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Joseph Stiglitz On Student Debt And The American Dream

Nobel-prize winning economist Joseph Stiglitz on how student debt is crushing the American dream, and what to do about it.

Graduates from various institutions take part in the Toss Your Caps: Philly Graduates College photo opportunity on the steps of the Philadelphia Museum of Art Friday, May 20, 2011, in Philadelphia. (AP)

Graduates from various institutions take part in the Toss Your Caps: Philly Graduates College photo opportunity on the steps of the Philadelphia Museum of Art Friday, May 20, 2011, in Philadelphia. (AP)

It’s cap and gown time all over the country.  And since it’s this country, that means a lot of new young college graduates graduating with a lot of debt.  $26,000 on average now for student loan borrowers.  In total, more than a trillion dollars in student debt.  Famously more student debt now in this country than credit card debt.

Nobel prize-winning economist Joseph Stiglitz says this isn’t just an astonishing number.  It’s a real drag on the US economy, and a real promoter of US inequality.  It’s got to change, he says.

This hour, On Point:  Nobel laureate Joe Stiglitz on student debt in America.

- Tom Ashbrook

Guests

Tamar Lewin, higher education reporter for the New York Times. (@tamarnyt)

Joseph Stiglitz, Nobel-Prize-winning economist. University Professor at Columbia University and Co-Chair of Columbia University’s Committee on Global Thought. His recent op-ed in the New York Times was, “Student Debt and the Crushing of the American Dream.”

Closing Segment

A selection from Annie Lennox’s commencement address at the Berklee College of Music in Boston.

http://youtu.be/9SRy6AsgFno

From Tom’s Reading List

The New York Times: Student Debt and the Crushing of the American Dream — “The crisis that is about to break out involves student debt and how we finance higher education. Like the housing crisis that preceded it, this crisis is intimately connected to America’s soaring inequality, and how, as Americans on the bottom rungs of the ladder strive to climb up, they are inevitably pulled down — some to a point even lower than where they began.”

Time: Elizabeth Warren: Students Should Get the Same Rates as the Bankers — “Consumer protection maven Sen. Elizabeth Warren, D-Mass., introduced her first piece of legislation this week, a proposal that would allow students to take out government educational loans at the same rate that big banks pay to borrow from the federal government.”

The Huffington Post: Obama Student Loan Policy Reaping $51 Billion Profit —  “The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.”

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  • 2Gary2

    We already have banana republic levels of wealth and income inequality.  There is nothing even remotely resembling equal opportunity in this country. I sadly  predict that unless the 1% voluntarily spread the wealth via the government or some other way it will simply be taken from them by force.

    The rich need to buy peace.

    Look at all the kidnapping of the rich in the banana republic going on now.  Americans are all pretty much armed.  It wont take much for forcible redistribution of wealth.

    It is unacceptable for the 6 Walmart heirs to have more wealth and income than the bottom 130 million American citizens.  There is no way to justify this on ANY grounds.  Same with the obscene pay of wall street.  They in NO WAY work any harder than the single mother working 3 jobs and taking online courses to better her lot.

    When the single best determinant of a child’s success is winning the lucky sperm club by choosing rich parents something is seriously wrong with this country.

    The American version of capitalism is not working for the vast majority of the citizens. We are sick of the rich socializing their losses and privatizing their gains. Time for a heavy dose of socialism to level the playing field. And no Obama is a moderate republican and is a huge disappointment.

    • Don_B1

      This article in The Atlantic shows that this problem exists across the whole world, and the developed world in particular:

      http://www.theatlantic.com/business/archive/2013/05/the-global-youth-jobless-crisis-a-tragic-mess-that-is-not-getting-any-better/275696/?google_editors_picks=true&utm_source=BerkshireDaily&&utm_term=0_30139049e9-23c5005835-40684293

      This has also been addressed by Paul Krugman in The New York Times:

      http://www.nytimes.com/2013/04/22/opinion/krugman-the-jobless-trap.html?ref=opinion&_r=5&

      where some of the roots of the wrong-headed policies, espoused in the U.S. mainly by members of the Republican Party (driven by Tea Party members) is given in a short essay.

      For a longer exposition of why politicians have been willing to enforce austerity while ignoring the horrendous destruction of lives by not implementing stimulus policies to cut unemployment, see Professor Krugman’s review:

      http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/?page=1

      of three books:

      The Alchemists: Three Central Bankers and a World on Fire

      by Neil Irwin

      Penguin, 430 pp., $29.95 
      Austerity: The History of a Dangerous Idea

      by Mark Blyth

      Oxford University Press, 288 pp., $24.95
      The Great Deformation: The Corruption of Capitalism in America

      by David A. Stockman

      PublicAffairs, 742 pp., $35.00   The first two books provide valuable information while Stockman’s book is a polemic screed that simply rants about various “sprees” the government has taken since going off the gold standard.The take-away is that the “Very Serious People” (VSPs) around the world have, at best, deceived themselves and at worst sold out the powerless for the wealthy.

      • northeaster17

        Reap what ye sow. Somethings never change

        • William

           The feds only cut 80 billion from the growth in future spending so we have not seen any austerity at their level. The feds have increased spending for every program over the last ten years without any elimination of programs that don’t work. Krugman is just stuck on spending, “dig a hole, cover it up, dig another hole, cover it up…etc..” Stockman called the FDR economic “fixes” total failures.

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            Someone wanna explain “business cycle” to William?

          • Don_B1

            He probably has less ability to discuss it rationally than the woman Barney Frank found less able than a dining room table.

            He only talks in untrue clichés.

      • 2Gary2

         I think they VSP sold out the rest of us for the wealthy.  Our problem ultimately is a political one.  Other countries such as the Scandinavian countries have faced the same pressures we in the USA face but with vastly better results.

        • Don_B1

          Absolutely!

          Fortunately the Scandinavian countries (Norway, Sweden and Denmark, Finland is a “cousin) had lesser problems because they had their own currencies (like the U.S. and the U.K.) and had not had the housing/mortgage bubbles that the U.S. and the rest of Europe (Eurozone) had had. Note that Sweden had a large financial crash of a similar nature back in 1991-2.

          Iceland took a path where they delayed paying back debt and kept unemployment up so that they are doing much better than the austerian’s pet countries of Ireland and the Baltics (particularly Latvia).

          If you missed my reference in another post, see documentation of the insanity of austerity when the economy is depressed:

          http://www.nytimes.com/2013/05/13/opinion/how-austerity-kills.html?pagewanted=all&_r=0

          Here is a good exposition of how the world got here and what is necessary to recover without making things worse than they have to be:

          http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/?page=1

          You are correct about the politics having gone astray and one of the big reasons is the way election campaigns are financed. Lawrence Lessig is trying to get a movement started to get a constitutional amendment passed either directly through a Constitutional Convention or using it to force the Congress to act:

          http://www.rootstrikers.org/ted_promo?splash=1

          I am sorry that I can’t say a lot that shows progress in this endeavor.

          • Johannes

            You conveniently leave out this fact about Scandinavia & specifically my native Denmark: There are 5.5 million Danes; 90% of whom are ethnically Danish. They all work. They have similar work ethic & culture–> Easy votes.  Try that with 330 Million multi ethnic multi ethic Americans– half of whom don’t work and 47% who pay no taxes. It’s no puzzle, it’s basic arithmetic.

    • William

       Would it not be easier to just create a labor shortage?

      • Don_B1

        And how do you propose to do that? Just let people die indiscriminately?

        • William

          A massive deportation of illegal immigrants. Huge fines and jail time for people and companies hiring illegal immigrants. A  freeze on legal immigration until the unemployment rates are less than 5 percent and real wage income has gone up for all segments of the economy.

          • Don_B1

            And are you ready to suffer the $100 billions in losses to the economy each year, and the suffering of millions due to the economic downturn that would create?

            As always complex systems do not have simple solutions without horrendous side effects, as any economist worth the term would tell you if you cared to find out.

            Your “solution” would not even lower the unemployment rate, so it is NOT a solution.

          • 2Gary2

             yes round up the illegals and send them home.  That is a biog first step.  We do not need any more unskilled/semi skilled labor.  Corporate death penalty for companies who keep hiring illegals.  Maybe really skilled can stay.  If it does not benefit the country send them home.

    • Johannes

      Who would pay for all those entitlements?

      • 2Gary2

        By taxing the rich and corporations.  Before you say “you can take 100% of the rich money and it will not do anything”.  That is simply right wing bs and is proven false.

        The rich need to be taxed hard as do corporations.  If corp move then slap on massive tariffs.

    • John Cedar

      You should find it equally unacceptable that the poorest in American have more wealth than billions of people  in the rest of the world. They probably have more wealth than a middle class citizen in the utopian Nordic countries.

      • 2Gary2

         you are confusing absolute poverty with relative poverty

        • John Cedar

           You are conflating poverty with not-poverty.

  • Ahmad Alhassan

    We cannot get a decent set of policies out of our political system which serves special interests.
     http://theoriginalamed.blogspot.com/2013/05/why-has-economy-become-unfixable.html

    • Don_B1

      Your reference seems to follow the same path as Professor Krugman’s in The New York Review of Books, though his is shorter and more direct.

      But your link does discuss the use (though often hidden) of (the discredited) Say’s Law that forms the basis for the again discredited “supply side” economics.

      As an aside, some attribute PM Thatcher’s pay increases for public workers as needed to maintain public order when the other austerity provisions were implemented; the number of police was greatly increased.

    • margbi

       We can’t get a decent set of policies when the two houses of Congress are working at cross purposes. One house is determined to block everything the president proposes, while the other is hampered by arcane rules of procedure.

  • http://www.facebook.com/profile.php?id=100002296415298 Ahmad Hassan

    We cannot get a decent set of economic policies out of our political system.  all the remedies to our woes are known.  The powerful use ideology to advance their interest at the cost of the rest
    http://theoriginalamed.blogspot.com/2013/05/why-has-economy-become-unfixable.html

    • Don_B1

      The threat is that the Tea Party hold on the Republican Party will prevent any change in austerity policies as would normally happen.

      The Republicans have been able, through Fox News Channel and the cowed Main Stream Media, to keep a majority of the citizens convinced it is both sides that are extreme and will not compromise with the other. But they are deadly wrong.

      It is in that area that President Obama has been all too willing to give too much away to get something done, and certainly the country would be worse off today if he had not, but it would have been a lot better off if what he actually wanted (e.g., the American Jobs Act) had passed into law.

      The question of whether the political system is fixable (and in time to prevent further irrational actions) is whether the Democrats can win the House of Representatives and keep the Senate in 2014. Another two years of this stagnation with more careers ruined may be too long and real disaster may be in store. If that can happen, maybe enough Senate Republicans will be cowed enough to break ranks or the filibuster will (finally!) be neutered so responsible policies can be passed. The best result, certainly not likely, would be 60 or more Democratic Senators.

      • Gregg Smith

        Austerity?!

        • Don_B1

          Try reading this:

          http://www.bloomberg.com/news/2013-05-14/u-s-deficit-to-fall-to-642-billion-says-budget-agency.html

          and then read this:

          http://www.bloomberg.com/news/2013-05-14/don-t-get-too-excited-about-the-new-smaller-deficit.html

          The fact that the deficits are not going to continue down is not because of “your” increased spending, which does not exist, but because revenues will not be increasing. And spending should go up with the population anyway. 

          The last paragraph says it all: get more growth through fiscal policy.

          But it is your bar-the-door shrink-government-at-any-price to the future of the country, out of pure ignorance (or at least I hope you are not that callous) that is causing this calamity.

          But you are a poster-boy for Upton Sinclair’s famous observation: “It’s difficult to get a man to understand something, when his salary depends on his not understanding it” though “ideology” may be a replacement for “salary?”

          • Gregg Smith

            We spent $15 billion more than last year and that’s after sequestration.

          • Don_B1

            This year is not over yet! How do you know?

          • Gregg Smith

            We are budgeted to spend…

            Sorry. There are no cuts.

  • Steve__T

      Senator Elizabeth Warren of Massachusetts has asked top government
    officials to explain the absence of Wall Street prosecutions. In a
    letter to the Securities and Exchange Commission, the Justice Department
    and the Federal Reserve, Warren questioned the government’s preference
    for reaching settlements with big banks accused of financial wrongdoing
    instead of holding them to account in court. Warren writes: “If large
    financial institutions can break the law and accumulate millions in
    profits and, if they get caught, settle by paying out of those profits,
    they do not have much incentive to follow the law.”

    http://www.democracynow.org

    • John Cedar

      She asks a great questions. It is too bad she doesn’t have the morality to ask the same question about mortgage applicants, mortgage originators and appraisers. Or to address that settlements in cases such as Buycks-Roberson v. Citibank… turned out to be a butterfly causing a tornado.

  • responseTwo

    It’s good to see NPR get away from the big excitement story of the day and do reporting that is related to the general population. Thanks NPR. This makes me want to to contribute.

    • Jasoturner

      Do it!  Even five bucks a month helps keep On Point on the air.

  • MadMarkTheCodeWarrior

    Bring back the balance!!! The system has been skewed so far in favor of the wealthy that our economy and our people are unhealthy.

    • http://www.facebook.com/german.zarate.161 German Zarate

       I am an economics professor at a 4-year college with student loans dating as far back as 1989 which I am still paying. This could be a generational time bomb since I now have 4 kids in college and the irony is I am paying for them to avoid borrowing yet I still owe 32,000 of my own student loans that I can’t pay until I can get my kids through college.

  • Tim from Durham, NC

    As a 20-something, I just don’t see student debt as the main issue here; the main problem is jobs. Is 10, 20, even 40 thousand dollars worth of debt going to make it difficult for people to get started? Sure, but if they’re working solid middle class jobs that debt will be manageable. The problem I see is that next to no one I know has landed any of those jobs. 

    My story: I graduated magna cum laude with a degree in psychology from a top private school in 2009 with NO debt at all. 3 1/2 years of work, a 6 month unpaid internship I took on to help boost my resume, and two moves to new cities to try to find a better job market later, and I’m still making $11 dollars an hour. My girlfriend and I are planning on getting married next year but we won’t be having a wedding because it’s simply too expensive. In a few months I’ll turn 26 and join the ranks of Americans without healthcare. How is anyone expected to start a family in this climate? My co-workers are all recent graduates, some with master’s degrees, working for under $25,000 a year, you can’t pay down debt with wages like that. Get people good jobs and the debt problem will fix itself. 

    I am looking to go back to school next year. It’s the connections and alumni networks more than the education I’m really hoping to help me out. It seems like you need someone who’s already established to help you up; everyone else gets stuck fighting over the crumbs.

    • 1Brett1

      If you wish to stay in the field of psychology, you probably aren’t going to make much money with a bachelor’s degree. Such a degree will qualify you to work in a MH group home or something along those lines, and those types of jobs won’t pay you much more than $30,000 a year if you’re lucky (and many these days aren’t even full time with benefits). Many with master’s degrees are even vying for those jobs. Many of those jobs aren’t even full time, and many don’t even have benefits. 

      If you manage a group home, you’ll make slightly more. Of course, you could go into the administration part of a human service agency and make a little more, or you could be a coordinator in a department of programs, something like that. You could also become a case manager for a county agency (which is what I did for over thirty years). 

      The only way you’ll make any decent money is to get a master’s in counseling as a therapist and open your own practice, or you can become a consultant. Those are a little more risky and require some start-up money, as they, essentially, are starting your own business with having overhead, etc. You’ll make slightly less money than if you have a PhD, but when you build up your patients/clients you’ll do alright.

      Anyway you slice it, though, the field of psychology will only earn you a respectable living over time, and you should at least have a master’s.

      • Tim from Durham, NC

        Thanks for the advice. On an individual level, I’ve already made the move away from psychology, more so due to my interests and where I feel my talents lie, than due to the poor earnings potentials. I’m hoping to go back to school for urban affairs, public policy, or a similar degree. I’ve pretty much resigned myself to the fact that, because I’d rather work for non-profits, doing work I find meaningful, I’ll be making far less money.

        From a public policy prospective though, it seems a very worrying sign that my friends with degrees across the spectrum of what universities offer all are experiencing similar problems. Salaries for younger workers fell across the 2000′s, and were particularly hard hit post-2008. That doesn’t bode well for future growth.

        At the same time, when MSWs who do important, hard work make $12 an hour to take care of the most vulnerable members of our society, and Instagram is selling for $1 billion dollars, I think the market is not allocating resources right. I don’t think they are totally disconnected, you have low taxes on investment income which starves public sector social spending and drives up the wealth of the elite investor class. 

        • 1Brett1

          Thanks for the reply, Tim. I read your reply with a bit of mixed emotion. On the one hand, I think you are wise to go in another direction than to stay in the field of psychology; on the other, the field is so lacking in real talent and in people who have natural gifts at that work.

          I have enjoyed working for non-profits most of my adult life, and I have found my life’s work, so to speak, rewarding. I am now out of the psychology field/sort of semi-retired and am running a couple of niche businesses (landscape designer and music teacher).

          You are so on the mark, I think, as far as the emphasis on what is important to society itself. It is not surprising that the human-service field is not attracting talented people when people with master’s degrees are competing for jobs that pay at nearly the poverty level. There is so much discussion in this era about people relying on government to be functioning members of society, yet the supports and funding to help people self-realize and become true productive members of society
          –and for talented staff to want careers in the filed–simply are not there for innovation and creating new ways to address such issues. 

    • adks12020

      I’m 31 and in a very similar situation.  I graduated just before the recession started.  I know a few people that have landed good jobs but mostly because they had family or friends of the family that new someone. 

      I’ve been dating my girlfriend for 3.5 years.  We want to buy a house and get married but don’t have the money for either.

      She’s been working in mortgages at a credit union and decided to go back to school for an MBA; I’ve been working as a paralegal for the past 5 years and managed get a master’s degree at night over the last 2 years in the hopes that I can do better for myself.  I’m searching hard but there isn’t a lot out there and the good jobs that are available have hundreds of applicants. Fingers crossed.  The graduate school debt will be really tough without a better job….good luck to you.

      • http://www.facebook.com/leonard.bast.90 Leonard Bast

        An ancillary problem here is the exorbitant price of houses. It used to be that you could graduate from college, go into an entry-level job, save your money for 5-6 years, and then buy a decent “starter” home with no problem. Now it’s a total impossibility.

        • Wm_James_from_Missouri

          An ancillary problem here is the exorbitant price of just about everything.

      • Ray in VT

        I hope that it works out for you.  I got my MS in 2005, and I managed to get into a professional job just before the recession hit, so I’ve had better luck than some.  The investment in an education isn’t something that always benefits one financially, but I know that in my case it pushed up my starting salary by about 10k, so over time it will pay off, and I knew that at the outset.  I think that people need to take those considerations into account, but, of course, one can’t always anticipate shocks that can dim their job prospects.

    • Don_B1

      It is not much solace for someone who has worked so hard and done things right, but at least by January you will be able to buy health insurance at rates that are near what employers pay.

      The Atlantic article I linked above/earlier shows you are not alone (again, not much solace) and do know that there are people out here that realize what damage has already been done by mostly those ignorant of macroeconomics (Keynesian) and unfortunately they are not yet done.

      My deepest apologies, but as you can see if you follow this program, there are a number of ideologues that post here and basically believe it is all your fault for the condition you find yourself in.

      If you need an elective in grad school, take some macroeconomics from someone who knows Keynesian economics.

      Read Paul Krugman’s column and blog posts in TNYT. He has a Twitter feed here:

      https://twitter.com/NYTimeskrugman

      His blog column has a list of some 18 posts he has made over the years showing why and how he came to see the way economies work. They are in a box on the right side of the page.

      And the best of luck may it fall on your prepared mind.

    • Johannes

      Did you not know when you began college that a degree in psychology would get you 11$ an hour?  Did no one tell you, can you not GOOGLE ‘ college majors/jobs that pay well’ ?
           Not everyone is smart enough to be an engineer, astronomer, doctor. Not all the smart ones are willing to work that hard for that long. If not, then plumbers, electricians, nurses, mechanics SKILLED workers make $$. You need a skill– what skill does a psychology degree give you?  Other than opinions? Unless you have a trust fund you can not afford to major in psychology dear. Or women’s studies or English or creative writing. Great stuff but no jobs. This is called personal planning responsibility; there are consequences to your PERSONAL choices that the rest of us have no place funding. (not unkindly as I have 4 kids who’s college tuition I paid by working 2 jobs for 20 years. One job feels part time now….) but I’m all done. I certainly don’t want to pay for someone else’s kid’s tuition. Or wedding or childcare.   
       As far as you getting married—I encouraged all of my children to elope; the wedding industry is obscene. I encourage you to get married at city hall. (Where are your parents in all of this? No advice from them?) But wait–if you can’t afford a wedding, can you afford to get married? & if you’re disappointed that you cant have a kardashian wedding or you think you are entitled to a ‘wedding’ –is there any hope for you at all?     
      Yes good jobs are needed I agree with you there— & now we have the topics of  American manufacturing, unskilled labor &  30 million illegals eliminating the unskilled natives from the <11$ an hour jobs.          But wait!  come on– if youre smart enough to get into a 'top private school' and you 'graduated magna cum laude' then why are you not smart enough to know a degree in psychology is not worth the paper its printed on?With all of these personal problems you mention the ultimate problem is this: Personal responsibility, consequences of your choices,  a popular culture that encourages entitlement mentality to susceptible psych majors. As I said to MY psychology major; you made the bed; you lie in it. It's a hard lesson.

