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It’s impossible to work your way through college nowadays

randalolson.com

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Re: It’s impossible to work your way through college nowadays

#81

Post by ams6110 »

jdreaver wrote: post #17

We have to ask ourselves why college is so expensive. When some people read articles like this, they call for more government aid to students. "We need to help young, hard working students from unprivileged backgrounds to pay for college!" Their hearts are certainly in the right place, and it isn't an unreasonable idea at first glance. However, could this idea be part of the problem? Maybe giving people free money fo…

You've identified a big part of the problem, but one also needs to consider the overall economic environment during that period. The chart in the blog post starts at 1980, showing that you could work 10 hrs and pay for a credit-hour of tuition. But remember, 1980 was the end of the financially disastrous 1970s. The 80s and 90s were boom decades, so parents with money in the markets were increasingly able to pay for college for their kids. This added to the demand side of the equation, along with the easy money in loans and grants, to cause the explosion in tuition.

You're also right about the buildings and staff bloat. I work at a state university and see all of that happening. The IT organization is honestly twice the size it needs to be, if people were held accountable for being even moderately productive.

Re: It’s impossible to work your way through college nowadays

#82

Post by fiatmoney »

The idea of consumption smoothing & college as a human capital investment (particularly in an arena with outsized rewards at the top end, which is now most areas with decent payoffs) imply that to the extent you don't absolutely have to, you shouldn't work through college. Other than perhaps connection-building internships during the summer, but those aren't really about the money.

Re: It’s impossible to work your way through college nowadays

#83

Post by msandford »

spikels wrote: post #59
jdreaver wrote: post #38

Earlier quoted context omitted.

I agree. Most of those loans, however, are sponsored by the government and can't be defaulted on. No normal lender would give an 18 year old $50,000 to get a degree in anthropology, because they are unlikely to get it back. When the student is legally obligated to pay it back, then there is much little risk to the lender. If defaulting on student loans were possible, then the cost of college would decrease.

How would allowing defaults on government guaranteed student loans lower the cost of college? Cost would likely increase for most students. If loan interest rates were increased to compensate for the additional losses this would increase the cost for everyone getting a college loan who doesn't default. And since default has significant costs overall costs would also go up. Lastly this would reduce the incentive to ma…

> No normal lender would give an 18 year old $50,000 to get a degree in anthropology, because they are unlikely to get it back. When the student is legally obligated to pay it back, then there is much little risk to the lender.

I think the argument goes like this:

1. Allow college debt to be defaulted on

2. After some time the government (or banks) will start to assess the risk of making student loans

3. Some time after that the loan market for students will be less crazy and more rational

4. With enrolled students able to spend less, colleges will be forced to charge less or lose students

5. Some college close, others stay open

6. College now costs a more reasonable amount of money

We're seeing the same dynamic in the college market as we saw in the housing market. The banks were typically in the business of saying "no, you can't do that" to people who were borrowing money, thus enforcing restraint on those who didn't have enough on their own. Once the banks stopped saying "no" when people were not a good credit risk, everyone went nuts and bid housing up to rather crazy levels. Housing prices are inversely proportional to interest rates in a very nonlinear way.

The situation is similar in the college market. The interest rates are more sane, but the risk assessment is much worse. There's all kinds of loan money sloshing around and not a tremendous amount of out-of-pocket money. If college had to be paid out of pocket you'd see lower enrollment or lower prices or both. Allowing defaults will force the market from largely loan-funded to a more reasonable mix of loan and out of pocket funding.

Re: It’s impossible to work your way through college nowadays

#84

Post by keeshawn »

jdreaver wrote: post #63
keeshawn wrote: post #48

Earlier quoted context omitted.

I don't know anyone who gets free money for college, except for people who inherit their money or have rich parents. I feel like this is a really central part of your argument, and it doesn't hold water. Every cent we go into debt has to be paid back with interest, and the students who have to foot the bill have zero input in the hiring standards of the companies we have to work for when we graduate. I think trying t…

> I don't know anyone who gets free money for college Here you go http://studentaid.ed.gov/types/grants-scholarships

I didn't even think you were talking about grants. Are you saying grants are responsible for high tuition costs? Without grants, the gap would have to be made up in student loans. What good would that do? It would simply make students assume a higher debt burden to get the same education that society demands from them.

Re: It’s impossible to work your way through college nowadays

#85

Post by Klinky »

jdreaver wrote: post #65
Klinky wrote: post #57

Earlier quoted context omitted.

