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It's up over 500% in the last 30 years. Rounding that down to an increase from 100 to 600 dollars for "unit" of education, would indicate the compounded annual return (nominal) is still over 6.15% per year. Since inflation runs 2 to 3% per year, being below the historical figures would indicate, for instance, that the price tag had risen only from 100 to 181, which would have been a 2% annual increase. This dramatic difference, along with the increase in the interest rates on student debt, are part of the reason the younger generation is so screwed.
Finaid.org, which actually tracks the cost of college tuition, shows that it has compounded annual from 6% on the low end, up to 9%. For simplicity sake, lets take 1.06 * 1.09 and then square root it to grab a quick geometric mean. We get 1.0749. So according to their figures, with a quick estimation of the geometric mean, we see that for every 100 dollars that someone would have spent 30 years, in 1984, they would now be required to spend 873.
When you consider that the quality of education has been steadily decreasing as proven by standardized tests scores over time (look at SATs, and control for the fact that a perfect score went from 1600 to 2400), and the fact that the return to labor (opposed to capital) has fallen as a percentage of GDP as labor unions have fallen out of fashion, and you have a scenario in which the young and uneducated are facing nearly insurmountable odds.
To state that tuition is more affordable than the historical norm would completely disregard any reasonable measure of affordability, such as cost or expected income upon graduation.
Please don't feed it. That poster loves to argue with posters on this board that college is affordable today compared to what it cost in the 1700s and 1800s. He will completely disregard any argument you put forth explaining the increase in tuition costs because he believes the cost of tuition in the post WWII era is irrelevant. It is complete nonsense and we would all just like to see him stay away.
If you would like to see his arguments, best to travel back through his posting history. Lots of entertainment on this subject in there.
Roughly I think 15% started out private so yeah they are screwed. For the Majority that are in federal what happened is that they did the same thing with ABS sort of. The govt loaned out money under good will and then transferred ownership of the loan to a bunch of private companies like Nelnet which also has subsidiaries. When ppl conduct statistics they only look at the origin of the loan and not the current holder. A lot of loans govt sold already aka they don't manage them is what I mean. These private companies well do their money making shenanigans
So yep problems occurred and of course mismanagement lead to the crisis we have today. If you look at the holders of these loans nothing but lawsuits or accusations well yeah shady and faulty system. The govt. and private enterprises were hoping to make a profit, but the recession halted everything. Young people are most likely to go delinquent and not pay recommended amount- 10 yr plan- since no jobs. 50% underemployment or $7.24/hr and a monthly payment of $400-$500 is uh not working out. Millennial generation will continue to increase the delinquency rate statistics until economy actually improves for people of all social standing. So far only poor and rich have benefited. Majority of loan holders who are middle class no help from government yet. The repayment of these loans are highly tied to the financial health of the middle class.
No surprise there. College is way overpriced and since the government guarantees that these schools get paid no matter what outrageous tuition they charge, these schools will continue to build Olympic sized swimming pools, 100k capacity football stadiums, rock climbing walls and hire gourmet cafeteria chefs.
I do think they need to scale back the amount of money they give out on student loans. It’s ridiculous that the common idea is that "everyone" deserves an education.
I can see the statistics being right on for several reasons; you can use the student loan money for just about anything. I think it should be restricted to simply tuition, books, and housing. People will probably cry foul that they need a computer, clothes and $$ to eat out. The money should exist to provide you with the bare necessities and most universities worth their salt should be able to provide computer services anyways and most people should be able to hold down a part time job while they get an education.
Another thing is that you can use this money for any degree under the sun. Maybe come up with a list of approved majors that actually provide people with a real skill. I mean, come on, American Studies? You can learn that watching TV.
The default rate on the for-profit schools I understand is high due to the immense cost associated with it. I know an individual going to a for-profit school and am paying roughly 2x what I did at a public university. People don't need to be $100K+ in debt for a degree that would of cost them $20K+ somewhere else.
I admit, I took out student loans bringing my debt level up about $17K but I used that money only for school and books and got a degree in something that I felt could help me find a job, accounting. I also went to school at community college my first years.
My suggestions aren't the end all be all solution and I understand there will be some folks out there that just have bad luck and still may not be able to get past those student loans.
Even if people "need" an education, there is nothing stopping them from living at home, going to community college for 2 years and working a job to pay for it.
I wonder how many of those students defaulting on their loans actually used a lot of that money for their wild drunken spring break orgies, or $200 concert tickets, meals out every day, and lots of pot and alcohol.
The post world war II era is the only era that matters. Why in the world would the cost of higher education in an economy built around farming and manufacturing, which is what the pre WWII era was, matter? In the post WWII era, a college education became almost mandatory to ascend into the upper middle classes and today it is almost mandatory to even enter the middle class. In the pre-WWII era that was not necessary. You grew up and started your own farm or entered a trade or worked in the factory.
