Guilt and Student Debt

[clifp]

I really wonder what is the reason for college education outpacing inflation by so much (I understand what some are saying, that loans drive up demand). But there must be more to it?

I'm told K-12 has gone up because all the special programs have increased so much. I can kind of see that, but it does not seem so apparent for colleges.

-ERD50

My understanding is the two main drivers are facilities, and dramatic increase of non teaching staff. (e.g. diversity program managers, student enrichment facilitators, community outreach coordinators, special assistant to Dean for non traditional curriculum development etc.)

 

[Chuckanut]

The head man of our local public university makes over 750,000 a year, only 12th on the list of highest paid public university presidents. But, less than the football coach.

 

[jon-nyc]

I really wonder what is the reason for college education outpacing inflation by so much (I understand what some are saying, that loans drive up demand). But there must be more to it?

Baumol's cost disease fits the data better than the usual explanations.

 

[MichaelB]

The Baumol effect, from Wikipedia Baumol's cost disease - Wikipedia, the free encyclopedia

Baumol's cost disease (also known as the Baumol Effect) is a phenomenon described by William J. Baumol and William G. Bowen in the 1960s.[1] It involves a rise of salaries in jobs that have experienced no increase of labor productivity in response to rising salaries in other jobs which did experience such labor productivity growth.

 

[engprodigy]

and enable the school to be sued if the student does not find a job in their chosen degree.

 

[engprodigy]

People choose to rack up college debt. It's not necessary to go into debt to attend college, and a degree from Harvard is not a birthright.

The point is: we hear a lot about the cost of "college," but for many people a substantial amount of that cost is living expenses, and these are highly flexible, especially for young people with no kids.

I worked all through school and lived really lean.

These articles often also ignore the truly amazing education that can be had for nearly nothing at community colleges.

This.

 

[engprodigy]

I think this is all an unintended consequence of the whole aid program. The government keeps raising the amount kids can borrow and the colleges keep raising the tuition to match.

Part of the new motto that every child deserves a college education... gubmint is seeing to it, it is only fair.

 

[Fermion]

I get tired of everyone blaming the student loan problem on the banks and holding the school at zero responsibility. Perhaps if the school sat down with students before taking their $$$ in tuition and explained to them that the job market for a masters in ancient Egyptian pottery translation isn't what it used to be then the student would realize they could not afford to take out a bank loan to pay the school $30,000 a year to study this.

 

[scrabbler1]

I get tired of everyone blaming the student loan problem on the banks and holding the school at zero responsibility. Perhaps if the school sat down with students before taking their $$$ in tuition and explained to them that the job market for a masters in ancient Egyptian pottery translation isn't what it used to be then the student would realize they could not afford to take out a bank loan to pay the school $30,000 a year to study this.

Reminds me of an old Jackie Mason joke I heard back in the 1980s when I was in college. It was about job prospects for certain majors.

"The philosophy majors can't get jobs.......but at least they know why!"

BTW I majored in business (Economics).

 

[engprodigy]

I get tired of everyone blaming the student loan problem on the banks and holding the school at zero responsibility. Perhaps if the school sat down with students before taking their $$$ in tuition and explained to them that the job market for a masters in ancient Egyptian pottery translation isn't what it used to be then the student would realize they could not afford to take out a bank loan to pay the school $30,000 a year to study this.

How would blaming the schools be any different than blaming the banks?


Banks could sit down with the students who are signing the loans and figure out if the earning potential to debt ratio makes any sense?

Whatever happened to individual responsibility and accountability though?

The banks aren’t signing people up for loans; the schools aren’t forcing people to sign up for classes. People are making choices and should be held accountable for those choices.


It is unfortunate for the 18 year old kids that had bad or no guidance from parents, but teaching them a few years later that the system was “rigged” and you aren’t responsible sends the exact opposite message that I think should be sent regarding adulthood and responsibility.


Personal accountability isn’t the entire answer, but it would go a long way in fixing the problem.

