« Raise your children to be overconfident if you want them to be successful | Main | Mass shooting in Manhattan »

August 23, 2012

Comments

There's something else: many young people have become aware of the dangers and are being cautious about incurring excessive amounts of debt. We've all heard the horror stories about graduates of mediocre law schools with $100K of debt and no jobs. The thing is, these stories are the exception, not the rule.

The student loan trap was worst for people who entered college when unemployment was low, but graduated after the economy went bad. Not to minimize their suffering, but at least their ranks won't be growing much.

" only 40.1% have any student loan debt at all. Only 7.4% of people over the age of 40 have student loan debt"

"Only"? Those both seem like large numbers to me. Especially the latter - if you are over 40 and still have student loan debt, that seems like a major FAIL to me, and I would have expected that number to be closer to zero.

If education is truly "more affordable" then demand should increase and more people will attend college. That's the way to sell your solution BTW. =)

The leftist elite has already implemented the "solution" and like all "reforms" it favors them. If you work for government or a "non-profit" (I am using quotes so much, but I have to because of how the left misuses vocabulary) your loan payments are greatly reduced and the remaining balance disappears in 10 years.

So for the rich, nothing has changed. They have to pay but it isn't a big deal. For the middle class the loans are unaffordable. Those who become footsoldiers for the leftist elite don't have to pay off their loans, and they will stay in the middle class. Those who work for the free market will be saddled with unaffordable loans and become lower class.

The result will be a gradual shrinking of private industry. Eventually we will have a three class society: the elite, their footsoldiers (the left-leaning remains of the middle class, with high verbal intelligence but low mathematical intelligence), and the masses.

Within the elite and foot soldiers there will be some class mobility but it will be entirely based on social and language skills, rather than on the ability to create value.

I believe that there will be a small fourth class: homeschooled descendants of the right-leaning middle class. However their numbers are likely to be very low for at least a century, almost to the point where it isn't worth talking about them.

"Politicians care about two major constituencies: the majority (who can vote them out of office), and people who donate money to them. People with student loans are a minority and they are too poor to be significant political donors. On the other hand, politicians receive a lot of donations from banks, for-profit colleges, and other beneficiaries of the status quo."

But you could have said the same thing about mortgage banking - and yet no one would deny that there was a mortgage bubble, and that the situation has changed in the last 10 years.

The bursting of a student loan bubble is characterized not just by borrowers being unable to pay their loans, but also by some other entity(either the banks, or the government, in cases in which the government guaranteed the loans) being harmed by their failure to be able to pay them back. That's why a bailout of student loan debt would gain steam - many powerful interests would support it, rather than oppose it.

Your statement that these powerful / connected / savvy group benefit from the status quo ceases to be true once people stop paying back their loans en masse. At least for some of the groups listed.

http://management.fortune.cnn.com/2012/08/22/college-major-paydays/

Student should see this list to figure out whether your loan would pay off.

Law School Costs Keep Rising, Despite Decreased Demand

http://blogs.wsj.com/law/2012/08/23/law-school-costs-keep-rising-despite-decreased-demand/

Law school can teach you a lot of things, but don’t expect a lesson on the laws of supply and demand.

Despite decreasing numbers of law school applicants, which Law Blog has noted, tuition costs continue to rise. Tuition and fees at private law schools this fall are up 4% to $40,585 from a year ago, while the increase for in-state resident students at public law schools is 6% to $23,590, according to an analysis of published rates by the National Law Journal.

“I’m not shocked by the numbers, but I’m horrified,” said Ohio State University Michael E. Moritz College of Law professor Deborah Jones Merritt to NLJ. “It’s professionally irresponsible.”

In June, Law Blog noted a new book by Brian Tamanaha, “Failing Law Schools,” which makes the claim that increasing tuition has lead to bloated faculties, overpaid professors, the gaming of the law school ranking systems and lots of scholarship money.

