The Next Bursting Bubble

Try to name the type of debt associated with these figures: total debt of $870 billion, 66% of which is owed by those under 40 years old, and an estimated 21% of which is delinquent. It might sound like a subprime mortgage snapshot from 2007, but these numbers exist right now -- in student debt. Here are the facts behind this bubble and what it means for the future.

Looking for new opportunity
Given the bleak unemployment picture, many high school graduates, the jobless, and the underemployed have returned to school in hopes of improving their ability to get a better job. This, in part, has led to the ever-growing balance of student debt. In 1999, outstanding student debt totaled $90 billion. Today, a Federal Reserve study pegs student debt at that $870 billion figure. But students will just pay off this debt once they graduate, correct?

Unfortunately, a large number of these students will not graduate. A study done on public institutions found that only 60.4% of full-time students and 24.3% of part-time students earned a bachelor's degree within eight years. For-profit education reveals even more dismal figures, according to the Senate Health, Education, Labor, and Pensions Committee:

Company

Schools Operated

Withdrawal Rate*

Bridgepoint Education (NYSE: BPI  ) Ashford University 84%
Washington Post (NYSE: WPO  ) Kaplan 69%
Corinthian (Nasdaq: COCO  ) Everest, Heald, WyoTech 66%
Apollo (Nasdaq: APOL  ) University of Phoenix 66%
EDMC (Nasdaq: EDMC  ) The Art Institute, Argosy, Brown Mackie 64%

*Withdrawal rate for associate degree students enrolling in 2008-2009, as of Sept. 30, 2010.

Those who go back to school potentially find themselves in a worse off situation, still without a job and degree, but now strained by thousands of dollars of debt. Those under 30 years old owe almost 34% of the total debt, and unfortunately those aged 16 to 24 are about twice as likely to be unemployed than the general population. As The Wall Street Journal reported, even those with jobs have seen decreased wages: "the average inflation-adjusted hourly wage for male college graduates aged 23 to 29 dropped 11% over the past decade to $21.68 in 2011. For female college graduates of the same age, the average wage is down 7.6% to $18.80."

What if this seemingly unbalanced equation of more debt and less pay does not solve itself -- and loans continue to default?

Potential outcomes
Educational loans typically are not eligible to be wiped from a person's debt when declaring bankruptcy. Also, there aren't any material objects to repossess from someone who defaults on education. But the government can take other steps such as garnishing wages or taking your tax refund. This means student debt will stick around, and as the National Association of Consumer Bankruptcy Attorneys concludes, consumers are "unable to afford to engage in consumer spending that sustains a growing economy." Simply put, for every $200 that goes to pay off that student loan, one fewer iPhone can be bought -- and that totals 4.35 billion iPhones not bought.

The solution
The White House offered one solution. Currently, the law limits monthly student loan payments to 15% of discretionary income, and forgiveness of the loan after 25 years, with a planned reduction in 2014 to 10% of discretionary income and forgiveness after 20 years. Last October, Obama issued an executive order to speed the eventual reductions to take effect this year as opposed to the scheduled 2014. This order only affects those who took out loans in 2008 or later.

The NACBA, being a group of bankruptcy lawyers, proposes another solution of allowing student debt to be discharged in bankruptcy again, as it was prior to 1976. It cites that there were few abuses of the system and that "fewer than one percent of all federally insured and guaranteed educational loans were discharged in bankruptcy." And currently, with the inability of student debt to be swept away by bankruptcy, private educational lenders enjoy an extreme protection from default. No doubt the guaranteed nature of these debts entices lenders -- and for-profit schools -- to push more debt upon potential students.

The future
This bubble may slowly deflate instead of pop. Students will have to weigh rising tuition rates with the new reality of falling incomes after graduation. I would also expect to see more regulation around the for-profit education industry, as Pew Research shows that even though only 9% of students attend for-profit institutions, they make up an astounding 44% of all loan defaults.

And most important to the economy, we might already be seeing the drag on spending that these loans cause. Short of complete forgiveness of this debt, this bubble will float around for decades.

Fool contributor Dan Newman wouldn't be surprised to see tuition reach $1 billion per semester. He also holds no shares of the companies mentioned above. Follow him @TMFHelloNewman. The Motley Fool owns shares of Bridgepoint Education. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 13, 2012, at 5:26 PM, xetn wrote:

    The real answer to the student loan problem and the ever escalating tuition costs are to get the government out of the loan guarantee business.

    You would likely see a lowering of both of the above; tuition would start to drop and student loans would not be so perverse.

    The end all though is to get government out of education entirely.

  • Report this Comment On March 13, 2012, at 5:40 PM, seattle1115 wrote:

    @xetn: "The end all though is to get government out of education entirely."

    George Washington is rolling in his grave. His failure to establish the federally-operated national university he envisioned was his greatest regret.

    The fact is, though, loan guarantees have little or nothing to do with the rising costs of tuition. I recently heard three of Washington state's public university presidents discuss the subject on NPR. It seems that the cost of educating a single student has remained remarkably consistent since 1990 or so - right around $15,000 per undergraduate student, in constant present dollars. In fact, it's decreased ever so slightly in the last 8 or 10 years. What has driven the increase in tuition actually paid by students, though, is deep cuts in state funding, off something like 30% in the last few years.

