There is no higher education bubble
November 21, 2012 7:25 AM Subscribe

It's the splashing, not the popping. What if American student debt is just too profitable and secure to admit any systemic reform? An interesting and gloomy argument against the higher education bubble theory.

Previously on the blue.

posted by doctornemo (156 comments total) 24 users marked this as a favorite

The opportunity to have a larger segment of one's workforce stretched thin, harassed by debt collectors, and without enough slack to leave your employ, well serves the kinds of people who have jobs they need to fill. Even if they're not making money on student loans directly, the loans "improve" the kinds of employees they can obtain. (Scare quotes because people in that unfortunate situation are probably not exceptional workers, but rather are unable to do anything about it if wages, hours and benefits are reduced in ways that put money in the owners' pockets.)
posted by spacewrench at 7:39 AM on November 21, 2012 [51 favorites]

Very well put, spacewrench. That is precisely the argument I have been making to my labor left friends who see the focus on debt that Occupy and similar groups have as a distraction from workplace organizing—debt is inextricably linked with issues of working conditions and worker control.
posted by enn at 7:47 AM on November 21, 2012 [12 favorites]

The reason student loan debt never expires is because it is not backed by equity. If you allowed people to default on their student loans, then lending them the money in the first place would be an act of colossal stupidity and would make it financially unsustainable for the government to back student loans. The end result is that most people would end up not going to college. (Which I am personally fine with, since it would stop degree inflation, but which I suspect most MeFites would be strongly against.)

Personally, I don't think student loan debt is a" problem," at least in the sense that is generally portrayed. The real problem is that young people need to realize that investing in their own education is like any other investment and does not guarantee returns. Unfortunately, most of them are subject to the Dunning-Kruger effect and think that "investing in themselves" is the best kind of investment there is. So they take on huge debt, expecting to be massively overcompensated, and then have a look of dumbfounded shock on their faces when this does not happen. Because the bottom line is that is you spend four years educating a turnip, it's still not going to be more valuable than any other turnip.

Obviously, it's not optimal to expect young people to be reasonable enough to be able to make responsible cost-benefit decisions about their future. Then again, we expect them to be responsible enough to be law-abiding citizens and not kill anybody, so expecting them to be financially responsible isn't such a huge stretch. This is what parents are for - to give their kids wisdom in situations where they are lacking it.
posted by wolfdreams01 at 7:48 AM on November 21, 2012 [6 favorites]

Reeeeeeeeeeeeeeeally thought that said "it's the splashing, not the pooping," which is also quite astute in a very different way. #cleanliness
posted by (Arsenio) Hall and (Warren) Oates at 7:49 AM on November 21, 2012 [12 favorites]

What if American student debt is just too profitable and secure to admit any systemic reform?

That's why we force it to happen with as much evil cackling as possible.
posted by shakespeherian at 7:53 AM on November 21, 2012 [1 favorite]

Wolfdreams01: Spot on.
posted by tgrundke at 7:55 AM on November 21, 2012 [1 favorite]

This is a tragedy. I keep hearing appeals to the "high-tuition/high-aid" model in defense of cuts to state funding of higher education. In a classic bait-and-switch, they're delivering a "high-tuition/high-debt" model in its place. Meanwhile, we forget that the "low-tuition/low-aid" built the world's best higher-education system, back when investing in our future was more politically palatable.
posted by smrtsch at 7:55 AM on November 21, 2012 [11 favorites]

So they take on huge debt, expecting to be massively overcompensated, and then have a look of dumbfounded stupidity on their faces when this does not happen.

Young people deciding to take on student debt generally have no money and no track record of making money. You know, because most college freshmen are 18 years old.

This has nothing to do with Dunning-Kruger effect, most Americans do not go to college.

The reason student loan debt never expires is because it is not backed by equity. If you allowed people to default on their student loans, then lending them the money in the first place would be an act of colossal stupidity and would make it financially unsustainable for the government to back student loans. The end result is that most people would end up not going to college.

What a steaming pile of bullshit. On one hand you mock idiot students for taking out loans, and on the other hand you warn that students wouldn't be able to take out as many loans if they could default on their debt.
posted by leopard at 7:59 AM on November 21, 2012 [8 favorites]

I mean, really, let's maintain a lending market where commercial lenders are guaranteed a profit, and if young people happen to end up with too much debt well it's just because they're so arrogant and full of themselves. If we tinker with this brilliantly logical system even one bit, nothing will work the way it's supposed to. Society would just fall apart.
posted by leopard at 8:04 AM on November 21, 2012 [3 favorites]

The government trumpets flexible repayment plans that end up extending both the lifespan of a loan and its interest period.

I don't see this as a bad thing. The most damaging part of a loan is not that it ends up being repaid for a long time. It's that the minimum payments become onerous. In the case of Stafford loans with their income-based repayment plans, the theory is that you only pay what you can afford at the time. This seems a world away from typical commercial loans.

I'd be interested to hear from people who have applied for these income-based repayment plans, and whether it helped their situation.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 8:05 AM on November 21, 2012

And wolfdreams01, you have your causation backwards: to service their debt, graduates have to be compensated at well above a living wage. Until somewhat recently, the expectation was that such compensation was indeed available. I'm sure it feels very nice to believe in a just world where anybody complaining about having been saddled with massive debt and no way to get rid of it -- including by working -- is just a moocher complaining about what's good for them. That must be very comforting for you. But it's a huge problem for the economy and for the existence of a middle class.
posted by gauche at 8:05 AM on November 21, 2012 [19 favorites]

Incidentally, I am occasionally accused of envisioning a bunch of monocled old white men in Monopoly top-hats, rubbing their hands and cackling as they plot these schemes. I don't believe there is such a cabal. This is just a natural result of everybody optimizing their little corner of the economy. Nobody starts out planning to screw students, or homeowners, or whomever; but when it happens, it turns out that there are new "benefits" to be capitalized on, and thus no consensus among the wealthy and powerful to disturb the status quo.
posted by spacewrench at 8:09 AM on November 21, 2012 [11 favorites]

Introducing a profit motive into something that, in any rational society, should be treated as a human rights or public benefit investment and properly in the domain of government function is going to result in a broken system of warped incentives, where individual actors motivations are shaped more by the desire to keep the money flowing, rather than attaining the ostensible goal. See: health care.
posted by T.D. Strange at 8:12 AM on November 21, 2012 [21 favorites]

Until the day you have to pass a test on nutrition, health and safety and finance to get a license to become pregnant, the assumption that parents are teaching their kid everything they need to know about any of those aspects is ignorant at best. We (try to) teach the first two in public schools. Until someone proves otherwise, the lack of financial education in schools is entirely intentional to promote lower and middle classes who are permanently financially indebted to one institution or another.
posted by griphus at 8:14 AM on November 21, 2012 [5 favorites]

The reason student loan debt never expires is because it is not backed by equity. If you allowed people to default on their student loans, then lending them the money in the first place would be an act of colossal stupidity and would make it financially unsustainable for the government to back student loans.

I am literally struck dumb by this comment.

Wait, I'm feeling better now. Governments don't make investments based solely on their ROI. If they did, the federal highway system and the U.S. military would need to have a long and awkward chat with the Congressional Budget Office. They make investments that are likely to better the public good. Equity takes many forms, not all of which are fungible. Like, y'know, having an educated populace.

Similarly, people are allowed to invest in things that aren't likely to pay them back handsomely, if they think it will lead to them leading better lives. Like, y'know, by studying things that they enjoy and maybe increasing the sphere of human knowledge.

The insanely-myopic view that each and every thing we spend money on has to somehow provide tangible monetary return is the lynchpin of what's wrong with the (modern, American) conservative school of political thought.
posted by Mayor West at 8:14 AM on November 21, 2012 [62 favorites]

They don't wear monocles, but there is absolutely a loosely affiliated crowd of people "at the top" who share tips and resources for staying there. It's not the Trilateral Commission or the Illuminati or anything, it's just the standard social network that springs up when people with common interests mingle.

I still maintain the best way to fix the majority of society's ills is to somehow persuade these people that it is actually in their best interests to treat the cattle well rather than poorly. Temple Grandin's lessons about actual livestock handling should be applied to managing the human working class. Keep them healthy and happy until slaughter and you get the best possible meat.
posted by seanmpuckett at 8:16 AM on November 21, 2012 [5 favorites]

The problem is that when I was in school -- and I assume this is true for everyone around my age (25) -- I was told the whole reason I was in high school was so I could go to college.

The school I went to, a public university in a big city that's mostly a commuter school, with a large percentage of students who were the first member of their families to go to college, was mostly interested in graduating people so they could start careers, not in learning or academics.

When I started college, in the fall of 2005, there were still jobs to be had. In the meantime, the economy collapsed, saddling people who were only in college to get a "better job" with tons of debt and no "better job" to be had.

I was fortunate enough that my parents could help me pay for school and I ended up without any loans. I still haven't graduated, but I go part time and work full time and so I'm able to pay (rapidly rising) tuition out of pocket.

Again. I am fortunate. If I hadn't quit school to go work in a guitar factory for a while, I wouldn't be in that situation. And a lot of people can't get jobs at guitar factories that pay enough money to cover their student loan payments.

Our generation was told that we had to go to college to get a good job, and that we had to have a degree to be able to have a stable future. Meanwhile, banks and schools were collaborating to make it impossible to pay for school without getting a loan, and the Boomers appear to have pulled up the ladder behind them.

I don't know where I'm going with this. But suggesting that students are wholly to blame for being crushed by student debt they can't pay off makes me a little stabby.
posted by epilnivek at 8:16 AM on November 21, 2012 [27 favorites]

The real problem is that young people need to realize that investing in their own education is like any other investment and does not guarantee returns.

Education is not supposed to have (monetary) returns. It's supposed to improve you as a person and us a society. (Pro-tip to MBAs: I said "society" not "company".)
posted by DU at 8:21 AM on November 21, 2012 [5 favorites]

Wolfsdream -- great comment. I made all my higher education decisions with an ROI-estimating Excel spreadsheet in front of me ... Dunning-Kruger explains a lot about the current mess, with non-ROI calculating people not only hurting themselves, but others, as their loan-and-grant fueled demand pushed up prices beyond rational levels.
posted by MattD at 8:21 AM on November 21, 2012 [3 favorites]

The insanely-myopic view that each and every thing we spend money on has to somehow provide tangible monetary return is the lynchpin of what's wrong with the (modern, American) conservative school of political thought.

bing bing bing
posted by DU at 8:22 AM on November 21, 2012 [5 favorites]

MattD, you have got to be kidding me. The only thing Dunning-Kruger explains is why some commenters think it's totally reasonable to blame 18-year-olds for taking on too much debt. You could restructure the lending market so that some of the risk gets shifted on to the parties lending money, thereby creating more discipline, but apparently cost-benefit analyses of debt are too complicated for commercial lenders, and are best handled by teenagers who have no one to blame but themselves.
posted by leopard at 8:24 AM on November 21, 2012 [27 favorites]

...with non-ROI calculating people not only hurting themselves, but others, as their loan-and-grant fueled demand pushed up prices beyond rational levels.

Fucking teenagers and their iron grip on the loan market.

Who will free us from the tyranny of the financially irresponsible children?
posted by griphus at 8:25 AM on November 21, 2012 [26 favorites]

The insanely-myopic view that each and every thing we spend money on has to somehow provide tangible monetary return is the lynchpin of what's wrong with the (modern, American) conservative school of political thought.

So, what exactly is the return on this investment, if not monetary?
posted by 2N2222 at 8:28 AM on November 21, 2012

So, what exactly is the return on this investment, if not monetary?

