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I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the nu

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving for my college a priority, but watching them go through the same dance with my younger brother makes me wonder how most people get it done. There's a huge value in going to higher education, but the ever increasing cost and amount of debt people are taking on is setting everyone but the top 10% of graduates up for a life of being in debt, which is kind of horrifying. Especially since they are debts that are impossible to shed through bankruptcy.

jlarocco 9y ago
> There's a huge value in going to higher education, but the ever increasing cost and amount of debt people are taking on is setting everyone but the top 10% of graduates up for a life of being in debt, which is kind of horrifying. Especially since they are debts that are impossible to shed through bankruptcy. I'm not sure you can make a blanket statement like that. The reason all these student loans have become a problem is that objectively a lot of degrees don't have a huge value. People are borrowing insane amounts to become the billionth undecided communications major and it doesn't make any sense at all. It's almost like we've cut k-12 education funding (and quality) so low that people need to go to college just to get the education they should have received in high school.
ProfessorLayton 9y ago
I definitely agree that rapidly rising education costs are a huge issue and need to be addressed. However, most (67%) undergraduate student loan amounts are for less than 20K[1] At 6.8% interest and 10 year repayment that comes to about $2,761 per year, with interest that can be paid with pre-tax money. Yes, thats a hefty amount to many, but earnings with a college degree are still much more than enough to offset that burden. Furthermore, 42% are for less than 10k. The student loan debt crisis doesn't seem like all doom and gloom just yet. [1] https://trends.collegeboard.org/student-aid/figures-tables/distribution-borrowers-average-balance-2015 https://trends.collegeboard.org/student-aid/figures-tables/d... Yes its from 2015, but I can't imagine the distribution has changed so much that it is irrelevant. According to Wikipedia, 39.9% owed less than 10k in 2012 [2]. https://en.wikipedia.org/wiki/Student_loan_default_in_the_United_States#/media/File:U.S._Student_Loan_Debt_Distribution_Q4_2012.png https://en.wikipedia.org/wiki/Student_loan_default_in_the_Un...
- lr4444lr 9y ago
  What's worrying is that the underlying asset that will eventually pay off this debt (wage growth due to increased productivity this education is supposed to confer) has been stagnating or growing a lot more slowly than the cost of college.
- moduspol 9y ago
  I may be missing something, but I don't see anything in either of those figures that rules out people who leave school after one or two semesters, or otherwise don't graduate for some reason. Maybe that's intended, but I feel like it'd be useful to include the average amount of debt of students who graduate. For my state (PA), it's at almost $35k, but only 71% of them have any debt at all [1]. That means that $35k is calculated with 29% of the values being zeroes. My degree wasn't in math, but I think that means that if you graduated with any debt at all in PA, you've likely got $50k or more. Does that mean it's a bubble? I don't know. I do know when I was an employee of a private university in PA, we were told year after year of 4% tuition hikes while being told we should be patting ourselves on the back because it's below the national average. That definitely sounds unsustainable, but so far it's been working out pretty well for colleges. [1] http://ticas.org/posd/map-state-data#overlay=posd/state_data/2016/pa http://ticas.org/posd/map-state-data#overlay=posd/state_data...
- jellicle 9y ago
  That's a snapshot in time. Yes, some people who have been out of college for twenty years have paid their debt down to less than $10K. Also, a sizeable percentage of homeowners have mortgages of less than $10K, at this instant. But both student borrowers and homeowners started off with more debt. You're assuming they're graduating with $10K debt. Actual average debt at graduation is $37K.
  - ProfessorLayton 9y ago
    That 37k average is distorted by graduate and professional degrees [1], which is why I specifically referred to undergraduate debt, which are the bulk of all graduates. [1] https://static.newamerica.org/attachments/750-the-graduate-student-debt-review/GradStudentDebtReview-Delisle-Final.pdf https://static.newamerica.org/attachments/750-the-graduate-s...
lz400 9y ago
I truly don't understand the USA sometimes. Don't you guys know that in Europe higher education is free? Well where I'm from there was a very low nominal cost but my father was a public servant so cost was waived, I literally studied CS for 0 cost. And these countries are able to afford it all! Magic! I don't understand how people in USA are not aware of this and literally rioting in the streets. At the very least swing public opinion and voting. Don't even start talking about the we are americans we don't like taxes BS, you really think being a young adult with a 200K student loan and a $6K deductible for healthcare insurance is better than an extra ~5-10% of tax? It's truly mind boggling.
- malandrew 9y ago
  > Don't you guys know that in Europe higher education is free? Nothing is free. Someone is paying for it.
  - lz400 9y ago
    Yes, the state via taxes, where incentives are (or at least have a possibility to be aligned with) quality, equality and cost efficiency, not profit.
  - deleted 9y ago
    [deleted]
- muninn_ 9y ago
  What is really mind-boggling is your comment. First, education is not, in any way, shape or form, free. You pay for it in taxes. Period. This isn't a pro/anti tax argument, but it's necessary to say. Second, you can also study CS for free in the United States or at a heavy scholarship. Large state schools subsidize a lot of engineers in their educational pursuit so long as you achieve good grades, or score well on entrance exams. The primary issue we're facing is that we, as a society, decided that in order to obtain an ok-paying job you must attend a university, even when the skills for the job have nothing to do with your education aside from genera knowledge increase. Because of this fact, and the large number of students seeking entrance to university (to get a job) we find that we have far too many students who want to attend college who should not be attending college and they get funneled into degree programs that, while valuable, are not valuable for work. The students that have exceptional need, or exceptional skill, are almost always given a full tuition scholarship so long as they make good grades. Furthermore, by any measure that matters, the universities in the United States are the best in the world, bar none. So the competition to attend, places further pressure on those seeking degrees that do not immediately translate into a high paying job. We've made a mistake, as a society, by emphasizing "go to college" over "go to trade school". The rest of your tax argument is based on not much. Paying high taxes is not indicative of anything. In many cases (in my opinion) government does a great job with services. Areas like healthcare are a prime candidate for government take over, but university education is a far more complicated situation. As somebody else mentioned, most student loans are for under $20,000. And a $6,000 deductible? Idk. I have a great healthcare plan where I don't pay much out of pocket. There is a good podcast about the cost of healthcare but I can't recal the name. But basically, the US spends far more than any country whether you consider it as a nationalized system or a free market system. It's far more complicated than a simple "pay $5,000 more in taxes" argument.