  • Report this Comment On March 13, 2012, at 6:00 PM, aptosjoe wrote:

    Wow, and I thought the 'end all' was to get an educated and literate body of citizens able to compete in the world markets. Silly me.

  • Report this Comment On March 13, 2012, at 8:45 PM, Midas5280 wrote:

    How about working while going to school? Whatever happened to that concept? I worked my way through four degrees. I took out a total $6,000 in loans. Why would anyone in their right mind go to a for-profit school? Legitimate schools won't recognize credits from these schools.

  • Report this Comment On March 13, 2012, at 8:49 PM, SUPERMANSTOCKS wrote:

    I owe for student loans, and to be honest I am putting off paying them back because Im still in school. I do have the option from the Army to use my Student Loan Repayment program to pay them off. But I am not sure if I wanna pass the buck onto the taxpayer or not yet.

  • Report this Comment On March 13, 2012, at 9:02 PM, JEMSS wrote:

    Unless bankruptcy is allowed for student loans, GDP will suffer given students with > $30,000 in loans cannot afford a car, house, and an independent household.

    Another issue has to deal with the high price of a college education. Paying more than $250/credit takes on huge debt with a minimal return on a lifetime investment.

  • Report this Comment On March 13, 2012, at 11:02 PM, CaptainWidget wrote:

    <<The fact is, though, loan guarantees have little or nothing to do with the rising costs of tuition. I recently heard three of Washington state's public university presidents discuss the subject on NPR. It seems that the cost of educating a single student has remained remarkably consistent since 1990 or so - right around $15,000 per undergraduate student, in constant present dollars.>>

    The loans started in 1978, so I don't know why measuring from 1990 would tell you anything of value....

    AND if you look at the graph of the CPI, it aligns perfectly with the price of tuition until 1978. Then guess what happens? It takes off like a rocketship, straight up.

    Do federal loan guarantees increase tuition costs? If not, that was one hell of a coincidence......

    <<Wow, and I thought the 'end all' was to get an educated and literate body of citizens able to compete in the world markets. Silly me.>>

    It's not. The 'end all' is the individual pursuit of liberty and happiness. Having a bunch of educated people would be great, unless that education bankrupts the nation. Then everyone is educated, poor, and miserable.

    And you're even making a leap in assuming that education makes people more competitive or successful. In my experience, I don't think it's true.

  • Report this Comment On March 13, 2012, at 11:42 PM, lowmaple wrote:

    unless your a con man most people are not going to have lawyers, medical doctors, or many other professional employments which DO make you more competitive.

  • Report this Comment On March 13, 2012, at 11:46 PM, TempoAllegro wrote:

    It's pretty clear to most people that the cost of education is rising, and has been for some time. My university tuition in 1983-84 was $13,000 per year and that school now costs about $50,000 per year. Do the math.

    So why is tuition going up? Is it because college professors and other staff require high salaries, or universities need to build better facilities? In part, perhaps. Simply put, expenses MUST go up if quality must be maintained. I doubt if anyone wants to see America's wonderful lead in the world's higher education arena erode. Furthermore, universities purposely raise tuition a bit more to provide additional merit and need-based scholarships to students they want.

    When the job market is tough, many folks invest in their own education so they can hope to find a better job either within their current field or in a different one. This is a no-brainer. However, in the current climate of deleveraging and slow improvement in the job market, I believe only the best for-profit educational institutions will thrive.

  • Report this Comment On March 14, 2012, at 4:53 AM, CaptainWidget wrote:

    <<So why is tuition going up? Is it because college professors and other staff require high salaries, or universities need to build better facilities? In part, perhaps. Simply put, expenses MUST go up if quality must be maintained. I doubt if anyone wants to see America's wonderful lead in the world's higher education arena erode. Furthermore, universities purposely raise tuition a bit more to provide additional merit and need-based scholarships to students they want.>>

    You'd have to do a lot of explaining to convince me of that. What is an education? And what are the core costs? I think at the heart of the matter, an education consists of distributing information, thinking of a way to test a student's retention of that info, and then keeping records.

    The COST of doing that should be dropping dramatically. Information is spread easier than ever thanks to the internet. Testing retention should, at least, be a wash. It shouldn't cost anymore to actually write curriculum now than it did 100 years ago (and due to rapid spread of best practices in the teaching field, it should be cheaper and/or better). Finally the cost of record keeping has dropped so dramatically it could almost be considered free. An entire universities records that would have taken hundreds of secretaries and rooms full of paperwork to be stored can now be written instantly onto an excel spread sheet onto a thumb drive costing $4.

    Like all other commodities, markets TRY to drive down prices. When the government hands out liability-free money, it fills up classes much more quickly than it would have otherwise. When the classes get full too quick, colleges have to raise their prices to force everyone to consider their personal utility towards receiving an education.

    Raising prices are simply the way they keep the schools from being over-crowded now. It's really that simple. Cut the loans, end class stuffing, force universities to drop prices and compete once again. It's that simple.

  • Report this Comment On March 14, 2012, at 10:22 AM, mrlnbrnd wrote:

    I unfortunatly got some really bad advice when I was in High School and didnt do my research, plus neither of my parents attended college so they didnt have a lot of information either. I had no idea what for profit schools were and why they were to be avoided. I continued to recieve bad advice in the loan office at my school and am now graduated with over $100,000 in debt. my student loan repayments are roughly 65% of my income barely leaving any left over for housing and food. Im just grateful that I have a job at all- many of my classmates are a lot worse off.