  • StilllHere

    Our post-secondary educational system has not changed with the economy and the jobs it offers.  The system looks much like it did 100 years ago, only the cost and the infrastructure it supports have grown enormously.  In the booming post-WWII economy, it was sufficient to be able to show your ability to think and follow through something to its end.     That is not the case now, and we have graduates loaded with debt and no distinguishable skillsets.

    • http://www.facebook.com/leonard.bast.90 Leonard Bast

      The problem now is that many people go to college for the wrong reasons. A four-year liberal arts degree was never intended to be job training. Not one of my peers thirty years ago (mostly history, literature, philosophy, and language majors) thought they were in college to acquire a vocational skill set. We knew that that was not what college was about, at least at the four-year undergraduate level. There were vocational schools, community colleges, etc., for that. Fortunately for us, there were so many jobs and such economic growth, that we could easily step into jobs (I can immediately recall five of my fellow history majors: one went into law school; one into high school teaching; one into banking; one into the military; and one into a retail management position). Except for the teacher, none had been specifically trained for their fields. Today, huge numbers of people go to four-year, liberal arts colleges who are misplaced in that they think job training is the purpose and that any amount of money spent (see huge loans) is okay for that purpose. The question is: why do so many people go to the wrong kind of school to meet their particular goals and why are they encouraged (and, I can tell you from experience they are) to go into such massive debt for it? The answer is, of course, that someone is making a huge amount of money from the situation.

      • northeaster17

        I’d don’t know for sure but I’d bet that it’s more than liberal arts majors that are having trouble with debt and a job that will pay it off and still afford a modest lifestyle. On the other hand, those seeing Arts degrees as job training are mislead or naive.

        • Don_B1

          I agree with you on the widespread calamity that is being inflicted on students today. Certainly a Liberal Arts degree is not a ticket to a lot of jobs but, depending on what your interests are, people have done well with philosophy degrees as well as history degrees.

          Chris Hayes has his own well-regarded show at age 34 with a philosophy degree.

  • Markus6

    Can we have some data on why it costs so much. And I mean real data, not cute little anecdotes about fancy dining halls or rants about bureaucracy or evil corporations. 

    What percentage of a 50K (or any number) tuition goes to: administration, professors, financial aid, buildings, maintenance, and all the rest. 

    Planet Money does a great job with this kind of research. They’re not on daily so they can probably dig in more than On POInt, but this is something Stiglitz should know. I don’t know the man, but anytime I hear the word “professor”, I figure the data we’ll get will be that of an advocate for something (probably more money from the government) rather than someone who will give all the facts. But here’s hoping.

  • ChevSm

    Passing Elizabeth Warren’s student debt law could be a good place to start. 

    http://www.politico.com/story/2013/05/elizabeth-warren-student-loans-91079.html

     

  • jefe68

    This is just plain disgusting: The Congressional Budget Office forecast on Tuesday that the federal government will turn a record $51 billion profit this year from student loan borrowers, a sum greater than the 2012 earnings of the nation’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.

    How is it that the federal government is going to make $51 billion in profit off of students and their families?
    All the federal government should make here is enough to cover the cost of administrating them.

    When does this corporate mindset stop in this nation, and what is good for the nation, and common good, come into play?

    • Gregg Smith

      The government shouldn’t be in the loan business to begin with. It’s not their job.

      • northeaster17

        At some level it seems to me that banks should not be in the loan business either

      • Ray in VT

        It wasn’t 100 years ago, but, then again, neither was making sure that the air and water wasn’t massively polluted.  Times change.  I’m much happier having my student loan payments going back into the system in order to help other students get an education rather than padding the bottom line for stockholders.

        • Gregg Smith

          Non-sequitur.

          • Ray in VT

            Not at all.  I think that the system by which the government is promoting education and skill training is a useful and valuable part of what government does in the 21st century, and I think that these investments, and the benefits which arise out of them, certainly promote the general welfare.

          • Gregg Smith

            I meant the pollution angle.

            I don’t disagree that the system by which the government is promoting education and skill training is a useful and valuable part of what government does in the 21st century. But I don’t think that means (with all due respect to a commenter above) loaning someone big time money for a degree in Africana Studies with a focus on Sustainable Economic Development. And that is a very laudable career choice so at least there is that.

            We went into debt to build an indoor riding arena but the arena was an investment with a return. A college education can be too or it can be a colossal waste of money… just like any investment. 

            I’ll avoid getting into a debate about the welfare clause which has come to mean anything under the sun.

          • Ray in VT

            I think that pollution angle is quite valid.  Both are examples of how the role of government has changed, in my opinion for the better, over time.

            Education can be a great investment, but people should have a plan and a goal, and some paths may not be great choices, but I guess that if someone is willing to take that on, then I guess that that is their responsibility.  I did the math before going for a grad degree.  I looked at my career prospects, looked at my skills, and concluded that I would likely make far more in the long term with the degree, despite the debt burden which I would have to incur.

          • Gregg Smith

            I won’t quibble but what I think has changed most is the value of a college education in this global economy in the information age. There are people who know more from their smart phone than others with bachelor degrees do. Not all but that was not the case 100 years ago.

          • Ray in VT

            It is true that information is much more easily accessible than it ever has been in the past, and that has been truly revolutionary.  On the other hand, to a certain extent, prestige still matters, but so does the method of interacting with that information.  Without the training, debate and interaction with established minds in the field that a formal education offers, one is, I think, far more likely to lose one’s way in the flood of information.  That is, I think, why I see what I think is a lack of ability among many of those who have not been formally educated to distingush between valid versus questionable sources and information.  There are too many self taught experts who don’t know how much they don’t know.

          • Don_B1

            @rayinvt:disqus 

            And where do you get that idea, Gregg?

            Government support of education has a long history in the U.S., from the first public schools in Massachusetts in 1635 to making it compulsory for all towns in 1642.

            Admittedly, the South has not cared that much about even literacy, from prohibiting it for slaves, etc. to more modern attempts to provide as little as possible for segregated schools and now trying to get government funding for elite private schools through voucher systems, etc.

            When F.D.R. took office, a lot of people where (probably correctly) afraid of a communist insurgency taking over the country, and you don’t seem to care if similar conditions develop here now or in the near future? Talk about ostriches put their heads in the sand. You just cannot see through your ideology any of the real things happening out there.

          • Gregg Smith

            That’s just weird especially the jab at the South. Nasty stuff. I’m all for education. 

      • jefe68

        So I guess you mean the GI Bill as well.
        It would appear that the government is doing rather well in the loan business, as the profits outstrip almost every other large cooperation.

        I disagree, there should be low interest loans available, I like Elizabeth Warren’  0.75% rate. 

        • Gregg Smith

          If you assume the government is making a profit then you must assume all the loans will be repaid with interest. That what the CBO did to draw their forecast. I smell a bailout coming.

          • Duras

            A bailout for ordinary Americans in the Reagan political economy … nonsense.

      • Shag_Wevera

        What is?  I’d appreciate precision in your answer.

        • Gregg Smith

          In a nutshell: “…establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity”.

          • Don_B1

            Re-examine “general welfare”!

          • Gregg Smith

            Ugh.

      • Duras

        You are right.  We should tax the piss out of the rich and provide free college education like other countries.  That way we wouldn’t have a student loan bubble.

    • William

       Well..both sides and the public have demanded bigger government and more government involvement in our lives so if the people running government turn a huge profit there is not much anyone can complain about this type of scandal.

      • Don_B1

        Now that is a non-sequitur!

  • brettearle

    What sort of costs are built into Tuitions that ought to be regarded as utterly unreasonable?

    Like Stephen Brill’s article in Time Magazine, a couple of months ago–that traced ungodly medical expenses, when hospitalized (was 1 aspirin priced with a 1000% markup, compared to what you’d pay, had you purchased the pill via generic retail?)–a competent investigative journalist should examine the libertine costs of a college education.

    Like Health Care, the prices are clearly out of control.

    If that is the case, then how can anyone justify deregulation, in this matter?

    Students–in overwhelming debt, who graduate–may be more prone to becoming the 99%, for much more of a sustained period.

    Plutocracy increases and the country is much worse off, in the foreseeable future. 

    • Ray in VT

      One problem is on the resources end of education support.  Costs for materials (databases, serials, etc.) often go up 7-12% per year, and that has been going on for 20+ years.  The publishing industry has very few providers for some types of research information, and that lets them charge outrageous prices for some of their products.  Open access publishing has some promise, but there are questions regarding validity and reliability with some of those materials.  Things are especially bad in the medicine and hard science publications, where a journal with 3 or 4 issues per year may cost as much as a luxury sedan, while the authors of the articles get little in compensation, except for prestige.

      • brettearle

        Hadn’t thought of that aspect, in any detail.

        Edifying.

        Thanks.

        • Ray in VT

          No probs.  It’s a problem for libraries that are trying to provide the desired resources during tight budget times, which some have been facing for years, while administrators move and repaint walls.

  • Jasoturner

    I just did some quick math.  Imagine you go to a college like BU, where tuition (excluding room & board) is probably $32,000 or thereabouts.

    Say a typical class has 30 students, and over the course of a year these students have 10 professors teaching them.  Let’s pay each of these professors $75,000.  And lets assume each professor teaches 4 classes.

    Okay, the tuition total comes to 30 X $32,000 = $960,000.

    The teaching total comes to 10 x $75,000 x 0.25 = $187,500

    The delta – to cover facilities, energy and supporting resources – is $772,500.  That strikes me as rather high.  And for a non science major (who takes advantage of labs and other cool stuff) it strikes me as absurd.

    I realize this grossly oversimplifies things, but from this naive vantage point, the numbers add up poorly.

    • brettearle

      That’s why I think, as in my comment below, a competent journalist should investigate this matter (if it hasn’t happened  already, which I think it hasn’t)–very much like what Time Magazine/Steve Brill did for the issue of excessive costs in Health Care, a couple of months ago.

      • Jasoturner

        Oh man, I just checked and tuition at BU is barely shy of $44,000!  So you can up the delta to over a million dollars a year.

        Agree with you, such an evaluation would be very interesting and, I suspect, very revealing.  The cost of instruction is probably a shockingly small fraction of the cost to attend university.

    • donniethebrasco

       You forget the catered meals, the rich retirement benefits, and local property taxes paid by universities.

      Oh, they don’t pay property taxes.

      They also pay for travel of professors and staff to seminars, sabbaticals, etc.

      Good business:  catering company near MIT and Harvard.

    • donniethebrasco

       There are also many professors who teach occasionally.  They get $300K for one class per semester.

      • Ray in VT

        There are far more professors who teach one or two classes per semester for only a couple of thousand per course.

        • donniethebrasco

           So where is all the money going?

          • Ray in VT

            Some to increased costs for materials.  Some is likely going to administrative overhead and some of the bells and whistles that get the occassional attention.  One ballooning cost that schools, like other companies and institutions, are having to deal with is the rising cost of health care.  There’s probably a certain amount of variablity from school to school.

          • jefe68

            Administration.

        • Fred_in_Newton_MA

           True, these are so-called adjunct faculty.
          Often PhD level people who could make more driving for UPS.  Treated as expendable and fungible assets by B.U. and most other schools which save $$$ using them instead of hiring permanent teaching faculty. Often no monitoring of teaching quality & zero job security.  The students pay for a BMW and enter a lottery where they could end up with a Yugo.

        • Jasoturner

          Makes you wonder.  Why couldn’t a confederation of professors interested in teaching (not focused on research or being published) conjure up a teacher’s college that would fairly compensate them while providing a relatively low cost education?  Probably a very small choice of majors would be possible, but so what?

          I mean, I realize it’s not that simple, but professors are generally pretty smart guys.  You’d think this might actually be feasible, so that it is financially viable for them to teach, and financially possible for students to attend.

      • WorriedfortheCountry

         Elizabeth Warren is exhibit A for the $3000K/class prof.  I mention ole Prof. Warren because she is prominent in Dr. Stiglitz’s NYTimes piece.

        • Don_B1

          I think she will have to investigate where the rest of that $3 million per class went to!

          Your math is about as good as your thought processes.

      • Duras

        When professors get paid that much it is because they bring in millions of dollars, either from donors or scientific innovation. 

        • donniethebrasco

           Then why isn’t the price of education going down?

          • Duras

            Do you remember a time when our education was afordable? 

            Try sometime before Ronald Reagan.  Look at how other countries, like Canada and England keep their costs low. 

            Second, I don’t know how other states do it, but in the state of Florida, there is a rule that prevents the university from taking money from the athletic departments.  That is why the University of Florida can be the New York Yankees of college sports, yet their liberal arts and sciences are in the dumps.

        • Ray in VT

          Like with the outrageous salaries of sports coaches?

          • Duras

            If you paid sports coaches 80k a year, what would they do?  Start a business? 

            It doesn’t take a lot of braincells to coach football?  The states can cap the coaching salaries and we would still have athletics and plenty of fans.

            And, yes, paying coaches more than our professors is the American symbol of our anti-intellectualism.

          • Gregg Smith

            Are professor’s salaries supplemented with the gazillions made from College sports TV contracts? I think so.

          • Duras

            Not in the state of Florida. 

          • Gregg Smith

            In 2009 UofF made $66.1 million from athletics, third in the nation. None of that went back to the university’s academics? Really? That’s not what my research says.

          • Duras

            I’m not going to look up the law for you but the athletic department gives money at their descretion.  The university has no power.

            And yes, the return to the unversity is small.

          • Gregg Smith

            I read $6 million but if it was only a penny it would be a penny they otherwise would not have gotten.

          • Ray in VT

            I agree with a lot of what you said.  States could probably cap coach salaries, but then some private institutions would poach them, and for some schools one probably justify, financially speaking, the high salaries.  It’s an arms race, and schools don’t want to be left behind.  Look at what Alabama pays Saban, but then look at the deal that the SEC inked with ESPN.  College sports is big business.  I like college sports, but I think that the costs and salaries have gotten out of control.

          • Duras

            I don’t mind if private schools snag the best coaches–and if their donors don’t mind lowering standards for student athletes, so be it.  Private institutions would have a better competitive edge on the field, but fans, especially in the mid-west and the south are going to continue to root for their state schools. 

            Also, private universities would have to open up bs majors that allow underachieving student athletes to coast through school while they play. Not that I’m for that kind of thing, but there is a reason why 99% of UFs football team majors in sociology.

            There are a lot of things wrong with higher education.

          • Gregg Smith

            Very good point.

            What would tuition be without the income from sports even after the coaches are paid?
            Also, what is the necessary degree needed to get one of these cush coach jobs? It seems to me that degree may be a worthwhile investment.

          • Ray in VT

            Whatever degree it is I wish that I had it.  ;)

          • Gregg Smith

            A degree in NBA point guard would be another good one.

          • Ray in VT

            Most of those guys don’t get degrees.  I don’t know if you follow pro sports much, but a lot of NBA guys, at least the top prospects go one and done, and then jump to the NBA.  A lot of the guys only do 2 or 3 years tops.  Relatively few graduate these days, at least at the time.  I’ve seen stories about a few guys who keep working on their degrees after going pro.

    • Wm_James_from_Missouri

      Jasoturner, Institutions have “institutionalized” the con. Put a suit and a smile on the on the salesperson, give them some brochures to hand to some pimple faced kid, tell their parents how they are going to change their little angel from the kid who doesn’t know how to clean up his room to an icon that will clean up the worlds problems while never breaking a sweat. Oh the cost, well, let’s just refer to other higher priced ‘conning’ institutions. See, look how much more “affordable” we are ! Wow, what a deal ! Proof ? — Here are some projections we ran on all of the money your little sweetie will make. How can you loose ?

  • northeaster17

    My Political Science degree, from a couple decades ago, has helped me immensely. But at today’s cost I might not have thought so. Most good jobs require some kind of a degree. We as a nation need educated people.
    My thought is that a student loan payment should be closer to a car payment. Not a mortgage. The fact that the costs are so high, that degrees are necessary for most, and that there is no bankrutcy protection (thanks Republican congress) means that todays students are sitting ducks for the vultures. Why is that equation so difficult to see and remedy?

  • NrthOfTheBorder

    Is massive student debt what happens when unfettered free-market capitalism finds its way into higher education? 

    • donniethebrasco

       It is actually a result of guaranteed student loans that serve as a price support to outrageous tuition.

      We are also victims of foreign countries seeing the American education as valuable and a signal in their own countries as superior.

      There has also been speculation of collusion between universities of implicit non-competition.

      • NrthOfTheBorder

        I’m not sure what you mean by “signal in their own countries as superior.”  — Plus,  it’s hard to see the US being a victim of anything. 

    • ReasonableJim

       Not at all. If you cut out the bloat at many of these colleges, you *should* be able to get that cost down. I know when I go by some colleges and see them break ground for their new $20M workout facility, I just shake my head. Colleges no longer provide just an education, they are in the “experiential” business as well. Remember when we had food courts at colleges in the 70s?  Right, we didn’t. Eliminate teacher tenure, make general classes partial online courses, stop teaching superfluous courses and then let’s start talking about college costs.

  • Shag_Wevera

    The “American Dream” has become little more than a punchline.

  • Shag_Wevera

    Simple mathematics.  If education is a commodity and you worship at the altar of capitalism, should’nt colleges charge exactly as much as they can get?

    • Gregg Smith

      Yes they should. 

  • Gregg Smith

    I question whether a college education is still a good investment for the majority of people and suspect it is not. 

    • northeaster17

      An uneducated population is not in the best long term interest of this country. Though such a situation, if applied properly, may attract certain jobs now currently available in the 3rd world.

      • Gregg Smith

        Who said anything about an uneducated population? 

        • northeaster17

          Good point. Though our market is currently more rewarding to people with the college diploma. The reason an education may not make sense these days is that predatory financial interests have cornered the market. That may help Wall Street. As for those seeking education, not so much. Very short sighted.

          • Gregg Smith

            I just think it all depends on the field one chooses to go into, that’s why I wrote “…for the majority…”. These days we have a global economy and unlimited communication abilities, there are options. Many many many, degreed professionals work for college dropouts.

        • jefe68

          You did. Seems to me that you exhibit a lack of critical thinking skills. One could say this is due to a lack of education, or maybe something else.

          • Gregg Smith

            I said no such thing. You are assuming much.

    • William

       It does not matter if it is a good investment. The bar has been raised in  most jobs that if you don’t have a degree in something you won’t be considered for the job. It is sad to see so many talented people not even considered for employment because they don’t have a degree.

      • Gregg Smith

        That may be true to a certain extent but 50 years ago any degree was better than no degree. I don’t think that’s still the case.

        • William

          I think the education industry has done a very good job pushing the idea of “Yale or jail” so those without a college degree are left out.

        • jefe68

          It’s amazing, you really don’t have a clue.

      • http://www.facebook.com/kenderJ2012 Kendra J Wastun

        I think you are absolutely right. Now it seems as if most employers are requiring a degree for even the most entry level of jobs. The days of starting at the entry level and working your way up through a company through skill and hard work seem to be a thing of the past. In my area, even the trades like auto shops, are now requiring a degree just to get in the door. The college degree “glass celing” seems to get lower every year.

    • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

      Why does everything have to be quantified? Obviously people need to provide for themselves and to do that they need skills, but education is never wrong. What’s wrong is how we’re funding education in this country. Education has provided our society with its high degree of living standard, the incredible technology, and its amazing theories and creativity. That’s invaluable.

      • Gregg Smith

        I don’t disagree with you. Education is never wrong but it can be a poor investment. That’s fine too as long as the borrowers fully understand the risk/reward element.

        I know they are exceptions but look at Steve Jobs or Bill Gates. They were both college dropouts. Henry Ford took apart the pocket watch his dad gave him and figured out how it worked, that lit the fire. He did not go to college. The point being one can become highly educated and innovative without a degree.

        I am not dismissing the value of a college education 100% of the time. I’m saying it is not a worthy investment 100% of the time. It seems to me that is the default assumption. It all depends.

  • donniethebrasco

    Simply put:  It is wrong not to be able to declare bankruptcy for student debt.  This law is creating a class of indentured servants who cannot pay off their debts and will continue to live in their own version of debtors prison.

    The rules also allow people to avoid their debts by working for non-profits, city, state, and federal government, but not for others.

    By allowing people to declare bankruptcy, it will put pressure on lenders and schools to make their degrees affordable and look at the credit worthiness of their lendees.

    • northeaster17

      It also creates a false incentive for banks to funnel funds towards one area of the economy at the expense of others. Not good either.

      • donniethebrasco

         So, you agree with me?

        • northeaster17

          cautiously

  • toc1234

    perhaps Stiglitz can comment on the rapid growth of admin and staff people at universities?  and also the rapid decline in hours profs are actually interacting with students?  and maybe compare the course offerings in, say, 1985 and 2013.  in short, universities today are bloated and shallow.

  • J__o__h__n

    We shouldn’t subsidize overpriced private education through student loans.  Public money should go to state universities and keep the costs down instead of competing in the arms race to offer everything one can imagine. 

  • sharlyne1

    An educated society is crucial to continue moving forward in a civilized manner, however, indentured servitude for the education only holds us back. An education is not freeing to a society when you have each student paying back between $60,000-$100,000 in debt. We’ve mortgaged our future for degrees in a capitalist society that do not pay. Stephen Brill you have a new byline, “Shackled Debt: Why College Grads are the New Indentured Servant”.

  • WorriedfortheCountry

    Here is a simple way to halve the debt:  halve the tuition.

    Perhaps  Dr. Stiglitz can go to the Columbia board of directors with the 1/2 tuition plan instead of a hand out to the taxpayer for additional funding.

  • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

    Hi Tom! Hi Mr. Stiglitz! I just want to quickly say that I’m reading ‘Globalization and Its Discontents’ and its phenomenal!

