Yes, the Higher Education Bubble Will Pop this Decade and Here’s One Reason Why
At Human Events Michael Barone has a fantastic column on a subject that Glenn Reynolds and others have been talking about for awhile now, the coming collapse of higher education:
We are still suffering from the bursting of the housing bubble created by low interest rates, lowered mortgage standards, and subsidies to Fannie Mae and Freddie Mac. Those policies encouraged the granting of mortgages to people who should never have gotten them — and when they defaulted, the whole financial sector nearly collapsed.
Now some people see signs that another bubble is bursting. They call it the higher-education bubble.
For years, government has assumed it’s a good thing to go to college. College graduates tend to earn more money than non-college graduates.
Politicians of both parties have called for giving everybody a chance to go to college, just as they called for giving everybody a chance to buy a home.
So government has been subsidizing higher education with low-interest college loans, Pell grants, and cheap tuitions at state colleges and universities.
The predictable result is that higher education costs have risen much faster than inflation, much faster than personal incomes, much faster than the economy over the past 40 years.
I have a special interest in this subject and you can expect blog posts from me on it regularly at PJ Tatler. From December 2007 through the end of July 2009 I worked full-time first as a student loan debt collector and then as an assistant manager helping oversee a team of such “default prevention specialists.”
To begin to understand just how screwed up the situation is it’s important to realize how federally-insured student loans are so different than other kinds of debt. As a “collector” I barely actually collected any money. Instead my job primarily entailed tracking down borrowers so they could put their loan back into forbearance or deferment so they would not default. Borrowers for loans dispersed between the early ’90s and the passage of Obamacare have a wealth of perks for those who are unable or uninterested in making payments. Lose your job? No biggie, you’re eligible for 2-3 years worth of unemployment deferment. Have a job that’s not paying you much? Chances are you’ll be eligible to use some of your 3 years’ worth of economic hardship deferment. Have other bills that you’d rather pay instead of your student loan? No problem, Sallie Mae and many other lenders offer sometimes as much as FIVE YEARS worth of forbearance time. Well, what happens if you’ve burned through all the time and still want need time off from having to pay? Sallie Mae offered 3 years of Title IV administrative forbearance that had the same qualifications as the economic hardship deferment. Thus, as a collector I’d regularly come across borrowers who had gone YEARS without ever making a payment and the loan’s capitalized interest had just grown and grown and grown — much to the bank’s delight.
And what happens if someone actually does default on their student loan? First of all they have to be delinquent for around a year before that happens. At 270 days of delinquency the loan is eligible for default but it usually doesn’t actually happen until 330-370+ days of delinquency. (The banks are legally required to perform due diligence to try and prevent default. If adequate attempts have not been made to reach the borrower then it cannot be defaulted.) At default the guarantor (the federal government’s collection of your taxpayer dollars) reimburses the bank almost everything owed and the borrower’s loan is sold to a collection agency. At this point the debt will increase by another 20% or so in collection fees but the borrower will often have the opportunity to “rehabilitate” the loan to bring it back into good standing. Usually they do this by making a year or so of auto-debited or at least consecutive payments. Then the loan returns, though much larger. But what also comes back? ALL of their deferment and forbearance options are reset back to zero because it’s basically a new loan. Then the whole cat-and-mouse process of putting off paying the loan, trying to hide from collectors and skiptracers, and letting the interest capitalize more and more can just start again.
It should be pretty obvious why a system like this is unsustainable and doesn’t actually help anyone except the big banks and politicians in both parties.
UPDATE: I respond to one of the commenters below in a new Tatler post in which I explain why federally-insured student loans cannot be discharged in bankruptcy.
But it’s not loan sharking or a disreputable payday loan, you know. Those things are “bad.”
Pennsylvania drastically cut back funding to higher education this year. So what happened? Yes, Penn State — which is really not run by the state but still gets mucho tax dollars– raised it’s tuition.
