The New Bubble

[noxiousdog]

I believe it.

[LordMortis]

I believe it and I am a lost at the proposed solution of more free money for every one who digs themselves holes they can't get out of and for banks to spread around.

For what it’s worth, my solution is the same as my solution to the foreclosure crisis: allow bankruptcy judges to reduce or eliminate these debts. But this simple solution probably won’t ever happen because it would actually protect and help us, the people. Our government would rather craft policy to help the banks and colleges, hoping to find more creative ways to stick us with the bills.

Aren't most college loans federally approved and backed, as opposed to non school loans that are taken out for the purpose of going to school. So when you want to reneg on your stafford loan are you sticking it to the banks who should have known better than to loan money to an 18 year old?

http://en.wikipedia.org/wiki/Stafford_Loan" target="_blank

Because the loans are guaranteed by the full faith of the US Government, they are offered at a lower interest rate than the borrower would otherwise be able to get for a private loan. On the other hand, there are strict eligibility requirements and borrowing limits on Stafford Loans.

[noxiousdog]

If they are allowed to go bankrupt, then the government and banks will stop giving them out so easily.

[SpaceLord]

PBS FrontLine special on For-Profit Colleges

A highly recommended video.

[Smoove_B]

Yeah, I have college friends that are still paying off loans 13+ years after we've graduated. The older I get, the more I appreciate that my parents paid for my college experience and that I didn't graduate with a $60,000+ monkey on my back.

All I know is that college isn't for everyone - and we need to stop telling kids it's their only option.

I have been seeing more and more of these articles over the past few months (and that PBS special) so maybe we're at the point where the mentality will change.

[Isgrimnur]

It may not be the only answer, and there certainly should be more options for technical training (state-run vo-tech high schools like prep schools?), but college still is a strong indicator. One only need follow the monthly numbers for unemployment (over 25) by education level to see what the differences are:

April '10

Less than a high school diploma - 14.6%
High school graduates, no college - 9.3%
Some college or associate degree - 7.4%
Bachelor's degree and higher - 4.0%

When there's a 5% swing in rates between having a 4-year degree and just a HS diploma, I want my kids to get one. Even jobs that wouldn't technically require a college degree are increasingly being required to have one, right or not. It's going to take a generation at least before the stigma of trying to get a professional job without a degree goes back to older ways of thoughts.

[Mr Bubbles]

It seems to me that the future of the coming generations are being mortgaged to finance the lifestyle of the current generation, but like has been said student loan debt has no default option. The fundamentals are not there. What is being asked of this current generation has never been asked for before. Laws and regulations have pushed education to the back burner and we are suffering. Talking about for profit colleges, which is something I have some experience with, I can honestly say they no interest in what is best for the student. The admissions departments are nothing more than a glorified sales department. Pushing students who probably have no right being in college, but succumb to high pressure sales, is doing a major disservice to these students. Even those that are successful are leaving these for profits with 100k plus in debt. Worst part is federal and state funds don't cover nearly all that is being charged to these students, so they end up taking out private loans that have high interest. Greed has run rampant in the for profit industry and even if you get your degree most students are not able to handle the month payments.

So while getting the degree is still important, what degree you get is equally important. Countries that are willing to put the money in (read Asian countries) you're going to find that we are going to be less competitive with the world. Cutting taxes while being good for the economy does not help the public college systems (we get funded from taxes, for example the CSU system only gets 20% of their funding from the students). We cut and we cut and now we are left with the scraps of what is left of what used to be a top notch higher educational system. But hey.. you start wars and you cut taxes.... Did we ever worry about the consequences to our educational system.

[Enough]

It may not be the only answer, and there certainly should be more options for technical training (state-run vo-tech high schools like prep schools?), but college still is a strong indicator.

I know around here the community colleges and tech schools are going like gangbusters and doing a decent job placing graduates of their programs. My cousin with only a high school degree and a CAD certification is now making a very good living thanks to hard work and a short stint at a tech school. The only problem is that our community colleges around here are even more underfunded than universities and are unable to capture more students due to capacity which then leads these kids to bite the bullet and go to a major uni on loans vs paying their own way at a more affordable tech school (or borrowing less).

[Enough]

And thanks for sharing the interesting article ND, I believe it too.

[GreenGoo]

Our university system is heavily subsidized. I paid for my education out of my high school savings, with my mom throwing in some cash at the end to finish it off.

