The statistics in this article aren't especially useful, and could easily have been made more so by breaking debt down by attainment. Students that leave postsecondary without a 4-year bachelor's degree on average apparently owe less than $10k; with a bachelor's, less than $25k; with a graduate degree, $45k.
Roughly 1/3 of all borrowers drop out, implying (I think?) that the majority of debt is held by people who complete degrees, a substantial minority of whom obtain graduate degrees.
If the student debt crisis is about rescuing people for whom college was of no benefit (for instance, because they attended a for-profit school and didn't obtain a bachelor's degree --- the overwhelming majority of low and middle SES quartile students at for-profit colleges do not), the intervention needed to solve that problem is radically different and less expensive than "forgiving all student debt".
The last point is key. There are so many options that provide relief for those who need it most that don’t bail out New York Times journalists who paid $150,000 for a Columbia English degree or big firm lawyers who paid $250,000 for a Columbia law degree. And given how much of the debt is subject to income-based repayment, there is also a set of options for bringing relief to those who don’t qualify to cap their loan payments at 10% of disposable income.
Though it'd be fair to point out that this article gets income repayment caps wrong, calling out the downsides without noting the fact that they also make large debts for the middle class more tenable.
There is also a free and fair option, just let people go bancrupt on their student loans. We've already seen politicians bailing out loans to help their reach friends, but saying it's all for the people.
There isn't much of a student loan market. The overwhelming majority of student loans are made by the government with no underwriting and the rates set arbitrarily.
I don’t believe that’s the case. My understanding is that the government holds on to the loans but hires servicers to interact with borrowers. These servicing contracts are subject to competitive bids and that’s why people regularly get new processors.
> In some cases, ED needs to transfer loans from one servicer to another servicer on the federal loan servicer team. ED transfers loans as part of its efforts to ensure that all borrowers are provided with customer service and repayment support. If ED needs to transfer your federal student loans from your assigned servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer on ED’s federal loan servicer team simply means that a new servicer will provide the support you need to fully repay your loans.
I think it’s still on the order of 3-400 Billion or so, but I am not sure of the numbers.
Either way loans go back 4+ years before graduation and people take 15+ years to pay them back. So I assume quite a few of these loans are out there even if the remaining balance is not that huge.
The problem with allowing people to BK their student loans is that it creates a perverse incentive. If you BK over a car, it gets repossessed. But nobody can take your education back. A BK at 22-23 years of age is not a strong deterrent; you'll still be able to buy a house in your early 30s, which is when a lot of people plan to do that anyways.
You can make loans dischargeable, but doing so will drastically change who loans are made available to in the first place.
Why could theoretically repossess the certification though. That is make it illegal to report you have a degree you bk’d on and make the colleges respond negatively when asked about your credentials.
I suspect that leads to outcomes that are uncomfortable for universities though.
For a long time people were allowed to discharge student loans in bankruptcy. Most people didn't because costs were reasonable and it hit your credit score.
If you suddenly made that allowed again there's be a bunch of initial bankruptcies because of pent up demand and the market racing toward equilibrium but it would almost certainly revert to somewhere near the level it was originally.
Two responses to this (we're recapping a previous thread at this point):
1. Tuitions were much lower when loans first started to be non-dischargeable.
2. The provision to exempt them from bankruptcy was based on concerns that people were already ruthlessly defaulting on them.
As this article notes: the current disposition of college financing is part of a package of policy changes geared at drastically expanding access to college, and that package is generally viewed as being successful on its own terms.
Allowing for bankruptcy discharge would lead to less predatory lending (since all of a sudden the banks would have an interest in checking credit-worthiness), and that in turn would lead to universities losing many students if they don't lower tuition costs to reasonable levels again.
Not allowing defaulting on student loans was a huge driver in why tuitions are so high without any added value from the universities.
The only real lender of significance in the market is the federal government, which makes loans without regard to credit worthiness. That policy is not subject to change for policy and political reasons. What credit check is an 18 year old going to pass for a large unsecured loan? Especially 18 year olds from disenfranchised groups?