BUT it was smallest hike in a decade and just a little more than half of what the average annual hike was.
The point of this is that state subsidies to universities do not result in lower consumer cost but rather wildly inflated faculty salaries and featherbed do-nothing jobs.
The problem is not faculty salaries which have generally gone down. Administrative costs and non academic activities like sports and recreation have soared. Building programs are out of control. Consumers have little choice.
Amen to that. Faculty and staff salaries where I work are not much. We haven’t had a decent raise since The Won came into office. Administrators, Green programs, diversity programs and buildings are booming. The actual teachers are left with a pittance.
I have been an administrator and faculty member at a large community college for 23 years. During that time, the number of administrators has skyrocketed, Obama administration driven sustainability and diversity programs have added additional layers of bureaucracy and buildings continue to be built increasing operating and maintenance costs. Democrats clearly want universal education to extend to the college level. Many of my students are in my classes only because someone else is paying for their tuition. They are not college level material and their presence is a great waste of expensive resources. By the way, another higher education inflation driver is the availability of tuition tax credits which colleges and universities are quick to soak up with higher tuition.
Higher ed is just a small, supporting bubble.
The biggest superbubble of all is the Misandry Bubble. Higher ed, lower ed, healthcare, housing, etc. all arose from the broader Misandry Bubble.
That article blew my roof off when I read it. You should too.
It’s definitely another bubble, but for various reasons I don’t see it bursting in the same way the housing market did. It will be like death by a thousand cuts.
I am very interested in the topic and would love to hear these reasons. Wanna say more?
That’s not quite accurate. The grants and loans are new, but the subsidy at state colleges has been effectively declining over the past 30 years since tuition has been rising so much more rapidly than inflation. A generation ago, it was possible to put one’s self through college by working summers, and graduate debt-free. This is no longer true. The “cheap tuitions at state colleges and universities” isn’t as cheap is at historically was.
As far as that goes, in NYC, it was possible until recently to get a free college education at CUNY. All this federal support for “affordable education” has ended that.
BTW, is that our friend “A Physicist” in the video?
LOL
snork, snork, snork. That was a REALLY dumb comment.
How could you possibly make such a mistake? The two could NOT be more dissimilar!
The guy in the video is actually interesting!
I am such a sucker. I paid back every dime I borrowed to got to school. It took me 15 years.
I was thinking the same thing. I paid them off early while living in an apartment and driving an old Honda.
Used my GI Bill to pay for an undergrad and postgrad degree and graduated debt free. Just one more reason I’m advising the grandkids to consider at least one tour of duty in some military branch (we can’t *all* be cavalrymen, nicht wahr?)
Generally an agreeable point, except for whole “cheap tuitions” thing. The education bubble will burst but cheap tuition will have very little to do with it. In fact, high tuition will have everything to do with it.
The whole bubble is that the federal government flushed the college consumer market with money, once the money supply goes up, so do prices. Tuition keeps rising because the schools don’t have to worry about sagging demand level due to the universal need for college education but also the Sallie Maes of the world.
The demand level is unlikely to drop off, but the federal money is something the government’s hand may eventually be forced on..
Interesting thought…
Would explain how the proliferation of “Illegal Aliens” being accepted into higher education at In-State Tuition Prices could be justified.
No need to worry about enrollment dropping off, open the loan office doors to anyone that wants to take on Federal Loans that prop up Gov’t. for years to come.
To use a quote from a respected man whose been around the business world, from blue to white collar; “Everything is a business model.” -George Ure.
But then, one could join the national guard, which at one time was going to pay off existing student loans as part of the incentive program. My son did that, except then he was told that the page containing that offer had been accidentally left out of the phone book size contract he signed, tough luck.
So, he’s in Afghanistan and those wonderful student loans are still waiting for him when he gets back. No marketable skills other than how to kill bad guys, no degree yet, no market for the degree if he finishes it.
