
The college debt crisis is worse than it seems - elberto34
http://www.bostonglobe.com/magazine/2016/05/18/hopes-dreams-debt/fR60cKakwUlGok0jTlONTN/story.html
======
rm_-rf_slash
The article should have mentioned the inflationary effects of foreign
students. A lot of foreigners who study in the US are either A: loaded or B:
backed by their home state. It has gotten to the point where foreign students
are somewhat expected to come to subsidize American financial aid. Add in the
article's woes: increasing value of a college degree, cuts in education
budgets, and cutthroat competition leading to a state of constant expensive
campus development all leads to an enormous bill just to keep the lights on.

The other aspect I take issue with is the farming out of federal loans to
private companies. The US Department of Education doesn't need to make a
profit on my federal student loans to exist, but my loan company does, and I'm
stuck paying 6%. I have never seen a convincing argument as to why people like
me are saddled with profit-seeking companies doing what should be a purely
public service.

~~~
shas3
Foreign students are 1.13 million [1] and the sum total of all students in the
US is around 20 million ( age < 25 + age > 25) [2]. How much can they really
contribute marginally to tuition inflation given that they are only 5-10% of
the population? If foreign workers are taking American jobs, Chinese factories
are taking over manufacturing, and international students are leading to
tuition inflation, in general, US seems to be coping rather poorly with the
effects of globalization. More likely, internationals are like Don Quixote's
windmills.

Edit: forgot references

[1] [http://www.wsj.com/articles/international-students-stream-
in...](http://www.wsj.com/articles/international-students-stream-into-u-s-
colleges-1427248801)

[2]
[http://nces.ed.gov/fastfacts/display.asp?id=98](http://nces.ed.gov/fastfacts/display.asp?id=98)

~~~
rm_-rf_slash
"Coping poorly" is one way of putting it. I prefer "[the American people were]
suckered into bad trade deals with countries with nonexistent labor and
environmental standards which forced them to compete on the same level even
though foreign competitors were handed enormous advantages as though they were
US states but immune from regulation, thereby gutting the American middle
class and the necessary tax base necessary to foot the bill for the kind of
human investments necessary for a large country to succeed in a global
information economy," but I guess your way works too.

~~~
maxerickson
The US is rocking the information economy.

You can maybe complain that we aren't employing even more people in the
information economy.

~~~
rm_-rf_slash
Maybe in the coastal cities and Austin TX. Aside from that, our economy is
barely budging and people are sliding ever further into debt. That's the thing
about rot: if you don't address it early enough it soon consumes everything.

Besides, a lot of our "rocking" of the information economy is because of
legacy, not current policies. The US emerged from the Cold War as the sole
global hyper power at the same time the Internet was being developed as a
commercial tool in the very same country.

If Great Britain hadnt conquered half the world their cultural products
(Beatles Bond and Harry Potter) would have very little reach, London would
have no more reason than anywhere else to be the global financial centre, and
their manufacturing and mining economy would be in equal shambles as today.

My godfather - a historian who specialized in Ancient Rome - often said that
"It only takes one generation's loss to lose everything forever."

------
eastbayjake
It seems like these thinkpieces about "debt" are really about two separate
issues:

(1) College debt is a good investment if you learn things and graduate, but
too many colleges are failing to educate students and too many students end up
dropping out with debt and no degree. The good news is that this problem has a
pedagogical solution, but it requires many colleges to hire faculty based on
teaching skill rather than research achievements. The US is doing some of the
world's best research, but too many academics are doing second-rate research
at third-rate institutions. Many of those academics should instead be focused
on teaching instead of research.

(2) Everyone can benefit from learning new things -- even (or perhaps
especially) a liberal arts education -- but many students are attending
college to get a credential and land a good job. We should be clearer about
what we want institutions of higher learning to teach: life's big questions or
job skills? I could imagine a higher education system that does both, but
there's no good reason it should cost $50k/year to read literature/philosophy
with thoughtful guidance and peer discussion. Maybe our liberal arts
educations should look more like structured gap years, while technical
education would have specific learning outcomes tied to workforce demand and
better information for prospective students about passing rate, job placement
rates, and starting salaries so they can make informed decisions about their
financial risk.

My final complaint: I've never wanted my student debt forgiven, but it does
sting to make student loan payments with after-tax income that goes directly
to banks bailed out at taxpayer expense during the recession. If lawmakers
wanted to help the student debt crisis, a great start would be making student
loan payments tax-deductible (up to a certain total, and only below a certain
income level) instead of just having student loan interest be tax-deductible.

~~~
rm_-rf_slash
There is literally nothing wrong with studying the humanities. I am amazed at
how many brilliant engineers skip history and literature and become
predictable consumerist cogs because "that's how the world works" as far as
they've ever known.

Time was you'd go to college, get a job, and get trained while you work. Of
course I'm not saying a rocket scientist opening should cater equally to the
engineer and the artist, but we have become so addicted to pedigree that we
forget how differently things can be done when we don't expect a new CS
graduate to build a mobile API on their first day.

