The student loan crisis is really an underemployment catastrophe(medium.com)
medium.com
The student loan crisis is really an underemployment catastrophe
https://medium.com/@eric_seufert/the-student-loan-crisis-is-really-an-underemployment-catastrophe-96181e937a10
361 comments
I'm not sure the author's suggestion that potential students be diverted to trades/coding bootcampts etc., will solve too much, and instead may simply shift the problem into those trade industries as well. Somewhere in the ballpark of 2,000,000 students earn a bachelors degree each year. Let's say 25% of students should be diverted into trade schools instead. That will mean an additional 500,000 student per year entering those fields, which will then have the impact of making those jobs ever more scarce and probably depressing wages as workforce supply outpaces demand.
That's not to say diversion of this sort wouldn't help at all, only that it is not a cure-all. I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever. I'm not sure what the solution to that problem is though.
That's not to say diversion of this sort wouldn't help at all, only that it is not a cure-all. I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever. I'm not sure what the solution to that problem is though.
One thing that I noticed in this article and charts was the unprecedented growth of auto loans. They too have skyrocketed. That seems like another "bubble" waiting to happen.
It's such a shame that the state can't support the education system financially, so that 20-year old people wouldn't have to take loans to study. It works in other countries, so why not in the US?
The amount of labor required for an individual to attend even a community college has increased more than 5-fold. This is for basic tuition at a no-name university, obviously the numbers are far worse for ivy league. You can slice that in terms of markets demanding more, costs going up, administration bloat or whatever else how you like but the fact of the matter is, when a college education is more critical than ever for many fields, it costs five times what it used to, optimistically.
If we want college grads able to leave school and not be saddled with debt for the remainder of their lives, make college free. I'm not interested in hearing about how someone might dare learn something that isn't inherently profitable; I reject the assertion that just because something cannot be successfully monetized does not automatically make it worthless. Art, culture, history, all of these are more valuable to society at large than the highest valued startup. End of. Argue it.
If we want college grads able to leave school and not be saddled with debt for the remainder of their lives, make college free. I'm not interested in hearing about how someone might dare learn something that isn't inherently profitable; I reject the assertion that just because something cannot be successfully monetized does not automatically make it worthless. Art, culture, history, all of these are more valuable to society at large than the highest valued startup. End of. Argue it.
The money has slowly been taken out of everything.
It's a deliberate program.
When a new market opens up, like say the internet in the 90s, then the investors and the people in charge will allow some of us to be overpaid for a while.
It's really not out of the goodness of their heart's. At that point they are focusing on market capture, and they need bodies to help them do that.
Eventually they find a way to make that market 'efficient' (read bad for everyone employed in it) and unless a new market opens up, it can be really bad for workers.
I can't think of a significant new market that's been opened up since the app bubble of 2010 or so.
It's a deliberate program.
When a new market opens up, like say the internet in the 90s, then the investors and the people in charge will allow some of us to be overpaid for a while.
It's really not out of the goodness of their heart's. At that point they are focusing on market capture, and they need bodies to help them do that.
Eventually they find a way to make that market 'efficient' (read bad for everyone employed in it) and unless a new market opens up, it can be really bad for workers.
I can't think of a significant new market that's been opened up since the app bubble of 2010 or so.
Talking about underemployment as a problem for college graduates in general doesn’t seem very insightful to me. It seems obvious that not all degrees have problems with underemployment. So which ones do? Why are people doing those degrees? Are they under the mistaken impression that those degrees will lead to employment opportunities that don’t actually exist?
I’m looking at the Underemployment vs Unemployment of Recent College Grads graph, and then the following graph of Unemployment of Young Workers vs Recent Grads and they seem like they should share one of the curves in common, but the graphs are different?
Underemployment rates for non-farm jobs in the US, 2005–2018 — Unemployment of Recent Grads
Vs
Unemployment rates for non-farm jobs in the US, 2005–2018 — Recent Graduates
The drop in the Unemployment rate for “All Young Workers” since 2011 however is staggering.
IMO a non-dischargable loan should have a correspondingly extremely low interest rate, but I think there has to be a bright line drawn at forgiving principal except in the case of fraud on the part of the educator or the loan servicer.
Underemployment rates for non-farm jobs in the US, 2005–2018 — Unemployment of Recent Grads
Vs
Unemployment rates for non-farm jobs in the US, 2005–2018 — Recent Graduates
The drop in the Unemployment rate for “All Young Workers” since 2011 however is staggering.
IMO a non-dischargable loan should have a correspondingly extremely low interest rate, but I think there has to be a bright line drawn at forgiving principal except in the case of fraud on the part of the educator or the loan servicer.
I would like to see these graphs next to graphs of for-profit university attendance. Looking at wikipedia, for-profit grew rapidly until enrollment started dropping around 2009.
For-profit schools are "13 percent of the nation's college enrollment, but account for about 47 percent of the defaults on loans. About 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities."- 2012 report [1]
[1] https://www.nytimes.com/2012/07/30/education/harkin-report-c...
For-profit schools are "13 percent of the nation's college enrollment, but account for about 47 percent of the defaults on loans. About 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities."- 2012 report [1]
[1] https://www.nytimes.com/2012/07/30/education/harkin-report-c...
If companies didn't require "higher education" degrees for entry, then schools would be forced to start appealing more to the masses. In an information age such as we live in, we can access virtually all the info we could get from universities for a mere fraction of the cost (just the books + supplemental material if we need it).