Teknoman117 9y ago
I went to one of the UC schools and left with $121k in debt ($100k borrowed plus the interest I couldn't pay off while working during school). Basically didn't qualify for any sort of scholarships or grants due to my parents making "enough money." Don't know where they get that figure from, as its not like my parents' could afford to write a check for $25k/yr just for my education (especially not with my sister entering college in my senior year). I had to take out loans for the whole bill. Not that I'd ever expect my parents to pay for my education. The one that kills me is that my sister, who graduated high school with a 4.5 gpa (second only to her class's valedictorian) wasn't able to get any scholarships or grants. If your parents' credit is good enough to take out the loans very few seem to be willing to give you even a merit scholarship. So I worked my ass off while attending school (academics and side projects) and got myself a nice tech-industry job (not like I'm pulling a Google level of pay though). Still, with the interest rates the government loans are (~7.5%), I'm paying a $2,350 a month bill to shed my student loans in 5 years. Kind of unnerving to think I'll be paying on them for the rest of my 20's. I won't lie, I find myself envious of people I met in school who got free rides in many cases for nothing more than being a member of some special interest group. A bunch of them are talking about starting companies or going to work for very risky (early stage) startups as they don't owe anything to anyone. With the student loan payment though, doing anything that doesn't have good stability seems like a bad choice.
- prawn 9y ago
  Is that 7.5% interest rate standard? Is it high because of the risk inherent in young adults being unable to service the loan?
  - djrogers 9y ago
    There is basically no risk, they are government guaranteed and can't be defaulted on.
  - callalex 9y ago
    That's the standard rate for the "federal non subsidized stafford loan"
tsunamifury 9y ago
Just because you find the price of college irrational, doesn't mean that the market will automatically correct it. If the past years and crashes have proved anything, its that the market will stay irrational until it crashes.
- ianai 9y ago
  It doubly blows my mind considering campuses now compete against online colleges. There are definitely important differences between the two experiences. But you still have to weigh the two against one another. At some point that should undercut the costs. As far as being a bubble...there's definitely overvaluation. I think the term "bubble" is both too small and too narrow focused for what's going on right now. People just voted in Trump because they want work. I don't know how society corrects all of this, and it all feels related.
bariereefwozere 9y ago
> it feels nearly predatory what a good portion of private and out of state colleges are charging From an outsiders (AU) perspective, it sounds very depressing for youngsters - massive student loans and then you need to jump on the mortgage treadmill (unless you're lucky). It almost sounds to the point where individual students could pay for personal tutors with the amount of cash they're spending* (or borrowing then spending). Someone over there must be making bank on this... I guess the banks. Edit: As in, if you took 100 ComSci students each paying $30k a year (or whatever it is), $3,000,000 should get you some pretty good educators for the year i.e. can the game be taken back from the uni's, and education started afresh with a new organisation?
- ericd 9y ago
  iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and there aren't any new Ivy League schools being minted. If it gets bad enough, the pressure to find alternative ways to educate will build up until we find a good alternative route.
  - mjn 9y ago
    In the case of the University of California system, it's almost 1:1 substitution, declines in per-student funding being matched by increases in tuition. Partly due to actual cuts to the UC budget since 2000, and partly due to funding not keeping up with increases in student numbers. The state government mandates these increases in student numbers, but in recent years has not been willing to fund accordingly. The mandate is that the UC system is required to offer spots for the top 12.5% of the current year's in-state graduating high school seniors, so this mandate obviously expands if university-age population increases. Which to be fair is sensible: it makes sense for the state university system's size to be roughly proportional to the size of the state's university-aged population. But then you should fund it proportionally too. Here are some numbers I put together a few years ago (not updated since 2012): http://www.kmjn.org/misc/uc_funding.txt http://www.kmjn.org/misc/uc_funding.txt Which is not to say overpaid administrators aren't also sucking out more money than they should be. The UC Office of the President (UCOP) is currently being deservedly raked over the coals by the state auditor, and I would not shed a tear if UCOP's budget specifically were cut. But in terms of big-picture trends, the state's per-student funding declining from $30k/student in the '70s and '80s to less than half of that in 2012 is a pretty good first-order explanation.
masterleep 9y ago
The more the government subsidizes higher education, the more expensive it becomes.
- opportune 9y ago
  I think this is true with regards to loans and grants that are independent of the university, but not for direct subsidizing of the education through the university. That is, I think you're right that guaranteeing large loans and things like Pell Grants simply incentivizes universities to increase their prices by that much. However, what should/could be done, is states could do what they've been supposed to do this whole time and begin actually covering students' tuition directly. Unfortunately most states don't increase tertiary education spending YOY at a rate fast enough to cover the increasing costs and enrollment numbers. So the burden falls on the federal government, which gave us this terrible debt-based system
