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Colleges at the breaking point, forcing ‘hard choices’ about education

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Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#631
post #64

Disclosure: i never went to college, I went to a trade school. Colleges really only started scaring the heck out of me when I started enjoying my career. After spending a day wrenching in a garage, we'd hit miller time and head down to the Soapbox Bar and Grill. Over the span of a month or two ordering buckets and shooting pool I learned our bartender Javon had a masters in biology and his fiancee Cortisha who bussed…

I saw something similar a couple of decades ago when I was living in Austin and working at a well-known game development house. There was a Chinese restaurant close to the office, a really good one. We ate there all the time, enough to get to know a couple of the waiters pretty well. One of them, a guy by the name of Bruce, was especially friendly and professional. He always remembered us, spoke perfect English, never let our drinks run dry. We'd ask to be seated in Bruce's section when we saw he was working. He always got big tips.

One day he mentioned that he had an MSEE degree from a university back home in China. Cue record scratch.

That was a deeply unsettling revelation, since a couple of us were EE dropouts ourselves. How'd I drop out of school and end up with my dream job, while Bruce finished his master's program and ended up serving Szechuan shrimp? WTF was up with that? What if, in my next life, I'm the one who gets hosed like this?

I didn't wake up the next day with a hangover or anxiety -- not with the ego that it took to run in that crowd -- but I certainly had a new perspective on things. If people think that even a STEM degree is going to be an automatic ticket to ride through the good life, there's some massive disillusionment coming.

And I don't think it's going to matter whether you're from China or the US or anywhere else. Not in the long run.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#632
post #544

Earlier quoted context omitted.

Let's make that point clearer: Since the bank is absolved from making that bet, it is now the young adult making the same bet that no sane bank would take. A lot of people are now living with having lost that bet.

The bank doesn't want the bet because "bankruptcy" means very different things to the bank and to the student. To the bank it means they lose all their money. For a just-graduated person with minimal assets it's not that bad -- sure you can't get a mortgage to buy a house for a while, but you probably couldn't have afforded that anyway with student loans. You still have the degree, they can't take that (well, https:/…

> For a just-graduated person with minimal assets it's not that bad

It is in fact bad.

You can’t just declare bankruptcy and get a high paying job a year later and have no student debt....

When I looked into personal bankruptcy I was told by my lawyer that it would only make financial sense if there was no way I could pay back the amount owed in the next 7-10 years.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#633
post #544

Earlier quoted context omitted.

Let's make that point clearer: Since the bank is absolved from making that bet, it is now the young adult making the same bet that no sane bank would take. A lot of people are now living with having lost that bet.

The bank doesn't want the bet because "bankruptcy" means very different things to the bank and to the student. To the bank it means they lose all their money. For a just-graduated person with minimal assets it's not that bad -- sure you can't get a mortgage to buy a house for a while, but you probably couldn't have afforded that anyway with student loans. You still have the degree, they can't take that (well, https:/…

I would not underestimate the impact bankruptcy plays in someone's life. You would be getting a bankruptcy on your record in the prime of your life (mid-twenties), making it very very difficult to borrow for the next 10 years. You end up starting building credit in your mid to late thirties, and maybe you are able to participate in the modern economy in your forties. It sucks. I lived it.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#634

Earlier quoted context omitted.

> All of us should be regularly lobbying our lawmakers to make student loans dischargeable by bankruptcy, I thought so too. This always made me so angry. Last time I posted a rant about that here someone urged me to read the REPAYE Act, and it completely changed my mind. Under REPAYE, students get income based repayment, even down to $0 payments if you're anywhere near poverty level. After a certain number of years o…

Doctors declaring bankruptcy to get out of medical school debt sounds like anecdata. If student loans were dischargeable, that would change nothing for MDs because they're still going to make enough money to service the debt after residency/fellowship.

Even if you're going to be making $200,000 a year after your residency, why not declare bankruptcy as soon as you graduate. It'll save you $200,000 which is totally worth a 10 year hit to your credit

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#635
post #554

Earlier quoted context omitted.

Let's say I've just graduated from college with a degree. I have minimal assets (clothes, computer) and lots of debt (100k in student loan debt). How does bankruptcy work out poorly for me?

7ish year delay in buying a house. Which may be better than 20 years of payments to debt.

On graduation, unless someone has incredible job prospects, wiping out 100k of debt in exchange for not being able to get a mortgage for 7y is a great deal. At 20k it's not great but still pretty good. I bought a house 7y after graduating from college, and I think this was earlier than most of my cohort.

Additionally, I wouldn't even expect a college bankruptcy to fully preclude getting a home mortgage. With a large down payment the bank isn't actually taking that much risk.

(Except that really I expect that if this law changed loans would require cosigners with good credit)

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#636
post #633
post #544

Earlier quoted context omitted.

