A multigenerational hit: Student debt traps parents and kids
bigstory.ap.org
bigstory.ap.org
When I went to college (2001-2005) the thought process was "borrow as much as you can, you'll get a good job straight out of college and no one can repo your college degree". I had the head of the financial aid department tell me that borrowing the max every year was fine and dandy and I should keep doing it because my degree wasn't like a car that could be repossessed. So I graduated $38K in debt and spent maybe half of that on actual school with the rest going towards stupid shit that 20 year olds spend too much money on.
I'm not sure I buy that. In the mid '80s my dad's secretary had a graduate degree in marine biology, and the attitude was "Yes, she has a graduate degree and she's working as a secretary. But what do you expect? Marine Biology."
The past wasn't as comfortable as people make it out to be.
I'm curious when this started. I graduated from undergrad in Dec. '99. At no point was I told the above. My parents had always pushed for MD/lawyer/engineer with business as a fallback. Keep in mind they were none of those things, and as a family we understood hardship. Maybe that is part of the equation?
When I originally started pre-med the potential salary at the time certainly drove my choice. I found programming as a side elective and switched majors the next semester. Even though I love technology and programming if the salaries didn't match up it would have remained a hobby and not something I majored in.
If everyone has a bachelor's degree, how is everyone going to command a premium income?
As I see it the problem is that it is actually correct at the present time. And despite the vast bulk of private schools claiming to be charitable organizations they act like rapacious capitalists. That being the case we can look at the equilibrium for firms in their positions, which is to capture virtually all of the surplus. That is exactly what they are in the process of doing.
There's probably several different governmental solutions possible, and by all means if you are interested in this issue you should pursue them. But if you want to do something on a personal level, consider forgoing the use of a degree as a proxy in hiring. Just look for whatever ultimate skills and attributes you are interested in directly. This will have a cost to you, the signal is not totally empty, but if adopted on a widespread basis it will have the salutary effect of making colleges live and die on their direct contribution rather than resting on their credentialist laurels.
Then it becomes a starting point, not an end point. Most businesses, when faced with a deluge of BA's, will start to look for people with master degrees. Same thing if they have a highly sought after position and get a deluge of people with masters, then they look for PhD candidates.
This becomes an issue when you have a BA in a field where a majority of people have master degrees. I had several roommates who were engineering and CS graduates. At the time, the economy was shit (early 2000's) and they went back for their masters. Most said it was because when the economy finally bounced back, they would have a leg up on the people they were competing with.
The only problem they found was as the economy recovered, they had more opportunities with a masters degree, but many were hired at the salary level of an entry level engineer.
Is it too harsh to say that this sounds a lot like people not taking responsibility for their own financial mistake?
[1] https://studentaid.ed.gov/sa/sites/default/files/federal-loa...
When there’s a society-wide systemic “failure to take responsibility”, it becomes everyone’s problem, and trying to blame individuals accomplishes nothing except to make whoever is doing the blaming feel smug.
That is impossible today without either full scholarships or massive borrowing; the inflation of the cost of a 4 year degree from a private school from then to now wouldn't allow me to duplicate this any more.
I spent 10 years volunteering at a local public university and most students had a similar experience (working, some help from parents, a few scholarships) although a few had to borrow a small bit of money. The difference of course is it was a public university which isn't as well regarded as mine, but in the end I bet the actual educational benefit was similar.
Going to college is a great benefit socially and educationally but spending a fortune on it is only useful for a small set of careers (like go to Stanford for CS). I never used any of my 6 years of college studying Chemistry. But I never had to borrow to get my degree. Unless you are talking about medical school I can't see the benefit to going into massive debt just to get a degree.
I don't have that much debt but I can't get a job that will pay me more than 40k ish a year and Seattle is too expensive to live in for that little even with a roommate and cooking skills. This will hopefully change and my income with increase over the next few years but it is scary enough that I am regretting how I went to school. I should have worked for more than the first year even if I had to be in school for longer because of it.
I used it when switching jobs and it help me land a 50% salary increase. I am not exaggerating that. It showed all the possible salaries that companies were willing to pay me before negotiation and interviews started. It helps show what you may actually be worth to employers. Obviously your milage may vary but 40k is extremely low for computer science. Now it obviously depends how good you are etc. For reference I struggled straight out of school as I did computer science minor with another computer degree as my major. However, once I landed my first job ($65K) it has been upwards every since. Best of luck and reach out if you'd like (or anyone else in a similar position).
I just threw a resume up on Dice and started getting decent to great recruiter contacts immediately. I still get hit up constantly on linkedin as well.
My immediate boss would love to hire me but as his boss says no I am stuck here looking.
Put in a year and see if they give you a decent pay increase - some companies will give a 20-30% pay bump after the first year if all has gone well. If not, start looking for another job.