- int_19h 9y ago
  It's the exact same story as with healthcare. If you try to implement welfare by throwing money at the private industry to make their product more affordable, the prices simply grow up (which is basic supply and demand stuff - more people with money = more demand). For this to actually work, you need to either regulate prices, or have a public-owned, government-run nonprofit with an explicit mandate to keep the prices as low as they can be, regardless of demand - and throw subsidies only at it.
  - moduspol 9y ago
    Or let it become a market again, like it was for our parents until these subsidies came along.
    - int_19h 9y ago
      Letting healthcare become a truly free market literally means having people die on the streets from preventable diseases if they can't afford to treat them. Most civilized nations have decided that they don't want that kind of thing a long time ago.
dv_dt 9y ago
This combines with the other economic discussion on the front page today re: the decline of home sales. Other parts of the economy are scratching their heads on why millennials are less likely than previous generations to buy homes and cars, etc. at their age. I'll leave it as an exercise to the reader to identify other contributing factors...
- LightskinKanye 9y ago
  I'll leave it as an exercise to the reader to identify other contributing factors... Are you my professor?
subterfudge4 9y ago
This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?
- irrational 9y ago
  Because there are almost no jobs available that pay more than minimum wage that do not require a college degree.
  - nugget 9y ago
    America is one of the most entrepreneurial countries on earth. There are plenty of fields that you can enter with no college degree and build your way up to a great living. Even for very "white collar" jobs we are starting to (slowly) move away from a pedigree-based economy towards a skills-based economy.
  - runT1ME 9y ago
    Except, you know...software engineer, IT, DevOps, Infosec, WebDev, etc.
    - alistairSH 9y ago
      1. Those are a very small portion of the total available jobs. Even if every 18 year old had the aptitude, there aren't enough of those jobs. 2. It's a LOT easier to get into all of those fields with a relevant degree. As noted elsewhere, a degree is a strong signal that you can perform at least some of the work.
    - opportune 9y ago
      This is true on an individual level but not a macro level. Not everybody can be a developer or IT professional. The market just can't support that.
      - subterfudge4 9y ago
        Then these people probably should not go to college in first place and instead become plumbers or car mechanics.
fwefwwfe 9y ago
You basically said it yourself. They could just go to instate public schools.
- jay-anderson 9y ago
  Even in public state university tuition is quite high. Community colleges are more reasonable. I'm considering suggesting my kids go to local community college for 2 years and then university to finish their degrees. We'll see when we get there.
  - sndean 9y ago
    > I'm considering suggesting my kids go to local community college for 2 years and then university to finish their degrees. I really wish I had done this. It would've saved me $20,000+. It's a great option, especially if you're in a place with a good community college system with guaranteed admissions agreements (e.g., Virginia).
  - fwefwwfe 9y ago
    > Even in public state university tuition is quite high. Compared to what, the price of a hamburger? In state tuition can be 1/2 or 1/3 the price of out of state tuition at the same school, and state schools have lower tuition than a lot of other unis already.
mljoe 9y ago
University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished, it's a bit of a network effect really. Maybe people can get hired from Coursera certificates, I would certainly consider it if I was a hiring manager.
- chii 9y ago
  didn't many try with MOOCs? The problem is two fold - university has an acreditation/reputation aspect and a learning aspect. MOOCs and other online resources "fix" the learning aspect, but does nothing for the acreditation/reputation. Unfortunately, most employers are actually using the acreditation aspect rather than the learning aspect as the filter (given that so many people are still so incompetent in high positions).
- secabeen 9y ago
  Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate online. I think you could see significant disruption in the lower-division, large-lecture classes, but upper-division classes, hands-on labs and small-group discussions and seminars will continue to benefit from physical proximity.
  - martalist 9y ago
    > the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. Paying tens of thousands of dollars per year to associate with others doing the same seems odd.
shriphani 9y ago
I found this comment on Quora: Through 1992, the top 50 colleges in the USA got together each year to collude on: amount of tuition base salary for assistant professors preventing any bidding wars for applicants Then the Federal government sued and put a stop to that. However, by that point the tuition was way out of whack and the private elite colleges are still allowed to increase tuition at a rate that is above the inflation rate, therefore keeping tuition very high. At the same time the endowments have increased to huge amounts. Elite colleges are being run like corporations with the goal to maximize income and continually increase the endowment. Therefore, tuition will continue to rise (as every college uses the elite private college tuition as their yardstick) until the Federal government sues and forces the elite colleges to reduce their endowment by using the money to reduce tuition. Elite colleges will gobble up all the money that they are allowed to........ https://www.quora.com/Why-have-college-costs-increased-so-dramatically-in-the-past-30-years-What-can-be-done-to-fix-this/answer/Tom-Stagliano https://www.quora.com/Why-have-college-costs-increased-so-dr... Gov intervention is probably needed.
- duncan_bayne 9y ago
  Welcome to the vicious cycle of Government intervention. "Well we threatened a bunch of people with violence until they behaved against their own judgement. Turns out this led to all sorts of problems. Better do some more threatening to correct it." In addition to being moral, a free market avoids this sort of feedback loop.
  - deleted 9y ago
    [deleted]
- abfan1127 9y ago
  gov intervention in easy money in the form of student loans and tax-payer backed private student loans is what caused it to be begin with.