The continued existence of a stable middle class, membership in which the children of both the current middle class and the lower class can realistically aspire and indeed achieve via education and hard work?
posted by gauche at 8:31 AM on November 21, 2012 [7 favorites]

Personally, I don't think student loan debt is a" problem," at least in the sense that is generally portrayed. The real problem is that young people need to realize that investing in their own education is like any other investment and does not guarantee returns.

No, going to university does not guarantee returns.

However, NOT going to university does guarantee a much higher chance of unemployment and lower wages than going to university. According to this article, the unemployment rate in the USA for recent college graduates 6.8%, but that for recent high school graduates is nearly 24%. People with bachelor degrees still earn more on average than people with only some or no college.

So what students are being asked to do is gamble: they could spend tens of thousands of dollars to try for a better income, or just accept a low income and a higher chance of unemployment? How is the latter a sensible choice, especially as, until recently, the risks in the first choice were not that high?

What has happened recently is that tuition has skyrocketed, and the economy has gotten worse. Not as bad for college graduates as for those with no college, but a bit worse. But really, the main culprit is rising tuition, primarily due to cuts in state-spending, which are themselves due to cuts in state-revenue, due to a LOW-TAX regime and historically low marginal taxes on the richest in society, who themselves benefit from having a highly educated workforce but don't wish to contribute adequately to support this.
posted by jb at 8:33 AM on November 21, 2012 [18 favorites]

You know, if lazy HR people hadn't been using 'has a degree' as a filter for even basic roles for a couple of decades now, fewer young people would feel getting one was necessary and there wouldn't be a glut of young people with unpayable debt.

Likewise if all the MBAs hadn't been determinedly offshoring any job they could see that wasn't 'knowledge work', there might be a lot more money around for everyone.

Turns out it's tough to run an entirely middle class society on offshored labour where huge numbers of people have crippling debt for at least the first half of their life.

I heard a radio story here in the UK about how people in their 20s and 30s were much less generous to charity than older generations and I nearly punched the radio. We would be far more generous if we weren't spending all our money on rent and student loan payments while working for companies where a 'good' graduate starting wage hasn't budged for a decade.
posted by Happy Dave at 8:36 AM on November 21, 2012 [12 favorites]

The continued existence of a stable middle class, membership in which the children of both the current middle class and the lower class can realistically aspire and indeed achieve via education and hard work?

Is that not, in the end, a monetary return on investment?
posted by 2N2222 at 8:36 AM on November 21, 2012 [4 favorites]

leopard: "MattD, you have got to be kidding me. The only thing Dunning-Kruger explains is why some commenters think it's totally reasonable to blame 18-year-olds for taking on too much debt. You could restructure the lending market so that some of the risk gets shifted on to the parties lending money, thereby creating more discipline, but apparently cost-benefit analyses of debt are too complicated for commercial lenders, and are best handled by teenagers who have no one to blame but themselves."

He may have been mocking. Possibly.
posted by boo_radley at 8:36 AM on November 21, 2012

Also, this FPP on the corporatization of higher education seems relevant.
posted by epilnivek at 8:37 AM on November 21, 2012

Education is not supposed to have (monetary) returns. It's supposed to improve you as a person and us a society. (Pro-tip to MBAs: I said "society" not "company".)

"Supposed to" according to who, exactly? I have very little student loan debt because my parents paid tens of thousands of dollars for me to attend an excellent public four-year university. I can assure you that the goal that they and I had was not a vague "improve as a person" but a very specific hope that I could gain skills and credentials to get a job that could lead to a middle-class lifestyle, eg, monetary returns. The same certainly goes for many, if not most, of the people I know.

"Education for the sake of education" is a lovely ideal, but it simply the reason most college students are there. Let's all try to look at the real world that exists, and not the one described in an ivory-tower dream.
posted by Tomorrowful at 8:38 AM on November 21, 2012 [4 favorites]

Is that not, in the end, a monetary return on investment?

Serious question: how would you price it? What method would you use to assign a monetary value to the middle class that would give you a confidence interval smaller than, say, 50% of the value itself?
posted by gauche at 8:40 AM on November 21, 2012

And wolfdreams01, you have your causation backwards: to service their debt, graduates have to be compensated at well above a living wage. Until somewhat recently, the expectation was that such compensation was indeed available.

Well, that expectation was flawed, just like the expectation that housing prices would constantly go up (and the end result on the individual level was similar). Generally speaking, people who have the belief that "a situation that exists now is likely to exist indefinitely" are called idiots and should not be making important investment decisions without skilled guidance, whether that investment is in stock or in their own education. This is the reason financial advisors and guidance councilors exist.

Similarly, people are allowed to invest in things that aren't likely to pay them back handsomely, if they think it will lead to them leading better lives. Like, y'know, by studying things that they enjoy and maybe increasing the sphere of human knowledge.

Absolutely - people should be allowed to do whatever they want. However, if they choose to abandon materialism entirely, they shouldn't complain about being poor since that is a conscious decision that they made. When you choose not to do a cost/benefit analysis of your situation, obviously you lose the right to complain about the cost exceeding the benefit.

Wolfsdream -- great comment. I made all my higher education decisions with an ROI-estimating Excel spreadsheet in front of me ... Dunning-Kruger explains a lot about the current mess, with non-ROI calculating people not only hurting themselves, but others, as their loan-and-grant fueled demand pushed up prices beyond rational levels.

Thank you - I did something similar. It's comforting to know that there are other rational people out there, who believe in making important life decisions based on logic and probability of success, rather than dreams and wishful thinking.
posted by wolfdreams01 at 8:41 AM on November 21, 2012 [1 favorite]

wolfdreams01: " However, if they choose to abandon materialism entirely"

Are you talking about suicide here? It sounds like you're waxing about suicide.
posted by boo_radley at 8:45 AM on November 21, 2012 [1 favorite]

I can assure you that the goal that they and I had was not a vague "improve as a person" but a very specific hope that I could gain skills and credentials to get a job that could lead to a middle-class lifestyle, eg, monetary returns. The same certainly goes for many, if not most, of the people I know.

This is not the way it used to work. But we somehow managed to enter an education death-spiral, where people get a targeted, money-driven education to get a job so they can pay for their kids to go to school to get a even more targeted, money-driven education etc etc. Remember when primary and secondary schools had meaningful arts and humanities programs? Now the only thing you ever hear about is STEM. And the only thing you hear about even that is how we need to get STEM grades up for economic/military reasons.

If college is also just going to be job training, the least we could do is have the corporations pay for it to be free for all.
posted by DU at 8:45 AM on November 21, 2012 [9 favorites]

"Wolfsdream -- great comment. I made all my higher education decisions with an ROI-estimating Excel spreadsheet in front of me ... Dunning-Kruger explains a lot about the current mess, with non-ROI calculating people not only hurting themselves, but others, as their loan-and-grant fueled demand pushed up prices beyond rational levels."

Thank you - I did something similar. It's comforting to know that there are other rational people out there, who believe in making important life decisions based on logic and probability of success rather than dreams and wishful thinking.

I'm having trouble sifting through the layers of sarcasm here.
posted by Ndwright at 8:54 AM on November 21, 2012 [12 favorites]

Serious question: how would you price it? What method would you use to assign a monetary value to the middle class that would give you a confidence interval smaller than, say, 50% of the value itself?

That's one of the tricky questions. How much value should I assign to your education. Which in the end is an argument that it's better for you to make that judgment for yourself. A system that has been largely true in the US. And a choice that some students (and their families) are not very good at making.
posted by 2N2222 at 8:55 AM on November 21, 2012 [2 favorites]

The cost/benefit idiocy is that we're expecting a bunch of broke ass 18 year olds to pay for having an educated and technologically adpet workforce, which is pretty much the only thing that makes our economy competitive with developing nations.

I agree, but changing student loans is not the correct answer - because that solution relies on lenders being willing to invest huge amounts of money on the slim chance that an idiotic 18-year old is going to be responsible enough to repay it later. A far more sensible solution would be raising taxes on the top 1% and using it to have an entirely subsidized education model, similar to Finland's.
posted by wolfdreams01 at 8:56 AM on November 21, 2012 [3 favorites]

This is not the way it used to work. But we somehow managed to enter an education death-spiral, where people get a targeted, money-driven education to get a job so they can pay for their kids to go to school to get a even more targeted, money-driven education etc etc.

As somebody in college, majoring in Creative Writing, which means very little in terms of employment opportunities, I can testify that at least 75% of the people I'm in class with (especially in the night classes) are just there to "get a good job." They want the degree. Most of them bitch about having to take gen eds because they're not relevant to whatever career they're hoping to end up with, as though general knowledge has no purpose or use.

It's pretty fucked up.
posted by epilnivek at 8:59 AM on November 21, 2012 [4 favorites]

Generally speaking, people who have the belief that "a situation that exists now is likely to exist indefinitely" are called idiots and should not be making investment decisions without skilled guidance, whether that investment is in stock or in their own education.

A few questions for you:

What sort of guidance do you think eighteen-year-olds get about whether or not they should go to college?

Why do you think it is necessary to stipulate that people who went to college in a time of relative economic stability were possessed of a belief that their situation would continue to exist indefinitely? What evidence do you have that this belief exists? Did you just want to make a straw man so that you could call your opponents idiots? Do you believe it is idiotic to believe that tomorrow will in many important respects resemble today? How about next month?

"At the end of the day, the skeptic leaves by the door and not the window." -- David Hume (paraphrased)
posted by gauche at 9:02 AM on November 21, 2012 [1 favorite]

> Most of them bitch about having to take gen eds because they're not relevant to whatever
> career they're hoping to end up with, as though general knowledge has no purpose or use.

But you certainly don't have to pay some college to give it to you. As you walk through the world you are surrounded by great piles, heaps, mountains of general knowledge. Reach out and pick it up by the double handful, free.
posted by jfuller at 9:05 AM on November 21, 2012 [3 favorites]

This is not the way it used to work.

How far back are you going? Seems to me that for at least the last century, higher education has had many lofty pretensions, with a bottom line of better job prospects that makes the charade actually work. Hell, it's only fairly recently that the value of college for women has grown beyond the ability to get a highly esteemed and secure Mrs. degree.
posted by 2N2222 at 9:06 AM on November 21, 2012

I think colleges should be required to secure student loans. Maybe not up to 100%, but enough so that they maybe think twice about burdening that eager humanities major with 40,000 in debt that they know full well they can't repay.
posted by empath at 9:08 AM on November 21, 2012 [4 favorites]

But you certainly don't have to pay some college to give it to you. As you walk through the world you are surrounded by great piles, heaps, mountains of general knowledge. Reach out and pick it up by the double handful, free.

I understand what you're saying, but what people who complain about the gen ed requirements miss is that taking classes in government and logic and science and English composition makes them more well-rounded and ultimately ends up making them better at whatever job they're doing because they know more. Not everybody is an autodidact.
posted by epilnivek at 9:11 AM on November 21, 2012 [2 favorites]

What's the ROI for the top 1% on the "entirely subsidized" education model?

This is such a ridiculous line of argument. On one hand we hear talk about how education is just a rational decision that comes down to dollars and cents. So if that's the case then why don't we pass the risk on to professional lenders who are capable of making these calculations? Oh no, if the lenders had to face some risk then no one would lend, and that would be a great social tragedy! So the materialistic viewpoint suddenly goes out the window and we're back to some high-minded conception of education as a public and moral good, and incredibly it should be funded entirely by taxes on rich people, regardless of the specific benefits accrued by individuals.

I mean, you seem to think you're really smart, but this doesn't add up to a coherent viewpoint. Have you heard of the Dunning-Kruger Effect? It's this phenomenon where... oh.
posted by leopard at 9:12 AM on November 21, 2012 [2 favorites]

That's one of the tricky questions. How much value should I assign to your education. Which in the end is an argument that it's better for you to make that judgment for yourself. A system that has been largely true in the US. And a choice that some students (and their families) are not very good at making.

