What’s Behind the Screwed-Up Student Loan Fiasco?
By Wolf Richter. This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
Enrollment in higher education in the United States has dropped by 11% from the peak in 2011. That’s a drop of 2.2 million students over the span of eight years, according to data from the Student Clearing House.
But over the same period, when student enrollment dropped 11%, student loan balances have skyrocketed 74%, to $1.6 trillion. The biggest portion of these loans is held by the federal government. It funded them by increasing its own debt.
So what’s going on here with this 11% decline in enrollment since 2011, and the crazy 74% surge in student-loan balances?
Moody’s, which rates structured securities backed by student loans, and which rates universities and the bonds they issue to fund their pet projects, and which rates Commercial Mortgage Backed Securities backed by “student housing,” well, it came out with a detailed analysis of what’s causing these student-loan balances to balloon like this – and it’s not what we thought.
Moody’s found that with scholarships, grants, and tuition-discounting all included, total college costs have largely tracked the increase in median household incomes since 2012. But before 2012, the ratio of college costs to household income had exploded.
For example, the average cost of public four-year schools, for students paying in-state tuition, runs just over $15,000 a year, which is about 24% of the median household income.
But that ratio of 24% of household income is down from 2012 when it peaked at about 25%. It has recently trended lower because household incomes have ticked up a tad faster than the costs of those schools.
The big damage was done in the years between 2000 and 2012. Over this period, for students at public four-year schools, costs exploded from 14% of household income to 25% of household income.
In dollar terms, costs soared 56% over the 12 years, from about $9,000 in the year 2000, to over $14,000 in 2012.
These costs include room and board, tuition, fees, tuition reduction programs, grant aid, and the like.
In terms of loans: In 2002, total debt per bachelor’s degree borrower – so people that actually took out loans while going to public four-year schools – was $22,500. But by 2012, this had soared to $27,000. And then it hit a ceiling. By 2018, this debt per bachelor’s degree borrower had ticked up by only $200 to $27,200.
This means that there are fewer students, and those fewer students have stopped borrowing more.
The total student loan balance of $1.6 trillion reflects the new loans added to that pile, minus the old loans getting paid down by former students. So this 74% surge in student loans since 2011 is a mix of those two factors:
- New loans being added;
- Old loans getting paid down.
And we’ll look at both of those factors.
So enrollment has been dropping, and student borrowing has hit a ceiling, and the ratio of student borrowing to household income has flatlined.
And Moody’s analysis found that the actual amount of new loans taken out every year – so-called “originations” – has declined since 2012, after the explosion of originations in the years between 2000 and 2012.
Originations peaked in 2012, with $115 billion in new loans taken out that year, up from $40 billion in new loans in 2000.
Since 2012, annual originations have dropped 8% to about $106 billion in 2019, which is below where they’d been in 2009.
This decline was driven by a 24% plunge in borrowing by undergraduates. In 2012, these undergraduates took out $72 billion in new federal student loans. By 2019, this had plunged to $55 billion in new loans.
A disproportionate share of new debt over the past few years has been incurred by graduate students. For example, in 2016, they made up just 15% of all students but accounted for about 35% of all new loans.
Many student borrowers don’t owe all that much: At the end of 2017, the median amount owed by the 45 million federal student-loan borrowers was around $17,500. Meaning that about 22.5 million students owned less than $17,500. All combined, half of the student borrowers owe less than $200 billion.
But for a fairly small group of student borrowers, the balances are gigantic: At the high end, 7% of federal borrowers owe over $100,000 each (often those with graduate degrees). And together, that 7% owes $500 billion.
So new borrowing exploded in the years up to 2012, and contributed a lot to the outstanding student debt. But since 2012, as enrollment fell and costs hit a ceiling, new borrowing has been a much smaller factor.
And what was the largest factor in driving up student-loan balances since 2012: student loan repayments have slowed to a trickle.
The repayment rate – that’s the percentage of existing debt that is eliminated in each year through repayments – averaged only 3% over the past 10 years. In 2019, it was down to just 2%.
In other words, in 2019, only about $30 billion of the outstanding student loans were being repaid, but $106 billion in new loans were being added.
This means that the old debt is coming off the books at snail’s pace, while new debt piles on much faster, and this disconnect causes the loan balances to balloon. And this situation has gotten much worse since the Financial Crisis.
For federal borrowers whose payment obligations started in 2006 to 2008, 40% hadn’t made a dent into their initial balance five years later.
But for the cohort for whom payment obligations started in 2010 to 2012, of them 49% have not lowered their initial balance at all (up from 40% five years earlier), and their monthly payments only covered interest. In many cases, payments didn’t even cover interest, and the balance of those folks actually grew. This is a serious deterioration from five years earlier.
By school category for this cohort for whom payment obligations started in 2010 to 2012:
- 20% of former students with degrees from private nonprofit schools, which include top-notch schools, have not paid down their initial balance one iota in five years. For all former students at these schools, so those with and without degrees, this jumps to 33%.
- 21% of former students with degrees from four-year public schools have not paid down any balances in five years. For all former students at these schools, so those with and without degrees, this jumps to 35%.
- 57% of former students at two-year schools had not paid down their initial balance one iota after five years.
- 75% of former students at for-profit schools who did not get a degree have not paid down their initial balance after five years.
The base line for federal student loans is that they should be repaid in 10 years. But only about a quarter of all balances are currently being repaid at that 10-year or shorter rate. Three quarters are being repaid at a much slower rate, or are not being repaid at all.
