I'm not sure who's more evil - bankers or college administrators.
The bankers provided the ammunition, the college administrators provided the gun, and the students and parents pulled the trigger.
In real estate, it was the P/E stupid - the ratio of rent to ownership costs.
For universities, it's the P/E too - the ratio of costs to potential income. Spending $150,000 on a liberal arts degree to earn $25,000 is folly. And the collapse of the debt bubble will now wash away what common sense couldn't.
And that's a good thing.
Posts
59 comments:
I sure as hell hope the tuition bubble will pop as well
Tired of paying 5K per Month to my kids Ivy.
But we aren't going into debt for tuition - paying cash.
Good thing we don't own a home, huh !! ;)
Hopefully it will all be worth it -
oh yeah BioMed Major, not Liberal Arts!
No Sucker Left Behind, the Great College Rip=off Exposed: http://NoSuckerLeftBehind.blogspot.com
Throughout the animal kingdom the adults educate their young to secure the survival of the species.
Throughout history countries have educated the next generation so the country could thrive and meet the challanges of the future.
A country in which education is mostly for profit has truly reached the end of the rope. We spend hundreds of billions each year so we can have more MBAs that do very little besides wrecking our economy. Math & science degrees are too difficult for our spoiled offspring. We hope we get enough smart foreigners to fill the engineering classes. I studied math and CSC, way over 50% of all students were foreigners. Americans are largerly either too stupid or too lazy to study anything of substance. Some that are college material can't afford the tution.
Suggestion: Any student capable that wants to study science/engineering/medical etc. can get a full scholarship at a public university leading up to a masters degree.
Most students are not really college material to begin with. They can either get a job or have their parents buy them a degree in whatever their little heart desires.
Excellent post,
I've been advising people not to repay their student loans in this bailout-happy climate.
That's what moral hazard does.
Fuck you very much Bush-Cheney-Paulson-Bernanke-Greenspan.
The latest (February's) Forbes magazine has an excellent article on the "great college con" called CRUSHED BY COLLEGE.
Jersey Girl
I have a son about to enter college. And so, the college tuition bubble has been on my mind lately. After touring a number of campuses, all I can say is that most colleges and universities have uniformly wasted their money on grandiose, over-sized buildings, dorms, student centers, etc. On recent tours, campus guides have proudly pointed out newly completed science, arts or business buildings. On touring these new buildings, I found them all full of wasted, prairie-sized open spaces with moon-high ceilings, wide windows, and ridiculously long and spacious hallways. In short, the typical modern American architectural opulence where “aesthetics” trumps utility. Keep in mind that the colleges and universities which I toured were all in the ice-cold Northeast USA. I can’t imagine what it must cost to heat these new buildings. What a waste.
And I don’t want to even get into the gigantic student health centers with their state of the art exercise machines, Olympic sized pools, on site personal trainers and masseurs, etc.
College has always been a bit of a four year vacation. But now it’s a four year de luxe spa get-away.
My take is that there a large number of colleges which will close. In addition, many colleges will re-think the four year plan for a B.A. or B.S. degree. Instead, many colleges will allow you to obtain these degrees on a shortened time frame– say 2.5 years. This will be done by dropping the requirement that students must take classes outside of their field of concentration. Further, there will be an end to the seemingly unending vacation breaks. And all I can say is that its about time.
My daughter attended UGA as an ou-of-state student on a full AFROTC scholarship which covered around 95% of the total yearly cost. She is now attending medical school, paid for by the Air Force, and is getting paid over 40k a year while she is in school - both salary and housing allowance. She will have NO DEBT, and 11 years active service requirement. No layoffs for her. Also, I paid my own way through college. It took me 6 years, but I also had NO DEBT, and got to party around an extra 2 years.