  • Report this Comment On March 14, 2012, at 10:36 AM, bossman5000 wrote:

    The Washington post should be embarrassed. 69 percent withdrawal rate? Unbelievable.

    I guarantee you there are a significant amount of underwater student loans that will never get paid. Id like nothing more than to short the heck out of this stock.

  • Report this Comment On March 14, 2012, at 10:39 AM, 48ozhalfgallons wrote:

    Apprenticeships awarded to promising young people will replace college degrees for those seeking lifetime employment. It is now happening in Germany. Of course The U.S. will be the last to adapt.

  • Report this Comment On March 14, 2012, at 11:47 AM, KingOfPizza wrote:

    Coupled with the debt problem is the problem of having a "second-class degree" if you didn't go to a private institution or nationally-known state school. Getting an affordable degree from a small public school is great, but it only moves you up a few spots on the employment queue; you're ahead of the high school graduates and GED holders, but you're still behind most other college grads.

    Working through college is not feasable for most - try convincing a physics major that he or she should be able to earn $15k/yr to cover tuition while attending school. Many of my classmates worked through school, and roughly half of them had to drop out because they either couldn't keep up financially or their grades suffered. The kids whose middle-class parents who can't or won't pay are the ones who most get into trouble; they don't qualify for need-based assistance even though they don't have any money.

    I financed my entire public school education and worked when I could, but never made more than $6000 in a year. I worked both on campus and off. On campus jobs pay minimum wage ($5.25/hr when I was a resident assistant and biology lab tech) and my off campus jobs had terrible hours, no scheduling flexability, and only slightly better pay.

    Once I graduated with my science degree in 2008, I moved to a large city to find work, and all that I could find was sewer work. I was literally climbing into the sanitary sewer system of a major metropolitan area 5 days per week, 10-12 hours per day. This after graduating with honors.

    After 3 years of that I moved to a different large city on another side of the country to find better work. I was unemployed for 6 month before finally finding a job a few months ago. I now make the "average" wage for my age group and education level, which is $15k more than I made doing sewer work. But my degree didn't really help - the sewer background got me the job. I now have enough income to make more than the minimum payments on my $60k student loan debt, but it will still be a few more years before I have the debt-to-income ratio to qualify for a mortgage, and at that point I'll be 30 years old.

  • Report this Comment On March 14, 2012, at 11:47 AM, JeanDavid wrote:

    "I think at the heart of the matter, an education consists of distributing information, thinking of a way to test a student's retention of that info, and then keeping records. "

    I disagree completely. The information you acquire in getting a formal education is obsolete by the time you graduate. It is true that some employers look for pre-tested people filled up with recent information. But as soon as those people's information is obsolete, they are too, and are fired or dead-ended. Throw-away commodities.

    What is important to get in an education is the ability to think clearly, to understand how to acquire information when you need it or to discover it independently if it is not available. To learn means of detecting bias (accidental or deliberate) in the information you have). To deal with the ever-changing reality in which you live.

  • Report this Comment On March 14, 2012, at 11:49 AM, DJDynamicNC wrote:

    "No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable" - Adam Smith

    http://en.wikipedia.org/wiki/College_tuition_in_the_United_S...

    Note where the University of Toronto, adjusted for inflation, costs approximately the same now as it did in 1940 (the chart only goes til the year 2000, but current tuitions average out to about 7,500 a year, still on the same pace).

    Note also that the Canadian government not only offers loan guarantees to every citizen, it will flat out pay for your education if you don't make enough money.

    Please also note that the Canadian government will cover not only your tuition but also your living expenses if you elect to go back to school after losing your job, in order to train for a new career.

    Please note that this all occurs while balancing the federal and provincial budgets and keeping tuition expenses to a minimum while also providing a world class education (University of Toronto is the 34th ranked economics institution in the world, for example).

    For whatever reason, the market seems able to survive all this government tinkering while providing a higher quality of life for the average Canadian citizen, offering higher educational attainment for whomever wants it, and offering reduced debt loads for those who choose to pursue it.

    I'm looking forward to hearing just precisely how lower debt, greater education, improved quality of life, greater economic opportunities, balanced budgets and strong economies are bad for freedom.

  • Report this Comment On March 14, 2012, at 12:22 PM, Upswingg wrote:

    One of the problems with the system is that it is far too easy for students to get these guaranteed student loans with NO credit check needed. I think it is reprehensible that the government is subsidizing for-profit institutions by allowing students to use federal loans to pay tuition at those schools.

    One problem with the system is that although the government provides students with incentives to attend college or trade schools, not every student should be going to college. Some students would be much better off if they could get a job right out of high school, but such workers are no longer competitive. How many college dropouts only went because they were expected to?

    In my previous job, about 1/3 of the people in my department had only a high school degree. They are very smart, good workers and contributed positively to the department. The company has since redefined the job description to require a bachelor's degree. That 1/3 of my department would not even be considered for the job if they applied today. It's a shame.

