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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#61

Post by wiremine »

mljoe wrote: post #39
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

> The problem is the career value of a degree has not diminished, it's a bit of a network effect really. Maybe people can get hired from Coursera certificates, I would certainly consider it if I was a hiring manager.

A university degree tells me three things a Coursera certificate doesn't:

1. A graduate have more breadth and depth in a given major. Standford's CS course includes math, physics, engineering, programming theory, data structures, algorithms, etc. (Just picked Stanford's program at random, not advocating they're perfect)

2. A graduate has exposure to multiple topics/subjects, and hopefully has some critical thinking skills. A Coursera cert doesn't do that.

3. Somebody graded them. It wasn't some massive online system.

Maybe other people don't care about these things, but as a former manager, I've found these qualities produce a better well rounded individual in the workplace. There are exceptions to the rule, of course, but that's my experience.

To your point: All these things can be replaced, but I'd argue micro-degrees don't do that.

I do hope this is solved: The price is crazy.

[1] http://csmajor.stanford.edu/Requirements.shtml

Re: US Household Debt Surpasses 2008 High

#62

Post by ericd »

secabeen wrote: post #50
mljoe wrote: post #39

Earlier quoted context omitted.

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate…

Maybe you could set up a cheap hybrid - get students together in one place to work together on MOOCs, and have some strict admission standards to ensure that the students are high quality. This would be a draw to high quality students, and help replace some of the signaling value of elite schools.

Re: US Household Debt Surpasses 2008 High

#63

Post by ryandamm »

ryandamm wrote: post #45
spenczar5 wrote: post #37

Earlier quoted context omitted.

Help me understand: what does 'exogenous capital flows' mean? What does 'capital flow into the US' mean? Investment in stuff physically in the borders of the US, where the money comes from outside the US?

At its most basic, it means money being put into US dollars from foreign entities. It could be a country's central bank buying US Treasury notes, or purchases of US companies by foreign entities, or even just investment in the public stock market by individuals. Anything where someone is investing money in the US from outside is a capital flow. They all have the same macro effect. The reason so much capital gets park…

I should point out I'm conflating things a bit; there are transactions involving US dollars that never come home. For example, US dollar-denominated transactions between business entities; those dollars are simply recycled. They don't have a major effect on capital balance, as the dollars are simply a medium of exchange.

The larger effect, though, is money that actually gets deployed in the US. Again, that can happen via purchase of debt, purchase of equities (stocks, or even companies), purchase of assets (homes, etc), purchase of debt itself (buying up US consumers' credit card debt). Because the financial markets in the US are deep and liquid, it doesn't matter where those investments occur; they aren't distorting, because yield-seeking investors will (theoretically) respond to the reduced yield in the particular asset and invest elsewhere. In the meantime, the total flows must still balance, so that inflow results in debt somewhere in the economy.

Hope that helps...

Re: US Household Debt Surpasses 2008 High

#64

Post by abfan1127 »

shriphani wrote: post #58
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

I found this comment on Quora: Through 1992, the top 50 colleges in the USA got together each year to collude on: amount of tuition base salary for assistant professors preventing any bidding wars for applicants Then the Federal government sued and put a stop to that. However, by that point the tuition was way out of whack and the private elite colleges are still allowed to increase tuition at a rate that is above th…

gov intervention in easy money in the form of student loans and tax-payer backed private student loans is what caused it to be begin with.

Re: US Household Debt Surpasses 2008 High

#65

Post by subterfudge4 »

fwefwwfe wrote: post #47
subterfudge4 wrote: post #35

Earlier quoted context omitted.

This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?

Because the initial increase in pay and lifetime increase in earnings is well worth it. Why do so many people get car and house loans they take more than 2 years to pay off?

If it is worth it then why complain so much ?

Re: US Household Debt Surpasses 2008 High

#66

Post by utternerd »

pilsetnieks wrote: post #18
jjawssd wrote: post #12

Germany provides excellent educational opportunities in many fields for American citizens at close to zero out of pocket expense for the student. Google "Germany Erasmus".

Erasmus is a EU programme for student exchange between cooperating universities for up to a year, it's not relevant in this case. However, they should look at German universities in general because they are practically free for anyone.

"Free" meaning coercion via the state to fund other people's pursuits. Perhaps we should look at why costs are rising? People need to seriously evaluate if it's really needed for them. I reject your notion that everyone, or even most people need a college degree. (I didn't, and I live quite comfortably thanks to tech with a 6 figure salary)

Part of the problem is exactly that we're subsidizing many people, forcing more scarcity and leading to higher prices. Using force to make someone else pay for my stuff isn't something I want to condone.

Re: US Household Debt Surpasses 2008 High

#67

Post by mljoe »

secabeen wrote: post #50
mljoe wrote: post #39

Earlier quoted context omitted.

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate…

I agree with you 100%, but MOOCs aren't necessarily the only option for educational innovation. The idea of Minerva (students still live together, but the university moves around the world) sounds interesting to me, even though it is not at all less expensive. These sort of things were never technically possible until well after the university system became entrenched. Another option is internships or entrepreneurship, what the Thiel Fellowship encourages. Chris Olah is a employee of special note at Google Brain. He never finished college, and he had the smart idea to basically reinvent scientific publishing.

Re: US Household Debt Surpasses 2008 High

#68

Post by conanbatt »

shriphani wrote: post #58
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

I found this comment on Quora: Through 1992, the top 50 colleges in the USA got together each year to collude on: amount of tuition base salary for assistant professors preventing any bidding wars for applicants Then the Federal government sued and put a stop to that. However, by that point the tuition was way out of whack and the private elite colleges are still allowed to increase tuition at a rate that is above th…

> Gov intervention is probably needed.

The government interventino has been the problem, as you just exposed.

Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves.

Re: US Household Debt Surpasses 2008 High

#69

Post by thinkling »

$600B additional student debt over 10 years sounded high to me, so I did the ballpark check.

$600B over 10 years is $60B/year.

There are about 20 million college students [1].

That means $3000 per student per year on average.

If loans are paid back over 10-20 years, this really says that students are borrowing $3000 more per year than they were 10-20 years ago.

The article suggested that borrowing was about $600B total, 10 years ago, so essentially it has doubled. FWIW, CPI inflation over the last 20 years is ~50%, the other 50% is either real increase in borrowing or due to the fact that college tuition rates have been increasing faster than inflation.

[1] https://nces.ed.gov/fastfacts/display.asp?id=372

Re: US Household Debt Surpasses 2008 High

#70

Post by austenallred »

manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many.

I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle class, but a lot of my friends were told "just go to the best college no matter what and don't think about cost you'll make tons later," which ended up to be only partially true, and only for some people.

I'm hoping that http://lambdauniversity.com will help overcome some of those things and extend opportunities to folks who can't afford that kind of risk. It's full-time computer science training for free up front, paid back as a percentage of income for a couple years after you graduate. If you don't make more than $50k/yr you never pay back.

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