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A friend and I were talking a little about finances, debt, and planning, each having a goal to buy a home in the next couple years.
A friend mentioned that his student loans were a huge burden on his finances. Currently, the loan payments are $900 a month. My friend has a huge student loan debt (6-figures). At this stage in his career, his pay is pretty decent, upper middle class in many metros, in ours it is barely middle class at around $80k. My friend is in his late 30s, and is not expecting any huge windfalls anytime soon. He’s also not seeing an end to the loan payments either.
Rent and loan payments represent about 50% of his take home pay.
In our city, an average one bedroom condo is about $250,000. A 3 bedroom town home in a decent school district is $700k. And that is still packaged with a long commute to most job centers.
With the huge amount of debt, student loan debt and otherwise, we are carrying,we have to delay big purchases. It reduces future and current purchasing power.
We are at an age now, where in previous generations, people would be “settled” into marriage and parenting.
Now, most people I know, even well paid ones, can’t even thing about making the leap into home ownership, due to the combo of high prices and existing debt.
How far are we from a student loan crisis?
It doesn't take a genius to see that the amount of debt people are getting in for a degree for the market wage being paid is not good.
What you described here is exactly what my position is.. I feel like I'm in a rut.. barely making it as a single guy.. with two degrees.. both marketable.. $15 / hour isn't bad, but increase the minimum wage to $10 and well.. the debt/income ratio is better for the one that never went to college.
The Market is simply not there for these people coming out with these mega sized loans.. so many are going back to further their education more because they aren't getting jobs.. they think a more advanced degree is their ticket to a better future. Not necessarily..
The problem is there has to be a market for that particular skill set, and sadly many are coming out with huge debt without a marketable degree..
This is a societal problem.. as no doubt the social programs are going to absorb the hit with the tax payers.. those being responsible..
People have their heads in the sand.. they aren't paying attention living in fantasy wonderland.
Yes there is a problem. It is a big big bubble that one day is going to pop.
It doesn't take a genius to see that the amount of debt people are getting in for a degree for the market wage being paid is not good.
What you described here is exactly what my position is.. I feel like I'm in a rut.. barely making it as a single guy.. with two degrees.. both marketable.. $15 / hour isn't bad, but increase the minimum wage to $10 and well.. the debt/income ratio is better for the one that never went to college.
Minimum wage should be viewed for what it is... A price floor. When minimum wage is bumped, upward pressure is placed on wages as a whole. The argument just you made highlights why wages have stagnated for so long. He shouldn't get a raise unless I get a raise too! And the answer is... Neither of you will get a raise. Happy?
Quote:
Originally Posted by Mikelee81
The problem is there has to be a market for that particular skill set, and sadly many are coming out with huge debt without a marketable degree..
The problem is, the majority are viewing college to be something that it is not... A jobs training academy. Go to trade school if you want to learn some form of marketable skill. Of course, I can't fault the student. For one thing, many of the programs taught in college belong in a trade school. Information technology comes to mind. Nursing, and many other related medical professions... Seriously, it's a waste of limited resources forcing these people to take useless and unrelated electives. All it does it drive up student debt, and enrich those in the education industry/racket.
Most jobs do not require the full college treatment. Give the students what they want, and more importantly, what they need, without all the fluff. Skip all the electives that simply give some geezer a chance to be meaningfully employed. Let the young folks learn exactly what they need to do a job so they can move on with their lives. There is precious little time in this world, so let's make the best of it.
Piece of cake. BLS income gap college vs high school grad: $300/wk, $225 net taxes. payback 29k/ (225 * 52 wks) = just over two years. No biggie. Great ROI.
You're not factoring in the lost income. Many are also spending significantly more time in college compared to years past. It seems like the norm for people to require 5 years to obtain a 4 years degree.
You're also overlooking the diluted value of a college degree. When the supply goes up, the value goes down. In many cases, employers are requiring a college degree for no other reason than they can. They don't even have to pay the person a higher wage. Sounds like the market is oversaturated...
What is also overlooked is the fact that most job growth in America today is low paying, and does not require further education. We are training too many people for jobs that don't exist, and show no sign of being on the horizon.
Basically, we are pricing our young people out of the market. We would be better off letting them figure it out themselves. Let the average ones find average jobs for the times. When you send them all to college though, the debt is a real killer for those that will inevitably end up in low wage occupations.
You're not factoring in the lost income. Many are also spending significantly more time in college compared to years past. It seems like the norm for people to require 5 years to obtain a 4 years degree.
You're also overlooking the diluted value of a college degree. When the supply goes up, the value goes down. In many cases, employers are requiring a college degree for no other reason than they can. They don't even have to pay the person a higher wage. Sounds like the market is oversaturated...