    I have my master’s degree from NYU in Africana Studies with a focus on Sustainable Economic Development. I am in a lot of debt, enough debt that I could be the owner of a small house. I understand that it was my decision to go into this much debt, but at the age of 22 I know that I didn’t completely comprehend of what I was signing my name to. All I knew is that I wanted a career in poverty relief and international diplomacy. I thought that in order to be the best social justice advocate I could for a continent like Africa I should further my understanding of Africa. The irony is that the kind of jobs I could apply to in this field that would support me and allow me to at least chip away at my debt require more international experience. In order for me to get more international experience I’d have to work for an ngo abroad. I would love to work for a small ngo abroad, but those jobs wouldn’t allow me to pay off my student debt. I’m in a financial/career pickle.

    Right now I’m 27 and I’m doing okay. But my debt scares me and has contributed to a lot of anxiety and depression in my life. There have been times I have actually felt like a bad person because of my debt. However, these days I refuse to look at it like that. I got an education and that is invaluable. Its also one that I hope allows me to help people in worse off situations around the world. But the only way I can function in a productive way is to just focus on each day as it comes and do what I can with my life rather than worry about my looming debt and how other people may judge me for it.

    • sharlyne1

      I’m in the same boat. Keep your chin up and keep perservering.

      • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

        Thanks! Same to you. I just had to come to the realization that my path may be different than the one I had envisioned and I have to get creative. I also keep close to my heart (maudlin, but true) that I am more than my debt and I am more than my degrees and there is more to life than all this stuff or having tons of money.

    • toc1234

      “master’s degree from NYU in Africana Studies with a focus on Sustainable Economic Development.”

      I realize its a master program but why do universities offer such narrow degrees?  universities should revert to training students to be problem solvers and the students should then apply those skills to whatever interests them.  and my point is that these specific programs are part of the reason why tuition is so high.  just more and more depts. with more and more staff/admin which drives cost higher and higher (that coupled w the gov’t subsidies).  universitities seem more interested in sustaining a bigger and bigger academia class than actually serving the students. 

      best of luck to you though…

      • jefe68

        Seems like a good area of study. 
        You sir, have a narrow world view.

      • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

        I chose that narrow degree because I was very certain of the field I wanted to pursue- Sustainable Economic Development in Africa. But I also have my BA in International Relations and Africana Studies. I have my certificate in Public Policy and Community Action. I’ve studied general American Foreign Policy, Environmental Policy, African culture and art, and racism both nationally and internationally. I’ve studied abroad in Ghana in an Arts and Culture program. And I’ve had internships and jobs working on art with children, and I’ve planned and organized several big events. My undergraduate education provided me with all those opportunities that helped me narrow my focus, so I think my college, Connecticut College (woohoo! go Camels!!) did exactly what I hoped for. There’s only so much one can tell about all their experience on an On Point comment board.

        • Jasoturner

          Good luck Jillian.  Sounds to me like you’d be a great person for someone to have on staff.  Hang in there.

  • http://www.facebook.com/profile.php?id=100000504390944 Elizabeth Curtiss

    Everyone should read “The Big Test” about how what began as universal access to education became a tool for social and economic exclusion.

    http://www.barnesandnoble.com/w/the-big-test-nicholas-lemann/1110890559?ean=9780374527518

  • TomK_in_Boston

    Student debt = class warfare and redistribution of income to the top. Follow the money.

    The primary drivers of this cancer on the middle class are:

    1. State funding of state universities has dropped dramatically as tax cuts have become the priority. The great U of CA system was once committed to essentially free higher ed, and the state provided 100% support. Now I think it’s under 30%. Some “State Us” are around 10%! As Jim Duderstadt, former president of the University of Michigan put it, “We used to be state-supported, then state-assisted, and now we are state-located.” Look at the breakdown in CA

    http://budget.universityofcalifornia.edu/wp-content/blogs.dir/9/files/2010/01/budget_graph_03.jpg

    How obvious does it have to get? Romney types get low taxes on their mansions so tuition rises. Direct reverse robin hood redistribution.

    As State U costs rise, there is less competition for private U to keep costs down. So, the states selling out the State Us is the primary problem.

    2. Corporatization. As every institution in America follows the toxic corporate model, there is more bureaucracy and more highly paid parasite  “executives”, with salaries sucking the $ out of the productive sector.

    That’s it. To those parroting the righty TP about how you really don’t need college, welcome to our post-middle-class society of aristocrats and menials. Maybe Mitt is looking for a butler.

  • Duras

    When I graduated from the University of Florida, the school was the number 1 in “bang for the buck.”  First, came the cuts to merit scholarships–at one time, the school attracted some of the brightest students from across the country.  That was very beneficial to students like myself who shared the classroom with them. 

    Then came the cuts to the professors.  Professors got layed-off, and professor pay got cut.  Other states, most notably North Carolina schools, snagged our best scholars.  Then Gov. Rick Scott raised tuition, and cut Florida Bright Futures scholarship while raising the requirements to obtain the scholarship.

    Paul Ryan likes to say, “We are for equal opportunity, not equal outcomes,” yet how is cutting our public universities while the upper class send their kids to private schools enhancing equal opportunity?

    ————————

    Second, Government Student Loans should only go to public institutions.  That would put all these worthless for-profit, online universities out of business that are also the biggest exploiter of the student loan system and significant contributor to the student loan bubble.

    Real private institutions can easily survive on their own.  And if private banks feel like they can get a return on lending to the for-profit, online schools, they can make that bet. 

    But it would be hard to take that action because corruption is legal in this country, and the for-profit, online industry has greased a lot of hands.

    • Gregg Smith

      I lived in Gainesville in the 70′s, great town. As a kid I’d go watch the streakers. Those were the days. Both of my brothers graduated from UofF.

      No point really.

      • Duras

        I know, man, you’ve told me before when I was under a different name.

        • Gregg Smith

          Sorry, I don’t remember talking about it but I just love Gainesville and still have friends there.

          • Duras

            I love Gainesville too.  I just wish it was along the ocean. 

  • WorriedfortheCountry

    This is a first.  Democrats concerned with high interest rates on debt.

  • sharlyne1

    Let’s not forget the PRIVATE student loans! Those are worse than the federal loans.

    • StilllHere

      Why, because they’re based on the assumption they have to be paid back and not some bureaucrats largesse with free money?

  • donniethebrasco

    Bankruptcy is the answer.

  • http://www.facebook.com/kyle.rose Kyle Rose

    Elizabeth Warren’s proposal is noble but naïve: giving students such low interest rates would only cause universities to raise tuition even more quickly than it has over the past 40 years. Sadly, a J.D. and a Senate seat do not guarantee economic literacy.

    • Duras

      Governors have the decision to raise and lower tuition.  And they have to take that political risk.

      • http://www.facebook.com/kyle.rose Kyle Rose

        Sorry, wut? Certainly that is not true for private colleges, but even for public colleges I find it hard to believe that most governors have dictatorial authority over tuition rates. My guess is the college administrations and legislatures are the ones with direct control over tuition, and with regard to the legislature, who is a single-issue “tuition rise” voter?

        • Duras

          I’m not for giving loans to students at private universities.  And, in the state of Florida, the governor has the say. 

          I know it is the same for many other states, but I am unsure that it is true for all states.  But if it is a public university system, it would be hard to believe that the university has all the say.

          • Don_B1

            I would argue that governors (and legislatures) have at least indirect control of tuition, and FEES, at state universities as they set the state support level and also much of the structure between income sources and expenditures.

            When the Florida governor can directly set tuition that does give a focus point for responsibility, but it is there even when it is somewhat diffused through the budgeting process.

    • WorriedfortheCountry

       It was simply a  political stunt aimed at the low information crowd.  She isn’t that stupid.

      • Don_B1

        You are correct that Senator Warren is not stupid, but her proposal is more than a political stunt.

        For one thing, by putting out an aggressive position, it makes room for a decent compromise, where that might not be possible without it.

        President Obama should have learned that by now, but he so wants to work with Republicans who do not want to work with him that to get something done he just keeps trying, giving away the store before negotiations begin.

  • StilllHere

    Education, like healthcare, has been perverted by the presence of the government.  Consumers have no connection to what they pay at the time they consume in either system.  In the end, the taxpayers pay and we’re all poorer, but some of us can answer all the $1000 Jeopardy questions.

    • jefe68

      You have it backwards, but then again you live in Bizzaro world.

  • donniethebrasco

    The best would be to allow payments as low as $50/month.

    Who cares if you ever pay it off.

  • http://www.facebook.com/jhayesboh James Hayes-Bohanan

    The elephant in the room, of course, is the growing need for loans to fill the gap left by governors and legislatures — and ultimately voters — who do not value higher education as a public good.

    Massachusetts has the dubious distinction of leading the nation most years in the paltry support it provides to public higher education, but the problem is ever more widely spread as states with a proud tradition of supporting their universities — such as Wisconsin — falling victim to politics that are short-sighted and divisive.

    • donniethebrasco

       The cost of higher ed is supported by government money, foolish children and parents believing in ROI of higher ed, and collusion in universities pushing costs to irrational levels.

    • TomK_in_Boston

      Exactly. When the states still had the commitment to nearly free public higher ed, there was no need for loans. The issue is not the details of how wealth will be redistributed to the top, it’s why students need loans at all. 

      This issue is part and parcel of our transformation from a middle class society to an oligarchy. That’s the big picture. Follow the money.

  • barbpooley

    Student loan debt cannot be discharged in bankruptcy and if a borrower defaults the federal government has ways in which it can collect on the loans (seizing federal tax refunds, for example)so how does the federal government justify charging such a high rate of interest – especially in today’s interest environment?  

    • donniethebrasco

       Exactly why you should be allowed to discharge student loans with bankruptcy.

  • Bill Austin

    Over the last 6 yrs I spent my inheritance on a business venture that now has me owing as much as I started with. As soon as we bailed out the banks and gave them 0% interest, they raised all my interest rates, although all accounts were in good standing.

    Why should I care about the debt these people owe, no one cares about mine! I’d LOVE the 6% rate they’re crying about, can’t we get these “too big to fail” banks to rebate what they’ve charged people due to their increases?

    • jefe68

      Part of the problem, not the solution I see.

    • donniethebrasco

       You can go bankrupt.  Not like students.

      • unwildbill

        CAN’T lose the house that my parents left me, that we moved into 48 yrs ago!

    • donniethebrasco

       How is your balance sheet/income?

      That can be a good thing if you have a growing business.

      • unwildbill

        Gross was up every year, but never caught up with the big bills I ran up the first couple of years, trying to find good events, and spending more than I had to.
         
        Finally, leaving Key West into a headwind Jan 2012, the roof blew off the ride’s trailer, allowing the large side doors to wrap around the back. As the ride ran IN the trailer, it pretty much shut me down, had been maxed out for 2 years. Just as well, air shows were my best events, and they aren’t going to do too well with the sequester.

        It was great, spreading joy to the kids, hearing them have a great time in it, only really “working” about 140 days a year, plenty of time to get to the next event, but if it doesn’t pay the bills…..

        Out of the blue, a guy I must have met at some event called wanting to buy it, I told him the situation, he flew in to FL from CA, paid what I asked (less than half of what I paid), paid me to take it to Laredo, he’s now running 3 of them in Mexico.

        Got home, sold the truck, bought a used Prius, was trying to get a PO rural route job with it, but takes too long, would only be guaranteed 1 day a week, it just wouldn’t have covered the bills……Since I was a Motor Carrier with Commercial Drivers License, I’m now Over-the Road truck driving, making more than I ever did working on Toyotas at dealers that don’t reward honesty and competence!
         
         

  • Zach Silvia

    As a student borrower currently in repayment the issue isn’t just the interest rates, but what happens to that interest after it accrues. If you have to go into forbearance you are looking at capitalized interest which could double the actual amount borrowed. I could never understand how such a predatory practice could be government policy. We shouldn’t be penalized for falling on hard times.

  • regretfulstudent

    I went to graduate school (at a public institution, which was out-of-state for me with no option for becoming a resident once i had started the program) for a professional degree. The field that I am in does not make nearly enough to cover the degree. I pay $1,000/ month in *interest* alone on all direct loans and that just keeps me out of default, it doesn’t even go towards the principal. That is what I did not appreciate when I took out the loans in my early 20s. I pay more per month in student debt than I do for housing. It is a huge weight on me all the time and has made me questioned whether I can ever afford to get married (don’t want to saddle a partner with MY debt), have kids or own a home. I am now in my early 30s and can’t see being able to afford any of those things in the near future…

  • Wahoo_wa

    Ummmm….the U.S. does have income contingent AND income based repayment.

    • Wahoo_wa

      And I know because I am on income contingent repayment for my $135,000 worth of student loan debt.

  • donniethebrasco

    Income dependent loan payback does exist in the US for people who work for non-profits and government agencies.

    • Wahoo_wa

      It’s available to all who have loans with the Department of Education’s Direct Loan program.  It’s not just non-profits and government workers.

  • Susie Foster

    What are the long term implications of college-educated people  having fewer children than non-college educated people?  

    • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

       Good question! I don’t think children are in my future. I want to be able to provide a good life for them, but I don’t think I can afford it.

      • http://www.facebook.com/jm.blyth.9 JM Blyth

        The cost of
        US citizens not reproducing to replace themselves will be a price too
        high.  I hope you reconsider your choice.

        • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

          I’m sorry, but are you insane?? As a species, human beings are WAY overpopulated and we’re only growing. And that’s a fact. We’re already creating more pollution and using up more natural resources than ever before and its only going to get worse. Not to mention, that there are already children born in this world who are abandoned and aren’t cared for. I’m not worried about the United States population.

    • http://www.thisoneisbroken.blogspot.com |k|

       Most of the intelligent people I know have chosen not to reproduce. They have weighed the pros and cons and decided that due to financial issues, environmental issues, social issues, etc., the best decision is not to have kids. The danger, of course, is that thoughtful people will stop reproducing thoughtful children.

    • Acnestes

      Eventually you wind up with the Morlocks and the Eloi, like in The Time Machine.

  • http://www.thisoneisbroken.blogspot.com |k|

    I will finish my graduate degree in August with about $45,000 in student loan debt. I am glad I went to grad school because until I was halfway through the program, I couldn’t get the $35k/yr job I have now. My take-home pay after taxes and healthcare is $2k/month…just enough to cover the necessities like rent, car insurance, fuel, etc. There is no wiggle room. I don’t know what I’m going to do when my loans come due again. Without grad school, I wouldn’t have been able to get my current job and I’d still be stuck in my low-paying dead-end job, but because of grad school, I’m deep in debt.

  • toc1234

    what would refreshing is if colleges (not grad schools b/c that is research based and specific studies) would concentrate on delivering a solid education w/o all the bells and whistles (which are mainly to make the staff/profs comfortable and improve their rankings – whatever they mean..).  most courses at the undergrad level do not need more than books, blackboards and profs.  in fact, why not see if todays students can hack a chem 101 exam from 1970?  same w calc, physics, ect…  and same with history, english and languages.  at the undergrad level they could be using the same curricla as 1950 and producing a better grad at a fraction of the price.  unfortunately, the costs keep rising for the betterment of the prof and staff…

  • suzieinnewport

    Since federal dollars are involved, the government has the right to do a full-on investigation of private and public universities as to how tuition dollars are being spent at all of these institutions. Let’s see an accurate pie chart for different kinds of institutions of higher ed. 

     How much is going to buildings and grounds, how much to libraries, how much to faculty, how much to administrators’ salaries and to the creation of new administrative positions (we keep seeing reports that university presidents’ salaries are ballooning in proportion to CEO salaries–why are students paying for that???)? 

    My sense is that administrative bureaucracy is ballooning across higher education, at the cost of full-time faculty (something like more 60% of faculty positions are contingent or part-time). Let’s look at the big picture and take a real look at the product these students are going into debt for. Is administration ballooning while the overall quality of the education decreases?

    • StilllHere

      The student is soley responsible for determining whether they are spending the money well.  The government should worry solely about the creditworthiness of the borrower.

      • Gregg Smith

        That makes way too much sense.

      • northeaster17

        Students at age 18 going up against seasoned bankers breaurcrats etc. With no way out. That’s not a free market. It’s rigged. And not in favor of the student or the country that benifits from educated citizens

        • StilllHere

          Gotcha, nobody has to take responsibility for themselves.

          • northeaster17

            Setting people up to be indentured servants for much of their life is not responsible. It is predatory. That is not a free market. It’s a crime. 

          • StilllHere

            Gotcha, no responsibility and no freewill.

        • injun2

          Agreed – when I was 18 I pretty much still believed that money grew on trees and had to appreciation for the value of a dollar, not to mention 10k or 100k, it was just a hypothetical. Maybe students under 21 should be required to have a parent or guardian co-sign student loans

    • donniethebrasco

       The problem with that is that state university have become filled with political appointees.  They won’t kill the golden goose of public university hack jobs.

    • donniethebrasco

       The government doesn’t give the money to the universities.  It loans it to the student.

      The easy government money is what has caused the incredible inflation in universities.

  • donniethebrasco

    The high cost of higher education is the unintended consequence of government supported loans.

    • Duras

      Again, governors control the tuition rates, not the universities! 

      This right wing myth needs to be debunked.

      Second, Canada started charging tuition about two years ago because the prime minister wants to lower taxes on the rich.  Do you see how their student loan system is going to increase?

      Student loans are the result of our lack of investment in public institutions.  In theory, students would pay the government back with interests.  That is a right wing theory.  Now that their theory didn’t work, the right wing wants to cut off student loans which would cut opportunity for millions of lower and middle class kids.

  • bacterial_sizzle

    If you can find a way to live off less than $800 a month, they cannot force you to repay. I am quitting my high paying job to work part time and live a minimalist lifestyle to avoid repayment. I refuse to be a lifelong wage slave for financial decisions I was goaded into at 17 years of age.

    • donniethebrasco

       I’d like to start a company that pays no salary, but supplies housing, food, and 401(k) payments, so that my employees can shirk their student loans.

    • Jasoturner

      Yeah, this is why the starting assumption for my daughter is that she will take a gap year before attending college (if she elects to attend at all.)  I agree with you that many teen age kids have too little understanding of themselves and the world to make this decision.  But I strongly disagree with the sentiment that we should walk away from our choices and the concomitant obligations, regardless of the inputs to said choices.

      That said, this may also be mild trolling, but it still raises a point of consideration.

    • Gregg Smith

      I’m not saying I blame you but that dynamic is bad for the country and it is not limited to college loans.

  • http://www.facebook.com/kenderJ2012 Kendra J Wastun

    It’s a vicious circle. We as a society are convinced that the only way to be “successful” as an adult, is to go to college. But college is not within the means of most US citizens. So, most young people and their families feel they have no choice but to go into massive debt that they will spend the rest of their lives repaying and that will significantly affect their quality of life while they pay back those loans.

    • Jasoturner

      I think it’s a consolidation of power more than a vicious circle.  The war was fought, and the wealthy have won.

  • http://www.facebook.com/WildRicey Susan Rice

    Really, your speaker is speaking the reality!!! Look at the tax code, his interest is not even tax deductible…

  • RVSLee

    Of course the horrible irony is that as we expand educational opportunity, the supply of educated labor increases, and the long term advantage of a college degree goes down, further lowering the ability of graduates to repay.

  • Boston_College_Grad

    As a parent struggling to get two children through college debt free, my wife and I are making many financial sacrifices to make a better future for our children. In listening to some of the college graduates speak about their loans, I am struck by the fact that many of these people act like carrying this debt is some type of surprise. Did they not look at alternatives in higher education, state universities, etc. before taking out these loans.  Perhaps high schools should do a better job helping these students visualize their future with debt and look at other ways for them to get education and job straining skills once they graduate?

    • Kelly McManus

      I’d be great to see this discussion in high school math classes where students have to look up tuition for 2 schools they like, look up loan rates and look up income for a couple jobs they would like using a degree (assuming the NBA contract falls through). Maybe throw in your car loan and rent and work out the math.  If our school doesn’t do this you bet I’ll make my kids do it anyway when they get to be 15.
      I guess it raises another question, what is high school doing to prepare kids for real life?  Or do we just wait to throw them into the deep end once they walk across the stage at college education with a $40K debt and shallow job prospects?  Isn’t part of the service of education is how to apply your skills not just hold them in the abstract?

  • http://www.facebook.com/profile.php?id=826803069 Peggy Simons Medema

    Regardless of how much an education costs or how long it takes you to pay off, it is the only purchase you will make in your life that no one can ever take away from you.

  • http://www.facebook.com/kyle.rose Kyle Rose

    LISTEN TO STIGLITZ. He is the only voice featured on this show who’s gotten the dynamic right.

    • http://www.facebook.com/kyle.rose Kyle Rose

      Sorry, got that wrong. :-) I meant, listen to the guy from reason.tv. LOL. Where’s the delete button? ;-)

  • donniethebrasco

    NPR – We have never met a government spending program we didn’t like.

  • Markus6

    I missed most of the program, but has the professor said anything about whether universities are efficient, especially with regards to professors. My guess is he thinks they’re just fine or even work their professors too hard. 

  • http://www.facebook.com/WildRicey Susan Rice

    Yeahhhhhhh, finally someone who recognizes the role private for profit predators!!!!!

    • donniethebrasco

       It is a problem for student debt.  But it still doesn’t excuse the $55,000 tuition of non-profit universities.

    • StilllHere

      Really, who’s the predator, the college granting degrees in a 4-yr womens studies program for $50K/yr or the cooking school that costs $20K all-in?