The trap with income based repayment is that after 20 or 25 years worth of payments less than the accruing interest the original principal plus all the capitalized interest is forgiven, but that forgiven debt is taxable income to the borrower. So the borrower has replaced a debt to the department of education to one to the IRS.
Surely the taxes on that income are considerably less than what was forgiven?
If nothing else, this seems like an argument for permitting the recipient of this particular kind of windfall to break it up across a few years, possibly retroactively.
When the lender is the government and the forgiveness is an intended and advertised part of the program from loan origination, I’d argue it isn’t meaningfully a windfall.
Further, I’d argue that the borrower isn’t the main beneficiary of these student loan programs. Rather they are intended to, and do, enable monstrous cost growth in private de facto for-profit universities.
It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place.
Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max.
The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward.
So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower.
Yup. And in healthcare most of the focus is on Pharma (which is certainly profitable and gouging Americans but is a small piece of the pie) and insurance companies (which don’t even make much profits), but not on hospitals which constitute around 70% of healthcare costs.
Administrators remind me of the old lady who swallowed the fly, administrators to administrate the administrators, eventually they'll swallow the horse, maybe
This doesn’t work for all Systems. From the UC system for examples, administrative salaries increased 13x while tenure faculty salaries increased 1.6x, but faculty growth is less then the growth of student body, from 1964-2015.
I call shenanigans, and yes, I've gone to the source[0] the article cites.
First off, the source doesn't even claim that. They measure total expenses on instruction. The instructors might be getting a shitty pay (most do), but the expenses could be high if the instructor:student ratio is high enough.
Secondly, I highly question their data and methodology.
The only relevant data to support the claim you made is in Figure 14. That figure does not explain how the expenses on "instructors" are tallied.
To start, the universities have purely teaching faculty and research faculty that also teach. The latter can be highly salaried, but also bring a lot of money to the university in the form of research grants, which actually pay the high salaries.
Thus research spending and instructional spending are likely mixed in Figure 14.
(It is a well-known fact that most of instruction is down by adjunct faculty at slave wages).
Going further, I don't see a distinction between undergraduate and graduate instruction. A graduate seminar, say, on tropical varieties for non-archimedean analytic spaces that exactly 5 students are enrolled in because it's something they need for their research can be formally listed as a class, but this 1:5 instructor-to-student ratio is not something a typical undergraduate student will ever see. Furthermore, whether the TA's (grad students) are counted in such ratios is unclear.
Now, let's look at the data[1].
From 1970 to 2009, the instructors' salaries have seen a modest increase (about $4K/year) after adjusting for inflation[4], less than 6%.
However, the cost of attendance has more than doubled, inflation adjusted[2].
For the claim in Figure 14 to hold any water, we should expect to see the student:instructor ratio drop by a factor of more than 2 since the 70's.
This simply did not happen[3]. The FTE student-instructor ratio, on the average, stayed at about 16-17.
Therefore, the Figure 14 that the book[0] includes without references to sources, can't be right.
The data I cited suggests that the tuition costs would be half of what they are today if they were tied to instructors' salaries. However, the costs have more than doubled.
(Everyone who would like to dispute this is welcome to dig into the statistics).
> After years of projecting big profits from student lending, the federal government now acknowledges that taxpayers stand to lose $31.5 billion on the program over the next decade, and the losses are growing rapidly.
Most civilized countries offer free or close to free education for their young population instead of trying to profit off of this segment of the population that barely knows what it wants out of life. If they can do it, I'm sure we could. How about bailing out the people for one and ending this for profit loan system once and for all? How about investing in the future generations of Americans for once instead of trying to profit from them? Or we could continue on the path we're on and see just how much worse things get for the masses here. I wonder just how much they will put up with.
Free education only works when you have a selection system where you are tested and then put where you fit(shoveling dirt, laying bricks, trade school, college, university).
In US any graduate from HS can go do 4 year degree in “something”. Try that in Germany or Netherlands.