Moody’s found several primary causes behind this slow-repayment issue:
One, many graduates from for-profit colleges, two-year schools, and non-selective four-year schools, or students that didn’t complete their degrees, face underemployment and lousy job prospects, and they have trouble with their student loan payments.
Two, a biggie: People voluntarily choose longer repayment terms. Extended repayment plans are available to students with high balances. And students can consolidate multiple federal student loans into a new federal loan, and this new loan may offer longer repayment terms. There are now over $500 billion in federal consolidation loans outstanding, and many of them have terms of up to 30 years.
And three, another biggie: during the Great Recession, the government created the so-called Income-Driven Repayment plans. These plans were designed to make it easier for federal student loan borrowers to service their debt. Payments are based on income, family size, the state the borrower lives in, and the federal student loan type. The plans allow for payments to be so small that there is no repayment of the initial balance; or worse, for payments to be less than the monthly interest charges, where the outstanding balance actually grows.
As of mid-2019, loans under IDR plans have surged to $480 billion.
In addition to all this, borrowers can make use of student-loan deferments and forbearance options, where they don’t have to make any payments at all for a while, and loan balances grow as interest costs accrue.
And the incentive for former students is huge to drag these loans out: IDR plans include provisions of debt forgiveness after 20 or 25 years of qualified payments.
IDR plans are mostly used by borrowers with high loan balances: Over half of all the loans with balances over $200,000 are in IDR plans. They amount to $121 billion, or 25% of total IDR balances. These people are just biding their time until taxpayer-funded debt-forgiveness kicks in.
Under these IDR plans, those who splurged and borrowed recklessly, win the most. And those who sacrificed the most and worked like dogs, and whose parents sacrificed the most, and who went to cheap schools, to minimize their debt, they got shafted.
And there is another factor why student-loan balances continue to balloon: Despite all the deferment and forbearance options, the IDR plans, and the extended term plans and loan consolidations, etc.: The delinquency rates are very high for student loans. But defaulted student loans cannot easily be discharged in bankruptcy. So the slate cannot be cleared, and these defaulted loans stay on the books, and are considered part of the loans outstanding.
So, seen from the angle of slow or no repayments that have been a big driver behind the ballooning student loans since 2012, this fiasco takes on different nuances.
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In 1998, Congress removed dischargeablility of student loans except if a debtor could show that paying back the student loans would create an undue hardship. In 2005, Congress extended this protection to private student loans.
“The big damage was done in the years between 2000 and 2012. Over this period, for students at public four-year schools, costs exploded from 14% of household income to 25% of household income.”
I would like to know what is the amount of the largest student loan ever borrowed under the student loan program. I have heard $400,000 from some quarters. Do I hear $500,000 anyone?
@joan of arc
Oral surgeons and Orthodontists have the biggest student loan bills. Ortho specialty has been under attack by cheaper competition too- poor orthodontists
This may be so because dentists have been relatively free of the fee limits set by Medicare for other health services.
If they can “earn” more, they can borrow more.
Simple solution to sky high dental costs Take a vacation overseas and get top quality dental care at a 80% discount And enjoy the rest of the money on gelato and cappacinnos , etc
Is there a good source for comparative costs and quality of medical/dental in various countries?
With soaring costs, declining coverage and inexpensive airfares this will become more of a thing for Americans.
I know someone who got heart surgery in India for $15k (instead of $200k in the US), it was a private hospital with Western-trained docs and high standards, including recovery at a medical beach resort.
This man borrowed $140k per year for 7 years at USC, that is insane. Why would anyone do that? What did he spend the money on? Obviously, not education.
REPAYE is how dental school and dental specialty education is financed. Graduating orthodontists have hundreds of thousands of dollars if debt. REPAYE allows debt repayment to be 10% of income so many if not most recent graduate dentists do this. As we all know, you can’t claim bankruptcy to discharge insane amounts of student debt which is SPENT ON TUITION OF UP TO 100K PER YEAR!! When the debt is forgiven, a huge tax bill is due so recent graduates are saving to pay for that, not trying to pay down an often u payable student loan bill. Dental schools know this and show students how REPAYE works and what tax bill they need to prepare for in the future. How this absolute financial scam of taxpayers – who are looking at hundreds of millions of dollars of student loan forgiveness – became law is uddely bewildering.
A relative of mine and her husband owed a combined $420k for dental and graduate nursing school.
Joan of Arc:
Personal extended family experience:
8 year medical….$300,000+.
That loan is being paid down slowly but surely….both partners working and both very responsible.
But, it does preclude any thoughts of purchasing homes and “extra” consumption.
I don’t understand any of this hugely expensive higher education; I come from a very old school where tuition at schools such as UC was very affordable and didn’t require an arm, leg, head, a whole future life of debt. It’s socially criminal.
Private student loans are securitized into student loan asset backed securities (SLABS). When students consolidate their government loans, they turn them into private loans, and into the SLABS machine.
Here is the thing about SLABS and other securitized loans – they can help corrupt intermediaries (the schools that pocket the endlessly growing loan proceeds) to extend their scams from deceived student borrowers to deceived bond investors.
With no skin in the game (very little happens to traditional colleges with awful student repayment stats) the colleges are incentivized to cause the maximum amount of loans – that inflation of idiotic risk is then palmed off on yield starved investors (including public pension funds with 8 pct hurdle rates) that have been ZIRPed by a bankrupt federal gvt.
And then these institutional worthies look at the surrounding ruin and say, “Who, us?”