“Why aren’t law schools announcing a decrease in their list price? That’s what you do when demand goes down,” Mr. Tamanaha said to NLJ. “We’re playing by the old rules, and the old rules say that tuition goes up every year.”

While applications are down about 25% over the last two years, schools that have placed highest in U.S. News & World Report’s yearly rankings of law schools are not among the ten schools receiving the most applicants, according to a new list from U.S. News.

Yale Law School, Stanford Law School and Harvard Law School – which were the top three schools in the 2012 ranking – were not among the schools with the most applicants. Only four of the schools on the list were ranked in the top ten programs.

Georgetown University received the most law school applicants, with 9,413 in 2011, followed by George Washington University, Columbia, University of Virginia, UCLA, and NYU. Finishing out the top ten were University of California – Berkeley, Boston University, American University and Fordham.

Hampshire College in Mass. offering new scholarship to illegal immigrants

http://www.washingtonpost.com/national/hampshire-college-in-mass-offering-new-scholarship-to-illegal-immigrants/2012/08/23/dd703086-ed5c-11e1-866f-60a00f604425_story.html

BOSTON — A small private liberal arts college in western Massachusetts has announced the establishment of a scholarship fund dedicated to helping illegal immigrants get degrees.

The scholarship will provide more than $25,000 each year to help an illegal immigrant pay for the $43,000-plus tuition at Hampshire College in Amherst. At current funding levels, the endowment will help support one student’s studies at the college every four years, said college spokeswoman Elaine Thomas.

@T: " If you work for government or a "non-profit" ... your loan payments are greatly reduced and the remaining balance disappears in 10 years."

There are strict income thresholds to be able to participate in the student loan forgiveness programs. If I recall, usually one has to make well under $50K to be eligible.

HS,

If student loans were eliminated, followed by a cutback on costs and enrollment, how would AA admissions be affected?

Just a q

"The Half Sigma solution goes against the liberal mantra that EVERYONE must go to college. No one would ever endorse a plan that would result in fewer people enrolled at college."

True, but as long as people insist on going to college then the focus of conservatives and your blog should be using the tuition crisis as a Trojan horse to sneak in policies that:

1) on the surface, promise to make college cheaper in order to gain public support.

2) will bankrupt leftist college departments in addition to making college cheaper.

Specifically, conservatives should support:

A) Lobbying their state legislators to impose price controls on college tuition inflation. If tuition increases slowed down it would be harder for colleges to afford maintaining liberal arts departments because they don't pull in as much money as business and STEM departments.

Governor Rick Scott of Florida has made noises about diverting money from the liberal arts departments to STEM in part because so many of his ideological enemies are concentrated in the lib arts.

B) Eliminate all gened requirements so students can graduate in half the time and with half debt (if you skim through college major descripitions, you'll see that the gened requirements can take up over 60 of the 120 credits needed to graduate).

From a strictly economic perspective, it's obscene that intelligent college students who overwhelmingly want to major in a vocational field have to waste their freshman and sophomore years going through subjects like US History 101 and Feministing 101 that smart students already have mastered in high school and which mostly serve as liberal indoctrination camps.

60 credit bachelor degrees should taken over a two to three year timespan should be enough to time to get out of college with a degree.

From a purely partisan advantage, forcing colleges to give up the revenue they pull from the extra two to three years worth of unnecessary general education course credits would starve the liberal arts departments of money. This is because the liberal arts departments earn regular funding for their department through how many students are taking class credits in libart classes.

However, the liberal arts don't earn much revenue through humanities majors because 80% of all college students are taking a vocational degree. Instead, the liberal arts departments bring in most of their revenue by forcing almost all freshmen and sophomores to take required classes in the liberal arts. This is why there's been a trend in college to reduce how many AP High School classes can be used to substitute out of core classes - because the longer the students take unnecessary gened classes, the more semesters of tuition revenue the colleges can pull in.

IF college students could skip the gened, then funding would dry up for uneconomically productive liberal arts classes and most non-business and non-STEM professors would be laid off.

