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Everyone thinks that the main factor that is driving up tuition costs are due to the fact that more and more students are attending colleges. It is part of the problem, but it is NOT the main factor driving up tuition. The game is rigged far more than the general public realizes. You can read all about it here in this EXCELLENT article:
If you decide not to read--student loan debt is securitized into student loan asset backed securities (SLABS) and is then sold on Wall St. These securities are guaranteed by the federal government, so even if a bunch of loans go into default, these securities still pay. It's already written on the books. Thus you have securities that are guaranteed paydays with virtually no risk so investors are eager to snatch them up. The money that is raised by selling these securities is then used to go out and hand out more loans and repeat the whole process again. Ever since banks were deregulated in '99 and '00, commercial lending banks are now allowed to delve into investment markets. Thus you have lending institutions like Sallie Mae handing out ridiculous sums of money to students that are going to have terrible job prospects and will have no hope of ever paying off their loans. Why should Sallie Mae care if they will drown in debt? Student debt is non-dischargeable and Sallie Mae can still make money on defaulted loans because they can be sold as securities and are government guaranteed to pay. The never ending flow of creditl then allows colleges and universities to constantly raise tuitions to whatever they want.
Now here's the kicker: nothing stops a university from investing in SLABS. In other words, a university could make money 2x off a student--once off of the up front tuition and fees, and a second time off of investing in their securitized debt (SLABS) on Wall St. That gives universities a STRONG incentive to raise tuitions since the more indebted their students become, the more money they make for their endowments. It used to be that only the super elite universities had billion dollar endowments. These days you can find no name XYZ university that has a billion dollars in endowment. There seems to be a strong correlation between rising tuition costs and the rise of endowments. Could it be that universities are investing in SLABS and are flat out betting against students? I highly doubt that universities have somehow gotten magically better at getting alumni to open up their wallets. Someone really should investigate university investments into SLABS.
There's a whole different world out there putting the pedal to the floor on tuition inflation than most people realize. Sound like the 2008 housing bubble much?
Last edited by fibonacci; 06-02-2011 at 09:52 PM..
Everyone thinks that the main factor that is driving up tuition costs are due to the fact that more and more students are attending colleges. It is part of the problem, but it is NOT, the main factor driving up tuition. The game is rigged far more than the general public realizes. You can read all about it here in this EXCELLENT article:
If you decide not to read--student loan debt is securitized into student loan asset backed securities (SLABS) and is then sold on Wall St. These securities are guaranteed by the federal government, so even if a bunch of loans go into default, these securities still pay. It's already written on the books. Thus you have securities that are guaranteed paydays with virtually no risk so investors are eager to snatch them up. The money that is raised by selling these securities is then used to go out and hand out more loans and repeat the whole process again. Ever since banks were deregulated in '99 and '00, commercial lending banks are now allowed to delve into investment markets. Thus you have lending institutions like Sallie Mae handing out ridiculous sums of money to students that are going to have terrible job prospects and will have no hope of ever paying off their loans. Why should Sallie Mae care if they will drown in debt? Student debt is non-dischargeable and Sallie Mae can still make money on defaulted loans because they can be sold as securities and are government guaranteed to pay. The never ending flow of creditl then allows colleges and universities to constantly raise tuitions to whatever they want.
Now here's the kicker: nothing stops a university from investing in SLABS. In other words, a university could make money 2x off a student--once off of the up front tuition and fees, and a second time off of investing in their securitized debt (SLABS) on Wall St. That gives universities a STRONG incentive also to raise tuitions since the more indebted their students become, the more money they make for their endowments. It used to be that only the super elite universities had billion dollar endowments. These days you can find no name XYZ university that has a billion dollars in endowment. There seems to be a strong correlation between rising tuition costs and the rise of endowments. Could it be that universities are investing in SLABS and are flat out betting against students? I highly doubt that somehow universities have somehow gotten magically better at getting alumni to open up their wallets. Someone really should investigate university investments into SLABS.