 

[growing_older]

and a degree from Harvard is not a birthright.

Complaining about the costs at Harvard, or Elizabeth Warren's salary for part-time teaching there are more or less irrelevant to this topic. The very top elite schools, including Harvard, do not rely on student loans for their budget and have endowments that can offer grants and scholarships to any student who wants to attend. They may suffer from tuition sticker shock and be very expensive to attend for people who can afford it, but the "average" student who would require assistance to attend will find it's less out of pocket cost (including zero loans) to go to these elite schools than anywhere else, because the schools offer comprehensive aid.

The vast majority of schools are not in this same financial shape and students there who get "aid" in the form of loans are not in the same situation as those at elite schools. In the 4 years my son attended a state university, the tuition nearly doubled. I have no idea why the costs rose so much, as the quality of teaching didn't improve, problems with getting access to required classes increased and desirable classes were more often full. (Aside: how can a lecture class become full? The campus is full of huge buildings with huge auditoriums. Moving a class to a larger room seems like a trivial problem and a lecturer can speak to a crowd of 200 as easily as to a crowd of 100.)

Textbooks are an absurd expense. Some classes required $150 for a single book, then used it very sparingly. The attitude seems to be that costs to the student don't matter since they will just get more loans, and that apparently seems like play money.

I do wonder about technology making inroads in education. Most of the classes could have easily been delivered by video - for free like coursera - and most of the professors involvement otherwise was creating and grading tests, which they were actually not very good at.

 

[progmtl]

Hey! GREAT first post. Had to check to see if I had written it, and then forgotten about it. Am almost afraid to find out if we went to the same college. It was very small (800 students) when I attended, in the 50's but it has an endowment of nearly a Billion today.

Thanks! Different school. Mine had about 4,000 undergrads in the 90s when I attended. You attended in the 50s (!). I guess your username is correct . By the way, I have read a bunch of your posts and only recently figured out what your username means.

And paying one's way through... Yeah.. You BET... 20 hrs a week, washing dishes, monitoring, and teaching... Also, a full tuition scholarship that the colleges cashed in on with a little payback of advertising from my athletic national recognition.

Sadly, it's not even possible for someone to "pay as they go" with part time jobs today due to rampant tuition inflation. I think even state school tuition is out of reach of that approach. Maybe it's possible at a community college.

Also... ditto on the expansion... Just incredible... The swimming pool was replaced with the newest state of the art olympic quality... electronic signing/tiiming/scoreboard $500K alone... But that wasn't the most expensive part of the deal... The old pool, built in 1929 was center campus. The decision was made to convert this relatively small building into a recital hall... Architects fees $3 million... eventual cost another $15 million. Seats about 150. That's just one of many, many new arenas and fieldhouses... skating rinks, science buildings etc... for a school with less than 2000 students. These costs for building alone. The ongoing maintenance cost can only be guessed at.

Incredible, and for such a small school. This endless building war, as someone else mentioned, really amounts to some reckless spending. Coupled with ever-increasing non-teaching administrators (as someone also pointed out), easy government loan money, and the devaluation of the bachelor's degree ("everyone needs/deserves to go to college") has really created a perfect storm of increased tuition.

That said, the school provides many millions in scholarships, and has the best post college ROI in terms of the human product. Overall, it's well managed and looks to be stable for many decades to come. Exceptional when compared to similar schools.

This is why I think the elite schools will not easily abandon their current path. That, and they can afford to give full rides to very bright kids who can't afford to attend.

I have a similar "rant" somewhere on this forum. Took some friendly flack on the tech based learning. Not a popular belief for most here, I think, but with 30% of the trillion dollars in student loans in arrears or uncollectible, there's no way to support the campus infrastructure and still stay in the race for education parity.

I just don't see how it could go any other way. The quality of such instruction, some of which is currently available for free from the Khan Academy and MIT, is only going to improve. A motivated student can do a lot of self-learning and only need a physical presence for occasional help, or for proctored exam-taking, etc. Someone will find a way to offer a respected degree using a lot of online material. And it will/should be CHEAP.

