Generation Debt
There's a bummer of a graph making the rounds:
Roger Kimball asks: "Is it worth it? Is four years at Yale (or Harvard, Princeton, or any other “competitive” college) worth $53,000 x 4 plus annual tuition increases for a grand total (assuming you are entering right now) of roughly a quarter of a million dollars?"
This is a question that, to the consternation of academic administrators, more and more parents — not to mention responsible teenagers — are asking themselves.
At Phi Beta Cons, Matthew Shaffer puts the question in relative terms:
Statistically measuring the real value of education is beyond my ken. But as a recent college graduate, I find it hard to believe that college is 3.5 times more valuable than it was in 1978, or more valuable at all, particularly with students studying so much less.
Shaffer's fellow PBC Nathan Harden relays the painful New York Times tale "of Allison Brooke Eastman, whose fiancé broke off their engagement after she disclosed the massive student-loan debt she had acquired on the way to becoming an X-ray technician/part-time photographer."
Remember kids: student loans cannot be discharged in bankruptcy! Not that that's stopped America's outstanding student loan debt, as Zac Bissonnette has noted, from surpassing its credit card debt -- for the first time in history. It's enough to make you wonder whether anyone could ever have made good on the implicit deal that drove so many upward-mobility-driven kids to sign on the dotted line.
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May '10
Re: Generation Debt
Well, this can be stopped if Washington gets a few people who went to state schools who will hire someone besides Ivy League grads. For most, though, the networks still obtain, don't they? It doesn't help when Cleveland's Hugh Hewitt writes a book advising kids that if they want to have influence they should go to Harvard or Yale.
For the record, my kids both did 2 years at community colleges, then state universities, then, somehow, still got graduate fellowships and did OK without student loans. So it can be done.
Aug '10
Re: Generation Debt
It was almost worth it.
But if I had to do it all over again, I would have chosen a smaller, cheaper school for undergraduate. In a drier part of the country, too.
Part of my problem was that the damp, mold-and-pollen-laden climate at my school had me sick all the time, something I wasn't fully aware of until I felt it was too late to transfer. So I think I wasn't healthy enough to take full advantage of all the wonderful opportunities my school did offer.
Had I been more mature (and my parents less ambitious for me) when I selected my college, I would have realized that it's plain stupid to believe that intelligence and curiosity should mean that physical limitations don't matter. I know better now, though it was an expensive price to pay for even such an essential life-lesson.
Edited on Sep 7, 2010 at 11:41amMay '10
Re: Generation Debt
Duane Oyen: Well, this can be stopped if Washington gets a few people who went to state schools who will hire someone besides Ivy League grads. For most, though, the networks still obtain, don't they? It doesn't help when Cleveland's Hugh Hewitt writes a book advising kids that if they want to have influence they should go to Harvard or Yale.
For the record, my kids both did 2 years at community colleges, then state universities, then, somehow, still got graduate fellowships and did OK without student loans. So it can be done. · Sep 7 at 9:02am
I agree fully. I've slogged through the dredges of the non-elite higher ed system, and managed to come out without dept and a career path that I can't complain too much about. That being said, I had to come to terms with rather quickly with the fairly discouraging, and to a degree un-American, reality that after graduation there were multiple paths immediately unavailable to me because of where I ended up doing my undergraduate study.
May '10
Re: Generation Debt
Zac Bissonette's parents need to write a book so we can each grow our own Zac; he's an inspiration.
It seems pretty clear that federal and state subsidies for education have contributed to its ballooning costs.Other factors include every state's narcissistic need for its own state university system and a governance structure that makes former customers and employees more powerful in decision-making than current customers.
But it is also true that a college degree results in higher earning power. What has happened since 1978 is that value-based pricing has taken over from cost-based pricing -- meaning that the ROI has narrowed for students, but it remains positive in the aggregate -- even with interest costs. At some schools it may no longer be positive. We have debated on this site the wisdom of a four-year liberal arts degree for everyone and this is a productive and useful conversation.