There's a whole different world out there putting the pedal to the floor on tuition inflation than most people realize. Sound like the 2008 housing bubble much?
Hmm, interesting. My one private loan for $25k has to be paid back in 12 years max, so I don't think I'm going to never pay it off. In fact, it should be paid off well before that if I plan accordingly. I guess the loans I'd be more concerned about are the ones that six-figures long.
Don't forget all the for profit degrees are out there and the public schools that let anyone in.
Is it the school's fault if you choose to apply and pay for an education that isn't useful?
If you are walking through NYC and someone sells you the Brooklyn Bridge for $100, whose fault is the lost money really? If you make a stupid decision and don't get a return on your investment, it isn't the school's fault, it is yours.
Is it the school's fault if you choose to apply and pay for an education that isn't useful?
If you are walking through NYC and someone sells you the Brooklyn Bridge for $100, whose fault is the lost money really? If you make a stupid decision and don't get a return on your investment, it isn't the school's fault, it is yours.
You said reasons why kids aren't finding jobs. A degree from a for profit is not viewed very well which leads to issues finding a job.
Is it the school's fault if you choose to apply and pay for an education that isn't useful?
If you are walking through NYC and someone sells you the Brooklyn Bridge for $100, whose fault is the lost money really? If you make a stupid decision and don't get a return on your investment, it isn't the school's fault, it is yours.
Yes, as a matter of fact, it is the school's fault for providing misleading information about salaries and job placement. It's kind of like, let's say, lying on your resume. And we've already concluded that you don't agree with that. Businesses lie, too, and just because they are a business, it doesn't give them a get out of jail free pass in regards to wrongdoing.
You said reasons why kids aren't finding jobs. A degree from a for profit is not viewed very well which leads to issues finding a job.
So then don't make the choice to go to a for-profit school.
It is still a personal choice.
Quote:
Originally Posted by Z3N1TH 0N3
Yes, as a matter of fact, it is the school's fault for providing misleading information about salaries and job placement. It's kind of like, let's say, lying on your resume. And we've already concluded that you don't agree with that. Businesses lie, too, and just because they are a business, it doesn't give them a get out of jail free pass in regards to wrongdoing.
So look up the school in BusinessWeek, talk to Alumni. Don't take the school's word for it!
Remember - there are lies, damn lies, and statistics. I would never go to (or recommend anyone go to) a school that does nothing but try and make money. There are certain schools that are absolutely sleazy, but unfortunately for us sleazy is not illegal.
So then don't make the choice to go to a for-profit school.
It is still a personal choice.
So look up the school in BusinessWeek, talk to Alumni. Don't take the school's word for it!
Remember - there are lies, damn lies, and statistics. I would never go to (or recommend anyone go to) a school that does nothing but try and make money. There are certain schools that are absolutely sleazy, but unfortunately for us sleazy is not illegal.
All not the point. Once again you listed reasons for kids not being able to get jobs. One reason is many people now have degrees from for profit schools that hold little value and decrease the chances of getting a job.
Your points about them are not really relevant to the main point.
This article is kind of distressing for many reasons:
One, I graduated in 2010 and had a full-time job lined up MONTHS before I graduated. I worked hard, studied for hours, gave up free time and weekends, and made sure to network and complete internships/co-op experiences. I did not expect anything to be gifted to me. All these stats about partiers, lack of studying, socializing, etc. are the CHOICE of those students. It's no one's fault but their own that they didn't work hard.
Second, I went to a college I could afford. This article's absolutely right that no one needs to be saddled with $100k in debt for a Bachelors degree in art history. I'm sorry, that's just stupid. If 18 year olds can't put forth the time to do some research to figure out how much their profession will make on average and how much their monthly repayments on loans will be then that's honestly their fault. I considered both strongly when choosing my academic path and how much I was willing to take out in loans.
