Glenn Reynolds has an article in the Washington Examiner about how he believes the higher education bubble is about to burst. Perhaps not imminently, but fairly soon. Why? Because the value of the product doesn’t match its rising cost.
Reynolds talks about the dilution of the worth of a bachelor’s degree even while the price has risen exponentially. Something’s got to give.
But there’s no real incentive for institutions of higher learning to back off the price. Why? Because government has chosen to subsidize those prices by taking over the student loan business.
Sound at all familiar?
With no penalty for raising the price, colleges and universities continue to do so knowing full well that whatever they stick the student with that requires a loan they will get upfront. And if the the student defaults, we, the taxpayers, get stuck with the bill.
One of the big complaints about the Wall Street bailout from both sides of the political isle had to so with “privatizing profits and socializing debt”. That’s precisely what the current government loan program does as well.
Reynolds makes the argument that colleges and universities should be on the hook for the debt. After all they’re the institutions providing the product. Tying the price of the product to the worth of the product is such an old fashioned concept isn’t it? Instead this new-fangled way of doing business has led to bubble after bubble which the uninformed then try to pin on “market failure”.
In fact it is a government takeover of a market. There is no competition, no incentive to revisit pricing, no reason to worry about default. Charge whatever you like, make an outrageous profit and if the loan fails, stick the taxpayers with the cost.
Nice crony capitalist system if you can arrange it, huh?
We all know exactly how it will end up … with a big “pop” and a bunch of surprised politicians asking “how could this have happened?’
And the first words out of most of their mouths?
And what does that usually mean?
More government intrusion and control.
Then the cycle repeats.
I‘ve mentioned before about the seemingly unbridgeable ideological divide confronting our federal representatives in Washington, DC. This seems to be a generational version of the same thing (my emphasis):
Young folks today appear to have the same dreams and ambitions that my generation had at the same age. We wanted an education, a good career, a home of our own and a happy life. The main difference between today’s youthful opinion is that most of us expected to stay in school, work hard and earn a good life instead of having it given to us at someone else’s expense — a point of view expressed by many young adults today.
Proof of the pudding showed up this fall in a survey conducted by Professor Jack W. Chambless at Valencia College in Florida. He asked his students to write a short essay expressing their view of The American Dream.
Most of the students responded with the familiar notions of youth expressed by my generation with one important and notable exception. Instead of taking personal responsibility for their future, they noted that the government should, “Pay my tuition, provide me with a job, give me money for a house, make sure I get free health care and pay for my retirement.” If necessary, “… raise taxes on rich people so that I can have more money …”
What else would you expect from young Americans, who, after several generations, have grown accustomed to a “Nanny State” in which the Federal Government has taken more and more license with the lives of individual Americans? This entire process has resulted in a citizenry in which one-half of wage earners pay no income tax at all and, indeed, in some cases even get a “refund” even though that refund comes from one of the other half of Americans who have paid income tax. If this is not a prime Marxist example of government, “From each according to his ability; to each according to his need,” I don’t know what is.
In fact, according to clip below, 80% of the students opined that health care, tuition, down payments and jobs should all be provided by the government at no cost to themselves. And, while this certainly isn’t a scientific poll or anything even approaching the sort, it should be noted that this was from a class of 200 college kids. So, at least 160 of them thought this way. Which is more than just pathetic and sad. It’s a harbinger of terrible things to come.
I truly pray that Valencia College has cornered the market on freeloaders, thus making this a terribly skewed sample. Or maybe the students surveyed are just a bunch of smart-asses having fun with their professor. Indeed, I’m sure that something far less than 8 in 10 college students believes that government should just provide for their every want and desire, paying for out of the pockets of the “rich” if need be (one wonders where they think all these goodies originate?).
But the number doesn’t really need to be all that high before serious issues arise. If, instead, the number is only 20% (or 1 in 5), that would be better, but still alarming. Consider that if 20% of the electorate feels this way, and that the remaining 80% are diametrically opposed on almost every issue, then pleasing that smaller cohort becomes the key to political victory. In short, giving free stuff to the 20% in exchange for their votes. Which is not at all unlike what we have now.
Of course if that number is higher that 1 in 5, the problem becomes much worse. At least, until they run out of other people’s money.
You can see a video of an interview with the professor who conducted the survey here.