But that aggregate level of debt is not in itself a crisis. It merely represents the market placing the economic cost of the education on the person it will benefit. If the cost becomes too high - the market will correct.
Re: Generation Debt
I think a far more interesting question is whether it's worth paying a quarter of a million dollars for a degree from a school that's ranked 75th or 100th. Because loads of people do that, and I've always wondered why.
Some Comparisons:
Princeton -- Rank 2 -- Tuition & Fees/year: $36,640
American University -- Rank 79 -- Tuition & Fees/year: $36,697
Clark University -- Rank 86 -- Tuition & Fees/year: $36,420
University of San Diego -- Rank 94 -- Tuition & Fees/year: $37,378
Edited on Sep 7, 2010 at 9:38amAug '10
Re: Generation Debt
Degrees have meaning to the extent they help you attain a profession your heart is invested in. For example, an engineering degree for a kid who wants to work in aerospace.
For those who aren't as focused, prestigious degrees once helped because they were relatively rare, had prestige, and promised a certain gravitas. It's different now. They're far more common, and almost trivial by comparison to the past. There are many underemployed graduates of expensive colleges now.
What if the money spent on fancy colleges were placed in smart investments instead? I'd rather see my son or daughter go to a community college and get only what they needed to start a business or contribute to an established one.
Much of higher education now is a useless conceit, and even a fatal impediment to happiness.
Re: Generation Debt
Diane Ellis, Ed.: I think a far more interesting question is whether it's worth paying a quarter of a million dollars for a degree from a school that's ranked 75th or 100th. Because loads of people do that, and I've always wondered why.
Some Comparisons:
Princeton -- Rank 2 -- Tuition & Fees/year: $36,640
American University -- Rank 79 -- Tuition & Fees/year: $36,697
Clark University -- Rank 86 -- Tuition & Fees/year: $36,420
University of San Diego -- Rank 94 -- Tuition & Fees/year: $37,378 · Sep 7 at 9:38am
Edited on Sep 07 at 09:38 am
This is a serious question, Diane. Small liberal arts schools are particularly terrified by the prospect of a new calculus. The Ivies have their endowments to worry about. The state schools have budgetary issues to fret over. Other schools? The basic worth of the education they're delivering.
Re: Generation Debt
Bear in mind that the "rack rate" cited by today's universities hides an awful lot of discounting described as "financial aid." Therefore, colleges can price discriminate based upon fashionable criteria such as current family income or total assets. In a very real sense, financial aid is really yet another steeply progressive -- and largely hidden -- tax on work, savings and investment.
I have been accompanying my 17-year-old son on college tours and when asked about tuition the student guide inevitably says, "Oh, nobody really pays that. Seventy five percent of our students receive financial aid." He doesn't mention that if you run a small business -- one of President Obama's "rich" households -- you will certainly wind up in the full freight tuition bucket.
It is possible to pay the bills, even without financial aid. I worked my way through all my schools and emerged with minimal debt, despite never receiving a dollar of "financial aid."
Jun '10
Re: Generation Debt
The most important thing I learned from the process of getting a BA and attending (then quitting grad school) is that I know how little the degree actually teaches you, so I am not impressed by people with degrees in the way that most people are. Personally, I do not counsel anyone to even get an undergrad degree, unless they either want to 1) get training in a practical skill (medicine, law, engineering, etc.), or 2) to meet rich connected people to network for power and fame, 3) to party a lot, study a bunch of largely worthless information, and postpone adulthood for another 4-7 years.
Rather, spend the time and money learning about the internet, marketing, social media, and offshore contracting of services. Become a media consultant to pay bills until you co-create one of the literally millions of opportunities to makes millions on the internet (providing some useful/fun service). The opportunities to combine 2-3 desired services in novel/productive ways are growing exponentially, and the next 2 decades make conventional education expensive masturbation. The days of college are over. It is the age of entrepreneurship.
