The higher-education bubble (continued)

Like a debit card, a credit card is also a plastic card issued by a financial institution for usage to complete payments and purchases. Instead of the needed funds to complete the transaction being deducted from an associated financial institution, they are issued in the form of debt by the underlying credit card company. visit : http://www.credocard.com

Loan crisis is prevailing among students across the whole world. The tuition is much higher than that in the past old days, which is not available for students in poor conditions. So students have to ask for a loan from banks. These money with the highest rates will be paid by young people after graduation, thus students are confronted with greater in their future job-hunting.
Another problem is that young people are lack of skills of managing their own money. They send a lot of money on unnecessary things, which adds a heavy burden on their family.
We can not change how much money we pay for universities,but we can get rid of bad behaviours of dip into our purse.

I just read another article a couple of minutes ago, about a student owning $400,000 in debt. She is a vet student and I can't understand how she was able to acquire such a big debt when vet students are just allowed with a $30,000 student loan.
Students should realize that before they go to any debts, they will have to think about their future. Will that student with that $400,000 loan live with a good life? Will she have a good future even if she finishes college?
article. Another article I want to share involves on learning the calculated value of your college education, minus the cost of a student loan for those who are interested not to be in debt.

Well it's a fact that the US is essentially a borrowing nation.
The govt is borrowing from other countries by selling bonds and other IOUs.
The citizens are trapped in credit card debts and other mortgage loans.
And then it's no surprise that students are also borrowing. It's more of a habit that has been inculcated.
That's why people are now more pessimistic about dollars but optimistic about commodities such as oil and precious metals.

I'm a PhD student at a large state school (20,000+ students; alas, not flagship) and though I'm not sure how to phrase a comment that doesn't sound peevish and whiny, I suppose I'll try (we grad students are famous for complaining).

I teach a very large general education class of primarily freshmen who are "undecided" or in some unrelated major. I would say that a full 1/3 of my students are completely unprepared for college and have been admitted because the school is flat broke. (Said university also embarrasses itself with a "walk-in admission day" in which anyone can walk up to a desk on campus, answer questions, and fill out an application and be admitted the same day...disgraceful for the university and the unfortunate student who's major life decisions are condensed into )

It's also commonplace that many students enroll in classes and remain enrolled throughout the semester accruing countless F's on their transcripts simply so they can collect student loans. The loans are processed through the university first who skims off fees and tuition and the remainder is refunded to the student so the University has little problem with this. Tzimisces is correct that many schools are cutting funding for PhD students (not mine thankfully, though it is a pittance). I have colleagues who've been funded in years past but were alerted that because of budget constraints, they would not be funded this year. Nice to ride a student for a year or two into a degree (generally having them teach undergraduate classes) then make it nigh impossible for them to finish by pulling the carpet out.

It's all a sham. My one consolation was that if I ever needed to bolt, I could scheme my way into a good law school, but then I would simply shift membership from the legion of unemployed academics to the legion of unemployed lawyers. Sadly, the main reason I went back to school was because access to funding (including loans) beat being unemployed...so I'm not much better than the undergrads I berate. It's easy for those ivy league administrators to dismiss Schumpeter's argument, they can afford it. They're ivory towers are far removed from the dirty underside that comprises most American higher education.

I forget whose idea it was, but it's worth repeating:

University compensation = 10% of a student's post-graduation income for 10 years.

Should get their incentives aligned, with the added bonus of making sure my crappy mechanics prof gets the boot.

I put myself through college without loans or parental support too. And, yes, I lived very frugally. But I had a lot of help.

However, this was possible only because (a) the University charged maybe 1/3 of the cost in tuition, (b) generous scholarships were available for certain key professions like microelectronics, which more than paid that tuition, and (c) large companies like Nortel hired student interns like me in large numbers for good wages.

I have, since then, paid all that back and much more in taxes. I, for one, will continue to vote so that (a) and (b) remain true... for for forms of education & training where the economy has a shortage. Like biotech. And pipefitting.