Hey, Hank Paulson was the US Treasury Secretary. So securitization must be OK. ?
Unfortunately, the US middle class has been slowly deprived of opportunity, year by year thanks to short-sighted decisions funded through charitable organizations dedicated to carrying out the will of the wealthy to limit their total tax liabilities. See https://www.nsf.gov/news/news_summ.jsp?cntn_id=130380.
Opportunities to advance in America are shrinking as students also face pressure from the need, not just to pay for tuition and living expenses, but for rising healthcare and housing costs. See https://www.investopedia.com/insurance/why-do-healthcare-costs-keep-rising/; https://www.forbes.com/sites/allbusiness/2017/06/28/what-we-can-all-do-about-rising-healthcare-costs/#1bb255b62f37.
Because student loans were made non-dischargeable in bankruptcy, students had to focus only on those career paths which had a high probability of being immediately lucrative: at least enough to enable them to live on their income decently and meet their loan payments. That is why many now have to go to graduate school to succeed in a job market in which so many lower-level jobs have been lost: e.g., an MBA has been required as a practical matter for a career in accounting for some years now. Previously, a bachelor’s degree was sufficient.
Such graduate studies are more expensive, particularly because you often double the time that you have to spend studying and graduate tuition may be higher. While pursuing graduate studies, you cannot work enough to pay down your total debts, including those incurred from undergraduate education.
Thus now, many careers that might have long term, beneficial effects (e.g., in esoteric physics or biological research) are not economically viable, except for those rare individuals that can achieve commercial breakthroughs, which often involves luck, since scientific research is frequently beneficial in helping future advances but not immediately useful. This will contribute to the shrinking US lead in making scientific breakthroughs. See https://www.nsf.gov/news/news_summ.jsp?cntn_id=130380
Many careers will only pay enough for a decent life if you obtain a graduate degree (often a Ph.D.), because you can then teach. (Actually, even jobs as associate professors now are not lucrative and tenure has become rare.)
Many would not mourn the fact that certain fields of study have now become unfeasible, except for those children of the wealthy endowed by trust funds. However, the figures show how the decisions that have been made are narrowing opportunities for the majority of Americans and will ultimately result in China and other countries (whose educational systems are better in K-12 levels) surpassing the US in patents and scientific advances.
P.S. I believe that there has been hidden inflation, e.g., in housing costs at least in coastal cities, so that real, average US income of the wage-slaves (of which I am one) has really declined year by year. That is one of the reasons why I am so angry at the “Federal” Reserve, which has sought to bail out its bank owners by creating increased inflation, despite the harm it has caused thereby to the majority of Americans.
Thanks, Uncle Joe!
17-18 year-old kids have no context for making an unassisted decision for borrowing tens of thousands of dollars in student loans. This is a critical decision that begs for parental guidance.
$1.7T of unlimited “Student Loans’ to kids with little or no credit history is a huge burden on millennials (not to mention taxpayers); no matter how well intentioned, this has done an incalculable about of damage to an entire generation.
Disagree. The student loan ”crisis” is enormously overblown.
This article spells out why—the median borrower‘S balance is a mere $17,500. That’s less than a car, and 50% of borrowers owe that amount or less! And I’d bet 75% owe less than $30-35k or so. These just aren’t large numbers over 10-yr payback periods.
Also note that $500B of debt is held by only 7% of the borrowers—$100K balances. Think about how you get a 6-figure loan balance, you either go to grad school (and command a higher salary) or you overpaid for a private school instead of just going to a state school. I don’t feel much sympathy in either case.
Great article Wolf, the only thing I’d add is I bet some people aren’t paying down their loans anymore because they think the government will forgive their loans, possibly as soon as the 2020 election depending on who wins. And that seems a gamble worth taking, honestly.
Your going to need to state your source. You appear to be referencing balances, which are reduced by student paybacks as well as loans from the early 2000s were significantly smaller than todays loans.
My Googling (source: https://www.investopedia.com/student-loan-debt-2019-statistics-and-outlook-4772007) shows:
1) For 2019 54% of students took out student loans
2) Average PUBLIC college student with student loan left with $26,900 student loan debt
3) Average PRIVATE college student with student loan left with $36,830 student loan debt
Javert, you are citing averages, but Chris cited the median. Since the average is materially higher than the median, that means a relatively smaller number of exceedingly high balances are dragging the average up. Chris’s point is that the majority of borrowers do not owe crushing debts, unless you consider $17,500 a crushing debt.
Even with the $17,500 median, 50% of the students have loan balances higher than $17,500.
At that $17,500 median, with a 5% interest rate, that’s $73 a month (approximately $875/year) – with a 10-year amortization, it’s about $150/mo ($1,800/yr).
The average $30,000 student loan 10-year amortization would be $250/mo ($3,000/yr).
Average college graduate starting salary (I can’t find the median) is around $50,000/yr or (after tax) around $3,400/mo. At that salary level, I doubt $250/mo is a “crushing” debt payment, especially for the education that earned you the opportunity for a life-time of high earnings.
I borrowed less than $20,000 as an undergrad. Later, I boorrowed for my grad school as well. When my loans went into repayment, I was directed to income based repayment as a single mom working as a teacher.
The problem is the interest accumulates on the balance as you make payments, and you never get ahead. There is no escape, after the balance ballons, as students have no choice but to stay on income based plans because a regular monthly payment is so much higher than before. I will now never be able to pay off my debt, and I am afraid of what my balance will be when/if my loans are forgiven, as I will have to pay taxes on an outrageous amount of debt.