There's no need for government subsidized education or broadening the job market. There's need of ditching bureaucrats and "Because we've-always-done-it-this-way" morons. Reward people for studying on their own, building their own businesses, networking, etc. rather than following the stupid system just to get two letters next to their name.
There's no need for government subsidized education or broadening the job market. There's need of ditching bureaucrats and "Because we've-always-done-it-this-way" morons. Reward people for studying on their own, building their own businesses, networking, etc. rather than following the stupid system just to get two letters next to their name.
A little bit unrelated question: why are HE revolving loans so cheap, having negative CAGR? Some piece of economics i totally fail to understand.
Re the escalating price of universities, why do we treat the issue like it’s totally a mystery? Aren’t the budgets and costs of large public universities (E.g. the UC system here in CA) public? Weren't these choices based on specific choices by specific individuals who are public employees? Can’t we pinpoint precisely who raised prices and why? What should cost substantially more today than 25 years ago (after inflation)? And why don’t we just demand that a system like UC just go back to the precise budgets of, say, 1995 (again inflation adjusted)? It seemed to be working ok then.
Didn't they have a medical loss ratio requirement with obamacare that required 85% of premiums to go toward actual health care?
Could a similar requirement be imposed which specifically required some substantial percentage of the money to go toward teaching payroll, specifically excluding administrator payroll, leisure activities, athletics, and building construction?
Or rather than that, just require schools to publish the percentage of tuition spent on actual teacher/T.A. payroll by department?
Could a similar requirement be imposed which specifically required some substantial percentage of the money to go toward teaching payroll, specifically excluding administrator payroll, leisure activities, athletics, and building construction?
Or rather than that, just require schools to publish the percentage of tuition spent on actual teacher/T.A. payroll by department?
No.
While more and better employment would help with the student debt, the fact is starting out in life saddled with what is essentially a home mortgage takes a huge bite out of the potential value of education.
And it carries a very high opportunity cost in that increasing numbers are avoiding school and or seeking options that do not put them in profound debt so early in life.
While more and better employment would help with the student debt, the fact is starting out in life saddled with what is essentially a home mortgage takes a huge bite out of the potential value of education.
And it carries a very high opportunity cost in that increasing numbers are avoiding school and or seeking options that do not put them in profound debt so early in life.
Schools charging the same amount to each student is an issue. Why should someone getting taught in an expensive engineering program pay the same as a British lit kid?
People want to do away with all the "useless" majors, which seems like a mistake to me. Colleges weren't about finding jobs until recently when companies decided to outsource training workers to these places. For our entire history colleges were places where people can learn about the world and different things. Suddenly shaming them for teaching literature when they have been doing it for hundreds of years is dumb. The answer is to just charge tuition relative to the cost of the particular education.
People want to do away with all the "useless" majors, which seems like a mistake to me. Colleges weren't about finding jobs until recently when companies decided to outsource training workers to these places. For our entire history colleges were places where people can learn about the world and different things. Suddenly shaming them for teaching literature when they have been doing it for hundreds of years is dumb. The answer is to just charge tuition relative to the cost of the particular education.
It's a crisis of handing too much money to people that have no chance of repaying it. We have people that took at $100k in loans for a music education degree. A very noble cause, but you're unlikely to pay that back within 15 years given the salary prospects.
The root of the problem like many other macro problems [housing crisis, income disparity, etc] is well-intentioned but misplaced government subsidies.
The root of the problem like many other macro problems [housing crisis, income disparity, etc] is well-intentioned but misplaced government subsidies.
It’s fairly obvious about what is going on with tuition costs. The burden has shifted from the tax payers to students, due to budget cuts. If you simply put the funding levels back to 90s a lot of this would go away.
https://www.cbpp.org/research/state-budget-and-tax/a-lost-de...
https://www.cbpp.org/research/state-budget-and-tax/a-lost-de...
I’m still trying to figure out why every major costs the same. Most non-STEM majors are using the same methods, and devices that were used 50, a hundred years ago.
$50K per year for an English degree vs $50k per year for a Mechanical Engineering degree, the English majors are getting jobbed. Think about all the majors that don’t require the underpinnings of constant technology upgrades, or need the latest and greatest technology.
$50K per year for an English degree vs $50k per year for a Mechanical Engineering degree, the English majors are getting jobbed. Think about all the majors that don’t require the underpinnings of constant technology upgrades, or need the latest and greatest technology.
Why should banks be allowed to inflate credit bubbles that people cannot pay back? Why do we keep saving the banks?
The problem with college is that going to college won't make you an expert in your field. Even if you're an A+ student, the amount of knowledge required to be an expert vastly outpaces the knowledge gained by going to college.
That's part of it but mostly it's due to rent seeking on the part of degree granting institutions.
H1B compete with the newly graduated college students. Before people say that there’s no problem with STEM graduates finding a job, I’ll counter that many of my coworkers 20 years ago didn’t have STEM degrees, and were previously English majors, business majors, etc. They were people with technical aptitude who realized they had picked a field of study that didn’t quite suit their financial aspirations. They were able to get an entry level IT job and move up. Now those jobs are filled by H1B.
It seems more fruitful to focus on what product is being sold through state-subsidized loans and if they provide the necessary value. Bloated administrations is largely to blame for the increased cost, and a middle class student getting a student loan they can't default on for a degree without earning potential is not a good choice.