I'm about to finish graduate school in the U.S. with tens of thousands of dollars in loans, and many of my friends will have closer to $200,000 in loans. Having so much student loan debt will affect my life for years and impact major life decisions, such as buying a house and having kids. I'm very worried about the impact that student loan debt is going to have on my generation.

I created a forum at http://www.repaymystudentloans.com to provide a supportive community for people dealing with the stress of having student loan debt.

Most of the posted comments have a great deal of validity in them. Speaking from experience, as I taught for 5 years at a college, I can assure you that big, greedy business, has come to the college campuses over the past 20 years. Irrespective of how you made it through college, you most likely paid way too much for your education. Those with loans -- of course - got the worst end of it. I also took out some student loans... and I regretted it. However, I made sure my children didn't, and they faired even better. The issue I see is tuition is out of control, and the lending practices are unfair, and our own government and Dept. of Ed have become embroiled in the mess, even promoting it. Obama knows it.. and he is trying to change it. The corporatocracy of the college campus chooses to leave things nice and cozy for themselves, and wants lending and spending and abuse of process to continue -- big bucks for them $$$$.... but, the American public is becoming much wiser, thanks to the internet. I can attest to the fact that when I was teaching in the early 90's, the colleges wanted to create more classes -- that weren't necessarily vital to the degree program -- but that would bring in more lucrative dollars from pell an student loans. Create a class, say it is required/or a good elective/ and gouge the students. I was asked to create such a class once -- and I refused. Students at my campus traveled, were working adults in many instances, and could just about afford the education -- let alone pay additional for a class that was not necessary. This is the truth. This is happening at many college campuses. The accrediting bodies for many of the degree programs are just as guilty. (That is another story). I suggest that we do educate ourselves, and our children and families. Recognize you can get an education in a lot of cost effective ways. Also, some colleges are becoming no-frill-colleges. That is a good way to go. The State of NH has some. College loans would not be so problematic if the lending system was not so corrupt and predatory, and the college tuition was reasonable -- which it isn't! I recommend that students become more aware, and that people write the President, and their legislators, and complain. Colleges that receive student loan money need to be held accountable, and President Obama is trying to have this happen -- with much retaliation from the private colleges, in particular. College is glamorous for many youth, it is an experience that I feel is very valuable -- but not if the cost decreases the value in the long run, the jobs aren't there -- and your loan payments are. Also, the caliber of the education in this country needs significant improvement, and we have all seen info on this, lately. The facts are out there. So, if the system isn't working -- let us change it. For the consumer/student, find a way that doesn't involve excessive costs, and go ot a no-frills-college, work part-time, or do whatever it takes to avoid a student loan. Until the system is fixed -- it is a trap, not an education you will be falling into.

I'll always remember my introduction to ROI with the example my Finance 101 teacher used: getting a PhD... lesson learned: totally not worth it!

These days you cannot avoid getting loans, even if you work full-time, adopt a lower standard of living, and go to school at night.

College tuition has increased exponentially, there are fewer scholarships and grants available (and those that are available are often insignificant), the overall cost of living has increased, and salaries have stagnated. So it's really not a matter of choice for those who would like a college education. This a systemic problem that can't be addressed by individual students and families sacrificing and working hard in order to decrease the amount of debt they take on.

On a different note, as long as tuition at private institutions is not regulated, the government will continue to subsidize expensive private universities/colleges (with massive endowments) by giving federal student loans.

And public universities are not necessarily a cheaper alternative, since tuitions have increased due to consistent cuts in state education budgets over the years.

This kind of a mixed bag though. There are certain students that take out massive guaranteed student loans with no intention of ever repaying them. Medical students are notorious for this. They call them "deadbeat docs". Med school can easily cost over $100K, but they figure the students are good for it because of the high dollar salaries that doctors get. But the docs take out the loans and just keep the money.

"Students are taking on more of the riskiest debt: unregulated private student loans. Here, students have the least protection and pay the highest rates. For-profit colleges are leading the way in this trend"

No doubt, alma mater receives a handsome kick-b...er...honorarium for arranging these loans.

