It's Coming!

Here's the NYT article - Doesn't this ring a familiar bell - Credit Default Swaps and the Housing Collapse? Click here and take a look! -
https://www.nytimes.com/2017/07/17/business/dealbook/student-loan-debt-collection.html?partner=msft_msn&_r=0

Living Life in a Bubble

In a recent conversation with my son's friend I was surprised when he told me that he was still paying a student loan debt of $600 per month. I was surprised because he is 38 years old and I assumed that student loans would be long paid off by this age - 15 years after graduation that is!

Well, my assumption was obviously wrong and then a short time later I saw the article below. It appears that the plight of my son's friend is far from unusual.

After reading the article I began to think about the recent housing market bubble. It was kind of the same thing in that people were loaned vast sums of money without regard as to whether they could really handle the debt. But then I began to realize maybe the student loan problem is even worse! The housing debacle at least had some collateral behind it even if it was poor collateral it was better than none. What collateral do student loans have?

You might say that the projected income after graduation is the collateral but my further reading on the subject revealed that only 16% of the degrees obtained are in the highly employable STEM areas.  A large portion of the rest is in fields that have poor employment prospects and are likely to leave those graduates unable to pay off their loans. Additionally, only two kinds of debt are immune from discharge in bankruptcy, taxes and student loans and therefore I  wonder if they can even be legally written off by the issuer? This means that these loans will follow individuals for a lifetime (continually accumulating interest) until they are fully paid.

If the housing problem was called a "bubble" what term can be used to accurately describe this? I don't think "bubble" will do! How about "economic Armageddon"?

After thinking about all this for a while it occurred to me that maybe all my dread is unwarranted. The advent of on line learning could come to the rescue. College costs should surely plummet when students can take course at home with no classroom or actual instructor required.

Well, I'm wrong again!

Look at the article below this one describing the cost of on line course at SNHU, a highly advertised New England college.

RU Athletic Absurdity

RU has the second highest in-state tuition of all public universities in the U.S. Will the expected "financial bonanza" from joining the Big Ten result in lowered tuition rates? 

Will future athletic costs include million dollar payouts because a coach "bullied" a six foot five, two hundred and twenty pound, twenty-two year old by throwing a ball at him and pushing him into position (Couldn't he have just quit the team if he felt so threatened)?

Will future athletic budgets include the outrageous legal fees incurred (and on going) by new "bullying" incidents?

PS

I've done some soul searching during these long, cold winter days.

Why do I write this blog and why am I so concerned about all these education isssues? I've been out of the loop for ten years now! Maybe it's because, when people ask me what I did with my life, I would like  to say "I was a teacher" with pride and head held high?

With all the disdain for public education and teachers which continually fills the media day after day, it makes it hard for me to utter those words without a downward gaze. I would like to see the day when I can speak about my life's work without even a hint of  apology.

But every time I write one of these diatribes, I say to myself it should be my last!  

I should resolve to stop being so compulsive about commenting on the constant criticisms, teacher bashings and failed schemes proposed by education "experts" and politicians because it seems nothing I can do will ever change it. It only gets worse!

Then, the next day, when I pick up the paper or turn on the radio I immediately read or hear the kind of stuff that drives me back to this computer. I guess I just lack the self discipline required to control myself but I will continue to try, I promise. 

Wish me luck.

A Friend Just Sent This Email to Me

A friend just sent this email to me and I replied and thought that maybe you might be interested too -

BTW - What's your opinion ??

Email 

Walt,

What do you think of the proposal for the state to take part of your income in exchange for paying for your education.

Reply

C______,

It’s good to hear from you.

I’m flattered that you ask for my opinion.

As to my feelings about the current plan, it’s just another mechanism to avoid confronting the real issue, “Why is college so expensive?”

When you and I went to school the tuition was but a fraction of what it is today. You might say “Sure but everything was cheaper too” but so were incomes and so that’s not a good excuse.

(See my previous article - Monday, August 12, 2013  - The College Loan Bubble - Toil and Trouble).