- conanbatt 9y ago
  > Gov intervention is probably needed. The government interventino has been the problem, as you just exposed. Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves.
austenallred 9y ago
It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many. I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle class, but a lot of my friends were told "just go to the best college no matter what and don't think about cost you'll make tons later," which ended up to be only partially true, and only for some people. I'm hoping that http://lambdauniversity.com http://lambdauniversity.com will help overcome some of those things and extend opportunities to folks who can't afford that kind of risk. It's full-time computer science training for free up front, paid back as a percentage of income for a couple years after you graduate. If you don't make more than $50k/yr you never pay back.
- fratlas 9y ago
  Your last paragraph describes the Australian university system. Government foots the bill to invest in your education, you pay it back gradually (and not until you're earning enough for it not to hurt).
  - austenallred 9y ago
    Makes a hell of a lot of sense, to be honest. The problem in the US system is the government feels everyone has a "right" to an education, so it will underwrite an unlimited amount of loans regardless of what you do with them. That pumps the system so full of cash no one is quite sure what to do. They just keep raising prices and people keep coming, because what are you going to do, not go to college? Even after funding slows, the prices are still sky high, and people keep paying.
    - muninn_ 9y ago
      Why would this be any different than a right to, say, health care? Why even pay for k-12?
propman 9y ago
Community College in the USA is so subsidized it costs maybe 1k a year to attend and they are strategically placed so 95% of the population can live at home and commute. Your expenses in the first 2 years where the content is exactly the same as a 4 year will be 0 living at home and if you do tutoring or a small part time job with all the free time you'll save a bit. Finish all your GEs, figure out what you want to do and go to a state college where In CA, 95% of the population can commute to again and tuition is 8-10k a year. Pick a good major you like AND can make ROI, get a summer internship and it is 100% possible to graduate with less than 10k in debt. Instead, predatory colleges raise prices of room & board, add random extra charges, add useless admin, spend recklessly(see UC extravagant spending scandal) because of cost disease, poor understanding of personal finance and govt backed loans people keep going regardless of cost.
cobookman 9y ago
I've been curious if you could pay off student loans using a credit card. Then declare bankruptcy.
- abalashov 9y ago
  I am not sure what the upper bound on consumer credit card limits is, particularly on credit cards issued to college kids or recent graduates. However, I gather anecdotally that it's somewhere in the low-mid five figures, which isn't the kind of stratospheric, crippling student loan debt that this discussion implicitly has in mind. Moreover, to get something like a $20k-$30k credit limit as an 18-24 year-old, you almost certainly need a parent to cosign, as you yourself would not have sufficiently long credit or positive income history. That in turn means they'd be on the hook for the debt in the event of your bankruptcy, and/or your bankruptcy would impact them as well. If there were an easy way to transfer large non-dischargeable balances into dischargeable form, everyone would be doing it. :-)
Shivetya 9y ago
Universities are betting on government picking up the whole tab. They already practically got the golden goose handed to them when the government put the brakes on many private founding sources for loans. the next step is simply make it so onerous that politicians step in and relive the debt or pick up more of the tab under some kind of student bill of rights. of course we won't get more and better students but instead even richer colleges. the number of private and state colleges with billion dollar plus endowments is astounding and the costs we spend per student is rarely if ever equal to the education they receive. this is marketing at its finest, or more dastardly.
pavement 9y ago
$30-40k a year Put another way, distilled to an abstraction, that's 30 students assembling in a room, to be lectured by one person, for maybe 6 or 9 hours, 4 or 5 days a week, for two 15 week semesters, at that price. [0] So one full classroom is possibly a million dollars for 30 weeks of talking, plus textbooks, times the count of the course catalog and all scheduled blocks for the entire school. Quite the budget, to share what is hardly the undivided attention of a supposedly nurturing instructor. One could afford to be waited on hand and foot, for four (50 week-long, 40 hour/week) years, for the same price. I'd almost wonder if a private apprenticeship is more valuable, but then again, how to broker selection for who takes you on? Or do internships prove that this is all so much education theater after all? And this says nothing about how little adjunct professors make (very often less than $30-40k a year), which further compounds any negative interpretation for these kinds of arrangements. [0] https://en.wikipedia.org/wiki/Course_credit https://en.wikipedia.org/wiki/Course_credit
ygfvvhygvn 9y ago
Too many people go to college these days and too many people choose majors that don't benefit them. We don't need millions of waiters/waitresses with psychology degrees from bottom of the barrel universities. There is a higher education bubble and hopefully it will pop so we can go back to a time where you don't need a master's degree just to get an interview
thatwebdude 9y ago
I think this a great opportunity for trade schools, community colleges, and apprenticeships to reinvent themselves.
hollander 9y ago
How does the student loan system work? Isn't it that students pay back a percentage of their income? If that is the case, how can it become problematic?
- speby 9y ago
  No, it's a regular loan and there is no collateral upon default. Additionally, they typically are not able to be thrown out in bankruptcy either. As a last resort, many student loans are federally guaranteed (so imagine if the borrower died, the government will guarantee the loan is repaid). In essence, this is one of the biggest (but not the only) reasons for ever-increasing costs at universities. They add more staff, more administrative people, more student perks, nicer dorms, and charge ever more money because they can. Students get the loans and in all but the most remotest of chance, that loan will always be repaid in due time. It's almost a no-risk loan for lending institutions making it practically like free money to be collected by universities/colleges.

