old Blighty for illustration as to how higher ed gets massively expensive. The LA Review of Books had a good recent article on it:

When its time came, the Tory government did the opposite of these things. Fresh from his victory in the general elections of 2010, Prime Minister David Cameron, along with his minister for universities and science, David Willetts, followed the recommendations of a previously commissioned “independent review” to convert the university system into a competitive consumer market, though one intricately managed by state policy. The government cut 80 percent of the public funding to universities over several years; reserved the remainder for strategic fields largely in medicine, science, and engineering; tripled the student fee cap to Ł9,000; increased lending to allow students to use borrowing to cover higher fees; and explored selling the student loan portfolio to private banks. While American policymakers fiddled with public funding, the British burned it. The concrete result will be that, in the government’s own figures, the typical future university student will “study for three years and leave with Ł35,100 of debt.”

You can read the rest here: there's a lot of it. But the UK is moving at warp speed to do what the US did over decades. Increase the number of private, for-profit schools, cut state funding for school drastically, increase individual student debt loads, and securitize them and let finance make profit off it.

That's the end-game. Let's see if the limey's like it any more than we do...

[flintlock]

Re: Student Debt

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.

Agree. Even mediocre colleges today have brand new state of the art facilities and are a far cry from those of the past. Nothing is too good for these kids and the administration justifies it by saying, " well we have to attract students somehow". The dorms are amazing. Suites with two or 4 private rooms sharing a full bath. We slept side by side in a tiny room and walked down the hall to use a shared bath for 50.
Instead of the cafeteria food we had they have Salad bars, Pizza bars, taco bars, etc. So the living cost of college increases are perfectly understandable. They are lifestyle related and mirrors US society in general. Champagne taste on beer finances.

But this does not account for all the cost increases of course. You still have high tuition, books, and other "fees". Cheap, easy to get loans are a big part of it. Same phenomena can be seen on any car lot in America and was seen until recently in the increase in the average size and features of homes. People will simply overpay and not shop around if they can just use credit and worry about it later.

Im sure overpaid administrators, senior professors, and other inefficiencies plays a part as well. But colleges will only get lean if they have to. That process starts with the consumer. Why should they if they have more applicants than they need?

I know in Georgia, the population growth is a big factor. The number of colleges has simply not kept up with demand. More people are seeking college related jobs today than in the past.

Which leads to the fact that too many people who probably don't belong in college are going today. Some of the graduation rates are abysmal. Lot of wasted money there. Much of it public money that has to be recouped. There are a lot of great technical jobs out there going unfilled yet we keep preaching that a 4 year college is the only way when in fact for many, the numbers don't work. A friend's kid went to one year of tech school and now has a $80,000 year job working an IT related job. How many liberal arts college majors will make that right out of college? Or ever? The kid was able to live at home and went for free with the HOPE scholarship we have here in GA. I know its not for everyone, but too many today look down on technical related jobs and seem to be seeking a cushy Dilbert job where they do as little as possible. Maybe that is part of the problem.

[BK]

Re: Student Debt

School Administrators have learned what the politicians figured out eons ago, just give the people what they want! Every parent wants to hear that their child is deserving of nothing but the best athletic facilities and first class living accommodations. The bulk of parents with children in school today are positive that going in debt is necessary to build a good life and it always works out fine. The bounce back in real estate in the major metro areas (thank you Benny B) has helped to cement their thinking that debt works.

Boomer parents know of no other way than to follow the life formula that worked for them. Sending a child to a trade school to learn to be a plumber or electrician will lead to a life of poverty and meeting the wrong kind of people. Going into debt to get a Bachelors degree makes sense, just has holding a retirement portfolio of the perfect mix of mutual funds is a sure way to a wealthy retirement......just like those Fidelity commercials on the television set.

[LazyBoy]

Re: Student Debt

Like the Liar Loans of real estate, there's no gatekeeper. No one to decide it might not be a good idea to loan this 'C' high school student $75k for a degree that won't help him make any money. But there's no risk to the lenders when the loans are non-dischargeable and guaranteed by the government. Hell, we should all be in this business.