The government, the media and a very large portion of unknowing, unthinking people have pushed kids into the educational meat grinder who should never have been there. And just to be damned sure they don’t resist going into debt to become indoctrinated, we’ll move out all of the blue collar jobs we can and import illegals to fill those we can’t move out,leaving them no other choice.
What a mess the government and the people who support it have made of this country.
Your son under no circumstances should still have these obligations. Would you or he accept no medical care upon his return because his recruiter claimed ‘it wasn’t in the packet.’ You should consider a letter campaing on his behalf – starting with his branch of service – and your congressman.
And thank him for his service. Good luck.
I recently read the M. Barone article – an excellent reference.
Not only is this a bubble set to pop, it’s now getting renewed newsworthy signifigance for a couple of other important reasons.
First because of the recent war on community colleges – with for profit institutions like The University of Phoenix – a primary target. So exactly who has been lobbying for the defunding of for profit 2 year or 4 year colleges? Most are hired lobbyists – who under the pretense of ‘protecting students’ – are in fact shilling for the 4 year colleges & universities. These established institutions are interested only in protecting their research and development dollars via federal procurement – along with ‘market dominance’ when it comes to federal funding available to prospective students.
In this regards this fight isn’t much different than the school choice/charter schools fight @ the K-12 level.
The rise of the on-line university (why Phoenix U is so successful) has been the game changer. It serves to challenge the runaway inflation that has characterized the monopoly 4 year college could exploit for decades – thus continuing to extort ever higher tuition from parents and eventually the struggling student loan holders you speak about.
Hense the final stage of desperate attempts for federal intervention. The competiton that has built up the past ten years has cut into a margin they have come to depend on – those student tuition dollars.
Yet their seems to be a real serious problem with the eventual return on the higher ed investment – and collections contracts like you speak of reflect that – and these problems are not just recent and exclusive to the for profit schools as the argument tries to claim.
Right now, as the Barone article pointed out, most of the focus is on the staggering costs of tuition.
But its’ more than just that. Nor is just about Phoenix U or Devry or some trucking school over-promising (including perhaps job placement) and under- delievering – but instead is a widespread INDUSTRY (Some for-profits but A LOT OF TRADITIONAL 4 YR COLLEGES AS WELL)problem. But it is largely out of pubilc view – dispersed through out thousands of collection agencies.
Something largely not notices unless you work there or are in default.
I also worked as a collector here in Phoenix – and spent a short stint on such a contract as you speak. Ironically it was in ’05 -’06 for a company that was owned by Canadians(which is another story all together – why is a foreign company given such a government contract to begin with – collecting on government owed debt owed by americans?).
Everything about the program was a joke – right down to the US Dept of Ed audit. Having lived with such audits by bottom-line driven corporations like American Express and others – this was like a snow day for retarded people – leaving most of us suprised they didn’t show up dressed like Bozo the clown.
Besides the Loan Rehabilitation you write of, what was most enlightening was the evolution of these programs, some of whom, like Perkins, date back to the halcyon days of LBJ’s Great Society. It is truly a surreal collections enviornment.
Very few parents have any idea of how quickly their kids can rack up 50k and face virtual endentured servitude via default. Because since congress in it’s infinite wisdom decided to exclude student loan debt from bankruptcy protection filing – essentially catagorizing it as the equivalent of tax deliquent or child/spousal support debt – the penalities and the ability for the government to ‘claw back’ far exceed the worst any private lender could dream of getting away with.
It’s right out of the Old Testiment.
I am not making this up. I as a collector would find myself making automated calls to some senior in rural Pa who was getting their social security check ‘offset’ monthly because they now owed tens of thousands for some debt run up in the 80′s! AT HAIRDRESSING SCHOOL! On a co-sign for a daughter or grand-daughter!
As a collector once encountering it I left in less than 90 days. Beside practially zero on the portfolio (this company had been at it for less than a year and was never above 8th out of the 12 companies they competed with on #’s) – never approaching 7% collections in any month – which translates into no commissions – it led to the worst kind of inhouse chaos/cannibalization I’ve ever encountered.