Well you have to ask yourself what you get for the money when you purchase anything don’t you? I mean isn’t that how you make buying decisions for the most part? You weigh the advantage the purchase makes in your life and you figure out whether or not parting with your money justifies the supposed benefits.
In the case of higher education in this country, it’s my guess we passed the point of diminishing returns eons ago. A college degree just isn’t what used to be a few decades ago, but it costs a hell of a lot more. Jack Kelly fills us in:
Tuition and fees at colleges and universities rose 439 percent between 1982 and 2007. Median family income rose just 147 percent during that period.
Median household income has fallen 6.7 percent since June 2009. The cost of attending the average public university rose 5.4 percent this year.
Student loan debt recently passed $1 trillion. It’s now more than credit card debt. The average graduate of a four-year college owes $27,000.
So you have a cost that has risen far and away faster than inflation and median family income for, well, no good reason that I know of.
Oh wait, I said “good reason”. There is a reason. Can you say “subsidy”? That coupled with the myth that a college degree … any college degree … is worth its weight in future gold. But it appears that gold may be fool’s gold.
I love this description of what many institutions of “higher learning” have become:
College students don’t get much for their money. Nearly half learn next to nothing in their first two years; a third learn almost nothing in four, according to a report authored principally by Prof. Richard Arum of New York University.
"Students who say that college has not prepared them for the real world are largely right," said Ann Neal, president of the American Council of Trustees and Alumni. "The fundamental problem here is not debt, but a broken educational system that no longer insists on excellence."
Or even adequacy. "A college degree nowadays doesn’t necessarily signal that its holder has any useful work skills," said Charlotte Allen of the Manhattan Institute.
"For decades our schools have abandoned the teaching of basic facts and foundational thinking skills, and replaced both with leftish received wisdom and stale mythologies, all the while they have anxiously monitored and puffed up students’ self esteem," said classics Prof. Bruce Thornton of California State University Fresno.
I agree totally with Ms. Neal. There is no insistence on excellence. That’s not true of every institution out there, obviously.
However a look at the various new degree programs provides a peek into the priorities of the schools. To broaden and accept as many students as they can to also broaden the revenue stream they’re provided. The unique offerings are most likely not made to produce anything meaningful in academia and certainly not in the real world, but they do attract a certain type of student to such a degree program that is fully willing to buy into the myth that somehow a degree in gender studies is going to be useful and are willing to pay the big bucks demanded (even if that means borrowing them).
And, of course, government subsidizes the purchase, so there’s certainly no reason for the school to back off such a useless program or lower it’s price to something roughly equivalent to its utility in the real world.
What happens? Precisely what you’d think would happen. Its much like the housing crisis. Loans are given to people who aren’t really capable of college work. They leave with nothing or some marginal degree and huge debt.
Others graduate to find there are no jobs for them. Roughly 60 percent of the increase in the number of college graduates since 1992 work in low-skill jobs, Prof. Richard Vedder of Ohio University discovered. In 2008, 318,000 waiters and waitresses had college degrees, as did 365,000 cashiers and 18,000 parking lot attendants.
Because degrees have been so diluted and their worth so compromised over the years, they’re less and less of a guarantee of a good job and better wages.
But because government subsidizes education and distorts the market, guess what?
And, according to a study by the American Enterprise Institution and the Heritage Foundation, teachers are paid $120 billion over market value.
There is fraud at every level of the education system, thanks mostly to politics, said Herbert London, professor emeritus at New York University. Teachers and professors go along to save their jobs.
"They simply cannot say that college isn’t for everyone … or that rigorous exit requirements at any level do not exist," he said. "Hence, there is the clarion call for more money."
Of course they can’t. The gravy train is just too rich to quit.
And, you also need to understand what is actually happening in colleges and universities across the nation to appreciate the full impact of this market intrusion by government. Colleges, as mentioned, no longer demand excellence. Instead, they spend an enormous amount of time and effort teaching what a college student should have mastered before ever showing up at a university:
We spend about $10,600 per pupil in public schools, 377 percent more, in inflation-adjusted dollars, than we spent in 1961. Yet among students who go to college, 75 percent require some remedial work.