jlarocco 9y ago

> There's a huge value in going to higher education, but the ever increasing cost and amount of debt people are taking on is setting everyone but the top 10% of graduates up for a life of being in debt, which is kind of horrifying. Especially since they are debts that are impossible to shed through bankruptcy. I'm not sure you can make a blanket statement like that. The reason all these student loans have become a problem is that objectively a lot of degrees don't have a huge value. People are borrowing insane amounts to become the billionth undecided communications major and it doesn't make any sense at all. It's almost like we've cut k-12 education funding (and quality) so low that people need to go to college just to get the education they should have received in high school.

ProfessorLayton 9y ago

I definitely agree that rapidly rising education costs are a huge issue and need to be addressed. However, most (67%) undergraduate student loan amounts are for less than 20K[1] At 6.8% interest and 10 year repayment that comes to about $2,761 per year, with interest that can be paid with pre-tax money. Yes, thats a hefty amount to many, but earnings with a college degree are still much more than enough to offset that burden. Furthermore, 42% are for less than 10k. The student loan debt crisis doesn't seem like all doom and gloom just yet. [1] https://trends.collegeboard.org/student-aid/figures-tables/distribution-borrowers-average-balance-2015 https://trends.collegeboard.org/student-aid/figures-tables/d... Yes its from 2015, but I can't imagine the distribution has changed so much that it is irrelevant. According to Wikipedia, 39.9% owed less than 10k in 2012 [2]. https://en.wikipedia.org/wiki/Student_loan_default_in_the_United_States#/media/File:U.S._Student_Loan_Debt_Distribution_Q4_2012.png https://en.wikipedia.org/wiki/Student_loan_default_in_the_Un...

lr4444lr 9y ago
What's worrying is that the underlying asset that will eventually pay off this debt (wage growth due to increased productivity this education is supposed to confer) has been stagnating or growing a lot more slowly than the cost of college.
moduspol 9y ago
I may be missing something, but I don't see anything in either of those figures that rules out people who leave school after one or two semesters, or otherwise don't graduate for some reason. Maybe that's intended, but I feel like it'd be useful to include the average amount of debt of students who graduate. For my state (PA), it's at almost $35k, but only 71% of them have any debt at all [1]. That means that $35k is calculated with 29% of the values being zeroes. My degree wasn't in math, but I think that means that if you graduated with any debt at all in PA, you've likely got $50k or more. Does that mean it's a bubble? I don't know. I do know when I was an employee of a private university in PA, we were told year after year of 4% tuition hikes while being told we should be patting ourselves on the back because it's below the national average. That definitely sounds unsustainable, but so far it's been working out pretty well for colleges. [1] http://ticas.org/posd/map-state-data#overlay=posd/state_data/2016/pa http://ticas.org/posd/map-state-data#overlay=posd/state_data...
jellicle 9y ago
That's a snapshot in time. Yes, some people who have been out of college for twenty years have paid their debt down to less than $10K. Also, a sizeable percentage of homeowners have mortgages of less than $10K, at this instant. But both student borrowers and homeowners started off with more debt. You're assuming they're graduating with $10K debt. Actual average debt at graduation is $37K.
- ProfessorLayton 9y ago
  That 37k average is distorted by graduate and professional degrees [1], which is why I specifically referred to undergraduate debt, which are the bulk of all graduates. [1] https://static.newamerica.org/attachments/750-the-graduate-student-debt-review/GradStudentDebtReview-Delisle-Final.pdf https://static.newamerica.org/attachments/750-the-graduate-s...

lz400 9y ago

I truly don't understand the USA sometimes. Don't you guys know that in Europe higher education is free? Well where I'm from there was a very low nominal cost but my father was a public servant so cost was waived, I literally studied CS for 0 cost. And these countries are able to afford it all! Magic! I don't understand how people in USA are not aware of this and literally rioting in the streets. At the very least swing public opinion and voting. Don't even start talking about the we are americans we don't like taxes BS, you really think being a young adult with a 200K student loan and a $6K deductible for healthcare insurance is better than an extra ~5-10% of tax? It's truly mind boggling.

malandrew 9y ago
> Don't you guys know that in Europe higher education is free? Nothing is free. Someone is paying for it.
- lz400 9y ago
  Yes, the state via taxes, where incentives are (or at least have a possibility to be aligned with) quality, equality and cost efficiency, not profit.
- deleted 9y ago
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muninn_ 9y ago
What is really mind-boggling is your comment. First, education is not, in any way, shape or form, free. You pay for it in taxes. Period. This isn't a pro/anti tax argument, but it's necessary to say. Second, you can also study CS for free in the United States or at a heavy scholarship. Large state schools subsidize a lot of engineers in their educational pursuit so long as you achieve good grades, or score well on entrance exams. The primary issue we're facing is that we, as a society, decided that in order to obtain an ok-paying job you must attend a university, even when the skills for the job have nothing to do with your education aside from genera knowledge increase. Because of this fact, and the large number of students seeking entrance to university (to get a job) we find that we have far too many students who want to attend college who should not be attending college and they get funneled into degree programs that, while valuable, are not valuable for work. The students that have exceptional need, or exceptional skill, are almost always given a full tuition scholarship so long as they make good grades. Furthermore, by any measure that matters, the universities in the United States are the best in the world, bar none. So the competition to attend, places further pressure on those seeking degrees that do not immediately translate into a high paying job. We've made a mistake, as a society, by emphasizing "go to college" over "go to trade school". The rest of your tax argument is based on not much. Paying high taxes is not indicative of anything. In many cases (in my opinion) government does a great job with services. Areas like healthcare are a prime candidate for government take over, but university education is a far more complicated situation. As somebody else mentioned, most student loans are for under $20,000. And a $6,000 deductible? Idk. I have a great healthcare plan where I don't pay much out of pocket. There is a good podcast about the cost of healthcare but I can't recal the name. But basically, the US spends far more than any country whether you consider it as a nationalized system or a free market system. It's far more complicated than a simple "pay $5,000 more in taxes" argument.