Since the managers were responsible for monthlies 7 performance they resorted to finding ever creative ways to steal what meager collections they managed from each other.
There is a reason why billions of dollars of these debts have been recurculating for decades – and yet still remain largely uncollected. Because these debts ARE UNCOLLECTABLE. Besides the instances of ex-convicts & assorted deadbeats who have no income nor property to lein – you quickly realize that it is just like so much government contracting – pushing paper make pretend work.
This is an issue that will only get worse until it either gets modified/fixed in some way or just blows up.
The second reason I mentioned at the onset as to why people will further scrutinize this issue: Obama used nationalizing the student loan programs as a means of ‘funding’ Obamacare – it being a primary account trick for him and Pelosi to claim that the health care reform would ‘cut the deficit.’
Now that Obamacare is being vetted via the courts – over whether it’s constitutional or what have you – so too will the this issue.
If there are congressional forces who are interested in tackling these problems I really believe reviewing the collections contracts and what can be learned is the place to start.
FANTASTIC comment. Thank you very much for your insights. I hope to hear more from you as I continue to explore this issue.
Phoenix, did you know that it has been discovered that Democrat donors have sent complaints to the department of education about the for profit colleges while at the same time shorting their stocks knowing “their people” in the dept. of ed. would go public with “their concerns.” Corrupt cronyism brought to you by the ones who care. Ya, right.
I have one word for real wannabe intellectuals:
Autodidact.
Actually, I happen to be an autodidact myself, and as many others in my condition, I have been asked “where did you get your doctorate from”? But there is nothing so extraordinary about this, a great many folks have much more knowledge and wisdom than ornate papers stating that they should be thusly endowed.
The funny thing is that when he was 15, my son declared that he would do as I did, and manage to educate himself on his own. I remarked that he would be living in a different age, and that what worked for me would not necessarily work for him. No, his mind was made up, he was going to take the jump, and climb his own ladder, at his own rhythm. I never spent a dime of tuition on him, and he is now doing well in the UAV business, one of the very few industries that is growing these days.
Bubbles or not, we may experience years of common hardship, where hard work and resourcefulness are going to be recognized as fundamental virtues again, and it won’t be because the schools were teaching it!
I graduated from a very good state college in 1979 and paid approximately $2,200 per year which included out-of-state tuition, dorm and a 7 day meal ticket. Books added an additional $400 per year for a total of around $2,600. I recently went on my alma mater’s web site and I was absolutely flabergasted to see that it is now $32,000 per year for the same education. UNREAL! I could never afford to go to college today and wouldn’t dare take on the debt load or expect my parents to pay for it. Wow, I think something is rotten in those ivy covered halls and I think if we look behind the ivy we would find a lot of PhD’s snoozing while others are doing most of the work.
All the grad student serfs are one scandal, but the other scandal is the admin to faculty ratio. 30 years ago there was about 4:1 faculty to admin staff. It’s reaching parity in a lot of places, and these aren’t cheap secretaries, these are highly paid deans of diversity and such nonsense. That’s one of the biggest money pits; high priced help that wasn’t ‘necessary’ 30 years ago, and still isn’t necessary.
Many graduate students are in the “willing to be exploited” part of the problem. I have been recently. My department curried graduate students, not to teach classes, but to pad enrollment in the classes the feather-bedding professors wanted to teach. My state school had granted about 45 PhDs from this department in the last 10 years. About 10% of the graduates were from that state. Most were from Eastern Europe, Asia or an Arab speaking country. The classes taught by grad students could be taught for less by instructors. Many of those professors had helped just 1 student by advising the student on a dissertation. A few professors had 2 or 3 to their credit, and a very small number of professors were doing most of the work. Giving a professor tenure does funny things to their work output.