Third, go to an instate school. Get scholarships and grants. It's not that ridiculously hard. I appilied to 7 colleges my senior year of high school, 5 of which were public schools. Public, instate schools were AWESOME about giving scholarships and aid. If you read on their websites on average all you need to do to get some sort of academic scholarship is a 3.5 cumulative GPA. If you didn't mess around in high school (or have some unforeseen circumstance or disability) this is totally and completely achievable.
Edit: I just checked the public university I went to (University of Central Florida) and their starting HS GPA for scholarship awards is a 2.75!
I don't really have much sympathy for this. Yes, tuition rates are ridiculous and have exploded, but no one needs to pay the sticker price. If you're not offered any scholarships/aid either you probably did poorly in high school and that's 90% of the time the fault of the student. I know tons of kids who had no grants/scholarships in college paying sticker price because they "didn't give a crap" in HS, got poor grades and thought it was hilarious.
One friend of mine in college (at this point I was at a private 4 year college in for another degree) was a nice guy, but had $70k in student loans and was only considered a college sophomore cause he kept failing the same courses over and over because he wasn't studying, but didn't care. This is his 5th year of college right now and he still doesn't even have enough credits to get an associates at a CC! He got kicked out of the university we were in and was trying to get back in after spending a year at CC to recover his grades. He did so just enough to be back in on probation and then FAILED AGAIN and thought it was funny. $70k in debt and no degree in sight is ridiculous! (story note: I'm not saying this is the norm, but it shows an example of poor judgement)
I don't expect people to have absolutely no loans, but just be smart about it. Worst case scenario students can go to community colleges for two years and transfer to full-time colleges to lessen their need for loans.
This article is kind of distressing for many reasons:
One, I graduated in 2010 and had a full-time job lined up MONTHS before I graduated. I worked hard, studied for hours, gave up free time and weekends, and made sure to network and complete internships/co-op experiences. I did not expect anything to be gifted to me. All these stats about partiers, lack of studying, socializing, etc. are the CHOICE of those students. It's no one's fault but their own that they didn't work hard.
Second, I went to a college I could afford. This article's absolutely right that no one needs to be saddled with $100k in debt for a Bachelors degree in art history. I'm sorry, that's just stupid. If 18 year olds can't put forth the time to do some research to figure out how much their profession will make on average and how much their monthly repayments on loans will be then that's honestly their fault. I considered both strongly when choosing my academic path and how much I was willing to take out in loans.
Third, go to an instate school. Get scholarships and grants. It's not that ridiculously hard. I appilied to 7 colleges my senior year of high school, 5 of which were public schools. Public, instate schools were AWESOME about giving scholarships and aid. If you read on their websites on average all you need to do to get some sort of academic scholarship is a 3.5 cumulative GPA. If you didn't mess around in high school (or have some unforeseen circumstance or disability) this is totally and completely achievable.
Edit: I just checked the public university I went to (University of Central Florida) and their starting HS GPA for scholarship awards is a 2.75!
I don't really have much sympathy for this. Yes, tuition rates are ridiculous and have exploded, but no one needs to pay the sticker price. If you're not offered any scholarships/aid either you probably did poorly in high school and that's 90% of the time the fault of the student. I know tons of kids who had no grants/scholarships in college paying sticker price because they "didn't give a crap" in HS, got poor grades and thought it was hilarious.
One friend of mine in college (at this point I was at a private 4 year college in for another degree) was a nice guy, but had $70k in student loans and was only considered a college sophomore cause he kept failing the same courses over and over because he wasn't studying, but didn't care. This is his 5th year of college right now and he still doesn't even have enough credits to get an associates at a CC! He got kicked out of the university we were in and was trying to get back in after spending a year at CC to recover his grades. He did so just enough to be back in on probation and then FAILED AGAIN and thought it was funny. $70k in debt and no degree in sight is ridiculous! (story note: I'm not saying this is the norm, but it shows an example of poor judgement)
I don't expect people to have absolutely no loans, but just be smart about it. Worst case scenario students can go to community colleges for two years and transfer to full-time colleges to lessen their need for loans.
All great points.
The thing I will add though is tuition at Florida universities are way below the national average.
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