Teknoman117 9y ago

I went to one of the UC schools and left with $121k in debt ($100k borrowed plus the interest I couldn't pay off while working during school). Basically didn't qualify for any sort of scholarships or grants due to my parents making "enough money." Don't know where they get that figure from, as its not like my parents' could afford to write a check for $25k/yr just for my education (especially not with my sister entering college in my senior year). I had to take out loans for the whole bill. Not that I'd ever expect my parents to pay for my education. The one that kills me is that my sister, who graduated high school with a 4.5 gpa (second only to her class's valedictorian) wasn't able to get any scholarships or grants. If your parents' credit is good enough to take out the loans very few seem to be willing to give you even a merit scholarship. So I worked my ass off while attending school (academics and side projects) and got myself a nice tech-industry job (not like I'm pulling a Google level of pay though). Still, with the interest rates the government loans are (~7.5%), I'm paying a $2,350 a month bill to shed my student loans in 5 years. Kind of unnerving to think I'll be paying on them for the rest of my 20's. I won't lie, I find myself envious of people I met in school who got free rides in many cases for nothing more than being a member of some special interest group. A bunch of them are talking about starting companies or going to work for very risky (early stage) startups as they don't owe anything to anyone. With the student loan payment though, doing anything that doesn't have good stability seems like a bad choice.

prawn 9y ago
Is that 7.5% interest rate standard? Is it high because of the risk inherent in young adults being unable to service the loan?
- djrogers 9y ago
  There is basically no risk, they are government guaranteed and can't be defaulted on.
- callalex 9y ago
  That's the standard rate for the "federal non subsidized stafford loan"

tsunamifury 9y ago

Just because you find the price of college irrational, doesn't mean that the market will automatically correct it. If the past years and crashes have proved anything, its that the market will stay irrational until it crashes.

ianai 9y ago
It doubly blows my mind considering campuses now compete against online colleges. There are definitely important differences between the two experiences. But you still have to weigh the two against one another. At some point that should undercut the costs. As far as being a bubble...there's definitely overvaluation. I think the term "bubble" is both too small and too narrow focused for what's going on right now. People just voted in Trump because they want work. I don't know how society corrects all of this, and it all feels related.

bariereefwozere 9y ago

> it feels nearly predatory what a good portion of private and out of state colleges are charging From an outsiders (AU) perspective, it sounds very depressing for youngsters - massive student loans and then you need to jump on the mortgage treadmill (unless you're lucky). It almost sounds to the point where individual students could pay for personal tutors with the amount of cash they're spending* (or borrowing then spending). Someone over there must be making bank on this... I guess the banks. Edit: As in, if you took 100 ComSci students each paying $30k a year (or whatever it is), $3,000,000 should get you some pretty good educators for the year i.e. can the game be taken back from the uni's, and education started afresh with a new organisation?

ericd 9y ago
iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and there aren't any new Ivy League schools being minted. If it gets bad enough, the pressure to find alternative ways to educate will build up until we find a good alternative route.
- mjn 9y ago
  In the case of the University of California system, it's almost 1:1 substitution, declines in per-student funding being matched by increases in tuition. Partly due to actual cuts to the UC budget since 2000, and partly due to funding not keeping up with increases in student numbers. The state government mandates these increases in student numbers, but in recent years has not been willing to fund accordingly. The mandate is that the UC system is required to offer spots for the top 12.5% of the current year's in-state graduating high school seniors, so this mandate obviously expands if university-age population increases. Which to be fair is sensible: it makes sense for the state university system's size to be roughly proportional to the size of the state's university-aged population. But then you should fund it proportionally too. Here are some numbers I put together a few years ago (not updated since 2012): http://www.kmjn.org/misc/uc_funding.txt http://www.kmjn.org/misc/uc_funding.txt Which is not to say overpaid administrators aren't also sucking out more money than they should be. The UC Office of the President (UCOP) is currently being deservedly raked over the coals by the state auditor, and I would not shed a tear if UCOP's budget specifically were cut. But in terms of big-picture trends, the state's per-student funding declining from $30k/student in the '70s and '80s to less than half of that in 2012 is a pretty good first-order explanation.

masterleep 9y ago

The more the government subsidizes higher education, the more expensive it becomes.