This is my ONLY debt. Bankruptcy is not an option. My only chance to resve this issue is death!
I feel like I was scammed when I was told to enroll in the income based program. it did not help me, it has made my difficult situation literally unsurmountable now.
It’s called educational sharecropping. The colleges and the financial industry have figured out a way to extract the value of your education from you as a stream of endless payments.
The argument that it is “only” $17,500 is used to mask the exact situation you describe. It’s called loan sharking. Payday loans are not very large either if you just talk about the principal. It’s the debt service that kills you.
When I went to college in the early 1980s, it was a privilege to attend college and parents and students worked their assess off to make it happen. Now, there are so many options for students of any caliber to attend a college, and combined with easy financing, it is just too easy for so many to get in over their heads.
This looks very much like the housing crisis of the great recession. Too easy credit to too many people with questionable credit worthiness.
And who gets the proceeds from the loans?
The endlessly inflating colleges.
If by that you mean Deans & Coaches, then yes, I would agree.
The government backing should be removed from these loans. This system is hopelessly corrupt. The loan marketers are loading students up with debt who in many cases will never be able to repay them.
It is well-known that some unscrupulous for profit colleges recruit homeless students and set them up with loans. Those loans are probably have some of the largest loan balances and are dead money in the system.
There is no solution to this other than to stop backing this process and to let the lenders lose if they don’t scrutinize their loan book.
@javert chip – it’s not so easy even for parents to figure this out. my kid is a top level high school student who will most likely get into ivy or similar schools. she is not a stem student, so the economic justification isn’t there. is it worth it to take on this kind of debt for her to be able to finish the education that we have been encouraging her entire life?
i also have a non-stem degree from a top level private university. i paid 1/3 my parents paid 2/3. my debt was paid off before i was thirty without any hardship. times have changed.
“times have changed”
Some in this thread appear to be pretty ignorant of the fact that tuition inflation has far outpaced income growth (or especially mere employment growth) for *decades*.
Which makes their pre 1985 anecdotes essentially irrelevant – they are comparing apples to cyanide.
“… tuition inflation has far outpaced income growth (or especially mere employment growth) for *decades*.”
The data presented above shows that this was true through 2012, by which time total costs of studying with in-state tuition had soared to 25% of median household income. However, since 2012, costs have bumped into a ceiling, with enrollment falling, and have risen about in line with median household income; and the ratio has declined to 24%.
Beyond tuition prices, REAL cost of living, wages earned and the level of education needed to earn them have all done what? People talk about their college years splitting a concrete bunker with 4 roomies, sharing 1 bathroom per floor. I respect that, but those cheap flats owned by small, local landlords were all replaced by “investment properties” traded on Wall Street. Jobs that paid $10 in 1995 MIGHT pay $12 now, meanwhile rent, phone/internet, healthcare, taxes..? You can’t even afford to shop at thrift stores anymore. But the beer is better, and we didn’t have Wolf Street mugs back then, so it evens out.
I would encourage you to investigate the “STEM” hagiography a little more closely — it’s no panacea
And 4, with the campaign promises of a student debt holiday, those who can repay are licking their chops at a liberal president in an upcoming election, and are reducing payments in that expectation.
One can just reduce payments at will?
Higher tuition costs combined with a larger percentage of students taking out loans to pay would be my guess
Why? Easy. Dorms are now 5 star resorts.
Some students stayed in school longer trying for advanced degrees as some four year degrees do not guarantee employment in high paying jobs.
My cousin got a law degree and passed her bar exam. She is married and had three children. Fifteen years into her marriage she has a part time job as a court clerk. Her husband has a good job.
Then she either went to a crap law school or got crap grades, or both. If she had any skill or a quality credential she’d be doing fine.
Law is only good if you go to the top 30 or so schools, and only if you finish in the top quarter of your class.
Too many people are going to college than the job market truly needs.
“Then she either went to a crap law school…
Law is only good if you go to the top 30 or so schools, and only if you finish in the top quarter of your class.”
So, you are saying that 170 of 200 law schools are crap – and even within the top 30, 75 pct of the students are screwed.
So, about 4 pct of law students get the promised value of the degree.
That may be true – but there is a huge academic industry dedicated to deceiving and defrauding the other 96 pct.
You might want to refine your targeting as to who exactly is “crap” in this ecosystem.
To my eyes, honored law school drama are the biggest piles of shit imaginable.
I strongly agree with sc7. This is no disrespect to your cousin; unfortunately, all this disappointment is actually built into the system.
1) Data for 2019. Lawyer salary is highly correlated to law school ranking (ie: lawyers from better law schools make significantly more money)
2) About 775,000 lawyers in USA; median salary (half above + half below) is $145,000
3) Lawyers at 75th percentile make $182,000 (those above 75th make more; those below make less)
4) Lawyers at 25th percentile make $79,000 (those above 25th make more; those below make less)
“If she had any skill or a quality credential she’d be doing fine.”
That’s just so lazy it doesn’t even qualify as an opinion.
Law degrees other than top 5 is useless. Software programmers make much more money. Plus they are always in demand.
Until they hit 40 that is.
There’s a reason men are flocking to plastic surgeons in Silicon Valley.
“always in demand”
Perhaps – but the jobs are vulnerable to automation too – improvements in software development environments reduce the number of programmers needed significantly.
And be prepared to perpetually re-learn – it is the rare 5 or 7 yr period that does not see a big turnover in in-demand languages, tools, methodology (frequently to no useful purpose).