When I returned to school years later, I took some student loans. But since the system is highly subsidized, the loans needed were not excessive and were paid off in a timely fashion.

As with health care, our system has problems, just different problems from yours.

[Zarathud]

Part of the problem are the marginal students who go because the money's available to borrow, with another part being that students aren't realistic about the costs until it's too late. When my wife worked in graduate school's admissions, she talked about a number of gradute students with $100,000+ debt looking for ways to stay in school just to avoid starting repaying their student loans.

But, ultimately, it's about whether you can afford the interest payments. Even if you're paying interest only for the rest of your life, student loans still make sense as long as the marginal salary benefits of edcuation exceed the cost of maintaining the loan. With low interest rates, it's easier to afford large principal balances.

As one of my college economics professors said: "Go to school where you're wanted, and they'll pay you to go there. That's where you're most likely to succeed."

[Mr Bubbles]

Part of the problem are the marginal students who go because the money's available to borrow, with another part being that students aren't realistic about the costs until it's too late.

I think the problem there is people are told what to believe. Going back into for-profit education you have an industry that goes for the marginal students and tells them they need to go back to school and unfortunately some of these students take the bait. As public schools pull back because of the scarcity for-profit schools will step in. This will only make the bubble worse and you will have more and more students with marginal degrees and higher debt entering or trying to enter the work force. I'd definitely expect to the problem to get worse even if the government pulls back and only after a massive failure in private loans.

[LordMortis]

Yeah, I have college friends that are still paying off loans 13+ years after we've graduated. The older I get, the more I appreciate that my parents paid for my college experience and that I didn't graduate with a $60,000+ monkey on my back.

All I know is that college isn't for everyone - and we need to stop telling kids it's their only option.

I have been seeing more and more of these articles over the past few months (and that PBS special) so maybe we're at the point where the mentality will change.

Except we look down on the vocation and labor and tell these people they're worthless and their jobs should be shipped over seas or held held by high school kids who need to get to college to get out of those jobs.

College loans were designed to take 15 or more years to pay off. To be a long term consideration like a house. Shit. I took loans for the one semester they wouldn't let me work (for student teaching) and they gave me 8 years to pay that semester off and it took me 3 with start of career wages.

[LawBeefaroni]

It may not be the only answer, and there certainly should be more options for technical training (state-run vo-tech high schools like prep schools?), but college still is a strong indicator. One only need follow the monthly numbers for unemployment (over 25) by education level to see what the differences are:

April '10

Less than a high school diploma - 14.6%
High school graduates, no college - 9.3%
Some college or associate degree - 7.4%
Bachelor's degree and higher - 4.0%

When there's a 5% swing in rates between having a 4-year degree and just a HS diploma, I want my kids to get one. Even jobs that wouldn't technically require a college degree are increasingly being required to have one, right or not. It's going to take a generation at least before the stigma of trying to get a professional job without a degree goes back to older ways of thoughts.

You'd have to dig deeper into those numbers to make any kind of assumption about the worth of a college degree. Just slapping a BA on someone doesn't mean they'll be employed. A middle class kid on the college track is statisticly more likely to be steadily employed at age 25 than a poor kid on the dropout track. Not just because one ends up with a college degree but because of a myriad of other circumstances unrelated to what degree they have.

IOW, a college degree is often the result of the charicteristics that makes one employable, not the cause of them.

[Isgrimnur]

While I agree with you to a certain point, as I've been told all of my life, that piece of paper still opens doors. In his career, my father has missed out on promotions to younger people with a lot less experience just because they have a degree and he does not.

There are always going to be people that can't sustain the effort to get it, but that's where we need the vo-tech schools to bridge the gap. But for people in the middle zone where getting the degree or going for "work/life experience" are equally open options, the 4-year degree is going to be more valuable in the long term and definitely in the short term when facing difficult hiring decisions.

[Scuzz]

Yeah, I have college friends that are still paying off loans 13+ years after we've graduated. The older I get, the more I appreciate that my parents paid for my college experience and that I didn't graduate with a $60,000+ monkey on my back.

All I know is that college isn't for everyone - and we need to stop telling kids it's their only option.

I have been seeing more and more of these articles over the past few months (and that PBS special) so maybe we're at the point where the mentality will change.

I have a friend who is approaching 60 (professional in the medical admin business) who has never stopped going to school. One of the reasons is that all her loans would then become due.

