

The Higher Education Bubble (Part 1) - mstockton
http://www.educationnews.org/higher-education-bubble/part-1/

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bentcorner
I can't pin my finger on it, but this feels too hand-wavy to me. AFAIK, the
housing market crash was caused by bad lending - people with bad credit were
able to get loans for homes for far more than they could afford (in the hopes
of flipping the home), they defaulted, and the banks are left holding the bag.

Could this happen to higher-education? Could too many graduating students
defaulting on their loans cause problems for future students in obtaining
loans? I don't know how student lending works (how does a bank know when or
when not to issue a loan to a student?), but I'd wager that if they aren't
taking into account a student's performance record and potential future
earnings, they will soon.

 _Google break_

Huh. It looks like they don't [1]. It would be interesting to learn why they
haven't yet, it seems like a good idea. It's certainly reasonable to think
that there are more factors to take into account (I'm thinking that of
moral/ethical considerations mentioned in the linked paper).

[1] <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941070>

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the_watcher
Federal Loans are basically unlimited to anyone without an adverse credit
history (so 18-24 year olds with no credit qualify). That is the definition of
bad lending. There is no linkage between likelihood of making the investment
back and size of the loan.

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mjmahone17
That's not true, unless you're a grad student or an independent, and can take
advantage of PLUS loans. As a senior, I can only take out 10 or 11k in
subsidized, and 2k in unsubsidized loans. The rest has to come from family,
aid or private loans.

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Sumaso
Not all degree's are equal.

I can't imagine any engineer saying that they cannot pay off their student
debt because they cannot find a well paying job.

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rayiner
That's not true. Even during the boom, many people who got engineering degrees
at second and third tier schools couldn't find jobs as engineers.

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vonmoltke
When I graduated in 2002 from a smaller state university I was the only BSEE
out of 12 (I think) who had a job or even prospects. The rest of the
engineering department wasn't much better.

I turned down Rose-Hulman because I would have had to make up $12k+ per year
in loans and wages to afford it.

Edit: I would like to add that, despite the complaints here about not having
enough programmers, the current unemployment rate for fresh BSCS grads is
about 7.8%.

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stevenameyer
This is because people are not looking for just any programmers, they are
looking for very skilled programmers with a specialty in what their company
does. Which is a hard ticket to fill the majority of the time.

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twoodfin
Taking the Harvard endowment's performance in 2008 (a year in which the S&P
500 lost 40% of its value) as a measure of the change in the availability of
financial aid is... strange.

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rdudekul
It would be interesting to see how MOOCs (Coursera, Udacity etc.) will change
the education landscape. Personally the MOOC courses have been far more useful
to me than any university courses I took. If getting a job is the sole
criteria, I can see a time where university courses can become irrelevant
compared to free online courses.

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stevenameyer
I think the major problem with higher education is two things.

1) Inflation. So many people are now getting degrees that they are starting to
mean less and less. But since so many people have a degree its starting to
become a necessity for jobs that use to not require them.

2) People see Higher education as something it was not designed for. Training
for a job. Historically (unless your going into a professional program such as
engineering or medicine) education was designed to help in the quest for
knowledge, not as a means to get a good paying job. And we are starting to see
this more and more. A BA may give you tons of knowledge in literature, or
history, or whatever your major is but more often then not this knowledge is
not preparing you for a job, it is acquiring knowledge for the sake of
knowing.

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lkrubner
Is there a way to reconcile their graph, which shows the cost of education
going up by 1000% on their index, with the statistic, lower on the same page,
that says the cost of education has gone up by 439%?

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KaeseEs
The graph shows a 1000-ish percent increase in tuition since 1978, the 439%
number later on the page is the cost (not tuition) increase since 1982.
Measuring different things from different starting points.