Among other reasons why this would be unlikely to work in the US: there would almost certainly be a racial disparity in who qualifies for higher education, and that would be a political disaster.
1. Testing 12-14 year olds to decide their lot in life is.. well unreliable. Not to mention brutal.
2. In US race card will be played once it is apparent that proportion of people with different ski color that get free education does not line up with demogrphic proportions(political suicide)
3. People WILL game it by hiring tutors to study to test, bribing teachers, teachers will cheat and give out solutions etc. In Netherlands they have what amounts to counter-intelligence apparatus to counter this. Good luck implementing that in all of the States.
We do have aptitude tests and a selection system in the US: the SAT/ACT. You can't get into competitive schools without not only doing well on that test but also doing well in high school and often outside of high school. Obviously, only people who pass and are admitted would get the free education. One can't just simply go to say Berkley and start studying anything. They have stringent admissions criteria. So I don't really see what point you're trying to make. There's absolutely no reason this couldn't work in the US. For people who don't test that well there's still community colleges and lesser state schools. Little about the testing and admissions process would have to change. Only the funding and cost would need to be reworked. That's far from impossible if we want to invest in future generations rather than using them to make a short-term profit.
I think a lot of the student debt crisis is self-inflicted. No one is forcing you to attend a 4 year straight from high-school, go to a community college and then transfer to a state school/4 year. (I spent 3 years at a CC, but I graduated from a UC and paid off my student loans within a year)
Yes, college is expensive, but there is an existing alternative that everyone seems to forget about and it boggles my mind.
I did 2 years at CC before going to a UC too. I don't think people are forgetting about it. There are many reasons people choose larger loans instead of transferring, most of which are unreasonable in hindsight once they enter the workforce.
Drop-out rates are much higher at community colleges, particularly for low-income and minority students. This is kind of a privileged statement to make. Also, the UC system is one of the few that retains a robust CC-to-university pipeline, so it's not fair to compare the opportunities available in California to those in a lot of places in this country, particularly when so many who would take advantage of what you did are priced out of housing.
No one is forced to take out any kind of debt; the issue is that typical debt is secured by an asset or dischargeable in bankruptcy. If you make severe mistakes with credit cards, you'll declare bankruptcy and the credit card companies will suffer. This imposes some market discipline on lenders. Banks are (ideally) not eager to make mortgages to people who are likely to become insolvent. Yes, I know about the Great Recession and this was part of the problem.
Severe student loans can be incurred starting at age 18 and aren't dischargeable. That's why they're uniquely pernicious. It's typically not possible to fuck up your financial life for decades via most debts, but it is with student loans. We don't know ourselves and the future is unpredictable, and that's why bankruptcy exists. Taking it out of the equation empowers predatory lenders and institutions.
Yes this is the main problem. People like the parent commentator look down on young students for being irresponsible when the other side of the deal is even more irresponsible. Lenders are incentivized to loan out as much as possible since they know they will get paid back.
A lot of kids are essentially forced. Maybe not with a gun, but there is strong societal and familial pressure to get into the best school that they can, and that’s engrained into them from a pretty early age. They are taught that their value as a human being is heavily dependent on academic success.
Then, the people who raised them, and who they trust the most, tell them to sign on whatever dotted line is in front of them. The finances take care of themselves later! The administrators act as though it’s business as usual. The student is their proxy to government guaranteed money.
Since student loans can’t be discharged, it’s not even that banks relax their standards. It’s much worse than that. They’re now financially incentivized to give out as much debt as they possibly can. The more they lend, the more they are guaranteed to profit.
Money is free, so schools raise their prices and hire more staff.
I don’t really blame the students at all. Most people are surprisingly financially illiterate, and 17 year olds are especially naive. Their brains are not fully formed. We don’t let them buy cigarettes or look at naked people, because we don’t trust them. Yet we throw them in this game with seasoned adult professionals who work with complex financial instruments for a living, and we somehow expect them to come out alive.
Sure, many individuals will navigate this just fine, but, predictably, those ones are lost in the noise when you measure populations.