The big push to get students to attend college is purely for the benefit of the colleges. It is true that many students are not college material, but it has been ingrained in our society that high school grads MUST go on to college in order to succeed. Dumb! Blue collar trades are in some cases more lucrative than white collar jobs. Many jobs don't even require a college degree and many students who graduate from college cannot get a salary that will allow them to pay back their huge student loans. They cannot bankrupt out of these loans either. They are stuck with them. How convenient for the schools. I have a niece whose parents pushed her to go to college even though she was a mediocre student in high school. She muddled through college for two years, but now her parents are in thousands of dollars of school loan debt and she has run out of gas and just dropped out of college, leaving them with loans, but no degree. Very sad.
Get a job and pay your way through college. You can go as a part time student year round and still graduate in 4-5 years. You will learn how to plan expenses and budget your income. Student loans are for those who are lazy or feel entitled to a college 'education', if that's what you call it.
Let's look at the facts...
1) for the most part academia is run by liberals
2) the government (read dem/lib/leftist) provide grants/loans etc for college
3) year over year college tuition has gone up in multiples of inflation
4) tuition consistently increases despite the economy and despite that these institutions have billions of dollars in endowments
Guess what? Nothing is going to change. The libs/dems in government will continue to fund their counterparts in academia.
Barney Frank unfazed, up to his old tricks again. Guys, we are doomed.
http://online.wsj.com/article/SB123258284337504295.html
College education is a product reserved for the economic elite. Get it?
If you really wanted that fact to change you would inform your elected representatives at the state level. Fed gov loan programs are a smokescreen and scam.
Definitely, do not pay back your loans, the bailout is coming. If it doesn't - well the world needs subprime borrowers.
...I've been advising people not to repay their student loans in this bailout-happy climate...
I know someone who tried this. Her measly paycheck is now being garnished by the gov. for $250 per month.
I am eagerly awaiting this bubble's crash...
In the first two groups of years on the chart above, I was finishing up a degree at my local UC campus and subsequently working as a low lever administrator at a veneralble public/private hybrid university in the east while my husband worked on his Phd (thankfully funded entirely by grants and work arrangements). I watched the "suits" come in and literally take over the university system, a la Invasion of the Body Snatchers. It was truly frightening. They used a divide and conquer mentality, making rock stars of some faculty and departments while punishing others. Slick, glossy communications and "branding" activities were their calling card. Their need for more and more revenue, facilities, programs, etc. was insatiable. "Liberal" vs. "conservative" doesn't even apply here. Their goal was the commodification and debt enslavement of every aspect of collegiate life. And it happened at all universities and colleges in all regions all at once.
We are dealing with something larger than liberal and conservative, folks. There be dragons... L.
Required Sasher viewing for this topic: "Declining by Degrees"
So many schools are the equivalent of the Inland Empire stucco shitbox, i.e. you're not getting what you pay for at any price!
The salary part is true, but $150K to start at $50K as an engineer is folly too (you could be Joe the Plumber sans degree.) A college education is another aspect of the American dream that has been sold to dupes (myself included) at unsustainable prices--oh, yes there will be UniveristyofPANIC!
Is college too expensive? Absolutley. Is there anything the colleges can do about it? Not yet. I'm an administrator for a cost conscious, very selective state university and I know you must pay to stay prestigous. But that's because universities want to be good at everything. The solutions is for universities to specialize and that change may be upon us. By the way, the reserach is expensive; instruction costs are much less.
I hope so. My kid starts next fall.
In reading the posts I sense an overwhelming bias against the idea of a Liberal Arts degree. Education has value in itself. Everyone should be educated to know History, Arts, Literature, Languages, Sciences, Journalism, and Mathematics. It create complete human beings. The idea that education is simply about money is almost as bad as saying that life is about money.
I have worked with many Engineers and Science types with world class skills and intellects but a High School level world views.
Everyone is college material just like everyone should spend at least some of their life working a labor intensive job.
What ever happened to the idea that we should all strive to be complete people who crave experiences, skills, knowledge, and self-respect instead of smugness, status, money, and crap?