  • ToyYoda

    Stiglitz talks about making universities more affordable for all. Yet companies complain that minted grads don’t have hireable skills. From my own experience, my job currently has nothing to do with 99% of what I learned in school. So basically, Stiglitz is championing cheaper way to unemployment. I guess that’s better…. uh….

    So, I am wondering why we are perpetuating the myth that kids need to go to college?

    Couldn’t we give choices to kids, for instance, encourage companies to hire interns straight out of high school? If we give clearly distinct paths to skill acquisition, then wouldn’t that force universities to cut cost in a massive way? Everyone would benefit. The democrats get kudos for helping the poor. The republicans help business with cheaper labor from inside the country. Kids get jobs that will lead to careers and universities fill be forced to cut costs to compete with a new option.

    • http://www.facebook.com/kenderJ2012 Kendra J Wastun

      What gets me is that the same employer that complains that new grads don’t have hireable skills tends to be the same employer that refuses to hire even a mail room clerk without a degree of some kind.

  • donniethebrasco

    The non-profits are free spending as well.

    • StilllHere

      Non-profit just means spends as much as they make and their incentive to make more so they can spend more.

  • Ken Lee

    I think we have to do a better job of counseling students on whether or not they should go to college.  But if they choose to go, they should be able to get the loans to go.  Taking away access to college from someone we don’t think should go would essentially be creating a caste system in this country where only the privileged few, who are allowed to go, and the well-off can attend college.  

    • injun2

      In Germany they still have a caste system of sorts, called tracking (or streaming). By age 10, your academic ability s assessed,  and it is determined whether or not you will go on a higher education track or a vocational track. Well off children naturally perform higher, going to college, creating a vicious cycle. On the other hand, this system does seem to produce better educated college graduates than our system does. 
      “in Germany pupils are selected into three school types after four years of 
      elementary school: The most ‘able’ pupils are supposed to attend the Gymnasium, which is a 
      nine- (or eight-) year higher-level secondary school and enables pupils to pursue further 
      academic studies (for example at universities).7
       An alternative school track is offered by the 
      Realschule as an intermediate level secondary school which generally lasts six years and 
      prepares pupils for a rather vocational education. Finally, the Hauptschule, as the lowest level 
      secondary school type, is supposed to be the most vocational and least academic track and 
      lasts five years. In principle, it is possible to change tracks after the initial track decision. 
      However, different curricula for the different school types complicate switching tracks, 
      especially after sixth grade.

  • keltcrusader

    My son will be starting at Merrimack College this Fall. We specifically looked at colleges that were within driving distance so he could commute rather than live on campus for an additional 10-15K per year. He will be going for EE/CE as we told him a STEM degree should allow him a more opportunities for a career that will pay better and will give him the ability to indulge his hobbies while still being able to pay his bills. His Math skills are phenomenal and he already has 17 credits that he earned by taking college-level courses in HS. This college offers a 5 year Master’s in EE/CE. He also received a guaranteed 4yr Merit Scholarship which helped bring down the yearly cost significantly and made it cheaper than even State colleges. He will have debt and we think (& hope) by the time he graduates, there will be more job opportunites. Only time will tell, but he will still be better off with BS/MS degree than not. 

  • WorriedfortheCountry

    Stiglitz is full of crap.  “Don’t touch my sacred cows in the faculty lounge”

    He has lost all credibility when he avoids introspection for escalating costs.

    • jefe68

      The escalating costs are not faculty. It’s administration and the coaches at schools with large sport programs.

      In 1960, 75 percent of college instructors were full-time tenured or tenure-track professors; today only 27 percent are.

      The crap here are your right wing tinged memes.

  • http://www.facebook.com/profile.php?id=1393701660 Thomas J Howard

    Nothing is going to change on this topic one way or another so long as we have the political gridlock in Washington – which is a direct result in how divided this country is over which direction it should go.  Ironically, these divisions fall along geographic lines with a few exceptions.

    My solution?  Turn the USA into two or more countries along these lines with strong mutual defense treaties and allow unfettered travel and commerce between them.  Let each new country take itself down the path it chooses with their own constitutions.

    My prediction?  Both sides will prosper – some in more ways that the other on each side – and people will gravitate geographically to the society they feel more attuned to.

  • ILLaura

    Why did some of these students not do the math BEFORE entering their programs to see if they could afford to pay for it in the future? As a middle school math teacher in Massachusetts I feel frustrated with the lack of personal finance included in the state curriculum. Why am I teaching students about stem and leaf plots instead of personal finance topics? From the tutoring I have done with high school students, they are not receiving any education in personal finance either. We are not serving young people well when we do not give them the knowledge they need to make important financial decisions BEFORE they need to make those decisions. 

  • darby150

    STUDENT LOAN ALERT!!!!

    You may not be able to afford that Theater Arts degree

  • Ellen Dibble

    I missed the beginning of the show, but I’ve been thinking that online education as a part of the equation should eventually ease the cost.  Stiglitz, I believe it was, was saying it’s not that government showers public universities with money making it noncompetitive; it’s that the competition for the best professors drives up the cost.  (Sounds like the argument for the outsized exuberance on Wall Street, shall we say.)  

         Education would be better if there were more give and take in classrooms, and leave the lecturing to online.  I’m not sure how exactly that will work, but it seems to me it has to.

    • Gregg Smith

      This is a bit off topic because it’s high school but your comment reminded me. I agree very much about the give and take. This young man was right albeit disrespectful.

      http://www.thewhig.com/2013/05/10/teen-lectures-teacher-in-viral-video

    • Kelly McManus

      I agree that online lectures could be a great way to lower costs to free up professors for more interaction. However, we have to be careful how much online is substituted for real life classes. For instance, I think the for-profit online colleges do a disservice. They seem to be a check-the-box exercise in exchange for a degree to add to your resume. After seeing the classes and assignments from friends, it doesn’t provide the higher level of education a bachelor’s degree promises.

      • http://www.facebook.com/kenderJ2012 Kendra J Wastun

        Not knowing which online schools your friends are attending, I think this is a case of doing your research. There are many online colleges out there that provide a higher level of education and a lower cost to the student and are accessible to more types of people.

  • http://www.facebook.com/people/Sam-Osborne/1115006842 Sam Osborne

    Not only do students have huge personal educational debt to
    take with them into their lives they also inherit being left to them: a
    national debt and neglect of maintenance of current infrastructure and far too
    little being invented in infrastructure for the future.  On top of this, rather than education being
    the right passed on to them to make of it what they will in terms of their
    dreams and imagination. 

     

    The current effort is to tool them into interchangeable
    parts that fit them well into business and industry until they become too obsolescent
    and are pink slipped. 

     

    To add insult to real injury, the current generation assumes
    itself too incompetent to solve its problems, but thinks it is smart enough to
    tighten education into an extruder that will disgorge

  • Shelly M.

    I have a question regarding the Australian model that Joseph Stiglitz has referred to, where people’s loan repayment is contingent on their income. How is this different that Income Based Repayment (IBR) in America? I gradutated from law school in 2011, and I have since worked as a judicial law clerk for the state. I have approximately $42,000 in federal student debt and $25,000 from a private lender. I make approximately $47,000 a year. My husband, also a law school graduate, has over $100,000 in student debt, and he works for legal aid amking about $45,000 a year. Before I signed up for IBR, I was paying over $500 a month to repay my loans. With IBR, I am only paying $130 a month for my fed loans and $230 for my private loans (which obviously didn’t change w/ IBR). IBR helps!

  • AME2013

    I am a 46-year-old professional. I’ve spent the last seven years completing an Associates & Bachelors degree at night and I am now just five credits away from finishing my Masters degree in business management. I am thrilled to say that, thanks to tuition reimbursement from the two companies I’ve worked for, I will graduate with a debt of just $2,600. 

    It has always been puzzling to me why more people do not take advantage of this benefit. While it cannot solve the overarching issue of education costs, there could be a possible opporutunity for high school graduates to look for entry level positions in companies that offer tuition reimbursement. I believe it is an untapped resource.

    • ToyYoda

      Blow the horns man!!  See my post  below.  More young kids need to know about these non-traditional ways to getting a degree.

  • donniethebrasco

    College application consultants are a great job.  Get $20,000 to help spoiled brats get into high end colleges.

    • jefe68

      What is wrong with you?
      You come across as a real nasty person.

  • TomK_in_Boston

    “The kids” need to get out the pitchforks and torches. The camo needs to be stripped from this class warfare so everyone can see the evil reality. In a nutshell, rising tuition at State U means low state taxes for the Romney types. How bad does it have to get? 

    • donniethebrasco

       The state universities have become overpaid political patronage jobs.

  • donniethebrasco

    Two things that are hurting public education:

    1. Teacher unions hurting kids by not allowing school choice.
    2. Cultural issues that don’t value learning in lower income households.

  • donniethebrasco

     The state universities have become overpaid political patronage jobs.

  • Government_Banking_Serf

    With all due respect, Mr. Stigliz glossed over and dismissed without real rationale the argument that “cheap money” from airplanes is not a main driver of the education inflation. As an academic, I can attest the Salaries argument is laughable.

    Was the Wall St Crash caused by Wall St salaries? No. of course the execs took exorbitant salaries along the way, just as University execs and bureaucrats do, but the real inflation was the stock and housing market itself where the cheap Fed Dollars went.

    The inability to pay back loans for education is as much a reality of the true value of things as the inability to pay off inflated home values.

    The easy money is the core source of both, the vampires who profit along the way are just fortunate onlooker/participants.

    • John Cedar

      To be clear, it is not “cheap money”, at least not relatively. It is however, easy credit granted to unvetted applicants for the purchase of an unappraised intangible. They have some work to do just to get up to 2007 mortgage crises standards.

  • Tim Chock

     Hi Tom,

    My wife and I are 53 year-old shopkeepers. When we graduated college in the early 1980s we went $65K in debt ($140K in 2013 dollars) to buy a little Main Street business and a run-down little house.  Our household income has never climbed above $40K, and Prof. Stieglitz has pointed out that incomes for people like us have been declining since 2000, and yet we own our own home and business. All during the time we were paying that off we were also paying student loan debt, My message to the young people who feel trapped in this bind is that you can stick to it and come out with something–but you have to stick with the course you have set out for yourself. The debt takes away your ability to switch. 

    • http://www.facebook.com/kenderJ2012 Kendra J Wastun

      My question to you would be, though, since you became small business owners just after college, do you feel that you degree enabled you to be small business owners? Or would have been as successful without the degree?

      • Tim Chock

        We ran a shop in the University neighborhood while still in school. My degree was unrelated, but my wife had her B.A. in Economics and plunged into building the business with gusto. I could easily have pursued the same course w/o going to college but would not have been the same person. This shop failed and we moved states to take over another shop, adding the 100% financed purchase price of that business to the $4K debt from the failed first try. The only reason we were able to do all this is that the local bankers saw us to be young, hard-working people–and the folks selling the business took back a second mortgage on it.

  • darby150

    There is an overwhelming belief that a student should be able to go to college and major in whatever they want without researching job/income potential. Are taxpayers suppose to pick this up?

    Please tell me why I had to work my way through college, work 65+ hours a week to send my daughters through college, but I should have to pay for your music theory degree?

    • Government_Banking_Serf

      Because this is the age of entitlement. Life is not real, its a video game.

    • John Cedar

      Because if you didn’t pay for it then I couldn’t afford my cell phone with ring back tone unlimited plan, tattoos, lottery tickets, cigarettes, gold chain, tricked out ride with kick a$$ bass, three exotic pets, medical marihuana, eat every meal out, and maintain my BMI of 35.

      I am Americas “poor”. Give me some of your stuff now!

      • Johannes

        Hammer—> nail.

        But they’ll whine “Oh John thats not FFAAIIRR!”

    • http://www.facebook.com/profile.php?id=1155042916 Mike Hanson

      Well said. 

  • SuziVt

    I agree that the cost of higher education is outrageous. To expect young students to take on that kind of debt is irresponsible. One point that is made irritates me though. First, putting off buying a home is relative. I was 28 when I bought my first home. We built our second home, and when I say built, we were out there with hammers, nails, saws, etc. in all kinds of weather. We did without so much, so that we could have the home we wanted. I feel bad for these young people with high debt, but I also see that so many have new clothes, piercings, tattoos, iphones, go out to dinner more than my husband and I can afford, and we have a pretty good income. Maybe they should have done the math before they went off to school, to see what a job in their field pays and how much of that will go towards their debt.? Then, consider this, what if you don’t find that job? I’ve been hearing about the lack of jobs for college graduates for quite some time. Are they living in a bubble? Everyone wants to go to the best school. Yes that’s nice, but if you don’t have full scholarships, perhaps you need to take a fresh and honest look at what’s practical. I wouldn’t doubt it if the kids in high school now are going to enter college and make the same mistakes that are, and have been made, being overly optimistic. They need a reality check. Make sacrifices, downsize your living expenses before, during and after college. My husband paid for every cent of his state school expenses, with no loans. Since he was very young, he worked and saved. While in school, he spent his summers and breaks working, he worked while at school. I realize there are people that do that and still have difficulties, but until our government starts paying for higher education or the universities lower costs tremendously, I can’t understand taking on more than you can afford and then being surprised about the outcome. 
    Do people really need an expensive dream wedding when they get married? I am not at all sympathetic there. It’s a waste of money, be creative and plan a simple low cost ceremony surrounded by family and close friends. Maybe you can’t afford a blow-out super wedding, but you can afford to get married.     

    • http://www.facebook.com/profile.php?id=14100563 Jillian Nowlin

      I am one of those students you’re talking about. I know my debt is my responsibility, but I also believed there would be jobs out there for me so I could pay off my debt. That was in 2008 and then the market crashed. I prayed during my master’s program things would get better by 2011. They slowly have.

      I don’t live beyond my means. I am very careful with my spending. I chose a less expensive cell phone carrier because that’s what I could afford. I don’t have an iphone. For a time I had a full-time job, a part-time job, and I interned for more experience. I don’t go on vacation. I work overtime. I’m working my butt off. I can’t speak for others. I was young when I applied for my loans and I didn’t get it and unfortunately I didn’t have parents who were capable of guiding me through my financial decisions. They did have me start working when I was in high school. At least they instilled a good work ethic in me. I did the best with the knowledge I had and I’m doing the best with what I have now. I don’t know when you finished school, but I can assume its a way different time now. 

      • SuziVt

        Jillian, I don’t think you’re one of those students that I was talking about. When I mentioned living in a bubble, it was directed mostly at parents, teachers, and guidance councilors. By this time, they should be more aware of the the realities of degrees, school costs, debts, and job prospects. You were unlucky enough to be in school right at the worst time for being hit with the consequences of the financial crises. 

        My frustration is with the students, that I know of, that did not do everything that they could to contribute to the costs of their education. As my husband worked hard to put himself through college and had a job since he was a paperboy at something like ten, he had a little brother who paid for nothing, couldn’t think about a job on spring breaks, or in the summers, until he treated himself to a long vacation to the ocean at least twice a year. After finally finding a job, when most of them were taken by more industrious students, he then quit 2 -3 weeks early to enjoy his freedom before returning to the grind of college. That was my first exposure to a spoiled individual that expected to have the good life handed to them. That was a long time ago. 

        In this decade, it’s even more critical that the  high school staff should be on top of the situation and be advising students as to the opportunities out there and the likelihood of students obtaining their dream job. Sometimes, some students may be better served to take on a trade school education. I’m no expert, but I hope that those in the field figure out what direction  pre-college guidance should take.  

        It sounds like you did all the right things to be successful upon graduation. My point was, that NOW it is unrealistic to assume that everything is going to fall into place. It’s a new situation out there, possibly forever. 

        Another reason that I wasn’t speaking to young men and women like you is that my frustration is with only those that do, and did, live beyond their means, unwilling to make many sacrifices. 

        What set me off, was when the young woman complained about having to put off marriage. I fail to see how a costly wedding is an entitlement or necessity rather than a luxury or option.

        Please excuse me if I seemed to be critical of you or all college grads. Admittedly, I am of some, but surely not all. Personally, I would like to see all education paid for by the taxpayers, but if and until that happens…

        Good luck to you Jillian.   

  • northeaster17

    Has anyone heard of a family starting a 503c corp to avoid taxes and then soliciting for college funds, as a Congressman does, as well as selling, say, t-shirts on line to fund an education? 

  • http://www.facebook.com/profile.php?id=1289474041 Melissa Gruntkosky

    In contradiction to what this segment is discussing, I currently have income contingent based loans here in the U.S. As a small business owner still trying to make my business work, and a part time adjunct teacher at a college, I’m living on a very low income. This payment plan has saved me. Why is this not being added into this discussion?

  • MurielV

    One of the reasons why health care and dental care are so expensive is because dentists and doctors owe so  much in student loan.  To pay back their loans they need to have a tremendous amount of income.  We end up paying for that as well as patients.  It makes no sense.

    • StilllHere

      That explains why they’re all driving Benz’s.

  • Jim

    My kid just turned 2… and i am thinking about basketball scholarship already. we live in the inner city where education is considered a luxury. i keep telling myself… just work the system… just work the system… it is all about money.. and indeed that is what college and corporation want.

    • StilllHere

      The govmint wants your money too.

  • axro

    (a) Dr Stiglitz mentioned that the cost of education was driven up by the cost of college teachers.  This is incorrect.  Today, over 70% of the faculty in American universities are ADJUNCTS, paid a third of the tenured faculty rates, no benefits, and no job security.  Big savings there!  The pay of administrators, however, has gone up exponentially.
    (b) How does Dr. Stitglitz factors in the globalization of universities –today American students have to compete with not just talented, but wealthier international students.

    Anny Rivera-Ottenberger
    Ph,D. MIT; Masters Harvard University
    Adjunct faculty

    • John Cedar

       But you didn’t tell us what the tenured 30% are being paid.

  • http://www.facebook.com/WildRicey Susan Rice

    Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit .  Talk about double dipping!  Go Elizabeth Warren!!!

  • donniethebrasco

    When my father went to an Ivy League college, he could pay for it from his summer job and working during the school year.

    When I went to a state college (and an Ivy League B-School), I could pay with a summer job and under $40,000 in loans.

    When my kids go to college, they will be able to pay by taking out $500,000 in loans (or my saving $1,200 per month for 18 years).

    It is insane.  The problem is the lack of controls on spending in colleges supported by cheap, easy government money.

    • northeaster17

      I went to state colleges in NY. I funded one half of my yearly tuition working my tail off all summer. Not such an easy thing to do today.

  • injun2

    Louisiana, which in most ways is a backwards state, has had a program ( the Taylor Plan) since 1989 where any student can go to any state college free. No income cap. All you need is to graduate from high school with a 2.5 grade average.

  • Kathy

    “And the truth is, there is something terribly wrong with this country, isn’t there?”

  • Jostrenz

    Here is another proposal from Europe:

    There is a private university (non for profit), which charges its students tuition as a percentage of their future income (between 2 and 3 percent to be paid, once the student starts the first job after graduation). This allows the students a choice of studies, which will not necessarily result in big income, but might still be important for society. On the other hand, the big income jobs (highly paid managers, lawyers, doctors and the like) will pay more from a higher income. And it works.

    • Kelly McManus

      But it is coming to light that the projected income of tradiditionally highly paid careers are being overvalued by the universities (like law school) so out going students are still behind the ball. There is also so many variance of salary within a career path as well as a 1st year versus a 5th year that it might make for some complicated math….
      I like the overall concept though!

  • jefe68

    That’s the best college commencement speech I’ve ever heard, and sung.
    Anne Lenox is amazing. 

  • Davesix6

    Gotta love Annie Lennox!

  • MGH_DC

    I graduated from law school when I was 24 years old. I am now 41 years
    old. I have never even contemplated getting married or having children
    – and certainly NOT buying a home — purely because I have not felt that I could do so because of my student
    loan debt.

    I finished law school in Boston in 1996 with $75,000 in student loan debt, including undergraduate loans. That was when tuition was around $20,000 a year, not $50,000+ like today. (My interest rate is almost 7.875%. For comparison, my credit union’s visa credit card interest rate is only 8.5%!)

    In the 17 years since finishing school, I have seen that amount increase to over $100,000 — due to long periods of unemployment and underemployment. I declared bankruptcy long ago, but the student loans stuck. My total loans have hovered around $100,000 despite making the payments for years, including several $10,000 payments to try to pay them down. (Those only paid down the interest accumulated on the unsubsidized half of my Stafford loans during forbearance or deferment periods.)

    Currently, only $125 out of my $770 payment each month goes to pay down the principle. I’ve been paying (or trying to pay) these things for 16 years.

    Even if I consolidate my loans with the Federal Government and use the new income-contingent payment plan (which started in December 2012), I would have to continue paying for another 10 years if I work in the public or nonprofit sector, or 20 years if I work in the private sector, before any remainder would be forgiven. I will probably be almost eligible for retirement before I am out from under these burdensome loans. And the cost to my self-esteem and psyche have been immeasurable.

    • jefe68

      So for you a law degree did not work out so well.
      Interesting. Do you think this is because there are to many lawyers being turned out?

      • Michelle Powell

        Now, that’s not fair. Not all lawyers make the big bucks. When I used to think of becoming a lawyer, I knew I wasn’t interested in working for a big corporation, but perhaps being a public defense attorney.  I found out they didn’t make much at all, and that if I wanted to pay off my student loans in any reasonable amount of time I’d have work for a big corporation that expected their new recruits to work 60-80 hours a week for at least the first few years of employment. No thanks, I want a life . . . and more meaningful work.