The only thing that boggles my mind is the fact that we haven’t corrected it yet, and most of the current proposals sound like they will actually make the problem worse. Bernie wants to make tuition free! That sounds like a pre-emptive bailout on a blank check.
If you want to understand why people seem to be inexplicably bad with money, it’s important to realize that their brain doesn’t work like yours does. So any assumptions based on what you think is logical are worthless in furthering your understanding.
I mentioned this to my parents and they basically brushed it off. We were told from middle school onward that you need a bachelors degree to succeed. We were even shown graphs about average lifetime earnings. High school students are woefully unprepared to weigh the financial decisions that college requires.
This also changed fairly recently. Cost of living and cost of tuition have skyrocketed over a generation or two, while wages have not (outside of tech, anyway). My parents generation could take out modest student loans and pay them along with a mortgage payment on a starter home with a single income. So what worked out just fine for them is setting kids up for disaster these days.
+1. Community colleges are like a cheat code. You pay a fraction of the cost for the same GE classes, you have far less competition transferring in as a junior than as a freshman, and you're a more attractive applicant because you've had two years to realize you don't actually want to major in electrical engineering.
Many community colleges even have transfer agreements with universities; you just check the courses off the pre-agreed upon list, and you're guaranteed admission.
Not only will your college be paid for while in, but you have the GI Bill when you separate and if you were forward-thinking choose a job that is marketable on the outside e.g., air traffic control.
Honest question, why are Universities becoming so expensive? Is because these credits are available? Was estudying a degree cheaper before the credits?
Longer answer, according to the universities: Because modern students demand more than just classes, they also want social services (on-site counseling, bias incident response teams, etc).
Longer answer, according to a cynic: Because universities are more or less guaranteed the money from the federal government, they've grown to spend the money on inflated administration. As costs go up the government allows students to borrow more and more to cover the costs, and universities find ways to jack up their prices to match the money on the table. While the government loaning poor students money to better themselves with an education is a great thing in theory, I think it's what directly lead to the current situation. I don't want to turn this into a long post against capitalism, but I think that the unfettered capitalistic worldview we have here in the US is the root problem.
ISAs are definitely interesting, it's nice to see a system that incentives the school to deliver value to its students.
>It seemed to me like the government subsidizing the market in stark contrast to unfettered capitalistic principles is the root of the issue.
My opinion was apparently unpopular, but I'm not claiming that the government is the cause of the problem. Instead I'm claiming that the government's noble effort is subverted by the fact that the schools care about maximizing immediate profits more than altruistic goals like building healthy strong societies. The cause of skyrocketing costs is, in my opinion, the simple fact that the schools seek to maximize their revenue and since there's no government-sponsored damping (as that would go against capitalist principles) we get a feedback loop as the government tries to educate its populace.
It’s too controversial to raise the idea that both super-expensive sectors (education and healthcare) are both heavily regulated and funded through government. Most act like it’s a mad-max capitalist free-for-all already when in fact it’s quite the opposite.
At public schools, state funding cuts are part of it. States have been cutting funding for schools (directly or in proportion to expenses/inflation) for decades. At the same time many more students are going to college than they used to. These things combined increase funding share that needs to be made up by tuition significantly.
>At the same time many more students are going to college than they used to.
In terms of cost this statement doesn't make sense to me. There are plenty of economies of scale in education. One professor can educate an undergrad class of 100 people for barely more than what it costs to educate 10 people. While the effort for checking exams multiplies directly with the number of people, many of the costs are lowered the more students you have.
The marginal costs per student almost go to zero if you have enough students.
That's just not true. Many costs scale with the number of students. Dorms, food, academic buildings, administrative workers, faculty (no you can't teach every class in batches of 500 like Econ 101, even then there is an army of graders), software licenses, land underneath the buildings, utilities and infrastructure, roads and parking, IT infrastructure and people to run it, grounds maintenance, student healthcare, etc. You can't just keep packing an arbitrary number of students into the same classroom.