Ah Beng,

That's spot on. I didn't get a dime of assistance through my school. Luckily we have an excellent career office that hooked me up with a paying internship through the state. Luckily I got in before the downturn started, I heard later from people that my experience was no longer typical and that while I had my pick of a large number of paying internships there weren't even enough paid internships for the Public Administration students who were required to have an internship to complete their degree the next year and they were having to take unpaid internships on top of school. What a difference a year makes, they couldn't fill all the paid internships one year, the next students were having trouble finding unpaid work.

PhD students had it easier since the school usually paid these, but I heard some internal rumblings that budget cuts were requiring us to fund less PhD students. Being only a Masters student myself I didn't pay much attention to this, but it will be interesting to see in future years if the downturn has led to even this level of funding for PhDs to slim down as well, requiring even more debt. I know tuition went up.

I've been out of graduate school for some time now and I can barely afford to pay off the interest on my loans, let alone the principal. I might also point out that these days, especially at large research institutions in the US, fellowships are no longer even granted to Master's students for teaching or tutoring. Essentially, these programs are cash cows for supporting the Ph. D. level classes on offer because the Ph. D. students by and large have a free ride. It's been pointed out to me before that Ph. D.s having lower wages after the completion of their degree than a professional Master's student makes some debt from the graduate school experience the arbitrage condition, but I have a hard time believing that's $40k.

Loans are pushed too hard, private colleges train people in the same skills on the job training used to, and too many people go to college who aren't mature enough for it. Lots of problems to solve. I think a big fix would be to encourage people to work for a couple of years before going to college, I saved up to go for my masters degree after a couple of years of working and the contrast in my behavior towards school with each degree is radically different (for my undergrad I was drunk most of the time and rarely in class, for my grad I was one of the top performing students). While there are certainly some people who are mature enough to focus from an early age, I don't think this is the majority. Most people would be better off getting their education a few years later when they can really benefit from it, and would also be less dependent on loans.

Of course, with tuition rates where they are today, very few people can get jobs without an education that can pay for school. Even going to a state school after saving for two years while living at my parents rent free, I still needed to take on some loans to pay for both school and living expenses when I went back to school(since the only good school where my parents live is private, I saved money by paying living expenses to attend a state school which required me moving, also living with the parents after several years on my own wasn't my favorite thing to do). Still, I think a lot of problems could be solved by trying to push for a cultural shift for later education, like I did with my second degree, rather than the cultural norm of college right after high school. Most kids need the discipline of a full time job to really be able to focus intently on college where they have so much independence (having your first drink somewhere other than a college dorm is probably also a big plus to discipline, people shouldn't be learning to drink in college but at home, I'm a firm believer in this, though it's off topic). I'd like to see more policy focus on getting people into school after a few years off, perhaps with night and online remedial and refresher courses (which I've blogged about the need for) to encourage returning after some time off by building confidence in academic abilities. I think a lot of people who didn't have the discipline their first time through school would find themselves vastly more successful if they made a second go at it, and this would help solve some of the problems, through an increased ability to pay, better knowledge of what a person actually wants the degree for, and a better ability to assess the value of the schooling relative to the cost.

Maybe too many people are now going to College / university and often with no plan of what they are trying to achieve there. It is now a costly option and you need to have a clear plan.

like other posters I worked and studied at the same time without running up any debts.

My government paid me to go to university because in Europe we realise that a highly educated workforce will increase growth and pay for itself. This might not be strictly true of course given that youth unemployment has soared.

Paid for my degree by working on farms, and then paid 90% of the cost our kids' college.

There's a lesson there somewhere, but I'll be darn if I can figure out what it is...

Nothing new here.

PBS's Frontline had a episode called "College, Inc."
A link to watch is on pbs.org/frontline
I believe that March 1st episode is a rebroadcast.

It's too bad that students make these "rational choices"
about going into debt, and then complain later.

Myself, I had to work while attending college in the evenings.

I had to forgo cableTV, cellphone, hippy-hoppity fashions, and make other sacrifices to put food on my table and a roof over my head. People had no shame in laughing at my lifestyle. ("You don't have..." hahaha)

I'm not in debt, so it was worth it.

College debt can't be expunged in bankruptcy. It'll come out of thier Social Security check if need be.

Regards