Do They Trace Their Problems Back To Government? Probably Not.
People tend to have a benevolent view of government (putting it mildly) as a benevolent force in their lives. That's because they take a childish view of government -- basically seeing it as Big Nipple -- and don't mentally go any further, looking to their problems to see their origin.
Now, of course, all problems are not caused by government meddling, but many -- for example, the vastly inflated cost of college -- sure seem to be. Government meddling in markets seems to have made college tuition soar.
From Zero Hedge:
Young people in their 20s are starting their careers with a negative net worth as a direct result of student loans. With student loan debt burdening a growing number of Americans, a new profile in the Seattle Times recently highlighted one couple's struggle with having a negative net worth to start their careers, despite both having degrees from prestigious universities and reliable work.Today, about 15% of households nationwide have a net worth of zero or less according to Federal Reserve Bank of New York data. Take, for example, Jenni and Sean Gritters. They recently moved to the Seattle area, where Jenni grew up, after earning both bachelor's degrees and master's degrees in Boston.
Combined, [she] and her husband owe about $125,000 on student loans, which has plunged their net worth to negative $93,500. The most expensive loan they had was Sean's $56,000 loan at 6.49% that he used to get a second bachelor's degree in nursing.
The difference-maker for their net worth being in the red, versus the black? Student loans. Without them, the couple's net worth would be in the black by $31,500, which would be above the national median for their age bracket.
Now, college was not exactly free in the past, but it was also not astronomically expensive. It was possible for some kids from poor families to work summer jobs to contribute to their college expenses, and to go to state schools that didn't cost a lot of money for in-state kids.
via ifeminists
Great blog post.
Crid at March 22, 2019 4:12 AM
Factoids, more factoids.
(The numbers are almost certainly rock-solid, but it feels wrong to cite Tweets as a source of "statistics," even when the cites are presented therewith.)
Crid at March 22, 2019 4:28 AM
The biggest cause of rising college costs has been the free money in student loans. Counterintuitively, the cure for what ails the student loan program may be cutting out the student loan program.
The other problem has been parents no longer funding or assisting with Junior's college education. Student loans are now the default parental college education funding mechanism.
Trade schools got the ball rolling with tuition that just happened to match the maximum student loan available and having students assign the school to receive the entire disbursement. 4-year colleges saw the windfall these trade schools were reaping and got in on the game.
Take away the free money and let college costs be born by the market. You'll see costs go down and austerity reign at formerly free-spending universities - as these universities seek to attract students with affordable tuition.
That austerity will mean Junior no longer gets a 4-year bacchanal on a deferred payment plan and might have to actually study once in a while. It will also mean no more "Science of Star Trek" or "Social Theory of 'The Simpsons'" electives; fewer grievance studies majors as students actually want some real-world-applicable value for their own money now being spent on getting an actual education.
Private charities, foundations, and even individuals are, of course, free to offer scholarships, fellowships, and tuition assistance without using taxpayer-funded government guarantees.
And, instead of the aforementioned elimination of student loans, the solution insisted upon by activists will be increasing the minimum wage.
Conan the Grammarian at March 22, 2019 5:35 AM
The total money I paid to my school for my bachelor's degree -- tuition, lab fees, student activity fees, other fees, and book cost -- was about $6500. I graduated in 1983. Using usainflationacalculator.com, that comes out to about $16,500 in 2019 dollars. Of course I also had living expenses -- housing, food, transportation, and so on. Doing some quick math, I spent a total of about $25,000, including everything, during the 3-1/2 years it took me to graduate.
I took out a student loan to cover my first year. The amount was $7000. After that, I worked my way through as a co-op student. It meant 12-14 hour days, between working 25-30 hours per week, going to class, and studying. I also lived frugally; I ate at home and spent little on entertainment. But I didn't have to borrow another dime.
The terms of the loan were 7% interest (which was good at the time) with a 10-year payoff period, starting one year after graduation. I paid off the loan in 1990, in part because interest rates were falling, and in part just to be rid of having to mess with the monthly payments.
Back in those days, student loans were private bank loans. They based the loan determination on what school you were attending and what you planned to study (and to what extent your parents could cover the loan if you failed to pay). I went to what was then a no-name school, but I was studying computer science, which the bank figured would be an in-demand field by the time I graduated (and of course they were right), so I got the loan. We need to go back to that system. A lot of the current problem started when the federal government took over control of student loans. Anyone can get a loan for anything, and because of that, schools have no incentive to control costs.
Cousin Dave at March 22, 2019 6:42 AM
Yes, but think of all those $GENDER or $RACE studies students who can only be employed by universities as Title XI or diversity coordinators! how can they draw 6 figure salaries if their employer isn't over charging students?
I R A Darth Aggie at March 22, 2019 7:05 AM
Thanks so much, Crid. And cousin Dave, I think maybe my tuition and expenses were $3,500 a year at University of Michigan in 1983 and thereabouts. I did live in the dorm and have the meal plan.