Not exactly. Food stamps can only be spent on food, but you can determine what food you buy. Financial Aid must have tuition(and often books) deducted before the remainder is deposited into your account. Your company may pay for your hotel room and meal, but only a room at a 3-star hotel or lower and a $20 meal at a casual dining establishment. It's not as black and white as you guys put it. Strings can exist, but ho…

I never said it was black and white. I thought that was the intent of the person I replied to when they said "down to the cent." I agree with you that it isn't black and white. (This is simply a semantic argument.)

I agree his statement appeared to be making a black and white argument. Your reply seemed to be further defining the concept behind his statement. Perhaps you were redefining it and I misinterpreted it.

Re: It’s impossible to work your way through college nowadays

#86

Post by [deleted] »

dnautics wrote: post #37
AaronFriel wrote: post #25

The solution though, isn't to stop providing money to students for college. If you don't have Pell Grants, Stafford loans and the like, lower income bracket individuals would never be able to afford college. There is a simple fact: I could not pay my way through my Midwest university education without these things. I will graduate and be in debt, but I'll be better off having done it. Certainly the experience is wort…

If people were so rational, everyone would go to college because the expected value of college still dwarfs the cost of college. Even for those individuals who would graduate with a significant amount of debt, it is far more worth it to have a degree than not. Those calculations are by necessity based on estimates based on earlier generations of college graduates. Moreover, those results have a selection bias of peop…

[deleted]

Re: It’s impossible to work your way through college nowadays

#87

Post by keeshawn »

AaronFriel wrote: post #25

The solution though, isn't to stop providing money to students for college. If you don't have Pell Grants, Stafford loans and the like, lower income bracket individuals would never be able to afford college. There is a simple fact: I could not pay my way through my Midwest university education without these things. I will graduate and be in debt, but I'll be better off having done it. Certainly the experience is wort…

Your colleges will only produce successful people in the sense that success can be directly correlated with income. There would be no point in doing anything else. Do you think that income-generating activities are the only purpose of education?

Re: It’s impossible to work your way through college nowadays

#88

Post by bane »

On the flip side, if you have a degree, this means fewer people can afford it and your degree becomes all the more valuable over time.

I've had a similar, but different thing happen as the state school I went to has shot up in the arbitrary US News and World Reports college rankings list over the last 20 years.

It enabled them to finance a bunch of new construction (research buildings, classrooms, specialized degree satellite campuses), all new dorms, etc. What used to be basically a small commuter school that happened to offer university (Masters and Doctorates) degrees has turned into the largest university in the the State.

The prestige it's offered my resume has gotten me endless recruitment offers and I ended up just taking it off my facebook profile I was getting contacted by too many people I didn't know wanting to form various alumni networks.

At any rate, rising tuition, etc. just means that what I already received is becoming a more valuable investment. I like that.

But I also feel empathy towards those going into college, knowing what a huge boost it was to my income earning potential.

I worked my way through college, Pell Grants, a few loans. I was doing an 2x minimum wage internship my last 2 years that made it suck, but doable. I made enough after graduation that I paid off my loans in just a couple years. It was really tight though. I think it's still very possible to do at the state school level if you get the loans. But it's definitely getting harder.

I couldn't imagine doing it at the private school or out of state level back then, and I can't imagine doing it today.

Re: It’s impossible to work your way through college nowadays

#89

Post by dtmooreiv »

ronnier wrote: post #16
wudf wrote: post #9

I didn't realize this was ever possible outside community colleges.

I worked my way through school for both my undergraduate degree and a masters in computer science. It wasn't bad. Just have to work hard. The nice thing was, I finished up school with zero debt.

When did you do this?

Re: It’s impossible to work your way through college nowadays

#90

Post by baddox »

brudgers wrote: post #28
jdreaver wrote: post #17

We have to ask ourselves why college is so expensive. When some people read articles like this, they call for more government aid to students. "We need to help young, hard working students from unprivileged backgrounds to pay for college!" Their hearts are certainly in the right place, and it isn't an unreasonable idea at first glance. However, could this idea be part of the problem? Maybe giving people free money fo…

In the US, few students get much free money these days. Instead they get loans which charge hefty origination fees - like 5 points, and which are almost impossible to discharge via bankruptcy...despite the fact that many of them are backed by insurance and those which are not insured typically compound interest during the time the student is in school (typically on the full principle). The bloat has not been fueled b…

Don't forget that this debt is massively subsidized by government. Do you think a bank would give a traditional loan for hundreds of thousands of dollars to a middle-class student straight out of high school pursuing a Bachelor's Degree in, say, history?
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