There's already a movement to having accelerated degrees.

Governor Scott Walker of Wisconsin has done something similar in Wisconsin that will allow high school students to earn degrees from Wisconsin public colleges by testing out of core school requirements and thus graduate faster.

But I would rather just give every student the option to skip the gened requirements completely - regardless of how smart or stupid the student is - so as to cutoff as much funding as possible to leftist professors.

Of course, most STEM professors are liberal too, but they are less effective spokesmen for the left than the liberals in the humanities because humanities professors are better at making emotional appeals than nerdy leftist scientists.

3) Support more online education so more liberal professors can be laid off and replaced by educational software programs.

"Let’s examine who benefits from student loans:"

The schools benefit from dragging out how long it takes for students to graduate by tacking on extra degree requirements that aren't relevant to the student's career preferences.

Why don't you support reducing the credit hours needed to earn a degree?

You yourself, Sigma, had your life and dreams of high social status ruined because you couldn't get a LAW degree as an undergraduate at your undergrad school, the highly ranked University of Pennsylvania.

Instead you went to lowly ASU LAW school to earn a post-bachelor's degree in a topic which you could EASILY have earned a JD degree in Law as an undergraduate at a higher ranked school.

Support truncated degree requirements, Sigma.

" only 40.1% have any student loan debt at all. Only 7.4% of people over the age of 40 have student loan debt"

A stupid argument. College tuition was cheaper 20 years ago than it is today. The current debt load of middle aged adults tells us nothing about the debt burden of current students, especially considering college tuition has been inflating FASTER than medical insurance premiums.

"* Poor people, because they don’t go to college and their children don’t go to college. Student loans make poor people better off because a middle class person with a job and student loans to pay off may actually not have any more spending power than an uneducated poor person collecting government benefits."

That is not a benefit to the poor.

One could argue that if the middle classes weren't so debt burdened, they could buy stuff that would in turn mean more money for the poorer working folks.

[HS: Happiness doesn't come from having more stuff, it comes from having more stuff than OTHER people have.]

"Only 7.4% of people over the age of 40 have student loan debt."

Where did the "7.4%" come from? It seems low to me. Of course, I'm >40, and have pretty much the same fucking $50K student loan balance as I did when I graduated law school in the mid-90's.

Decades of un- and under-employment hamper a person's ability to pay off principal.

"Since 2005, the number of Americans in their 50s with student loans has doubled to 4.6 million, and borrowers in their 60s and older more than tripled to 2.2 million."

http://online.wsj.com/article/SB10001424052702303612804577533332860797886.html

I'll probably never pay my student loans off.. Sure, I deferred them too much when I was working low paying state jobs. I guess I should've gotten a roommate or something? Not like I was living large and buying expensive cars n shit.

Plan was to pay them off w/ home equity then BOOM 2008 happened.

My fault for (1) being academically smart enough to get into law school in the 1st place, back when student loans were considered "good" debt, (2) going to law school, (3) not graduating in the top 10%, (4) not being rich or well connected enough to land a high-paying gig after law school, (5) being born blah blah blah.

MKP, the mortgage situation is entirely different. There is no legal obligation to pay a mortgage. If your mortgage+house combo isn't worth it you can walk away from it. The worst that can happen to you is that you lose the house and your credit is ruined.

The only way for a normal person to get rid of student loans is to pay them off. You cannot default, you cannot negotiate, you cannot declare bankruptcy, you cannot do anything. They will garnish your social security and/or disability checks. The bottom line is that you will pay off your student loans. Thus it is impossible for the student loan bubble to burst because there is no legal mechanism by which to stop paying.

E. Rekshun,

Your information is out of date. I know someone making mid-60s who had her payments reduced by 80% and will have the the remainder forgiven, simply because she works for the federal government.

This "forgiveness for public service" program is going to dramatically change the future social structure of the US. It allows the elite to salvage a portion of the middle class (the part that is useful to them) while allowing them to destroy the rest of the middle class.