Amy Alkon at March 22, 2019 7:14 AM
Thanks, Amy. The school I went to, when I first started there, did not have a meal plan; there was a cafeteria, but it was not open on weekends. There was no on-campus housing; the school sub-let to students some badly run-down apartments that they leased. They did eventually build a dorm, but the cost was outrageous -- you could rent a one-bedroom apartment in town for less than the dorm cost, so when they ended the apartment sub-leasing, that's what I did.
My co-op experience might have been as valuable as my formal education. I did real work on real systems; I got practical experience in embedded computing (which, as it turned out, has been a big part of my career), and I learned a lot about the ins and outs of being employed in the profession.
Cousin Dave at March 22, 2019 8:35 AM
Last I was in school there was a big outcry about the cost of university especially state schools. The big driver was the state...and how much they had been cutting funding. One state representative was ripping the administrators a new hole. One responded with the numbers -- at his particular school the cost per student had been driven down but the cuts in funding were greater so the cost to the student had gone up.
The interesting point a remember from one of the newspapers: In the then coming year (2012 I think) the cost of a slot at one of the big state schools was 20% cover by state funding and 80% by the individual (this would include any financial aid). They went back and found in 1974 (I think, the 70's anyway) it was reversed (80% paid by the state and 20% was paid by the student).
The Former Banker at March 22, 2019 8:40 AM
On other topics as well, gov meddling makes things worse. Actions in 2008 froze markets when they needed to be liquid, putting many companies out of business. In other words, gov made the 2008 crisis worse. The New Deal made the Great Depression much longer and worse. Zoning laws and rent control make housing shortages worse and prices higher.
cc at March 22, 2019 9:16 AM
$70k for a nursing bachelors???? He could have gotten his 2 year RN for maybe $5k then online RN to BSN for maybe $9k, while he worked. So anyone that fiscally stupid was destined for trouble.
Only way my kids are going the 4 year traditional route will be with a full ride, and they know it. Otherwise its community college while working, or the military.
Momof4 at March 22, 2019 9:21 AM
Several years ago, there was a documentary about life on an aircraft carrier. A young sailor was asked if he regretted having not gone to college instead of joining the Navy. He said something like:
"Sure, I would have enjoyed four years of drinking and sex, but I'm happy doing what I'm doing on this ship"
So, the non-college people are starting to figure out the game.
David Foster at March 22, 2019 9:24 AM
If the government repays all student loans, what happens to people who are debt free because they (or their parents) saved and went to a state or community college? Do we get the privilege of paying for our own college plus the college of the idiots who decided to pay too much?
I got a math degree at a state university. I helped my wife pay for an AAS at a community college and then 2 years of a computer science degree at a state school. Why should I be responsible for anyone's degree at an Ivy or private school?
We chose wisely. F anyone who was stupid and an poorly paying, expensive degree.
Curtis at March 22, 2019 9:24 AM
My wife and I had a nice chat on a road trip with couple we are friends with who we disagree with politically. The wife said "my problem with conservatives on abortion is that while I understand why they want the child to be born, they oppose the social safety nets that would allow the mother to give birth to and keep the child."
My response: "My problem with the social safety nets is by reducing the consequences of illegitimacy, they in a way create more of it."
Trust at March 22, 2019 10:51 AM
I received my BA (1965) and MA (1969) from Cal State Uni Northridge. Total fees were then $49 per semester.
Total fees there are now $3453. A 7000% increase.
R Bradley at March 22, 2019 11:55 AM
This.
Nixon's wage and price controls did nothing to tame the inflationary pressures he inherited from LBJ, saddling both Gerald Ford and Jimmy Carter with a stalled and sluggish economy that neither could seem to jump start. Ford was reduced to mindless platitudes like, "WIN: Whip Inflation Now!" Carter was reduced to flailing and telling people to keep calm and wear sweaters.
Minimum wage laws make it more expensive to hire low-to-no-skill employees and drive up labor-sensitive prices, negating the benefit of a higher wage for those employees.
For the most part, Smith's "invisible hand" seems to take care of most market imbalances that need to be taken care of; not as quickly as most people would like, but it does get there. It's impatience and fear that drive demands for the government to "do something, anything."
Conan the Grammarian at March 23, 2019 6:57 AM
"Sure, I would have enjoyed four years of drinking and sex, but I'm happy doing what I'm doing on this ship"
And he said it with a straight face. Go Navy!
Gog_Magog_Carpet_Reclaimers at March 23, 2019 3:26 PM
I graduated in 1985 (from a no-name school) with a Civil Engineering degree. I chose that school because they had a program I liked, plus I could walk to class from both home and work.
Financed by 1) a small Federally Insured Student Loan which I paid off in about 2 years 2) a couple of even smaller scholarships 3) savings, and 4) a tuition reimbursement program where I worked (this was in the corporate glory days of the 80s, remember). Working full time and going to school part-time, which was excellent training for my life now. I think I was incredibly lucky to have all of that amazing opportunity.
Kate O'Brien at March 26, 2019 5:22 PM
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