Don Payne
I have 2 Sons and both will attend college after HS but I have told both of them not to mortgage their future for a sheet of paper. If that means a local tech school and work at night so you pay as you go then that is fine. Life is tough enough when you start out with a home loan,car loan,insurance cost,ect with-out another anchor around your neck. I call this the first college course they take at home and its completed before they reach 18. I teach them for free...
Common Sense 101.
What a sad state of affairs we have reached when we scam our youth and rob them of their future earnings before they ever work the first day...Whats next? Senior citizen scams?
Hi Keith,
Maybe with MS going down the tubes, they will stop bribing Congress to allow so many 413Bs into the US. Then, all the kids that borrowed to get a technical education can actually find jobs, instead of having to compete with foreigners who had their education for free or little cost in their home country. How about American jobs for Americans? Huh, what about that CRAZY idea??
Liberals are responsible for college tuition? What baloney. Every single elite conservative is from an Ivy League school. The secret societies are the foundation of all the most expensive schools. The vast majority of Bush voters send their kids to college.
I really hope tuitions go down. From a 12/3/08 NY Times piece:
"Published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families."
439% tuition increase? FUBAR, if you ask me.
yes, the college debt bubble will pop. students should be demanding a "test out" option for ever course so generic online courses (like generic medicines) can be used instead of brand name versions which ofter no competitive advantage.
the colleges that create unique learning experiences will when...
My wife went to college and got a Masters Degree. 12 years on the job and she's making $38,000.
I, on the other hand, stayed home and got drunk (skipped college).
I'm making 3X what the wife makes.
My Daddy used to say, "College is a great thing if you want to be a Physician or Engineer. But who do you think it is who is hiring all these MBAs coming out of college? It's the guy who rolled up his sleeves, busted his butt 80 hours a week, to build the business."
Nowadays, anyone can take anything they've learned in college- no matter how useless their degree seems to be in the job market, and turn it into a decent income. Opportunities are limitless for people who want to use what they know to earn a living for themselves, instead of waiting for someone to hire them.
Earn from what you've learned
Think education is expensive try ignorance.
Bend over and meet your proctor.
The system is a total scam.These colleges have you folks by the balls.They want you to think you are nobody without one of their crappy degrees.I know lots of successful people without degrees.Corporate america is a joke.start your own business and think on your feet.quit being brainwashed by the media.
college students really should analyze their education on a PE basis. and perhaps the universities should price it as such. a BA in history should be dirt cheap as you likely won't find a job. an engineering degree would cost more.
my 4 year EE degree from a top notch state school engineering program was the best investment I ever made.
And I don’t want to even get into the gigantic student health centers with their state of the art exercise machines, Olympic sized pools, on site personal trainers and masseurs, etc.
-----------------------------
sounds like you visited umaine in orno.
OT. Cheney talks about debriefing on UFOs:
www.youtube.com/watch?v=z93PrwYURkk
Apples doing well. everything will be o.k.
Next Ponzi scheme:
PAYING CARBON TAXES THROUGH GOLDMAN SACHS AND OTHER ZIONIST BANKSTERS.
How's that Global Warming doing? It must be very hot where you're right now, right? Right? It's 53 degrees down there in Miami.
Suckers!
NYT stock heading towards zero. Of course Rupert Merdock may buy them out around 3 or so. Then he's going to get medieval on the asses of the more blatant propagandists.
Believe me, there's a lot of anger about how the MSM covered Obama's back during this election, many are planning payback, and they are PISSED!!! Expect blood.
Hey sheeple, it costs a lot to support all those ultraliberal-union-parasite academia, all right? So STFU and keep on paying because you love socialism.
Tuition is only about 40% of the bill parents face. The other "fees" have gone up at the same rate and for a real idea of what it costs to attend a university, multiply those numbers by 2.5X.
Like the fees for health insurance, none of this is sustainable and it will eventually collapse under its own weight. Since Uncle Sam now seems hell bent on socializing everything, I suppose we will see college become yet another entitlement.
God bless the USS of A.