Speaking on behalf of the entire middle class--and let me assure you that I am both qualified and authorized to do so--we are getting sick of working our asses off just to live our entire lives sunk up to our multiple chins in debt.
But no one is likely to lift a finger to do anything about it until after missing a few meals. Perhaps it will help when Mr. Khan and allied parties in the tech industry start to eat Academia's lunch. Thanks to the Internet, you don't absolutely need to pay $100k+ for a degree, and you don't even need to pay the "buck fifty in late charges from the public library," as suggested in the movie Good Will Hunting.
Once employers start de-prioritizing an accredited degree and start recognizing online coursework certifications, it will already be too late. Nobody will be going to college for anything short of calculus, law, medicine, or petroleum-related geology.
After all, if your art history degree isn't going to help you get a job anyway, you could just browse artists' pages on Wikipedia and visit museums instead.
What is the mechanism which will cause this change? It looks a bit chicken/egg from here—there will continue to be college graduates because they are strongly advantaged during hiring, and hiring will continue to strongly advantage graduates because there are enough of them that doing so doesn't drive their costs up much. Plus, no-one in HR gets fired because the Harvard grad didn't work out—take a chance on the guy with a GED and pile of Coursera certificates, OTOH...
It's not as if new networks would not exist in abscence of college networks.
Out of curiosity, who authorized you? And who had the authority to authorize you to speak on behalf of the middle class?
That fragment you quoted was a joke, intended to draw attention to the presumption that may have been missed if I just said "we".
I'm excluding Republicans since their base believes that government intervention to alleviate student loan debt will be the equivalent of Judas kissing Jesus and Road to Serfdom and all that shit.
And it goes without saying the quixotic brand of Silicon Valley libertarianism is not fertile ground for this sort of thinking.
Not to mention this attack ad is right on the website for the Washington State Republican Party:
Also, in bankruptcy the creditors are the ones who assume the losses. When defaulting on government loans, the taxpayers would foot the bill. Totally different scenario.
Loans always involve some risk and there are always some bad loans. But there is, in fact, a real difference between secured debt and unsecured debt. A mortgage is secured debt. A student loan is unsecured debt.
Furthermore, since the point of education is to basically help people become more clever, if we make it too easy for smart, knowledgeable people to wash their hands of their student loans, the end result will be an overall societal attitude of "Only a fool actually pays their student loans." At that point, the entire system falls apart in a way that makes our current woes look like small potatoes.
That's going to happen regardless, with over a trillion dollars in student loan debt. Its just taking longer than expected.
Smart people will always learn how to hack the system. Its easy to default on a house in any state. Its easy to default on your student loan debt if you're moving to another country. The only people who get stuck with worthless debt are suckers.
Colleges could literally spend as much as they're provided. A lot of money right now seems to go towards adding shiny new things to attract more students (e.g. newer buildings, more tech, nicer chairs, etc). The only thing stopping them from charging more is competition, but so few students even check the cost of their education that it isn't working well, and many are geographically restricted.
Community college is where people go if they actually care at all about the costs. Or at least they get 2/3rds of their education done at a CC.
If I was in charge I'd attack this problem as follows:
- College loans are now provided by the US Government only at an interest rate DESIGNED to break even (i.e. no longer for-profit).
- Loans are repaid as a tax (for people who remain in the US, like a debt for people abroad).
- No repayment is required under a certain threshold (e.g. $30K single, 50K family, in 2015 dollars).
- Repayment schedules scale similar to income tax (e.g. you MUST repay faster the more you make).
- Loans are not subject to bankruptcy and are treated like a tax for inheritance purposes (i.e. paid back first).
- Under certain circumstances interest can be frozen (e.g. documented medical issues, natural disasters, continued education, etc).
This means that unemployment or illness isn't as damaging. People who leave college and get low paying jobs aren't hurt as badly day to day (although might technically have an outstanding loan for the rest of their life).
Only major difference is, death & bankruptcy release you from the loan in NZ...
It's the parents of younger kids who should be paying attention.
I paid off $10K in student loans. It didn't take too long and i was making well under $50K a year. Lived in a cheap, not-very-nice apartment, drove an old car, didn't spend much on entertainment, etc. It's very possible to pay off even the average of $20K in debt and not have it be a chain on your life forever.
People also need to make sure they actually want to use the degree, that it's in a field where there are jobs, work while they are in school, and during their school time forgo the extras in life.
That's the fundamental driving force behind a lot of insane pro-debt policies, especially student loans and mortgages. If you want the college situation to get better, attacking the idea of retirement is the way to go. That, and suing places like fire departments that require a college degree for no relevant reason.
FYI to anyone who is curious but not enough to check out both: The actual writing appears to be the same, but they have different titles and different photos (+, of course, photo descriptions/comments) and I guess one has a video the other does not.