If you managed to catch some of the protests in WI that included teachers and caught the spelling on some of their signs, the stats above wouldn’t particularly surprise you. We spend more on education today and and get even less than in the past. What you have to remember is that at every level it is either run by or subsidized by government.
Now at every level, we’re seeing the results of that sort of intrusion, aren’t we? A dismal record of extraordinarily expensive non-achievement. And nothing is going to change or improve in that regard as long as government stays in charge and subsidizes the growing bubble with your money.
But you’ll never hear that said, will you?
We’ve been treated to stories of “greed” and supposed corporate misbehavior by the OWS crowd, but here’s a story that ought to make you furious, especially if you’re an Illinois taxpayer:
Two lobbyists with no prior teaching experience were allowed to count their years as union employees toward a state teacher pension once they served a single day of subbing in 2007, a Tribune/WGN-TV investigation has found.
Steven Preckwinkle, the political director for the Illinois Federation of Teachers, and fellow union lobbyist David Piccioli were the only people who took advantage of a small window opened by lawmakers a few months earlier.
Obviously any number of people are culpable. The lawmakers, of course. But the two who took advantage of this legal loophole are simply morally reprehensible people who took advantage of the system for personal gain without earning what they will receive.
The legislation enabled union officials to get into the state teachers pension fund and count their previous years as union employees after quickly obtaining teaching certificates and working in a classroom. They just had to do it before the bill was signed into law.
So seeing an opportunity to cash in without actually having to do any real teaching, they quickly got teaching certificates and substitute taught for one day. One day. They were paid $93 for the day.
The result from that day? Probably over $100,000 a year in pension payments:
Preckwinkle’s one day of subbing qualified him to become a participant in the state teachers pension fund, allowing him to pick up 16 years of previous union work and nearly five more years since he joined. He’s 59, and at age 60 he’ll be eligible for a state pension based on the four-highest consecutive years of his last 10 years of work.
His paycheck fluctuates as a union lobbyist, but pension records show his earnings in the last school year were at least $245,000. Based on his salary history so far, he could earn a pension of about $108,000 a year, more than double what the average teacher receives.
Meanwhile, as you might guess, the pension fund is horribly underfunded and teachers who’ve spent a career in the classroom stand to get less than half what these two will get.
The union finds no real problem with what its two paid lobbyists did:
A spokesman for the Illinois Federation of Teachers emphasized that the lobbyists’ actions were legal and that they made "individual decisions."
Even so, union President Dan Montgomery said the deal Preckwinkle and Piccioli landed "should never be allowed again." But the union, which provides its employees with a private 401(k)-type plan, is standing by the lobbyists’ right to have access to the public pension.
"They entered TRS under the law and are participating members of TRS. As a TRS employer, the IFT is required to make the payments to TRS," the union said in a statement.
Of course we all know that legal and moral are only the same by coincidence. These two scoundrels knew precisely what they were doing and did what they did with malice aforethought. This was a bid to cash in while doing nothing. And of course, cheats like them are more than happy – along with the union – to stand behind the façade of legality.
And oh, by the way, it should never happen again because the law was changed after these two grifters cashed in.
Always looking out for the little guy and making sure he gets a square deal, those union guys.
HT: Duane Lester
What would we do without the experts — teachers told to avoid white paper because it may cause racism
No, honestly. That’s according to a story in the UK’s Telegraph. Additionally, witches should be dressed in pink, fairies should be in darker pastels and when a teacher is asked their favorite color, they should answer “black” or “brown”.
All of this from experts who are “early years consultants”. The premise of course is changing all these colors changes the perception of everything among a bunch of kids who haven’t yet digested that the kid next to them is a different color:
Instead, teachers should censor the toy box and replace the pointy black hat with a pink one, while dressing fairies, generally resplendent in pale pastels, in darker shades.
Another staple of the classroom – white paper – has also been questioned by Anne O’Connor, an early years consultant who advises local authorities on equality and diversity.
Children should be provided with paper other than white to drawn on and paints and crayons should come in "the full range of flesh tones", reflecting the diversity of the human race, according to the former teacher.
Finally, staff should be prepared to be economical with the truth when asked by pupils what their favourite colour is and, in the interests of good race relations, answer "black" or "brown".
Yes friends, white paper is racist because it doesn’t reflect the diversity of color out there, or something.