  • Report this Comment On March 14, 2012, at 12:34 PM, Sparticus501 wrote:

    Greedy university Presidents, deans and faculty now make big bucks - 200K or more a year and work part-time. They raise tuition to over 30K a year, then demand the federal government provide more student aid. We have to stop federally subsidizing higher education, or at least limiting federal student loans to schools that charge 15k or less a year. BIG EDUCATION is a racket, with big fatcat education types charging way too much to teach liberal mush.

  • Report this Comment On March 14, 2012, at 12:48 PM, DJDynamicNC wrote:

    "How many college dropouts only went because they were expected to?"

    Me. I was not cut out for college and it was a big waste for me to go. I would do fine there now, as a mature adult, but it's no longer worth the investment.

    @Sparticus - if 200k a year for salary raises your ire, you must be FURIOUS over banks charging additional fees to pay their traders millions in bonuses.

    Although I suppose profiting off of fees collected from transactions in invisible numbers is commensurately more valuable to society than imparting knowledge to young human beings, so fair's fair!

  • Report this Comment On March 14, 2012, at 12:59 PM, fullmetal97 wrote:

    Once again the government interferring. I have loans in excess of $100K for my undergraduate and graduate degrees. I refinanced and consolidated those loans. I WILL pay them back in full. Why are those who can't control their finances rewarded with forgiveness?

    I have never been late on a mortgage payment. My house is probably worth less than I owe, but I continue to pay. Others have their debt forgiven.

    This country has created a monster that needs to be stopped.

  • Report this Comment On March 14, 2012, at 1:02 PM, KenRtbcr wrote:

    There must be some perverse incentive if the cost of a college education can increase at levels like this. Graduating students are not finding jobs. Are any of them being led to pick courses of study where the job market is weak? Is it possible that the quest to have every college be everything to everyone increased costs? Wouldn't the average cost of an automobile go up if everyone insisted on buying a top of the line Cadillac? If the buyer/student will not restrain spending then who will?

  • Report this Comment On March 14, 2012, at 1:17 PM, JacksonInVA wrote:

    I think you missed the next bubble. It is the US government. There is so much incompetence and corruption combined with my way or the high way attitudes that this baby is gonna pop!

  • Report this Comment On March 14, 2012, at 1:26 PM, badnicolez wrote:

    What would happen to the price of an automobile if the government were to start subsidizing loans for them?

    I would make the case that anybody who can't get scholarships or qualify for low-income grants or have their parents pay for college outright probably shouldn't go to college.

    They should get a job and learn some skills or go to trade school or pay for community college out of pocket.

    I don't think a fraction of these kids realize how the debt will impact the rest of their lives.

  • Report this Comment On March 14, 2012, at 1:34 PM, Fool wrote:

    Great articles and a great discussion to follow.

    Would just like to say AMEN to fullmetal97. Student loans are like any other debt -- and I don't feel bad for anyone who gets in over there head and then whines for someone else to bail them out. I'm in the same boat as many on this board: 5-digits of student loan debt that I'm paying back aggressively out of my paycheck.

    My only comment to add is that I think high-school students need to be better counseled on developing career goals. High dropout ("withdrawal") rates are a direct indication that students don't know what they're getting themselves into when they go to college.

    I would personally like to see the government divert some of the money it is putting into loan guarantees and give it to the states to develop more comprehensive career counseling programs. Several of the people at my company are making terrific salaries -- even with just community college degrees -- because they knew what they wanted to do and got exactly the experience/training that was required for it.

    Keep in mind that a good education doesn't actually make you smarter. It just arms you with the tools that you need to be successful.

  • Report this Comment On March 14, 2012, at 1:47 PM, phillyarchitect wrote:

    There was recently an NPR interview of an author of a book concerning the college tuition issue. Apparently there is no simple explanation of why these have been increasing far above the rate of inflation because construction costs, utilities, and teacher salaries have no corresponding increase. It is really a multiplicity of reasons as discussed above. The one not mentioned above and the one the author (whose name or book title I don't remember) said was prime is "that we've consistently shown that we're willing to pay it" They're raising tuition for the simple reason that they can.

    Germany does a great job at getting their university programs to match up to the needs of their economy in terms of science, medicine, etc. They also heavily subsidize higher education. Let's see, how are they doing as an economy these days? hmmm

  • Report this Comment On March 14, 2012, at 2:22 PM, wasmick wrote:

    "Although I suppose profiting off of fees collected from transactions in invisible numbers is commensurately more valuable to society than imparting knowledge to young human beings, so fair's fair!"

    You must be new to this country.

    Nearly everything is considered more valuable to society than imparting knowledge to young human beings. Not that that's what most colleges in this country do anyway, but that's a whole other story.

    What's most valued in this country is either being able to hit a little white ball or creating a media identity based on the idea that one's ordinary everyday life is somehow important and interesting to others.

  • Report this Comment On March 14, 2012, at 3:39 PM, MCrawley1970 wrote:

    DJDynamicNC:

    I'm a Canadian citizen, and I think you've taken some serious liberties with the truth in your remarks.

    Number 1: "Note also that the Canadian government not only offers loan guarantees to every citizen, it will flat out pay for your education if you don't make enough money."

    This is simply not true. Our student loan program has a number of eligibility requirements, and I know many people from low-income backgrounds who have never received any special assistance -much less free tuition- from the government. You're also expected to repay any loans you do take out. The government does give free tuition to Native Canadians, but they are a very small share of our overall population.

    http://www.ehow.com/about_6565733_average-university-tuition...