...spend hundreds of billions each year so we can have more MBAs that do very little besides wrecking our economy. Math & science degrees are too difficult for our spoiled offspring.
Why should people go and get HARD degrees, when any idiot C student from a mediocre high school can get a BETTER starting salary/benefits working on the assembly line at GM! THOSE jobs have a future--THOSE jobs are "secure". UNION YES! LOL
We hope we get enough smart foreigners to fill the engineering classes. I studied math and CSC, way over 50% of all students were foreigners.
Yes, we should have as much immigration as we can, to fill all those jobs that Americans AREN'T WILLING to do--like designing bridges and buildings, writing national security software, crafting business contracts, developing banking regulations, etc, etc. ALL BEST DONE BY FOREIGNERS.
Americans are largerly either too stupid or too lazy to study anything of substance.
Being dumb is COOL. Being a nerd is ICK.
Suggestion: Any student capable that wants to study science/engineering/medical etc. can get a full scholarship at a public university leading up to a masters degree.
BUT THAT'S SOCIALISM! That's the way France and the Netherlands do it! EWWWWWWWW! Better not to have such smart people--they'll prevent Christo-Republican Fascism from RISING AGAIN! HEIL LIMBAUGH!
I'll add to my previous Anon comments ("...LIMBAUGH" etc) by saying two things:
1. Among my family and friends, across three generations, there is a DIRECT positive correlation, and in some cases exponential correlation between the number of college degrees, they have, OR NOT, and whether they are surviving/prospering/THRIVING in these uncertain times, OR SUFFERING.
(If you don't know what a positive exponential correlation is, STAY IN SCHOOL until you do. And if you're a Republican, LEARN the difference between correlation and causation already, will ya?)
2. I'm hoping once this college cost / college value bubble really gets rolling, the scam artists can con the idiots into taking out "college value equity loans" on their future salaries. LOL the next rich-get-richer-on-the-backs of-the-middle-class scheme! YAY!
great post here
It is not a housing bubble or a tuition bubble, it is, plain and simple, the god damn locust boomers screwing over the younger generations.
"Student loans are for those who are lazy or feel entitled to a college 'education', if that's what you call it."
You did not go to college or pay for your own education, did you? The thing is, many degree programs, especially professional degrees, do not even allow students to go part time.
No the problem is not in the cost of college, it is in the value you get from it. Too many baby boomers taking up middle and upper management spots in a job market that is dwindling due to innovation = artifically low salaries for college grads. There is little doubt that what is learned in college (be it academically, socially, or in work-ethic) is valuable to employers. The employers aren't forced to pay for it anymore because of the boomers taking up the position and the global job market.
I am nearly 30 and have never worked at a company with anyone within 20 years of my age. My wife is the same way. Many of my collegues have equal footing with me without a college degree, my wife similar. At both of our companies, one cannot even get an interview without a college degree anymore. Hippocritical to say the least. Just another thing the boomer generation is forcing down the throats of those that follow...debt, debt, debt. Buy my used four bedroom house for 5 times the average income for the area, even though I only paid 2.5 times the average income for it when it was brand new in 1975. I won't interview you unless you have a college degree, even though I don't have one. Or higher up, a master's degree is required now for jobs that former bachelor's degrees were sufficient.
The baby boomers ruined america.
I believe that if you get a bunch of credit cards and pay off your student loans with the credit cards, you can then declare bankruptcy in a year or so and then be free and clear of the student loan debt. It is my understanding that courts will not question the transfer if it was to get a lower interest rate and/or if it was a 0% offer. The thing is, it cannot look purposeful - and heck, if you're bankrupt, then I guess you are bankrupt, so how can it be purposeful?
Applying for student aid was always a joke. You thought you might get a grant or some other help based on your performance. I would always get student aid all right. "Student aid" would come in the form of a big fat student loan.
What the student loan corporations, government, and universities and colleges are doing is just plain evil. Kids now leave college with a huge bill and debt. They have never had exposure to paying down debt and don't understand the consequences of all the money they've been loaned.