An arbitrary number and not all costs misses the point that some costs scale roughly proportionally while others scale less than proportionally. Meaning tuition per student should definitely not increase with more students, there's actually more possibility for savings due to scale.
You're missing my initial point that with constant dollars from the state, more students means the state's money gets stretched thinner over the student body, so each student has to pay a larger percentage of the cost of their enrollment.
An interesting hypothesis is that this is caused by everything else becoming much cheaper (because e.g. automatization), while teaching remains similarly hard as it was 100 years ago.
Why have the costs for healthcare and higher education been rising so rapidly? This article seems to blame government money and people wanting higher ed, but it doesn’t back up any of its claims.
I'm just going to reply a dead comment that I saw while using the HN app that shows dead comments by default. Looks like that comment got downvoted for some reason.
>It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower.
I think even though your point appears very inflammatory at first glance, I think your point raises a deeper problem. The issue of why are we subsidizing poor value majors. So in an ideal world any major that doesn't have much value would automatically get culled as its graduates won't find jobs but with guaranteed federal loan money that's not happening.
So tomorrow, I could go and setup a "department of crystal healing and contemporary perspectives on it" and I'll start getting the federal loan dollars from my students. The only way I see to fix this, is to make loans dischargeable via bankruptcy to bring this negative feedback pathway back into the pricing of courses ecosystem.
I understand that one is privileged to some extent to have been able to pay off student debt. But, I can't help but think it could be problematic to cancel all student debt and in effect penalize all those who worked hard to save and pay off their debt.
Only a couple years ago it was advantageous to pay off your student debt quickly to avoid interest. Now it seems beneficial to pay the monthly minimum only and hope that the debt gets forgiven by the government at some point...
Does any one know if any of the Democratic candidates have talked about this issue?
Not based on direct evidence, but based on the candidates' rhetoric and Democrats' typical platform goals, I'm thinking they will prioritize forgiveness for low earners, similar to how they limit write-offs for student loan interest payments to incomes below a threshold (I think it was 80k last year? I don't remember).
So if you're already in a place to pay it off without struggling, I'm betting your life won't change that much. I'll just be happy to see my loans gone. If I end up paying it off in 5 years and find out it all would have been forgiven regardless, C'est la vie.
Student loans can also be used to pay rent and meals, and living in an urban center is increasingly expensive. My alma mater is tearing down old dorms and building pricey new ones instead of making student life as affordable as possible.
The story makes some very good points, but completely misses two other reasons that tuition costs have risen so much faster than inflation:
1) State aid has dried up considerably. Public colleges used to get a a huge amount of their budget from the state. However, cutting funding to higher education has always been more politically palatable when tightening the belt than other areas. When I was in college, the funding was roughly 50%. Now it's about %25, and in inflation adjusted dollars is significantly lower than 20 years ago.
2) For at most of the past 20 years, there's been an arms race amount colleges competing for students. In that pursuit, enormously expensive new facilities from dorms to rec centers have ballooned capital expenses, covered primarily by bind issues that have interest to be paid and therefore necessitate higher tuition. To make ends meet.
These two items, along with easy financing, represent the three legged stool on which massive tuition and increased and student debt sits.
Any idea where this arms race comes from? Were the colleges holding classes with empty seats because they couldn't get enough students?
One would like to think that this would allow new schools to materialize that opt out of that race to the top, though of course the overhead is very high. I've been watching Signum University, an online-only school, work its way to accreditation over the past several years, and they're nowhere close. (A big bolus of cash would probably help; they're trying to do it with only small-donor donations.)
I feel like college has become not-worth-it in the three decades since my degree, though unfortunately that's not true: even with the ballooning costs it's still a net positive. It just seems as if they're raising prices to absorb as much of that net positive as they can, and in doing so the people on the left side of the return curve go from positive to negative. Since the schools get theirs up front, that's pure positive for them.
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[ 4.9 ms ] story [ 140 ms ] threadThe whole thing seems a touch more diabolically evil in a way.
Roughly 1/3 of all borrowers drop out, implying (I think?) that the majority of debt is held by people who complete degrees, a substantial minority of whom obtain graduate degrees.