And yes, witches, soften them up with pink pointy hats I guess. Otherwise you’re likely to get … witchism? Can’t wait to see if this takes hold by Halloween.
If not, I suppose I ought to lecture the parents about the fact that they’re engaged in turning their little witches into racists. Yeah, that’s the ticket.
Oh and before you start thinking “those stupid Brits”, pause and reflect:
The advice is based on an “anti-bias” approach to education which developed in the United States as part of multiculturalism.
It challenges prejudices such as racism, sexism and ageism through the whole curriculum and teaches children about tolerance and respect and to critically analyse what they are taught and think.
Right. And what they’re taught to think is things like affirmative action is the cat’s meow. I have to laugh when I see claims such as this – they’re not taught to “critically analyze” what they’re taught, they’re taught what to think and regurgitate on command. They’re propagandized and introduced to group think.
"This is an incredibly complex subject that can easily become simplified and inaccurately portrayed," she said.
"There is a tendency in education to say ‘here are normal people and here are different people and we have to be kind to those different people’, whether it’s race, gender, ethnicity, sexual orientation, age or faith.
"People who are feeling defensive can say ‘well there’s nothing wrong with white paper’, but in reality there could be if you don’t see yourself reflected in the things around you. “As an early years teacher, the minute you start thinking, ‘well actually, if I give everyone green paper, what happens’, you have a teaching potential.
“People might criticise this as political correctness gone mad. But it is because of political correctness we have moved on enormously. If you think that we now take it for granted that our buildings and public highways are adapted so people in wheelchairs and with pushchairs can move around. Years ago if you were in a wheelchair, then tough luck. We have completely moved and we wouldn’t have done that without the equality movement.”
Actually it isn’t an “incredibly complex subject, but “experts” don’t get paid consulting fees unless they at least try to make it one. And I at least appreciate the fact that it is acknowledged as political correctness.
Take a look at that load of pap above and then consider this:
Margaret Morrissey, a spokeswoman for the Parents Outloud campaigning group disagrees. She said: “I’m sure these early years experts know their field but they seem to be obsessed about colour and determined to make everyone else obsessed about it too.
“Not allowing toy witches to wear black seems to me nonsense and in the same vein as those people who have a problem with ‘Bar Bar Black Sheep’ or ‘The Three Little Pigs’.
Children just see a sheep in a field, whether it be black, grey, white or beige. I have worked with children for 41 years and I don’t believe I have ever met a two year old who was in any way racist or prejudice.”
However, recent research by Professor Lord Winston provides evidence that children as young as four can hold racist views. In an experiment carried out for the BBC’s Child of our Time series, children were presented with a series of images of faces of men, women, boys or girls. Only one of the faces in each sequence was white.
Children were asked to pick out the face of the person they wanted as their friend and the person they thought would be most likely to get in to trouble.
Almost all white children in the survey associated positive qualities exclusively with photographs of white children or adults. More than half of the black children made the same associations.
In contrast, people with darker faces were viewed as troublemakers.
Of course we have no idea of the experiences the children in question have had or what they’re home life teaches them. We just conclude that they associate dark with bad for no other reason than they’re inherently prejudiced. And apparently they assume they can change that by changing the color of their paper and claiming, whether true or not, that favorite colors are “black” and “brown”.
It is, again, the state via the school system, attempting to dictate a certain type of behavior or belief. This is the same sort of model that is used with the environment – where children are taught (or propagandized if you prefer) that much of what supports their standard of living is bad and harmful to the environment.
By the way, critical analysis requires what? That both sides of an argument be presented factually and objectively, right? Clearly in the case above and the environmental example (at least based on what I’ve seen), that’s not the case. And calling it that is simply the usual redefinition of a word or concept that is so prevalent (and insidious) these days .
So put up your white paper, you racists. Don’t you know that your insistence on using it is just racism? Readability – phaa. Your clients will welcome your new orange stationary, I promise.
Byron York brings us the story of one school district in Wisconsin which sees the new law limiting collective bargaining by public sector unions as a "God send".
The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it’s all because of the very provisions that union leaders predicted would be disastrous.
In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health insurance coverage and none of their pension costs. Now, they’ll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and also contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board President Todd Arnoldussen.
Of course there’s an additional benefit to this – if they run a “surplus”, they can lower taxes, can’t they?
