A quick run through the headlines:
- Obama Proposes Overhaul Of NSA Surveillance Policy (WSJ) — Whatever. I thought it was fine the way it was.
- Assad unhurt as rebels attack convoy (The Guardian) — Unhurt, yes — but they managed a mortar attack on the president’s convoy.
- US student loan bill signed into law (The Guardian) — Wait a second. Are you trying to tell me that something actually got done in Washington?
- Dominique Grant released from jail, paperwork filed to dispose of charges (WIS) — That’s the daughter of the man accused in Gabiee Swainson’s killing.
- Why Picking Your Berries For $8,000 A Year Hurts A Lot (NPR) — Just in case you weren’t feeling guilty enough already today.
- Naked man allegedly steals car (Aiken Standard) — OK, so if I’m reading that headline correctly, then the “naked” part wasn’t just “alleged.”
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RE #3: As probably the only commenter here who actually has student loans, I’ll say this. It ain’t the interest that’s issue – it’s the principal.
Congrats to Congress for doing what they do best – passing a symbolic bill.
I have a few student loans for my kids… You’re right, Bryan. The problem is students who think taking out $60-80K in loans to get a degree in a major with few job prospects is a wise idea. Unless you are a top student or in a high demand degree program, you’re wasting your money. Colleges should tell incoming freshman what the placement rate was for graduating seniors in their major and the average starting salary.
What is the issue with the principal? People purchase college degrees just as anyone buys any other goods; we make cost-benefit decisions.
If it isn’t worth it, don’t buy.
I’m cooking 4 boston butts on a slow cook for 14 hours for a party tomorrow. I had to get up and adjust the BBQ smoker, so that’s why I’m up. I started typing a response, but it got too long. Accordingly, I’ve got a much longer answer over at my blog. Direct link to my response is here.
Bryan, nice piece on your blog and I loved the graphs. But I think you missed the elephant in the room. You suggest that a society will have more of anything that is subsidized. Yet you don’t actually make the point that the government is subsidizing college tuition. Loans are decidedly NOT a subsidy. In fact what you miss is that the government is paying less, far less, for state supported colleges. Combine that with the increase in tuition costs because of the “bubble” factor (in a sense a complicated and subtle form of collusion) and the net cost to the student is much higher than before. And while the principal of the loans is the single most important factor in that cost just ask any first year finance major and they will tell you the power of compound interest is very important to the overall debt burden.
Here’s what we need to do. First, for state supported colleges let’s put an end to this insane building mania. Why on earth does the business school at USC need a new, grandiose (and might I add ugly) building that is farther away from most student housing? The old building was built while I was in school. Ok, I’m old, but not so old that a building that age is obsolete. Can’t a student learn about supply and demand in a building constructed in 1978 just as well as one built today?
Second, let’s take a look at labor costs. Some of the highest paid employees in state government are high ranking university officials. Since many of them don’t even teach at all we could probably get by with a lower paid dean of the economics department.
Third, rather than cut back on the amount the taxpayers support public universities as has been the trend over the past 3 decades, let’s increase it. In the long run that would be money well spent to insure financial security for college graduates and allow them more money to pump into the economy starting as soon as they graduate.
Finally, let’s keep student interest rates low. Why should a student loan cost more than a 15 year mortgage?
Why should interest rates be higher for school loans than mortgages? Because if you don’t pay back a mortgage there is an asset that can be legally taken to recover the debt. More risk = higher rate.
You did make some very good points on excessive building and high pay.
But you cannot discharge student loans in bankruptcy.
Maybe if we allocated 4 year college educations to those who can best utilize them, and encouraged others to pursue tech and two-year degrees, and took the “ability to pay” out of the equation, as they do in Europe….
“But you cannot discharge student loans in bankruptcy.”
Right. And if you could, the interest rates would be higher due to the greater risk to the lender that the money might not be paid back. There is no asset tied to the loan to recoup in case on non-payment. Same reason credit card interest is higher than mortgage interest – the lender can’t get back the $100 you spent on a meal.