I contend two things: one, you are making this argument with the benefit of hindsight as to the job market and tuition costs over the past two decades. The conventional wisdom is still decidedly in favor of sending eighteen-year-olds to college, although it is less strong than it used to be.

Two, students and families are not sophisticated repeat participants in the higher education market; lenders on the other hand are. It's not at all clear to me that the risk of default should be shifted to those significantly less able to price the risk. Why should young families (i.e., graduates) be the sole bearers of that risk?

(N.b., for the thread: you cannot argue at the same time both that students stand to be the primary beneficiaries of their educations and that going to college is a terrible investment.)
posted by gauche at 9:13 AM on November 21, 2012 [1 favorite]

I feel we've reached an ironic/Godwin level with the Dunning-Kruger effect, such that the act of bringing it up as the explanation for something shows that one's own understanding of the thing is lacking, and the Dunning-Kruger thing is like a message from one's own subconscious mind, the thing kept right under one's nose, an over-reliance on the idea of mental ability acting as proof of mental inability, the blind chasing of one's own tail, the assumption of other suckers at the poker table when none can be seen.
posted by fleacircus at 9:14 AM on November 21, 2012 [13 favorites]

Is the author right about no prospects for reform?
I've heard various observers mutter than second term Obama might do something, or the new Jubilee project get traction over time, but I'm skeptical.
posted by doctornemo at 9:14 AM on November 21, 2012

The weak are meat, the strong do eat.

But in the universe where we don't have to arrange our societies based on what's easiest and laziest, it's clear that an educated populace is a public good, and it's also clear that anything that gets people out of the workforce is also a public good — we have too many workers for not enough jobs. Undergraduates shouldn't pay for their educations, they should receive a stipend from the state to help support themselves. Someone who is going to school is doing all of us a favor (two favors, really: educating themselves, and not looking for a job for a little while).
posted by You Can't Tip a Buick at 9:16 AM on November 21, 2012 [5 favorites]

Students graduated with much less debt when student loans were dischargeable in bankruptcy than they do now, because lenders would not lend them ridiculous amounts of money for school. This in turn kept downward pressure on tuition.

I totally agree with the first sentence. The second sentence, however, misses the dynamics of why tuition has been rising, especially at public institutions. It's because of massive cuts in state support; student debt has followed that, rather than been a driver. It's fun blame the baby boomers for the cuts, but really it's a lot broader than that, and support for the cuts in higher education have been quite broad.
posted by Forktine at 9:21 AM on November 21, 2012 [1 favorite]

Thank you - I did something similar. It's comforting to know that there are other rational people out there, who believe in making important life decisions based on logic and probability of success, rather than dreams and wishful thinking.

Right. Even if we did assume that your model for the reason for a higher education [mo' monaaayy!] was correct, we would still have to assume that all students with debt are in that situation because they obviously didn't chose the right career path, or they went to the wrong school, or they sucked at it, or didn't try hard enough, or suffer from the dreaded Dunning-Kruger affect in order for your "logic" to play out. Because no one ever succeeds in a moderately highly ranking school in a sound field and then has trouble finding a job. Oh, and fields that require copious amounts of schooling, but don't then offer high paying jobs, are stupid and pointless and have no real value (hello librarians!).
posted by FirstMateKate at 9:21 AM on November 21, 2012

empath: "burdening that eager humanities major with 40,000 in debt that they know full well they can't repay."

The ridiculous rise in cost for college must be addressed. I started college at 16, and my costs were $4.00 a credit hour. $16 an hour for graduate school. If my 10 year old wanted to go to the same top tier public university, the cost is between $330 and 686.00 per credit hour. Over $2,000 for a SINGLE class. A single 3 hour class.

(In my day...) I could work part time as a bartender, go to school full time, maintain a 4.0 (in philosophy and literature, no less...with the constant demand for 30 page papers), live in an apt with only one roommate, and still have plenty of time for an active social life, travels during the summer, and graduated with zero debt. That would be impossible now. Not hard, not unlikely...impossible.
posted by dejah420 at 9:24 AM on November 21, 2012 [8 favorites]

The ridiculous rise in cost for college must be addressed.

Well, ideally if the colleges were on the hook for paying back the loan, they'd perhaps think about lowering the cost for degrees that don't lead to higher paying jobs. Though I suspect that they'd just eliminate them instead.
posted by empath at 9:28 AM on November 21, 2012

dejah420: "The ridiculous rise in cost for college must be addressed. I started college at 16, and my costs were $4.00 a credit hour. $16 an hour for graduate school. "

Can I ask when and where?
posted by boo_radley at 9:29 AM on November 21, 2012

The second sentence, however, misses the dynamics of why tuition has been rising, especially at public institutions. It's because of massive cuts in state support; student debt has followed that, rather than been a driver. It's fun blame the baby boomers for the cuts, but really it's a lot broader than that, and support for the cuts in higher education have been quite broad.

Oh, absolutely. But the lie -- enabled in part by massive student loans -- has been that your kids could still go to college and we could take money out of education and put it elsewhere.
posted by gauche at 9:32 AM on November 21, 2012

I'm taking 6 hours this semester at the University of Memphis. A state school in an urban area with an incredibly high poverty rate. My tuition this semester was $2290. That's a lot of money.
posted by epilnivek at 9:33 AM on November 21, 2012 [1 favorite]

Well, ideally if the colleges were on the hook for paying back the loan, they'd perhaps think about lowering the cost for degrees that don't lead to higher paying jobs. Though I suspect that they'd just eliminate them instead.

Slashing public support for higher education was a brilliant move, because everyone just blames the universities for the tuition raises. Around here, twenty or so years ago the state provided about 80% and less than 20% came from tuition. Now, that's been reversed -- state support has been cut and cut and cut again, to the point that the state provides about 20%, leaving 80% to come from tuition.

That's a political program of the worst kind, totally regressive and short sighted. But hey, LOW TAXES!!! What's not to love?

Of course debt follows that, because there's no way that most families have the financial reserves to pay those kind of tuition bills out of pocket. The students get screwed big time, but there are big societal costs, too.
posted by Forktine at 9:42 AM on November 21, 2012 [4 favorites]

you cannot argue at the same time both that students stand to be the primary beneficiaries of their educations and that going to college is a terrible investment.

Sure you can. Just not for the same people.

I'm not getting the gist of where you're going. I think it's pretty clear that college is beneficial for most who go, even if you're, well, gauche enough to measure the benefit in purely monetary terms. Nor do I think students should necessarily be the sole bearers of the risk in the investment.

However, if find it completely unrealistic to think that return on investment should be forbidden topic when it comes to lending practices for students. It absolutely is part of the math, as it should be. Divorcing ROI from the equation would likely be a driving factor in the rising costs of college. Probably already is.

On the one hand, there seems to be a group who think that college is for allowing the best and brightest to better ponder the nature of the universe. Yet, without recognizing that professional pondering the nature of the universe is a high skill activity that creates value.
posted by 2N2222 at 9:45 AM on November 21, 2012

Boo, Texas in the early 80's. At the time, I think all Texas universities had the same price, subsequently they have been deregulated, and I think some schools are more expensive than others. My link was to the current published rates for U.T. Austin. But I recently considered taking some sculpture classes at the local junior college, and it still would have been over a thousand dollars for a couple of classes, putting it out of my reach for a "just cause I wanna take a class" experience.
posted by dejah420 at 9:45 AM on November 21, 2012 [2 favorites]

Hell, it's only fairly recently that the value of college for women has grown beyond the ability to get a highly esteemed and secure Mrs. degree.

You know, I used to wonder what an MRS degree was - Masters of Research Science? And why only for women?

yeah, I'm not too swift.
posted by jb at 9:58 AM on November 21, 2012

I think what will end up happening is more and more people will start taking those free college courses online and more and more employers will start accepting them. Universities are an incredibly labor-inefficient way to transmit information, after all.

Except that the online courses would presumably need some form of assessment for that to work and, for the most part, that requires labor. Sure, it saves someone having to turn up to give the lecture, but I think there's a fairly narrow range of subjects where automated assessment is feasible. I mean, I'm officially paid for twenty hours a week. Approximately four are teaching, another four are office hours, which leaves 12 hours of keeping the course going.
posted by hoyland at 9:58 AM on November 21, 2012

I made all my higher education decisions with an ROI-estimating Excel spreadsheet in front of me

Better a spreadsheet in front of me than a frontsheet spread... into me? Let me work on that.
posted by schoolgirl report at 10:00 AM on November 21, 2012

If student loans were fully dischargeable, students would apply for loans competitively the way they apply for college admissions -- lenders would pick and choose based upon personal attributes and career prospects -- and those who were selected as eligible borrowers would still pay credit card-like rates and face credit card-like borrowing limits. Tuitions would be forced down, but enrollments would still plummet, and the social sciences and liberal arts would be disappear outside of the most elite colleges.

There might be a better solution where the government guarantee went away and loans were non-dischargeable but subject to income-based-repayment regimes which imposed a material amount of risk assumption upon the lender (and likely the school, which lenders would require to co-venture with them). You'd still have a dramatic dislocation as more marginal students lost access and liberal arts and social sciences would go away in most places, but the rest of the students would have better borrowing capacity and more lenient terms.
posted by MattD at 10:04 AM on November 21, 2012 [1 favorite]

By the way, the spreadsheet was a real thing. Excel before graduate school, but for undergrad (which preceded Excel) it was more a pen-and-paper thing. A 17-year-old who can't figure out that he needs to do just that is a 17-year-old not ready for college.
posted by MattD at 10:06 AM on November 21, 2012

schoolgirl report: "Better a spreadsheet in front of me than a frontsheet spread... into me? Let me work on that."

If only you had taken a creative writing course!
posted by boo_radley at 10:06 AM on November 21, 2012 [2 favorites]

^Better a spreadsheet in front of me than to spread shit behind me?

I think a lot of people severely overestimate the knowledge, ability, and access to resources the given person has before being pressured to make a decision about higher education and the promise of a secure future. Basically what gauche said about putting all the risk on the inexperienced/incapable part of the equation. For the students, it's a case-by-case scenario that typically involves a high personal risk, but the lenders have an unbelievably more advantageous perspective and only face risk at an aggregated level.

I don't know how to accurately convey the rock and the hard place between a guaranteed jobless present and unknowingly amassing debt for the promise of a job in the future, but if taking advantage of this situation doesn't sound like exploitation to you... I guess all I can say is there really is no guaranteed "return on investment" as much as there is false advertising.

The real question seems to be: who should pay for America's higher education and how much? Like epilnivek said, $2300 per semester is a lot of money for some people. Whether that's a well-designed price tag or the unintended result of capitalism run amok, the individual decision to overcome that hurdle is the real value placed on higher education. It can be paid for by the 1%, or state taxes, or the kindness of strangers, but we're still trying to buy and sell something, and I agree it's a transaction that should be considered more thoroughly by the parties involved.
posted by Johann Georg Faust at 10:10 AM on November 21, 2012

Except that the online courses would presumably need some form of assessment for that to work and, for the most part, that requires labor. Sure, it saves someone having to turn up to give the lecture, but I think there's a fairly narrow range of subjects where automated assessment is feasible.

So then charge people to get assessed. I'm sure it doesn't cost $4,000 per class to pay someone to figure out what you know.
posted by empath at 10:16 AM on November 21, 2012 [2 favorites]

Obviously, it's not optimal to expect young people to be reasonable enough to be able to make responsible cost-benefit decisions about their future. Then again, we expect them to be responsible enough to be law-abiding citizens and not kill anybody, so expecting them to be financially responsible isn't such a huge stretch. This is what parents are for - to give their kids wisdom in situations where they are lacking it.