Anyway, other benefits accrued from the law:
In the past, Kaukauna’s agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust — a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums.
Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, ‘We can match the lowest bid,’" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes. At least for the moment, Kaukauna is staying with WEA Trust, but saving substantial amounts of money.
Funny how that works, no? I’m just the vindictive enough type of person to let WEA stew in their own juices and take the lowest bid that isn’t theirs. It tends to make for a very competitive bid the next time they’re given the opportunity. Aren’t markets an amazing thing?
Then there are work rules. "In the collective bargaining agreement, high school teachers only had to teach five periods a day, out of seven," says Arnoldussen. "Now, they’re going to teach six." In addition, the collective bargaining agreement specified that teachers had to be in the school 37 1/2 hours a week. Now, it will be 40 hours.
The changes mean Kaukauna can reduce the size of its classes — from 31 students to 26 students in high school and from 26 students to 23 students in elementary school. In addition, there will be more teacher time for one-on-one sessions with troubled students. Those changes would not have been possible without the much-maligned changes in collective bargaining.
Teachers’ salaries will stay "relatively the same," Arnoldussen says, except for higher pension and health care payments. (The top salary is around $80,000 per year, with about $35,000 in additional benefits, for 184 days of work per year — summers off.) Finally, the money saved will be used to hire a few more teachers and institute merit pay.
Or, the schools will have some options that actually benefit the students vs. benefitting the teachers. I know … for most of us that’s what we thought the system should always have been about, no? But for too long, public sector unions ruled the roost and were able to get working conditions and benefits from friendly politicians that were essentially ruining the education system (and other parts of government) by limiting options and choices.
The introduction of some market based mechanisms plus more options is sure to benefit students over teachers as it should be – not, I’d argue, that teachers come out of this on the poor side of things. On the contrary – now they have to join the rest of us an work 40 hours a week, pay for their benefits and do a bit more to earn that $125,000 in salary and benefits for 184 days work.
Tough stuff, huh?
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I’m really looking forward to attending this event put on by my good friend Jim Lakely and the Heartland Institute. I’ll be able to about the science that argues against the alarmist view of global warming from people I’ve been reading for years. I hope to be able to interview some of them. The theme this year is “Restoring the Scientific Method”, which is sorely needed among the purveyors of alarmism. Anyway, here’s how the event shapes up:
Sen. James Inhofe, R-OK, among the most prominent critics of global warming alarmism in Congress, will kick off The Heartland Institute’s sixth International Conference on Climate Change (ICCC-6) with a breakfast keynote address at 8 a.m. June 30.
(If you can’t make it in person, Heartland will live-stream the entire conference. Tweet coverage: #ICCC6)
Inhofe will be joined at the Marriott Wardman Park in Washington, DC by dozens of state and federal legislators and climate scientists who dispute the claim that “the science is settled” on the causes, consequences, and policy implications of climate change.
Past climate conferences have taken place in New York City, Chicago, Washington DC, and Sydney, Australia and have attracted more than 2,000 participants from 20 countries. The proceedings have been covered by ABC, CBS, NBC, Fox News, the BBC, The New York Times, The Washington Post, Le Monde, and many other leading media outlets.
ICCC-6 will feature presentations by more than two dozen scientists, economists, and elected officials commenting on the latest research on the causes, consequences, and policy implications of climate change. Click here for an updated conference schedule. Our line-up of speakers includes:
- Timothy Ball, Ph.D., environmental consultant and former climatology professor at the University of Winnipeg, Manitoba, Canada. He was recently sued for libel by Michael Mann, a professor and prominent figure in the Climategate scandal.
- Alan Carlin, Ph.D., former senior analyst and manager at the EPA. In March 2009 he authored a highly critical internal review of the EPA’s draft report on endangerment from greenhouse gases, which led him to become a whistle-blower.
- Robert Carter, Hon. FRSNZ, research professor at James Cook University (Queensland, Australia), where he was head of the School of Earth Sciences between 1981 and 1999. He is author of Climate: The Counter Consensus.
- Scott Denning, Ph.D., professor of atmospheric science at Colorado State University. Denning, who believes in man-caused global warming, spoke at ICCC-4 in 2010 and profusely thanked the organizers and attendees for a respectful, stimulating conference. (See this video.)