And for every successful IPO where the handful of magic beans/options pay off – there are 20 f*cked startups that dive straight into bankruptcy.
The distance between myth and fact is growing in tech SV…
boot straps and pull ones self up yada yada yada, until it happens to you
One lawsuit I know about was filed against my daughter, whose vehicle was hit by an unlicensed juvenile running through a stop sign in his Grandfathers truck.
The lawyer was a free lance youngster who apparently took the case on a wild shot at a contingency fee.
Daughter’s insurance company lawyer scuttled his hopes and the Grandfather’s insurance company ended up with a much bigger bill than it would have been, absent the young lawyer’s overreach.
Programming is very segmented. Particular languages and skills can be in demand and if you don’t have that very specific experience you can be out in the cold, even if you’re the kind who can adapt and pick up new stuff quickly. And corporate HR departments can be very literal and stupid about this.
Data science is hot right now, but a lot of students are going into this major.
Some jobs (physical therapy being one) now require a Masters degree to get a job. I was told it used to be an apprentice training situation.
In NYS, you need a PhD to be a licensed PT.
Since a BA now confers roughly the same income premium that a high school degree did forty years ago – and then only because wages for HS grads are declining, not because college grads wages are rising – how long before you’ll need a Masters degree for a customer service job?
J. S. R. G.,
Speaking of 5 Star resorts, check out this YouTube video from 2016:
How I spent my financial aid like a boss.
Vocational training used to be regarded as distinct from academic education, but now all education is regarded as vocational. As more degrees are awarded their value will have to deteriorate unless the economy produces more jobs with high pay, which isn’t happening. So the value of degrees has drastically declined and they have become a glut on the market.
Also, the easy availability of student loans has caused the cost of education to soar. It was obvious that this would happen, but no doubt it was made possible by kickbacks to politicians from the private sector, as in other highly corrupt sectors of the US economy, such as drugs and weapons.
I should have said “the value of education has drastically declined and it has become a glut on the market”.
“from the private sector”
There are plenty of “non-profit”/public sector institutions absolutely rotted through with corruption and political kickbacks too.
Probably more…because much more of their revenue is entirely dependent on political processes.
It is no accident that the millions of members in teachers unions or governmental workers unions form the marching army of the statist Democratic party.
They know *exactly* how their bread gets buttered.
why pay it back, next election, they are going to forgive it, both of my
kids exited college debt free, they worked and I and my wife worked to
put them through, thank goodness they are both highly paid tax payers
Girls outnumber boys in the universities. Boys are not interested in education or have lesser debt in general. Girls are more inclined to take those gender studies and underwater basket weaving. I do not know who is smarter.
My friend from Ireland told me, what ever the loan amount student borrowed, he have to make minimum payment for 20 years and the debt will be erased. If the student can pay back in full, its also fine. In line with usury acts, government should pass the cap in student loan payments.
Meanwhile the athletics facilities, football stadiums and parking garages are getting bigger and bigger!
C P, your comments about female students taking trivial classes is totally without merit, just an uninformed, old-school opinion. It’s quite the opposite, especially among students who are coming from poor backgrounds. Ask professors (esp. at community colleges) which students work the hardest, get the best grades, have the highest attendance, are attentive to lectures – not screwing around in the back rows. You may find that those are females who have children, no spouse and are trying to get a decent paying job in fields like healthcare, it, business services. Your stereotypes sound like cheap propaganda from the right-wing mills that thrive on conspiracies.
No father in the picture is a result of left wing policies. Colleges offer too many degrees in worthless-ness and the staff is left bias. Your left wing non conspiracy policies are destroying the family unit. But, hey you are smarter than us conservatives, right?
Tiffany Trump just called.
Joebag of whatever:
I think we are straying from the idea of what colleges (upper education) are supposed to represent. We are confusing “good paying jobs” with the mixing of the souls of humanity to find themselves amidst the crass materialism of the elites and/or the arts of the humanities.
It is to our peril that we eliminate the latter for the former.
P.S. Have grandchildren, both male and female that have struggled thru college and are decently employed in what they “enjoy doing”. That’s more than can be said for those who pursue the more “popular” AI studies that will eventually suck the life out of society. In addition to another commenter above: With the oncoming probability of “climate change”, a degree in “Underwater Basket Weaving” may become popular and profitable!
Observing one of my recent grandchildren (a male) enrolled in a very good UC campus and his tales it only reflects on what is what this is all about: Entering another phase of life (for him) of more intense competition and able to tolerate more “stranger” humans in the intimate life of living on campus. It’s all about “growing”.
I’m sick of all this “stereotyping” even the politics.
That’s a left-wing foul.
The education system joined the scam economy a long time ago.
It’s not a trivial comment but it’s not about gender either. Colleges are loading their core curriculum with crap courses, that you have to take before being allowed on to the major classes. It’s a big reason people get stuck with student loan debt with no degree. If you change schools, it starts again with different crap classes.
Women are driven out of engineering programs and STEM careers by people like Cobol.
Susan Fowler wrote a detailed fascinating description of what it was like to work for Uber as a female. Well worth the google.
“Boys are not interested in education…”
Not true of our family’s boys. Two went to college and the third got his education “informally” (He learned to build houses).
All three are well off.
Good for your kids. Boys are reduced in number but still goes to school, take more STEM courses and thus, have more ability to pay back the student loans.