    Number 2: "Please also note that the Canadian government will cover not only your tuition but also your living expenses if you elect to go back to school after losing your job, in order to train for a new career."

    Uh, no they don't. You get unemployment compensation. It's probably more generous than its US equivalent, but you DO NOT get a free education and your living expenses paid for.

    Some unversities have limited programs where tuition fees can be negotiated by unemployed persons, but they're not at all what you seem to believe they are.

    Number 3: "Please note that this all occurs while balancing the federal and provincial budgets and keeping tuition expenses to a minimum "

    The Canadian Federal Government is actually running a budget deficit this year of about $30 Billion (for a country of about 33 million people), and most provincial governments are as well.

    http://business.financialpost.com/2011/09/30/canadas-federal...

    http://www.dailymotion.com/video/xoq4xn_economist-don-drummo...

    http://www.thestar.com/news/canada/politics/article/1082124-...

    I'd REALLY like to know who told you our budgets were all balanced, along with this other fanciful stuff you mentioned.

  • Report this Comment On March 14, 2012, at 5:33 PM, CaptainWidget wrote:

    <<What is important to get in an education is the ability to think clearly, to understand how to acquire information when you need it or to discover it independently if it is not available. To learn means of detecting bias (accidental or deliberate) in the information you have). To deal with the ever-changing reality in which you live.>>

    While I agree that is what an education should be, I've been to college, and I can attest, it's not. At least not at my college. Maybe at Brown, but not at my little school. 90% was information retention, and 10% was an IQ test/writing skills 101. I got a 100% in a class that I read no course material and listened to none of the lectures, simply because I wrote good papers. He didn't TEACH me to write good papers, but that's what I was graded on.

    But at any rate, that STILL shouldn't be more expensive. Good teaching is "best practices", which is cheaper than ever to instruct. The best lectures and course work in the WORLD is free online, on Youtube.

    The market would be driving down the cost of education, the government is driving it up. If the government cut all subsidies tomorrow, there would be no applicants. The university would only have two options. Either close up shop or cut their prices and put asses in seats. They're not stupid....

  • Report this Comment On March 14, 2012, at 6:09 PM, MCrawley1970 wrote:

    I would like to see some research done on how many "administrators" are employed, on average, by universities today, as opposed to a generation ago. Few things will expand an organization's costs more rapidly than a bloated bureaucracy that contributes little, if anything, to the stated mission of the organization.

    As one example, writer Victor Davis Hanson pointed out in a recent column that the California State University system now has as many administrative staff members as it does professors, while the educational attainment of the students within the CSU system seems to be in decline: a pretty sad combination of circumstances.

  • Report this Comment On March 15, 2012, at 3:21 PM, DJDynamicNC wrote:

    @MCrawley:

    1) My fault for conflating the Ontario government with the Canadian federal government; the program I'm referring to, OSAP, is a provincial level offering. I should have said the Ontario government makes these offers. My fault, though the point holds.

    2) A Canadian who has lost his or her job is eligible to apply for the Second Career program which offers sufficient money to cover ALL educational expenses AND living expenses for the term of education. I am familiar with this program because one of my closest friends is RIGHT NOW making use of it. Perhaps it is not very well known, but I have seen the tuition payments being made.

    That said, this may again be an Ontario only program; I'm not a Canadian (yet) and all of my experiences are related to Toronto and Ontario. Things may be different elsewhere.

    Ok, I looked it up and it is in fact another Ontario program, not a federal one.

    3) I was unable to find the data on when these programs were initially implemented, but I would like to note that they have been maintained since AT LEAST 1995, during which time the budgets WERE maintained. The budgets were balanced in 1997 and the outstanding debt paid down until the global recession of 2008. I would argue that this makes the fundamental element of my claim true, if the programs in question had indeed been federal in nature as I had assumed.

    HOWEVER, given that I was mistaken about the federal nature of the programs, it would be unfair to compare provincial program sustainability while measuring federal budgets, so we should instead look to the Ontario budget, and here it turns out the province has in fact been running deficits for 9 years.

    Consequently, I'm afraid I have to concede the point and accept this as a lesson in extrapolating my personal experiences to the larger picture without adequately researching the evidence.

  • Report this Comment On March 15, 2012, at 5:36 PM, DJDynamicNC wrote:

    And no, it's no fun being wrong. :lol: But there's also no shame in being corrected.

  • Report this Comment On March 16, 2012, at 10:18 AM, MCrawley1970 wrote:

    DJDynamicNC:

    I'm afraid you're still playing fast and loose with the truth:

    1) The OSAP program, like the federal student loans program, has a number of eligibility requirements. It does NOT mean that "it will flat out pay for your education if you don't make enough money" so no, your point does not hold.

    2) The Second Career Program was only offered by the Government of Ontario, it was only offered from 2008-2011, and only about 20,000 people were eligible to even participate - a tiny fraction of the unemployed population of Ontario, much less the country as a whole. The program has also been a big disappointment to some who did try to use it:

    http://digitaljournal.com/article/279694

    The program also requires some people to repay part of their tuition subsidy if or when their financial circumstances improve:

    http://www.stratfordbeaconherald.com/ArticleDisplay.aspx?e=1...

    "Things may be different elsewhere."

    You're ---- right they are.

