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The student loan crisis will dwarf the housing market crash.

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Re: The student loan crisis will dwarf the housing market crash.

#81

Post by jseliger »

jacquesm wrote: post #62

Student loans are a rip-off. The market is set up in such a way that to get jobs you have to have a degree, and to get a degree you have to borrow a bunch of money so that you can pay your way through school if your parents aren't wealthy enough. The end result is that you'll be beholden to a bank for a good sized portion of your life (as if having a mortgage or rent isn't enough to hold you down). Smart societies ha…

"Student loans are a rip-off."

If you know of another way to get government-subsidized, interest-deferred or interest-free loans to spend four years of your life professionally learning, and that have generous deferment provisions after you're done with those four years of professional learning, let me know. I'd love to access that money.

"Smart societies have free education, and their schools may not be always as good as those that you pay for with half of your life or so but they're adequate enough."

I would like you to name those smart societies with free education and world-class universities. Notice the Shanghai Jiao Tong University list of schools: http://www.arwu.org/ARWU2009.jsp .

The problem with "free" education is that a) it isn't really free -- someone is paying; b) as with so many "free" things, you get what you pay for to some extent; and c) people without any skin in the game aren't likely to value their "free" education as much. Any society you manage to name with a nominally free university education is going to suffer from some or all of those problems.

(Note: the above isn't to say American universities are optimal, or that they don't have problems: they do. But the solutions are not to proclaim that everything should be free, as if there is no such as opportunity cost, or that free from the student's perspective is equivalent to free from society's perspective.)

Re: The student loan crisis will dwarf the housing market crash.

#82

Post by texel »

patio11 wrote: post #20

It isn't going to be as bad as the housing market crash, because degrees are revenue producing assets for the overwhelming majority of people and houses are costs for the overwhelming majority of people. Also, student loans do not have any mechanisms in them which are designed to induce payment shock, like ARM resets are. (I am only half sardonic there.) If your loan repayments are $700 a month when you graduate, the…

Can you point me to more information about master's degrees being a bad idea? My wife is about to start a master's program, and it'd be good to know ahead of time.

Re: The student loan crisis will dwarf the housing market crash.

#83

Post by jacquesm »

jseliger wrote: post #81
jacquesm wrote: post #62

Student loans are a rip-off. The market is set up in such a way that to get jobs you have to have a degree, and to get a degree you have to borrow a bunch of money so that you can pay your way through school if your parents aren't wealthy enough. The end result is that you'll be beholden to a bank for a good sized portion of your life (as if having a mortgage or rent isn't enough to hold you down). Smart societies ha…

"Student loans are a rip-off." If you know of another way to get government-subsidized, interest-deferred or interest-free loans to spend four years of your life professionally learning, and that have generous deferment provisions after you're done with those four years of professional learning, let me know. I'd love to access that money. "Smart societies have free education, and their schools may not be always as go…

Free from the students perspective is actually a net gain for society because a better educated general public benefits everybody, not just the students.

France comes to mind:

http://en.wikipedia.org/wiki/Education_in_France

Not 100% free but the stipend more than makes up for the very low tuition fee. There are also private schools and universities in France, they charge considerably more.

Re: The student loan crisis will dwarf the housing market crash.

#84

Post by jseliger »

jacquesm wrote: post #83
jseliger wrote: post #81

Earlier quoted context omitted.

"Student loans are a rip-off." If you know of another way to get government-subsidized, interest-deferred or interest-free loans to spend four years of your life professionally learning, and that have generous deferment provisions after you're done with those four years of professional learning, let me know. I'd love to access that money. "Smart societies have free education, and their schools may not be always as go…

Free from the students perspective is actually a net gain for society because a better educated general public benefits everybody, not just the students. France comes to mind: http://en.wikipedia.org/wiki/Education_in_France Not 100% free but the stipend more than makes up for the very low tuition fee. There are also private schools and universities in France, they charge considerably more.

France comes to mind:

... and France's first university on the Shanghai Jiao Tong list: about 40. And it goes down from there, probably in large part because its universities are underfunded, like most of Europe's.

Free from the students perspective is actually a net gain for society because a better educated general public benefits everybody, not just the students.

The question is what happens on the margins and whether there are enough university slots for everyone who wants to go. In the U.S., there basically are, especially when one takes into the community college -> four year path. From what I understand, in most of Europe this is a continual problem.

I think your example does more to prove my point than disprove it.

Re: The student loan crisis will dwarf the housing market crash.

#85

Post by thejash »

ahlatimer wrote: post #56
byrneseyeview wrote: post #33

Earlier quoted context omitted.

Whoa, there! What discount rate are you using? For the median degree, I get an NPV less cost of $47K. Here are my assumptions: * Discount rate of 6% (we're talking about an asset with a 40-year lifespan and zero terminal value). * $25K in annual school costs. * $25K in annual opportunity costs. (May be conservative for people who are college material but didn't get a degree.) * Four years to complete the degree. Whic…

I think you're overestimating the annual cost of school. I know it doesn't cost $25k/yr for me to go. I pay around $6k/yr for tuition, plus another $1k or so for books. According to College Board [1], that's about $1k less than the average for a student going to a public school, in-state. Your figure matches about what it costs to go to a private school, but, from my experience, public schools are also more likely to…

It's unfair to use your public school costs as evidence because they are not comparable to his numbers. Here are the numbers across the board for all college students [1]: Median: $9K Mean: $26K

Also, if we were to put opportunity cost into the calculations (because you could work/work more if not going to school), it would quickly approach the $25K figure.