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Moderator cut: off topic Let's not pretend that college is a trade school designed to help you get a job. It's not. College is an institution of higher education designed to further academia and innovation.
This theory that you have of college being required to be a middle class individual is complete nonsense and not supported by real-world data. There are plenty of middle-class trades that do not required a college degree. These include construction, plumbing, drafting, hair cutting, fixing computers, repairing cars and much more.
So, the only real solution to this problem of affordability is to cut tuition at colleges to nearly zero, and build enough colleges to accomodate about 90% of high school graduates. Of course, this would mean heaping on more taxes on the rich - but hey, life isn't always fair, is it?
Well, when you consider that the good colleges are nearly free for good quality students, you realize that tuition is already nearly zero for those who have the most potential (as measured by merit). Do we really want to put so much $$ behind students with poor merit? Is that the best use of taxpayer funds?
It's up over 500% in the last 30 years. Rounding that down to an increase from 100 to 600 dollars for "unit" of education, would indicate the compounded annual return (nominal) is still over 6.15% per year. Since inflation runs 2 to 3% per year, being below the historical figures would indicate, for instance, that the price tag had risen only from 100 to 181, which would have been a 2% annual increase. This dramatic difference, along with the increase in the interest rates on student debt, are part of the reason the younger generation is so screwed.
Finaid.org, which actually tracks the cost of college tuition, shows that it has compounded annual from 6% on the low end, up to 9%. For simplicity sake, lets take 1.06 * 1.09 and then square root it to grab a quick geometric mean. We get 1.0749. So according to their figures, with a quick estimation of the geometric mean, we see that for every 100 dollars that someone would have spent 30 years, in 1984, they would now be required to spend 873.
When you consider that the quality of education has been steadily decreasing as proven by standardized tests scores over time (look at SATs, and control for the fact that a perfect score went from 1600 to 2400), and the fact that the return to labor (opposed to capital) has fallen as a percentage of GDP as labor unions have fallen out of fashion, and you have a scenario in which the young and uneducated are facing nearly insurmountable odds.
To state that tuition is more affordable than the historical norm would completely disregard any reasonable measure of affordability, such as cost or expected income upon graduation.
The flaw in your assessment is that you're looking at only the past 30 years. Look at the cost of college vs median income between 1100 and now. There was an artificial increase in the affordability of tuition just after WWII that made college feel extremely cheap.
We could stop subsidizing land based institutions and provide a high quality of education through an online program. Fund that with the G.I. bill and it would easily have enough students to be cost effective. Despite the initial high fixed costs, the scaling is incredibly cheap. Switching to an online schooling system could remove the vast majority of the cost because the physical infrastructure could be largely eliminated. Further standardization of the system would allow employers to see which students were actually proving themselves in the classroom through completion of classes that are difficult. (I have a 4.0 in a Master's program. When I say classes are a joke, I speak from experience). This would also enhance the incentive for students to actually learn because they might be evaluated based on the skills they demonstrated in school rather than just responding to "Who is your daddy and what does he do?" After all, the most dominated predictors of income during life are parental income and education level attained.
It would be vastly cheaper for the government to design an exceptional online program than to sponsor the thousands of schools that all create their own online program.
The problem with online education is that it can only provide about 20% of the education of a brick & mortar institution. Keep in mind that 80% of college learning happens outside of the classroom where tacit knowledge comes into play. Academic research, interfacing with PhD students and professors, assisting in publishings and debates, going to academic conferences, etc. That's where you learn about your field (and is also why college is so expensive). The classroom textbook work is just a small fraction of the foundation.
No surprise there. College is way overpriced and since the government guarantees that these schools get paid no matter what outrageous tuition they charge, these schools will continue to build Olympic sized swimming pools, 100k capacity football stadiums, rock climbing walls and hire gourmet cafeteria chefs.
You only pay the overpriced price if you want to. Many colleges don't require you to pay the sticker price. My college actually paid me to go there (their scholarship was more than the tuition).
Now, when you consider that many colleges don't even allow their students to take loans, you really have to blame yourself if you're taking a loan. Take a look at schools like Penn that will match your federal loan with a grant so you don't have to take the loan (actually, you aren't allowed to take it).
My god, are you still spouting that nonsense? My tuition increased from 120 per credit hour in 2006 to almost 200 per credit hour by the time I graduated in 2011. You think that is the same as the inflation rate.
Whatever, you are going to believe whatever nonsense you want.
NJBest goes on all these education threads to say that college is more affordable now than ever. Its as if he works for the collegiate industrial complex
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