    3) "The budgets were balanced in 1997 and the outstanding debt paid down until the global recession of 2008. I would argue that this makes the fundamental element of my claim true, if the programs in question had indeed been federal in nature as I had assumed."

    This is a complete non sequitir. You're assuming that federal budgets WOULD have remained balanced if these (costly) entitlement programs existed across the country during that time. They never did! And the one province that DID implement them is currently running large budget deficits. Once again, the Second Career program was only offered from 2008-2011 in Ontario, for a very limited number of people. Once again, the vast majority of Canadian pay for their university education themselves by one means or other.

    You're also ignoring the fact that the Canadian government "balanced" its books in the late 1990's in part by shifting of some of its financial responsibilities onto the provinces. Were some fiscally responsible measures taken? Sure there were, but there was some "creative accounting" at work as well.

    There is nothing "fundamentally true" about your remarks, and your assertion to the contrary is downright offensive.

    "But there's also no shame in being corrected."

    Well, I'd say there's a lot of shame in attempting to score political points on a message board by making claims that are completely and demonstrably false. I strongly recommend you "adequately research the evidence" before you write anything more about my country, or anyone else's.

  • Report this Comment On March 16, 2012, at 12:16 PM, jconboy0226 wrote:

    CaptainWidget appears to be one of the only people who truly understands the issue. College tuition continues to increase in part because of loan availability and no incentives to cut costs. While having a more educated workforce is desirable, there are so many factors that play into whether it is worth it or not.

    Just because someone is provided access to something does not mean that they will benefit from it. This basic concept seems to be lost on many people. If I accept someone who barely made it through High School, then what am I going to teach them? Remedial subjects? If that is the case, then why not just hold them back at High School?

    Many universities have grown to offer degrees that have little advantage in the professional market and do not prepare individuals for seeking and performing a job. I would go as far as saying that some of them offer programs that do not even scratch the development of self-learning and critical thinking. In that regard, it becomes 4 or more years of partying and I knew plenty of people from my college who did just that. There was essentially a spectrum of workload, value, and difficulty given the size of the college and the programs offered.

    College in many ways has been the new high school for many job applicants. This is a shame because many of these entry level jobs do not or should not require a college degree to perform. Part of this requirement is due to the flood of college degree holders, and the other aspect of it probably has to do with a decline in the educational standards of K-12.

    From a technological standpoint the distribution of information should be cheaper, but college costs are not going down. Most of my lectures in math, for example, involved the professor going through the example problems at the beginning of each chapter. These examples were thoroughly explained in the book, so unless someone was illiterate, there was almost no value added from the lecture. As a result, I did not go to the lectures and I did fine just by reading the book. At that point, the cost should have been the book plus the cost to administer tests and nothing more.

    I find it shocking that most people do not understand the effect that loans have on demand, and the legislation of loan forgiveness and having more loans through the federal government will do nothing to solve tuition costs.

  • Report this Comment On March 16, 2012, at 1:45 PM, DJDynamicNC wrote:

    @MCrawley:

    I appreciate your interest in getting it right, but it appears you missed this paragraph:

    "HOWEVER, given that I was mistaken about the federal nature of the programs, it would be unfair to compare provincial program sustainability while measuring federal budgets, so we should instead look to the Ontario budget, and here it turns out the province has in fact been running deficits for 9 years."

    That's the part where I openly concede the point, note that it would NOT make sense to extrapolate out these programs to the federal level and instead compare to the provincial and DO find that the programs have necessitated a budget deficit.

    I'm not sure what more you want from me, since you go on to demand that I admit precisely what I just admitted.

    You take additional issue with my claim that although I mangled some of the details, much of the spirit of the initial claims was accurate. To that end, you ignore the Canadian low-income assistance grant because it has "eligibility restrictions," which is true. They are:

    Must be from a low-income family as defined by the Canada Student Loans Program;

    AND

    Must be enrolled in a full-time in a multi-year program that is at least two years in duration (minimum 60 weeks) at a designated post-secondary institution.

    In other words, you must be low income and attending classes. Since my initial claim was "they will pay for your tuition if you are unable to afford it," I think a program that will pay for your tuition if you can't afford it meets that criteria because that is what those words mean.

    And that IS a federal program. Since the program will pay up to $3,000 per school year, that's a substantial element of your tuition, though again I will freely admit it is NOT the full amount.

    And your country is mine, too; my immigration has already been approved. So don't think you'll be getting rid of me that easily. ;)

  • Report this Comment On March 16, 2012, at 1:50 PM, DJDynamicNC wrote:

    Oh, hey, I did a little more of that "research" thing and found that Canada's Federal government also offers a tuition repayment assistance plan. If you experience financial difficulty, Canada will pay the interest on your student debt and, if the financial hardship is extended for more than 5 years, the Canadian government will pay off your debt for you.

    That certainly does sound an awful lot like the Canadian government paying for your tuition if you don't have enough money, but I'm sure you're eager to correct me and, if my information from the Canadian government's website is wrong, I'm eager to be corrected.