Too many people go to four year colleges who have no business going there and the only reason they do is because there is easy money available to fund their bad idea until reality sets in. They also make the stupid mistake of taking loans to cover more than tuition and room/board. Books, spending money, etc. And then they compound the mistake by not paying at least the interest while in school. That $10,000 @6% for freshman year is $12500+ when/if you graduate in four years.
They needed a new building so they could put Darla’s name on the building. The old building was already named: Close-Hipp. It was actually two buildings constructed about 10 years apart (I think) and named for two businessmen. Darla gave millions and millions, but they couldn’t rename the building, so they named the SCHOOL after her. The Darla Moore School of Business in the Close-Hipp Building. Awkward. More money, new building, the Moore name. And it is ugly, AND it is next to a building that the University can’t figure out how to reuse – or tear down. Placing the Moore building there is going to cause a major shift in student traffic. However, the majority of upperclassmen don’t live on campus. The shuttles from the off-campus commercial student housing complexes run constantly all over campus.
Plenty of student loans here Caskey! I’ll put ours up against anyone’s.
You lost me at your Wellesley example. A woman with a Wellesley degree won’t be defined by her major, unless she chooses to define herself that way.
The situation, unfortunately, will not be true of the grad from the University of Phoenix or any other such diploma mill (including many state colleges and universities across the country).
What you are concerned about is the result of the GI Bill. Schools evolve in response to the pulses of society. We decided to make a priority of increasing the availability of college after WWII (and of home mortgages). The results are predictable. So we have two choices: Continue to provide “support” to students which further distorts the economics of receiving an advanced education, or we throttle that back and accept that inherited wealth and social/political connections will determine who can matriculate into the more limited number of remaining schools.
In the end, college (and everything in life) will always be all about the money – past, present or future.
What we can control as an individual is to seek to make wise cost-benefit decisions about financing an educaion. That is the only thing we can do. It is also the thing that we are – collectively – not very good at doing, That’s the problem. That would of course also include making the connection between career path and debt load. In that, one’s chosen major is not the issue. The issue is what one does with one’s degree. The problem is that people don’t reach to achieve.
I might also argue that the net result of this increased availability of student “credit” is to drive up the quality of the best schools, and turn the vast majority of educational institutions into pools of also-rans. Since economics has been made fairly meaningless, the remaining variables are intelligence and social standing/connections (this factor, however, is far broader and more diffuse than most people realize).
The other thing which is killing us as a society is that while student debt is not dischargeable in a bankruptcy, nearly 40% of student loan debt is in default. We, as a country, need to address that. The wheels have come off our future.
@mark
The degree major does matter. Many jobs require a specific degree and candidates who don’t have one in that area will be rejected automatically..especially those people without experience in the field.
A history major cannot be a doctor or an electrical engineer.
But it is also up to the individual to maximize his opportunities. If you are a computer science major and cannot show me examples of programs you have written outside the classroom assignments, I would have little reason to consider you.
If you are a programmer….
Also, a lot of CS programs are so demanding, the students don’t have time for extra programming.
“I don’t have time for a girlfriend, but a talking frog is cool.”
Baloney.. I went through a top 10 Computer Science program. I’ve got three kids who have been through or are in college. They have plenty of spare time to do other things. Five Points is full of college students Thursday thru Saturday.. they aren’t there doing research.
How many C.S. graduates came out of USC this year? How many are currently employed in the field?
When you went through CS, computers were a lot simpler.
I doubt many, if any, CS students are in Five Points. I have proctored several exams, and these are not sociable sorts….the college students in Dive Points are frat kids and the like….
And how many of your three kids majored in CS?
None. Why? The son of a good friend is entering his junior year at USC in C.S. I have seen his schedule. I also know he spends a lot of time playing Halo and Call of Duty.