I certainly do not want to fight with everyone, but females are lesser in STEM courses. Even the genuine fem-empowerment cannot increase or explain why. Most of the men in STEM including the Indians with H1b, are actually nerds and very soft in nature regardless of the rough looks. Female taxi drivers are facing the problems not from those nerdy people.
There is no left or right wing politics about saying men are less represented in colleges because men are in every party and indeed in every family. Soon (in 10+ years), every MSM media is going to question this phenomenon.
I am not saying females lack the capacity or abilities for college. Non-STEM courses have very less street value and the job market favors them lesser. My concern is that, when girls choose non-stem courses and student loans, earning power is reduced and so on.
Colleges purposefully keep the “crap courses”, actually students refer to them as “Easy A”. These courses give student a chance to beef up his credit GPA but that’s another story.
Think about all the college text books. In my time, I can borrow, share or use an old textbook. Today, colleges force the students to buy a new text book. In order to attend the online quiz for students, students must enter the book code to get a login. Colleges get a cut out of this scam.
Did I mentioned about the parking garages?
Education is a fulfilling activity all by itself even if there are no job prospects. If everything is monetized, the expectation of students to get return on their investment is also fair.
More than half the students in medical schools are women. Each one of those women took a whole lot of science courses. Just sayin’
One thing the research left out was the ballooning costs of tuition itself. When the student loan program hit its best stride the colleges and universities jacked up the tuition. Not by a small amount; it went up significantly.
Then the administrators’ salaries skyrocketed as well. Programs expanded, new administrators hired, new staff, etc.
The most popular office at many schools was the Federal Aid and Financial Services office. Go in and apply for a loan, have daddy co-sign and the next thing you know there’s a big ass check in the mailbox.
Oh, and don’t forget (wink, wink) that you have to repay the loan.
Where I am the football team is a big money maker for the state college, over $150M. The coaches all make $500K+ and are among the wealthiest people in the state. No clue where the money really goes because the system is still funded by tuition and taxpayers.
Tom Herman, football coach of the Univ of Texas signed a 5 year contract worth $28.75 million in base compensation in 2016.
Alumni also foot the bill, in return they are allowed to make insider trades on big games. The new rule on NCAA players making money will change everything. College football has become a more exact replica of the NFL (or the other way around). Big name college players now jump into starting NFL roles, it wasn’t always that way. Eventually the NFL will term limit players, due to head injuries, and that brings more money into the college game. The next great superbowl moment might be a game between the NFL champ and the College champ. It was fifty years ago that the Jets beat the Colts for the first ever AFL win. IMO among both fans and gamblers, college has always been a better game.
The research actually discussed this, and I included this in the article and podcast. To summarize what I said above in much more detail:
Total costs (tuition, fees, room and board, minus tuition reductions and grants) of going to a public four-year school paying in-state tuition is measured against median household income. This ratio (student-cost-to-household-income) has soared from 14% of household income in 2002 to 25% of household income in 2012 but has then bumped into a ceiling and has declined a tad.
This means that costs outran household incomes by a huge margin up through 2012, but have then grown in line with median household incomes.
On a marginally related note…
I often wonder if the gvt has been fudging the median income stats by excluding out of work non-earners from the measured universe (sorta like the games the unemployment rate plays with allegedly out of labor force workers).
Take a look at 25 to 54 employment to population ratio since 2000 on FRED – pretty ugly…and horrific in patches.
And yet the reported median HH income is fairly steady.
Somehow the median income has been much, much more stable while working age employment has variously imploded and slowly crawled out of impact craters.
Kinda the result that might be expected if unemployed, zero income HHs were methodologically excluded from measurement of the median.
The gvt plays these kind of games elsewhere.
Might be worth a glance and/or a post…
Ah now you’re touching on something I’ve considered for a some time. Once you start lying about one group of numbers, whats to stop you from lying on others? Technically you’re not lying, but its lying.
This is median “household income.” The data is collected by the Census Bureau. We’ve gotten those surveys in the past. You have to respond. You’re not allowed to not respond. You have to provide the entire income of your household from all sources: work, SS benefits, unemployment benefits, side-gigs, interest and dividend income, rental income, etc. But capital gains are excluded. And from all people in the household. Having been through the survey process myself, I think this is pretty good data.
“ the average cost of public four-year schools for students paying in-state tuition, runs just over $15,000 a year”
thats a lot! Is it really $15k/year better than self education? I mean can’t a kid watch pseudoscience and propaganda videos at home for free”
“Paid 15k/yr in college tuition ….. and all I got was this pro-trannie T-shirt & cis-gendered walkin shoes !”
“mean can’t a kid watch pseudoscience and propaganda videos at home for free”
No climbing wall. That’s worth 15k right there.
So with regard to students with the financial savvy and the iron stomachs to wait out the loan-forgiveness period — universities are government-funded, like they used to be!
When in doubt, just follow the money. In the US these days, that entails following it up the corporate food chain and overseas to tax havens. Properly interpreted, virtually all the major problems in the world can be attributed one way or another, directly or indirectly, to the greed of the rich.
The student loan debacle is a poster child, but there are plenty of others.
The US federal government and the states no longer fund higher education as they once did because the rich didn’t want to pay for it. So they don’t. At the same time, corporations run by the rich saw the US higher education system as a cash cow to be exploited. So they do. Meanwhile, the jobs that college graduates used to get have either gone overseas, have been taken by cheap foreign imported workers, or have disappeared entirely, because cheap-labor conservatives wanted it that way.
