Guilt and Student Debt

[tryan]

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.

[progmtl]

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.

Heh, good point. I graduated from a very well-endowed college. I get the constant "begging-for-money" calls and mails and it irks me. I paid my tuition. I took out loans. I paid them back. I even earned a merit-based scholarship my freshman year and had the college reduce my aid grants by the same amount, such that it had no beneficial effect for me.

I have a friend who went to the same school and has similar views on money and wealth. He made a great comment one day, saying that our college asking for money from us is like having a rich uncle who invites you to lunch and asks you to pick up the tab. No thanks.

I also agree with the comments regarding tuition inflation. Easy government loans are a big part of the problem. Schools endlessly building, expanding, and upgrading the quality of life (fancy dorms, massive sports facilities, etc) are also part of the problem. In my opinion, aside from the elite schools, this trend is going to crash and burn within the next 20 years. Online learning - and hybrid online/in-person learning - is going to reduce costs and revolutionize college.

-progmtl.

[ERD50]

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

[imoldernu]

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Originally Posted by progmtl Heh, good point. I graduated from a very well-endowed college. I get the constant "begging-for-money" calls and mails and it irks me. I paid my tuition. I took out loans. I paid them back. I even earned a merit-based scholarship my freshman year and had the college reduce my aid grants by the same amount, such that it had no beneficial effect for me. I have a friend who went to the same school and has similar views on money and wealth. He made a great comment one day, saying that our college asking for money from us is like having a rich uncle who invites you to lunch and asks you to pick up the tab. No thanks. I also agree with the comments regarding tuition inflation. Easy government loans are a big part of the problem. Schools endlessly building, expanding, and upgrading the quality of life (fancy dorms, massive sports facilities, etc) are also part of the problem. In my opinion, aside from the elite schools, this trend is going to crash and burn within the next 20 years. Online learning - and hybrid online/in-person learning - is going to reduce costs and revolutionize college. -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.
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.
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.

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.

Quote:

In my opinion, aside from the elite schools, this trend is going to crash and burn within the next 20 years. Online learning - and hybrid online/in-person learning - is going to reduce costs and revolutionize college.

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.

[Hermit]

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Originally Posted by ERD50 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

Have you been on a campus in recent years? I did the college tours with my kids about 5 years ago. There is an amazing construction war that seems to be going on between all the colleges. Whoever builds the most new buildings apparently wins.

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. That pays for the new buildings and what kid wants to go to a college without air conditioning, etc.? Hence, all colleges must play this game. Government mandated paperwork has also added another layer of administrators.

[clifp]

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Originally Posted by ERD50 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]

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Originally Posted by ERD50 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

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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]

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

[engprodigy]

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Originally Posted by Urchina 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.

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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.

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I worked all through school and lived really lean.

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

This.

[engprodigy]

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Originally Posted by Hermit 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]

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Originally Posted by 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.

[scrabbler1]

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Originally Posted by 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.

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]

Quote:

Originally Posted by 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.

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]

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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]

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Originally Posted by imoldernu 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.

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Originally Posted by imoldernu 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.

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Originally Posted by imoldernu 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.

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Originally Posted by imoldernu 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.

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Originally Posted by imoldernu 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]

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Originally Posted by engprodigy 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]

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Originally Posted by Jager 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.