Our debt has a way of focusing us on downsides, because debt turns a continuous income curve into two discontinuous lines: “solvent” and “insolvent.” More generally, debt has a way of magnifying life events. When things are going well, debt can help them go better: You can buy a house and a car, or you can buy a bigger house and a nicer car. But when things are going badly, debt can turn a slight income loss into a major disaster.
Most Americans now have a lot of debt, whether they’re ordinary workers or commercial landlords. Which means that most Americans have to be extraordinarily sensitive about letting their income cross the line where they can no longer support their debt payments. Which in turn means that already sticky prices may become positively glue-like.
The Roe Effect, combined with way-too-high college tuition and fees for a lousy education, the resulting student debt, and underemployment of recent college grads is going to lead to many more colleges closing in the coming years.
A waning number of high school graduates from the Midwest is sparking a college hunt for freshman applicants, with the decline being felt as far away as Harvard and Emory universities.
The drop is the leading edge of a demographic change that is likely to ease competition for slots at selective schools and is already prompting concern among Midwestern colleges.
“You can’t create 18-year-olds in a lab,” said Brian Prescott, director of policy research at the Western Interstate Commission for Higher Education in Boulder, Colorado. “Enrollment managers are facing an awful lot of pressure that they can’t do much about.”
Denison University, in Granville, and the College of Wooster, both project about a 13 percent drop from within the state. Ohio residents make up about a quarter of Denison’s student body and about a third at Wooster. Denison and Ohio Wesleyan University have boosted travel outside the state to attract prospective students, especially in California and the Southwest.
[N]ow is probably a good time to reprint – and expand – the list of empirical studies that have, in one way or another, found that schools in large part capture aid money rather than becoming more affordable. The list probably isn’t exhaustive, and there are many limitations that make it impossible to prove that aid fuels inflation, but combined with the logic that you’ll willingly pay more if you have someone else’s money, these studies show that there is very good reason to conclude that aid is counterproductive:
There have been some slight improvements in the scores of younger children, but they don’t last. By the time students are preparing to enter higher education or the workforce, they are no better prepared academically than they were two generations ago–despite the fact that we have spent three times as much on their K-12 education as we did educating the class of 1970.
The current situation is unsustainable, with lending risks falling entirely on the students and taxpayers. The rewards go to the universities, which have raised tuition to maximize their share of the flood of cheap money. University of Tennessee law professor Glenn Reynolds estimates that college tuition grew at more than double the inflation rate between 1980 and 2010. In fact, college costs rose more steeply than the price of health care.
University administrators saw no need to curb their appetite to raise tuition rates because no matter how high the cost of entry to college, it was always covered by cheap loans, subsidized by the taxpayers. Federal student aid increased by 372 percent between 1985 and 2010, from just under $30 billion to almost $140 billion, according to the Cato Institute’s Neal McCluskey. This is how Uncle Sam has been inflating the higher-education bubble.
Families should be able to weigh the true costs and benefits of college. This can’t be done while Congress continues to “help” students by subsidizing a debt that has reached $1 trillion. The Senate should take up the House bill, which represents a modest first step in deflating the bubble.
Who could possibly object to seeing 18- to 22-year-olds take on large debts that must be paid back so that we can keep the college-industrial complex healthy? Have you no decency, sir!?!?!
Lastly there’s higher education. Once again, someone who hasn’t had much time to study policy might reasonably think the key to improving and expanding higher education would be for the federal government to spend more on it. But again, reality differs: federal aid fuels tuition inflation and encourages massive waste.
The connection between aid and prices is somewhat intuitive if you think about it. Basically, if you give people $100 more to buy something, sellers will raise their prices $100. The buyers are no worse off, the sellers are better off, and the only losers are the people who furnished the money. With college aid, we call these losers “taxpayers.”
Of course there’s more to college pricing than aid, but the effect remains.
Studies have found that private colleges raise their prices a dollar for every extra buck students get in Pell Grants, and schools often reduce their own aid when government assistance rises.