My old college, ’76-’80, is now 30 grand a year, 12 times what it cost me. An apt. in the same city is 4 times as much.
I recently went to a community college and the cost was about the same as my old college. The teachers were fantastic long termers and the classes were small with lots of hands on type learning with the teachers there for any questions and they really knew their stuff.
The reality is that it’s cheaper and smarter to do your first two years at a CC and then move on to a university; the big schools don’t like that.
I’ve been watching this slowly develop from the inside and most of the comments are accurate. Building projects, new adminstrative levels with highly paid staff, non-academic student services/student life, counseling, TRIO, remedial courses, etc. And it is true that faculty salaries have remained relatively stable despite tuition increases.
I also couldn’t agree more with the recommendation to attend a good Community College first. . . and to do well there as a “ticket” to a good 4 year school to finish up. In fact because of all the “production” of PhDs these days, the competition to teach at any level has gone up dramatically. I was on a search committee for one entry level history position and we had 120 applicants, 80 of whom were qualified PhD candidates. The pay isn’t going up even though class sizes are increasing, but the quality of instruction is most certainly increasing as an artifact of this competition, a silver lining on a cloudy forecast.
Most of my peers are now concerned not with University of Phoenix, but with “canned” instruction from Harvard, I-Tunes University, etc.
IMO, it’s even smarter not to go college at all, at least not until this bubble has burst (and the much-needed housecleaning has been completed).
All of this sounds an awful lot like indentured servitude/peonage.
I wonder if the bankruptcy laws will end up being challenged on the basis of the Thirteenth Amendment.
sorry to pop yet another bubble, but I’ll lay dollars to stale donut holes the “education” you’d get today at that institution would come nowhere near the one you actually got back then. So, not only has the price risen ten-fold or so, the quality of “goods” has declined to roughly half of what you got for that tenth.
My 13 year old is now spending time online, beside his fascination with animation, on the MITOPENCOURSEWARE site.
A quote from Robert Heinlein -
A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.
I would add to that “It,s better to know how to do something, than to have a piece of paper that says you know how to do something”
These are a lot of very encouraging, thoughtful responses on the issue.
David:
As always there are many unbirthed soulutions here to the myriad of problems faced by the current and future generations. Antedotes are not solutions, Where are the problem solvers?
Herman Cain claims to be one. Do you suppose he actually might be? He might believe that government sould not pay 17 to 25 year olds to go surfing and drink beer all day. That could be the start of something real.
There are two types of students. Those who want to educate themselves and those who who see it as an easy way to buy another swath of the life of leisure. I don’t like having to pay for the latter but I deem it an honor to assist the former.
You just lowered my opinion of Robert Heinlein. Our evolutionary niche is to be generalists who specialize. We do so well specifically because we specialize and trade.
Is it a Higher Education Bubble or a Student Loan Bubble.
The cause (worthless over priced college degrees) seems far removed from the effect (the mrry-go-round of lingering debt)
It’s both. Hucksters, private and government, are selling kids who don’t belong in college, into serfdom. The loans are feeding the bubble, both directly by flooding the industry with cash, and indirectly by flooding the industry with unsuitable customers.
My daughter and son-in-law went to a school where they were given easy to get student loans to cover tuition and all their living expenses. They couldn’t get jobs in their field of study, even though “every graduate in the classes before them was working at high paying jobs in their field”. Now they work at Papa Johns and Wal-Mart and have loan payments for $800 – $1,000 a month each! They were better off financially before they went to college!
I don’t see how that’s possible. First, I can guarantee you that they’re eligible for economic hardship deferments. If your monthly payment is more than 20% of your gross monthly income then you qualify.
Second, what could their fields of study possibly be in if they each have monthly payments like that? I collected on people with loans that put them all the way through medical school and they didn’t have monthly payments that high.
Good to see many here catching on to this educational debt treadmill.Now if we can clear out the dead wood from IT departments so REAL techs can get those jobs then MAYBE networks will be a little more secure.Or least will know what to do when the sheet hits the fan.