And they got it. They have the usual familiar lies that are useful for blaming the victim – and thereby excusing the role of their own greed in the disaster. >Dorms are 5-star resorts – even though most students live hand to mouth. >Students major in underwater basketweaving instead of STEM majors – even though there’s a glut of STEM majors. And so forth.
We have several US expatriots here with STEM degrees, including advanced degrees, including two biomedical MD/Ph.D.s who got stuck on the postdoc slavery treadmill even into their 50s, plus numerous assorted mechanical, electrical, and computer engineers, accountants, a nurse, a statistician, an algebraic topologist, an astrophysicist, and so forth. They will never repay their combined millions in student loans. Ever. There was never any way for them to do so, and they knew it. So they escaped the system, and they never looked back, and they ended up here, fully employed and debt-free.
Higher education is just one of the fronts in the class war, and student loan debt peonage is one of the results. So is skyrocketing debt all around, and so is spectacular income inequality, and so is wage and salary stagnation, and so is declining household formation, and so are residential real estate bubbles, and so is mass-surveillance-screen-addiction. See my previous comments for additional examples.
So say goodbye to the US middle class. Say goodnight, America.
Just a short add on to unamused’s fine comment:
Public Schools k-12 underfunded
Grade 12 achievement virtually meaningless for employment
New adolescence now said to be up to age 24-25
BA degree (or BSc), now just an add on to grade 12, also meaningless for employment opportunities
Specialization now required for any opportunity
This results in more grad students and higher debt
I used to teach high school in Canada (BC). My working background was aviation and construction. Every year I volunteered my time to conduct several seminars for students in Grade 12, or approaching graduation while considering options.
My first theme, “You never go on to university ‘to find yourself’, unless your parents are independently wealthy and don’t mind footing the bill”.
2nd, “Consider a trade and obtain specialized training after you have a better idea of opportunities and what you are suited for”.
3rd, “With your trade certification you can work part time while attending university and not take out any student loans, whatsoever”.
I provided many many examples, including the one of my cohort who worked his way through medical school. During under-grad he worked in a poultry processing plant killing chickens. He ended up running the breast cancer unit of the BC Cancer agency and was the go to expert. Another friend was a geologist student and spent every summer as a rock knocker doing mineral exploration.
I dropped out of university at age 18 (after 1 month) to work construction and become a bush pilot. Almost 20 years later I worked my way through university flying part-time and doing renovations. No loans. I paid for everything myself…working.
I do agree with Unamused’s statement that this current trend is a facet of class war and adds to further social stratification. In Britain it was/is your birthright and accent that keeps you in place. In the US you are judged/limited by your degree and connections.
Definitely class war, always has been and always will be. Plus, the pie is now shrinking very fast and the rules are increasingly rigged for the wealthy. Young people spend what? 100X more…1,000X more time? pissing around on their phones than they do thinking about the future or working on their skills.
Courtesy of Levon Helm and The Band
Life is a carnival
Believe it or not
Life is a carnival
Two bits a shot
K12 is NOT underfunded! Overfunded and overly ridiculous and mostly useless- expensive babysitting.
Anyone who derides the importance of the custodial function of public education hasn’t the slightest clue why it’s a bedrock requirement for a high-functioning mixed economy.
Agreed, what other sector is funded by a mandatory wealth tax (*gross!* of debt financing) on property hugely, transiently inflated in value due to gvt money printing/interest rate manipulation – regardless of whether or not your child (if you even have a child) actually used the school system.
There was never a private sector monopoly that had it as good as the smallest pissant school district – only gvt can *force* you to buy its overvalued products.
Huge teacher union political muscle has cultivated the “underpaid/underfunded” myth for decades.
Despite the fact that school districts/government units are almost always among the five largest employers/revenue recipients in any city.
I would like to commend Unamused’s taste in music and Paulo’s comment ‘pissing around on their phones’.
However the idea that MD/PhD and engineers and the rest can be defined as the downtrodden working class is a stretch , and Paulo’s ideas about accent and background being all important in Britain are very out of date. It’s money and connections now, which is why the wealthiest thieves and fraudsters send their children to the most expensive private schools.
However the idea that MD/PhD and engineers and the rest can be defined as the downtrodden working class is a stretch
Most doctors in most hospitals in the US are being turned into commodities, same as everybody. It’s one of the reasons they’re quitting in droves. They’re also quitting private practice, also in droves, because of red tape and related expenses, thanks to the avarice of the medical insurance industry. Most of those doing well have overpriced specialities.
Don’t take my word for it: go talk to them yourself.
As for engineers, I can place a notice on any of the US online job boards and have my pick of thousands by the end of the week. Try it yourself.
Doctors as commodities:
The rich and big corporations love big government. They control it. They expand it to fit their needs. They use it to keep the uppity smaller competition in line. They use it to socialize their losses and protect their profits.
Not one banker in jail for the last 15 years. Eric Holder declaring “too big to jail.” Massive losses but yet massive bonuses. Today, guaranteed profits to the banks no matter what decisions they make. So they make the most reckless decision possible in order to maximize profits. Gee – why are houses so unaffordable?
The health insurance industry saw massive profits after obamacare was instituted. Obamacare destroyed any competition and guaranteed profits. Why can’t I find affordable health care?
Student loans used to a be a private matter between a person and a bank. They could be discharged in bankruptcy. College was affordable. Health care costs skyrocketed.
Big government got involved. Students loans could not be discharged in bankruptcy anymore and the government would guarantee all student loans. The Banks and Universities saw the free money and increased tuition multiples of inflation. They can’t lose no matter how much they lend and take in the cash profits.