Do y'all see this, or is I lonely?
Edited on Sep 7, 2010 at 10:06amJul '10
Re: Generation Debt
I agree with all of the above and would add that we as a society need to admit that most jobs do not require college degrees. (We should also be honest enough to say that some college degrees, such as Women, Gender, and anything with Study in the title, are not just useless but pernicious. But, that's another story.)
The average machinist in the US is in his mid 50's, the same is true for many other trades. Trade schools and their graduates have been disparaged by opinion makers, college degree is now necessary to sell shoes. But only some degrees, if Sarah Palin, a graduate of University of Idaho is anything to go by.) Parents and young people should do the math. Thank goodness some people are beginning to see the light.
Incidentally, Roger Kimball writes like an angel, should he not be invited to be a contributor, please?
Sep '10
Re: Generation Debt
More to the point, what are the kids getting in return for the money? Young America's Foundation compiled a list of bizarre, politically correct courses from various liberal colleges:
1. Occidental College — "The Phallus"
2. University of California–Los Angeles — "Queer Musicology"
3. Amherst College in Massachusetts — "Taking Marx Seriously: 'Should Marx be given another chance?'"
4. University of Pennsylvania — "Adultery Novel"
5. Occidental College — "Blackness"
6. University of Washington — "Border Crossings, Borderlands: Transnational Feminist Perspectives on Immigration"
7. Mount Holyoke College — "Whiteness: The Other Side of Racism"
8. University of Michigan — "Native American Feminisms"
9. Johns Hopkins University — "Mail Order Brides: Understanding the Philippines in Southeast Asian Context"
10. Cornell University — "Cyberfeminism"
11. Duke University — "American Dreams/American Realities"
12. Swarthmore College — "Nonviolent Responses to Terrorism"
If I were a proud parent, I would cheerfully cough up a quarter-million bucks to have that kind of sewage poured into my kid's head. Yes, indeed.
May '10
Re: Generation Debt
You're making ample assumptions here, starting with the the value of these ranking systems. That Princeton is a top ranked research institution says nothing about whether the undergraduate education is qualitatively that much higher than the lower ranked.
Also worth taking into consideration is the field of study. There are many highly ranked programs in specific fields outside of the general elites. If your goal is to teach elementary school, it's probably a bad choice to overpay to attend American University. If your goal is to filter into the State Department, it's probably much more worth it.
Honestly, I think most of this boils down to people making poor decisions. As a teacher of college freshmen, it's quite clear to me that most students made their decision on where to study based on motivations far removed from financial value or long term benefits. What were their parents telling them? I don't know.
Edited on Sep 7, 2010 at 3:29pmRe: Generation Debt
Mark Lewis: Rather, spend the time and money learning about the internet, marketing, social media, and offshore contracting of services...The days of college are over. It is the age of entrepreneurship.
Not a horrible idea in theory. But it requires a whole lot of self-motivation to teach one's self all one needs to know to be competent in anything. And there are very few 18-year olds who can thrive in an unstructured environment.
I graduated both high school and college this past decade, and can attest to the huge difference between 22 - 25 year olds who went to college and those who didn't. The folks who went to college feel empowered to dream bigger dreams and set bigger goals for themselves. They acknowledge that they have agency to influence others and to achieve. Those who do not attend college tend to lack self-confidence and end up working full time at the retail jobs they used to work part-time in high school. Their concept of the possible is much more confined.
Aug '10
Re: Generation Debt
One of the key problems with student loan debt is not the high level of the debt itself, but the increasing costs of that debt. My undergraduate student loans were at less than 2% interest. Think about that for a second. That makes them little if no burden and it becomes less important to pay that off quickly than to put money into investments that earn more than 2%. Any time I am paying off those loans with money I could have invested at 2%, I am losing money in NPV.
