What's rising faster than health care? College costs
lifeinc.today.com
lifeinc.today.com
The graph in the article show college costs up 300% in the last 21 years.
The economist[1] reports an 11x increase in college tuition from 1978-2011.
The problem is definitely _not_ that people can't get loans but rather that college is so expensive that it requires loans in the first place.
[1] http://crimsoncavalier.blogspot.com/2010/09/who-says-theres-...
I have more than a few friends and acquaintances who are deep in debt from school loans, many of them with degrees from excellent schools but with low market value (compared to e.g. engineering, science, medicine, law). I'd be in the same boat (a lit degree) if it weren't for an obsessive hobby that happened to be lucrative (programming, design).
So I think you're exactly right. Many people are given false expectations about what opportunities a degree confers. Much of what you're paying for is a good brand attached to your name and access to a social network. That's much more of a gamble than med school, where although you're guaranteed to come out with a lot of debt, you're also fairly certain you'll be able to pay it off in ten years or less while making a very comfortable living.
I would love to see more money and effort spent on secondary education, vocational education, and community colleges. I would pay more taxes if that's where they were going. If the collective mindset could be shifted from "I need to go to college" to "I need to get an education, learn how to be creative and work constructively with other people," we'd have fewer people in debt and more functional institutions.
/hand-waving
There's a reason we aren't graduating enough people in the difficult high-value fields like engineering. Its financially too easy to take an easy, low-value degree. And young people don't have a good understanding of how things work out in the long run.
So societally we are, once again, sending people down very bad roads paved with good intentions.
We have a mistaken belief that every good thing can and should be subsidized. But in doing so we destroy the decision-making process that normally would weigh the costs and benefits.
The result is decisions that more frequently don't make sense for individuals or society.
If I was held to the same standard as your last sentence I would've never made it to a quality college when I had many external circumstances that affected my GPA. And yes, I was, and am, still talented.
Where do others like me fit? Are we to be cast aside? Will you push aside the next genius for something that is more 'safe'?
So I think it's a bit unfair to say that this is merely a 'cultural belief'. Do you have any data to support that dramatically improved salary and employment rate is just a myth?
I do agree with the points on students loans, but I just hear way too often how "college isn't worth it" without any data to back this up what-so-ever
Because you can't get out of student debt, the banks are more than happy to make loans to people who shouldn't really be taking them. Eventually, the bank will get its money back. For the education bubble to be popped, there's going to have to be a change in legislation allowing people to be protected from student loans if they go into bankruptcy.
Once that's the case, banks will start being more careful with the loans they make, there will be less cheap money available, and people will have to start making more rational decisions about which college they attend.
I think there is a balance there, but that is the huge deal: no one should be able to co-sign, and you should be able to go into bankruptcy after a long period of trying to make it work and drop the student loan dept too.
I don't want to swing the other way and see chapter 7 bankruptcies right after school driving rates up to absurd levels.
* WARNING - ANECDOTAL EVIDENCE AHEAD - PROCEED WITH CAUTION! * After I graduated high school (~ 8 years ago), I realized how little information I got from the school about college and my post-high school options. Most of what I had learned was from doing my own research and what my family had told me. Perhaps all the college counseling went to the gifted and talented group (yes, there actually was such a group in the school for each year).
The public school education system probably sucks in this regard for the same reason why most public schools don't teach anything about personal finance: there is none. No good reason whatsoever. It's quite baffling really.
Additionally, you don't get the "judgement" part of your brain until after you're partially through/done with college: http://www.hhs.gov/opa/familylife/tech_assistance/etraining/...
I get your argument, but the cost is far past $1.
$11,110 per semester out of state for guaranteed tuition plan and $1,185 in fees.
in state is $1,185 in fees and $2,248 per semester.
So here are starting and mid-career salaries (medians) for different colleges:
http://www.payscale.com/best-colleges/best-engineering-colle...
And I guarantee you 100k a year buys you a MUCH nicer house in Atlanta than in LA (further skewing the value).
Most college advice books orient on the Ivies- or did circa 1999 or so.
Scholarship markets in my family's experience are atrocious, they might as well not exist for certain demographics/majors.
Colleges charge more and more -- the growth rate is way above anything most of us would consider reasonable. Why? Because the feds guarantee loans for kids attending. That is, the person directly paying is not the person receiving the benefit. In fact, for many people the goal is to have the feds completely pay for education using loans, thereby giving everybody the chance to make an easy trade: take on some debt which you will have to pay many decades from now, and in return you get a few years of attending a super cool school, learning incredible stuff, and making new friends.
Except, you can never default on these loans. Once you make them, you are stuck with them for life. And those things you choose to study? Many of those will never offer you the chance to make the money you need to pay the loans back.
So now you're out of college with a degree that doesn't offer the income potential you need to pay for all those loans you signed for.
So how is this any different from indentured servitude? It's not to a particular person, but to society at large. We give you a piece of paper, you sign it, you have fun and work hard for a few years, and then you're in such bad financial straits that you'll have to take anything you can find that makes money in a sad attempt to ever get even again. How many PhDs are waiting tables in college towns? Does this appear to be a functional system achieving necessary societal goals?