    • carl_christian

      Sounds positively Dickensian — debtors’ prisons to punish the unluckiest members of society apparently more out of spite than anything else. If even the lawyers are getting screwed how long can it be before our version of “anything goes” capitalism kills the great American  experiment in democracy?

      • http://www.facebook.com/kenderJ2012 Kendra J Wastun

        Lets face it, the US experiment in Republicism failed years ago, possible about the time of WWII. Bread and circuses killed it off. Things just haven’t gotten bad enough for the US citizens to bother getting a better government. We’ll probably keep going like this for quite a while longer before we collapse under our own corruption. Rome kept going for anywhere between 1.5 -3 centuries after they had a dictator in everything but name. As it is, there is too much government interference in business for us to be a truly capitalist society and we were never a democracy.

  • Government_Banking_Serf

    I am sympathetic to the Australian system, but lets not fall whole hog into a socialist model of this. Market forces and the prospect of rewards for work or investment, or making do with less due to laziness or academic incompetence are important and just aspects to one’s character and future success. 

    Might not like that but its true. Early bird gets the worm. Not enough worms for all.

    Australian system, ok.  Free universal college degrees? No. 

    Just address the collusion between the University Industry and the Government/Banking Industry, and then the pricing mechanism can work properly instead of siphoning printed money off to Administrators and Bankers.

    • Jostrenz

      Market forces have no place (or should not have) any place in education. Then why not start with making you pay for High School? Free education is not socialism, it is  a human right! And yes, if you profit financially from your education it should be paid back by a proportion of your income tax.

      By the way. The early bird only gets the early worm. So worms, stay in bed longer!

      • Government_Banking_Serf

        The problem is that while we like to say “market forces have no place” here or there, they do have a place and do act, like it or not. The problem is when we ignore them or try to reshape them, and often they end up corrupted or leading to bubbles etc. I’m not arguing there is never a need for a safety net or a subsidy, but we do have to be clear there is no such thing as a free lunch, and that there are downstream consequences to meddling with open markets that reflect the human nature and decision making of free people.

        The pricing mechanism of open markets is not an Evil to be defeated, it is the purest way of determining what is valuable to people and how to allocate things.

        We shouldn’t be scrambling to give people free money to pay for skyrocketing prices in education, which are NOT the result of market pricing. We should be fighting to get the froth out of the education market by not letting it get inflated by cheap loans like the housing market.

        Sounds like tough love now, but if people can’t afford it, they won’t go, and the Universities won’t get their money until they lower the price, and spend less on their bloated administrations and bloated missions.

        The cycle has to be broken. Sadly we never look at things this way, and just wait for the bubble to burst, the vampires to walk away fat and happy, and the masses/taxpayer to pick up the tab.

    • jefe68

      How about this: 1.5% interest for the first 5 years after graduating. Then it goes up to 2% for the next 5 and after that it’s capped at 5%.  I also think student loans should be forgiven in bankruptcy and death.

  • ToyYoda

    I love this commencement speech.  So many speakers want to impart wisdom.  How boring. This speaker is different.  She wants to show off.

  • MurielV

    We cannot all be doctors or engineers. To have a healthy society we need musicians, artists, historians, anthropologists, and so on.  The question is do we want  to live in a healthy, fair, equitable society.  I do and I salute students who go into professions where they  know they will not make a lot of money but will make a difference in other people’s lives such as teachers.

    • jefe68

      Well said, and I concur. What kind of society do we want? Right now we area heading towards one of mostly have nots and people loaded down with debt and one were 1% are reaping huge finical gains.

    • http://www.facebook.com/profile.php?id=1155042916 Mike Hanson

      “To have a healthy society we need musicians, artists, historians, anthropologists, and so on”

      Ever consider we have too many? There is a reason we have so many soft majors these days. Everyone is told they have to go to college but when they get there they realize that majors which actually pay well are difficult to get. 

      I have never heard of a student say: “man that critical gender studies midterm was a BEAR … I’m gonna switch majors to chemistry”. 

      • Duras

        Are you kidding me?  The liberal arts in this country is in the dumps.  You should take a historical perspective and look at the support for the liberal arts before Reagan. 

        Not to mention, liberal arts keep democracies alive.  You can look all throughout Western history, a flowering of liberal arts is followed by democracy, while those who attack the liberal arts have destroyed democracy. 

        In America today, we have neither good liberal arts nor a strong democracy.

        • http://www.facebook.com/profile.php?id=1155042916 Mike Hanson

          Can’t argue that “liberal arts” is in the dumps today as the discipline has been redefined and ruined by postmodernism. That might explain that while we have more LAS graduates than ever and more LAS departments in academia than ever, ther creative and productive contribution to society as a whole becomes less and less.

          But what does Regan have to do with this?

    • TomK_in_Boston

      Don’t forget butlers, footmen, maids, cooks, housekeepers, gardeners, drivers, bodyguards, nannys, tutors etc. As we welcome the American Oligarchy and move backwards in time, let’s look to “Downton” for the jobs of the future.

  • Government_Banking_Serf

    I actually agree with Elizabeth Warren on this. If we are going to use the Fed Window to “invest” in our Banking Corporations, we can use it to invest in our students.

    Open the window for both, or neither. I say neither as it distorts the economy and provides environments for collusion and skimming, but if we are going to bankrupt ourselves through Federal Reserve meddling, we might as well all be able to party as we go down with the ship.

  • Markus6

    I know 3 professors closely. One in a california university and two in private liberal arts colleges. It’s a great gig. Lots of time off, very short work weeks, sabbaticals and you can’t fire them. Let me repeat the third item – you can’t fire them, no matter how incompetent they are. Two were politically connected to get their jobs. Don’t know with the third, but I suspect her race made it easier. 

    Smart, nice, well-meaning people. Am I envious? Sure am. Do I think their semi-retirements are a major factor – probably not. But add up a number of these kinds of inefficiencies and you have a lot of cost 

    • jefe68

      How do you know how much they work?
      You do realize that all of them most likely have PHD’s.
      The amount of research they have to do on top of teaching is huge and they have to publish. 

      You’re comment shows that you no nothing, nothing at all about academia. They can be fired, it’s hard but they can be. Also it most likely took 6 to 10 years to get tenure from the time they started out in their academic careers. If they are associate professors they work their butts off.

      That you admit to being envious says a lot. Do you have an advanced degree? Also I hope one day your close friends find out the who you really are. Who needs back stabbing friends like you.

      • TomK_in_Boston

        Scientists work because they love to do science, so despite the theoretical possibility of “semi retirement”, I can’t think of any who do. 

        However, if we’re going to play this TP game: OK, you can’t be fired. If want you do the bare minimum, you have no professional status. No funding.  No students coming to work with you. No getting invited to meetings all over the world. Office in a closet. All the most unpleasant committee assignments. And your bare minimum won’t remain so bare, as you will get more teaching load if you don’t do anything else.

        How appealing :)

      • Markus6

        Odd comments, but not unusual.

        I have an advanced degree and I have taught at a college. None of them are in scientific areas. And all three admit they have cushy gigs. 2 have phds and 1 doesn’t. The phds do a small amount of research, the other almost none.

        Wish I had time to explain more. 

    • TomK_in_Boston

      Can’t speak for your friends, but the academic scientists I know are such workaholics that if you mentioned “work week” to them they wouldn’t know what you mean.

    • Michelle Powell

      Sounds nothing like the professors I know closely at a public institution

    • Duras

      You are glossing over one very important detail.  Professors who earn tenure have to produce great scholarship.  The ones who earn tenure have produced the scholarship that would negate the possibility of them being “incompetent.”  And I believe, most programs, certainly flagship schools, require professors to produce scholarship after they earned tenure.  Tenure allows the professor to publish with more political freedom.  But they still have to publish quality work, which would negate the idea that these people are “incompetent.”

  • carl_christian

    It is disappointing that the discussion so far has included very little mention of the elite (as in top one percent salary incomes) nature of many higher education administrators and professors; ivory tower indeed. The disruptive and morally corrupting unjust income disparities begin right in the halls of academic institutions — the very same institutions that the rest of us were raised to think of as beacons of light and justice. A great deal of money could be saved if we simply stopped overpaying top salaries and followed a policy of fixing a ratio between the lowest and the highest, no matter what the profession; we need to cease with the notion that money is the arbiter of worth and ability and the single best incentive. I think the evidence is all around our planet (in environmental crisis) that perhaps we don’t get the best ideas and wisest choices from society’s top tier when they have arrived there with money as their primary incentive.

  • Government_Banking_Serf

    RE: Notion that FACULTY salaries driving costs. Not.

    http://hereandnow.wbur.org/2011/11/02/university-cost-bloated

    • Government_Banking_Serf
      • Government_Banking_Serf

        “U.S. universities employed more than 230,000 administrators in 2009, up 60 percent from 1993, or 10 times the rate of growth of the tenured faculty, those with permanent positions and job security, according to U.S. Education Department data.
        Spending on administration has been rising faster than funds for instruction and research at 198 leading U.S. research universities, concluded a 2010 study by Jay Greene, an education professor at the University of Arkansas.”

        • TomK_in_Boston

          Like everything in America, Universities are rapidly becoming corporatized. The corporate model is to reward elite executives with enormous salaries and to squeeze everyone else and make them jump through endless bureaucratic hoops. No surprise, huh?

          • Government_Banking_Serf

            Yes, and the $ to support that kind of corrupt fluff comes directly from the Federal Reserve.  An honest, organic money economy would not tolerate the graft and fluff and prices would help to reward true value and work (faculty) and weed out the charlatan vampires.

            But no. We accept the Fed Window>Wall St Pals>Elite society mainlining that does not serve the masses and is the real Trickle down model that does not work.

            Competition and Pricing and Supply and Demand are not our enemies, its the bypassing of these natural market forces that we all would participate in in a free market, for the corrupt Fed>Corporate>Government model we have let ourselves get into.

          • Government_Banking_Serf

            When liberals or progressives or establishment republicans or whoever continue to defend the Fed/Wall St/Government Central Planning model, you just keep perpetuating these problems.

            Government was meant to be of and by the people, and markets to be as open as possible, with the Rule of Law patrolling for cheating and stealing and killing.

            The Benevolent Dictator fallacy of empowering the Fed/Government/WallSt elite is failing us horribly.

            When will we learn.

            Now I’ll wait for IRS to audit me.

          • TomK_in_Boston

            OK, but if the states continued to support “their” universities we wouldn’t even be having this discussion.

          • Government_Banking_Serf

            Depends on whether the Universities felt the burden of accountability and scarce resources. If State taxes were all that funded them, you would probably be right, because the tax burden that state and local people can really handle would be much smaller than University expenditures today.

            If States kept bonding and borrowing to allow inflated infrastructure and bureaucracy, it likely wouldn’t change.

            Our society needs to deflate.

          • TomK_in_Boston

            The states are actually paying less/student over time. As the state pays less, the students pay more. No mystery.

          • Government_Banking_Serf

            If it was the only the student paying more, it would work. Its the student and the future taxpayers, via Fed easy money based loans, that are supporting the rising University costs.  

            The Fed spigot model of social justice does not work for “we the people” in the long term and yet we know who it does benefit: the finance industry and the politicians with their promises for all we desire.

          • Duras

            I think you are glossing over the real liberal point: we don’t have to have tuition at all. 

            The FED is not the problem.  If you cut the availibility of student loans, you are cutting opportunity. 

            But liberals prefer a system, where at least every flagship school has free tuition while the satalite schools are still inexpensive. 

            As for the banking industry, the FED would not have bailed out the banks, if a law known as Glass-Steagall hadn’t been repealed.

            I got news for you, this is Reaganism.  This crap didn’t exist before Reagan because of FDR and the liberal class. 

            It is a problem of the political economy we are in–and I’ll tell you, the overregulation of the 1970s is a far lesser evil than the regulation of Washington by Wall Street.  You think Dodd-Frank is a liberal-progressive law, guess again.

            No body knows what liberalism is anymore.   

          • Government_Banking_Serf

            We bailed out the banks because Hank Paulson said we’d have to or the sky would fall. He had no authority, but we are so spineless and clueless about rule of law now, his breathtaking discretionary maneuver was accepted and the greatest transfer of wealth from the taxpayer masses to the financial elite was underway.

            Glass Steagall might have prevented the crisis. Only a respect for Rule of Law and Market Accountability, as opposed to Too Big to Fail, would have stopped the Bailout.

        • StilllHere

          Sounds like the bloating we’ve seen at all levels of government.

          • Government_Banking_Serf

            You got it. Dump in easy money and the bureaucracy, the management grows, and develops a sense of entitlement to what are not really necessary or productive jobs. After enough time, a huge portion of our government and economy, companies, can get like this, and then our short term interests won’t let us cut our fat, because so many depend on it.

            All based on debt. All owed by taxpayers. Off course the banks get bailouts and a fresh start every cycle, and of course the government won’t shrink itself. The rest of us, real workers, real companies, real educators get the bills.

  • TomK_in_Boston

    Middle Class America:

    “The California Master Plan for Higher Education adopted by the state in 1960, helps integrate the missions of these colleges and universities in meeting the educational needs of Californians.
    The Master Plan designates UC as the primary state-supported academic research institution. It also gives UC exclusive jurisdiction in public higher education for doctoral degrees (with the exception that CSU can award joint doctorates) and for instruction in law, medicine, dentistry and veterinary medicine.

    The Master Plan also established an admissions principle of universal access and choice, assigning UC to select its freshmen students from the top one-eighth (12.5%) of the high school graduating class and CSU from the top one-third (33.3%). The California Community Colleges were to admit any student capable of benefiting from instruction. The Master Plan was subsequently modified to provide that all California residents in the top one-eighth or top one-third of their high school graduating classes who apply on time be offered a place somewhere in the UC or CSU system, respectively.”

    Class warfare America:

    “The market sets the price, kid. Go see the shylock if you need a loan.”

    • Duras

      What kills me is that people are so encased in the Reagan political economy that arguments like ours just don’t seem to strike people as they should.  But if people would just look at history and the way other countries run their university systems, it is obviously class warfare waged from the top and Americans, for the most part, don’t see it.

      This is why CNN news anchors were perplexed when Canadans protested a tuition increase from $0 to something like $75.  They just don’t see that Canada is losing their middle class in order to create not wealth but superfluous wealth for the upper class. 

      • TomK_in_Boston

        Yeah, I don’t get it either. It seems the media have sold the story that the Reaganomics economy is inevitable, all these bad things happening to the middle class come from forces beyond our control. Nonsense! Once we prioritized quality public higher ed, now we prioritize low taxes. Money flows from the poor kids taking out the loans to the Romney types with their tax savings. That’s it, it’s our choice.

        The sad thing is that a lot of parents of these kids getting screwed voted for pols who promised to keep taxes low and “get gub’mint off our backs”. There ya go, that free education has been taken off your back. Hang on a bit, and Ryan will unburden you of that comprehensive big gub’mint Medicare, too. 

  • carl_christian

    Annie Lennox and Stevie Wonder for co-Presidents.

  • MLS417

    This was such an interesting discussion!  My husband is a product of the US Military Academy at West Point, which requires 5 years of active service post-graduation in return for his government-paid education.  Would adopting the military program into the civilian education system work? It could be on a full or part time basis and be an option for students who want to work in their field, build experience, and reduce their post-graduation debt.  The government would then get a source for free services to offer to those that need it.  The young woman who called in to your show who is a psychologist might opt to work 10 hours per week with the clients the government sends her in order to pay down her student loans.  She could work more or less hours this way, based upon her income and needs.  If she works part time she might pay off her debt within 7 years, but without actually paying out of her income to do so.  It would mean some overtime, but I think if given the option, many young people might sign up.  I know as a recent college graduate I was working 40 hours a week and could have worked an additional 5 – 10 hours, and would have done so happily, if I knew that would erase my over $35K in student debt.  Just a thought.

    • William

      Well…it was taxpayer paid eduction vice government paid education. There is really no such thing a “free” in government, government programs, services etc..somewhere, somehow, it all has to be paid for by the taxpayers. If the taxpayer gets teachers, police, civil servants on the cheap in exchange for paying for that person’s college education that is worth a look. It works with the military personnel and the taxpayers really get high quality labor for pennies on the dollar. 

  • Michelle Powell

    The prevalent wisdom at the time I began college almost 10 years ago was that a college education would lead to a higher paying job, and that extra income would pay for the student loans. It took me almost a year to find a full-time job after I graduated. The job I finally got requires only a high school diploma, and my yearly income is $24,000. My student loan debt is more than twice that.  I can’t see myself ever being able to afford to buy a house. My husband and I really want to start a family, but that is financially out of the question.  If there are so many like me putting off starting a family and buying a house, it seems plain to me that this could really be slowing our economy down. But how do we fix this, not just for the people entering college right now, but for those who have already taken on so much debt that its slowing down their lives. I don’t want to be forgiven my debt. Stagnant income levels seem to be the problem. And I can’t help but think about all those businesses believed too big to fail, bailed out, even though they had made very poor decisions leading to the crisis that befell them.  However, getting an education is never a poor decision, collective student loan debt is unbelievably high, yet forgiving any amount of student loan debt is talked of as anathema.

  • Eric

    Last week, I graduated with my bachelor’s degree in Physics. Even with a four-year tuition scholarship, a modest research grant, and a secured internship next year, I am $20,000 in debt and will use most of my graduation gift money to pay it down. I cannot help but feel a little sick — even though I have been afforded so much help and opportunity, it seems the next decade of my life will be dedicated to paying off loans. 

    Tom’s callers raised the point that loans interfere with “life” (having kids, buying a home, etc.) to a great degree. I don’t mind being very frugal to pay off these loans. But I have learned that repetition breeds habit, and habits are hard to break. Will that habit interfere with my “life” once these loans are paid off?

    • Gregg Smith

      You’ll be fine. You have a degree in a field that has opportunity. Your debt is relatively small. But you raise a good point about the next decade. That’s part of the decision. 10 or 15 years is a long time when you consider how much vocational expertise, money and real life market skills can be nurtured in that same time without the debt.  

    • hennorama

      Eric – congratulations on your graduation.

      Living below one’s means is the simplest and surest path to financial freedom.  The ability to distinguish between “needs” and “wants” goes a long way toward living below one’s means.  Get into the habit of asking the question “Do I really need this, or do I only want this?” before a purchase, and you’ll be well on your way.

      In the same way as there is no mystery as to how to lose weight, there really are no secrets about how to improve your finances.

      There are only three way to get ahead:

      1. increase income
      2. decrease expenses
      3. do both

      Live below your means and you can be financially independent.  This sort of freedom is priceless.

  • Government_Banking_Serf

    Lets face it, the Federal Reserve and the Elites they fund in Banking and Government, are our Central Planners.

    If you like Central Planning, don’t believe power corrupts, and don’t believe in Self Government, fine, defend it.

    If you don’t like Central Planning, do believe power corrupts, and thus value the model of our Constitution and self-governance of our founding, then we need to start making some big reforms and really rethink the Fed and our Monetary policies.

    Who has profited from our political-economic model as it has drifted farther from its founding principles?

    Sound Money and Self Government are not radical or romantic notions.  They are mechanisms toward avoiding the corrupt and tyrannical pitfalls of humanity as seen throughout history.

    That we have been convinced otherwise, and blinded by the fog of consumerism and immediate gratification and sense of entitlement, a sense that there is no such thing as scarcity any more, is sad.

  • Gregg Smith

    I don’t make much money but I have zero mortgage, zero college debt, zero credit card debt and I own my tin-roofed shack and 100 acres. I own my old truck. I have a lovely career and enjoy my work. I do much for my community.

    I sure am dumb.

    • 1Brett1

      I guess people should just do what you’ve done: become a musician at a hotel for years, get a girlfriend who has knowledge of raising and stabling horses and who can help you start a horse farm, live in a remote area where housing and land are cheap, get in a time machine and start buying property twenty years ago, pick up gigs accompanying others at parties/festivals, and build your own house, etc. 

      Sounds like a sure-fire recipe for success. Why I’m surprised more haven’t followed this formula.

      • Gregg Smith

        Those are quite the conclusions. Too bad they are mostly wrong. I didn’t play at a hotel for years, I didn’t build my house, I don’t live in a very remote area, I didn’t start a horse business, I paid the going rate for my land and on and on but it’s all irrelevant because I never advocated my path.

        The path I choose is not for the faint of heart. I’m lucky to be alive. It was of full peril, sacrifice, hunger, loneliness, insecurity, exhaustion and sweat. Fortunately, things turned out fine mainly because of the lessons I learned, risks I took, decisions I made and skills I have nurtured. It took a while but I’m in a very happy place now that I’m older. 

        So if I was to offer advice, as you seem to think I did, it would be work hard while you’re young and be very careful with debt. If you take a risk make sure you have minimized it and that there is a potential payoff. Get good at something you are passionate about. Never take praise seriously and never ever take criticism unseriously. Don’t have kids if you can’t afford them. Don’t let drugs or drink rule your life.

        • 1Brett1

          You and your girlfriend didn’t start a business raising/stabling horses? You weren’t a musician for years? Was land, say, over a decade ago in Western NC as expensive as land, say, in Northern Virginia? Were houses as expensive in, say, Western NC as expensive as, say, Raleigh-Durham? 

          I guess no matter how much you characterize your life in one post, viewers can never be sure if what you say is true or is simply something for you leave open so you can refute in later posts.

          Your initial comment was snide and myopic. And, one can learn life lessons and work really hard, and make all of the right decisions, and can get an education and all of that without your “rugged individualism.” How you achieved success specifically is more of a recipe for failure than success.  

          What, by the way, was the point to your initial part about, “I sure am dumb”? It seemed to be taking a shot at something (I know, don’t tell you what to think, or alrighty then, or something). 