opportune 9y ago
I think this is true with regards to loans and grants that are independent of the university, but not for direct subsidizing of the education through the university. That is, I think you're right that guaranteeing large loans and things like Pell Grants simply incentivizes universities to increase their prices by that much. However, what should/could be done, is states could do what they've been supposed to do this whole time and begin actually covering students' tuition directly. Unfortunately most states don't increase tertiary education spending YOY at a rate fast enough to cover the increasing costs and enrollment numbers. So the burden falls on the federal government, which gave us this terrible debt-based system
int_19h 9y ago
It's the exact same story as with healthcare. If you try to implement welfare by throwing money at the private industry to make their product more affordable, the prices simply grow up (which is basic supply and demand stuff - more people with money = more demand). For this to actually work, you need to either regulate prices, or have a public-owned, government-run nonprofit with an explicit mandate to keep the prices as low as they can be, regardless of demand - and throw subsidies only at it.
- moduspol 9y ago
  Or let it become a market again, like it was for our parents until these subsidies came along.
  - int_19h 9y ago
    Letting healthcare become a truly free market literally means having people die on the streets from preventable diseases if they can't afford to treat them. Most civilized nations have decided that they don't want that kind of thing a long time ago.

dv_dt 9y ago

This combines with the other economic discussion on the front page today re: the decline of home sales. Other parts of the economy are scratching their heads on why millennials are less likely than previous generations to buy homes and cars, etc. at their age. I'll leave it as an exercise to the reader to identify other contributing factors...

LightskinKanye 9y ago
I'll leave it as an exercise to the reader to identify other contributing factors... Are you my professor?

subterfudge4 9y ago

This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?

irrational 9y ago
Because there are almost no jobs available that pay more than minimum wage that do not require a college degree.
- nugget 9y ago
  America is one of the most entrepreneurial countries on earth. There are plenty of fields that you can enter with no college degree and build your way up to a great living. Even for very "white collar" jobs we are starting to (slowly) move away from a pedigree-based economy towards a skills-based economy.
- runT1ME 9y ago
  Except, you know...software engineer, IT, DevOps, Infosec, WebDev, etc.
  - alistairSH 9y ago
    1. Those are a very small portion of the total available jobs. Even if every 18 year old had the aptitude, there aren't enough of those jobs. 2. It's a LOT easier to get into all of those fields with a relevant degree. As noted elsewhere, a degree is a strong signal that you can perform at least some of the work.
  - opportune 9y ago
    This is true on an individual level but not a macro level. Not everybody can be a developer or IT professional. The market just can't support that.
    - subterfudge4 9y ago
      Then these people probably should not go to college in first place and instead become plumbers or car mechanics.

fwefwwfe 9y ago

You basically said it yourself. They could just go to instate public schools.

jay-anderson 9y ago
Even in public state university tuition is quite high. Community colleges are more reasonable. I'm considering suggesting my kids go to local community college for 2 years and then university to finish their degrees. We'll see when we get there.
- sndean 9y ago
  > I'm considering suggesting my kids go to local community college for 2 years and then university to finish their degrees. I really wish I had done this. It would've saved me $20,000+. It's a great option, especially if you're in a place with a good community college system with guaranteed admissions agreements (e.g., Virginia).
- fwefwwfe 9y ago
  > Even in public state university tuition is quite high. Compared to what, the price of a hamburger? In state tuition can be 1/2 or 1/3 the price of out of state tuition at the same school, and state schools have lower tuition than a lot of other unis already.

mljoe 9y ago

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished, it's a bit of a network effect really. Maybe people can get hired from Coursera certificates, I would certainly consider it if I was a hiring manager.

chii 9y ago
didn't many try with MOOCs? The problem is two fold - university has an acreditation/reputation aspect and a learning aspect. MOOCs and other online resources "fix" the learning aspect, but does nothing for the acreditation/reputation. Unfortunately, most employers are actually using the acreditation aspect rather than the learning aspect as the filter (given that so many people are still so incompetent in high positions).
secabeen 9y ago
Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate online. I think you could see significant disruption in the lower-division, large-lecture classes, but upper-division classes, hands-on labs and small-group discussions and seminars will continue to benefit from physical proximity.
- martalist 9y ago
  > the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. Paying tens of thousands of dollars per year to associate with others doing the same seems odd.

shriphani 9y ago

I found this comment on Quora: Through 1992, the top 50 colleges in the USA got together each year to collude on: amount of tuition base salary for assistant professors preventing any bidding wars for applicants Then the Federal government sued and put a stop to that. However, by that point the tuition was way out of whack and the private elite colleges are still allowed to increase tuition at a rate that is above the inflation rate, therefore keeping tuition very high. At the same time the endowments have increased to huge amounts. Elite colleges are being run like corporations with the goal to maximize income and continually increase the endowment. Therefore, tuition will continue to rise (as every college uses the elite private college tuition as their yardstick) until the Federal government sues and forces the elite colleges to reduce their endowment by using the money to reduce tuition. Elite colleges will gobble up all the money that they are allowed to........ https://www.quora.com/Why-have-college-costs-increased-so-dramatically-in-the-past-30-years-What-can-be-done-to-fix-this/answer/Tom-Stagliano https://www.quora.com/Why-have-college-costs-increased-so-dr... Gov intervention is probably needed.

duncan_bayne 9y ago
Welcome to the vicious cycle of Government intervention. "Well we threatened a bunch of people with violence until they behaved against their own judgement. Turns out this led to all sorts of problems. Better do some more threatening to correct it." In addition to being moral, a free market avoids this sort of feedback loop.
- deleted 9y ago
  [deleted]
abfan1127 9y ago
gov intervention in easy money in the form of student loans and tax-payer backed private student loans is what caused it to be begin with.
conanbatt 9y ago
> Gov intervention is probably needed. The government interventino has been the problem, as you just exposed. Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves.