@Undiscovered Jew: “Why aren’t law schools announcing a decrease in their list price? That’s what you do when demand goes down,” Mr. Tamanaha said to NLJ.

I don't think the law of supply & demand applies yet. There are still far, far more applicants than slots. Remember, most applicants outside of the top 14 have a grandiose vision of their own success in and after law school.

@hm: http://management.fortune.cnn.com/2012/08/22/college-major-paydays/


Median pay for a recent college graduate with a full-time job in 2010, the researchers found, stood at $53,976. But these 15 majors commanded substantially more:

1. Pre-med $100,000
2. Computer systems engineering $85,000
3. Pharmacy $84,000
4. Chemical engineering $80,000
5. Electrical and electronics engineering $75,000
6. Mechanical engineering $75,000
7. Aerospace and aeronautical engineering $74,000
8. Computer science $73,000
9. Industrial engineering $73,000
10. Physics and astronomy $72,200
11. Civil engineering $70,000
12. Electrical and electronics engineering technology $65,000
13. Economics $63,300
14. Financial management $63,000
15. Mechanical engineering technology $63,000

These figures seem high for median "pay" for new 2010 college undergrads. I suspect "pay" includes the estimated cost of benefits.

A recent study at my employer revealed that the cost of all benefits (including the cash value of sick & vacation time) averaged 35% of base salary. Of course, that ratio is lower for the highly paid and higher for the low paid.

For reference, the employer contribution to health insurance for the single plan is $6000; for the family plan is $13,000.

"While applications are down about 25% over the last two years, schools that have placed highest in U.S. News & World Report’s yearly rankings of law schools are not among the ten schools receiving the most applicants, according to a new list from U.S. News."

I'd say this is a large change. The average law schools will just raise acceptance rates, but the very bottom law schools will have nowhere to turn and might start to go out of business (or shrink drastically). Does anyone know if this has started to happen?

"Median pay for a recent college graduate with a full-time job in 2010, the researchers found, stood at $53,976. But these 15 majors commanded substantially more:"

One issue with looking at averages is that majors are distributed differently across universities. For example, if you look at average SAT scores, you'll find women's studies near the top. This is because for the most part only high quality schools offer the women's studies major. It would be informative to look at income/SATs per major on a school by school basis.

@ TUJ

You said: You yourself, Sigma, had your life and dreams of high social status ruined because you couldn't get a LAW degree as an undergraduate at your undergrad school, the highly ranked University of Pennsylvania.

The liberal arts program and law school are scams to keep the gravy train running. They are the meat & potatoes of most college revenues including the Ivies. I have spoken to the people whom I know and have just graduated from top tier law schools and are now in BIGLAW. Some of them tell me it was a waste of money and have regrets. Between paying back student loan debt and living the high costs of NYC which includes taxes and rent, they are only earning about $100K for all the schooling they've received and time spent. Factoring all the long hours of grinding at work, it seems like a minimum wage salary. I have a friend who works as a IT manager of a Big Law firm and earns a six digit salary. His hours seem like a breeze, a max of 50 per week. No student loans and no law school training.

[HS: Happiness doesn't come from having more stuff, it comes from having more stuff than OTHER people have.]

Hmn, and here I thought happiness came from having a hot woman, (or several).

Is that only because she is hotter than the woman the other guy has, or would he be just as happy if all women were hot and every guy had at least one?

Of course, you can always become a topless dancer to pay off your law school loans. Do they teach this in law school?

http://redtape.nbcnews.com/_news/2011/09/13/7730301-lawyer-turns-topless-dancer-to-pay-the-bills

There are always powerful constituencies in favor of the status quo. Overcoming that requires something very strong.

Nothing significant will change unless there is an actual crisis, which probably needs to happen in the Treasury bond market.

Even the mortgage crisis didn't do much. Look at how Gramm-Dodd got watered down, etc.

"Look at how Gramm-Dodd got watered down, etc."

I meant Dodd-Frank of course.

The comments to this entry are closed.