 

[Fermion]

How would blaming the schools be any different than blaming the banks?

It wouldn't, but I don't see any articles lamenting the student loan problem and putting the blame on the schools. They always say it is the evil banking empire, out for a profit at the expense of poor little Edgar. How dare the bank want a return on their investment! In the OP article, the proposed solutions were to allow for more non-recourse defaults and/or mandate extremely low interest rates from banks. Not one mention of holding schools, or *gasp!* the individuals themselves accountable.

 

[Independent]

The student debt situation in the U.S. is both travesty and tragedy.

One of the primary drivers of rapidly escalating college costs is the easy availability of funding. Pretty much anyone who can fog a mirror can get a student loan.

And then on the other hand you have the broad math and financial illiteracy in this country. Kids (and their parents) just keep singing those forms every semester, piling up the loans, without so much as a passing thought as to how they'll ever repay them. The notion of higher education as the inevitable path to success has been a social mythology forever. The number of students who ever do an ROI analysis of their expected degree field is infinitesimal.

I don't think there will ever be any quick solutions. But you could start to solve it by mandating extremely low rates of interest, capping student loan debt loads (perhaps by degree), and enabling discharge in bankruptcy - measures which would reduce the attractiveness of this naive group of borrowers to rapacious lenders.

Ultimately, the answer is financial literacy. You make that a core curriculum subject, starting in elementary school.

+1

I'll add that doing an ROI analysis (or any simpler financial analysis) requires information. What's the chance that this specific degree from this specific college will increase my earning power? by how much?

If I don't know that, I can't make a decent financial decision.

So I'd require that colleges that accept federal loans track every grad and provide prospective students data on employment and income by degree.


Self serving (and sometimes just ignorant) adults have sold HS students on the notion that a four year degree is both a necessary and sufficient condition for a "decent" job in the US. They will continue to borrow as much as they can, and colleges will continue to spend every dollar of that borrowed money, until somebody gives them some different information.

 

[explanade]

I remember the college bookstore had all these credit card applications.

That's how a lot of students ate out, went on spring breaks, etc.

 

[ERhoosier]

Love the calls I get from the alumni association to donate to the university ... now that I know the salaries of some of the tenured professors, that's not happening.

My niece graduated from a private high school with a BILLION dollar endowment. Seems to me that thing should be throwing off enough cash to run the school for FREE for EVER. But instead tuition is +30k/year.

^^^^^

Tenured profs too often make big $$ (pay & very generous benefits) while non-tenured & PT faculty are often underpaid. Generally a system of haves-vs-have nots. With current unjustifiably high costs of US higher education & increasingly onerous student debt load, shouldn't these tenured prof's be taking pay CUTS like they would if w#rking for a "real world" megacorp under similar market pressures?

 

[Chuckanut]

. Perhaps if the school sat down with students before taking their $$$ in tuition and explained to them that the job market for a masters in ancient Egyptian pottery translation isn't what it used to be then the student would realize they could not afford to take out a bank loan to pay the school $30,000 a year to study this.

I think a college degree is about more than just getting a job.

That said, colleges should probably advise student that borrowing more than about their first year's expected earnings from the degree is not a good idea. Why don't they do it? Follow the money.

 

[Fermion]

I think a college degree is about more than just getting a job.

Sure. It is about football, socializing, weekend parties. All of which the student does on the bank's dime, then uses the social media skills gained in college to try and sway the public into blaming the student loans and the banks for their financial problems.

 

[Chuckanut]

Sure. It is about football, socializing, weekend parties. All of which the student does on the bank's dime, then uses the social media skills gained in college to try and sway the public into blaming the student loans and the banks for their financial problems.

My experience of college life and current college students does not support that much cynicism.