And i agree specialization is for insects.
About 99% of this problem goes away if we can change one rather venal aspect of the current equation:
In an act of unbelievable cruelty and viciousness, student loan debt was made to be undischargeable in bankruptcy. Thus, these supposed uncollectable accounts continue to build up interest for decades until some asset or income stream is discovered that is reachable through the debtor’s name.
What other debt do we protect so zealously? Other than tax debts, the answer is, none. So, who paid off who in order to go against constitutionally-established bankruptcy concepts to call out this one form of debt as an exception to the idea that everyone deserves a chance to start over?
And, to make matters worse, think about who it is – what group in general – that is getting massacred by this “your debt is forever” outrage? It’s mostly very young people with little available cash who are looking to improve themselves and their lot in life by going to college.
And who benefits from this new slavery? It’s those very colleges, all of whom seemed to double and triple in price in a relatively short period of time.
There’s a new slave trade, and it’s run by academia. Kill it.
Bobby B, the reason student loans are not dischargeable through bankruptcy is that a student loan is the biggest unsecured debt anybody is likely to have. The average graduate of a public law school owes $66,000 in student loans; for private law schools, it’s $88,000. Some borrow as much as $150,000. Imagine the result if student debtors could rob their creditors of such large sums. What creditor would lend money on such risky terms and how long would they themselves remain solvent if they did?
That’s the argument I led with in my new Tatler post responding to this comment: http://pajamasmedia.com/tatler/2011/07/22/as-long-as-taxpayers-remain-conned-into-guaranteeing-student-loans-they-cannot-be-discharged-in-bankruptcy/
You say that as if that would be a bad thing if lenders stopped handing these loans out like candy. In reality, that would be the best thing that could happen to this broken system.
Jack Olsen, I do believe you are wrong, on a historical basis. The reasons you gave may have been the marketing buzz excuse for pushing through a truly RADICAL and now shown as clearly toxic modification of well-established lending and bankruptcy laws, but that’s ALL it was buzz.
The real reasons for it, which I am sure an earnest historical survey of the college loan industry since the late 1960′s would make obvious, are creating new drivers of tappable wealth for lenders. New and rich markets.
Student loans, easy credit card lines, and easy mortgages all of the same era, practices, ethos and social and business circles of those who developed the business. And boy did they ever give the young generations the business.
The colleges? The academics, the educational professionals? They benefited like a weak player in a poker game will benefit for a while, if not the whole night, from being exploited by a strong player as a lever to pull wealth from the other players.
Uh huh, and what lender would issue a mortgage to a person who had no income and no prospect of ever having an income? Answer: depends upon who’s threatening whom and who has promised to make good on any defaults.
Now that student loans are government issued (rather than merely guaranteed), look for taxpayers to pick up the tab for lots of students’ college costs. No incentive whatsoever to loan to those who might repay the loan, no incentive to collect on the loan. No need to make that evil “profit.”
I can’t find the article now, but a recent Washington Examiner article noted that 20% (iirc?) of the Fairfax County (VA) Public School graduates end up at the Northern Virginia Community College (NOVA) FCPS is one of the largest school systems in the country. NOVA has guaranteed-admission agreements with many DC-area and Virginia colleges and universities; minimum GPAs vary.
http://www.nvcc.edu/about-nova/directories–offices/administrative-offices/academic/guaranteed-adm/index.html has a list of the colleges. My kids also have been taking as many AP courses as they can handle in high school, and the oldest is a Marine Reservist (who now has limited GI Bill benefits after his tour in Iraq).
There are ways to avoid huge loan debts as long as students are willing to forego the traditional “get into the best school no matter what the cost” route. In our circles, kids are asking “what’s the best school that’s willing to pay for most or all of my education?”
Here’s something for everyone to research. Who decided it was a legitimate dodge to get a college deferment during the 60′s?
