Posted on 06/28/2013 9:48:51 AM PDT by SeekAndFind
In the face of staunchly high unemployment and the prospect of long term job scarcity, one of the most common solutions is to increase your skill set or pick up a new one; to go back to school. Throughout most of the last half of the last century, we've had it hammered into us and into our children that we need to attend higher education in order to achieve more profitable employment. According to the 2000 Census, people with a high school diploma averaged a little less than two thousand dollars a month while people with a bachelor's earned almost double that. For those who can support a Ph.D at the end of their name? The average is almost eight thousand a year. Sounds like a no-brainer investment.
The problem is that while the average salary is higher, the bill in the aftermath can be devastating. The debt left after a bachelor's degree ranges anywhere from $10,000 to $50,000, depending on the school and attainable aid. That lovely Dr. prefix? Five years in a doctorate program will run between $250,000 to $300,000. So how does that average out? The class of 2013 was left with sticker shock: the average debt they walked down the aisle with was $35,200. Currently, the total amount of student loan debt is approaching a trillion dollars with larger and larger amounts of this debt being delinquent in payments. When you take high rates of unemployment, people delaying retirement longer, market crashes and bubbles, and severe cuts on services due to government budget control (a phrase I can almost write with a straight face), you have a recipe for an incredible amount of stress on the middle and working classes. Now, add to that the dangling carrot of higher wages that may in fact actually cause wages to be lower due to loan repayment and suddenly that stress becomes almost unbearable.
With the doubling of the interest rate on these loans scheduled to go into effect next week, this is an economic catastrophe waiting to happen on the macro scale and a tragedy for the individuals that are going to suffer the consequences of attempting to better themselves: the cost of college tuition has skyrocketed so much that, outside of the exceedingly wealthy, higher education has also become synonymous with extreme amounts of debt.
The truth is that any solution is going to have to be both at the student level and at a significantly higher level. If the United States wants to stay competitive in Science, Technology, Engineering, and Mathematics jobs, higher education needs to be both attainable and affordable, allowing these new graduates to use their degrees to participate in the general economy, not just the debt. At the student level, people need to be more informed about their educational options; an engineering degree that makes $80,000 a year shackled to a $100,000 in debt with a huge interest rate will be worth significantly less to the owner than a technical certificate that makes $60,000 a year with only $5,000 in course fees. Likewise, these students need to be educated on early investment development.
A $100,000 in loans, on an average time frame to pay (10 years for students), with 6.8% interest, will total out to almost $140,000 at $1,100 a month. If you took that same thousand dollars a month and invested half of it in a diversified portfolio, you could potentially be substantially ahead of the $100,000 mark with dividends being paid and a hedge to insure your wealth.
To that end, if I was talking to a new set of young investors to the market, I'd recommend getting into a variety of silver: from junk bags to fractional pieces from various nationalities to some numismatic pieces, the low entry point into the market right now allows for maximum accessibility with the potential for huge profit within a couple years. The great part about silver is that because it is so cheap right now, income level isn't a barrier into the market. It can be difficult for some people to lay hands to a thirteen hundred dollars for an ounce of gold, but at just over eighteen dollars an ounce, even students could afford to put an ounce or two away a month to start developing that part of their portfolio.
The student loan bubble is going to continue to threaten the personal economics of the next generation until it either bursts or we can come up with a better solution than shackling people with endless debt. In the meanwhile, getting twenty and thirty-somethings into the market, beginning a diversified portfolio they can maintain is a wise choice that will yield more fiscally responsible adults ready to better participate in the greater markets.
Stop subsidizing it with federal loans, let emplyers test employees' skills, legalize apprenticeships, end government-issued professional licenses, eliminate the minimum wage, and then college tuitions will seek their natural level.
Besides, college is the farm team for professional football players and professional communists.
We put my wife through school too. Same as me and we weren't rich at the time and she didn't work.
Both of us went to Universities. Both of us graduated without any debt.
geeeee... if the kids don’t want to repay their debts... let’s stop lending our money to them!
ps: nobody’s being “shackeled” by student loan debt.
students are being given the OPPORTUNITY, and it is an un-earned opportunity too, to use someone else’s money to finance their desired educations
nobody’s kidnapping children and putting them into chains
as popular a subject as that seems to be these days
People fiscally stupid enough to live on campus quite justifiably call into question the value of any business degrees they might have garnered.