If the student debt crisis is about rescuing people for whom college was of no benefit (for instance, because they attended a for-profit school and didn't obtain a bachelor's degree --- the overwhelming majority of low and middle SES quartile students at for-profit colleges do not), the intervention needed to solve that problem is radically different and less expensive than "forgiving all student debt".
Don't let history repeat itself
This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
In 2010 the policy changed, however plenty of older federally backed student loans are still being sold and resold. https://www.investopedia.com/articles/personal-finance/08121...
https://studentaid.ed.gov/sa/repay-loans/understand/servicer...
> In some cases, ED needs to transfer loans from one servicer to another servicer on the federal loan servicer team. ED transfers loans as part of its efforts to ensure that all borrowers are provided with customer service and repayment support. If ED needs to transfer your federal student loans from your assigned servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer on ED’s federal loan servicer team simply means that a new servicer will provide the support you need to fully repay your loans.
There was a change as a rider to the 2010 affordable care act. But, older federally backed student loans are sold and resold.
Either way loans go back 4+ years before graduation and people take 15+ years to pay them back. So I assume quite a few of these loans are out there even if the remaining balance is not that huge.
You can make loans dischargeable, but doing so will drastically change who loans are made available to in the first place.
BK's on your undergrad also would make it harder to take out loans for post graduate courses.
I suspect that leads to outcomes that are uncomfortable for universities though.
If you suddenly made that allowed again there's be a bunch of initial bankruptcies because of pent up demand and the market racing toward equilibrium but it would almost certainly revert to somewhere near the level it was originally.
1. Tuitions were much lower when loans first started to be non-dischargeable.
2. The provision to exempt them from bankruptcy was based on concerns that people were already ruthlessly defaulting on them.
As this article notes: the current disposition of college financing is part of a package of policy changes geared at drastically expanding access to college, and that package is generally viewed as being successful on its own terms.
Not allowing defaulting on student loans was a huge driver in why tuitions are so high without any added value from the universities.
If nothing else, this seems like an argument for permitting the recipient of this particular kind of windfall to break it up across a few years, possibly retroactively.
Further, I’d argue that the borrower isn’t the main beneficiary of these student loan programs. Rather they are intended to, and do, enable monstrous cost growth in private de facto for-profit universities.
“literally nobody knows who these people are or what they are doing”
https://www.forbes.com/sites/carolinesimon/2017/09/05/bureau...
You don’t have to make profit to waste a lot of money.
First off, the source doesn't even claim that. They measure total expenses on instruction. The instructors might be getting a shitty pay (most do), but the expenses could be high if the instructor:student ratio is high enough.
Secondly, I highly question their data and methodology.
The only relevant data to support the claim you made is in Figure 14. That figure does not explain how the expenses on "instructors" are tallied.
To start, the universities have purely teaching faculty and research faculty that also teach. The latter can be highly salaried, but also bring a lot of money to the university in the form of research grants, which actually pay the high salaries.
Thus research spending and instructional spending are likely mixed in Figure 14.
(It is a well-known fact that most of instruction is down by adjunct faculty at slave wages).
Going further, I don't see a distinction between undergraduate and graduate instruction. A graduate seminar, say, on tropical varieties for non-archimedean analytic spaces that exactly 5 students are enrolled in because it's something they need for their research can be formally listed as a class, but this 1:5 instructor-to-student ratio is not something a typical undergraduate student will ever see. Furthermore, whether the TA's (grad students) are counted in such ratios is unclear.
Now, let's look at the data[1].
From 1970 to 2009, the instructors' salaries have seen a modest increase (about $4K/year) after adjusting for inflation[4], less than 6%.
However, the cost of attendance has more than doubled, inflation adjusted[2].
For the claim in Figure 14 to hold any water, we should expect to see the student:instructor ratio drop by a factor of more than 2 since the 70's.
This simply did not happen[3]. The FTE student-instructor ratio, on the average, stayed at about 16-17.