austenallred 9y ago

It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many. I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle class, but a lot of my friends were told "just go to the best college no matter what and don't think about cost you'll make tons later," which ended up to be only partially true, and only for some people. I'm hoping that http://lambdauniversity.com http://lambdauniversity.com will help overcome some of those things and extend opportunities to folks who can't afford that kind of risk. It's full-time computer science training for free up front, paid back as a percentage of income for a couple years after you graduate. If you don't make more than $50k/yr you never pay back.

fratlas 9y ago
Your last paragraph describes the Australian university system. Government foots the bill to invest in your education, you pay it back gradually (and not until you're earning enough for it not to hurt).
- austenallred 9y ago
  Makes a hell of a lot of sense, to be honest. The problem in the US system is the government feels everyone has a "right" to an education, so it will underwrite an unlimited amount of loans regardless of what you do with them. That pumps the system so full of cash no one is quite sure what to do. They just keep raising prices and people keep coming, because what are you going to do, not go to college? Even after funding slows, the prices are still sky high, and people keep paying.
  - muninn_ 9y ago
    Why would this be any different than a right to, say, health care? Why even pay for k-12?

propman 9y ago

Community College in the USA is so subsidized it costs maybe 1k a year to attend and they are strategically placed so 95% of the population can live at home and commute. Your expenses in the first 2 years where the content is exactly the same as a 4 year will be 0 living at home and if you do tutoring or a small part time job with all the free time you'll save a bit. Finish all your GEs, figure out what you want to do and go to a state college where In CA, 95% of the population can commute to again and tuition is 8-10k a year. Pick a good major you like AND can make ROI, get a summer internship and it is 100% possible to graduate with less than 10k in debt. Instead, predatory colleges raise prices of room & board, add random extra charges, add useless admin, spend recklessly(see UC extravagant spending scandal) because of cost disease, poor understanding of personal finance and govt backed loans people keep going regardless of cost.

cobookman 9y ago

I've been curious if you could pay off student loans using a credit card. Then declare bankruptcy.

abalashov 9y ago
I am not sure what the upper bound on consumer credit card limits is, particularly on credit cards issued to college kids or recent graduates. However, I gather anecdotally that it's somewhere in the low-mid five figures, which isn't the kind of stratospheric, crippling student loan debt that this discussion implicitly has in mind. Moreover, to get something like a $20k-$30k credit limit as an 18-24 year-old, you almost certainly need a parent to cosign, as you yourself would not have sufficiently long credit or positive income history. That in turn means they'd be on the hook for the debt in the event of your bankruptcy, and/or your bankruptcy would impact them as well. If there were an easy way to transfer large non-dischargeable balances into dischargeable form, everyone would be doing it. :-)

Shivetya 9y ago

Universities are betting on government picking up the whole tab. They already practically got the golden goose handed to them when the government put the brakes on many private founding sources for loans. the next step is simply make it so onerous that politicians step in and relive the debt or pick up more of the tab under some kind of student bill of rights. of course we won't get more and better students but instead even richer colleges. the number of private and state colleges with billion dollar plus endowments is astounding and the costs we spend per student is rarely if ever equal to the education they receive. this is marketing at its finest, or more dastardly.

pavement 9y ago

$30-40k a year Put another way, distilled to an abstraction, that's 30 students assembling in a room, to be lectured by one person, for maybe 6 or 9 hours, 4 or 5 days a week, for two 15 week semesters, at that price. [0] So one full classroom is possibly a million dollars for 30 weeks of talking, plus textbooks, times the count of the course catalog and all scheduled blocks for the entire school. Quite the budget, to share what is hardly the undivided attention of a supposedly nurturing instructor. One could afford to be waited on hand and foot, for four (50 week-long, 40 hour/week) years, for the same price. I'd almost wonder if a private apprenticeship is more valuable, but then again, how to broker selection for who takes you on? Or do internships prove that this is all so much education theater after all? And this says nothing about how little adjunct professors make (very often less than $30-40k a year), which further compounds any negative interpretation for these kinds of arrangements. [0] https://en.wikipedia.org/wiki/Course_credit https://en.wikipedia.org/wiki/Course_credit

ygfvvhygvn 9y ago

Too many people go to college these days and too many people choose majors that don't benefit them. We don't need millions of waiters/waitresses with psychology degrees from bottom of the barrel universities. There is a higher education bubble and hopefully it will pop so we can go back to a time where you don't need a master's degree just to get an interview

thatwebdude 9y ago

I think this a great opportunity for trade schools, community colleges, and apprenticeships to reinvent themselves.

hollander 9y ago

How does the student loan system work? Isn't it that students pay back a percentage of their income? If that is the case, how can it become problematic?

speby 9y ago
No, it's a regular loan and there is no collateral upon default. Additionally, they typically are not able to be thrown out in bankruptcy either. As a last resort, many student loans are federally guaranteed (so imagine if the borrower died, the government will guarantee the loan is repaid). In essence, this is one of the biggest (but not the only) reasons for ever-increasing costs at universities. They add more staff, more administrative people, more student perks, nicer dorms, and charge ever more money because they can. Students get the loans and in all but the most remotest of chance, that loan will always be repaid in due time. It's almost a no-risk loan for lending institutions making it practically like free money to be collected by universities/colleges.