Half Sigma has pointed me to two stories that I think are of some interest, and illustrates a general trend. JOBLESS GRAD SUES COLLEGE FOR 70G TUITION:
The Monroe College grad wants the $70,000 she spent on tuition because she hasn't found gainful employment since earning her bachelor's degree in April, according to a suit filed in Bronx Supreme Court on July 24.
The 27-year-old alleges the business-oriented Bronx school hasn't lived up to its end of the bargain, and has not done enough to find her a job.
The information-technology student blames Monroe's Office of Career Advancement for not providing her with the leads and career advice it promised.
Then there is this story of a woman with $120,000 in student loans, working for $7.25 plus tips, Student loans puts college graduate into deep financial hole:
But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
The second case is clearly one where an individual who shouldn't have gone to college, did. Not only was she academically not up to it, neither she nor her parent had the background to be able to navigate the paperwork which would have smoothed her path. She kept not filing FAFSA, and so took out more onerous loans from Sallie Mae. She also took out loans above her minimum needs. It seems this was a case where a kid from a lower middle class to lower class background did not understand that middle to upper class status does not entail from simply matriculating at a university, you have to do a lot of other things, or, you parents have to hold your hand along the way. In other words, if you have money and connections you can party your way through college, but if you have neither, you better focus and get your educational money's worth.
In the first case there are fewer details, but the bigger issue seems to be the marketing that goes along with many universities, promising jobs magically at the end of a bachelor's degree. There really should be "entertainment purposes" only advisories stuck on to those brochures. It seems the biggest problem here are unknown private universities which charge many times more than a public institution without offering many times more the name recognition and prestige.
Student loans can not be discharged in bankruptcy. This of course means that lenders are eager to push money at students, since they can't be written off so easily. This is good for responsible students, or those whose parents can bail them out if they are irresponsible, since that means lower interest rates and no worry about not being approved. But it is a different proposition if you don't have a parental back up and also don't have the skills or outlook which would have made you a good bet in the first place.
Here are some data for 2007-2008:
- Undergrads who graduate who have debt (2007-2009): 66%
- Average debt on graduation for those who have debts: $27,803 (includes PLUS loans, $23,186 excluding PLUS loans)
- 25% bachelor's degrees recipients have more than $30,526 in loan debt
- 10% bachelor's degree recipients have more than $44,668 in loan debt
Aside from the issue of inflation in this sector due to "cheap money" flooding in due to subsidized loans and grants, taking out loans is probably good bet for most who do take them out. The problem are the minority who a) were never cut out for college, b) who college won't improve and c) who don't have familial resources to allow them absorb the negatives of their problematic life choices. They're saddled with debt which is nearly impossible to get rid of.
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Interesting observation. I really wonder when the market for post-secondary education will shift, as potential students realize that a B.A. isn't the only career path to go down, nor the most lucrative in some cases. Things like skilled trades (plumbing, brick-laying, etc) could be a better career path, economically, if not as, shall we say, palatable for some tastes in a social way.
College and community college tuitions and fees have had a miraculous freedom from market forces. So far.
That's about to change as the student (consumer) and his/her parents (related consumers) begin to question: What are we really getting for all those funds we ship off to Huge U.
If the student should never have been a college student in the first place, who will make that tough decision, and when will they make it? After 4 years?
"and illustrates a general trend."
Women are whiners with a sense of entitlement who blame their failures on others?
"25% bachelor's degrees recipients have more than $30,526 in loan debt"
This can't be a good investment or good policy, burdening the young, often from the poorest backgrounds, with that much debt to start out working life. If it's a good idea when the prime rate is 6%, is it a good idea when interest rates rise, as they do, to, say 10%?
I propose Geek Bonds.
In Canadian high tech firms, you can tell who the immigrants are from the Canadians by looking at the parking lot. Immigrants are driving BMWs; Canadians, still, paying off their student loans, are driving Hondas.
I wonder if the backlash will come or not. Do the parameters really favor it? For one thing, I heard on NPR the claim that at least over some certain set of colleges (I forget what set), the prestige of the place had very little effect on the pay one made X years later.
But that's not the whole story. Your pay is only half the transaction. If I make 50k as an accountant or middle manager and you make 50k digging up dinosaur fossils or running a small art gallery, the mean person will opine that you got a much better deal. The mean elite moreso. You'll also have better mating status than me ceteris paribus, especially among elites.
Not to mention college also functions directly as a mating ground (for marriage, I mean), in addition to altering your future mating status.
Yeah, I've only now realized that my "Top Tier" university was a bad investment. I should have taken the road to become a doctor like my immigrant parents advised. Instead, I borrowed $40,000 and only earned a 3.2 GPA in Economics. I'm also not-white or connected as both my parents work in academia. Poor choices...poor choices
I wasn't completely dumb, though. I had an internship at an I-Bank, but my closest friends there are either unemployed or have no jobs to give. In a good environment, I think I would have survived...maybe even thrived. Damnit, I should have been an engineer like my uncle.
Nobody really knows how much difference colleges make, whether specific colleges make much difference, or whether middle class connections make a difference - because (so far as I know) there are no studies of these variables controlled for IQ and Personality.
But probably these things make little difference to long term outcomes if IQ and personality are taken into account, and most of the effect of higher education is signalling.
http://medicalhypotheses.blogspot.com/2009/07/replacing-education-with-…
After further thought, the musings in my comment above aren't plausible.
Stipulate for the sake of argument that alums of a certain elite college make the same salaries as those of some mediocre college. It's not very likely that the elite grads have higher-status and more fun jobs despite equal salaries. Many people from both schools will opt for optimal salary. It seems quite likely that if one set of grads had jobs that were more fun and "sexier", they would also have a higher mean salary.
@eric johnson
Actually you were correct in thinking that a job is rewarded in two ways: salary and intrinsic rewards of the job.
The intrinsic rewards might be that the jobs is 'sexy' or in some way high status. Or it might be that a job is perceived as caring or offers emotional rewards or pleasuable interpersonal interactions.
If the status is high enough the job may have zero salary or actually cost money and be subsidized by the participant eg being a prestigious poet, a ballet dancer or an actor.
In fact, poetry is such a popular 'job' that the wages are abolished and in practice there are no poets _at all_ who make a living from writing it! Even the top poets are forced to do teaching or scholarship, or give readings/ lectures in semi-sinecures which are very modestly paid - or else write journalism or novels to make money.
(I say 'poets' by convention but in reality there aren't any actual poets writing in English nowadays.)
If a job has actual negative status (eg a prison guard) then the salary must be higher to compensate.
If a job is necessary and requires doing stuff that most people find unpleasant, like working with numbers, the job attracts a salary (or conditions) premium - so that 'quant'-type jobs are either well paid or have free-and-easy working conditions (or both, if you want to retain really smart quant workers)
This is well explained in Why Men Earn More by Warren Farrell.
This trade-off also features in David Brooks' Bobos in Paradise, when he describes the ruling class as composed of quite rich creatives, and very rich non-creatives - of approximately equal status.