~~~
enraged_camel
>>Time was you'd go to college, get a job, and get trained while you work.

You got trained while you worked because most people stayed at the same
company from the day they started until the day they retired. So it was easy
for companies to justify investing time and money into training: barring
unusual circumstances, they expected that person to remain an employee for a
long time.

Nowadays though, job-hopping is the norm. If the company cannot expect you to
stay for longer than X years, they're going to adjust their hiring practices
to make sure new hires are "safe", i.e. have degrees from prestigious
colleges. Of course that still doesn't guarantee they will have the necessary
skills from the get-go, but if things don't work out the hiring manager can at
least cover his/her own ass by saying, "well, he/she was a <prestigious
college> graduate..."

~~~
rm_-rf_slash
Absolutely. Seriously this cannot be stressed enough: there is a huuuuge
amount of influence in the decision-making process, whether it's choosing a
vendor or hiring an employee, that ultimately goes back to someone
preemptively covering their ass.

When I tried an Ed-tech startup in college, our biggest barrier was that
nobody wanted to sign off on an untested product in case it went wrong and
they got the blame.

------
_xander
Maybe we should learn from the ‘controlled’ experiment in the UK. There the
new fees structure caps undergraduate tuition at £9k per year. Gov loans with
very forgiving repayment terms are provided for students. The government
expected only a few elite universities to charge the full £9k, with the rest
charging between 6k and £8k. Their rationale was that universities would
compete on price and try to deliver value for money. In reality, universities
interacted with each other in entirely the opposite direction – they raced to
the top. This is quite surprising, considering the huge variability between
universities and courses: 3 years of tutorials in economics at Cambridge cost
the same as staying at home and doing social work at the University of
Huddersfield. LSE used to charge £8.5k (a symbolic gesture, more than
anything), but bumped it up to £9k when it realised (1) their perceived value
was derived from their price tag (the higher the better) and (2) that hyper-
competition over league tables encourages aggressive spending programmes.

I think this tells us that universities will always charge as much as they can
get away with, and that laissez faire economics does not work well in a market
filled with institutions that are often shielded from free market effects
(e.g. ‘lock-in’ to past choices, difficulties for new entrants into the
market, no easy way to weigh-up costs/benefits of investment, etc.). Colleges
in the US have a broad range of incentives to charge the highest acceptable
market rate (which is usually between $55k and $85k for undergraduate
tuition).

~~~
maxerickson
It think that gets a lot of it. If everyone has loan money, universities get
less out of competing for students than students get out of competing for
spots at universities. So the universities stop competing (financially) for
students (that's a euphemism for charging the maximum).

To me it makes sense to limit the support that students see to competitive
grants that only cover most of the cost of tuition (like 75 or 80 percent).
Then universities have some reason to keep tuition lower (students will be
somewhat price sensitive), students have motivation to examine whether they
should go to school. There's probably some fairness issues to address with
that, I guess the competitive aspect of the grants could be the size of the
grant, with every student having some access.

edited in the (financially) in the first paragraph.

~~~
danielweber
Yes. For a long time, most schools never competed on price, because the
student was never seeing the price. The result was predictable: skyrocketing
costs.

------
thearn4
It seems clear that the American university system is fed by a largely
inelastic demand and isolated from larger market forces, thanks in part to the
endless spigot of federal loan money (complimented by the strong preference of
employers towards traditional degree holders).

What is less clear to me is how to fix this in a reasonable, least-damaging
way.

~~~
vkou
Ban education discrimination against job applicants. (Except for jobs which
require certification).

Right now, there is no drawback for an employer requiring a bachelor's degree
for a job that has no use for it. Putting an end to this practice will stop
the pointless rat race.

Alternatively, cap student loans, and put lower boundaries on what % of
tuition goes towards instruction. Most tuition funds do not go towards
education, and there is a lot of pressure for universities to spend them on
building Potemkin villages.

~~~
lettergram
I really want my aerospace engineers to be able to do math...

Universities accredit them, so companies don't have to spend their money doing
it (via a ridiculous number of interviews). Interviewing is already one of the
largest sinks of money for a largish company, no need to make it worse.

Far better, would removing the guaranteed loan payback the government
provides. This would force universities to lower prices as students wouldn't
be eligible for loans. Further, it increases the barrier to universities,
meaning less people will have degrees and in turn companies would have an
incentive to hire people without degrees. Plus people with degrees would get
paid more (making it easier to pay off loans).

The whole issue is universities aren't having to deal with market forces. Add
back in the incentives and it'll be 10x cheaper.