It's mind-boggling that you put forth this involved argument about the source of the student loan "problem" (which, you assert, is not a "problem" at all, really) without having evidently RTFA (or cared about its substance). The piece goes into heavy detail about the systemic and political decisions (and, more to the point, non-decisions) that have led to the problem. Yet all you seem to want to blame is the students themselves, for playing the game as they were told/inculcated from the beginning of their ability to form consciousness about such things, for being dupes/idiots/stooges enough to fall for the con job.

And what "wisdom" do you propose that parents, many of whom who are now pushing their kids two steps out of the crib to gear up to go to college because it's the only thing they can possibly do to have a chance at a decent adulthood, give their kids? The hope that someday we'll have a fully subsidized education system like Finland's? What fantasy world is that premise operating from?
posted by blucevalo at 10:17 AM on November 21, 2012 [6 favorites]

Most of them bitch about having to take gen eds because they're not relevant to whatever career they're hoping to end up with, as though general knowledge has no purpose or use.

To be fair, when I was in college, lo these many years ago, the "core requirement" classes were essentially the same classes I had taken in high school, only now I got to pay for the privilege.

When you're stuck in a lecture hall with 300 other kids taking a warmed over version of social studies, it's hard not to be irritated at the waste of your time and money.
posted by madajb at 10:45 AM on November 21, 2012 [1 favorite]

Even with the greatest spreadsheet in the world, you can't predict what the labor market is going to be in four or five years.

What if people limited themselves to the majors that look best on their spreadsheet? Then you have a glut of graduates in those career fields. The four year old spreadsheets are not going to be right. If they hadn't followed their spreadsheet, they would be in a better position.

If the job market matched the predictions you made four years previously, you were lucky. The oil industry looks great right now. How many times has it busted? If it busts again in four years, is that the fault of the person who chose a petroleum geology degree?
posted by Quonab at 10:48 AM on November 21, 2012 [1 favorite]

I'm not getting the gist of where you're going...

To be perfectly candid, it's possible I don't know where I'm going, either. I'm kind of just conversatin', here. I wasn't trying to pick on you in particular, 2N2222, but just to get at the idea -- and here I'm kind of tracing the thread back a bit -- that significant-but-probably-unmeasurable value accrues to the whole economy when there is widespread education and when the costs of that education do not fall disproportionately upon the young families which once were students making educational decisions.

And I get a bit het up when people go on about about how these kids should have known better, had no business going to college anyway, who do they think they are, expecting a job at the other side. I think that is the benefit of hindsight with a big side of victim blaming, and more to the point, I think it is damaging to the ongoing fitness of the American workforce. I don't say you were doing that, but a lot of folks were and I freely admit that I'm a bit quick to argue when I hear that.

Ultimately I think the student loan situation that exists now is a serious threat to upward mobility in America. I know that non-dischargeability in student loans is only one part of a multi-dimensional issue and is not a complete solution. But something's got to give on the debtor side.
posted by gauche at 10:51 AM on November 21, 2012 [3 favorites]

I'm not necessarily expecting an answer here, but Christ, when/how is this going to end? If people can't afford an education, then they can't get the skills to advance themselves professionally, and the nation has to import skilled workers to fill professional ranks in necessary and/or growing industries. Likewise, if advanced education is only available via loans, then mid-career changes are risky and costly which will inhibit professional development and likewise keep the U.S. lagging in skills. Taking this pattern over a few dozen years, am I correct in assuming that Americans will just stop going to college at some point? That the graduation rate will drop off to pre-1940s era levels, there will be a massive labor shortage in many professions, and the U.S. will have to start offering huge incentives for qualified foreigners to live and work here, just to keep the economy moving?
posted by deathpanels at 10:58 AM on November 21, 2012 [5 favorites]

That the graduation rate will drop off to pre-1940s era levels, there will be a massive labor shortage in many professions, and the U.S. will have to start offering huge incentives for qualified foreigners to live and work here, just to keep the economy moving?

I don't think that a drop in graduation rates would lead to a massive labor shortage because, let's be honest, most of the jobs performed by Americans today don't require any sort of college education. At most, a year or so of trade school.
HR departments would just adjust their education requirements downward, just as in the age of education inflation, they've adjusted them upwards.

There have already been calls for an increase in the allowable number of foreign (read cheaper) workers but I think that's a different (but not unrelated) issue.
posted by madajb at 11:07 AM on November 21, 2012 [1 favorite]

People with bachelor degrees still earn more on average than people with only some or no college.
posted by jb

The problem with this is that you aren't really comparing like with like, if you compare the earnings of BAs with those of the (small minority of) School leavers that have good grades but who *choose* not to go to College, rather than those who didn't have any choice, then you will get a very different result.

How expensive does an education have to be before its not worthwhile 100K?, 300K?, 10 Million? - there has to some point at which people will say no and choose a different path.
posted by Lanark at 11:10 AM on November 21, 2012

Lanark: that's a good point. But I don't know anyone who has that data.

Also, this is assuming that school leavers could get good jobs without a degree. I'm only one person, of course, but the jobs I could get out of my high school diploma paid minimum wage, while with my degree I can make twice that. Still not enough to rent a two-bedroom within easy commute of my work, of course.

For women especially, the employment options without a degree are pretty dire, no matter how good your secondary school grades were. Maybe we should be putting our energy into making those options - largely in the underpaid service sector - less dire, but in the meantime going on to tertiary education is, for most people, the best possible option they can see. Climbing a shaky ladder out of hole is better than climbing no ladder at all.
posted by jb at 11:17 AM on November 21, 2012 [2 favorites]

Just to add: I did work two years between full-time secondary and university -- and I went to university partly due to the job market (or lack thereof) for people without a degree.
posted by jb at 11:17 AM on November 21, 2012

Tuitions would be forced down, but enrollments would still plummet, and the social sciences and liberal arts would be disappear outside of the most elite colleges.

I don't know about social sciences, but it's my understanding that the variable cost of providing a liberal arts education is pretty low relative to, e.g., the science degrees. You can teach somebody Latin or Philosophy or English or Mathematics or History with a well-stocked library, a classroom, and some chalk. It's not my impression at all that the liberal arts would suffer. Music, Theatre, and Fine Art do, I suspect, have some higher costs-per-student but at least at my school, my recollection was that there was a departmental fee associated with those classes. As well, those students were under even less impression than the rest of us that they were likely to get rich.
posted by gauche at 11:20 AM on November 21, 2012

To be fair, when I was in college, lo these many years ago, the "core requirement" classes were essentially the same classes I had taken in high school, only now I got to pay for the privilege.

You may have acquired the knowledge in high school, but a lot of your peers most certainly did not. That hasn't changed since you were in college.
posted by one more dead town's last parade at 11:23 AM on November 21, 2012 [1 favorite]

I don't know about social sciences, but it's my understanding that the variable cost of providing a liberal arts education is pretty low relative to, e.g., the science degrees. You can teach somebody Latin or Philosophy or English or Mathematics or History with a well-stocked library, a classroom, and some chalk. It's not my impression at all that the liberal arts would suffer.

Schools are already grossly underpaying liberal arts faculty. I know associate professors who make $20k/yr teaching a full courseload of English classes, and who can't get tenure-track positions because there aren't any more of them. That causes liberal arts to suffer: when you don't pay enough to get qualified people to teach them.

Then you end up with crappy teachers, who just shovel people through the class without learning anything. Then you end up with no one actually learning anything from those liberal arts classes. The cost of classrooms and teaching materials isn't the issue.
posted by epilnivek at 11:23 AM on November 21, 2012 [4 favorites]

You can teach somebody Latin or Philosophy or English or Mathematics or History with a well-stocked library, a classroom, and some chalk.

the chalk is often unnecessary.
posted by jb at 11:36 AM on November 21, 2012 [1 favorite]

I think in order to examine what's wrong with America's educational system, we need to examine a system that works, and then see exactly where America deviates from it. Let's establish two fundamental premises to build off of.

1) As the "model system", let's use Finland as our baseline, since their educational system is widely acclaimed to be one of the best in the world.

2) Let us also acknowledge that no amount of tax increase can allow everybody to get a college education.

Are we all on board with those two ideas? If not, then please feel free to stop reading and start composing your angry response now, since the rest of this comment won't make much sense to you.

As a more socialist government, Finland believes that education should be free, and consequently absorbs all the education costs for its citizens. Considering that we all accepted premise 2, this begs the question, how do they pay for it all? The answer is quite simple: not every citizen gets a higher education. Acceptance is based upon G.P.A. as well as the Finnish Matriculation Exam. And since Finnish schools are subsidized by the government (meaning that there is a limited supply of spots available) that means that if your G.P.A. and scholastic achievements are unsatisfactory, you simply do not get a higher education.

One advantage of this plan is that Finnish students tend to be highly motivated. If you meet a Finnish student getting a PhD in Contemporary American Literature, you can be assured that he's not just some pompous twit who simply regurgitates lofty concepts - he legitimately worked hard to be accepted into a small but competitive program. Similarly, in Finland, you won't find many "art" majors who think that they're creative geniuses for splashing a canvas with bodily fluids and giving it a subversive name. The burnouts and slackers we have in American colleges simply don't qualify for an advanced degree under the Finnish education system. Essentially, the government decides (indirectly, through test scores and other qualifying criteria) who deserves to get an advanced degree. In exchange for having that decision-making power, the gov't also assumes all the financial risk by subsidizing that program.

The U.S. system deviates from Finland's in many significant ways, but perhaps the most fundamental is that they take the decision-making out of the government's hands. One pivotal (and in my opinion, flawed) assumption about the U.S. educational system is that everybody is entitled to a degree. If your grades aren't high enough to get into one school, who cares? There's always another school that will accept you! This fundamentally American concept, with its emphasis on individual choice, takes the decision-making power away from the government and puts it entirely into the student's hands. Nobody can tell them whether they can or can't go to college - it's entirely their decision. However, because of premise 2, such a system also places all the risk on their shoulders as well. And really that's the only way such a system will work - because we can't afford for everyone to get a higher education, we need some punishment inherently built into the system for students whose ambition exceeds their talent. They made a bad choice all on their own, and now they have to pay for it. Over the long run, this helps to balance supply and demand. The shattered lives of people who made the choice to go to school for degrees that do not compensate them enough will serve as an incentive to future generations to consider their college decisions really fucking carefully.

Personally, I think this is a horrible system because it expects 18 year olds to have realistic expectations and be able to perform a cost benefit evaluation of the next four years of their life. (And while I did that, I freely admit that people as calculating as me are rare.) I think a much better choice would be to adopt the Finnish system in it's entirety, and have all schools be run by the state - and subsidized by it as well. However, we need to be pragmatists and accept the economic truth - that the financial responsibility of getting that degree needs to lie with the person who has the authority to decide on whether they will go to college. That's the only way education will be economically sustainable. If the students want to be able to make the decision of whether or not to attend college entirely on their own (as opposed to having the academic/government partnership make that choice based on their academic credentials) then they also need to accept the financial risks in their entirety as well. And if they want a subsidized education system, then they need to accept that the government will impose high cutoff requirements for fluff degrees like Advanced Jazz Studies.
posted by wolfdreams01 at 11:39 AM on November 21, 2012 [4 favorites]

Happy Dave: You know, if lazy HR people hadn't been using 'has a degree' as a filter for even basic roles for a couple of decades now, fewer young people would feel getting one was necessary and there wouldn't be a glut of young people with unpayable debt.

Agreed. Paying tens of thousands of dollars just to be considered for a job pushing paper and making phone calls is madness.
posted by dr_dank at 11:41 AM on November 21, 2012

Madajb -- that's exactly right. Society is definitely enriched when everyone who is capable of, and desires, a real college education can be offered one at a reasonable price.