          Your general advice is sound but way too simplistic, general, smug, and is based purely on your own experience, which is a very narrow view.

          • Gregg Smith

            Mighty nosey.

            My girlfriend started the business from nothing before I came along. I don’t like horses. I helped her. This did not happen: “get a girlfriend who has knowledge of raising and stabling horses and who can help you start a horse farm”.

            It all depends on whether you are talking about Asheville or Flat Springs compared to Arlington or Mechanicsville. All I can tell you is I paid the going rate in an area that is not all that cheap. But we also did it over 30 years with 5 different (but connected) parcels. None cost the same. Much of it was bought with money from Rock-n-Roll. Add to that this is a buyers market and some deals available now are better than others then when all is considered.

            I am a musician, I always have been a musician and I always will be. You didn’t say anything about that. I didn’t “play at a hotel” for years. But you’re a musician, you know. Do you advocate playing bars, festivals, proms and frat parties as a way to succeed? Maybe you do, for all I know you are Led Zeppelin himself. I sure don’t advocate it.

            So forget what you think I think or thought. Forget what you think I meant and tell me what about my advise was not good advice. Do you think drugs and drink ruling your life is a way to success. Or having kids before you can afford them? Or is getting good at something you love and nurturing skills bad advice? Should you not be cautious about debt and the return on risks? Is the notion of working hard while you’re young so you can take it a little easier when you get older really that crazy? I said or implied nothing else. you said the advise was sound but smug. Good advise is good advise, nothing smug about it.

            That brings me to what I was getting at in case you missed it. It is not necessary to go to college to get educated, be successful or be happy. Going into extreme debt that confiscates 10 or 15 years of your potential earnings is a choice that may be wise but is not the only way. In reading many of these comments I get the feeling many believe it’s the government’s job to forgive, ease or otherwise address college debt. Or that suggesting college and debt may not be the best choice for everybody leads to an uneducated society as if massive debt is the only way. I disagree.

            The main thing is the things I suggest cost nothing.

          • 1Brett1

            It might not be necessary to get a college education, and many can do what they do, successfully, without one. Others can get training from a technical school in lieu of a college education. But, by and large, without a college education in this day (or some form of higher education), people put themselves at a considerable disadvantage without college, even getting an associate’s from a community college isn’t going to really carry a person very far. 

            Your lack of a degree hasn’t affected your success, but so what? And anyone (including you) is to be commended for finding his/her way in pursuing their passions, etc. While I worked for over 30 years doing something my degree afforded me to have a career in, my current way to make money has more to do with skills and knowledge I’ve acquired outside of my years of formal matriculation, but again, so what?

            Neither your unique circumstance nor my unique circumstance means much in terms of overall what will get most people ahead in today’s world. 

            I said in my last post that your general advice was sound, and I meant it, even the general advice of college not being for everybody or is the only way to get ahead. However, college is only one of a very few ways (and those ways are dwindling) the average person will be competitive. For the average person (who, for example, doesn’t have a particular skill as, say, a lifelong musician, or a lifelong gardener, or whatever), his/her path to some semblance of a middle-class life will be to compete with a college degree. The other alternatives would be to fly by the seat of one’s pants in starting a business or having a trade (and those are still benefitted by some form of higher education, either in business administration or by certification from a technical school). The latter two are iffy. Most businesses fail, and unless one takes a trade skill toward self-employment, one will be at the mercy of  corporations that value trade skills less and less with each passing year.

            We lifelong musicians are lucky; we know what true passion is…many people will never know that kind of dedication and commitment, or passion (I don’t know about you but I remember the countless hours of practicing/honing my skills because my passion led me to continue). Most people will not be able to turn such passion into a way to make real money, either. 

            Most people will need some form of higher education to make a life, irrespective of exceptions one can count or point to.

          • Gregg Smith

            Well see there, now you’re making sense. I largely agree with most of that, all of it really but I’d add a point or two.

            I don’t apply my circumstance to anyone else. My story is unique as is everybody’s. I don’t want to go all Henny on you and quote myself but please read my comment to Bruce on the Bacharach board explaining how untalented I am. Also a reply on this board to lauralmsb above. They sum up my thoughts on what each of us possess. The reply to Eric below is pertinent too. Sorry, this has been a blog heavy day and I’m getting redundant.

            I’ll also refer to you and how you honed your musical and other skills over the years and are now benefitting from it. And that BTW is the other alternative to a degree you did not include, honing skills and developing a work ethic over a lifetime. You did put it as those who don’t have a particular skill but I see that as a choice that is free.

            That’s my main thing here because it’s in contrast to sinking years into college and another decade into repaying loans.

            If we disagree it’s a matter of degree and not concept. I don’t think I think not having a degree is quite as limiting as you do and I do think you don’t believe as many people can hone their passions into assets as I do. 

            If you followed that last sentence (I was careful) you deserve a medal, but again, I’m agreeing with you in concept.

          • 1Brett1

            “My girlfriend started the business from nothing before I came along. I don’t like horses. I helped her. This did not happen: “get a girlfriend who has knowledge of raising and stabling horses and who can help you start a horse farm”

            Sorry, I should have said, “get a girlfriend who already has an established business and ride on her success.”

          • Gregg Smith

            She wasn’t successful until I bought the 20 acres next door, fenced the place and built the barn. But she is awesome and could not be stopped either way. She was invaluable to my music career as well. We’re a team.

            Why do you have to be nasty, really? Was that necessary? You don’t have a clue about my life, what makes you so sure you do?

          • 1Brett1

            Sorry, I should have said, “get a girlfriend so you can make your love relationships symbiotic business partnerships to succeed in life so you don’t have to go to college.” 

            As far as what started this off: why end a comment about not going to college and being successful with, “I sure am dumb.” It seems to presume something about a supposed opposed opinion.

          • Gregg Smith

            We had both dropped out of college years and years before we met. I was majoring in Music but college was causing me to miss gigs.

            Are you resentful I’m happy? Seems so.

          • 1Brett1

            Not at all. That’s great you’re happy. I’m quite happy and fairly financially well off (although anything can happen to any of us at any time to upset that apple cart) and don’t look at anyone else’s life with envy. I also feel very fortunate that I can essentially do what I want. 

            Your view seems narrow/myopic, however, in that you’ve used your personal life as an example of no need for college, which has no real relevancy to the general topic of what people must endure to realize their lives and how college loans can effect achieving that realization. Obviously, people can find their place by either going to college or not going to college. Using one’s own example of not going to college, though, as a comment without also mentioning in the same comment that college is a reasonable option for many if they wish to be competitive these days, and then following that sentiment up with a snarky, “I sure am dumb,” seemed flippant and unnecessarily antagonistic. That’s all.

  • Dave Caldwell

    I’m a somewhat older student (40), trying to establish a fruitful career and have been lucky with very little debt so far.  Is this conversation another example of a deeper problem of income-inequality?  Extremely weathly people, corps and companies vs. the working poor, even if one has a degree.  Talking (relatively) low pay, long hours, no benefits….

  • dorilh

    This is not just a problem for young people.  Many parents took out parent plus loans to support their kids.  Some of us boomers had to go back to college to change careers and took out loans in our 40′s and 50′s, especially because of the recession.  I also pay a quarter of my income on the combined loans from supporting my kids (now 30 somethings) through undergrad school, and then returning in 2002 for 2 years of college myself to qualify to teach (which I do now).  I will not be done paying college loans until I am 85.  

    • Eric

      Wow. We also took out a PLUS loan, which no one in my family expected. 

      Did your children attend in-state our out-of-state schools? I ask because today’s show didn’t address the often huge tuition differences between the two.

  • Imran Nasrullah

    I think the whole student loan schema impedes our ability to compete on the global stage.  As the whole world has largely shifted to a knowledge economy, now more than ever advanced education is required to compete globally.  I have been in the biotech industry for 20 years and it is very common to see people with M.D., Ph.D.s combined with law degrees or MBAs.  The cost of course is astronomical; but to compete globally or to compete for high paying jobs (in biotechnology whether in Cambridge, Singapore/Malaysia, China, India or Switzerland) these are the degrees you need.  If you want to start up a company in biotech, or medical device or technology, you need the education to be an entrepreneur.  The cost to acquire these advanced degrees is easily over $150k (not including the interest you pay over the years to the banks)

    Yet, with loans like these, you cannot renegotiate the interest rates on these loans once you consolidated them. I am paying 9.25% on law school debt and debt from my masters degree because I consolidated the loan in 1995 at those rates.  The only option I have is to leverage the equity on my house to pay off the loan – but why would I want to put my house at risk to pay off the bank? 

    What I find even more egregious, is that federal loans are transferred to private banks who also won’t let you renegotiate the loan (even though all other types of loans can be renegotiated – like your mortgage and car loans).  So the banks are making 6+% on interest.  The rates never adjust with the economy.

    On the tax side, I cannot claim the student loan interest as a tax deduction because I make “too much” money to qualify for the deduction.

    The whole student loan system disenctivizes students from investing into their education so they can compete against foreign graduates who come here with no student debt (because their countries pay for their education), advanced degrees, and a financial head start.  Americans come out of school leveraged to the hilt and when they get a job, they are just paying off debt, not saving, and not building for their futures. 

    We will lose the global innovation race because we have made it too expensive to get the right education for high paying jobs like those in biotech, high tech, and information technology.  Shame on the government, the banks and Universities for conspiring against students for their own financial success.  We will define entrepreneurship by people who create restaurants and bakeries, rather than Google, Apple, Biogen-Idec, or Vertex.

    • Wm_James_from_Missouri

      Entropy.

    • John Cedar

      “The only option I have is to leverage the equity on my house to pay off
      the loan – but why would I want to put my house at risk to pay off the
      bank?”
      To save money on interest?
      To make the interest deductible?
      Or are you saying you earn so much money, that your deductions are phased out under the new tax rules passed this year?

  • John Cedar

    When listening to Joe speak today, I was critical of most of what he said. One thing that struck me particular was the attack that he made on the private for profit education centers. I would like to see some statistics to back up his (academia’s) assertion that the for profits have a worse track record of improving the lives of their graduates.

    As today’s headlines list thousands of graduates being pumped out of the community colleges this time of year, I am skeptical to say the least, that those degrees will earn more than the tech degrees from the for-profits .

    Another “fact” that caught my attention was his statement about per capital wealth in our country going down. I immediately guess that much wealth in our country is in the form of stocks and “stuff” (often real estate). And the quantity of stocks and stuff is largley the same or has increased. So while it is true that if you monetized all your stocks and stuff, it might get you less “wealth” in dollars at this instant in time, it is still the same amount of stocks and stuff.

    And as always, the tired old song about wealth disparity. Poverty should ONLY be defined by what you don’t have, not by what others have.

    • StilllHere

      Refreshing.

      I believe for-profits are required to publish statistics regarding percentages of graduates employed in their field of choice.  I don’t believe public or private are.

  • http://www.facebook.com/profile.php?id=1017091038 Roy Donkin

    two comments. 
    As a culture, historically we have provided free the basic education needed to become a contributing member of society.  When we were an agrarian society, we provided up to 8th grade.  When we became an industrial society we provided 12 years of education which often included training in trades.  Now, even to work in a factory one usually needs more training than is provided in 12 years of public school.  Indeed, that education qualifies a person to do nothing beyond the service sector which is not an income that meets basic needs.  It is irresponsible as a society to not provide adequate training for our young people to become contributing members of that society.
    Second, there are additional societal costs to student debt.  When a young person graduates from college with what are often crushing debts, their options are limited for the directions they can choose.  They cannot become entrepeneurs because they have bills to pay.  They cannot think in terms of serving the broader culture – providing low cost medical care or legal advice – because they have debt that must be served.  They cannot work on the next great technical innovation because they must find high paying jobs to pay debts.  Additionally, those debts impact the ability to have families which impacts the future in many ways including removing those future workers from further building our society and the very people being discouraged from starting families are the brightest and most productive member of society.

    • William

      Is there a danger for too many people to become too comfortable with the idea of “free stuff”? Certainly, at some point a person that receives a free college eduction must pay much higher taxes to support the next generation’s entitlement to the same “free stuff?”

      • pairno1

        Having free education and having free stuff are not the same. Free stuff are consumed and there is no return on that stuff, but education is an investment, where you get the return as these people grow up and work to improve lives of people like you and i.

    • Government_Banking_Serf

      I believe it is a fallacy to think we are spiraling ever upward in 
      income/education/productivity/income/education/productivity…..
      We cannot all be professors, or CEOs or business owners etc. Villifying those that do or are is silly. There is alot of chance and serendipity in life, and we may or may not occupy those positions. We can increase the chances through focus, hard work and investing ourselves in our education.

      But the notion that we should communally try and subsidize everybody to those positions is unrealistic and economically dangerous.

      At the end of the day we NEED to eat, stay out of the elements and raise our kids to be able to do the same.

      The notion that we are free of the notions of sustainability or scarcity because the iPhone was invented and we all deserve one is silly.

      Our modern lifestyle is likely unsustainable. Good progressives know that don’t they? Open markets and Pricing actually help to reflect reality and resource allocation.  Printing money to subsidize an unrealistic standard of living, while altruistic in intention, is utopian and not possible, and our continued demanding to “have it all” from our politicians and their banking backers, is destroying us. 

      Of course they earn interest on the whole sorry farce.

  • Thirtytwopaws

    I can’t wait to hear the show on this. I graduated from law school in 2000. I currently owe MORE than when I graduated, about 35 or 40 thousand dollars (I can’t even bear to look at the statements). I had to do a few financial hardship deferrals along the way, so the unpaid interest got added to the balance. My payments are $500 per month right now!

  • laurelmsb

    I have $80k in student debt after undergrad and grad school. I’ll take the $80/hr that I earn as and adjunct instructor at a community college over the $20-30/hr I could earn without my graduate degree. I remain convinced that higher education is worth it.

    I also realize that I am extremely fortunate. I have been lucky enough to cross paths with a series of people in my field who were willing to take a chance on me. This fortune is no doubt a product of my privileged socioeconomic status. I wish such privilege were available to all the brilliant minds longing for higher education-it should be.

    I believe that institutions of higher education need to make transitioning their students into a career a primary goal. It’s  the return on the student’s investment that colleges and universities consistently fail to honor. Such institutions are increasingly adopting a business-like model of education. I think they should provide a warranty for their products.

    In my humble opinion…

    • twenty_niner

      “$80/hr that I earn as and adjunct instructor at a community college”

      How many hours per week?

    • Gregg Smith

      “In my humble opinion…”

      Too humble, in my humble opinion. I know lot’s of people with privileged socioeconomic statuses who I would not trust a bit. And I know others of low socioeconomic status that I would bet my life on. I get your point and it has merit but you are the one who made yourself into someone worth taking a chance on.

  • Duras

    Gregg,

    Concerning the law that prevents universities from taking funds from the athletic department….

    I learned about the law while taking a business managment course a year or so ago.  There is prevailing confusion around the campus why UF has great athletics and we continue to make cut after cut to serious fields of academic inquiry.

    Like I said prior, the university cannot take money from the athletic department.  Money is given to the university at the discretion of the athletic department.  It is a stupid law in my opinion.  The university should be in complete control of the money. 

    So far, you seem tentitive about this issue.  To me, it seems like good old fashion conservativism to repeal the law and get the university more money instead of raising taxes more than is necessary to fund the public institutions. 

    • Gregg Smith

      I am not questioning your statement. I’m sure you are correct about the law and I certainly do not know enough to refute that. I take you at your word.

      Having said that I have a problem with your conclusion. you wrote, “not in the state of Florida”, when I asked, Are professor’s salaries supplemented with the gazillions made from College sports TV contracts? I think so.

      But I’m right. If the university is prohibited from taking money from the athletic department that does not mean they are not supplemented. They are supplemented to the tune of millions. That has to help defray academic cost. And again, it’s millions more than they would have without the sports. That’s my only point. 

      • Duras

        But those profits would still be there if the law wasn’t in place.  And it’s not like fans are going to go anywhere if states cap coaches salaries.

        Like I said to someone else, it doesn’t take a lot of braincells to coach football.  But you have to pay science and law professors a lot due to the competitive and profitable nature of their field.  But you can cap football coaches at 80k like you can cap philosophy professors at 80k.

        • Gregg Smith

          Well, I’m not arguing the law. You may be right, that’s a different discussion. I’m just saying college academics are better off because of the money from sports. How much that trickles to professor’s salaries, I can’t say. But I don’t think it’s a stretch to say paying a coach millions makes more money available for professors, not less.

          • Duras

            You realize you are starting to sound like a right wing characture of a liberal.  Why should we pay public employees i.e., football coaches millions of dollars (especially when football fans aren’t going anywhere)? 

            I just don’t understand why conservatives defend college coaching salaries?  Is it because it comes from a liberal?  Or do conservatives like the backward, anti-intellectual symbolism of paying a coach more than a professor? 

            Do you think Nick Saban is going to quit football and open a hedge fund if we pay him 80k? 

          • Gregg Smith

            I don’t even like college sports. I don’t know who Nick Sabin is. What did I say that wasn’t true?

  • sciz48

    Check out the history of student loans, from National Defense Loans forward to today, and you will find it was ” basically a gift to the banks from the republicans.” It’s just that simple. Why are the people on NPR protecting the republicans? 

  • twenty_niner

    I think we have a design pattern now applied to housing, student loans, and the government.

    We need more loans for more money for more people.

    We can’t repay the loans.

    We need to absolve the loans.

    Now that are loans are cleared, we have room for more loans.

    Print more money.

    Repeat.

    • Duras

      No.  Tax the rich like this country once did before Reagan.

      Provide free college education like other countries.  If we pass a housing bill, write in consumer protections that will prevent banks from having costumers for an entire life span.

      What kills me is that no one has destroyed private property like Ronald Reagan, creating a nation of debt ridden people in order to maintain a nation of economic inequality, to support consumerism and a wealthy class that has an amount of money that rivals the pre-Depression era, yet you don’t see the very thing you describe, which is Reaganism at its soul.

      • Gregg Smith

        The rich are paying a higher percentage of the overall bill than at any time in history. Revenue averaged higher as a percentage of GDP under GWB’s tax rates than it did under Eisenhower’s 90% rate.

        • Trond33

          Of course they are, use your head – the rich hold more of the capital than any time in history, hence, it only stands to reason that despite their best efforts, they are paying overall more in taxes.  The argument of that the rich are paying a “higher percentage of the overall bill than any time in history,” in NO WAY absolve the rich from their social responsibilities.  That argument is circular and illogical.  

          • Gregg Smith

            Usually it’s TomK that points that out but I’ve heard that for years. I disagree on a few levels.

            I don’t agree with the premise the rich got rich at the expense of the poor so I lose you right off the bat. Money is not distributed, it’s earned. Bill Gates did not take a dime from me but he did improve the lives of countless people with his products and has given billions to charity with his wealth. I say cool. 

            I do not agree the rich shirk their responsibilities socially, quite the opposite. If it weren’t for the rich there would be no food stamps or welfare. If a rich person didn’t buy a house a poor person could not rent one. If a rich person did not buy a new car then a poor person could not buy a used one. If the top 1% didn’t pay 39% of the bill then the bottom 47% could not avoid paying altogether. And if I were to give a reason the rich pay more and the poor pay less I’d blame Bush and the EIC enhancements that took 6 million of the rolls altogether and lowered the rate of those left paying at the bottom 5%. I don’t see how that is arguable.

            Of course to say the above I had to accept the premise that it actually is the responsibility of the rich to address our social ills and I really don’t. But they do anyway. 

            Finally, I made another point about revenue and 90% rates to point out higher rates do not mean more revenue.

          • Duras

            “If it weren’t for the rich there would be no food stamps or welfare.”

            If companies like Walmart paid their employees, the tax payer wouldn’t have to subsidize their living wage which comes out to about a $1,000 per Walmart employee.

            In fact, if republicans hadn’t made it virtually impossible to unionize in the South, 1.5 million Walmart employees would have middle class lives right now, along with other industries through out the South.  But no, we have to defend four Walton grandchildren and their pursuit of billions of dollars. 

            I wish a liberal would call the republicans out on their bluff and cut welfare and food stamps.  It’s bs.  And republicans only use the food stamp rhetoric to get racist people to vote against their own economic interests.  Republicans would never cut those programs because they don’t want the social unrest.

          • Gregg Smith

            The government cannot cut a check to anyone until it prints it, borrows it or takes it from someone else which is where the rich come in. 

            No one is forced to work at Walmart. No one has the right to tell any private enterprise what they must pay.

            You can’t just give everybody a raise in a vacuum without devastating consequences, which is what you are suggesting. The money has to come from somewhere.

            Aside from the recent dynamic of a President decimating the economy and a Labor Force Participation Rate in the dumper for no good reason which has certainly made things tough, I will say this: Any adult who has not nurtured the skills, work ethic, responsibility and integrity to earn more than minimum wage is a total loser.

            I won’t work for minimum wage. 

          • Duras

            “No one has to work at Walmart.”  First, get real.  Second, a country isn’t free unless it can unionize.  Republicans might as well be Chinese communists if they don’t believe in the right for employees to unionize. 

            Second, there is more than enough capital to give millions of people middle class wages.  It’s been done and we have seen the results.  Read your American history!

            It’s answers like this that lead me to believe that republican voters are destructive by nature.  That they rather pay for food stamps because it gives them some sense of status above others instead of being for policy that obviously builds middle classes.

          • Duras

            Also, when a child is borne in the wilderness, raises himself, builds a mansion, and drives a BMW without ever seeing another human being his entire life, then you will have a point. 