Therefore, the Figure 14 that the book[0] includes without references to sources, can't be right.
The data I cited suggests that the tuition costs would be half of what they are today if they were tied to instructors' salaries. However, the costs have more than doubled.
(Everyone who would like to dispute this is welcome to dig into the statistics).
[0] https://www.mercatus.org/system/files/helland-tabarrok_why-a...
[1]https://nces.ed.gov/programs/digest/d10/tables/dt10_267.asp
[2]https://nces.ed.gov/programs/digest/d07/tables/dt07_320.asp
[3] https://nces.ed.gov/pubs2012/2012001.pdf - page 377
[4] Inflation calculator: https://www.officialdata.org/1976-dollars-in-2006?amount=924
Higher education is a ponzi scheme, from books to peer review to administration.
Most civilized countries offer free or close to free education for their young population instead of trying to profit off of this segment of the population that barely knows what it wants out of life. If they can do it, I'm sure we could. How about bailing out the people for one and ending this for profit loan system once and for all? How about investing in the future generations of Americans for once instead of trying to profit from them? Or we could continue on the path we're on and see just how much worse things get for the masses here. I wonder just how much they will put up with.
In US any graduate from HS can go do 4 year degree in “something”. Try that in Germany or Netherlands.
1. Testing 12-14 year olds to decide their lot in life is.. well unreliable. Not to mention brutal.
2. In US race card will be played once it is apparent that proportion of people with different ski color that get free education does not line up with demogrphic proportions(political suicide)
3. People WILL game it by hiring tutors to study to test, bribing teachers, teachers will cheat and give out solutions etc. In Netherlands they have what amounts to counter-intelligence apparatus to counter this. Good luck implementing that in all of the States.
Yes, college is expensive, but there is an existing alternative that everyone seems to forget about and it boggles my mind.
Severe student loans can be incurred starting at age 18 and aren't dischargeable. That's why they're uniquely pernicious. It's typically not possible to fuck up your financial life for decades via most debts, but it is with student loans. We don't know ourselves and the future is unpredictable, and that's why bankruptcy exists. Taking it out of the equation empowers predatory lenders and institutions.
In practice, I'm not certain this is true. In Massachusetts, a parent can be forced to pay for his over-18 child's college education:
https://www.familyneedslaw.com/blog/2019/03/massachusetts-pa...
I'm unclear as to whether or not the court can force a parent to go into debt to accomplish that.
Then, the people who raised them, and who they trust the most, tell them to sign on whatever dotted line is in front of them. The finances take care of themselves later! The administrators act as though it’s business as usual. The student is their proxy to government guaranteed money.
Since student loans can’t be discharged, it’s not even that banks relax their standards. It’s much worse than that. They’re now financially incentivized to give out as much debt as they possibly can. The more they lend, the more they are guaranteed to profit.
Money is free, so schools raise their prices and hire more staff.
I don’t really blame the students at all. Most people are surprisingly financially illiterate, and 17 year olds are especially naive. Their brains are not fully formed. We don’t let them buy cigarettes or look at naked people, because we don’t trust them. Yet we throw them in this game with seasoned adult professionals who work with complex financial instruments for a living, and we somehow expect them to come out alive.
Sure, many individuals will navigate this just fine, but, predictably, those ones are lost in the noise when you measure populations.
The only thing that boggles my mind is the fact that we haven’t corrected it yet, and most of the current proposals sound like they will actually make the problem worse. Bernie wants to make tuition free! That sounds like a pre-emptive bailout on a blank check.
If you want to understand why people seem to be inexplicably bad with money, it’s important to realize that their brain doesn’t work like yours does. So any assumptions based on what you think is logical are worthless in furthering your understanding.
Many community colleges even have transfer agreements with universities; you just check the courses off the pre-agreed upon list, and you're guaranteed admission.
Not only will your college be paid for while in, but you have the GI Bill when you separate and if you were forward-thinking choose a job that is marketable on the outside e.g., air traffic control.