  • Report this Comment On March 16, 2012, at 1:56 PM, oyoyoy wrote:
  • Report this Comment On March 16, 2012, at 3:18 PM, 3l1ngeniero wrote:

    @CaptainWidget:

    <<Raising prices are simply the way they keep the schools from being over-crowded now. It's really that simple. Cut the loans, end class stuffing, force universities to drop prices and compete once again. It's that simple.>>

    Really? College admins sit around and say, "we have too many people in our classes, so we'll raise tuition?" Earth to CaptainWidget: colleges and universities have these things called "Admissions Departments", in charge of deciding who gets in, and they keep the student population pretty much constant. If they have too many students, they'd just admit fewer students. State college tuitions are up because money from state governments have been dropping for decades, and there aren't any costs left to cut.

  • Report this Comment On March 16, 2012, at 3:24 PM, 48ozhalfgallons wrote:

    @ oyoyoy: I glanced at the first link just long enough to comprehend its lament about small percentage increases in salaries and furloughs (not to be confused with layoffs) Definition of furlough: n. A leave of absence or vacation, especially one granted to a member......

    You would be keener to not defend University compensation hardships to the graduates who cannot find work as preconceived via a degree which leaves them indebted for life. The very debt they have incurred has gone to support those poor professors and administrators.

    You would be keener to not defend this to those with degrees laid off in mid careers, encouraged to borrow more to pay the liberal educational extortionists for educational upgrading; and if they are lucky, only to return to the workforce earning 40% of wages prior to the lay off in an economy of 15+% and rising real inflation.

    Lets say it as it is.

  • Report this Comment On March 16, 2012, at 3:36 PM, 48ozhalfgallons wrote:

    I recall a conversation about Canadian welfare by a resident of the 400 block of East Hastings Street in Vancouver. The number of indebted college graduates residing there may surprise you. Just ask 'em.

  • Report this Comment On March 16, 2012, at 3:37 PM, 3l1ngeniero wrote:

    @Midas5280:

    <<How about working while going to school? Whatever happened to that concept? I worked my way through four degrees. I took out a total $6,000 in loans.>>

    Doubtless you weren't facing costs of $20K plus a year (and rising) in tuition, fees, books, room and board.

    I know a bucket load of students. Unless their parents are very well off or they they have a full ride scholarship, most work 20 to 40 hours a week at menial jobs, in addition to a full load of 4 or 5 classes.

    Needless to say, they aren't exactly in a position to compete for top grades, when they aren't getting enough sleep and eating cheap food.

  • Report this Comment On March 16, 2012, at 4:23 PM, 3l1ngeniero wrote:

    @jconboy0226:

    <<CaptainWidget appears to be one of the only people who truly understands the issue. College tuition continues to increase in part because of loan availability and no incentives to cut costs.>>

    You both make the assumption that standard market pricing applies in situations where the profit motive is absent.

    The higher education price index rises at a clip slightly higher than CPI, while the subsidies from state legislatures trend down. Why would we not see tuition and fees rising yearly in such a situation?

    The real issue is that higher education has been subverted by the elites (ie, those having influence over legislators on either side of the aisle) to subsidize commercial research and development, and to winnow out the lackeys willing to work 60 hour weeks in a cube farm.

  • Report this Comment On March 16, 2012, at 4:42 PM, oyoyoy wrote:

    48ozhalfgallons: this is not the place to have such an argument, nor do I have the desire to have such an argument. No, my lack of desire does not relate to my ability to defend my point.

  • Report this Comment On March 16, 2012, at 5:11 PM, 48ozhalfgallons wrote:

    Arguments are fun.

  • Report this Comment On March 16, 2012, at 6:10 PM, DJDynamicNC wrote:

    "Arguments are fun."

    Can't argue with that. :)

  • Report this Comment On March 16, 2012, at 7:10 PM, MCrawley1970 wrote:

    DJDynamicNC:

    I'd like you to admit that you initial remarks were very misleading and ill-advised (we both know they were) and that you’re now making substantially different claims. Canada is not –and cannot afford to be- a nation that does everything for everyone.

    With respect to the following:

    “Canada's Federal government also offers a tuition repayment assistance plan. If you experience financial difficulty, Canada will pay the interest on your student debt and, if the financial hardship is extended for more than 5 years, the Canadian government will pay off your debt for you.”

    You now concede that there are eligibility requirements for programs such as this but seem to believe that they aren’t actually applied in practice. Debt forgiveness is lot harder to get than most people realize. Don’t forget that THEY get to decide what constitutes five years of “financial hardship”, not you. There is also an upper limit ($26,000) to the amount they will reduce your loans. Once again, this program is not a “blank check”, and it really shouldn’t be.

    With respect to the Canadian low-income assistance grant, the official web page says the following:

    “Canada Student Grant for Persons from Low-Income Families: Students from low-income families who qualify for a federal student loan and meet the specific grant eligibility requirements will receive $250 per month of study. This grant is available for all years of an eligible university undergraduate, college, or trade school program.”

    http://www.hrsdc.gc.ca/eng/learning/canada_student_loan/cgsp...

    You’re forgetting once again that THEY decide who qualifies as “low Income”, not the applicant. Furthermore, $250 per month of study only equates to $3,000 per year if you attend school 12 months per year, while 8 months per year is standard at most Canadian universities. Thank you for admitting -finally- that this not full tuition at most institutions, and not at all what you originally claimed.

    In closing, I’ll leave you some cultural advice: if you want to fit in in Canada, learn to think before you speak, particularly if you’re going to be speaking about us.