Unintended (?) consequences of the government guarantee. Stop that and make the loans dischargeable, then loans will have to be qualified, enrollment will plummet and prices will drop.

[Slimprofits]

Re: Student Debt

Like the Liar Loans of real estate, there's no gatekeeper. No one to decide it might not be a good idea to load this 'C' high school student $75k for a degree that won't help him make any money. But there's no risk to the lenders when the loans are non-dischargeable and guaranteed by the government. Hell, we should all be in this business. Unintended (?) consequences of the government guarantee. Stop that and make the loans dischargeable, then loans will have to be qualified, enrollment will plummet and prices will drop.

Excellent point, Lazyboy. There is also the factor of high schools pushing for the highest possible college enrollment rates.

[wayiwalk]

Re: Student Debt

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.

Nice - I love that observation.

I hope it will all soon quickly sort itself out. The generation this has been foisted upon make up too much of the population to sit down and take it. The issue is getting fair coverage in the press, at least compared to housing being a scam, for instance.

[ProdigyofZen]

Re: Student Debt

Aye. And they're securitizing the debt into student loan asset backed securities (slabs) just like they did in the mortgage market.

They have always done this. Student loan securitization is big business and one of the few securitization markets that kept going after the 2008 crash because government could directly lend.

This is one of the credit spigots the government/Fed used to keep overall debt growth positive.

[lektrode]

Re: Student Debt

They have always done this. Student loan securitization is big business and one of the few securitization markets that kept going after the 2008 crash because government could directly lend.

This is one of the credit spigots the government/Fed used to keep overall debt growth positive.

and in so doing, have kept the value of said 'education' declining directly proportional to the number$ involved?

the anecdotal evidence being that occupations that once required mostly one to show up, on time, ready to work and might've required a HS diploma, now demand a degree (that mostly signifies attendance and not much else)

[flintlock]

Re: Student Debt

Yep, I was just telling my wife that the loans are govt guaranteed and thats why the debt is so high. Its like free money to a 20 yo kid. With no system of risk to the lender to keep things in check, its like crack.

good point about parents following the formula that worked for them. I suppose that is something that hasn't changed that much over time. My 80 year old parents can't understand why my niece doesnt have a better job 2 years out of college. After all, she has a degree. Its a Drama degree but still...

[flintlock]

Re: Student Debt

Frankly, outside of more technical degrees like engineering, nursing, etc, I'm skeptical of the value added from 4 years of a business or liberal arts degree. My kids are pretty well educated in high school in terms of economics, business, writing, presenting reports, etc. Not so sure a mediocre college has much to add over a really good HS, at least for the cost. Most of us still learn our real skills on the job. I hear stories about college grads who can't write in complete sentences and it makes me wonder.

[lektrode]

Re: Student Debt

Frankly, outside of more technical degrees like engineering, nursing, etc, I'm skeptical of the value added from 4 years of a business or liberal arts degree. ...
....
Most of us still learn our real skills on the job. I hear stories about college grads who can't write in complete sentences and it makes me wonder.

exactly - its also why all the focus/bullhorn (never mind the billions n trillions) on 'education for educations sake' is just so much propaganda from and for the benefit of the .edu-industrial complex - coupled with lamestream media-fanned .gov policies that encourage MORE MORE MORE + mostly DEBT DEBT DEBT = 'trickle-down' big paydays for the lower manhattan mob

couple that with how NAFTA has gutted the industrial base + even more lamestream media-fanned propaganda 'glamorizing' how the 'information, nka: social media & service industries are transforming the US economy' and pretty soon (already?) most of us will end up employed in retail/F&B - aka 'doing each others laundry' at 10bux/hour jobs that will REQUIRE a 'degree' (even if ya CANT make change or write in complete sentences, u no?)