            But until that happens, wealth is not possible without other people.

          • Gregg Smith

            “You didn’t build that”.

            Yea, I’ve heard that before. what’s that got to do with minimum  wage?

          • 1Brett1

            Duras, you should know that ff the rich didn’t have manicured lawns, then the poor wouldn’t have lawn care jobs. If the rich didn’t have dinner parties, then the poor wouldn’t have wages by serving them their meals. If the rich didn’t dirty up their mansions, then the poor couldn’t become maids. If the rich didn’t give their tuxedos to Goodwill, then the poor would never wear formal attire…Yeah, let as all extol the virtues of the rich and their benevolent benefactorismzzzz….  

          • Gregg Smith

            Good points, thanks.

          • Benjamin MacCormack-Gelles

            you know 1brett1 was mocking you right…

          • Johannes

            Who is the arbiter of ‘social responsibility’? Is there an amendment addressing SR? A law? Who wrote that law regarding tax? Who writes law? Does the IRS have judicaial authority? Oh wait!

        • TomK_in_Boston

          I know you understand that as the 1% get more of the income they will pay more of the income tax, so throwing around “the % of the overall bill” with no mention of “the % of the overall income” is a shoddy debate trick. I’m not thrilled that the 1% share of the total income now rivals that of the 1920s!

          • Gregg Smith

            Clockwork.

          • TomK_in_Boston

            Orange.

            Yes, you did parrot the TP about the poor 1% like clockwork. I’m used to it, no problem.

          • Gregg Smith

            I don’t care one millisquidgeon how much anyone makes. Not even you. It has no affect on me.

          • TomK_in_Boston

            Wow, you say that a lot! And then I say, it’s not an individual matter, it’s a question of what kind of society we have. It baffles me that you might think there is no difference between life in our late-great middle class America vs in a “Downton” model of aristocrats and servants.

            This tape will repeat.

          • Gregg Smith

            I understand, we don’t agree.

        • Duras

          How many times to I need to debunk this nonsense?  Let this be the final time!

          The rich are paying a higher tax burden (“a higher percentage of the overall bill”) because the rich have sucked up most of the national income drived from national GDP.

          If we had stayed on the income distribution trends of the 1970s, the rest of the country would have a higher tax burden because they would have a bigger slice of the pie.  If we would have stayed on the 1970s’ trend, almost everyone commenting on this board would be richer!  Average income would be around $77k if Reagan hadn’t been elected. So if you are a republican who makes less than top income, you have voted against your own economic interests.

          Second, revenue-to-GDP did not go up during the Bush years.  It stayed around 8%.  During the Clinton years it was around 13%.  Before Reagan it was north of 15%. 

          You are wrong.

          • Gregg Smith

            So you agree the rich are paying a larger portion of the bill than at any time in history, as I said. But you disagree why? Is that it? I assume you are referring to  multiple comments because the one you replied to was two undeniable facts.

            Elsewhere I made other claims, to that end: How can removing 6 million of the poorest from the rolls not cause the rich to pay more? How does a rich person sucking up the GDP keep the poor person from doing the same? Does the rich have more access to infrastructure or did they just pay more for it?

            Too many “ifs” and “would haves” in the second paragraph to address especially since they don’t conflict with anything I wrote.

            I said revenue as a percentage of GDP was higher on average than under Eisenhower. That is demonstrably true. Look at OMB’s table 1.3 and do the math.

            Please tell me what I got wrong.

          • Duras

            “Too many ‘ifs’ and ‘would haves’”… didn’t Congressional Library or some office put out a statement a few months back saying that low taxes on the rich over the last 30 years have contributed to the large concentration of wealth in this country. 

            Certainly, making it virtually impossible to unionize holds people down and creates inequality.   Do you like subsidizing Walmart employee wages with food stamps, welfare, and medicaid? 

            Do you believe in middle classes?  Because the world has yet to see a thriving middle class and a class of superfluous wealth.  There have been middle classes and wealthy classes … but there has not been anything that republicans who truly believe in middle classes are thinking of. 

            All that other stuff is bunk.  The tax burden would be higher on the middle class (with the same rates) if the income distribution of GDP was on the same level of the 1970s.  That’s a fact. 

          • Gregg Smith

            But the taxes have not been low on the rich, they’ve paid more.

            It’s not virtually impossible to unionize although it’s harder to do so in the public sector as it should be. Public sector unions are untenable. I’m with FDR on that. 

            “Income distribution of GDP” sounds like Communism to me.

          • Duras

            And seriously, did you listen to this program.  Yes the rich have advantages in the country.  There is not equal opportunity in this country.

            The only state that has close to equal opportunity is California because a family can get their kid into Berkeley, which is as good as any of the MITs or Yales. 

            Now if Berkeley were free, the kid would have the same opportunity as the kid from the rich family who pays for everything to the tune of a not having student debts or working during college.

            Romney had a stock portfolio during college.  Boy that would have been nice if I had a dad who would have set me up with that kind of thing in college….

            All you republicans think you are voting against an “entitlement” culture, but all you are doing is voting for the real entitlement culture.

             

          • Gregg Smith

            No, I don’t get it for another 15 minutes in my area.

            “The rich are paying a higher percentage of the overall bill than at any time in history. Revenue averaged higher as a percentage of GDP under GWB’s tax rates than it did under Eisenhower’s 90% rate.”

            You did not tell me what I got wrong. You just changed the subject. 

          • John Cedar

            First assume you have a can opener.
            If we had stayed on the income distribution of the 70′s
            If wishes were fishes
            BTW…we don’t measure revenue per GDP, we measure in dollars.
            Assume the GDP would be static regardless of tax rates?
            If you use GDP as a metric, you should at least subtract the huge government spending portion.
            Its no coincidence that our middle class boomed right after the manufacturing means of the rest of the world was obliterated by WWII bombs.
            Although, FDR wage caps were the biggest force popularizing employers as nanny pension healthcare providers…at the expensive of higher wages.

      • twenty_niner

        OK, you convinced me. We’ve gotta get Reagan out of there.

        • Duras

          I don’t think you understand the concept of political economy. 

          I’m looking for the macro-economic policies that FDR put in place, which built the middle class and made America an economic super-power. 

          The era of Reaganism has only weakened the middle class and made us less competitive.

          • harverdphd

             That was a long time ago.

          • 1Brett1

            If one can believe you are actually a Harvard PhD (atrocious spelling notwithstanding), you exemplify the idea that a higher education at a prestigious Ivy League school may not lead to a successful future. 

          • Gregg Smith

            I think the spelling is brilliant. I get it.

          • 1Brett1

            Yeah, Gregg “I sure am dumb [because I succeeded without college]” Smith. I’m sure “harverdphd’s” purposeful bad spelling (and mocking of east-coast-elite-ivy- league-intellectualism) appeals to your own neocon anti-intellectual sensibilities.

          • jefe68

            Spot on.
            It’s interesting that the closing of this program was the speech by Annie Lennox at Berklee college of music.

          • Gregg Smith

            I love Annie.

          • twenty_niner

            Clinton-Gore signed NAFTA and gave China MFN status, which opened the flood gates to outsource the middle class. Repealling Glass-Steagall, bailing out LTCM, and an overly accomodative Fed (also under Clinton-Gore) sewed the seeds for the housing bubble and Wall Street becoming Crack Street.

            And now the current administration is topping all of this with policies that are going to result in the latter half of this decade being referred to by historians as the FUBAR years.

          • Duras

            No crap.  Do you think that would have happen if Carter had been reelected and corporations never got to start getting their hands on everything during the 1980s?

            Do you think I like Clinton?  I hate Clinton. 

            Before Reagan, both parties used to be working man A, and working man B.  Now they are rich man A, and rich man B. 

            I’m not cheerleading for a party.  I’m a liberal-progressive, and I have the historical understanding to know Clinton is no liberal.  Nixon passed a bigger liberal agenda than Clinton.

            Again, learn about the concept of political economy.

      • harverdphd

         Ronald Reagan was a long time ago.

        • Duras

          He also transformed the nature of our economy.  I want to get out of the Reagan political economy and move into a political economy that would be similar to the macro-economic policies FDR established. 

          Again, FDR built the middle class and made America a economic superpower.  The economic policey of the 30s, 40s, 50s, 60s, 70s, was way further to the left than today. 

          The effective tax rate on the 1% never got below 45%.  After Reagan, it has hovered between 25% and 35%.  CEO to average earner income was 40:1 in 1979.  It is 385:1 today, which is the same as the pre-Depression era.  (In Japan, the ratio is 10:1.)

          Why do you think the middle class is falling apart?  It’s Reaganism!

          • John Cedar

            I grew up middle class in the 70′s
            Mom and dad were teachers and dad eventually quit to work for a living.
            I would rather be “poor” today than middle class in the 70′s.
            The only thing..ONLY THING…I had that kids today don’t…is a father living in my house.

            I lost a lot of money when Regan revamped the tax code. Couldn’t deduct my 10% car loans or income average.

            But the wealthy lost even more. They used to have passive losses. Everyone that made good money was investing in oil wells, horses, incorporated or int he rental business. Apartments could be depreciated over twice as fast as today. “Effective tax rates” are meaningless. EBIDTA might give you a hint of how things have changed. But efficiency is so much improved because of tencnology, I doubt it would mean anything either.

  • http://www.facebook.com/profile.php?id=1155042916 Mike Hanson

    If you cannot pay for your education by working while in school (a novel concept to be sure) or with a job in your chosen vocation after school, then go into something else. Stop putting me on the hook so you could get a $200,000 journalism degree at Columbia. 

    • Rakesh Kumar

       It is like wanting to stay in waldorf astoria when one can only afford HoJo. There are all kinds of schools with all kinds of tuition structures and providing money to those who can not afford by billing who can barely afford is undemocratic.

  • Trond33

    I do not blame the students, they are the victim of the financial industry (government included) and the higher education industry.  They are given rosy prognosis upon choosing schools and area’s to major in.  Then told not to worry about the future with easy to qualify for loans.  

    The reality is that educational institutions need to be held accountable.  Most, if not all, are graduating students into saturated fields or to careers that they know only a small percentage of the students will make any real money in.  It is the dirty secret of higher education.  The Federal government should be more vigorous in capping aid to schools and specific programs.  Force the schools to limit the class sizes of programs to a reasonable expectation for success by their graduates.  Refuse aid to the bottom 10% performing schools in any field of study.  Does it make sense that a college clinging onto its accreditation has an MBA program?  Does online paper mill institutions make any sense? 

    On the financing side, there should be a major rewrite.  Any individual making under $75,000 should be capped at 5% of earnings going toward loans, with the individual is also saving 5% of their income toward retirement (in secure bonds, not 401K’s).  The percentage drops on a scale for those making under $30K a year.  Also, there should be time cap of 15 years.  With a sliding scale starting at 30 years of age of 2 to 1 years. Thus, if you graduate at 32, you have a 14 year cap.  Gradate at 40, you have a 10 year cap.  This will allow individuals to not only save for retirement, but actually have a family and kids.  Furthermore, restrict educational loans on a sliding scale starting at 30, capping at 40.  Yes, no loans over 40, invest in those having the longest work viability left.  Give an exception for programs that are clearly retraining to equip people with new skills to continue in their field. Also, increase the availability of vocational training for older displaced workers, don’t just dump them in higher education with unrealistic expectations.  

    There is not going to be any transformation on the educational crisis!  Too many people and industries are making great money on how things are currently set up.  No, many individuals caught up in this are destined to the crush of debt, diminished lifestyles and poverty retirement.  Society has failed them.  The US has failed them.  A society that only too easily blames the victim.  

    Although, forces outside the US are starting to change the situation.  Up until now, the US has largely been insulated from the global employment market.  Although, in the past 5 years, increasingly degreed workers are realizing there is an overseas market for their skills.  Many go for the realization they can have a better life overseas, but a increasing number go because it is an alternative to DEATH in getting out of educational loans.  This is a brain drain the US cannot afford, but is only going to get worse.  Short of a draconian withholding of passports (don’t put it past Congress to restrict travel to these individuals), the US is going to be increasingly hobbled by its citizens caught in a Catch 22 in the US, deciding to seek their fortunes overseas.  A choice between financial worries limiting their lifestyles in the US, versus the American dream overseas.  Life in even a second world country, with bi-yearly European vacations is a better alternative than the future holds for many in the US.  I don’t blame them, they are acting as true capitalists.  

    No the US higher education industry is in a shambles.  The educational loan industry is the elephant in the room, but the rot is deeper than that.  It is an industry that is failing the American people just at the moment that global economic shifts are forcing the Country to reinvent itself.  A shift that is largely dependent upon an increasingly well educated workforce.  

    • twenty_niner

      The excessive loans created the inflation feedback loop, same thing in housing. The money supply needs to be reduced to yield price deflation. In simple terms, reduce net lending and higher-ed will be forced to lower prices.

      cheap money => unintended consequences 

  • http://www.facebook.com/profile.php?id=32606540 Brian Belgard

    I graduated with 50k in debt 3 years ago. I now have a great job with great pay in a field I enjoy, and my loan payments still consume about 1/3 of what I make.

    Do I regret college? Absolutely not, but I do regret not paying attention to each loan I took out. I don’t think any 19 year old is capable of weighing the long term costs/benefits of these agreements, but I wish we would do more to drive this point home. 

  • notafeminista

    Pay as you go seems to work.  I finished in 4 years – no debt.  Best thing I ever did.

    • Samuel Walworth

       How did you manage to get education without loan? How much you had have to pay for it?

      • notafeminista

        4 year state school – at the beginning of each semester the university tells you exactly how much you owe.  The school doesn’t care how you pay for it – just so long as it is paid by the end of the semester. As I recall, the total bill came to 35K and change – and that was just to the university – it doesn’t include peripheral expenses.

        I lived off campus, worked 40+ hours a week, drove a 14 year old car and had no television.  I also commuted 30 miles one way.  I received a bachelor’s degree in 4 years from a brick and mortar school. 

        Incidentally I started in 2006 – about 18 months before the financial bubble burst – and still finished on time.

        • http://www.facebook.com/profile.php?id=1155042916 Mike Hanson

          I graduated in 2001 and did pretty much the same .. went to a state school, worked on breaks, worked part (20-30hrs) time during the school year and it only took me one extra year to graduate, but it was completely debt free.

          • notafeminista

            Tough, but not impossible.  Good job.

        • jefe68

          You worked 40+ hours a week and were able to keep up with your academic work?
          That’s pretty impressive but for some degrees this would not work. Pre-med for instance.

          • notafeminista

            Depends on what you want.  Harder if your glass is always half empty.

    • madnomad554

       Pay as you go is the best way almost every time. At 44, I haven’t had a credit card since 1993, nor have I needed one. No big deal about the TV was it? I haven’t had one of those in 15 years.

      It is possible to live with minimal to no debt and be satisfied about life.

      • notafeminista

        Most of the time no, I do not miss the TV(I still don’t have one).  But now and again..especially at Oscar Award show time…

        • Isernia

          forget the Oscars…most overblown media stupidity …it’s not the dresses that you miss, I hope. Sad for someone named notafeminista !

          • notafeminista

            I love all of it.  And why not miss the dresses?  They represent a lot of hard work, creativity and vision by their designers.  Who doesn’t respect that?

          • Isernia

            Forget it !  The designers are just props for Hollywood PR, those dresses are made by African “slave” labor in Camorra (Mafia) controlled Naples, and the “vision” means boob exposure that generated that anti-feminist song at last year’s Oscars. 

          • notafeminista

            I expect the world will keep turning.

      • jefe68

        I guess you never rent a car or book a flight or hotel room.

        • madnomad554

           Do I need to?

  • Jeffrey Cauwels

    How thoroughly irresponsible. I just sat and listened to a journalist I normally respect and a Nobel Prize winning economist wonder why the U.S. doesn’t let students pay back their loans based on their income? 
    The answer, simply, is that we do. Older federal loans can have their payments capped at 15% of discretionary income for a maximum of 25 years, at which point any remaining balance is forgiven. Newer direct loans are 10% for 20 years. If you work full-time for a qualifying non-profit, forgiveness comes after 10 years of those payments. Deferment and forbearance can suspend the requirement to make payments altogether if you’re having a financial hardship. And the most basic research could have revealed this.
    The percentage of defaulted borrowers who never utilize these programs or even speak to their servicer once is staggering, and it’s lazy, dishonest panic-mongering like this that is the reason why.

    • jefe68

      And yet the federal student loans made a $51 billion profit last year. Also the criteria is pretty narrow for forgiveness of the federal loans. This show was about all student loans, not just the federal ones. The majority of people getting loans are getting private ones on top of the federal ones or only the private ones. Those are not forgiven, ever.

      • Jeffrey Cauwels

        Private loans are only a very small portion of the market share. 15% tops. And while immediate discharge of your loans is very specific, you basically need to be either completely unable to work due to disease, the forgiveness after the Income Based Repayment plans is automatic. If you make payments based on your income (which, by the way, can be as low as $0.00 per month), then your loans are forgiven automatically.

      • NJJ

        Loan forgiveness would be a nice option, now wouldn’t it?

  • 1Brett1

    Maybe guidance counseling in high school should get beefed up a bit. Students should be taught to look at weighing out costs vs. benefits (in terms of college) in making decisions that will affect them for decades to come. Perhaps more emphasis should get placed on teaching practical knowledge in conjunction with academic knowledge. Maybe the 18 year old who is trying to navigate those big decision-making processes for the first time to determine the best path in life is starting too late/is our society leaving someone that age grossly under-equipped to make those kinds of big decisions. 

    I worked through college and accumulated very little debt, but by the same token a college education was much cheaper in the late ’70s. And I was reaching that age at a time in our society’s history when people of my generation could take risks and try different things–including making a lot of mistakes in judgment–without those decisions being an anvil on our backs for decades.

    With the proverbial wiggle room being less and less with each new decade, maybe children should be taught better decision making in making life decisions at an earlier age. The trick is to balance all of that out without stifling one’s sense that one can reinvent oneself or define oneself through being open to different ideas.  

    • NJJ

      “…a college education was much cheaper in the late ’70s.”  That’s for darn sure!  A good private liberal arts college cost about $12K a year, all inclusive.  Nowadays, good luck finding anything like that.  

  • VinceD2

     I rent to college students. Last year about 15 of my tenants graduated. TWO had jobs. This economy is a disaster! Corporations have shipped every job that isn’t bolted down to other lands. They’ve imported workers to drive wages even further down. Now the corporate goons want to flood the workplace with massive immigration. As if there are enough jobs for young legal Americans, let alone the “dreamers”.  Unless something changes, this generation is doomed to debt and unemployment.

    • notafeminista

      So who’s doing all the jobs Americans won’t do then?

      • VinceD2

         As you probably know, there are no jobs Americans won’t do. Congrats on putting yourself through, that’s quite a feat!

        • Isernia

          Jobs that Americans won’t do are clearly those that don’t require a college education.  Until unemployed grads are seen picking lettece for agribusiness and cleaning toilets for hotel chains or until we consumers are willing to pay 2X more for products produced in sweatshops here and in the Third World, immigration will continue.

          • VinceD2

             Funny, but where I live, Americans do all of those jobs. But then we’re not infested with illegals yet. Just thios morning I saw Americans putting on a roof, landscaping and doing road work.

            Food costs? There would be a very minimal increase if workers were paid and worked fairly. Labor is a small component.

            Sweatshops? Well, do you really think the consumer is benefiting from sweatshop labor? Perhaps the CEO’s need a pay cut…

    • Rakesh Kumar

      If this is what is happening then how come schools don’t feel any pressure to bring down the burden by reducing the tuition cost? In a typical open market system that’s what would happen. Imagine people queuing up to buy a TV at ever increasing price and that does not work as soon as we install it?

      • VinceD2

         Simple: Because the loans are way too available. There is woo much money chasing an education, and the educators are using it foolishly. The students don’t regard it as “real money”, but they learn that it is the hard way when they graduate.

  • sjw81

    Great show and right on. I have 2 kids in college also. I have also read Stiglitz’ books on the economy and the 2008 crash. In my opinion the fedgovt created this mess. Just like the housing bubble they created with loans and rates and mortgage tax deductions and “everyone shoould own a home philosphy” regardless if they even have income or a job!. NOT everyone must go to college and take out loans to pay for it.; even thought loans are so easily gotten and forced on us all by the fed govt . and increasing student loans to  the public, that cant be defaulted on, promotes rising costs. the colleges raise their rates to get all the fed govt money being loaned out. there is a direct correlation to the 700 % college tuition rise over the past 30 years and ever increasing fed gov “aid”. To call it out and criticize this scam is to be called anti education or racist…it is out of control Stop funding this aid and the colleges would lower thier prices tomorrow, since it would then depend on the real market

    • Government_Banking_Serf

      Stiglitz was poo-pooing the notion that the loan bubble is causing this, he blamed it on faculty salaries.

      Nobody likes to blame the bubble-pumping because when we scratch to deep we see it underlies so much of our illusory status quo.

    • VinceD2

       The increases can also be attributed to the deluxe facilities, bloated administrations and crazy expensive privatized housing that colleges are forcing students in to.

    • jefe68

      You claim to have read Mr. Stiglitz’ books and you completely disagree with there thesis. So your point of this information is what? That your right wing dogma is so thick that you can’t even use reason and critical thinking. That’s what it looks like to me.

      Blaming government for everything is absurd.

      • thequietkid10

        Why not?  Government is the only force that touches the lives of every single American, in large part because you don’t have a choice in the matter.  There are lots of a libertarians (even in academia) who completely reject Keynesian economics.  

    • StilllHere

      Great points, though those who live off this fat will be after you.