  • Report this Comment On March 16, 2012, at 7:49 PM, SpaceVegetable wrote:

    I think a big part of the problem is that too many students are financially illiterate. Why else would they take out huge loans to get degrees in fields that don't offer the kind of salary needed to actually make the payments? When I was researching college, I determined what my needed loan amounts were, along with what the payments would be after I graduated. Then I narrowed down my degree choices to ones that would pay the bill. In my case, that degree was in Electrical Engineering, which has proven to be a great investment of my time and loan dollars.

    Unfortunately, people graduate with a degree in Obscure Medieval Mongolian Literature and expect to get a 6-figure job and a corner office. Not all degrees are worth the expense, especially if you have to take out loans to finance them. I won't even talk about those for-profit schools, since they're way overpriced and the value of the piece of paper they give you is far less than the cost. Sadly, it seems that common sense (and basic math) have fallen by the wayside.

  • Report this Comment On March 17, 2012, at 1:34 PM, 48ozhalfgallons wrote:

    @MCrawley1970: Thank you for the facts, your eloquence in stating them and your firmness in opposing inaccurate perceptions which have been written here.

    I believe that flawed perception is the greatest inhibitor to progressive human evolution. Unfortunately, world leadership in all institutions is mostly corrupted by greed first, then followed by some egotistic sense of entitlement to posterity. The ego of today's leaders disseminates its distorted perception using propaganda, pseudo science, dogma, populism, media presence, etc. to gain validity until the distortion becomes accepted by the masses as truth itself. Briefly, indoctrination.

    More insidiously, I proffer that the inaccessibility to diverse higher education by common people is a social engineering design intended to reduce independent, rigorous thought in the masses. Diversities as opposed to universities would offer a more three dimensional educational environment empowering individual thinking. As we race toward 9 billion without the ability to spread to uninhabited planets, the affluent who undeniably are the controllers of humanity realize that indebted and ignorant masses better serve the their need for accumulation. Partisanship serves the elite as the engine for dilution of unified effort to share in world output.

    The surplus of a common individual's output is mined by leadership to the point that the individual cannot grow. His average wages over time which include taxes, debt, layoffs, starting over, retraining, commodity inflation and health care deteriorate to the subsistence level. His spouse (a declining reality) must work. Offspring are regarded as parasitic for those who are deemed too poor to support and educate them; pregnancy evolves into a health issue (disease) until population numbers are reduced to a point which no longer serves the elite's pursuit of accumulation. The elite seek to optimize population numbers to best serve their interests. Too large a population dilutes resources and threaten mass revolt which can temporarily shift resources away from the status quo. Smaller, enlightened populations more effectively organize and can more permanently reallocate resources. So a comfortable (for the elite) balance must be sustained. 7b? 9b? 12b? It depends upon technology, ignorance and the mass's tolerance for subsistence. It follows that the greatest population tolerating subsistence yields the greatest accumulation to the elite.

    Tolerance is achieved through indoctrination. Generally, in the developed world indoctrination assumes the forms of: indebtedness; mass psychosis injected by media, entertainment, and visualism (my term for image over substance); and partisanship. Nationalism, islamism, socialism, communism are doctrinaire associated with the second world, while also extremely harmful, they are less stealthy in their impedance upon evolution.

    All the above are symptomatic of evolution failure derived from distortion of reality for the sake of one's or a group's own doctrinaire. The truth shall set you free is in conflict with the truth shall make you rich. The latter becomes the doctrinaire of distorted envisioned leadership and its followers. Continuance will lead to human extinction.

  • Report this Comment On March 22, 2012, at 1:54 AM, MrPillpusher wrote:

    I'd like to start off by saying I'm a student in my last year of school and think it's ridiculous that student loans (any loans for that matter) should be forgiven. I will be graduating with about $120,000 in total of student loans and I have every intention of paying that back.

    What really bothers me about this situation is the fact that students are going to expensive schools, for lack of better term what I will call "bullsh*t majors." It's not reasonable nor is it logical to attend an university that costs an arm and a leg only to graduate with a degree which lands you a job where you get paid $30,000/year. (hypothetically) However, it seems to me that students who go to college think they can go for 4 years, graduate with any degree and land a job within a large company where they will be paid handsomely. The idea that everyone should go to college is unfortunately, a terrible one . Too many resources are going to undeserving students who couldn't care less.

    I guess the point I am trying to get at is college is expensive and unless you work towards a degree that will pay you well upon graduation you should just attend a state school. As a student who works 20-30 hours/week it bothers me to no end seeing all the students that attend my university paying $20-30,000/year for teaching degrees, etc. when you can attend a state college and graduate with nowhere near $20,000 in loans after a 4 year stay.

    THAT people is the true problem.

  • Report this Comment On March 22, 2012, at 4:50 PM, DJDynamicNC wrote:

    @MCrawley: Look, I'm talking to a Canadian RIGHT NOW who is getting 11k from OSAP of which he is only responsible for paying back 7k. His tuition is only going to be 5600. That's thousands of dollars in grant money to cover expenses above and beyond tuition, and that's before the Second Career program he's also entering.

    I'm happy to concede that it's stupid to make a post based on anecdotal evidence and I will cheerfully retract the claim and concede that you're largely right, but it wasn't like I just made this stuff up or attempted to misrepresent anything. Stupid mistake? Sure. Lying? No.

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