When I was at Oklahoma State I rented a 2 bedroom appartment and cooked myself for 2/3 the cost of living in a shared dorm room eating cafeteria glop. I had a place to stay during holidays (unlike the dorms where they kicked everyone out) and my own bathroom with no vomit or drunks.
When I took in a room mate I saved even more.
Among their abuses are:
Remember BO bragging about making the student loan business more efficient during his re-election campaign by eliminating the middleman, IOW, competition to the government?
This is the next bubble waiting to happen-- millions of borrowers saddled with debt which they have little hope of repaying and cannot discharge. A homeowner who is foreclosed, at least, can walk away from the debt through the bankruptcy process.
The only real long-term solution is to phase out SallieMae and privatize the student loan business. The outline of such a plan to do just that:
In conjunction with this program, all borrowers which are current on payments after provision #1 kicks in would be able to apply and get an interest rate less than or equal to the rate they are paying on their primary residence. It makes no logical sense to have people paying more than double the rate on student loans than they are paying for mortgage loans secured by real property.
Agree. It has to be phased out. But, just like the banking crisis, the politicians will wait until the system collapses, and then compound the problem with emergency legislation.
That's the way to go. Especially these days. But I'm still skeptical of the intrinsic value of most college diplomas.
We're sending my daughter, who wants to be a teacher, to a state college. She'll be commuting, and working part time. She won't have any debt at graduation. I told her that her degree will be a joke. Just a credential necessary to get a job. She understands that.
If you have to go in, it's best to go in with your eyes open.
very sloppy. he says a non college grad earns ‘less than two thousand dollars a month’. (18K/year - which i don;’t buy) ok lets be conservative and say 1.5k/month. then he says that college grads earn twice that..., that’s 36k/year, again i don’t buy that either...
then he says that phd’s earn eight thousand dollars a year... huh? i’d buy 8k/month, not per year.
he adds that a BS degree typically garners 10-50k in debt, then moans about people graduating with 100k in debt. from where?
and btw, 2.7 years. if you take the extra the BS earner gets and divide it by the 50k debt (the high end) it is 2.7 years to pay it off. so there is a lot of wiggle room to add interest payments, etc.
so these figures don’t make sense to me, and i been through it. (of course i paid my loans off in two years so....)
It is the “thing to do” or “everybody does it” and many campuses may require it.
Too many distractions for me and probably most students. So it was a good thing I wasn’t on campus. :)
Some of us are SO OLD - that my tuition was $270/year. Books about $100 per quarter, and my housing costs were $140/month for a separate room+3 meals a day.
I graduated with a degree in Electrical Engineering, and because I got a job teaching labs my senior year I had $1000 in the bank upon graduation.
Now-a-days, the cost at that University is estimated to be about $20K/year (tuition/room/board/books included). and it’s a State school.
My kid is going to the University of Oklahoma on a National Merit Scholarship. It costs me $8K/year in-state tuition (room/board/books covered by the scholarship.). This is affordable, and we won’t be broke at the end of 4 years. You CAN save up for these expenses - but you won’t be going to Harvard either.
The real issue is - does their major get them a job afterwords?
Unlike people from the rich classes, those of us from the working classes can't afford to attend college “for the fun of it” and waste our (or our parents) time and money on worthless degrees that won't provide us with a decent job and income AND a means to pay off any debt incurred.
College's purpose is to train a person for a job. If a student gains more than that along the way, then great. Icing on the cake.
If a vocational program or on-the-job-training does the same thing, then why consider college?
One thing nice about your daughter's degree. She can carry it with her if she leaves the State, moves somewhere else, etc. She'll probably have to take some classes to get certified in that locality but that might only be a semester. Her degree will be recognized everywhere.
Foreign governments are paying the freight for their brightest kids to come here for college degrees. And they aren’t subsidizing degrees in transgender studies from Columbia, they are here to get degrees in Engineering at Purdue and Georgia Tech. My son attends Purdue majoring in Chemical Engineering, and he has to watch his back, for the Asians look out for themselves. My niece attended Georgia Tech, where the majority of faculty in the hard sciences is now Asian. They most definitely discriminate against the white students and favor their fellow Asians.
We need to stop subsidizing crap and be selective about what we provide financial aid for. I know it makes sense and our homosexual domminated communists in charge of these institutions will have a hysterical hissy fit, but it’s what needs to be done.
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