However, credential inflation epitomized by "any BA will do" requirements is highly destructive, and college costs which are incurred through the coercion of credential inflation -- forcing people to enroll who lack the interest or capability needed to benefit from college work -- are deadweight losses regardless of who bears them.

Everything a generic college degree (supposedly) tells you about someone's intelligence, organization, planning or rule-following ability can be better assessed in a standardized test, battery of interviews, and a three-month probationary period.
posted by MattD at 11:42 AM on November 21, 2012 [1 favorite]

...the variable cost of providing a liberal arts education is pretty low relative to, e.g., the science degrees. You can teach somebody Latin or Philosophy or English or Mathematics or History with a well-stocked library, a classroom, and some chalk.

This is true. The humanities, in fact, subsidize the sciences, bringing in more money via tuition than they spend in salary and physical plant. The campaign against the humanities is ideological, not economic or pragmatic.
posted by gerryblog at 11:49 AM on November 21, 2012 [10 favorites]

Finland believes that education should be free, and consequently absorbs all the education costs for its citizens. Considering that we all accepted premise 2, this begs the question, how do they pay for it all? The answer is quite simple: not every citizen gets a higher education.

One pivotal (and in my opinion, mistaken) assumption about the U.S. educational system is that everybody is entitled to a degree.

If you look at the data here, you can see that 37 percent of Americans are educated until the "tertiary" level... compared to 32 percent of Finns. Have you really identified the critical difference between the two countries?
posted by leopard at 11:49 AM on November 21, 2012 [3 favorites]

He asked, leadingly.
posted by boo_radley at 12:01 PM on November 21, 2012 [2 favorites]

wolfdreams01:
You make some very cogent points, however they lead you to some very different conclusions that I think are neglectings some key points about sociology and American society in general.

The "deterrent" you describe ("shattered lives of people who made the choice to go to school for degrees that do not compensate them enough will serve as an incentive to future generations") is a horrible way to teach anything, and over all just makes the world a shittier place than it already is without our mucking about. This would be described by most people as "a bad thing" and we should take steps to avoid it. I do think it is strange that you both appeal to authority (the state should decide who can and can't go to college) and at the same time think that the individual should be responsible for whether or not they go to college, and should base that decision upon the world view that you hold through careful study and experience, which I can pretty much guarantee that no one else holds, since no one else is you, and you appear to be suffering under the delusion of asymmetrical insight (another fun human psychological phenomena similar to the Dunning-Kruger Effect). Your evaluations and calculations are based upon information that you have or had available to you. Not everyone has the same information. Sure, you say, "but it's available at the public library or it's all available online, you just have to look for it", but; what if your library is only open 3 days a week and closes at 3PM. Which is before you can get there after school because you don't have a car and have to rely on shitty city busses that are overcrowded and always late. And you don't have a computer at home because, well, mom's already working 3 part-time jobs. And that pays the rent and keeps the lights on, and keeps you sort of fed on processed food. Because no one will hire her full time because they don't want to have to give her a raise or include her in any benefits because, well, their cost/benefit sheet told them that it's cheaper to hire 20 part-time workers than have 10 full-time workers. You have been told all your life that going to college is going to make it so someone will want to hire you full time. That's all your teachers talk about. That is all your guidance counselor told you the one time you got to meet with him, because he has to counsel 1500+ students in your graduating class, and well, you already get good grades, so you don't need any guidance, so just pick and school and apply and don't forget to fill out the student loan forms and get you mom to sign them and provide the paperwork showing how much money she doesn't make so you will qualify.

By the way, this is fiction. I just made all of that up. But how many people reading that can see that story around them, or have lived it?

The world is a horrible place. And we're making it worse by perpetuating crap ideas like "every man for himself" and "sucks to be you". Let's make it better. Not shittier.
posted by daq at 12:02 PM on November 21, 2012 [12 favorites]

Another reference (pdf) states that:

15.4% of Finland’s population aged 25-64 has a college degree, and 9.4% of the U.S. population aged 25-64 has a college degree.

9.4% -- is that like almost everyone?
posted by leopard at 12:02 PM on November 21, 2012 [1 favorite]

leopard; wait what?
seriously? 9.4% of the population has a college degree?

Um. That does not compute.
posted by daq at 12:06 PM on November 21, 2012

I think community colleges (two year programs) ought to be a big part of the solution. A lot of the less academically inclined kids who feel pressured to attend a four year institution would probably get very close to the same level of education from a community college at a fraction of the cost. A two year program doesn't look as good on the resume, of course, but the value of four year degrees (except from the top programs at the top schools) has gotten so diluted that I don't know that it makes a difference (and, certainly, it does not make up for the enormous difference in cost.)

Just spitballing here, but I can imagine a system that starts out with a federal guarantee of the applicant's choice of (a) two fully dischargeable years at a community college or (b) four partially dischargeable years in a bachelors program. Those who choose (a) and are able to complete the two year program should be able to transfer to a four year program, with the final two years of tuition having limited dischargeability. This would more closely align the interests of the state (ensuring a post-secondary education without breaking the bank to do so) and the borrowers, who want an education, but not a worthless one. Four year institutions would suddenly have to explain to applicants why they should take the extra risk to attend their school, and this should in theory put downward pressure on the cost of the four year programs.

I am sure there are serious problems with my idea that I've failed to consider, but I do think the general idea of a more prominent role for community colleges putting pressure on four year institutions has merit.
posted by tonycpsu at 12:09 PM on November 21, 2012 [1 favorite]

Part of the reason that higher education is required by many employers is that secondary education in the US is spotty and uneven. Having a degree from an accredited college ensures some minimum ability to write and communicate, and probably do basic math and have at least a brush with science.

Merely graduating with a high school degree in the US ensures none of these things. A pathetically low number of high school seniors can pass basic reading and math skills tests.[1] I recall a seemingly large cohort (>10%?) of my freshman class at a top-tier public university in the mid-'90s requiring remedial classes before commencing with general and degree requirements.

These are basic, essential skills -- not only for the job market but also for navigating life as a citizen and taxpayer in a modern state -- and the US public educational system is horrible at providing them. It works against us in a number of ways. Among them are the financial pitfalls the OP link is talking about. Another is that there are some people who do graduate from high school and are self-taught learners, but have incredible difficulty getting past HR recruiters because they don't have a degree. (Anecdotally, I have one such friend who had a very successful career for many years as an advertising exec for a large metro newspaper, took a couple of years off to train horses, and now can't get an interview to save her life).

If our free public education was better, there would be less pressure for people to go to university just to get a job. As MattD says, "Society is definitely enriched when everyone who is capable of, and desires, a real college education can be offered one at a reasonable price," but I submit that a good deal of what most people get out of a BA these days can and should be part of the high school curriculum.

[1] http://www.betterhighschools.org/docs/nhsc_highschoolliteracy.pdf
posted by scelerat at 12:17 PM on November 21, 2012 [2 favorites]

Yeah that 9.4 percent doesn't make sense sorry
The right number is probably more like 30.
posted by leopard at 12:36 PM on November 21, 2012

wolfdreams01, so what you're saying is the state should be responsible for doling out higher education to the most worthy students, but until this socialist paradise has been established, a person who has acquired student debt is entirely responsible for their own dilemma and deserves no help in getting out of it. I don't think that throwing a large segment of the population under the bus is going to help the situation.

I'm not too familiar with the system in Finland, but it sounds similar to the German system. Nearly all colleges in Germany (except a very, very small minority) are run by the state, a maximum tuition is established by the state, and students are "tracked" much earlier in the process, so that a student who shows no aptitude for academics at age twelve is unlikely to be on the university track at age nineteen.

Germany also, importantly, values trade schools and provides better career placement for people who are not attending universities. Which we don't do in the U.S. I know plenty of people who would have much rather have spent two years training for a technical field than four years studying a topic they were not really interested in, only to emerge afterward with no job prospects in the field anyway – but they didn't realize it was an option, or they were told through the culture that being a mechanic was a lousy thing to do with one's life.

It's not hard to see why the German system would not be popular in the U.S. For one thing, it establishes, or at least acknowledges the existence of, socioeconomic class. Americans are ridiculously class-blind. We want to believe that a brilliant genius who has a bad time of it in high school can turn things around and end up a well-respected professor by age 40. The German system would be politically unviable in the U.S. because access to education is tied up in so much of the post-war national character (of which we are inheritors) and various cultural pressures between different groups (determining access to higher education according to early academic performance will probably, for instance, have the effect of diminishing minority representation in higher ed, reflecting disproportionate access to quality primary schools).

But there is a cost to maintaining this system, a cost primarily shouldered by students at this point (soon to be the tax payer), and the only way of bringing down costs per student may be to get the state involved. For one thing, we should certainly be subsidizing the hell out of education in fields in which the country has a labor shortage. If the BLS says nurses will be in high demand in 10 years, we should be paying people to major in nursing in proportion to the projected demand. Something like the WPA may be necessary as well to put to work the throngs of underemployed B.A.s to the task of, say, raising the quality of primary education for the lowest income earners. I wish we would start thinking of this through the lens of labor economics instead of throwing around bullshit accusations of "entitlement" and ridiculous non-solutions to "punish" people for choosing undesirable majors. Americans are going to have to start caring about labor politics to get out of this, but note the total absence of this sort of language on the U.S. political landscape today. Our problem is simply one of labor surplus. We have too many psychologists and not enough welders.
posted by deathpanels at 12:45 PM on November 21, 2012 [3 favorites]

You may have acquired the knowledge in high school, but a lot of your peers most certainly did not. That hasn't changed since you were in college.

Which is an argument for reducing the availability of college, not increasing it.
posted by madajb at 12:48 PM on November 21, 2012

However, in my opinion, the decision-making power and responsibility have to go hand-in-hand - that's the primary goal and the only way to ensure fairness (as well as a stable economy).

Why the decision to borrow rather than the decision to lend? You offer no reason to visit this responsibility on students rather than lenders, or to mix the responsibility in some fashion as we do with other forms of debt. What is your reasoning for this?
posted by gauche at 1:09 PM on November 21, 2012

Why the decision to borrow rather than the decision to lend? You offer no reason to visit this responsibility on students rather than lenders, or to mix the responsibility in some fashion as we do with other forms of debt. What is your reasoning for this?

Obviously because if you made lenders shoulder the responsibility, nobody would ever want to loan money to students.

Try to see this from the financial perspective. Imagine you're a lender. Would you want to invest hundreds of thousands of dollars into some random 18 year-old college student's education, with absolutely zero collateral? Relying only on his responsibility and sense of moral decency to prevent him declaring bankruptcy and skipping away with a shiny new degree in his hand, leaving you footing the bill? Hell no - it would be insane. Any rational person in that situation would simply reject every college loan application to cross their desk. In order to make lending a profitable proposition, the lender needs some way to inflict substantial pain on the borrower's life if they try to run out on the debt, whether that's loss of collateral (as in the case of a mortgage) or crushing debt which will follow them around for the rest of their lives (in the case of student loans). No potential for pain = no repayment. It's a sad but truthful commentary on human nature.
posted by wolfdreams01 at 1:44 PM on November 21, 2012 [1 favorite]

Try to see this from the financial perspective. Imagine you're a lender. Would you want to invest hundreds of thousands of dollars into some random 18 year-old college student's education, with absolutely zero collateral? Relying only on his responsibility and sense of moral decency to prevent him declaring bankruptcy and skipping away with a shiny new degree in his hand, leaving you footing the bill? Hell no - it would be insane.

Hahaha. I think the credit card companies that let me run up thousands of dollars in debt from the age of 18 would probably have to disagree.
posted by empath at 1:51 PM on November 21, 2012 [2 favorites]

And a further thought on that -- if they stop issuing student loans, then either colleges will have to lower tuition or they will have to shut down. Supply and demand. Right now tuition is artificially increased by an unsustainable credit bubble.
posted by empath at 1:53 PM on November 21, 2012 [3 favorites]

Obviously because if you made lenders shoulder the responsibility, nobody would ever want to loan money to students.