A big cause of rising tuition is foreign demand bidding up the cost of tuition.
Go visit a world-class university on either coast of America, and look at who the student body is. Many are foreigners here on visa, whose tuition is lavishly subsidized by their own country’s government.
Saudi Arabia, for example, sends 15,000 of their young people to America for their higher education.
Here in MA where I live, with universities like Harvard and M.I.T., some 24,000 of their students are from foreign countries. At Babson College, fully one-fourth of the student body are from foreign countries.
They come here and learn the best that American higher education has to offer. Then they go home, and use that information to better their own society in their own country. While their tuition, fully paid by their own country’s governments, helps bid up the price of American tuition for our own kids.
So our universities are helping to educate the future competitors of the U.S.
“They come here and learn the best that American higher education has to offer.”
I wonder about that. I think the reasons they come here are different than that today. English skills, and familiarization with American culture. Even with a ruined Higher Education system, America is still the biggest dog in the pack by far.
Also I do not underestimate the value of Hollywood and the Pop Culture which make the freedom and pizazz of America incredibly enticing to those in other countries.
Of course. Did you expect otherwise? Education must be our biggest export industry, and if not the biggest, then surely in the top five. Somebody has to pay for all those imports.
Guilty! My father died when I was in college and I had a hard time qualifying for financial aid (did you know they still look at your tax returns after you’re dead?) Since my father made too much money when he was alive, I didn’t qualify for financial aid at our state university. But I was able to transfer back to an expensive private schoold that worked out an aid package for me based on some grants and student loans. I remember arguing with my advisor before I graduated. He seemed to be of the opinion that once I departed with my BA empoyers would be falling all over themselves to offer me high paying jobs. I told him nobody in my town had ever heard of this school. Unfortunately, I was right. My first job (after graduating in 1990) only paid 14K, so I couldn’t repay the full amount. I lost my job after a bank merger the next year and was unable to find another job that paid even that much. Then I was unemployed for several years. I kept postponing the payments and as this article states, the interest continues to pile up until it totalled almost $50K. Now I’m in my 40′s, still underemployed and only now finally paying what the loan people consider an acceptable amount monthly. The good news is, that if I keep paying at my current rate and postpone retirement until I’m 70, I’ll be able to pay off the loan before they start deducting it from my social security checks.
If they ever invent a time machine, I’ll go back and tell my 17 year old self to skip college and get a job. I did receive an excellent eduacation, but apparently not the kind needed to pursue a lucrative career. And I just don’t think reading Moby Dick was worth 50 grand of debt.
Feeling a little grim about the mouth eh?
I love me some Melville. Was required reading when I was in HS, now replaced by the witless scribbling of Alice Walker.
Well, from my angle a lot of what I’m seeing in this bubble coming at is is created by policies that have been in place for decades. The biggest one is the fact that nearly every employer for officer work or bottom to mid level management positions require a four year degree. Take something like logistics for example? Four year degree plus X amount of years experience required. Mind you these positions that you need to get these degrees pay anywhere from the teens to twenties per hour for low level positions of management. Mind you I did very similar work in the Military for years, managing troops, logistics and other things. That does not matter anymore.
The days of you get in by your previous work experience are over. Employers are requiring a four year degree from everyone. And the jobs that require the degree do not pay anywhere to what the degree itself costs. Gosh, that sounds sorta like the housing bubble where your loan was worth more than the property! Yet to even stay somewhat competitive everyone -has- to have that degree. Work and real world experience be damned. Yes, previous generations would have a college graduate see substantial income improvements over their peers with out one, and these were for very advanced job positions. Today, a 15 dollar an hour job requires a degree. This is one of the biggest problems.
Recapping all comments: True, USA education is a far cry of what it was years ago. Need proof? A study published and discussed in an hour program on CNBC in JUNE 2011, about world education, education levels, etc. revealed that US education ranked 26th out of some 50-odd countries in the study group. Of this finding, top ten, eight were found to be Asian countries or education institutions of these Asian countries.
