Posted on 12/24/2020 9:02:01 AM PST by Twotone
In his book Bubbles and Crashes, Brent Goldfarb says a bubble is much like a stock that traders keep buying because others are doing the same thing.
“This usually happens when a company or product has a compelling narrative around it that isn’t backed up by data,” Goldfarb writes. “They’re easy to invest in, there’s a lot of uncertainty about the future value, and it’s often about a lot of novice investors.”
The student loan bubble checks all of these boxes. Americans have been hearing about a student loan “crisis” for over a decade, and there’s a reason for that. Forty-three million Americans hold $1.5 trillion in federal student loan debt. The average debt per borrower is $37,127. Since the late 1970s, tuition has risen at a rate three times that of inflation.
Not only is a college degree getting more expensive, it’s doing so while arguably becoming less valuable.
The Wall Street Journal reports that 43 percent of graduates are underemployed in their first job. Of those, two-thirds remain in jobs that don’t even require a college degree five years later.
Meanwhile, the Washington Post found that only 27 percent of graduates work in a job related to their major. And estimates show that the rate of return on a degree has been decreasing since the Great Recession.
(Excerpt) Read more at fee.org ...
It’s pretty simple, really.
Colleges and universities exploited dumb 18-year olds for their student loan dollars and encouraged them to bury themselves in student loan debt.
Not any more complicated than that.
And dumb 18 year olds , who don’t know what they want to do with their lives, and don’t uunderstand about debt, or personal finance, are making bad decisions.
Many college majors don’t lend themselves to particular job or career paths.
If you take on student loan debt to get training in a field with good paying job opportunities , then borrowing for college can make sense.
But borrowing to get a degree in history, is not going to help you in the job market.
I would add a little more complication: High schools abrogated their responsibility to prepare students for college with the result that college students have to spend more time (and money) taking remedial courses and colleges also offered to make students “proper citizens” by offering (and requiring) garbage attitude classes administered by ever-growing education bureaucracies.
A lot of fools actually believed that government-backed student loans were designed to help college students. That is 100% false. The purpose of these loans is to have the taxpayers give an enormous subsidy to the schools.
“ A lot of fools actually believed that government-backed student loans were designed to help college students. That is 100% false. The purpose of these loans is to have the taxpayers give an enormous subsidy to the schools.”
That needs repeating. Excellent observation
Griggs v Duke Power (1971)
https://en.m.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.
Had the Supreme Court declaring that companies who used tests in hiring or promotions were guilty of illegal racial discrimination if the pass rate of blacks was lower than whites (”disparate impact”)
Companies then started demanding degrees as a way to screen for basic literacy, and the college bubble started inflating.
Take that away, allow companies to require that young applicants provide standardized test scores, and the bubble pops.
When a home schooled 18 year old out scores the average college graduate, the game is over.
Even if you use what you learned in college very little of it applies. I took EE and frankly during a 35 year avionics career as an engineer I used only the basic principles I learned in my basic electronics AC/DC classes and some programming training. The rest of all that calculus and stuff never applied in the slightest.
“Tap the endowments for the debt. Require universities to cosign for the debt.”
That is a good idea but they won’t do it without collateral.
That collateral could be in the form of future earnings and job prospects (i.e., value of the degree) for the loan bearer.
Perhaps there is a parallel universe where this could actually happen.
And tuition increases at triple the rate of inflation while liberals pushed the narrative that everyone must have a college degree didn’t help.
If you subsidize something, you get more of it. The execrable federal government subsidized poorly prepared students going to college, people who were incapable of earning a serious and marketable degree. Surprise — those people went into totally worthless studies programs and the universities happily expanded those programs to suck up the federal largesse.
The universities churned out millions of America-hating, self-hating worthless “graduates” who could either 1) flip burgers at minimum wage, 2) join antifa/BLM, 3) “work” for the government, 4) join faculties and perpetuate the cycle, or 5) go on welfare.
Is there ANYTHING surprising about this result? Get the damned government out of education!
How to fix the student debt issue:
1) Eliminate the prohibition on wiping out student debt in bankruptcy. The possibility of bankruptcy and loss of the funds imposes discipline on the lender. Without it, there is none.
2) Require all student loans to be originated by the education institution. Since there is no property to be acquired, there is no cost. The loan is simply delayed payment for services.
3) Get the government completely out of the student lending business. Just as with investing, the government should not be in the business of “picking winners” and rewarding certain behaviors.
4) Require audits to verify that the “price” of education charged to a student is derived from its actual cost.
5) Require each school to provide evidence of ACTUAL income of students in each field of study who graduated from that institution, and an estimate of the return on investment. Include information about the unemployment rate for such students.
Teacher admits he helped write Common Core to end white privilege
https://www.youtube.com/watch?v=LQ8Nr3_2724
College tuition priced at $20,000 in 1977 → $302,789.22 in 2020
https://www.in2013dollars.com/College-tuition-and-fees/price-inflation
The state of New York recently passed a law requiring prospective school teachers to take a literacy test to get their license, but repealed it the following year because 36 percent of whites, 54 percent of Hispanics and 59 percent of blacks failed on the first try.
https://www.nytimes.com/2017/03/13/nyregion/ny-regents-teacher-exams-alst.html
80% of NY City HS grads can’t read at grade level
https://www.americanthinker.com/blog/2013/03/80_of_ny_city_hs_grads_cant_read_at_grade_level.html
Home schooled students already outscore the average college graduate, but that, too, is censored. You could not design a more appropriate system for ensuring children are unable to learn than our current one.
Disclaimer - I homeschooled both my kids, one graduated from Virginia Tech summa cum laude in mathematics a week after she turned 20. The other graduated from Maryland’s honors college in IT.
Trump already has the Dept of Education give statistics on earnings of college graduates, by school and major.
https://collegescorecard.ed.gov
The NEA is fulfilling it’s goal of producing illiterate, indoctrinated, pliable fools.
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