[don]

Keeping the E in FIRE

The idea that we need to allow in more workers with science, technology, engineering, and math (“STEM”) background is an article of faith among American business and political elite. (STEM: science, technology, engineering, math)

But in a new report, my Center for Immigration Studies colleague Karen Zeigler and I analyze the latest government data and find what other researchers have found: The country has well more than twice as many workers with STEM degrees as there are STEM jobs. Also consistent with other research, we find only modest levels of wage growth for such workers for more than a decade. Both employment and wage data indicate that such workers are not in short supply.

In an article entitled “The Science and Engineering Shortage Is a Myth” for the March issue of The Atlantic, demographer Michael Teitelbaum of Harvard Law School summarizes the literature on STEM. “No one has been able to find any evidence indicating current widespread labor market shortages or hiring difficulties in science and engineering occupations that require bachelor’s degrees or higher,” he points out. Teitelbaum is one of the nation’s leading experts on STEM employment, former vice president of the Sloan Foundation (a philanthropic institution essentially devoted to STEM education), and author of Falling Behind? Boom, Bust, and the Global Race for Scientific Talent, just published by Princeton University Press.

In looking at the latest government data available, my co-author and I found the following: In 2012, there were more than twice as many people with STEM degrees (immigrants and native-born) as there were STEM jobs — 5.3 million STEM jobs vs. 12.1 million people with STEM degrees. Only one-third of natives who have a STEM degree and have a job work in a STEM occupation. There are 1.5 million native-born Americans with engineering degrees not working as engineers, as well as half a million with technology degrees, 400,000 with math degrees, and 2.6 million with science degrees working outside their field. In addition, there are 1.2 million natives with STEM degrees who are not working.

Meanwhile, less than half of immigrants with STEM degrees work in STEM jobs. In particular, just 23 percent of all immigrants with engineering degrees work as engineers. Of the 700,000 immigrant STEM workers allowed into the country between 2007 and 2012, only one-third got a STEM job, about one-third got a non-STEM job, and about one-third are not working.

from the National Review:What STEM Shortage?

the fed, always there to help . . .


Firms often change the way they utilize workers and the mix of skills they employ during recessions and recoveries. The weakening demand during recessions forces firms to look for new ways to be more efficient to cope with hard times. These adjustments do not affect all workers equally. Indeed, it’s what we typically think of as middle-skilled workers—for example, construction workers, machine operators and administrative support personnel—that are hardest hit during recessions. Further, a feature of the Great Recession and indeed the prior two recessions, is that the middle-skill jobs that were lost don’t all come back during the recoveries that follow. Instead, job opportunities have tended to shift toward higher- and lower-skilled workers.

As we’ll show, these same trends have played out in our region. While there’s been a good number of both higher-skill and lower-skill jobs created in the region during the recovery, opportunities for middle-skilled workers have continued to shrink.

I believe it is important for us to highlight these job trends and to understand their implications for our region. There have been significant and long-lasting changes to the nature of work. As a result, many middle-skilled workers displaced during the recession are likely to find that their old jobs will never come back. Furthermore, workers are increasingly facing higher skill requirements in order to land a good job. These dynamics in the labor market present a host of challenges for the region to address. However one thing is clear: workers will need more education, training and skills to take full advantage of the types of job opportunities being created in our region, as well as across the nation. So, it’s important that we work together to find ways to help people in our region adapt to these changes.

William Dudley, President of the New York Fed: What Kind of Jobs Have Been Created During the Recovery?


The idea that a "middle-skilled" person can go back to school at age 40, take a few classes and become a java programmer, an engineer, or a chef, and land a meaningful job in that field is nothing but hope-filled hype. Perhaps 1 out of 100 make some use of their training. The rest just end up deeper in debt.

Fed-induced boom-bust cycles that benefit the already wealthy at the expense of everyone else, and debt-overhang, including student debt that exceeds $1 trillion, are the major problems today, not the alleged shortage of skills.

Mike "Mish" Shedlock