~~~
vkou
Your aerospace engineers already need to pass engineering certification. My
fast food franchise managers, on the other hand, need to show up, and apply a
little common sense.

~~~
thearn4
> Your aerospace engineers already need to pass engineering certification

Generally not in the U.S., unless it's a civil or electrical engineer
designing infrastructure. I say this as an aerospace engineer with a
mathematics PhD only.

------
mswen
Here is my observation: based on oldest kid graduating 1.5 years ago from a
Big 10 University with a degree in Scientific & Technical Communication. It
was substantially harder to get a job than we expected. With my network - I
finally located her a summer internship on 1099 basis that has turned into a
year long engagement - still on a 1099 basis. To date she is showing no
financial advantage from attending college. She could make the equivalent
doing any number of things that don't require a 4 year degree. They are
finally making noise about bringing her on FT salaried with benefits.

Then we run into someone who graduated in her same class - still hasn't found
work in her field and is making do as a hostess at a restaurant. No financial
advantage.

These are kids who graduated from respected university and yet here they are
still struggling to see a financial benefit.

My daughter's debt is fairly low because: she took advantage of a state
program that pays tuition to start college early, she lived at home, took
public transportation, didn't buy a car until she got this 'job' and still
lives at home with our support so that she can focus on paying off the
education loans that she did end up with.

Was college worth it? I still think so and I have 3 more to go, but I have to
say that I am really starting to think hard about the value of higher
education.

~~~
brians
What department at your employer would you expect to hire a Comms major? How
many do they need per year? What fraction of those are college hires, vs
people who have paid their dues in some trench elsewhere?

~~~
mswen
She is working in an Engineering department for a company that does sensors
and cloud monitoring in a specific vertical industry. She does a combination
of QA for devices and related software plus has been migrating their
documentation from a wiki to SharePoint and editing the entries for clarity,
grammar and writing style of the documentation as she does the migration.

People from her degree typically would work with product and engineering teams
to do both internal documentation as well as user manuals, well written FAQs
and other support documentation. In a major medical device company located
near here they have teams of people doing this working with expert translators
to appropriately localize surgical guides for surgeons around the world. In
more academic settings they are sometimes employed to provide assistance in
grant writing.

You make some good points about new college hires versus experienced people
who have paid their dues - but that is true of any field. I am not saying I
expected that she would match the salary of CS or engineering grad from the
same university. But in comparison to pure communications degrees or English
lit degrees - this degree is positioned as the sensible writing degree that
actually has corporate positions available.

And, to the point of the article - which focused on people who maybe aren't
quite ready for college and don't finish their degree but still end up with
debt. If anything she is the opposite - qualified to start college 2 years
early. Finished in a total of 4.5 years and for what?

Now it may payoff as she continues to pay dues in entry level work but for now
she could make as much money doing any number of jobs that don't require a 4
year degree.

------
zackmorris
The college debt crisis is not so much about specifics like the rising cost of
education or that more women and minorities are attending now than in the
past. It's really about corruption.

Fannie Mae and Freddie Mac got big after the saving and loan scandal in the
80s, orchestrated by Neil Bush:

[https://en.wikipedia.org/wiki/Savings_and_loan_crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis)

[https://en.wikipedia.org/wiki/Neil_Bush](https://en.wikipedia.org/wiki/Neil_Bush)

Sallie Mae got big after Reagan largely defunded public universities,
switching to student loan based funding with the goal of moving those loans
over to private institutions.

So what it basically comes down to is each generation keeps getting fleeced by
these private firms while the government looks the other way, and taxpayers
pick up the tab.

Just watch as this thread fills up with thousands of comments blaming this or
that. They have us all distracted bickering amongst ourselves so we don't see
who is profiting. If we want to fix higher learning in America, we need to go
back to pre-1980s policies and get private financing out. Universities should
be funded by endowments set up by the alumni who have profited greatly by the
quality educations they received. It's no wonder that people are doing the
math and opting out of college because the loans are too expensive. It was
never supposed to be like that in the first place.

------
Kinnard
I think it's obvious to anyone not living under a rock that the higher
education cliff is in view.

------
scarface74
No one is forced to go to a private college and rack up debt. Go to a state
college. Most students could probably go to a junior college their first two
years close to home and transfer. I always laughed seeing people thousands in
debt getting a comp Sci degree making no more than me - a graduate of an
unremarkable state school.

------
EnFinlay
That first graph is really confusing.

------
Overtonwindow
This is another article beating the college debt drum, and unfortunately it
also misses a few critical points: Students are attending expensive schools,
with expensive private loans. Instead of going to a community or state school,
paid for by the federal Stafford loan, they choose to take out loans from
banks to go to private, or worse, for-profit schools, with zero certainty and
little guidance. This is further compounded by the endless number of require
classes students are forced to take, that have little to no impact on their
major, career choice, or academic goals, and are further saddled with endless
labs, and fees.

Large student debt is the fault of both the students, and the schools. Both
need to take responsibility.