[LawBeefaroni]

While I agree with you to a certain point, as I've been told all of my life, that piece of paper still opens doors. In his career, my father has missed out on promotions to younger people with a lot less experience just because they have a degree and he does not.

Sure, but we're talking about employment, not promotion. That's another discussion.

There are always going to be people that can't sustain the effort to get it, but that's where we need the vo-tech schools to bridge the gap. But for people in the middle zone where getting the degree or going for "work/life experience" are equally open options, the 4-year degree is going to be more valuable in the long term and definitely in the short term when facing difficult hiring decisions.

I'd argue that it's not an "equally open option" when you have to run up $60K in debt. I imagine there are very few individuals who are in a positon to pay for college (or get it paid for them) and decide they're better off with work/life experience.

[Smoove_B]

This really seems to be the only thread we have dedicated to the subject, and 7 years later, the outlook isn't good:

Americans don't understand the student-loan crisis because they've been trained to view the issue in terms of a series of separate, unrelated problems. They will read in one place that as of the summer of 2017, a record 8.5 million Americans are in default on their student debt, with about $1.3 trillion in loans still outstanding.

In another place, voters will read that the cost of higher education is skyrocketing, soaring in a seemingly market-defying arc that for nearly a decade now has run almost double the rate of inflation. Tuition for a halfway decent school now frequently surpasses $50,000 a year. How, the average newsreader wonders, can any child not born in a yacht afford to go to school these days?

I say this as someone that earns a paycheck from higher education - I don't know how people afford to attend college. And more so than any other time, now everyone I talk to isn't even interested in the 4 year degree any more - they're looking to graduate and instantly start on a Masters degree, increasing their debt load even more. Essentially you're looking at someone that is around 24 years old, has an advanced degree, is hundreds of thousands of dollars in debt, and has little (if any) practical work experience. I don't know how on earth they're going to get out from under the loans.

[RunningMn9]

The stupidity of that is mind-boggling. I can think of nothing more useless than a fresh out with a Master’s Degree. They’re even more useless than a fresh out because they are even less aware of their uselessness.

[Kraken]

Well, at least their loan interest is tax deducti-- oh, snap!

[Smoove_B]

The stupidity of that is mind-boggling. I can think of nothing more useless than a fresh out with a Master’s Degree. They’re even more useless than a fresh out because they are even less aware of their uselessness.

Here's what's even worse. When I start talking to them about it (it comes up when they ask me my thoughts, I never preach), I tell them they should go and work for a few years and see if having a Masters degree would be worth it then. They tell me that people like me (with work experience) tell them the exact same thing. But all of the full-time tenured academics are telling them to just keep going to school because if they stop, they're never start up again.

I point out that might be true, but that only matters if you actually need an advanced degree. If you don't, who cares if you don't go back?

I don't want to say the undergraduate degree is useless, but there really is a feeling that it's viewed like a high school diploma now (by graduates, not employers).

[Isgrimnur]

Not to mention that you might be able to convince your employer to pay for it.

[Blackhawk]

As a parent of two kids thinking about college who has been out of the workforce for more than 15 years, this entire discussion is both confusing and disconcerting.

[GreenGoo]

The stupidity of that is mind-boggling. I can think of nothing more useless than a fresh out with a Master’s Degree. They’re even more useless than a fresh out because they are even less aware of their uselessness.

When you can't get a job with a bachelor's, it's not unreasonable to believe that more education improves your chances.

The last time I went through, I was seriously toying with a masters after my bachelor's, but time spent with actual master's students taught me otherwise. Either go for the full deal with a doctorate, or get busy working with your bachelor's. The master's just keeps you out of the job market longer, creates more debt, and doesn't improve your salary enough to warrant the extra time out of the work force.

And that was before the job market tanked. I can't imagine graduating and starting work at McDonald's. I mocked my fellow high school students who worked there before they graduated HS (I personally worked in a lumber yard. I was kind of a dick).

I really can't fault students for thinking more education is better. We've been trained to that thinking for all of our early years.

[Isgrimnur]

National Center for Education Statistics

[stessier]

Depends what subject the Masters is for. I got a stipend from the school to get one in chemical engineering. My brother got a PhD in biochemistry but was also paid. No added debt and more time to grow up...highly recommended.

[GreenGoo]

Mine was aerospace. The math just doesn't work. Giving up 1 or 2 years of salary for an incremental improvement when you enter the work force would take years to reclaim. It's possible that mid to late in my career the master's would provide more opportunity and more compensation, but it certainly wasn't guaranteed, and the bachelor's plus 2 additional years of work experience is going to get you pretty far if you're motivated anyway.