The data don't support this. Plenty of people lend money to students. Credit card companies, for instance. There were indeed student loans prior to 1976, when Congress first restricted the dischargeability of student loans in bankruptcy.

It seriously seems like you are writing from an alternate universe in which there is no unsecured personal debt.
posted by gauche at 1:53 PM on November 21, 2012 [4 favorites]

Hahaha. I think the credit card companies that let me run up thousands of dollars in debt from the age of 18 would probably have to disagree.

Look, you're making a total false equivalency here. "Thousands of dollars" are one level of risk. "College education bill" is another level of risk entirely, and different safeguards and restrictions will apply. If you don't believe me, why don't you try running up 100k (the approximate level of a college education) on your credit card and see if your analogy still holds true? (It won't.)
posted by wolfdreams01 at 2:02 PM on November 21, 2012

Isn't the typical credit card limit much much lower than the typical student loan? Like, a student with a $75,000 student loan might get approved for a $2,500 card.

I have no idea if those are realistic numbers. I got a credit card with a $500 limit as a student in the 90s in Canada. Tuition was $3,000/year and I was fortunate enough to live with my parents, take transit to school and pay off tuition & books with a summer job.
posted by Pruitt-Igoe at 2:03 PM on November 21, 2012 [1 favorite]

You made the claim that lenders have no leverage against student borrowers if those borrowers could discharge their loans in bankruptcy. We are pointing out that this is in fact a solved problem. Please look at the rates of student loan bankruptcy discharge prior to 1976 before you continue with this line of argument.
posted by gauche at 2:05 PM on November 21, 2012 [1 favorite]

It's not going to take a few shattered lives to purge the system (a disgusting notion in itself), it is going to take many hundreds of thousands of shattered lives, possibly millions, all of whom will be young and angry and not at all happy to martyr themselves.
posted by deathpanels at 2:08 PM on November 21, 2012 [5 favorites]

"Rate of return" has nothing to do with "leverage" or "surity," so 1976 is an irrelevant derail. If you're a lender and a student skips out on a 100k loan that you have absolutely no collateral for, what do you tell your angry bank manager? "Sorry man, it really seemed like a good investment, based on what I know of student loan bankruptcy discharge prior to 1976"...?
posted by wolfdreams01 at 2:12 PM on November 21, 2012

If it's a bad investment, it's a bad investment whether the student can default on it or not. All you've done is push the unacceptable risk from the bank to the student.
posted by empath at 2:15 PM on November 21, 2012

What I'm saying is that student debtors prior to 1976 -- which is when they still could get rid of their loans via bankruptcy -- did not do so in any kind of widespread numbers. Thus, your fear that without some kind of absolute leverage, lenders will get totally hosed is unfounded.

Do you understand this? It really is starting to feel as though you are not arguing in good faith here.
posted by gauche at 2:17 PM on November 21, 2012 [2 favorites]

"College education bill" is another level of risk entirely, and different safeguards and restrictions will apply. If you don't believe me, why don't you try running up 100k (the approximate level of a college education)

I think what we are all agreeing on is that 100,000 is a ridiculously inflated price for a college degree.
posted by empath at 2:17 PM on November 21, 2012 [1 favorite]

You made the claim that lenders have no leverage against student borrowers if those borrowers could discharge their loans in bankruptcy. We are pointing out that this is in fact a solved problem. Please look at the rates of student loan bankruptcy discharge prior to 1976 before you continue with this line of argument.

Surely this is not a real argument. There have been substantial demographic shifts in terms of who goes to college since that time in addition to changes in fields of study and the loan-to-expected-income and loan-to-part-time-while-studying ratios.

By all means, let's push the responsibility (and thus the decisionmaking) to the lenders. There will never be another humanities PhD or MA (and probably no more pharma-related *Sc, either).

It seems like the people complaining about the loans situation want it both ways -- they want people to have the freedom to study whatever non-career-related subject they want, like some completely irrelevant past that they picture as the good old days (a very small part of the overall population composed almost entirely of men and women from wealthy backgrounds and the occasional other, and even then the subjects were often directly relevant to careers, at least for men of the time) and at the same time don't want those people to pay for it. The bulk of the non-STEM subjects *must* be non-career-focused because the rate of matriculation vastly exceeds the rate of job creation and that is never going to change.

The only way that works is if the rest of us pay for it, and at that point, there are going to be very real restrictions needed on fields of study that will amount to the same thing + a pittance for the arts (in the same way that the NEA is a drop in the bucket next to the government sponsored science and technology research).
posted by rr at 2:17 PM on November 21, 2012 [1 favorite]

There is a difference between tertiary education (all post-secondary, including college diplomas) and a bachelor's degree. It may be that all tertiary is relevant in this discussion, but it's something to keep in mind when comparing numbers.
posted by jb at 2:40 PM on November 21, 2012

By all means, let's push the responsibility (and thus the decisionmaking) to the lenders. There will never be another humanities PhD or MA (and probably no more pharma-related *Sc, either).

What? Anyone who takes out debt to pursue a humanities PhD is a sucker. Successful humanities PhDs almost always secure funding for their studies.

And once again, we get the one-two punch of (1) how ridiculous it is to expect everyone to go to college! and (2) if lenders aren't guaranteed a profit, suddenly it will be hard to go to college and the world will end!

This whole "freedom to study whatever subject you want" thing is a red herring as well. One gets the impression that the poor job market for college grads since 2007 is a function of college majors. As if at the exact moment in time Lehman went bust and AIG needed a massive bailout, college students suddenly decided to all study queer basketweaving theory and were no longer employable. In reality, economics and business are overwhelmingly popular college majors. It's not even clear that the labor-market function of higher education is to educate people for the workplace (as opposed to providing a sorting mechanism that allows employers to figure out the ability level of their entry-level hires).

By the way, if we are concerned about collateral, one can imagine a system in which repayment on college loans is tied to post-education income in some way. It's ridiculous to think that the system can only work if the student assumes 100% of the risk.
posted by leopard at 2:54 PM on November 21, 2012 [11 favorites]

Some more stats I was able to look up.

29 percent of Finns age 25 to 34 have the equivalent of a bachelor's degree, compared with only 13 percent of those between the ages of 55 and 64.

The figures here indicate that 33 percent of Americans age 25 to 34 have a bachelor's degree or better, compared to 27 percent of those 55 or older.

Once again, the data does not indicate that the US has a considerably more "universal" higher education system than the Finns. And although I may be asking questions "leadingly" I'll note that I'm not really getting any answers.
posted by leopard at 3:10 PM on November 21, 2012 [1 favorite]

Leopard, I don't think he was making the point that US has considerably more universal higher education in absolute terms. He's talking about access, not outcomes. He's making the point that in the US, the access to higher education is more universal - ANYONE can access it, if they are willing to pay or borrow the money.

While in Finland, having money or borrowing it means nothing if you don't test high enough.

This doesn't make any statement about the number of people who actually do end up getting it. In fact, if Finland manages to provide even more citizens with higher education without crippling personal debt, isn't this a vindication of that system?
posted by xdvesper at 3:26 PM on November 21, 2012 [1 favorite]

In fact, if Finland manages to provide even more citizens with higher education without crippling personal debt, isn't this a vindication of that system?

Why do you think that *I* am the defender of the current American system. In this thread, there is someone arguing that we can't change the current student loan system without having devastating effects on higher education. That person isn't me!

wolfdreams01 started out positing a ROI view of higher education and blaming students for being unemployed -- because everyone knows that the unemployment rate is not at all affected by macroeconomic forces, and is purely a function of how many students study engineering instead of comparative literature in college. (In reality it appears that college majors are not important determinants of lifetime incomes. "Our results imply that given a student’s ability, achievement and effort, his or her earnings do not vary all that greatly with the choice of undergraduate major.") He then switched to a view of education as something that should be "free" for students, but only for deserving students who do well on tests.

The only consistency across these views is victim-blaming. Life is a morality play. Bad things happen to bad people for a reason -- first they unreasonably think they are entitled to a college education; second they take out unreasonable amounts of debt; third they study art; fourth they are unemployed and are unable to get out from under their debts. People either have to suck it up or renounce their freedom and embrace that they never should have gone to college in the first place. This viewpoint even blames the students for the fact that lenders have their loans guaranteed by the federal government; it has nothing to do with profitable lobbying, it's just a 100% natural consequence of unreasonable entitlement. Almost like a law of nature.

There are ways to restructure the lending market to spread risks to other parties other than students. This would indeed reduce the supply of loans, but everyone here seems to think of this as a good thing. The insistence that there is no possible way the supply would not shrink all the way to 0 is just lazy. For example, the federal government could only guarantee loans to students at schools that met certain requirements. According to wolfreams01's own logic, this would get rid of loans to students who don't deserve to go to college while preserving loans to students who do deserve to go to college (and who surely wouldn't do stupid things like study comparative literature, because they are not only serious students meeting high standards but also on the hook for their loans!) The only cost would be inflicted on this supposed American ideal that *everyone* should go to college. As 70% of Americans don't have a college degree and as college has become incredibly expensive in recent years (hence the crippling debt), is this really an ideal that we're living up to right now? Problem solved with almost no effort! (And we could surely do much more with a little bit more thought and effort.)
posted by leopard at 4:14 PM on November 21, 2012 [3 favorites]

Okay, so the omnipresent "college is where you go to get skills for work" idea indicates that people with money to hire employees prefer to outsource the cost of training, as much as possible, to universities. Since education, in this model, is a benefit that accrues to people with money to hire employees, we should fund education through taxing those people. What percentage of the population could we educate at no direct cost to the students by, say doubling the capital gains tax rate and shunting the proceeds into a program to pay tuition and board for undergraduates? How much can we lower unemployment by getting that percentage of the population out of the workforce for a few years? I'd love to find out...
posted by You Can't Tip a Buick at 4:20 PM on November 21, 2012 [4 favorites]

You Can't Tip a Buick, no one actually believes that college students develop real-life work skills; even kids from top universities are mostly useless entry-level hires whose main selling points are intelligence and diligence. When Goldman Sachs looks to hire kids out of college for oodles of money, they don't care about how much "practical" stuff like calculus (snort) or corporate finance they've studied, they care about smarts, diligence, and ambition (and they conveniently restrict their search to a handful of selective universities, including those not necessarily known for investing in undergraduate education). "College is where you go to get skills for work" is just an excuse to slag off on people who find comparative literature and art history worthy of study.
posted by leopard at 4:26 PM on November 21, 2012 [4 favorites]

Try to see this from the financial perspective. Imagine you're a lender. Would you want to invest hundreds of thousands of dollars into some random 18 year-old college student's education, with absolutely zero collateral?

I strongly disagree with the U.S. mindset which puts the decision-making power and responsibility in the hands of 18 year olds

I'm not sure why it is that you seem to think that the only people who take out student loans in the US are dewy-eyed, duped, unthinking 18-year-olds. That's a fascinating take on things, but it doesn't match up with reality. A great many people who are in hock to student loan debt (both undergraduate and graduate) are way past that age and were way past it when they signed on for the loans in the first place. Does that alter your decision-making calculus any at all, or are the past-18 crowd also a priori incapable of making adult decisions for themselves?
posted by blucevalo at 4:43 PM on November 21, 2012 [3 favorites]

This whole "freedom to study whatever subject you want" thing is a red herring as well. One gets the impression that the poor job market for college grads since 2007 is a function of college majors. As if at the exact moment in time Lehman went bust and AIG needed a massive bailout, college students suddenly decided to all study queer basketweaving theory and were no longer employable. In reality, economics and business are overwhelmingly popular college majors. It's not even clear that the labor-market function of higher education is to educate people for the workplace (as opposed to providing a sorting mechanism that allows employers to figure out the ability level of their entry-level hires).