Big corporations and the rich love big government. The bigger the better.
“Big corporations and the rich love big government. The bigger the better.”
Agreed – but the Left seems to refuse to see this…they always promote Statist solutions that have a long, proven history of making things *worse*.
Virtue preening – yes.
Actual solutions – no.
More limited, non government run fixes like increased mandatory disclosure of info (like medical pricing) have been more successful (if rarely used) because they enhance the power of the end user citizen/claimed beneficiary – not some government intermediary with unknown/conflicted/bribed incentives.
DC could do a *lot* of things to make American life better – but they won’t do them unless the power/money passes through their hands.
The Tories are nationalizing the railways again. The last time I checked they were the antithesis to “leftists”.
***kicks myself again for reading the comments***
Agree 100%. Another reason to just enjoy life right now at this moment.
Unamused, Best post of the day! Agreed………..
Doctors & engineers who refused to pay off their student loans.
Yep, say goodbye to the middle class!! Priceless.
Where exactly is “here?”
1. less govt subsidy of college costs/higher costs borne by students
2. supply and demand- supply of bachelor degree people is higher, price lower- less ability to pay back loans
3. weaker job market for non-college-required jobs- plays into the larger supply of bachelor degrees and less demand for all entry-level (good) jobs
4. easier loan requirements
Pretty simple stuff- on the most obvious level
The causes/policies that lead to these? More complex
Globalization of job market, crass misunderstanding by elites of real lives of average joes, etc.
You never know … Capt. Corona might do it’s part to ‘refresh’ society, thus impoving the market of supply & demand some generations into the future ..while simultaneously making the world big again !
But I think we’re gonna need to establish a few more monasteries first.
A lot of people on ibr, are high earners dual income house holds in big cities. It is beautiful when the system makes undereducated proletariat and the middle class fund their luxury condos and foreign vacations. Most of them expect IRS to settle for pennies on the dollars when the tax bill comes from debt forgiveness or better yet lobby the congress for irc exemption. Its an entire class of people now. Those who don’t take risks don’t win ;)
The best one yet is government lawyer class with 200k of debt and tax free forgiveness after 10 years. These guys really struggled to serve you! Its only fair y’all pay for their education that they will take to private practice after the forgiveness, which they do the moment debt is forgiven. Based on the plsf forgiveness numbers it seems only the government lawyers have enough know how to navigate the system.
Also when I was in law school in early 2010s, forgiveness was sold as part of the reason why large debt is OK, esp plsf!
Did not read the article. Waste of time. Any moron knows that if you promise to forgive loans, you will get a lot of loans. And bigger loans by the minority that are criminal. And bigger costs by the administrators that suck off that tit.
Is this a great/(stupid) country or what?
Is there a way to tease out for-profit school loan debt from traditional colleges?
In terms of total student loans outstanding (the $1.6 trillion), I have not found any reference in the report. But the report found that in 2016, 15% of all NEW debt was issued to students at for-profit colleges, though only 6% of all students went there. But since then, this has come down hard, both in terms of enrollment and loans.
“But since then, this has come down hard, both in terms of enrollment and loans.”
Yep, as a result of a mjr gvt crack-down on placement stat fraud…though mysteriously limited to for-profit schools.
Guess those “non profits” (many with essentially untaxed billions in endowments) are politically immune from improved oversight – despite the fact they absorb the vast majority of loan money…
Our colleges are :
1) Entertainment centers for the locker room guys, our new
community leaders clones.
2) A beach head for Chinese young & brightest, who pay full tuition, whatever the cost, because :
a) a potential change in the family zip code, to expand their family tree overseas. and they can easily beat our stupid stupid nativist . c) a close proximity to the Pentagon, DARPA and US top secrets research labs.
3) The coronavirus will build a wall with China. Exporting students to Stanford, MIT, CMU ==> will decline.
Me thinks decline will become a universal thing, just chaotically dispersed …
During the 2008/09 recession, the gov had two choice :
1) Send our angry young and brightest to the streets.
2) Lock them up in college campuses. Real or fake education is better and cheaper than riots and bloodshed in the streets. The $ cost and the political cost are much lower.
3) If the young and brightest extrapolate, piling up debt, the next president will have a cause, a very appealing cause, to be elected in 2020 ==> debt forgiveness jubilee on Jan 2021 inauguration.
The next recession will be a cause to rejuvenate : Invade Wall Street.
Fascinating. A one word answer formed in my head as I read the headline. Then, I come to the full article, and find that this word is only mentioned very occasionally in the comments and is completely missing from the text of the article.
Q: Student enrollment is falling, yet student debt is climbing. Why?
Greed in at least two places. Student fees that are accelerating at rates far higher than the official inflation rate. And of course the rip-off artists like Trump who run scam-job fake colleges just to collect Federal money that is then charged to the sucker students as student-loan debt.
Greed! And it is not good. It is not good for the society or the country at home. Then we try to blame migrants for the problems caused by Greed.
Plenty of greedy businessmen and politicians are importing the illegals too.
And breaking a country’s immigration laws for personal benefit is greed as well…if on a smaller scale.
Slime is all around.
They can be anything they want but vast majority will end up being a low income debt serfs! That’s the beauty of this here country. Losers lose and rich people get rich. And that’s fair.
With my unrealized gains ==> Yamazaki for u.
and these children that you shit on as they try and change their worlds, are immune to your consultations theyre quite aware of what theyre going through.