I remember hearing someone say that tuition is increasing because allowable loan amounts are increasing. Just like with home mortgages, the more student loan students can take out, the more expensive tuition becomes.
NO,
because the debt never goes away, cannot be written off, cannot be forgiven under bankruptcy.
I worked full-time and went to school full-time. Sadly, I still make less with my college degree than I made before. Universities try to hide the fact that many students cannot get well-paying jobs with a communications degree or a medieval history degree. Even some science degrees are not paying well. Most Biology majors I know started at $18,000 a year after school.
Hold on. The tuitions are going to go up.
Media says that the government is going to add more assistance programs and tax credits, which only help driving prices up, not down.
The tuition in average will just rise for the amound of money in those programs.
What else was there? Tax credit for books? Sure, those $200 books will just go $300.
Went to state colleges, got 50% scholarship + student loan (2% rate) which was used to buy property overseas. Graduated Summa Cum Laude @ B-Schools twice.
Keep on paying for my education and assets, obamanoids. I love socialism to fleece the sheep.
Next: Obama-Barney Frank socialist $25k credit giveaway to buy homes. I'll be buying with both fists, so the slave sheep can subsidize me once again.
MSF laying off 5,000 employees.
Buh-buy salary bubble, buh-bye geek high lifestyle in Seattle and San Fran.
TWEET THIS: TECH SALARY BUBBLE IS FINALLY BURSTING! NO MORE SIX-FIGURES TO WRITE STUPID WIDGETS OR BLOGS.
You'll live green all right...by having to eat grass at your homeless parks in San Francisco. bwahahahaha
Don Payne said..
The idea that education is simply about money is almost as bad as saying that life is about money.
Perfect.
How much would you pay to avoid working your life away at Walmart or Mcdonalds
If you do not have a degree, you will not even be interviewed.
I'm not arguing against the value of a college education (except for Arizona State - that's not really an education).
What I have a beef with is the inflated cost - brought about by access to debt, and then exploited by evil college administrators.
the cost of the course is a part of the barrier to entry - only the most determined will risk 4 years/100,000 to gain a qualification.
compared to how much walmart pays, it still pays to take the risk - u can always become a teacher.
As to a shortage of American science students - how can this be, when American companies pay their technology staff much lower wages than their MBA, ACCOUNTANTS?
The shortage of technical students is just a con, used by companies to get more H1B, and Universities to con students into thinking that thier will be lots of high paying jobs present
Its still worth studying at uiversity, but you have to make sure its only for subjects that cannot be outsourced - medicine, law, etc
In reading the posts I sense an overwhelming bias against the idea of a Liberal Arts degree. Education has value in itself. Everyone should be educated to know History, Arts, Literature, Languages, Sciences, Journalism, and Mathematics. It create complete human beings. The idea that education is simply about money is almost as bad as saying that life is about money.
I have worked with many Engineers and Science types with world class skills and intellects but a High School level world view
Wow, we are in deep shit. This guy would starve to death in a week if this bubble system collaspes. It will collaspe. You, however would need some math and economics to see it before your credit card stops working.
Liberal arts people are running things now. After they destroy what is left of the money ponzi economy) you my friend will understand what is truely important. FOOD AND SHELTER. Those things my utopian friend reguire good old fashion money. OK hit me with the spelling insult. I think I will go back to school and pick up an underwater basket weaving degree. Obammmmmyyyyyy will give me the 150,0000.00
There's nothing wrong with a liberal arts degree.
There is something wrong with going into 50k of debt in order to get one.
Talking about Ponzi schemes, I just read that it's 50 degrees in Southern Brazil today, in the middle of the summer.
Global Warming my a$$.
It is not just the monetary cost of a college 'education' but also the time expense that is too great. It takes far too much time to earn a college degree and provides little real 'education'.
I have done several degrees and in general look back on the time I spent sitting in a classroom being lectured to as an outrageous waste of time. One of my degrees is a law degree from the oldest law school in Canada (2nd oldest in North America).