The idea that an undergraduate program could possibly serve as training for any job at all is utterly baffling to me. Undergraduate degree programs serve the following social purposes: 1) to reinforce class divisions by putting a pay-wall between the average high school graduate and low-level white collar careers, and providing a simple labeling system to identify one's class in the absence of overt indicators (in the Victoria era, class was distinguished by dress; in modern America, it is distinguished by type of work, educational attainment, and, perhaps to a lesser extent, where one has earned one's degree), 2) to provide a foundation for graduate-level studies, 3) to support the university system itself through tuition. An undergrad degree might be "required" to "enter the middle class" but let's not pretend that this means job training. Parents don't send their eighteen year olds off to learn spreadsheet software and how to run sales meetings.
posted by deathpanels at 4:47 PM on November 21, 2012 [2 favorites]

The University of California used to get 70% of its funding from the state of California.

Now it's 18%.

Where'd all that money go?

Prisons.

What picked up the slack? Student loans.
posted by effugas at 4:52 PM on November 21, 2012 [9 favorites]

An undergrad degree might be "required" to "enter the middle class" but let's not pretend that this means job training. Parents don't send their eighteen year olds off to learn spreadsheet software and how to run sales meetings.

Yes, actually, they do. You can pretend otherwise, but your assertion is no more true than the idea that parents are sending their kids to universities to learn to write poetry.
posted by rr at 5:20 PM on November 21, 2012 [1 favorite]

wolfdreams01 said: Acceptance is based upon G.P.A. as well as the Finnish Matriculation Exam. And since Finnish schools are subsidized by the government (meaning that there is a limited supply of spots available) that means that if your G.P.A. and scholastic achievements are unsatisfactory, you simply do not get a higher education.

Several have already objected to your argument, I'm not going to rehash their points. In fact, I think, in principal, I agree with your objective, which is to make higher education free to those who deserve it.

The problem is, in America, you can't just start at higher education. Finland has a comparatively homogeneous society. I'm sure they have their cultural divisions (what, Lapps, Swedes, Russians? I'm totally guessing here), but that's nothing like America.

Here, we have layers upon layers of cultural and economic barriers limiting the development of some students and encouraging the development of others.

Until you can homogenize the educational process from birth through high-school, so that everyone taking that "Matriculation Exam" is on a somewhat equal footing, your proposal would only perpetuate the current hegemony.
posted by jasonstevanhill at 5:20 PM on November 21, 2012 [1 favorite]

The University of California used to get 70% of its funding from the state of California. Now it's 18%.

Do you have a link for that? http://www.universityofcalifornia.edu/news/budgetmyths.pdf would seem to disagree with this claim. You will also want, of course, to compare the number of students and, more importantly, programs between those two points in time.
posted by rr at 5:22 PM on November 21, 2012

Surely this is not a real argument. There have been substantial demographic shifts in terms of who goes to college since that time in addition to changes in fields of study and the loan-to-expected-income and loan-to-part-time-while-studying ratios.

It is indeed a real argument against wolfdreams01's apriorist position that absent absolute nondischargeability, people will have no incentive whatsoever to pay their student loans and indeed will default on them en masse, lenders will make literally no money in the student loan market, &c. &c. I pointed to a time in which the incentive which wolfdreams01 seems to think is the only reason graduates would pay back their loans was absent, and submit to the room that many, many more people did indeed pay their loans without that incentive than my interlocutor would have us believe.

Your point about changing demographics is interesting, and I should like to hear you flesh it out a bit more. What demographic shifts, in particular, do you feel make it more likely that a graduate of the class of 2013 will default on her loans than a graduate of the class of 1975?

It is further my understanding that the conventional wisdom vis a vis the demand for "STEM" majors is inaccurate. I am looking for the numbers on that but also expecting company. Happy Thanksgiving to all in case I don't make it back to the computer tonight.
posted by gauche at 5:25 PM on November 21, 2012

"Parents don't send their eighteen year olds off to learn spreadsheet software ..." Yes, actually, they do.

So which universities offer spreadsheet training classes? Do they attract a lot of students? Do they have a good record placing students at good jobs?
posted by leopard at 5:25 PM on November 21, 2012

Even within the science curriculum, though, a lot of coursework is about either being "well rounded" or showing that you can satisfy some arbitrary hurdles. Every doctor out there has taken organic chemistry, probably at least two semesters. Why? Are they going to go into the back and whip up a total synthesis of Cipro when treating someone with an infection?

Further, the route to becoming a doctor in the USA involves no actual medicine at the undergraduate level. You have to take some biology, but lord knows a B.A. in biology translates into precisely zero actual medical skills.
posted by en forme de poire at 5:37 PM on November 21, 2012

Ok I'll actually engage in the main argument going on here - student debt exploitation. If there's a perceived injustice, first thing I'd do is follow the money.

Is Sallie Mae exploiting students? Sallie Mae net income over the last 4 years:

2011 they made 633 million
2010 they made 530 million
2009 they made 324 million
2008 they lost 212 million

These are very low returns for a company that is supposedly exploiting student debt, considering the scale of the business - they have loaned out 180 billion dollars, and are only making half a billion a year.

If you want to talk about exploitation, I'd say accusing someone like AAPL of it makes more sense, of either underpaying the wages of workers in China or overcharging witless consumers in the first world. (AAPL made 41 billion dollars in 2011 and they have less balance sheet assets than Sallie Mae).

Sallie Mae looks like they're operating on razor thin margins already. If people want a scenario where the risks are held by the lender (Sallie Mae) and not by the people borrowing the money, then interest rates on the loan must go up to cover the costs of defaults.

It's a reasonable scenario - I'd expect interest rates would have go up by quite a lot to cover this. This hurts all borrowers, because they are paying for the ones that would go on to default.... I think this is fine too, but I imagine there are plenty of people who would disagree.

This is a bit like how health insurance is run in Australia, where insurance companies are not allowed to price discriminate on anything - pre-existing conditions, smoking, obesity, even age ** - everyone pays the same rate. However there are many people who disagree with this... certainly people I've described it to have exclaimed aloud "OMG... so people who don't smoke or drink, and exercise and keep fit, pay exactly the same as someone who doesn't take care of their health at all???" and I say, well, that's the point of insurance, to spread the risk among the population... but they don't get it. I suspect people won't get the idea of letting Sallie Mae take the risk of default either, when they learn their interest rate is going up because they're paying the default risk of the bum students who go to college to study arts and don't show up for classes because they're busy getting stoned.

** there's pricing based on age only if you don't buy a policy before 30, and it's a flat rate government adjusted scaling thingmajig **
posted by xdvesper at 5:49 PM on November 21, 2012 [1 favorite]

The idea that an undergraduate program could possibly serve as training for any job at all is utterly baffling to me.

Computer Science does this.

Even degrees that don't have that level of practical training provide knowledge and background that would be required for certain jobs. Geology, engineering and kinesiology all come to mind. Even at the undergraduate level.
posted by Pruitt-Igoe at 6:21 PM on November 21, 2012 [1 favorite]

The problem is, in America, you can't just start at higher education. Finland has a comparatively homogeneous society. I'm sure they have their cultural divisions (what, Lapps, Swedes, Russians? I'm totally guessing here), but that's nothing like America.

I think it's important to emphasise that a lack of homogeneity (which, by the way, is code for 'immigrants' and, to a lesser extent 'black people') isn't what's standing in the way of equitable access to education in the US. (jasonstevanhill, the rest of your comment makes it clear you haven't fallen into this trap. However it seems to come up every time someone mentions Finland and it drives me batty. It happened the last time we had a discussion of Finnish education and the article was about a school with a high immigrant population!)
posted by hoyland at 6:27 PM on November 21, 2012 [1 favorite]

I love when people start talking about Canada as more culturally "homogenous" - what with our two official languages and the fact that we have higher immigrant population (as a percentage of the total). I've been told, straight-faced, that healthcare works in Canada, because we're not as diverse as the US or the UK.
posted by jb at 6:36 PM on November 21, 2012 [1 favorite]

The real problem is that young people need to realize that investing in their own education is like any other investment

The real problem is that education was, until recently, not understood as an investment in any material sense. Not until the intensive story-telling about college as a career-builder, the increasing corporatization of campuses, the chasing of student-debt (much as the 'development' of the youth 'market') as part and parcel of the creation of consumer America post-WW2.

The perversion of the campuses by such practices, the dilution of education in favor of training, etc. etc. were all predictable outcomes of this profitable 'conversion' of education, a conversion being extended into the K-12 sphere with the promotion of Charter schools. Because if American citizens aren't slaves or at least a commodity, what good are they??
posted by Twang at 7:02 PM on November 21, 2012 [1 favorite]

The real problem is that education was, until recently, not understood as an investment in any material sense

Right now everyone is all "education bubble!" and "don't take on debt for a worthless degree!" But it was surprisingly recently that every question about school on AskMe would get a bunch of "education debt is good debt" answers. (I suspect you could track the change by searching for the phrase "good debt," actually.)

So there was good long while where the standard advice was to take on high debt loads because it was guaranteed to pay off. (Which sounds somewhat like a bubble, no?) I have trouble faulting people for making that choice when everyone was telling them it was a good idea.
posted by Forktine at 7:18 PM on November 21, 2012 [1 favorite]

xdvesper:

1. The controversy about student loan debt is not based on the fact that lenders earn excessive profits, it comes from the fact that a number of students end up with burdensome levels of debt. Certainly when considering this social problem it is appropriate to note that (a) the federal government insures lenders from loss (b) the federal government has made it impossible for people to discharge student loan debt in bankruptcy. In other words the government has done a lot to ensure a large supply of student loans -- a supply that seems larger than what is appropriate given the levels of burdensome debt.

2. Even if we were to focus on profit margins, comparing Sallie Mae's profits to the sheer quantity of the loans they originate is not the right measure. What matters is Sallie Mae's return on capital, which is determined by the amount of risk that they face. When Sallie Mae originates a loan and then sells it to investors through securitization, they are acting purely as middlemen, not as risk-taking lenders. Of course even when they keep the loan on their books they do not face much risk.
posted by leopard at 7:34 PM on November 21, 2012 [1 favorite]

When Sallie Mae originates a loan and then sells it to investors through securitization, they are acting purely as middlemen, not as risk-taking lenders.

The bastards bought my loan. I wish they would sell it so someone else.
posted by Quonab at 7:39 PM on November 21, 2012

The good news is that as of 2010, Sallie Mae is still buying existing federally-insured loans, but all new federally-backed student loans are granted directly by the feds with no skimmers in-between.
posted by tonycpsu at 7:52 PM on November 21, 2012

The end game here is global online universities that provide quality education at more reasonable costs through economy of scale.
posted by meadowlark lime at 7:58 PM on November 21, 2012

The idea that an undergraduate program could possibly serve as training for any job at all is utterly baffling to me.

My undergraduate studies in formal logic have served me pretty well as a software developer (although I did also apply for and take one graduate-level course on the subject). Also, in general, having a well-rounded liberal arts education has provided me entry-points into acquiring a wide range of more specialized skills (and my first job as a legal code copy editor and later entry into the IT field as a technical writer absolutely came about as a direct result of skills I'd acquired editing college literary journals). There are lots of ways a good, general liberal arts education can enhance the skills one brings to the labor force. This comment seems sorely lacking in perspective to me.
posted by saulgoodman at 9:27 PM on November 21, 2012 [1 favorite]

Right now everyone is all "education bubble!" and "don't take on debt for a worthless degree!" But it was surprisingly recently that every question about school on AskMe would get a bunch of "education debt is good debt" answers. (I suspect you could track the change by searching for the phrase "good debt," actually.)

