“If you want to get laid, go to college. If you want an education, go to the library.” ― Frank Zappa
I think Frank was onto something. There is much debate going on today about whether a college degree is worth the cost. The editorial below has much truth in it. The more government has gotten involved in higher education, the more fucked up it gets. The government provides grants and low interest loans to anyone that can scratch an X on a loan document. When the crisis hit in 2008, the Federal government took complete control of the student loan program. Look what happened next.
Does that graph remind you of another graph? How about mortgage debt and home prices. It will end the same way, with you the taxpayer footing the bill for a massive write-off totaling in the hundreds of billions. Whenever the government says they are solving a problem, they are surely making it worse. Is it a good thing that anyone can get a low interest student loan? Obama and his minions wouldn’t be dishing out these loans so unemployed people will not be counted as unemployed, would he?
Student loan debt is now in the vicinity of $1 trillion. It cannot be extinguished in bankruptcy (thanks to the Boomers who hid in college during Vietnam and defaulted on their loans en masse). As the article points out, 30% of the borrowers drop out without graduating. These people will be and are defaulting in large numbers. Those who graduate have an average debt of $25,000, with many exiting college with more than $100,000 of debt. This anchor around their necks will keep them from buying houses, starting families, and buying cars. With the Boomers unable to retire, the job market is upside down. There are fewer and fewer jobs for these graduates in their fields.
When I went to college in the 1980s it cost about $8,000 per year to go to Drexel University. It was a good college, but nowhere near one of the top schools. With my accounting degree I was able to get a $20,000 per year job with an accounting firm. Today it costs $41,800 plus another $8,000 for room and board. I commuted so my room and board was $0. It costs $50,000 per year and starting accounting jobs pay $40,000 to $50,000 per year. So the cost to attend Drexel has gone up sixfold since the 1980s, but starting salaries have only doubled. The payoff is even worse for liberal arts graduates.
The government interference, manipulation and control of the student funding market has caused the prices to skyrocket. Anyone who has taken Econ 101 should understand. The proliferation of easy low interest debt to anyone who thinks they are college material has artificially boosted demand. The supply of colleges is static. Therefore, the government created high demand, based on cheap debt, leads to much higher tuition costs. If the government was out of the equation, the number of people lured into this game would drop dramatically. Colleges would be forced to compete on price and would need to offer more financial aid. Only the best colleges would have pricing power.
This would leave the for profit publicly traded diploma mills like the University of Phoenix, Corinthian Colleges, and Career Education up a creek without a government paddle. These parasites feed off the government teat. They know how to game the Federal student loan system to maximize their quarterly profits. Educating people so they can obtain good jobs is not a priority for these lowlife institutions. They lure in the 40 year olds that have been laid off with the promise of new careers with an online education. There great at marketing, great at gaming the student loan golden calf, and not so great at getting jobs for their graduates. Do you really think the 533,000 enrollees at the University of Phoenix are getting a top notch education for their borrowed money?
They have about as much chance of getting a good job as Bluto.
“Christ. Seven years of college down the drain. Might as well join the fucking Peace Corps.”
College too costly, too subsidized
Thursday, May 31,2012
WHAT PEOPLE subsidize, they get more of. Consequently, about 40 percent of Americans have college degrees, compared with 5 percent in 1940. This growth industry has been unnaturally boosted by government subsidizing higher education with direct funding and more indirectly with low-interest student loans.
This has been mistaken for progress. In reality, it is the victory of the entitlement-minded over those who foot the bill. Ironically, they often are the same young people. As with all income-redistribution schemes, it has unpleasant, unintended consequences.
Almost everyone now realizes living off borrowed money is one of the causes of today’s faltering economy. Bills come due. They don’t always buy what was intended.
Home mortgages inflated to reckless amounts and credit card debt buried consumers. They provided short-term joy rides, only to become great financial burdens. Defaults are economically damaging. Lenders lose, borrowers lose and the economy eventually self-corrects with contractions, as seen in recent years.
The more than $1 trillion in student loans is another symptom of short-sighted appetites for instant gratification, oblivious to long-term consequences. These debts, much like government-subsidized and incentivized mortgages, have ballooned to ruinous levels.
COLLEGE ENROLLMENT is up 38 percent in the past decade. More than 20 million people are enrolled. Some students amass six-figure loan debts by graduation, and too often can’t even find a paying job.
Nearly 30 percent of college students with loans drop out. Dropouts, according to the Education Sector think tank, are four times more likely to default on their loans. Many students who stay in college increase likelihood of default by working to meet expenses. That requires taking fewer courses, lengthening their stay but decreasing odds of graduating.
Much of this problem results from the misguided notion that anyone who can pick up a pencil should attend college. As columnist Robert Samuelson wrote in the Register, “We overdid it. The obsessive faith in college has backfired.” As Register editorial writer Mark Landsbaum previously noted, “Not only is a college education not necessarily all it’s cracked up to be, it’s not as necessary as you’ve been led to believe.”
Government-backed loans and subsidies encouraged colleges to accept more students because tuition is paid upfront, unlike tuition debts. The result is completely unwarranted enrollment numbers.
VOCATIONAL EDUCATION has been downplayed and bad-mouthed. Even in our high-tech culture, 69 percent of jobs don’t require post-high school degrees, the government says. To admit more students, entrance standards were lowered. “We’ve dumbed down college,” Mr. Samuelson wrote.
“Forty five percent of college students hadn’t significantly improved their critical thinking and writing skills after two years,” concluded the authors of a book, “Academically Adrift.”
Unfortunately, the herd mentality persists, urging and luring ever more young people onto campus, instead of creating new vocational and tech opportunities and private-sector apprenticeships. Living off borrowed money remains attractive, at least until the bill comes due, especially for the unemployed.
— The Orange County Register
