quote:

ORIGINAL: Iamsemisweet

Great post Samboct.
. Seems we are in agreement that people need to take a much harder look at the cost/ benefit of higher education. I also am strutting with this, since I have long bought into the idea of education leading to a better life. I also agree that out of control tuition is part of the problem, and that won't change until the states find ways to increase funding. I also think that private so called trade schools need to be penalized for being little more that financial aid mills, in many cases.

quote:

ORIGINAL: samboct

Semi

Here's a chart showing the explosive growth of this debt. This to me is due to a Republican idea that rather than grants, students should pay for their own education- along with guarantees to the banks that underwrote these loans that the federal gov't would ensure that the loans get paid off- hence the 2005 decision altering bankruptcy.

http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/

and here's a link that shows in some mind numbing detail, just exactly who's taken out the loans and how big they are...

http://www.finaid.org/loans/


And here's the article which showed that the Dept of Ed. took over these loans from banks in 2010- turns out that the Dems slipped this one into the Obama care bill.

http://articles.sfgate.com/2010-03-30/business/20827156_1_college-loans-stafford-loans-rate-on-plus-loans

This is an issue that deserves more attention than its been getting. It's a disaster for our country- we've got kids graduating college in debt up to their eyeballs- they're not going to be able to afford to buy things like cars, homes etc. for a long time and the only industry that makes out from this is the financial industry. I suspect though that schools have been jacking up tuition unconscionably- this is smelling like what happened in health care when for-profit hospitals showed up. The net result seems to have driven up the cost terrifically as non-profits begin to match what for-profits charge- and that's probably happened in education as well.

All of this strikes me as idealogy gone wild- the Republicans say that the Federal gov't should let the private sector take over, and now we've got a rentiers economy where students are in thrall to the banks for decades, and hospital costs have spiraled out of control. Can we please point out that occasionally the gov't does a good job of holding down costs in areas where the profit motive shouldn't exist- such as education, health care, and prisons- and that when we allow "free market" capitalism into these industries, we have the current disaster.

To me there are four main issues going on here:

1) Historically, the US succeeded economically when it guaranteed a higher level of education to its citizens than other countries. This was done through high school prior to WWII where US graduation rates were higher than nearly every other country, with the exception of Germany IIRC. However, this was not done through student loans- it was done through scholarships.
2) We need to find more jobs for our graduates.
3) The amount of money being paid in interest (even at the federal level) is strangling our economy- this money needs to be spent on other products.
4) Perhaps the idea that everyone should go to college is flawed. I'm not sure about this one by the way- but it does seem like if there was an additional 1T worth of demand, and we began manufacturing stuff back in this country to protect our intellectual property, we'd create a virtuous cycle that would help graduates find jobs.

Sam

quote:

ORIGINAL: FirmhandKY

quote:

ORIGINAL: Iamsemisweet

Great post Samboct.
. Seems we are in agreement that people need to take a much harder look at the cost/ benefit of higher education. I also am strutting with this, since I have long bought into the idea of education leading to a better life. I also agree that out of control tuition is part of the problem, and that won't change until the states find ways to increase funding. I also think that private so called trade schools need to be penalized for being little more that financial aid mills, in many cases.

I basically agree with this, except I take exception to the belief that it is a "funding" problem with schools.

The cost of tuition has risen all out of proportion to inflation.  Schools need to look at what they are doing that is not education and to be more constrained on what they spend.

It's not the lack of money spent on education that is causing the majority of the problem.  It's the lack of strong fiscal constraints on the budgets of many of the schools that is the problem.

Firm

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ORIGINAL: samboct

If you look at the size of the federal loans to students- they haven't changed much in 15 years- I think it's around $6k per year.

quote:

ORIGINAL: Iamsemisweet

Tuition at my state universities has risen 14-17% each year for the last 4 years. Funding from the state has been cut 50% in the last three years. Coincidence? I think not. UW raised tuition because they had to make up for their loss in funding somehow. In addition they began actively recruiting more out of state students who pay higher tuition. It most certainly is a funding problem, and I would rather see it be dealt with by improving funding at the schools than forgiving student loan
UW is the situation I am most familiar with, but I imagine this is true at other universities also. In addition, UW funded their endowment with lots of real estate investments that took a huge hit when the Seattle market crashed. I just don't see all this wasteful spending you are talking about, I see funds drying up.

quote:

ORIGINAL: FirmhandKY

quote:

ORIGINAL: Iamsemisweet

Great post Samboct.
. Seems we are in agreement that people need to take a much harder look at the cost/ benefit of higher education. I also am strutting with this, since I have long bought into the idea of education leading to a better life. I also agree that out of control tuition is part of the problem, and that won't change until the states find ways to increase funding. I also think that private so called trade schools need to be penalized for being little more that financial aid mills, in many cases.

I basically agree with this, except I take exception to the belief that it is a "funding" problem with schools.

The cost of tuition has risen all out of proportion to inflation.  Schools need to look at what they are doing that is not education and to be more constrained on what they spend.

It's not the lack of money spent on education that is causing the majority of the problem.  It's the lack of strong fiscal constraints on the budgets of many of the schools that is the problem.

"All universities, and in particular major institutions with or seeking elite status, will use any and all funds they receive for the pursuit of perceived excellence and improvement.”

While spending money in the pursuit of excellence by universities sounds great—who doesn’t like excellence— there is the downside that whatever they spend has to come from somewhere. Indeed, the expenditure of additional resources is the same thing as raising the cost per student. Thus, if the financial aid system allows for schools to acquire additional resources, it will have the effect of raising costs per student. In other words, viewing the problem as how to distribute financial aid, given the costs of providing an education is inappropriate when costs are partly determined by the financial aid system.

Is there reason to suspect that the current financial aid system will lead to higher costs? Yes.

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ORIGINAL: samboct

Hi Semi

Maybe I'm not understanding something- but it looks to me like the Fed has taken over the loans that had been handed to the banks. The banks may have originated the loans, but the Dept of Ed is now responsible. See: http://www.estudentloan.com/student-loans/federal-stafford-loan.html

Since it's not the banks capital- I don't see how much squawking they can really do. Furthermore, given the high rate of defaults, its clear that the banks haven't been responsible lenders, so again, I'm not so sure that their contracts would really hold water.

DBG- there's a spreadsheet that I downloaded that I can't find the link to again called debtatgraduation which breaks down student debt, parent debt etc. It looks like the average student educational debt at graduation is $37k with about $24k of that being student debt or about $6k per year with the remainder being parental debt. There are big differences between the mean and the average though, which means that there are some people with six figure debt in the average as well.

Sam

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ORIGINAL: Iamsemisweet

Have you thought about the Peacecorps, or Americorps, Alley? I think you can get some debt forgiveness from that.