And how is that working out for his GPA? Taken Compilers yet?
Computers have never been simpler – our past was somebody’s present. The thing was, people’s understanding of how to get machines/electronics to do their work (or play) was simpler. But they had to work just as hard to get a result as we do today. Or as “we” – being other people for me – do as I was an Art History major and therefore unfit for the needs of the modern workforce.
Compilers has a very different meaning to me. I am sure that I could not make it past the drop date in a course about a topic like that.
Is there any demand for jobs working on compilers? Can you name a few companies that are hiring software engineers for compilers? Sounds like a waste of time to me. But then I’ve only been working in the actual IT world for 30 years….
I’d really be interested in the stats on C.S. major job placement at U.S.C. Surely there are numbers available. Or even just anecdotal evidence that most undergrads are finding jobs paying $40K or more.
Once I teach that frog to make biscuits….
Doug while I agree with your financial points I would suggest that obtaining knowledge about something important is a valuable asset to whoever has that knowledge regardless of any financial benefits. I think it’s important for society as a whole to have people with a wide range of knowledge not just knowledge of practical skills as defined by money. Money is important but it’s hardly the defining measure of wealth.
Then don’t spend money you can ‘t pay back acquiring knowledge. It’s a bad idea. There are cheaper options to acquire knowledge.
And why don’t the colleges work as charities if it is so important to impart knowledge on students? It’s benefiting society, right?
The State salary database shows 716 employees at USC making more than $100K and 107 making more than $200K.
Seems pretty lucrative to be in that business. Apparently they define wealth the old fashioned way. Those salaries DEPEND on the availability of tax dollars and student loans.
Governments should subsidize college education to a far greater extent than they do. It would be a great thing for society.
Really Doug you obsess over the money aspect of everything way too much. Other things in this world are more important than merely acquiring money. George Bailey said in well when he slammed Mr. Potter in It’s a Wonderful Life: “Let me tell you one thing Mr. Potter, the world doesn’t revolve around you and your money”. And so it is. We need money but let’s not look at it as some sort of religious symbol.
I don’t obsess about money. I obsess about government spending money is a wasteful manner. I also have a basic understanding of economics to know that there are always unintended consequences (good and bad) when you try to manipulate the market either in terms of price fixing.
You, bud, obsess on using the government to redistribute money from one group of people to another through taxation. You believe “fair” equals taking from one group by law and giving it to another. When you give someone something for free, they don’t appreciate it and become accustomed to expecting it.
I don’t care one bit what anyone does with his or her own money. They can spend it all on educating themselves in any area they want. I do care when the government creates a trillion dollar market for loans to prop up higher education in areas that have little prospects for jobs.
And if you want to use an “It’s a Wonderful Life” reference, you may want to consider whether George Bailey was an individual with admirable traits or a pawn of the government. We need more George Bailey’s and fewer politicians.
Only when you reach the upper levels. There are, I think, about 5000 employees at USC Columbia. The salary database shows 3048 of those making over $50K. Of those, 716 make over $100K. That leaves about 2000 making less than $50K.
Who do you think does most of the actual work that keeps the University running? The University keeps letting in record freshmen classes but doesn’t pump any additional money into the basic resources that serve those students, like the libraries. Thomas Cooper Library is one of the highest traffic areas on campus, but librarian salaries are stagnant and severely low compared to peer institutions. The fancy, sexy, stuff gets funded, but not the core needs.
I have two relatives (young men in their early twenties) who each have over 100k in loans. They attended an out of state college and majored in Journalism and Recreation Management. Great kids… They are each paying $1000 per month for twenty years. The journalism major makes $15 an hour as a technical writer on a government contract. The recreation management major is painting houses.
Neither should have paid out of state tuition for degrees with little opportunity for a decent salary. They bought into the hyper that any degree is worthwhile.
I’m a parent of two girls who chose private schools (Johnson and Wales in Charlotte and Savannah College of Art Design). We took on some of the student loans simply to keep them from starting life with an enormous debt. We’re better equipped at this point in our lives to make payments than they are as young people.