I also did an MBA via distance education at the same institution as my law degree. I know that the books, professors, exams were all the same as a regular, onsite, full-time program.
I learned far more by the part-time distance education model.
Our post-2ndary education system needs to get much more efficient, stop wasting the prime years of our youth sitting in a lecture learning nothing.
"Everyone is college material just like everyone should spend at least some of their life working a labor intensive job."
Yes, everybody is special and everybody is a winner.
The truth is that 'bout half the high schoolers have below average intelligence. From the remaining half about half of those have below average work ethics. That leaves about one quarter of high school graduates with above average intelligence and work ethics. Those are the ones I would consider college material. The rest, get a job. You don't need a MBA to operate a copy machine or the coffee maker.
I just had the HVAC guy come over to fix my heat pump. $125 minimum charge just for showing up. That goes to prove that you don't need a degree to make a six figure salary either.
A true rags to riches story.
Back in '99, an old high school buddy of mine from metal shop class, Peter failed the bar exam for the 2nd time when he paniced and called me for help.
In tears over the phone he confided that he was flat broke, facing evection from his apartment, and had over $250K in student loans looming over his head for his now useless law degree.
For two years back in the late 80's, Pete was my best friend; but his parents forced him to attend college; while I went to trade school then straight to a car dealership to work as a mechanic.
Back then I new nothing about the world of finance. Pete explained to me that he was screwed because he could not file Chapter 7 bankruptcy on these debts and that his creditors would garnish his wages for upto 25% of his gross income. Worse the debt was interest bearing, therefore unless he could find a really high paying job (very unlikely without being able to practice law) he might have to suffer 30 to 40 years of wage garnishments on a very low income job. He told me that the system had turned him into a DEBT SLAVE.
That's when my wife, who works as a part time book keeper chimed in. She gave Pete the idea to start his own business, so that he would have no paycheck to garnish.
Six months later, Pete and I co-owed a BUY HERE PAY HERE AUTO LOT, using a 2nd mortgage on his fathers house for our start-up capital.
Pete manages the sales office, my wife does all the book keeping, and I manage a full time staff of 6 mechanics. We hit the auto auctions and the impound lots for junk cars that we can fix up cheap, put on the lot and keep running for as long as our clients keep paying.
We've been in business for over 9 years now. We have all become multi-millionares. And the best part is that Pete never paid off that STUDENT DEBT.
Everytime some collection agency calls asking for him, we laugh and say that he is working at the San Diego Zoo for a guy named Sam Baline. :)
Moral of the story:
SCREW THE SYSTEM, before it screws you!!!!
Hint: If you did not get the joke above- Sam Baline is a fish.
There is a bubble in college costs. No doubt. But there is also the supply and demand factor.
For top schools, the demand is very high by students and parents. Look at most Asians and Indians from the Asian sub-continent. They are generally savers, paying cash, driving modest cars and not going into debt. They have money to spare and education for their children is a top priority- this carries a lot of prestige and status as education is a family value. These people will continue to pay whatever the price is and it will be tough to shake them out of the market.
Here in Thailand where I live, there are many rich families that send their children to study in Australia or the US. The parents shell out big $$$ while their kids party it up in bumf*ck ohio and hang out drinking with their Thai friends. The skate by, get a degree with a poor GPA, don't speak much English, and come back to take a job in Thailand that pays (no joke) less than $1000 per month. Their English is not much better but they can tell their collegues they got a degree from America. No mention of what they studied nor the specific University. People here are just too stupid to analyze that- they just think someone got a degree abroad and therefore they are smart and well connected.
-Mike
Not all companies refuse to interview someone without a degree. I have worked at some of them over the last 20 years. And there are plenty more out there. Let the companies that hold style over substance get the mediocre results they deserve.
If students actually wanted to work for a useful degree, the p/e would look a little more like this:
4.5 year degree cost: $35k
First year income: $60k
Post a Comment