  • Jeffrey Wagner

    What about the issue of foreign students. University’s have been biding to attract students from abroad who pay higher tutition. Rec Centers, modern dorms. My University actually added a maid service for foreign dorms. I guess the bigger picture is that Universities are trying to be more attractive to students that pay the highest tuition (Ie. foreign and out-of-state), making spots less for those who pays less, and thus willing to pay more.

    • Trond33

      Interesting thing about foreign students is that 20 years ago they came, got a degree, then sought to stay in the US.  Now they come, get degrees, then get out of the US.  Which by result, is a brain drain on the US.  Especially in scientific and engineering fields that where foreign students are overly represented.  It is touted as an achievement that the US has the worlds best higher education institutions, but irrelevant when many top schools are not educating individuals who will stay to improve the US. 

  • Rakesh Kumar

    Don’t we forget the unsubsidized student loans that is already at 6.8% when we say that the student loan rate is 3.4%? Not many middle class families qualify for subsidized loans and it hurts when everywhere media reports the loan rates to be 3.4%

  • Paducah72

    People should be able to discharge their students loans in bankruptcy. Then, it won’t be so easy to borrow. Then, college attendance will go down and tuition will have to go down, too. If corporations want better trained workers, then they need to work with government to provide more apprenticeships.

  • Rakesh Kumar

    The need based aid calculation from FAFSA is pure farce – it typically comes up with an EFC that is beyond the means of a middle class family. Colleges dole out money to poor kids but the middle class families are left out lurking in the corner both by FAFSA as well as the schools. In turn, the middle class families end up paying for their kids as well as subsidized kids. Colleges need to manage the money better and reduce the tuition itself as it really contributes only a fraction of the total budget of the school.

  • http://www.facebook.com/profile.php?id=62600635 Ben Gildehaus

    My wife and I are social workers in jobs requiring Masters degrees. We make modest salaries right now (around $80k together in Boston) with income growth possible over time. Right now we have collective debt of $150,000 and pay $1800/mo toward loans and will have to continue this way for the next 7-8  years. Loans plus rent comes out to $3300/mo. This kills us no matter how frugal we manage to be. Saving for a mortgage much less qualifying for another loan is next to impossible even though we have strong credit. How would we even imagine paying for child care if we started a family? We don’t mind sacrificing luxuries and whatnot. What’s most frustrating is how much we end up paying toward interest even paying $1800/mo toward loans not to mention we work in stressful jobs serving the underserved. Tough to get by for young couples right now, which seems silly given we did almost everything right. my job’s extremely rewarding but I often wish I’d gone into a high tech, higher earning field.

    • GuinnessWoman

       Great post, after reading your post, I was thinking about all the sacrifices you have to make.  Like me you can’t add to the economy.  You don’t have much left over.  I wish employers knew how far the salary they pay us goes.  They just have no clue, I laugh when politicians want consumers to spend more.  With what?  Most of us are just trying to survive.

      • http://www.facebook.com/profile.php?id=62600635 Ben Gildehaus

        I have coworkers whose parents paid their full tuition through grad school, and they’re doing fine. Making sacrifices builds character, but I think our situation is just another illustration of the debt crisis non-privileged students are facing, which reverberates all through the economy and prevents couples from moving forward with investing and family planning.

  • Rakesh Kumar

    Most of the good name schools are sitting on a huge pile of endowments that can be used to reduce the base tuition itself so that it does not require so much loans and subsidies. Schools, now a days, are being run like a private enterprises that keeps collecting money but it does not like the open market economic model where a badly managed company is allowed to go down. 

  • jefe68

    Nice rant. Some of what you say is true, however the message is steeped in anger. By the way mister huge liberal, you make your living off the very thing you condem. What does that make you?

    • ChrisV7200

      If you saw the egregious excesses I have seen in the last 5 years you would be very concerned.  When the stock market was in absolute free-fall 5 years ago, the Executive Assistant of one of the Top 5 Universities in our country said to me, and I quote; “we are not interested in saving our students money”.  This was in reference to a proposal that would save their students $4.7 million annually.  I wish I could have recorded that statement, because as everyone else was in panic about our economy, here was a professional essentially stating: let them eat cake!  WOW!

      I am a liberal and I made mention of that because I don’t want readers to believe that I am some self-absorbed conservative condemning everything and everything about academia.  That being said, there are real structural problems in our university system today.  Simply identifying that systemic problem is the first step to fixing it; but my point is that no one wants to talk about the excesses.  Pointing out this problem doesn’t make me a hypocrite or bad or evil.  It will be hard for some to swallow, but attitudinally, there is a problem in Academia.  I see it everyday and that attitude has implications for how their finances (and endowments) are managed.

    • InsideJoke3

      A salesman?

    • VinceD2

       Sometimes anger is a good thing! Hang around academia and you’ll be angry also.

  • StilllHere

    Interesting observations from someone with real-world experience; however, you will be condemned by those who know nothing.

    • ChrisV7200

      Thanks.  I know I am sticking my neck out with an unpopular view of great institutions.

  • NJJ

    With tuition rates often higher than many Americans’ annual salary, it is doubtful that it is currently possible to work your way through college in most places in the US anymore. 

  • NJJ

    Reading through these comments, I find myself increasingly chagrined at the elitist attitude concerning education.  When a person can no longer get ahead in life–not from lack of desire or ability, but because he or she cannot afford college–we have created a nightmare elitist society.  Keep the poor down, and limited, and then blame them for being too lazy to work for it.

    Right.  

    • GuinnessWoman

      An acquaintance of mine said getting an education is an investment in yourself.  Yes it can be as long as it will further your career and your pay.  What I see happening instead are people who get into more debt.  The increase they may receive for their education does not pay off the loan.  The reason why I refuse to go back to school for another 50 cents is because I will be adding more dollars to my debt.  I have a co-worker working on her masters in HR.  Yes her pay went up but she works full-time and has two part time jobs.  How is that getting ahead?

    • John Cedar

      No doubt that elitism and education go hand in hand.
      But more often in a different vein than you are implying.
      Its more often in regards to who’s prescriptions for utopia  should be given credence.

      I suppose any man can build his body, if he lifts enough weights and any man can build his brain, if he lifts enough books, but some constraints of IQ will always be there.

      Elitism, realism, whatever…

      Ive seen enough MBA’s try to practice codified new age six sigma Lean theory of constraints and fail.
      But the power Point presentations were superb.
      A gallon of water in a quart container.
      I’m off to get patches sewn on my elbows and then to partake in wine and cheese. Perhaps later I will pay to publish, for a pier revue.

    • Rakesh Kumar

       A person can always afford a college but he or she may not be able to afford the college of the desire. Most of the community colleges have the arrangement with state schools so that any student who earns A in all the courses can join the state school. This will drastically bring down the cost while earning a good degree.

  • NJJ

    By the way, I heard the Annie Lennox bit where she sang.  Something sounded odd, but I couldn’t pinpoint it, until I realized it was because she asked who could forget Aretha Franklin’s “Say a Little Prayer for You”–which is actually a Dionne Warwick’s song.  ;^p     I love finding out that famous people are only human like the rest of us.  

  • EP

    I graduated Summa Cum Laude from a state university in Minnesota. My family was barely middle class when I started attending school, and received almost no financial aid that wasn’t in the form of student loans. I graduated with $40,000 in student debt. 

    • Rakesh Kumar

      The situation is worse for middle class family as rich don’t need support and the government aid and school support is not for middle class at all. Schools were supposed to be the center of the education but now it is all about football and basketball. Even at Stanford, the highest salary is drawn by the football coach and not by any Nobel Laureate (I would like to get corrected).

  • paper_grader

    Completely agree. But there’s no incentive for colleges to control costs because students can borrow infinity dollars to attend school (seems likely to be playing a role in the rise of so many for-profit colleges). And if the government were to take any steps on its own, it would likely either be vilified or create unintended consequences.

    Let’s say, for example, that students could only borrow a certain amount per year from now on. Colleges would have to figure out how to keep their costs down if they wanted to maintain enrollment. However, this would immediately create a situation where either (1) only the wealthiest could attend college or (2) banks stepped in to plug the gap, creating potential consequences for both themselves and students down the road (student debt bubble, increased bankruptcy rates through loss of forbearance and deferment, etc). And who knows how long it would take colleges to catch on and either adjust their tuition down or their financial aid up.

    • John Cedar

      Limiting borrowing? Interesting concept
      What if borrowing was limited by the starting salaries of the graduates?
      What if tuition was not the same for every major?
      What if the feedback loop were closed?
      What if, what if, what if?

      • VinceD2

         What if institutions were graded as to cost effectiveness?

    • Rakesh Kumar

       Schools (mostly private) keep claiming how generous they are with the aid and how they use the endowments to ensure that no student walks out with a loan. It can not be far from the truth. They publish the average aid e.g. one school claims that the average aid is about $35K per student as if money is being fairly being distributed all across the student body. If they want to be transparent then they should publish the standard deviation and variance.

  • twenty_niner

    Yes, Stiglitz is another Keynesian hack, who sees no issues with cheap money, other than it’s probably not cheap enough. We should all be paid for taking out loans. The solutions are always printing money and issuing debt than you can’t service, defaulting, and repeating, and going bigger the next time around. The answer to a $150,000 4-year degree or a $1,000,000 three-bedroom fireworks stand is to loan more money at ever lower standards to keep the Ponzi Parade going.

  • darnley

    The problem is not the interest. It’s the principal. ChrisV7200 and Rakesh Kumar are on the right track I think. Tuitions are out of control. Prof. Stigletz cites the examples of student assistance in Europe and Australia. How much is tuition in Australia? If it’s as high as the US, then the income-contingent loans would be tough to make work. I think he said tuition is $1500 semester in Ireland and the Netherlands, vs five figures at least in American state schools, and several times that in the private universities. Are European professors paid that much less?

    Costs need to be controlled. Government support needs to be a priority. Otherwise we will fail to be an equal opportunity nation.

    • John Cedar

      No doubt that the elephant in the room, is the exorbitant price fixed to tuition. 

      But if the interest rate were zero, then there would be no problem, no matter what the principal.
      The question has to be answered, if the default rate commands such
      relatively high interest rates. But then that might make someone look
      into the variance in default rates amongst, institutions as well as
      majors.

  • 228929292AABBB

    I think the gentleman’s position that colleges are blameless is contradicted by myriad facts, such as the 60% increase in administrators in Universities.  He cites a cut in government aid (about 10% per student) as the only, and innocent, reason for tuition increases (over 50% for the same period).  These facts are directly from On Point’s show on college costs a week or two ago.  

    • Rakesh Kumar

      Universities are definitely badly managed through bloated staffing. Even when the economy is anemic the tuition keeps rising? I would like to know what makes the tuition rise when the salaries are stagnant and more and more students are willing to study? Even through all this the endowment keeps rising.  My only guess is that they are milking both the government and the students in the holy name of education.

  • John Cedar

    Word association?
    Hey, did you read the modern iconoclasm explanation, that the origin of life simply serves to hasten entropy?

  • Adam Clements

    That medical school graduate with 100k could cry me a river and i wouldn’t care. He’s the last person who should be complaining. 

    • Samuel Walworth

       Well, after studying for 12 years or more after the Bachelors and then acquiring debt around 200k with interest rate of around 5% at the age of 30, is tough when one is barely starting his/her career.

      On top of it, we get loads of Medical Professionals who come from APAC or EU with ZERO student debt, who has then similar income but ZERO debt, so theoretically someone who is born, bred and educated here in the USA is thrown back 10 years or so financially just because he/she took the education here.

      Sounds like a fair comparison?

  • VinceD2

     Chris, you are right on the money! Academic arrogance is rampant, and many administrators regard student as free money to them.

  • Al_Kidder

    You managed to mislead your audience about how Australia funds students.
    Repayment is “income contingent” in the sense that you only repay your tuition fee (called HECS, Higher Education Contribution Scheme) if you earn a certain minimum taxable income. You do not pay a higher rate if you earn a big income, and you do not have to pay the debt any faster.
    That is for publicly funded places in courses. It is also possible to study paying full fees at your own expense if you do not meet the minimum academic standard for a publicly funded place.
    I believe HECS only applies to Bachelor level courses. Advanced degrees come at your own expense

  • Rakesh Kumar

    Is there a way one can ask the information to provide the break-up of  the tuition cost? Or is it already available somewhere? The line items should be same mostly but with different price tags. That will provide us insight as to where the money goes and what makes a school costly. The use of the endowment should also be discussed. UVa alone is sitting on a cash pile of about $20 billion and I am not sure why it can not use this money to bring the cost down?

  • Don_B1

    There are multiple reasons that measures other than “pure” dollars are more appropriate for comparisons of economic performance:

    1) When GDP levels change the needs of ensuring a fir and just  system in which to conduct business call for more expenditures, for police, courts, roads, etc. This is why Revenue as a percentage of GDP is relevant for most uses, with the one major exception being by those who have the shrinking of government to a size that it can be drowned in a bathtub as their main goal in life.

    2) When populations grows, there are more children to educate so that the workers of the future will be able to do the work required to continue to grow the economy also requires increases in spending that are not capture by pure dollar numbers. Thus revenue per capita needs to be used also.

    Just as a comparison of revenue between different sized countries would not be worth much as a direct comparison of dollars without factoring in the different GDPs and different populations. And when comparing the numbers from different times, where both those factors have changed requires the use of them to make comparisons valid.

    But that is the way the 1% has decided to confuse the issues so as to make their demands seem reasonable when they are not.

  • Don_B1

    Clever to  change the subject and then accuse the other party of changing the subject!

    Typical Republican argumentation.

  • Don_B1

    It is fairly easy to determine that that “47″ percent contains large numbers of retired people (many that vote Republican, or did, and a large number of low-wage workers that are below the level where EITC gives them money to supposedly allow businesses to employ them, and then there are a lot of disabled who find it difficult to work for justifiable reasons.

    It is true that the diversity of Americans does make it easier for some, and some might include you from the tone of your post, to cast aspersions on others without justification, as you also imply by your reference to  Danish ethnic homogeneity.

    I greatly admire the Danes for so much of what they do, but I am sure that not all work, but those that don’t mostly have justifiable reasons.

  • Don_B1

    There are multiple reasons that measures other than “pure” dollars are more appropriate for comparisons of economic performance:
    1) When GDP levels change the needs of ensuring a fir and just  system in which to conduct business call for more expenditures, for police, courts, roads, etc. This is why Revenue as a percentage of GDP is relevant for most uses, with the one major exception being by those who have the shrinking of government to a size that it can be drowned in a bathtub as their main goal in life.
    2) When populations grows, there are more children to educate so that the workers of the future will be able to do the work required to continue to grow the economy also requires increases in spending that are not capture by pure dollar numbers. Thus revenue per capita needs to be used also.
    Just as a comparison of revenue between different sized countries would not be worth much as a direct comparison of dollars without factoring in the different GDPs and different populations. And when comparing the numbers from different times, where both those factors have changed requires the use of them to make comparisons valid.
    But that is the way the 1% has decided to confuse the issues so as to make their demands seem reasonable when they are not.

    I think you are confusing the reason for F.D.R.’s wage and price controls. They were instituted to prevent inflation during WWII when there was a legitimate need to ensure that the economy could send millions of workers to war as soldiers and keep the prices of scarce goods within the reach of those working to supply the troops with food, clothing and military equipment.It is true that providing health care as a non-taxable benefit was used by employers to get around wage controls to retain and recruit workers, and it is true that a single-payer plan would work better today that the current employer-provided system which leaves many citizens without insurance.
    The recovery of the American economy after WWII was the result more of the pent-up demand of Americans and the G.I. Bill that provided an educated workforce than the export of goods to the rest of the world. Look up the numbers. a way employers

  • tamullen1

    It is not only student debt there is also Parent debt, I owe more than $75,000 on parent plus and private loans.   I make 100,00 per year but at the end of the month there is no leeway for emergencies nevermind  saving for retirement.   Rent, utilities and communication fees are astronomical….I cannot believe the cost of communication…cellphones/computer/TV/landline.   Worse than heating bills.  I keep thinking I’ve made all the wrong financial decisions but I don’t live extravagently.   Don’t go away for vacation, don’t get my nails manicured, don’t eat out every week maybe once a month..Education is important or was now it is a crap shoot worse than playing the lottery.  All this money and no guarantee of a good financial return on our investement.

  • GEN_XER

    The baby-boom generation has collectively sold us into debt slavery. They have continuosly voted for politicians who promised they can have thier cake and eat it too (witness the impending bankruptcy of social security, etc.) Now they want to extract future earnings from thier children and grandchildren through the power of compound interest. We have had the “greatest” generation, which was unfortunately followed by the the “most selfish” generation. They have single handedly destroyed most everything that was great about this nation. Shame!

  • ExcellentNews

    You wonder, young working people (and not so young working people) how it is that you work more for less, while we are told the US economy has grown so manifold since the 90s…??? (that is assuming there is work for you…)

    Well, there is no contradiction. The economy has grown. In fact, the top 0.01% have seen their wealth increase by over $25 TRILLION since the 90s. It is estimated that about $10 TRILLION of that is chilling out in offshore accounts. So yeah – you make more, they take more. Also, they ship your job to slave-labor countries, and make more. Finally, they paid for the election of George W. Bush, who enabled them to keep the money scot-free and pass it on to the next generation of little oligarchs without lifting a finger. And the deal is not over with Obama, since for a few billion, they still own Congress and can block any real economic reform in our country.

    The student loan system (which some intelligent listeners correctly labeled as “indentured labor”) is only one aspect of that process. Like the rest though, it is based on organized money buying politicians to write the law that allows them to make even more money while keeping the peons in place. If only you knew the detail of the “laws” that have been passed, and how they enable a handful of private investors and hedge funds to make money on the back of taxpayers, parents and students….

  • rbernu

    I’ve been following this discussion quite closely over the last 5 years.  As the financial ‘meltdown’ occurred, I was writing my congressional and senate representatives to highlight that part of the problem in terms of high consumer debt had to do with the student loan burden so many people had been carrying. In addition, during my time in college, credit card companies were handing out credit cards like they were candy.  An 18 year old with little experience of finance should not be held to the same standard as a 25 or 30 year old, especially when science shows that human brains are not fully developed until the age of 24, making the ability to fully understand risk impossible.  

    I’ve also been following this because I’m 37 years old and I still carry about $22k in student debt from my undergraduate studies, and I know many of contemporaries who do the same. In addition, I have other friends who either did not have a great deal of undergraduate debt but now carry a great deal of graduate school debt because they hit professional walls or because they wanted to re-direct their careers, often for higher earning positions, but not always, and they took out student loans for grad school which are even less generous in terms of interest rates and other terms than are undergraduate.  Most of us worked 2 jobs in our 20s, an office day job and an evening service industry job in order to pay for living & for the debt.  Most of us probably accumulated more debt than we absolutely had to in our undergraduate careers, but it should be noted that no one was having the discussions we are having now about the impact of the debt, and we genuinely all believed that we’d be able to repay the debt quickly because our degrees would afford us opportunities that not having them didn’t.  Also, in my case, I did not take on private loans and I was always flipping credit cards to never pay any interest,  worked my way through college, and applied for any scholarships for which I knew I was eligible. I think that whilst I could have probably taken $4K less in loans, my excesses were extremely minimal. I also worked a full-time job each summer during college (or several part-time jobs… one summer I had 4!) and always had a part-time job during the academic year.  

    I didn’t go to graduate school in the U.S. I left for France which has a parity law for international students in terms of tuition. However, that meant I had no familial support and had to pay the costs of living whilst studying law in a foreign language.  I took a forebearance on my student debt during some of that period (somewhere around a year) which meant I didn’t have to make payments but that the 8.25% interest rate that I am locked into continued to accumulate.  (It’s hard to believe now but 8.25% was considered a good rate when I locked into it!) The recent policy changes don’t apply to people like me and I wish there was more discussion of the fact this problem began in the 90s and continues to affect people like me. I did not seek a career that would pay 6 figures, and the work I was trained for was work that was largely available in a handful of cities (international human rights, development and policy), where the cost of living is high. I worked hard through my 20s with 2 jobs from age 23-27, left for graduate school where I worked during which I worked part-time and full-time in the summers. 
    The way we were given loans at school and by credit cards certainly engendered the culture that led to the credit bust 5 years ago. And whilst many of us may have learned the lesson before that, we have never been enabled to free ourselves of the burden of our debt.  

  • thequietkid10

    You are right on the money….but why should they change thanks to government back loans and a culture that says your a second class citizen if you don’t go to college? (guilty as charged regarding that mindset)  They have no reason whatsoever to change.  EVERYONE goes to college.

  • thequietkid10

    Your right, it is a choice, a choice made by 18 year olds who are wowed by luxurious dorms and dining halls, who are told by their parents, their teachers and the media that they should go or else, and don’t have to worry about paying the bill for years.

  • http://www.facebook.com/lori.cerny.7 Lori Cerny

    Regardless of the reasons leading to excessive college fees and tuition, it is a choice to attend higher education.  After eighteen years in the workforce, I attended college, taking on two B.A.s.
     
    The two degrees turned out to be useless after the economy collapse, so I’m currently enrolled in a practical program – nursing.  I only earn $14,000 gross, but pay for my current degree, while paying off $30,000 in student loans.  

    This was all of my choosing, though.  I do without to pay those bills, but I could have just muddled along in any job… but I wouldn’t have had the wonderful experiences, friendships, nor the pleasure of pushing myself academically to succeed. 

  • Pingback: Student Loan Forgiveness: Obama’s Land-Grant Act? | Cognoscenti

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