Even if your master's is free, the opportunity cost needs to be taken into account. Sure, maybe some fields make sense to get your master's. Many don't.

[GreenGoo]

National Center for Education Statistics

Beats me Isgrim. The stories over the last few years, especially when your economy tanked, were pretty scary. I never bothered to look at the stats. Don't forget that the decision to get a degree is often made years before receiving the degree, and a lot can change in that time.

From my personal perspective, I value education very highly and probably would have gotten my master's despite the advice of other grad students if I hadn't gotten married around then. I would have gotten it just to hang on my wall, probably.

I started saving for my kids university education when the first was about 5 (yeah, I waited until my salary was in a better place) and have been doing so every year since. Of course it's not going to be enough for a foreign exchange student degree in the US, but it should give them a good to great head start for the first 2-3 years. After that, we can discuss. If they really want that degree, they can get jobs. If they are highly successful in post secondary education, I would consider shelling out even more, but presumably there would be supplemental sources of funds, like scholarships, bursaries, TA jobs, etc.

[GreenGoo]

The stupidity of that is mind-boggling. I can think of nothing more useless than a fresh out with a Master’s Degree. They’re even more useless than a fresh out because they are even less aware of their uselessness.

Can I just say that I love when Rmn9 calls everyone an idiot who doesn't know the things that took him years of experience to learn himself. Do you even remember being in school Rmn9? Did you know ANYTHING about how the real world worked, besides get a job, get married, get a mortgage and house, have kids, live middle class, murder wife if she cheats on you?

This is just the current example how anyone less than half his age and no work experience is a dumbass for not knowing what comes next after getting a degree.

[Kraken]

Depends what subject the Masters is for. I got a stipend from the school to get one in chemical engineering. My brother got a PhD in biochemistry but was also paid. No added debt and more time to grow up...highly recommended.

My nephew is on the cusp of earning his bachelors in electrical engineering, and recruiters are already luring him with six-figure starting salaries. Google and Amazon have both come calling. A masters degree might be worthwhile a few years down the road, but he wants that phat loot now. As a veteran he'll graduate with little or no debt.

So yeah, it depends a lot on one's field of expertise.

[Unagi]

I don't want to say the undergraduate degree is useless, but there really is a feeling that it's viewed like a high school diploma now (by graduates, not employers).

But what does that even mean here.....

OK, so if : most students today that get their college undergrad degree feel that it's lame and not all that big a deal - and that most college undergrads then : plan to push on to their masters in the way that they also went from 'Highschool to College' - what does that mean??? Since there is a serious discussion to the value of the college degree itself - it's interesting...

Does this reflect the separation of the (future) social classes?

It's Highschool or Masters now?

[RunningMn9]

Can I just say that I love when Rmn9 calls everyone an idiot who doesn't know the things that took him years of experience to learn himself. Do you even remember being in school Rmn9? Did you know ANYTHING about how the real world worked, besides get a job, get married, get a mortgage and house, have kids, live middle class, murder wife if she cheats on you?

This is just the current example how anyone less than half his age and no work experience is a dumbass for not knowing what comes next after getting a degree.

Well, that escalated quickly.

I remember being in school and I remember the specifics of being faced with this decision myself, yes. I knew something about how the real world worked because I talked to and listened to people who were out in the real world and who had experience. Well, you could argue that I didn’t “know”, but I knew enough to know that I didn’t know, and so I listened to those that did.

Like so much, there are exceptions to the rule, where getting advanced degrees are necessary. What I’m criticizing is the decision to do it, at considerable cost, just because.

For years I toyed with the idea of going back to get a Master’s degree in Software Engineering, but over time I’ve met dozens of software engineers that had one. I’ve still yet to meet one who was made better at their job because of it.

That’s not a reason to not get it by the way. If someone wants to get an advanced degree, go for it. I support educating yourself. Of course you can do that in lots of different ways, sinking further into debt at a time where you still don’t have any idea what you need to learn to be practical, isn’t a particularly good way IMO.

Smoove - your students are mostly correct. It’s far less likely that you’ll go back to school if you take a break - but as you say, does it matter if the degree isn’t needed?

[GreenGoo]

I think smoove's point is that a bachelor's is the new "minimum" education whereas high school was the minimum for previous generations, not that it's no big deal.