Will the degrees be worth the price? Monetarily, I suspect not, but there’s more to life satisfaction than money. Both are pursuing careers they love, and they are very happy. Their happiness and life satisfaction makes us happy and adds to our life satisfaction. So, yes, it’s worth it.
But I hope you realize that you can borrow for school, but not for retirement….
Of course. We’re looking out for that end of our lives as well.
And there’s the difference, Norm: You have made a choice (an admirable one) to help your children achieve something they are interested in. Nothing at all wrong with that.
It’s the kids who don’t have that option who need to stop taking tens of thousands of dollars in loans, especially when there is no clear career path in their field to help them pay back the loans.
Another young relative of mine spent $35K per year on a degree in Art Education at a small liberal arts college. After two years of ZERO job opportunities and only part-time work in retail stores, she has now decided to go for her masters in Art Education, paying another $60K. That’s $200K in the hole and she’ll be 26 years old when she graduates… and what jobs are there in Art Education that will help make that “investment” worth it?
Doug, maybe she loves art education and absolutely hates with a passion IT stuff. Not everyone has the same passion. To continue pursuing something that you hate is worse than having a low income. Let’s turn this around. Let’s say that the really good jobs involved extensive knowledge of Classical English literature and IT skills were not needed. In this alternate universe would you immerse yourself in the lucrative Shakespeare trade? Think about it. You’d have to spend all day analyzing in-depth the meaning of Hamlet and the purpose behind a Mid Summer Nights Dream. Wouldn’t that constitute a form of Hell? Wouldn’t you be willing to sacrifice some income to be happy developing software APs for $10/hour, if you could find the work? If that was your passion you can bet your bippy you would.
No, I would not work for $10 an hour. You can’t live on $10 an hour. If you can find happiness living in squalor but staying true to your “art”, go for it. I would find a job that utilizes my skills. It wouldn’t have to be IT for me. I could have chosen several careers in my college days… everyone has a choice. I went with what I love to do and what I am proficient at.
You present a choice as if there are only two options available. There aren’t. There are plenty of career options available to people that would also allow them to pursue their passion in their spare time.
Have you counseled your children to pursue careers that can support them or to just follow their dreams and not worry about silly things like food, shelter, and healthcare?
I’d prefer to leave my children out of this, especially since they don’t much listen to what I have say anyway. The only person I can really speak for is myself. When I made choices in college I chose a path that did not lead to great wealth and prosperity, even though I had the option to do so. And I’m thankful every day for having made that choice since it gives me far more gratification than money ever could. Yes, I’d love to have the wealth and financial security that some of the other posters here are blessed with. But I would not be nearly as happy.
And here’s the other key point – the art major DID what she wanted to do, what she loved. And she spent two years without any job opportunities. She’s going to be living at home til she’s in her late 20’s because she thinks an advanced degree is the ticket to the job she thought she’d get when she got her undergrad degree.
You think she’s happy living at home and still going to school? Taking Instagram pictures and posting them to a blog read by five people? Or decorating shoes with markers to demonstrate her “artistic ability”? And working part-time in a clothes store and hating every minute of it?
That’s worth $200K? Okay.
Why don’t you ask her? I’ll meet you half way. I’ll acknowledge that it may be necessary to sacrifice some of your dreams in order to address the practicalities of the real world. In return all I ask is that you accept that for many of us it’s far more important to make a living in something we love, even at a significantly reduced wage, rather than being miserable for 30 years in a profession that we loathe.
I never said that people should do jobs they hate. They should try to find jobs that match their skills and interests but also consider the job market.
An IT major who only can do Java programming is competing with millions of foreigners who can do the same job for half the pay or less.
Some cultures consider their children their retirement plan. They invest all they have in their children’s education and look toward raising the educational and income level of future generations. That being said there are cost effective ways of obtaining an education – that is if one has the good fortune of already living in an area where educational opportunities are easily accessible.