Then there are the dismal outcomes that go with giving away college money.
First, only about 58 percent of first-time, full-time students finish a four-year degree within six years at the school where they started, and most who don’t finish by then likely never will.
Next, a third of people with bachelor’s degrees are in jobs that don’t require them.
My students, especially soon-to-be master’s-degree recipients, frequently ask about whether Ph.D. programs are a good career path. Given the difficulties of this job market, even for students in a professional program who have experience in the field, the prospect of a Ph.D. can seem like a permanent safe harbor. Appearances deceive, though, as a tight academic job market and a deepening reliance on adjuncts make even employment after the Ph.D. a difficult proposition. It’s no surprise, then, that there’s been an increasingly strident pushback to the idea that Ph.D.s are necessary. Numerous examples exist in the humanities, sciences and social sciences.
Rather than restate themes that have already been covered better by others, I offer recommendations for how faculty mentors should answer these sorts of questions from students. We are always going to be asked about whether students should follow our career paths, and the days of faculty blindly endorsing Ph.D. programs as if they were a universal solution for all students are over. Doing our job as advisers well requires that we take a pragmatic approach that gives students a clear understanding of the challenges currently confronted by academe. This will require many who advise Ph.D. students to take a more hands-on role in preparing their students for the challenges of an increasingly difficult job market. This pragmatic approach has three elements: honesty, professionalization, and options.
It’s awfully hard for something or someone to help you get where you want to go when you don’t know where that is. When you’re searching for a job, there is nothing more important than knowing exactly what you want. Going to grad school is a very expensive way to ask for directions. There is nothing wrong with being lost for awhile.
You are not paid for your academic writing (see Reason 88) because no one is willing to pay to read it. In fact, virtually no one is willing to read it at all. After several years of work on a dissertation, you can have some confidence that your adviser will read the finished product, and somewhat less confidence that the other members of your dissertation committee will read it. Beyond that handful of people, it is unlikely that anyone will ever read your dissertation again. As university libraries are increasingly archiving dissertations digitally, you may not even have the satisfaction of seeing your name on a volume in the library. On rare occasions, someone may come along and cherry-pick something from your research that relates to his own, but chances are that no one will ever sit down and read the paragraphs over which you agonized for so long (see Reason 28).
The same fate awaits the vast majority of published academic writing. Typically, it takes months of research, writing, and revision to produce a journal article that will be seen by fewer people in its author’s lifetime than will visit this blog in an hour. Academic presses print as few as 300 copies of the books that their authors have labored over for years. Most journal articles and academic monographs are written because academics need to be published to keep their jobs, not because there is a demand or need for their work (see Reasons 33 and 34). To the extent that academic writing is consulted at all, it tends to be “read” solely for the purpose of furthering someone else’s writing. In many cases, editors and peer-reviewers probably read manuscripts more carefully before they are published than anyone will ever read them after they are published.
A growing number of liberal-arts colleges are supplementing their traditional glossy brochures touting ivy-covered libraries and great-books seminars with more pecuniary pitches: Buy seven semesters, get one free. Apply today, get $2,500 cash back. Free classes after four years.
The schools are adjusting their marketing to attract students at a time when families are struggling to foot the bill for college—and increasingly concerned about the potential payoff. Some of the most aggressive offers come from the most financially vulnerable schools: midtier, private institutions that are heavily dependent on tuition and sit in regions with shrinking pools of college-bound high-school seniors.
. . .
The pressure on liberal-arts schools is coming from several directions. Nationwide, the number of graduating high-school seniors this year is expected to decline to 3.32 million from a projected all-time high of 3.41 million during the 2010-11 school year, according to the Western Interstate Commission for Higher Education. And fewer college-bound seniors are choosing private four-year schools: Between 2006 and 2011, the percentage of students at those schools dropped to 20% from 22%, according to the College Board Advocacy and Policy Center.