So there was good long while where the standard advice was to take on high debt loads because it was guaranteed to pay off. (Which sounds somewhat like a bubble, no?) I have trouble faulting people for making that choice when everyone was telling them it was a good idea.

Well, I've made the case before in prior threads that most of MetaFilter's user base is not really as smart as they think they are - we're simply very articulate and some users tend to mistake that for genuine intelligence. Your point about how so many MeFites used AskMe to offer terrible and potentially damaging advice about education debt strongly supports what I was saying back then about how it's important not to conflate linguistic sophistry with clever decision-making skills.

Granted, I sort of wish you could have mentioned this much earlier back when I made my original point about the intelligence thing. It would have been nice to have some support when people who was emotionally vested in the illusion of MetaFilter being a place for the best and brightest were attacking me for voicing that unconfortable truth. But hey, better late than never. I appreciate your taking the time to bring up this evidence to back up my prior argument, even if it is ancient history and only tangentially related to our current discussion.
posted by wolfdreams01 at 10:01 PM on November 21, 2012 [1 favorite]

wolfdreams01: The phenomenon of people giving the advice that high college debt loads were a worthwhile investment was not limited to AskMe threads or to MeFi more generally, though. For decades now, everyone and their sister has been dispensing that advice and it was accepted as the conventional wisdom. It seems to me you may be avoiding facing some uncomfortable truths yourself.
posted by saulgoodman at 10:08 PM on November 21, 2012

Hell, even now in 2012, WSJ's MarketWatch is still dispensing that advice (granted with some carefully cherry-picked anecdotes about how it's possible to keep these debt levels reasonably constrained).
posted by saulgoodman at 10:13 PM on November 21, 2012

For decades now, everyone and their sister has been dispensing that advice and it was accepted as the conventional wisdom. It seems to me you may be avoiding facing some uncomfortable truths yourself.

Hey, I never dispensed that advice about college debt. Nor did I ever recommend investing in the housing market - in fact, apart from one bad investment in Nokia (that I still feel very ashamed about) I made quite a bit of money from this recession. What should I feel uncomfortable for? Giving good advice while other people mocked me for dismissing "common knowledge"? Instead of just assuming I was one of the sheep giving bad advice on education debt, perhaps you could at least do me the favor of verifying it first. If you really want to know who should feel uncomfortable, I suggest going through those AskMe threads to find out which specific individuals were giving out the horrible education debt advice that Forktine mentioned. I guarantee that you won't find my name among them.

In fact, any mild snark aside, this is good life advice in general. You want to know how I managed to make good decisions about college while so many other people didn't? Part of my secret to good decision making is that before I take advice from people, I consider how qualified they are to give it. Going through old AskMes to find out who gave prescient advice and who gave advice that turned out to be poisonous may be very helpful in that regard. Does that seem unreasonable?
posted by wolfdreams01 at 10:27 PM on November 21, 2012

Well, then I guess you aren't responsible, since by implication, responsibility only extends to the individual level and members of a society don't have any shared social responsibilities. (BTW, I don't think I ever claimed you personally dispensed that advice. My point is that our society is and has been carrying that message loudly for so long know, it simply isn't reasonable to blame individuals for buying into the idea; our entire society shares in any blame there might be to go around on that count, and is therefore responsible for helping clean up the mess.) It's tempting to compartmentalize personal responsibility the way you seem to be doing here, in theory, but in practice, it leads to myopia and a kind of narrowly-focused selfishness that renders the entire concept of society a dead letter. It's not even enlightened self-interest. It's just plain old, can't-see-the-forest-for-the-trees unenlightened self-interest (a.k.a. selfishness) to take the narrow view of personal responsibility you seem to be taking here.
posted by saulgoodman at 11:00 PM on November 21, 2012

Saulgoodman, I'm not a bad person. I give to charity, organize volunteer groups for environmental causes, and generally try to leave the world a better place than I found it. But even if I was the most horrible person in the world, that fact alone wouldn't invalidate any of my points, so I'm not sure why you're focused on me personally. It seems weird, irrelevant, and vaguely threatening.

Furthermore, it's odd that you are building this weird logical construct which involves some quasi-mystical bond whereby I am part of society and therefore share the blame for its foolishness even though I was one of the few people who fought against the bovine tide when the sheep were flocking along down this self-destructive course. And it's even stranger that you are going to so much trouble to indirectly attribute blame to me when all you have to do to find some of the specific people who were more directly responsible for creating this dangerously naive and harmful societal misperception is to look up old AskMes.

Can we please stop derailing this conversation by making it all about me and instead return to the issue at hand?
posted by wolfdreams01 at 7:32 AM on November 22, 2012

I've been told, straight-faced, that healthcare works in Canada, because we're not as diverse as the US

If they're using "diverse" to mean "non-white," they're right. Canada is 80% white people.
posted by one more dead town's last parade at 8:01 AM on November 22, 2012

If they're using "diverse" to mean "non-white," they're right. Canada is 80% white people.

Some Americans make this point - and it may be valid if the thought is "Healthcare is harder to pass because white Americans are less likely to see it as benefiting themselves" rather than the somewhat disturbing idea that "socialized medicine won't work because it just doesn't work when there are more non-white people" (which does seem to be some people's thought). Interestingly, it's not that much of a difference: while Canada is 80% white, the USA is 72.4% white. However, the nonwhite population in Canada is very different from that in the US - the wikipedia tables say only 2.5% of Canadians are black, while 12.6% of Americans are black. Also, 3.8% of Canadians are Aboriginal, while only about 1.1% of Americans are (including Native Alaskans, Hawaiians and Pacific Islanders).

But in this case, it was a comparison between Canada and the UK as well as between Canada and the US, and the person was referring to explicitly to immigrants and the cultural diversity that immigration brings. But about 19.8% of Canadians were born outside of Canada, compared to 13% of Americans and 8.3% for the UK (with over 90% of the population being white British or white Other). Basically, the argument went as follows:
- "The NHS doesn't work, and the US shouldn't have public healthcare"
- "I haven't experienced the NHS, but single-payer health care works wonderfully in Canada."
- "Canada doesn't have as many immigrants as the UK or the US."
I looked up the numbers and brought them to the next class. The person - in this case, the professor and so-called historian of public welfare, ignored them. I've since lived in the UK and used the NHS. It was awesome, better than Canadian health care. He just lived in a Thatcherite myth-bubble.

But now every time I hear: even if X works in Country Y, it won't work here because we're more diverse/it only works there because they are homogenous, it just makes me think that the person making that argument probably knows nothing of the ethnic/racial tensions of the other place (I mean, Northern Ireland is incrediably homogenous, right? Those Protestant Irish and Catholic Irish are all the same -- and the Finns must LOVE Russians, they are so similar!), and may be holding conscious or unconscious biases about minorities (ethnic or racial) in their own country.
posted by jb at 9:07 AM on November 22, 2012 [3 favorites]

And Australia still remains the only developed country with a higher foreign-born population than Canada - 22.2%.
posted by jb at 9:11 AM on November 22, 2012

Can we please stop derailing this conversation by making it all about me and instead return to the issue at hand?

As far as I can tell, you are the only one making it all about you. It's the internet: people are going to mostly be wrong, and sometimes offensively so. Let them be wrong and keep your dignity. If people don't seem to be getting your point after the first clarification, either you aren't communicating well or they aren't interested in hearing it, and either way continuing to engage isn't going to work out well.
posted by Forktine at 9:31 AM on November 22, 2012 [3 favorites]

it's not that much of a difference

Non-Hispanic white people are just under 64% of the U.S. population. (I'm not saying that single-payer won't work in the U.S.—it would totally work and people would love it after a decade—but Canada is less diverse than the U.S. if you're going for non-European people as a measure of diversity.)
posted by one more dead town's last parade at 9:52 AM on November 22, 2012

I'm confused: how are white Hispanic people "non-European"? Or, at least, any more "non-European" than the millions of Quebecois whose ancestors have lived in Canada since the 17th or 18th centuries? I realize that in the US "Hispanic" has become a particular racial/ethnic category (an concept of pan-Hispanic identify which has been recently exported back into Latin America), but French Canadians are equally seen as a "distinct society" within Canada. (And, until recently, faced some pretty bad discrimination on racial/ethnic grounds).

If you are referring to the language issue, 82% of Americans claim English as their "mother tongue" or "main language"; Spanish is spoken by "over 12%". But English is the mother tongue/first language of only 58.8% of Canadians; 23.2% speak French as a first language, and a further 18% have another first language.

So: the US has more non-white people, but only by a small amount. It has a lot more black people, and more people who speak Spanish, but not as many people who speak Spanish as a main language as those who speak French in Canada. Is "diverse" defined as being black and/or speaking Spanish?

What Canada does not have is any single non-white group as large a part of the population as African-Americans (i.e. black Americans whose families are not recent immigrants - just over 12%) or Hispanic people (16% total - about 1/2 white). The largest census groups for non-white Canadians are South Asians (4%) and Chinese (3.9%). Our census is weird (Chinese, Japanese and Korean are all different race/ethnicities, but "White" and "Black" are lumped together respectively), but if you add all of the Asian categories from this table together, you get about 12% of Canadians being of Asian origin, but of course there is no common feeling across all those categories (from the inside or the outside).

When I lived in the US, everyone told me I was living in a very "diverse" city. Coming from Toronto, it didn't feel diverse at all. The city was divided largely between black residents and Hispanic residents - but there wasn't much diversity within those two groups. (Most of the black people, for example, were African-American - there were very few Caribbean or African people - unlike the apartment buildings where I had just lived in Canada). When people talk about the challenges of offering social services due to "diversity", I expect actual diversity -- needing to offer translations into 20 different languages, for example. If there is only one other major language, that's not very diverse. It offers its own unique challenges - children with 20 different languages all have to use English at school, for example, but those with a shared language can use that - but they are not the challenges of diversity.
posted by jb at 12:45 PM on November 22, 2012

oh - I'm still relying on Wikipedia for my numbers, in case you were wondering - USA, Canada. The weird categories on the Canadian page are how the race/ethnicity question is structured on the long form census (before we cancelled it, because our government hates demography).
posted by jb at 12:49 PM on November 22, 2012

It's odd how I somehow accidentally blamed someone personally for something there, and called them a bad person, and apparently started a derail, I guess, but on topic, what I'd like to say on the subject of college debt, is that as a society we need to do something collectively to help all those people who now find themselves shackled with insurmountable college debt loads, due to years of overwhelming social pressure to take on those debts. I think that's a point I am making. Also I believe I'm saying that it's in everyone's enlightened self-interest to do so, since we are all members of this society that is now suffering due in no small part to lots of its members being burdened with unreasonable amounts of debt. But please, anyone who understands what I mean better than I do, please correct me, in case I miss my guess and I'm actually saying something else that isn't on topic.
posted by saulgoodman at 6:57 PM on November 22, 2012 [1 favorite]

This needs to not become one-user-vs-everyone. Let's be the change we want to see; ignore derails and steer the conversation to the more interesting places it can go. Thanks.
posted by LobsterMitten (staff) at 2:07 PM on November 23, 2012

Escalating Delinquincy Rates Make Student Loans Looks Like The New Subprime Mortgages
posted by the man of twists and turns at 5:14 AM on November 28, 2012 [1 favorite]

The Needless Tragedy of Student Loan Defaults
posted by homunculus at 7:13 PM on November 28, 2012

« Older Honorary Degree Rescission Scoreboard | Strunk & White & Pinker Newer »

This thread has been archived and is closed to new comments

MetaFilter

There is no higher education bubble
November 21, 2012 7:25 AM Subscribe

Tags

Share

There is no higher education bubble November 21, 2012 7:25 AM Subscribe

Tags

Share

There is no higher education bubble
November 21, 2012 7:25 AM Subscribe