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Student Loans Are A Drag On The Economy

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Re: Student Loans Are A Drag On The Economy

#51

Post by aaron-lebo »

judk wrote: post #44
aaron-lebo wrote: post #23

Earlier quoted context omitted.

You are absolutely right about the relative value of community college, but you pointed out the major problem: community colleges are not thought of highly at all, even though 2 years of CC credited to a bachelor's degree at a more prestigious university counts just the same. I'm not sure how CC's get over the stigma attached to them, but it really needs to happen. They are good value.

Because when there are fewer jobs than candidates, artificial distinctions are used to judge them, and rent seekers exploit that to extract all the economic surplus. This is basic stuff, people. If everyone is going to college, everyone should know this.

> Because when there are fewer jobs than candidates, artificial distinctions are used to judge them, and rent seekers exploit that to extract all the economic surplus.

But that isn't what is happening in this situation. If Candidate A attends 2 years of community college and then transfers those credits to State College, his resume will still say "Bachelor's Degree - State College" the same as Candidate B who attended State College for a full 4 years.

It doesn't have anything to do with job candidates, it is purely the psychological aspect of not attending a big state uni for your first two years in college.

> This is basic stuff, people. If everyone is going to college, everyone should know this.

I'm not sure if this is snark, but is it really basic stuff for people coming out of college to know about rent seeking? I guess in an ideal world...

Re: Student Loans Are A Drag On The Economy

#52

Post by raverbashing »

enraged_camel wrote: post #25
Glyptodon wrote: post #18

Meh. This is (mostly) the students' and the families' who abet their stupid decisions fault. If you go to an in-state community college and then matriculate to an in-state university in my state the total cost of college is (~$4500 for 2 years of CC living at home + ~$25000 for 2 years of closest to home in-state school) ~$30000 + the cost of living at home. Meanwhile people continue to whine about sending their kids…

Wow. I like you blamed this entire mess on students and parents. >>The real issue is that people feel entitled to the best schools and will so make absurd decisions to enable it Nonsense. People want to send their kids to the best schools because the best schools are the gatekeepers to the upper class. Someone who graduates from an Ivy League school gets to build a network with affluent alumni and has a high chance o…

"Someone who graduates from an Ivy League school gets to build a network with affluent alumni and has a high chance of landing a job that pays six-figures right off the bat"

Absolutely not the case

So if I graduate anything from an Ivy League I'm getting a 6 figure job? No. Especially when fresh out of the school.

This is an idealization of schools in detriment of personal effort.

After some years of experience SCHOOL DOESN'T MATTER It doesn't. Really

A better school certainly helps in that initial step but it is more clear than ever it's not worth it

Re: Student Loans Are A Drag On The Economy

#53

Post by carbocation »

jjoonathan wrote: post #33
SixSigma wrote: post #6

Earlier quoted context omitted.

It boggles the mind. By the time I graduate I will owe about 1 year's projected income (about $70k) and I think that's a pretty good return. If a dentist can make back nearly half a million then something needs to be done about the cost of dentristry, something doesn't add up.

I don't know how it works for dentists, but my understanding is that for doctors we've essentially given the doctors' guild the ability to legally dictate how many medical graduates they will allow, making them the envy of unions around the world (and schools, who are very happy with an arrangement that allows them to auction off a restricted supply of meal tickets). Sometimes you'll hear the AMA blame congress becau…

> The other two thirds come from drug price overruns (US drug buyers pay twice as much as single-payer countries which have much more size = bargaining power)

As an infuriating elaboration on your point, the United States has a huge single payer in Medicare that is by law prevented from effectively negotiating drug price.

Re: Student Loans Are A Drag On The Economy

#55

Post by eropple »

Glyptodon wrote: post #38
enraged_camel wrote: post #25

Earlier quoted context omitted.

Wow. I like you blamed this entire mess on students and parents. >>The real issue is that people feel entitled to the best schools and will so make absurd decisions to enable it Nonsense. People want to send their kids to the best schools because the best schools are the gatekeepers to the upper class. Someone who graduates from an Ivy League school gets to build a network with affluent alumni and has a high chance o…

You exaggerate. Mostly it's people who don't do well at their colleges that have trouble. At Ivy Leagues it's fewer people because they have the worst grade inflation and don't accept many borderline students. For state schools there are lots of people at the margin - IE they don't do well enough to really reap a benefit from their degree. Maybe getting good grades at a public won't get you 6 figures in your first jo…

I have a degree from a cow college. I'm very good at what I do. But I'm at a disadvantage: my network doesn't include people who are valuable to know. The dudes who started Dropbox are dudes friends of mine knew in college. People like that aren't in my rolodex. That's what these colleges are for: social entry into that class of mover shaker, be it MIT for tech or an Ivy for politics. This stuff is the difference between having doors open to you and needing a crowbar to get anywhere. I happen to be both good enough to demand attention and savvy enough recognize when there's an opening, but I get that getting where I am now has been a luck-based thing.