For students headed to college, tuition is a bigger issue than ever. The average cost of public and private schools jumped 92% between 2001 and 2011, compared with a 27% rise in the consumer-price index. Last year the average amount that students at public colleges paid in tuition, after state and institutional grants and scholarships, climbed 8.3%, the biggest jump on record, according to the State Higher Education Executive Officers Association.
The paradoxical effect of the full-recourse [student] loans is that banks are happy to provide almost unlimited funding to a slice of society rich in ill-conceived ideas.
. . .
As if the debt burden was not enough, potential employers are checking credit reports. High student debt can render you unemployable.
. . .
An entire generation has been set up for debt servitude. We are eating our young. The source of the problem is a complex and nuanced confluence of factors. The chronically profligate boomers, stressed by inflationary pressures and dazed by the equity and real estate downturn, are in no position to help their kids pay for college.
In fifty years, if not much sooner, half of the roughly 4,500 colleges and universities now operating in the United States will have ceased to exist. The technology driving this change is already at work, and nothing can stop it. The future looks like this: Access to college-level education will be free for everyone; the residential college campus will become largely obsolete; tens of thousands of professors will lose their jobs; the bachelor’s degree will become increasingly irrelevant; and ten years from now Harvard will enroll ten million students.
. . .
Why, after all, would someone pay tens of thousands of dollars to attend Nowhere State University when he or she can attend an online version of MIT or Harvard practically for free?
This is why those middle-tier universities that have spent the past few decades spending tens or even hundreds of millions to offer students the Disneyland for Geeks experience are going to find themselves in real trouble. Along with luxury dorms and dining halls, vast athletic facilities, state of the art game rooms, theaters and student centers have come layers of staff and non-teaching administrators, all of which drives up the cost of the college degree without enhancing student learning. The biggest mistake a non-ultra-elite university could make today is to spend lavishly to expand its physical space.
Somehow, recently, a lot of people have taken an interest in the broadcast of canned educational materials, and this practice — under a term that proponents and detractors have settled on, massive open online course (MOOC) — is getting a publicity surge. I know that the series of online classes offered by Stanford proved to be extraordinarily popular, leading to the foundation of Udacity and a number of other companies. But I wish people would stop getting so excited over this transitional technology. The attention drowns out two truly significant trends in progressive education: do-it-yourself labs and peer-to-peer exchanges.
. . .
There’s a popular metaphor for this early stage of innovation: we look back to the time when film-makers made the first moving pictures with professional performers by setting up cameras before stages in theaters. This era didn’t last long before visionaries such as Georges Méliès, D. W. Griffith, Sergei Eisenstein, and Luis Buñuel uncovered what the new medium could do for itself. How soon will colleges get tired of putting lectures online and offer courses that take advantage of new media?
Two more appealing trends are already big. One is DIY courses, as popularized in the book Fab by Neil Gershenfeld at the MIT Media Lab. O’Reilly’s own Make projects are part of this movement. Fab courses represent the polar opposite of MOOCs in many ways. They are delivered in small settings to students whose dedication, inspiration, and talent have to match those of the teacher — the course asks a lot of everybody. But from anecdotal reports, DIY courses have been shown to be very powerful growth mechanisms in environments ranging from the top institutions (like MIT) to slums around the world. Teenagers are even learning to play with biological matter in labs such as BioCurious.
Fundamentally, DIY is a way to capture the theory of learning by doing, which goes back at least to John Dewey at the turn of the 20th century. The availability of 3D makers, cheap materials, fab software, and instructions over the Internet lend the theory a new practice.
Student debt levels have reached a new high – rising $42 billion in the last quarter to $956 billion, according to a report this week from the New York Fed. At the same time, tuition rates have seen a staggering 72% increase since 2000.
As if those two upward trends weren’t hitting students hard enough, the average earnings for full-time workers ages 25-34 with bachelor’s degrees has also dropped 14.7% since 2000.
Shocking Chart on Tuition Vs. Earnings for College Grads, from Blaire Briod