Nowhere are officials in our US Dept of Education addressing this finding, or speaking about it. Of importance, to these officials, is continuing support of NEA, SEIU, Right-to-Work, etc. Just recently, we had A Statewide cheating scandal where many teachers were caught altering test scores to improve both class standings and overall school performance.
So, government is in the business of guaranteeing a party loyal candidate for President or Congress, shilling for their interests (read:greed), guaranteeing these labor representintg organizatiions and social service political organizations (operating extra electorally, by the way) the ability to electorally swaying an elections outcome.
Vote in 2012. Massive voter fraud is on it’s way. God Bless America.
The “bubble” I’m wanting to see explode is the U.S. communist media “bubble”. That will be a treat to witness. And if I can help pop it in any way, I will.
The “education bubble” was built by radicals that want to see this culture suffer and die. They have been working on this for 50 years.
The “housing bubble” was built by an incompetent Congress and their cronies. They have been working on this for at least 30 years.
American “bubbles” are being created for the control of the populace by the government. Our Congress, Democrats especially, are enriching themselves at the expense of our businesses.
And when the business community is sufficiently sucked dry, where does the money come from for the government to function on, and continue it’s oppression?
The “bubble heads” in power now, don’t care. They’re getting theirs.
This past week I spent $30 on a book, downloaded some open-source packages (google “CUDA”), and began learning how to program massively-parallel processors.
$30, plus a laptop and a bit of time and concentration; that’s all it takes to master the basics, these days. Universities long ago became trade schools. They’re about to take the hit involved.
Autodidacticism is the college of the future. I believe that I read that somewhere.
I agree. When there are enough defaulted debtors on student loans who will never be able to pay them off, and have that disincentive to become economically productive, Congress will make the debts dischargeable in bankruptcy.
“defaulted debtors on student loans who will never be able to pay them off, and have that disincentive to become economically productive, Congress will make the debts dischargeable in bankruptcy.”
I don’t foresee that day ever coming. The numbers of people who fall into that category is fairly small. These aren’t onerous loans. Just how high do you think the monthly payment is going to be for the average person who graduates from 4 years at a state school and has maybe 30-40K in student loan debt?
One way to have the loans discharged is to go on social security disability. It isn’t that difficult to do. I’ve seen people living off of student loans in subsidized housing for years, getting food stamps and racking up hundreds of thousands of dollars in debt. The final scam is for them to fake a psychological disorder and be awarded social security disability which absolves them of their student loan debt, and at the same time gives them free money to live on for the rest of their lives, all at taxpayer expense.
Just getting social security disability isn’t enough. You have to get a doctor to sign off saying that you are so disabled that you’ll never be able to work again.
It can’t happen fast enough!
I need this bubble to burst before my 15yr old starts applying to colleges. FASTER, PLEASE!
This isn’t necessarily something to worry about for the last wave of Gen Yers who are still in high school and college.
What does your 15 year old want to do with his life? He might not need to go to college or could use any number of the different alternative routes to a college education. (And if he’s going to school in hard sciences or something technical then he should certainly be fine. Just try and avoid paying big tuition for liberal arts degrees.
OK wow this makes a lot of sense dude. WOw.
http://www.net-privacy.us.tc
Messup;
A study published and discussed in an hour program on CNBC in JUNE 2011, about world education, education levels, etc. revealed that US education ranked 26th out of some 50-odd countries in the study group.
It’s a bit more nuanced than that. American education is not a failure since it is working very well for some groups. White and Asian students are near the top in international tests. Black and hispanic students are near the bottom. Both hispanics and blacks drop out of high school in large numbers.
http://www.vdare.com/sailer/101219_pisa.htm
We have to ditch political correctness and stress the importance of education to these groups. With the population of hispanic kids exploding, nothing else is going to work.