And that's a tech degree, mind. I get the feeling you really have no idea how hard it is to find a livable-wage job if aren't in tech or cleaning bedpans. The idea that fundamentally irrational people - teenagers! - should be expected to make decisions to actively limit their upside based on a downside risk they literally cannot contextualize is a failure to understand humans.

Re: Student Loans Are A Drag On The Economy

#56

Post by joezydeco »

This is an interesting NPR Planet Money podcast where they try to break down why Duke's tuition costs $60,000/yr (and Duke claims that the actual cost of a student is really $90,000/yr).

http://www.npr.org/blogs/money/2014/02/26/283018555/episode-...

One of the most interesting points is that colleges are in a unique inverted position when it comes to price vs. demand. Cutting their tuition price would actually decrease the perceived value of the degree, and thus lower the demand for their product.

You can grind your teeth at the rest of the podcast where the administrators claim a lot of this cost is building amenities and facilities that students now expect out of a high-tier college like all-single dorms, a myriad of cafeteria options, and 24/7/365 library and IT staffing. I'll go back to my lawnchair now.

Re: Student Loans Are A Drag On The Economy

#57

Post by existencebox »

aaron-lebo wrote: post #19
superJoy wrote: post #10

At what point do these students realize the cost indicates they should stay from that school? Like, "Oh wait, even though X is a better school than Y, it will cost 5x more, and my starting salary will only be 5% less." Is that happening? It just seems some of these people are naive. Another example is ones that are unaware of the economy of the city they aspire to live in, and get a degree with little value in that c…

How many 18 years olds are making rational decisions about return on investment in 10-15 years time? I'm not sure how you go about adequately informing students about a major life decision they are making.

At this point; I'd accept "more than not at all."

Anecdotes ahead, proceed with caution: Very average PA public school; had a "home ec" course, in which we did hilariously outdated calculations on things like interest vs compound interest. Not a single mention of what I'd call "practical economics"; e.g. actually balancing a real budget (which, FWIW, I've heard is becoming more a thing in certain districts), calculating the costs of goals, and perhaps touching on long term financial planning. When I first had to handle retirement fund options; you could have handed me a live squid for all I knew what to do with it. I got _lucky_. I had parents who filled in many of the gaps, and were willing to be a resource as I got older, as well as some more informed friends; but I worry about how people with less might have gotten by.

Re: Student Loans Are A Drag On The Economy

#58

Post by jjoonathan »

carbocation wrote: post #53
jjoonathan wrote: post #33

Earlier quoted context omitted.

I don't know how it works for dentists, but my understanding is that for doctors we've essentially given the doctors' guild the ability to legally dictate how many medical graduates they will allow, making them the envy of unions around the world (and schools, who are very happy with an arrangement that allows them to auction off a restricted supply of meal tickets). Sometimes you'll hear the AMA blame congress becau…

> The other two thirds come from drug price overruns (US drug buyers pay twice as much as single-payer countries which have much more size = bargaining power) As an infuriating elaboration on your point, the United States has a huge single payer in Medicare that is by law prevented from effectively negotiating drug price.

Yes! It's insanity!

Well, I wish it was insanity. It's actually cold and calculated exploitation. This is why we need campaign finance reform. Under the current system, politicians don't have the freedom to reject bribe money even if they want to. What a mess.

Re: Student Loans Are A Drag On The Economy

#59

Post by dredmorbius »

dlp211 wrote: post #11
higherpurpose wrote: post #7

So stop letting the government guarantee the loans. Watch how the prices fall once only a small fraction can afford to take a $200,000 loan to pay for their college, afterwards. US colleges have been spoiled. That's why prices are so high.

That's not the only reason that costs are increasing and to imply that it is, is dishonest.

Curious, but what other reasons do you see?

Re: Student Loans Are A Drag On The Economy

#60

Post by bryanlarsen »

patmcguire wrote: post #21

It's not the interest, it's the principal. And I don't understand how the principal got so high. Is calculus ten times more expensive to teach than it was thirty years ago? Is Shakespeare? Supply is totally inelastic, because it's almost impossible to get a new college accredited (for profit schools all started with an already accredited school and expand them). Same with demand - not having a college degree puts you…

University tuition going up faster than general inflation is due in part to Baumol's cost disease[1] which cannot be avoided without structural changes like MOOC's.

So some people wring their hands, say "can't be helped", and walk away. But I believe that the causes that you and others have noted are more prominent.

1: http://en.wikipedia.org/wiki/Baumol%27s_cost_disease

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