 

[engprodigy]

Sure. It is about football, socializing, weekend parties. All of which the student does on the bank's dime, then uses the social media skills gained in college to try and sway the public into blaming the student loans and the banks for their financial problems.

Only being 6 years out of college, from what I recall, that isn't an unfair assessment for a large portion of the college population.



Our society is providing more and more positive feedback that personal accountability is unimportant, and instead that there is someone or something else responsible when things aren’t rosy.

 

[Chuckanut]

Only being 6 years out of college, from what I recall, that isn't an unfair assessment for a large portion of the college population.

Our society is providing more and more positive feedback that personal accountability is unimportant, and instead that there is someone or something else responsible when things aren’t rosy.

Most of the college age people I know attend community college and work hard. Many of them are ex GI's, often the most dedicated students. Tarring a whole group with one brush is just not fair.

That said, I must agree that personal responsibility is lacking in to many people who would rather blame others.

 

[Live Free]

In the 4 years my son attended a state university, the tuition nearly doubled. I have no idea why the costs rose so much, as the quality of teaching didn't improve, problems with getting access to required classes increased and desirable classes were more often full. (Aside: how can a lecture class become full? The campus is full of huge buildings with huge auditoriums. Moving a class to a larger room seems like a trivial problem and a lecturer can speak to a crowd of 200 as easily as to a crowd of 100.)

Textbooks are an absurd expense. Some classes required $150 for a single book, then used it very sparingly. The attitude seems to be that costs to the student don't matter since they will just get more loans, and that apparently seems like play money.

I do wonder about technology making inroads in education. Most of the classes could have easily been delivered by video - for free like coursera - and most of the professors involvement otherwise was creating and grading tests, which they were actually not very good at.

Agree with this completely. Tuition just keeps going up and up. With regard to classes being delivered by video - it sure isn't free. My neighbor has two kids off at VA Tech. Both take multiple classes online due to not enough space in regular classrooms. My neighbor is complaining that she is forking over $24K/kid/year and instead of being in a class with a PhD professor working with them, they have online classes. Why is she wasting so much money on tuition and room/board if they can just take online courses?

The whole textbook thing is a racket. My son is in college and while you can now rent textbooks or buy used for less money, there are professors that require course "keys" - these are codes that are required so students can take quizzes and tests online - that are bundled with the new textbook or sold for big $s separately. This essentially eliminates most of the savings one might have in buying a used textbook versus a new one. You have to have a code.

 

[Chuckanut]

The whole textbook thing is a racket. My son is in college and while you can now rent textbooks or buy used for less money, there are professors that require course "keys" - these are codes that are required so students can take quizzes and tests online - that are bundled with the new textbook or sold for big $s separately. This essentially eliminates most of the savings one might have in buying a used textbook versus a new one. You have to have a code.

+1

Who do these guys think they are? The monopolistic cable companies?!?!?

Many years ago I had a business teacher who wrote his own text book. Every few years he would make just enough changes to the book - mostly questions, charts and things that changed paging - so that students had to buy a new copy of his mediocre book. And his previous students had no market to sell his now totally worthless old text book. It is pathetic that school administrations and supposed ethics policies allow this to continue.

There is more and more push back forming on the high cost of college. Look for a shake up especially when the on-line, web generation gets fed-up.

 

[Hermit]

There is more and more push back forming on the high cost of college. Look for a shake up especially when the on-line, web generation gets fed-up.

In the meantime my kids are going to get an opportunity to achieve their dreams and I'm going to pay for it because if I don't, they will likely either be stuck in a low paying menial job or be saddled with big loans. So why do I choose to do this? Because I'm their dad. (I guess that makes me a big part of the problem!) By the way, my parents didn't pay for my college. My "Uncle Sam" did.

 

[Independent]

I remember the college bookstore had all these credit card applications.

That's how a lot of students ate out, went on spring breaks, etc.

We have a stuffed animal that once had a credit card.

My daughter filled out an application when she was a senior just to see if the CC company did any checking at all.