Posted on 05/09/2013 6:50:11 AM PDT by Kaslin
Markets work. But sometimes they take time.
That's the uncomfortable lesson that proprietors of America's colleges and universities are learning.
For many years, market forces didn't seem to apply to them. There was a widespread societal consensus that a college education was a good economic investment.
Politicians gave lip service to the idea that everyone should go to college. No one should be stopped by a lack of money.
There was historic precedent. The G.I. Bill of Rights vastly expanded college populations and helped build prosperous post-World War II America. Putting even more through college would make us even more prosperous.
So Congress passed student loan and grant programs to make it easier for people to pay for college and university tuitions. That increased potential higher education revenues.
Surprise! Over the last three decades, tuitions rose faster than the economy grew.
For a long time, that didn't seem to be a problem. College still seemed like a good investment during the quarter century of low-inflation economic growth from 1982 to 2007. You could pay off those loans with earnings increased by your degree.
Meanwhile colleges and universities -- and not just the highly selective ones -- competed for students whose test scores would improve their ratings in the U.S. News College Guide by giving "scholarships" that actually were discounts on the tuition list price.
To attract these students, the educational institutions built fancy dormitories, gymnasiums and student centers. And they vastly increased the number of administrators, to the point where colleges and universities had more administrators than teachers.
Government helped to produce an ever-increasing demand for higher education. So higher education administrators saw no need to compete on price. Higher tuitions just gave your school more prestige.
Now the higher education bubble has burst. The Wall Street Journal reported this week that that the average "tuition discount rate" offered incoming freshmen last fall by private colleges and universities has reached an all-time high of 45 percent.
At the same time, their "sticker price" tuitions have increased by the smallest amount in the last dozen years. Tuitions for in-state students at public four-year colleges and universities also increased by the smallest amount during that period.
Applicants are negotiating bigger discounts than they used to. Market competition has kicked in.
What has happened is that in a recessionary and sluggish economy, potential customers have been figuring out that a college diploma may not be a good investment -- particularly if it entails six-figure college loan debt that cannot be discharged in bankruptcy.
The Millennial Generation that voted so heavily for Barack Obama -- 66 to 32 percent in 2008, 60 to 37 percent in 2012 -- has had a hard time finding jobs, even with diplomas in hand. Especially if their degrees are in gender studies or similar fields beloved of academics.
In even worse condition are those students who never get a degree, a disproportionate number of whom are blacks and Hispanics admitted under affirmative action programs who prove unable to keep up with the pace of instruction at schools where most students enter much better prepared.
We see in higher education something like what we saw in housing. Government programs aimed at increasing college education and homeownership, particularly among minorities, turn out to hurt many of the intended beneficiaries.
The intentions of the people who created these programs were good. The results -- well, not so much.
Home ownership is a good thing generally, but it's not good for everybody. The young and transient, for example, are often better off renting.
Higher education is a good thing generally too, but again not for everyone. People whose talents are more artisanal than academic are often better off getting a job or vocational training than seeking a degree that guarantees them student loan debt but not a job.
College and university administrators are not used to being disciplined by market forces. For years, they thought they were above all that.
Many got into the habit of producing a product that didn't serve their consumers' interests well. In a prosperous and growing economy, there seems to be no penalty for doing so.
In more straitened circumstances, they are discovering that, sooner or later, markets work. Their old business model is no longer working.
Colleges and universities have been doing a good job of meeting their administrators' needs. Now, in the new normal economy, they're scrambling to serve society's needs, as well.
Market forces have never effected colleges because they were subsidized by government.
The photograph above is interesting. Those graduates are not undergraduates. They medical students! Imagine having the guy with the bare legs treating you or a loved one.
The world needs ditch diggers too.
A very wise lad in our circle of friends is graduating from a trade school with a certification as a diesel mechanic. He will never have to look for a well-paying job and will start with a very generous pay check.
Meanwhile, other less astute grads will be working at waiting tables for tips, having squandered their time and a lot of money on worthless university degrees.
Depending on how hot it was he may have been the smartest one in the picture. Those robes are dark and don't breathe well, it was sunny (as evidenced by the sunglasses) and commencement speeches can go long. I'd have no problem with him as a doctor.
I really couldn’t care less if he wore shorts to his graduation. As long as he was a good Doctor.
Even when he shows up in your exam room wearing shorts, flipflops, & a “Weed Rocks!” T-shirt?
;^)
I wonder what the most common degrees earned were under the GI Bill? Accounting? Engineering?
I don't see that happening, though, as they're moderately sensible, or at least as sensible as kids can be. That, and their old man graduated with a decent major. Mrs WBill needed to learn the hard way, doing her undergrad in History, before doing graduate work in something employable. Funny how being hungry, and not finding any work better than minimum wage in a surf shop inspires that sort of thing.
If the kids wound up in a trade school, my feelings wouldn't be hurt, not one bit.
Oldest is a math whiz, though. I think he'll wind up an engineer like his dad. Youngest likes to build things....trades may be a good possibility.
A while ago, my plumber came to my house and fixed one of my toilets. He was here about 30 minutes and charged me 160 bucks.
And I went to 4 years of college.
Either A : No one advises them to pick a degreee for a field that is hot, like Information Assurance is really hot.
Or B : They dont like any of those fields(not natural), they like something unemployable and follow their dreams to unemployment and bankruptcy.
There is always cleaning patients in nursing homes with their worthless degrees.
My father earned his electrical engineering degree under the GI Bill and I earned my accounting degree under the GI Bill.
Many would do better going to a TRADE SCHOOL where they will get REAL MARKET skills.
Welder
Electrician
Pipefitter
Plumber
Steel worker
Heavy equipment Operator
Trucker
Oil Field worker.
And dozens of other Real JOBS! That is where the money is!
And there is nothing to be ashamed of
WTF?
IA : Cyber warfare protection.
Really hot now, I have a friend who just got a MS in it.
Good question. It would also be interesting to see what courses were offered then. Bet there wasn't a "Studies" subject in the lot.
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