In the absence of an open topic thread, here’s today’s latest bad news about Obamacare:
Out of pocket caps for the insured are being delayed until 2015. None of the delays have anything to do with Republicans. This is the Democrats bill and they are proving day by day as the deadline approaches that they had no idea what they were doing.
http://www.forbes.com/sites/theapothecary/2013/08/13/yet-another-white-house-obamacare-delay-out-of-pocket-caps-waived-until-2015/
“First, there was the delay of Obamacare’s Medicare cuts until after the election. Then there was the delay of the law’s employer mandate. Then there was the announcement, buried in the Federal Register, that the administration would delay enforcement of a number of key eligibility requirements for the law’s health insurance subsidies, relying on the “honor system” instead. Now comes word that another costly provision of the health law—its caps on out-of-pocket insurance costs—will be delayed for one more year.”
“The promise of out-of-pocket limits was one of the main reasons we supported health reform,” says Theodore M. Thompson of the National Multiple Sclerosis Society . “We have wonderful new drugs, the biologics, to treat rheumatoid arthritis,” said Patience H. White of the Arthritis Foundation. “But they are extremely expensive.”
Doug, the purpose of Obamacare is not to fix the system, but to break it. Here’s Harry Reid saying that Obamacare is just another stop on the road to single-payer.
http://yhoo.it/17mUCJ1
Oh, I hope you’re right. And I hope it happens sooner rather than later…
Oh, that was fun — going back and reading my single-payer column from December 2007:
I especially enjoyed that last bit, about the screaming…
And the thing is, there’s nothing hyperbolic about what I wrote regarding the anti-gummint folks and their excitability. I couldn’t even have imagined then that by now the Republicans would have voted 40 times to repeal Obamacare.
That reality WAY exceeds my joke about the screaming…
You’ve never explained what companies like United Healthcare, Aetna, and Blue Cross Blue Shield do under single payer. Are they abolished? Or do all their employees become government contractors (we’ve seen how that worked out for the defense industry)?
Once Obamacare fails, we aren’t going to single payer. There are way too many market forces to stop it – insurance companies, unions, providers, drug companies. You need to stop dreaming of something that won’t happen.
Better to fix the system than expect a complete overhaul.
Every time you use the phrase anti-gummint, you contribute to the downward spiral of discourse you claim to abhor.
And more news – a $1.5 million dollar fine from the EPA for Columbia’s wastewater treatment pollution,
Maybe if the city hadn’t been stealing their “investment” returns from the water revenues over the years, this could have been avoided.
http://www.thestate.com/2013/08/13/2916226/feds-fining-city-15-million-for.html
The comments on this post started out promisingly with the mention of smoking pork butts…
And then we’re going to smoke some crawdads, as Granny said — which got the Griffith Park hippies all excited…
Doug,
Obamacare is an attempt to make a broken system better. The current system waas at it’s life end.
I am surprised that you would argue that what was in 2008 was the best available option. It wasn’t – for anyone or any enterprise. Accepting the status quo simply because it is the status quo is always a bad idea. Give me reasons why what was is better; better, not just more known.
It was better than what Obamacare will be over the next couple years. It was better for most Americans who were happy with their insurance. This was a case of government doing what it does best: screwing things up. They’ve had three YEARS to get things right and now it’s falling apart as most of us who have dealt with government programs expected. Costs are not being contained. Access isn’t
The fixes to the healthcare system should have been simple and market based. Open up competition. Enact basic regulations around portability and pre-existing conditions. Find ways to increase the supply of providers not drive them away with price fixing. Stop allowing drug companies to advertise to reduce costs. Allow any American to buy into the same medical plans that their elected representatives have at the same price. Provide vouchers to the poor for insurance by cutting defense spending.
They have made this even more complex than 2008. The IRS is now part of the healthcare system. And that’s better?