[1]http://www.collegeboard.com/student/pay/add-it-up/4494.html

Re: The student loan crisis will dwarf the housing market crash.

#86

Post by jrockway »

jacquesm wrote: post #62

Student loans are a rip-off. The market is set up in such a way that to get jobs you have to have a degree, and to get a degree you have to borrow a bunch of money so that you can pay your way through school if your parents aren't wealthy enough. The end result is that you'll be beholden to a bank for a good sized portion of your life (as if having a mortgage or rent isn't enough to hold you down). Smart societies ha…

I don't see this as being true. I went to a state school (UofI). It cost $700 a quarter.

I got bored and dropped out. I had absolutely no trouble finding a job. Not having a degree has not come up at all, even when working for a big corporation that does extensive background checks.

So I am not buying that college must be expensive, or that there is no way to get a job without completing college. Sure, some people are rejected from some jobs for not having a degree, and some people spend a lot of money on college for no real reason. Overspending on college is no different than overspending on anything else.

(Example: I just bought a $900 vacuum cleaner. That doesn't mean that if you don't have $900 you can't clean your house. It just means that I overspent.)

Re: The student loan crisis will dwarf the housing market crash.

#87

Post by blahblahblah »

istari wrote: post #52
patio11 wrote: post #20

It isn't going to be as bad as the housing market crash, because degrees are revenue producing assets for the overwhelming majority of people and houses are costs for the overwhelming majority of people. Also, student loans do not have any mechanisms in them which are designed to induce payment shock, like ARM resets are. (I am only half sardonic there.) If your loan repayments are $700 a month when you graduate, the…

You didn't factor in the very high possibility of someone dropping out. Google "college dropout rates". Consensus figures seem to be around 40% of enrollees don't have a degree 6 years later.

Choosing an arbitrary cutoff of 6 years and then assuming that everyone who didn't complete their degree within 6 years is a college dropout is not a particularly valid way to measure dropout rates. I completed my degree after the 6-year mark and I'm certainly not the only one to do so. These statistics erroneously include people like me in the dropout category. A more accurate method of measurement would be to track each cohort of students from entrance through graduation and chart a histogram of the elapsed time from initial enrollment to graduation. Once you've collected these histograms for several cohorts, you're then in a position to construct a model of the statistical distribution. Then you can make accurate estimates of the true dropout rate by fitting the known graduation data for a given cohort to the model to estimate how many of the students are in the tail of the distribution that will eventually graduate.

Re: The student loan crisis will dwarf the housing market crash.

#88

Post by dnsworks »

muhfuhkuh wrote: post #42
dnsworks wrote: post #29

Earlier quoted context omitted.

"It isn't going to be as bad as the housing market crash, because degrees are revenue producing assets for the overwhelming majority of people and houses are costs for the overwhelming majority of people. Also, student loans do not have any mechanisms in them which are designed to induce payment shock, like ARM resets are. (I am only half sardonic there.)" Degrees clearly are great revenue producing machines for the…

"Degrees clearly are great revenue producing machines for the portion of the workforce currently unemployed with degrees." The unemployment rate for degree-holders in the US is currently 4.5%, compared to 10.5% overall. The bulk of the unemployed are in blue-collar sectors and among those who have graduated with a high school diploma or less. We can argue about what is or isn't an "acceptable rate" of unemployment, b…

Forgive me, "I'm 50% less likely to be unemployed in a bad recession if I go $200k into debt for college". You have me sold, where do I sign up?

Re: The student loan crisis will dwarf the housing market crash.

#89

Post by ahlatimer »

thejash wrote: post #85
ahlatimer wrote: post #56

Earlier quoted context omitted.

I think you're overestimating the annual cost of school. I know it doesn't cost $25k/yr for me to go. I pay around $6k/yr for tuition, plus another $1k or so for books. According to College Board [1], that's about $1k less than the average for a student going to a public school, in-state. Your figure matches about what it costs to go to a private school, but, from my experience, public schools are also more likely to…

It's unfair to use your public school costs as evidence because they are not comparable to his numbers. Here are the numbers across the board for all college students [1]: Median: $9K Mean: $26K Also, if we were to put opportunity cost into the calculations (because you could work/work more if not going to school), it would quickly approach the $25K figure. [1] http://www.collegeboard.com/student/pay/add-it-up/4494.h…

We both linked to the same article, so I'm well aware that my tuition costs are not what everyone else will experience.

A median of $9k is still less than half of what the GP used, and my cost of tuition is a lot closer to the average than the $25k the GP used.

Also, if we were to put opportunity cost into the calculations (because you could work/work more if not going to school), it would quickly approach the $25K figure.

Which the GP already did.

Re: The student loan crisis will dwarf the housing market crash.

#90

Post by muhfuhkuh »

dnsworks wrote: post #88
muhfuhkuh wrote: post #42

Earlier quoted context omitted.

"Degrees clearly are great revenue producing machines for the portion of the workforce currently unemployed with degrees." The unemployment rate for degree-holders in the US is currently 4.5%, compared to 10.5% overall. The bulk of the unemployed are in blue-collar sectors and among those who have graduated with a high school diploma or less. We can argue about what is or isn't an "acceptable rate" of unemployment, b…

Forgive me, "I'm 50% less likely to be unemployed in a bad recession if I go $200k into debt for college". You have me sold, where do I sign up?

Definitely not at the college that puts you 200k in debt. Not everyone goes to Harvard.
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