Back to the question you asked about the currently proposed scheme – any plan that indentures people for a lifetime to pay outlandish college costs, whether it be upfront or back door, doesn’t appeal to me at all !

All this will do, as the student loan program has done, is to encourage even higher tuitions and fees. The whole thing is similar to credit cards, which certainly have induced even more spending by consumers and allowed

prices to rise even more than the would have without them.

Thanks again for asking.

Walt

The College Loan Bubble - Toil and Trouble

Let me add a little personal, anecdotal history about college tuition in New Jersey.
In the early 60s when I graduated from high school I had no money for college. Consequently, I got a job as a carpenter's assistant for $1.25 per hour. When I finally accumulated enough money I applied to Montclair State College and was accepted.
The tuition rate was $75 per semester and I don't remember any additional fees being involved.
The reason I applied to MSC was because of the lower tuition, RU was somewhat higher but still not exorbitant by comparison. At the end of my four years, the tuition rate had not changed.
Many of my peers at MSC had applied for and received the State Scholarship which covered all their tuition costs. Since I did not enter college immediately after high school I did not qualify and never received its advantage.
But that is not my point.
How is it that now tuition rates throughout the state (and everywhere) are sky high ?
Why are students now required to saddle themselves with tens of thousands of dollars of debt ?
Who could work their way through college today ?
Why is the national Student Loan debt over a trillion dollars ?
I guess you might say inflation, things are much more expensive today but of course wages are much higher too so it all kind of evens out.
Well, I'm not so sure !
The average minimal wage in the early 60s was about what I was paid, maybe a bit higher, $1.50 - $1.75 per hour, Let's say today that wage is $10 per hour. This means it has increased roughly sevenfold. Certainly, seven times $150 (the yearly tuition at State schools in the 1960s) does not come close to today's rates and fees at these schools.
Am I saying that tuition today should be $1050 ? No, but it surely shouldn't be $10,000 either !
Now, how about the student loan situation ?
The recent furor over loan rates being raised resulted in their being capped (to some extent anyway) and people cheered. Not me !
I think the conversation should have been directed at why tuitions are so high and how they should be lowered. Instead, loan rates where lowered (I mean not raised as much) which simply encourages more borrowing.
To add insult to injury not only have the costs increased to dramatic heights, at the same time the school year has been sharply reduced.
In the 60s and before, the first semester started at the beginning of September and extended to mid January with a one week Christmas break. After the first semester was completed there was a one week intermission and the second semester began. The last day of the school year occurred the second week in June.
I've done some calculations and I find that today's college four year education is actually a full year short of that of the 1960s.
The bottom line -  lots less for lots more !
Another math exercise I did was to figure out the cost per hour of class time. At RU it is over $30 per hour (in state students). A ticket to a Broadway show which lasts for two and a half hours is about $75 (a reasonably good seat). You do the math !
And to make things even worse, many classes consist of hundreds of students, all herded into an auditorium with the professor appearing the size of a dime below. Questions from the students, I don't think so. Questions are reserved for the TAs, low cost graduate students trying to pay their own tuition bills.
My own college experience consisted of class sizes of twenty and less with student questions handled by the professor during class time. (And the professor was always available after class for more questions).
Is college today a scam on the middle class or is it just my cynicism showing through as usual ?

For What It's Worth??

I have many questions:
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Should RU continue its quest to become an athletic powerhouse?

And can this even be achieved ?

What is the true motivation behind  this attempt to bring "big time" sports to RU?

If accomplished will it really help the universities' prestige?
And if so, how ?

Is providing unpaid farm teams for the NFL and NBA a worthwhile goal for our State university?

Should the highest paid public employee in the State be the RU football or basketball coach?

What was the problem with RU remaining in the Patriot League in the first place?

Did RU  think it had to pump up its athletic image to attract more applications? 

How does high caliber athletics help to attract high caliber students?

How is a universities' "pride"  based on  its athletic program?

(BTW - what do they mean by a universities' "pride" anyway?)
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As the song goes "Gimme some truth, all I want is the truth!"