[Smoove_B]

I think smoove's point is that a bachelor's is the new "minimum" education whereas high school was the minimum for previous generations, not that it's no big deal.

Yes - in the eyes of the people looking to graduate with a 4 year degree (for those that I have talked to). On the whole they seemingly have some ridiculous expectations about earning right after graduation - which is understandable as they're likely $100K in the hole. So (I'm guessing) when they look at entry level salaries and run the numbers, punting the ball and going back for another 2 years to get a Masters seems like a great idea, because more degrees means more qualified (in their minds).

[RunningMn9]

I think smoove's point is that a bachelor's is the new "minimum" education whereas high school was the minimum for previous generations, not that it's no big deal.

We can let Smoove weigh in, if he cares to, but I would say that his students certainly seem to believe that statement to be true. I know a number of people who do a lot of hiring across a number of fields, they don't respect a Master's degree without any work experience any more than I do.

In many cases, that will make it *harder* to get your resume looked at, because there is an assumption that you believe you are worth more than you actually are.

[Smoove_B]

That's exactly what I tell them. I point out that if I was hiring a college graduate with a 4 year degree and no experience, why would hire someone with a Masters degree and no experience? Of course not all experience or degrees are the same, but no working experience levels the playing field pretty quickly. When I ask why they want to go on immediately after graduation, it's always to maintain momentum. I think all they're doing is blowing up the debt bubble even larger and going to find themselves in their mid-20s without much to fall back on. It definitely bothers me though that my academic counterparts are telling them to just keep at it. I really cannot even begin to fathom the debt load some of these people are carrying.

[Jeff V]

You really need to understand your industry...maybe that ought to be a 100 level class. In IT, some certs will trump any degree. If you're a CCIE, for example, you will do quite well.

My wife is in nursing. When she came here, she was able to take the CNA exam and was certified. This qualified her to work a job earning less than your average McDonald's burger flipper is demanding. She went to school and is now a LPN making double what she did. She wants to go next for her RN and BSN, that combo will double her salary yet again. There is a well defined education/reward pattern. Most professions aren't nearly so clear cut however.

[Combustible Lemur]

For teachers, a master's is pretty no brainer. Not going straight master's cost me 10 grand aross 5 years, so half my cost. And should I want to admin, it's mandatory so waiting just let's education costs grow and kills an anually higher salary.

Sent from my SM-N950U using Tapatalk

[GreenGoo]

What was your salary during the time you would have been getting your masters? Teaching is one of the very, very few fields where salary is directly tied to your education plus seniority.

There is a bit of that in the federal government as well, but it's not nearly as rigid as in teaching, and not nearly as impactful.

[GreenGoo]

Well, that escalated quickly.

Heh, yeah, you remind me of a co-worker I used to have (we're still friends although we don't spend much time together these days). He knew everything until you proved he didn't know something, and instead of realizing his mind was not an infallible all knowing machine and gaining empathy for those who he considered "dumber" than himself, he just took the new knowledge and assumed NOW he knew everything.

Obviously that is not exactly how I see you, but you sure are quick on lots of topics to call those who don't know any better, dummies (usually something harsher), even when it's completely valid that they have not gained the knowledge in question, yet.

You learned what you could before you entered the job market. Similarly I spent a lot of time researching a master's and then decided against it, and then when I did enter the workplace, I literally interviewed a number of contractors who's work I greatly respected with regard to how contracting/subcontracting worked, what were the pros and cons of various encorporations and employment relations. There were other factors that turned me away from subcontracting in the IT field.

I guess my point is that out of the hundreds of thousands of very (very) young people who are about to graduate, it's not surprising that some have misconceptions about the job market, the demand for various degrees, and what that means in a practical sense.

Hell, despite all I learned ahead of time, I still thought my marks would matter to an employer, at least somewhat. Obviously I was mistaken, and learned quickly how mistaken I was.

So my commenting on you was based on years of observations followed by this very specific, current topic. It was meant as soft (very soft) criticism which I know you will survive easily (also based on years of observation). I just think you were being unreasonably harsh on a generation of college goers. They will learn, just as everyone learns. Just you learned. Just as I did. Your opinion is bang on, from my experience. I just don't think it's reasonable to assume everyone should know it before entering the workforce.

Anywho, back to the topic.

If you don't know whether your field is one that would benefit you to have multiple degrees, it's safe to bet that it isn't, assuming employment and salary are your primary drivers.