There's a big discussion over whether college is necessary. No clear answers there. But there is also a discussion over whether the money trades that we make as a society are actually doing any good. We keep paying more and more, getting lots of good folks in debt, and when we ask if college is supposed to help them pay these loans back, we get a speech about how college is a special time in a person's life and shouldn't be related directly to money. It seems fine to relate it directly to money when the kid is signing his life away for a vague promise, but when we ask where the payoff is we're told we're being crass. It's about more than money. It's about the experience.
That might be true, but there are a lot of special times in a person's life. Why are we letting people trade a few good years when they're young in order to limit their options for decades afterwards? Where's the sense in that, not to the person involved necessarily, but to the rest of us?
The high school student who chooses NOT to go to college might be better off for a few years after high school, but on average, their LONG TERM economic future is not as bright as that of a college grad-- even if the college grad has a rough time find settling into a career after graduation.
This is perhaps more clear if you look at people in their 30's and 40's. The college grads are, I think, generally better off (modulo some outliers).
Imagine if a university decided to randomly pick people to educate. (Not randomly pick among the applicants -- randomly grab people off the street.) Do you think those students would be very much better off after being educated?
(Btw, yes, I'm very happy I went to university.)
It also depends, at least somewhat, to what the degree is. This is anecdotal, but my friends that majored in math, CompSci, and Engineering rarely have trouble finding a decent job. On the other hand, the English and History majors I know frequently struggle to find a good job.
http://www.collegeresults.org/search1b.aspx?institutionid=13...
(Check the Finances and Faculty tab shown for the college comparison linked above, and then sort by Instructional Expenditures / Total FTE column.)
Public college costs used to be covered more by the state, whereas now the states are cutting and cutting and raising tuition and fees dramatically. This raises student's tuition at a much faster rate than the total tuition rate is actually rising.
Worth considering?
Sure I, and most students in Sweden, take loans to pay for food, rent and books but the school itself is free - even now! We're also getting a good low rent loan with a part allowance. No wonder we're having so many foreign students. That's going to change from next year though when the foreigners will get charged.
There is no free lunch.
I still find it a bit hard to imagine, where would I be now if I had loan a lot more. I might be studying the same but I surely would work harder, both in school and during the summer.
On a related note things like medical care and laws sometimes makes me feel the same.
It seems like folks will likely continue paying more to go to college so long as the boost in income is worth it, and colleges will continue to increase tuition until they can no longer get away with it, so it seems like that's where we could be headed.
Why it didn't happen before, I figure could be due to public schools setting a very low bar and private schools had to remain at least somewhat nearby. But as the government continues to pull funding from public higher education, it becomes more and more private, i.e. driven by the market.
Obviously: competition and alternatives. Just like the equilibrium price of a computer is way lower than what you are willing to pay for it.
Often, markets lead to lower* prices on many things as technology and processes improve in pursuit of profits.
*: If you define the value of a degree as the extra value above and beyond the next best alternative, than of course alternatives don't really factor in. But with most goods and services, there is some kind of alternative in addition to competition.
A degree in medicine is a MD + a Bachelor's. An undergrad English degree is only 1 degree. Medical schools are their own beast, too.
Better compare the Bachelor's in English vs. the Bachelor's in Biology.
That's why I qualified my statement by saying:
> Perhaps at the undergrad level there is some truth to this.
Evidently this upset someone though, sigh:(
Colleges are basically in the fashion industry, if you squint at their business models. Price can be a selling point, if it can be used as a way of signalling class or dedication, look at Gucci handbags and the Ivy League. It doesn't matter how little you can buy a handbag for, people still pay more for a top brand.
I guess it might follow the fashion industry. A few boutique providers sell "high quality" goods, to people who want to pay extra for the label. Everyone else will try to drive costs to zero. I wonder how much business process outsourcing they will end up doing? Get ready to have your tutorial papers marked by someone in another timezone ...
The difference is, there's no defaulting on student loans. Even bankruptcy won't save you. And that means this bubble is going to be much harder to pop. In the meantime, colleges will keep raising tuition because there's enough cheap loans out there to sustain it, and the banks will keep making cheap loans because it's a bet they can't lose.
The numbers I hear quoted for an Ivy education is usaully 1 order of magnitude higher than I hear quoted for a state U.
From the article...
"As a hypothetical example, take the University of Pennsylvania and Penn State, which are two schools a lot of students choose between," Krueger said. "One is Ivy, one is a state school. Penn is much more highly selective. If you compare the students who go to those two schools, the ones who go to Penn have higher incomes. But let's look at those who got into both types of schools, some of whom chose Penn and some of whom chose Penn State. Within that set it doesn't seem to matter whether you go to the more selective school. Now, you would think that the more ambitious student is the one who would choose to go to Penn, and the ones choosing to go to Penn State might be a little less confident in their abilities or have a little lower family income, and both of those factors would point to people doing worse later on. But they don't."
American middle class parents. Middle class parents don't have any problem doing so in plenty of other countries.