- Christopher Horner, J.D., senior fellow at the Competitive Enterprise Institute and author of Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud and Deception to Keep You Misinformed.
- Harrison Schmitt, Ph.D., former astronaut and U.S. Senator from New Mexico and the last man to set foot on the moon. Schmitt earned his Ph.D. in geology from Harvard University and is a member of Heartland’s Board of Directors.
- S. Fred Singer, Ph.D., founder and president of the Science and Environmental Policy Project, is coauthor of Unstoppable Global Warming: Every 1500 Years and Climate Change Reconsidered and professor emeritus of environmental sciences at the University of Virginia.
- Roy W. Spencer, Ph.D., principal research scientist at the University of Alabama in Huntsville, where he directs a variety of climate research projects. He is the author of several books, including most recently, The Great Global Warming Blunder.
- Anthony Watts, a 25-year broadcast meteorology veteran and currently chief meteorologist for KPAY-AM radio. He hosts the popular climate change blog Wattsupwiththat.com and a Web site at surfacestations.org devoted to photographing and documenting the quality of weather stations across the U.S.
Past ICCCs have featured presentations by members of Congress, the president of the Czech Republic, Vaclav Klaus, and scientists who view themselves as “skeptics” as well as “alarmists.”
The theme of ICCC-6, Restoring the Scientific Method, acknowledges the fact that claims of scientific certainty and predictions of climate catastrophes are based on post-normal science, which substitutes claims of consensus for the scientific method. This choice has had terrible consequences for science and society. Abandoning the scientific method led to the Climategate scandal and the errors and abuses of peer review by the Intergovernmental Panel on Climate Change (IPCC).
More information is available at the conference Web site.
Get Twitter updates of the conference, and tweet your own coverage, by following @HeartlandInst and using the hashtag #ICCC6.
As you might imagine, for the next few days, most of what I blog about will have to do with the subject that I’ve followed closely for years and is of extreme interest to me. Any questions that you might have are welcome. I’ll actually have two days to get them answered this time vs. the hour I had with Dr. Kissinger, so I should be able to put them too most of the players there. I’ve talked with Horner before during an interview on WRKO. I’ve read Singer and Spencer’s stuff for years and have also haunted Anthony Watts site at certain times to read or find explanations to the latest attempt by the alarmists on one subject or another.
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In line with the recent posts here on the worth of college education (and Bryan’s post on a possible loan bubble) it seems that the job market is also making a statement on college:
Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates — the people who were most protected from the slings and arrows of recession — the outlook is rather bleak.
Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.
Of course in any economic downturn, especially in one which unemployment is high, this sort of thing is going to happen. According to the NY Times story, 22.4% of recent graduates are not working. 22% are not working in jobs that require a college degree. And, of course, of the 55.6% who are working in jobs requiring a degree, many are not working in their degree area. It also appears that the median salary has dropped significantly during the recession – after all, it’s a buyer’s market:
The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account.
That’s a significant drop and again, it makes the argument that going to work for 4 years instead of college may have two benefits: 1) no college loan debt and 2) 4 year work history which would most likely see a salary or earnings well above the median starting salary for college students. And as might be expected, it is those college students who are graduates from liberal arts programs who are suffering most.
The choice of major is quite important. Certain majors had better luck finding a job that required a college degree, according to an analysis by Andrew M. Sum, an economist at Northeastern University, of 2009 Labor Department data for college graduates under 25.
Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.
So what sort of jobs are those who are degreed but not working in a job requiring a degree holding?
An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.
Of course that has a ripple effect in which less-educated workers may be displaced.
“The less schooling you had, the more likely you were to get thrown out of the labor market altogether,” said Mr. Sum, noting that unemployment rates for high school graduates and dropouts are always much higher than those for college graduates. “There is complete displacement all the way down.”
Obviously the lesson here is education is still valuable, the question however is “how valuable”? Valuable enough to commit to the tremendous debt a college degree can bring? It is that sort of ROI that young people must begin making – especially those considering liberal arts programs. Assuming a desire by most who attend college to use their credentials to get a high paying job and secure a better future than foregoing such a program of study has to be under scrutiny by those in such a situation.