The bank doesn't want the bet because "bankruptcy" means very different things to the bank and to the student. To the bank it means they lose all their money. For a just-graduated person with minimal assets it's not that bad -- sure you can't get a mortgage to buy a house for a while, but you probably couldn't have afforded that anyway with student loans. You still have the degree, they can't take that (well, https:/…

I would not underestimate the impact bankruptcy plays in someone's life. You would be getting a bankruptcy on your record in the prime of your life (mid-twenties), making it very very difficult to borrow for the next 10 years. You end up starting building credit in your mid to late thirties, and maybe you are able to participate in the modern economy in your forties. It sucks. I lived it.

I'm talking about declaring bankruptcy immediately on graduating, at age 21 (not mid-twenties), and it's off your record seven (not ten) years later, at 28.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#637
post #64

Disclosure: i never went to college, I went to a trade school. Colleges really only started scaring the heck out of me when I started enjoying my career. After spending a day wrenching in a garage, we'd hit miller time and head down to the Soapbox Bar and Grill. Over the span of a month or two ordering buckets and shooting pool I learned our bartender Javon had a masters in biology and his fiancee Cortisha who bussed…

College, and the push to send everyone to it, makes much more sense when you view College as both an economic proposition, and a part of social class. The economic aspect has been well covered here, but the social class has not. Social classes are a set of shared values, habits, and beliefs that help cluster people together into a sense of shared social membership. It is completely distinct from economic class, with…

[deleted]

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#638
post #349

Earlier quoted context omitted.

It will force "the system" to come up with some other way to pay for tuition. What do you think about Income Share Agreements? https://www.thesimpledollar.com/loans/student/income-share-a...

So what you‘re proposing is that a fairer way to paying back tuition is making it essentially free when taking it and then, IF you end up making a lot of money, paying it back with a share of your income? I can‘t resist the feeling this sounds surprisingly related to the concept of free higher education and a higher, progressive income tax, a pretty revolutionary approach we‘ve been doing with limited success over he…

I realize you're being somewhat facetious, but a key difference with ISA is that you don't actually pay the "tax" if you don't go to college. this doesn't make much difference for successful people, since most of them probably went to college anyway. but if you're a lower/middle income person who didn't go to college, it seems sort of unfair to have to pay towards other people gaining an advantage over you in the job market.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#639

Earlier quoted context omitted.

> Now we get to pay for it. Partly that means higher taxes, so we can finally properly fund social security and medicare, and repay the literal trillions of dollars we just borrowed in the past few weeks. Sounds like a great deal for those who were alive then. I don't think it's as simple as you suggest.

I'm not saying borrowing for the stimulus was necessarily a bad idea. Only that, unless you think the current level of debt is either sustainable long-term (maybe?) or that it can continue to rise, that the only rational conclusion is that our material standard of living has to decrease. That seems to be the only rational conclusion when you see 25% increases in US national debt in an environment where GDP is growing…

Fair enough. I would agree at least, that spending needs to decrease. Figuring out how, is, as you've touched on, a whole other issue.

Re: Colleges at the breaking point, forcing ‘hard choices’ about education

#640
post #607

Earlier quoted context omitted.

> The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules. Universities are not businesses. Students are not customers. Student tuition was much more heavily subsidized by states, but funding from states to universities has declined in the past few decades. This is the reason for tuition hikes. In the past, there was an agreement between states and universities: The st…

Yours is a narrative that universities themselves like to put forth. However it doesn't make sense. Tuition rises are a long-term trend. As https://www.usgovernmentspending.com/education_spending points out, from the 1950s to the present, the share of GDP spent by government on universities went from 0.4% to 1.7%. With sometimes progress, and sometimes a loss. But the long-term trend is that spending by states has go…

>As https://www.usgovernmentspending.com/education_spending points out, from the 1950s to the present, the share of GDP spent by government on universities went from 0.4% to 1.7%.

A four-fold increase in funding as a percentage of GDP isn't relevant to the more important metric, real funding per student.

https://www.cbpp.org/research/state-budget-and-tax/state-hig...

> But the long-term trend is that spending by states has gone up relative to both enrollment and inflation.

Real funding per university student has not increased, and this claim is not backed by your source. See my source above for rebuttal.

https://www.dallasnews.com/news/texas/2012/09/23/texas-colle...

"State officials used to brag about the affordability of college, but the costs have ballooned since 2003, even when inflation is factored in.

Less money from state

That year, to help close a budget cap without raising taxes, lawmakers cut the amount of taxpayer money the state sent to universities — an overall 11 percent decrease per student — but removed ceilings placed on tuition so campuses could make up for the lost revenue."

> But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.

Yes, that state funding doesn't return to prior levels (See my first source)

> Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.

A university is more than its teaching staff. There's research, buildings to maintain, academic support staff and programs, and plenty of other things as well.

> But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).

One source which happens to ignore many of the factors I mentioned above does not prove your point true. Most importantly, tuition ceilings imposed on universities by state governments. Luckily the paper discusses its shortcomings:

"Given that our model effectively lumps private and public colleges together, it appears that changes in state funding support and changes in other sources of non-tuition revenue largely offset each other. In future work, we plan to disaggregate the model along the public/private dimension."

The source groups private and public colleges together. Private colleges do not receive state funding and therefore would not have to hike tuition in response to lower stand funding. This noise averages out the effect that state funding cuts have on public school tuition rates.

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