What is also overlooked is the fact that most job growth in America today is low paying, and does not require further education. We are training too many people for jobs that don't exist, and show no sign of being on the horizon.
Basically, we are pricing our young people out of the market. We would be better off letting them figure it out themselves. Let the average ones find average jobs for the times. When you send them all to college though, the debt is a real killer for those that will inevitably end up in low wage occupations.
We're stagnant regarding % graduating college, and in the last 20 years, 9 nations passed us in that metric.
We're hardly on the verge of an oversupply, unless you mean unskilled labor, in that arena, we have a massive oversupply.
You're not factoring in the lost income. Many are also spending significantly more time in college compared to years past. It seems like the norm for people to require 5 years to obtain a 4 years degree.
You're also overlooking the diluted value of a college degree. When the supply goes up, the value goes down. In many cases, employers are requiring a college degree for no other reason than they can. They don't even have to pay the person a higher wage. Sounds like the market is oversaturated...
What is also overlooked is the fact that most job growth in America today is low paying, and does not require further education. We are training too many people for jobs that don't exist, and show no sign of being on the horizon.
Basically, we are pricing our young people out of the market. We would be better off letting them figure it out themselves. Let the average ones find average jobs for the times. When you send them all to college though, the debt is a real killer for those that will inevitably end up in low wage occupations.
We're stagnant regarding % graduating college, and in the last 20 years, 9 nations passed us in that metric.
We're hardly on the verge of an oversupply, unless you mean unskilled labor, in that arena, we have a massive oversupply.
Your measure of oversupply is based on the supply provided by other nations? You're suggesting that the usefulness of a college education is dependent on the number of college grads in other nations. What determination can we then make about the number of people jumping off bridges in other nations? Shall we seek equilibrium in this category as well?
The fact is, demand is not determined by supply. Today, America is creating mostly low wage, low skill jobs. If the demand for college grads were to rise, we have an ample number of underutilized college grads just itching for a career level opportunity that matches their education level.
Employers are having no problems finding college graduates. The rest are spilling into low paying retail and food industry jobs. This is not an efficient use of our scarce resources. Educating cashiers and burger flippers is of no benefit to the economy, although it does tie the worker down with useless debt. I suppose long term, such debt contributes something to the GDP, but it's no more honest than China building ghost cities that serve no purpose other than inflating economic numbers.
Quote:
Originally Posted by HappyTexan
Only 50% that enter college actually graduate
Kind of supports my premise... We are trying to educate too many. Focus our resources a bit more selectively, and direct them towards those who are most likely to benefit. The current strategy of dumbing down the curriculum or offering low tier options will simply dilute the value of a college degree.
Folks need to accept... America is becoming a low wage nation. Colleges can't rewrite the rules of economics. Maybe people will make smarter choices at the polls...
Your measure of oversupply is based on the supply provided by other nations? You're suggesting that the usefulness of a college education is dependent on the number of college grads in other nations. ...
This is a global economy, and we're fighting for our % of global market share. Nations moving up got MORE competitive, those declining LESS competitive.
What we have for jobs NOW is never STAGNANT. New Software corps moved into Southern Ca in years past largely because they knew the talent was there. As a nation, we need to be ready for the jobs that do not exist YET, and those will continuously requiring more skill.
This is a global economy, and we're fighting for our % of global market share. Nations moving up got MORE competitive, those declining LESS competitive.
What we have for jobs NOW is never STAGNANT. New Software corps moved into Southern Ca in years past largely because they knew the talent was there. As a nation, we need to be ready for the jobs that do not exist YET, and those will continuously requiring more skill.
This sounds like a problem for the government. If they want to prepare for jobs that may, or may not appear, shouldn't they foot the bill? Individuals cannot afford to spend thousands in anticipation for phantom careers, as the downside will be crippling. If you presented this in the form of a business plan, a bank wouldn't lend a dime.
And realistically, how do you teach skills for jobs that don't exist?
This sounds like a problem for the government. If they want to prepare for jobs that may, or may not appear, shouldn't they foot the bill? Individuals cannot afford to spend thousands in anticipation for phantom careers, as the downside will be crippling. If you presented this in the form of a business plan, a bank wouldn't lend a dime.
And realistically, how do you teach skills for jobs that don't exist?
Individuals can and do prepare. One example: The growth of the medical coding industry: Training was avaailable very early in the process. People took it, before being able to see what a more developed market looked like.
We are nation full of folks who take chances. 99.99% of folks though the Wright brothers were luny.
And no, I do not want government footing the bill. Loans, grants, scholarships, and work during school can handle the load.
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This is a global economy, and we're fighting for our % of global market share. Nations moving up got MORE competitive, those declining LESS competitive.