Opting to begin work out of high school vs. pursuing a college degree may become a real possibility. And naturally that will have another ripple effect. Colleges and universities will see decreased attendance which will in turn mean less revenue and possibly spur competition among them to attract students.
I actually see that as a beneficial effect, especially given the cost of higher education today, that may eventually make the ROI work somewhat better for potential college students. It is obvious the cost of higher education has risen much higher than any inflation rate. That’s a bubble that needs to be popped and popped rather quickly. Dropping enrollment because of a perception of not receiving the value for what is paid may be the motivator for higher education to cut their prices or suffer the consequences.
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You might have read one of the increasingly frequent stories (like this solid essay in n+1) about a student loan bubble. The basics:
- College is widely believed to be the ticket to success. Degree-holders are more likely to be employed and they make more income than non-holders.
- Many people tried to take refuge from a lousy job market by going to college, and the recession also pinched state budgets, forcing schools to raise tuition.
- Consequently, the amount of student loan debt has exploded toward $1 trillion, eclipsing even consumer credit. Since student loan debt is impossible to discharge even in bankruptcy, it was widely considered safe for lenders, and was securitized much in the same fashion as mortgages.
- As punishing as the rules for paying student loans are, those saddled with the debt have been unable to pay—many fresh graduates aren’t competitive candidates for still-scarce jobs. Only 40% of student loans are being actively repaid. So lenders are starting to pull out.
Over the longer term, the growth in college costs has far outpaced inflation for decades (“Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation”), while the added-income value of those degrees has not grown at nearly the same pace. The oft-quoted statistic that college graduates make $1 million more over a lifetime is misleading (it doesn’t take into account years of foregone income, for one thing), and there’s reason to suspect that much of the real discrepancy is due to correlation: students who have what it takes to pass through the filter of college admissions and stick it out are likely the kind of people who would make more money over their lifetimes anyway.
But is that enough to call it a bubble?
First, no one can really walk away from student loan debt like they can walk away from a mortgage, so many currently nonperforming loans can be expected to perform again when employment picks up.
Second, even if many people lose faith that a college degree is worth the price, tens of millions of kids have been groomed for college from a young age, and it’s true that employers still use college degrees as a significant signal of value.
That faith is unlikely to collapse overnight, and even if it did, it would take time for businesses to adjust. Employers would have to start signaling a greater interest in other factors that prospective employees could substitute for accredited colleges.
Even entry-level jobs have college-educated competition, so how is a young adult to invest his time and credit, other than jumping on the subsidized college bandwagon?
- Take a risk on going unemployed for a stretch?
- Work for free? (He’d still have to compete with college students.) Aside from internships, working for less than the minimum wage to establish one’s value as an employee is generally prohibited.
- Try to convince employers that alternative forms of study are as valuable as college experience?
These are luxuries many can’t afford. There are federal guarantees for college money, but the closest thing a young adult can get to a subsidy for entrepreneurship or job hunting is the welfare state safety net if he fails. The college path is blazed, even if it is the scenic route.
So for now, the lack of alternatives will help ensure there’s no big “pop” but a few marginal shifts:
- Young adults will try to attend cheaper schools, work through college, and take on less debt.
- Creditors will be less generous with student loans while repayment rates remain low.
- And colleges will get by on less money than they planned to have.
As much as we need greater competition in postsecondary education, and better alternatives for young adults to build and signal their value, no student loan “bubble” will do the job. It isn’t a bubble if the air has nowhere to escape.
A former student of a course that sounded innocuous enough by its title turned out not to be as you’ll see when you read his lengthy expose.
In there are the usual blathering about “academic freedom” (the last resort, I think, of many a marginal teacher), etc.
Is it a question of academic freedom when instructors/teachers/professors clearly intend to do something other than impart knowledge which allows a student to make his or her own mind up? In the name of "academic freedom" are students and institutions to be held hostage to absurd distortions of its meaning?
Clearly, when you read through this, you’ll find yourself having difficulty categorizing what is presented as anything other than indoctrination – assuming you know what indoctrination means and can separate it from what academia is supposed to do to “educate”.
But apparently, the university takes the easy way out even with the evidence recorded and videoed.
It’s a long article, but worth the read. And frankly I could spend a day talking about many of the aspects of this argument, but, since mine is rushed today, I’ll leave it to you to do the heavy lifting in the comment section.
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