Longer answer, according to the universities: Because modern students demand more than just classes, they also want social services (on-site counseling, bias incident response teams, etc).
Longer answer, according to a cynic: Because universities are more or less guaranteed the money from the federal government, they've grown to spend the money on inflated administration. As costs go up the government allows students to borrow more and more to cover the costs, and universities find ways to jack up their prices to match the money on the table. While the government loaning poor students money to better themselves with an education is a great thing in theory, I think it's what directly lead to the current situation. I don't want to turn this into a long post against capitalism, but I think that the unfettered capitalistic worldview we have here in the US is the root problem.
It seemed to me like the government subsidizing the market in stark contrast to unfettered capitalistic principles is the root of the issue.
Perdue’s income sharing plan mentioned in the article seemed really interesting off the cuff.
I think it would have been really beneficial had I been required to create a pitch deck to get financing for my education.
>It seemed to me like the government subsidizing the market in stark contrast to unfettered capitalistic principles is the root of the issue.
My opinion was apparently unpopular, but I'm not claiming that the government is the cause of the problem. Instead I'm claiming that the government's noble effort is subverted by the fact that the schools care about maximizing immediate profits more than altruistic goals like building healthy strong societies. The cause of skyrocketing costs is, in my opinion, the simple fact that the schools seek to maximize their revenue and since there's no government-sponsored damping (as that would go against capitalist principles) we get a feedback loop as the government tries to educate its populace.
In terms of cost this statement doesn't make sense to me. There are plenty of economies of scale in education. One professor can educate an undergrad class of 100 people for barely more than what it costs to educate 10 people. While the effort for checking exams multiplies directly with the number of people, many of the costs are lowered the more students you have.
The marginal costs per student almost go to zero if you have enough students.
https://slatestarcodex.com/2019/06/10/book-review-the-prices...
>It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower.
I think even though your point appears very inflammatory at first glance, I think your point raises a deeper problem. The issue of why are we subsidizing poor value majors. So in an ideal world any major that doesn't have much value would automatically get culled as its graduates won't find jobs but with guaranteed federal loan money that's not happening.
So tomorrow, I could go and setup a "department of crystal healing and contemporary perspectives on it" and I'll start getting the federal loan dollars from my students. The only way I see to fix this, is to make loans dischargeable via bankruptcy to bring this negative feedback pathway back into the pricing of courses ecosystem.
Only a couple years ago it was advantageous to pay off your student debt quickly to avoid interest. Now it seems beneficial to pay the monthly minimum only and hope that the debt gets forgiven by the government at some point...
Does any one know if any of the Democratic candidates have talked about this issue?
So if you're already in a place to pay it off without struggling, I'm betting your life won't change that much. I'll just be happy to see my loans gone. If I end up paying it off in 5 years and find out it all would have been forgiven regardless, C'est la vie.
1) State aid has dried up considerably. Public colleges used to get a a huge amount of their budget from the state. However, cutting funding to higher education has always been more politically palatable when tightening the belt than other areas. When I was in college, the funding was roughly 50%. Now it's about %25, and in inflation adjusted dollars is significantly lower than 20 years ago.
2) For at most of the past 20 years, there's been an arms race amount colleges competing for students. In that pursuit, enormously expensive new facilities from dorms to rec centers have ballooned capital expenses, covered primarily by bind issues that have interest to be paid and therefore necessitate higher tuition. To make ends meet.
These two items, along with easy financing, represent the three legged stool on which massive tuition and increased and student debt sits.
One would like to think that this would allow new schools to materialize that opt out of that race to the top, though of course the overhead is very high. I've been watching Signum University, an online-only school, work its way to accreditation over the past several years, and they're nowhere close. (A big bolus of cash would probably help; they're trying to do it with only small-donor donations.)
I feel like college has become not-worth-it in the three decades since my degree, though unfortunately that's not true: even with the ballooning costs it's still a net positive. It just seems as if they're raising prices to absorb as much of that net positive as they can, and in doing so the people on the left side of the return curve go from positive to negative. Since the schools get theirs up front, that's pure positive for them.