With the recent revamp of student loans under the Obama Healthcare bill, the interest rate has increased to between 6 and 8%. It is much more difficult to find investments that pay those kinds of yields on a consistent basis. Worse than that, the money is being paid as a tax to the government to fund government programs. Under the old system, the interest at least went to financing other investments. Now it goes to the new Health Care bill and other social programs.
Students are becoming increasingly indebted to their government, and that is problematic. Is Harvard worth $250k at 2% or less? Yes. 8%? Maybe not.
Re: Generation Debt
11. Duke University — "American Dreams/American Realities"
The funny/sad thing is that I can easily picture a course with this title that would muster plenty of evidence that the PC view is an American dream way out of sync with American realities. American history is littered with utopian projects and passions. Yet a course dwelling on that would have a devil of a time making it into the catalog.
May '10
Re: Generation Debt
Diane Ellis, Ed.: I think a far more interesting question is whether it's worth paying a quarter of a million dollars for a degree from a school that's ranked 75th or 100th. Because loads of people do that, and I've always wondered why.
Some Comparisons:
Princeton -- Rank 2 -- Tuition & Fees/year: $36,640
American University -- Rank 79 -- Tuition & Fees/year: $36,697
Clark University -- Rank 86 -- Tuition & Fees/year: $36,420
University of San Diego -- Rank 94 -- Tuition & Fees/year: $37,378 · Sep 7 at 9:38am
Edited on Sep 07 at 09:38 am
I violently disagree with the so-called ranking of any undergraduate schools. Learning is entirely up to the student. You cannot make a meaningful distinction among any of the 50+ state public universities and the Ivy League, etc. You get just as many bad lectures by lower division TAs at Harvard as you do at Michigan State, you just pay more for the privilege. You can also get as many good ones.
Graduate school rankings may be valid by subject area, though the law rankings also tend to measure political correctness and networking as much as academic quality.
May '10
Re: Generation Debt
James Poulos, Ed.: There's a bummer of a graph making the rounds:
I like to imagine a bunch of lemmings climbing up that top line and plummeting over the edge.
Going to a community college for my first two years was one of the smartest things I ever did. The teachers were as good, and often better, than those I had at the universities I attended. It cost me so much less. And only the college of one's senior year matters for the degree, which is all most employers care about.
For applied sciences, college makes a lot of sense. It's just the universality of degree expectations that makes a joke of us all.
May '10
Re: Generation Debt
James Poulos, Ed.: There's a bummer of a graph making the rounds:
....or might it not be a bummer at all? It indicates a bubble--which means the cost of a college education is bound to come down, soon and drastically, whether through competition from community colleges and for-profit schools, or through decreased demand.
Right? Wrong? Maybe?
Jul '10
Re: Generation Debt
Wow. All this Ivory Tower talk, and I'm an academic!
The tuition is well worth it for the Ivies. Because you may or may not get a good education, depending on lots of factors. But you will be assured a good network and the Ali Baba Effect is huge. The most famous example of the former outside the Ivies is the Notre Dame network. The latter will open doors that would not be available for someone who graduated from West Regional University.
Tuition increases are there because the government keeps subsidizing tuition. Also, there is a positive correlation between the price of the education and the quality of education. Rice University, which is famously inexpensive, considered tuition increases as a way to enhance their reputation with regards to other schools such as Stanford, Duke, Emory, etc.
Aug '10
Re: Generation Debt
Michael Tee:
Tuition increases are there because the government keeps subsidizing tuition.
Definitely.
You know, my school (Ivy X) did the same thing. And it justifies no longer offering generous academic scholarships for the same reason -- that the other Ivies stopped doing it, so if my school continued to do it, it would lose prestige (fortunately, there are still outside sources for scholarships). But how the heck does an educational institution lose prestige by attracting even more bright students with academic scholarships?
I think that what I hated most about my school is that it seemed to feel the need to adopt the bad habits of other Ivy-League schools simply because it was Ivy-League itself. Diversity, my foot!