College Conspiracy

[spade2you]

Adjusted for inflation, the cost of college was gone WAY through the roof. I say mainly bc of the abundance of loans, making it easy for anyone to go to college, pay tuition, and spend the rest of their loan on stereos, vacations, and beer.

Nobody ever forced students to take out the max every year.

On a side note, I think part of the problem we're in was because so many people got used to spending like they did when times were extremely good. I'm only 31 and won't say "back in MY day", but it's not to say that we spend a lot but seldom save much.

 

[aborgman]

So taking the information we have about purchasing power with the US dollar, is the cost of a college degree actually more expensive these days or is it the same as it was 5, 10, 15, or even 20 years ago?

More expensive.

In inflation adjusted dollars it's approaching double the cost it was in 1980.

That being said - on average the difference in income from having a Bachelors degree will cover the difference in cost between 1980 and today in about 3 years.

 

[Metal Matt]

I stopped watching when they started going on about how the government was responsible for the economic crash. It wasn't the government giving out garbage loans to people they knew couldn't afford it, it was the private sector doing that. Granted our government should have done something about it... Seemed this video was pushing the idea that we need more private sector loans and I think that's a horrible idea. Last thing we need is predatory lending aimed at college students.

That aside, I've heard mention of a school loan bubble from other sources. I know private companies are in on giving out easy credit to college kids and I know plenty of people going to school who are in debt and who are unemployed or underemployed and will be paying it off for goddamn ever. I'd like to know the numbers as far as how many college students are receiving federal loans VS private loans.

 

[aborgman]

Before you look at just college, we also need to keep in mind the overall living conditions. Even 20 years ago, folks didn't all have a TV in every room, expanded cable, computers for everyone in the household, smart phones, etc.

Absolutely.

Average size house for a family in 1950 was: 983 square feet, 1 bathroom.
Average size house for a family in 2008 was: 2,430 square feet, 2 bathroom.

Average number of cars for a household 1950: .99
Average number of cars for a household 2008: 2.2

Etc.

 

[Ziltoid]

It costs me about 1300$ of tuition per semester here. I do get half-price because my parents are both teachers here, but even there it's 2600 or so for other students... I like Canada

 

[powderfinger]

Simple fact-
If loans were made unavailable, tuition would eventually go back down. Supply and demand.

 

[powderfinger]

I stopped watching when they started going on about how the government was responsible for the economic crash. It wasn't the government giving out garbage loans to people they knew couldn't afford it, it was the private sector doing that.
.

The financial instituions themselves are at fault because PURE GREED drove them to give out these garbage loans.

And lastly, the people who took these garbage loans are gulity, because no one forced them to take em'. They took these loans because, like many other Americans, they just *had* to keep up with Joneses and have everything the Joneses have. Without any sort of self responsbility or thought of consequences, THEIR GREED drove them to take these garbage loans.

 

[spade2you]

Simple fact-
If loans were made unavailable, tuition would eventually go back down. Supply and demand.

Probably, but this is more of a complex problem, which semdom have simple solutions. Just as Americans have gotten used to live high on the hog, colleges have been allowed to grow and expand. Like us, it would be a major shock to the system if the serious cash flow is reduced or stopped.

 

[drerio]

Hints of truth exists in hyped videos of this nature, but it does little to spell out the complete story. Back as far as the 20's we have had an education system trying to keep up with changes in the economy... back then and up through the 50's the education system was based on preparing individuals that would be wedded to the land (agrarian economy) and those working assembly line (factory) jobs. The problem now is that Americans are not filling those jobs (agrarian) and most of the jobs simply don't exist (exported to cheap labor markets). So our economy has shifted and requires a different skill set. Universities have done an adequate job at helping to build that skill set. So should it cost that much? This is part of allowing Universities become part of the free market economy (even those that are 501c organizations) along with all other sectors of our society. In countries where the economy has shifted (like ours), government subsidizes education to lower cost and bring more of the population into the new workforce. At face value, this is a stale argument... but in America it has become an argument of class warfare. The understanding of the new economy and what is required to work in that economy will have to play out over time. Yes we will still need carpenters, plumber, etc... but the larger economy will simply require a different skill set. Some may want to call this brainwashing, but it has been with us for a long time and not sure what alternative the producers of this video would like to see take place?

disclosure: I have worked at a private (non-profit) University for 15 years.

 

[spade2you]

The financial instituions themselves are at fault because PURE GREED drove them to give out these garbage loans.

And lastly, the people who took these garbage loans are gulity, because no one forced them to take em'. They took these loans because, like many other Americans, they just *had* to keep up with Joneses and have everything the Joneses have. Without any sort of self responsbility or thought of consequences, THEIR GREED drove them to take these garbage loans.

Very easy to blame the financial institutions, but they didn't force people to take the money.

Heck, when I was buying a car, they told me I could afford a bigger and better car. I chose the one that suited my needs.

When I bought a house, I saved for several years to put down a nice downpayment. They actually tried to convince me to use less as a downpayment as well as try to convince me to get a bigger house.

It's more $ for them in the long run if you take out a bigger loan, at least theoretically. Last I checked, they're not using Jedi mind tricks to get you to take out bigger loans than you need or can afford. I'm hardly a rocket surgeon and saw through it all and turned down the offer.

 

[aborgman]

Simple fact-
If loans were made unavailable, tuition would eventually go back down. Supply and demand.

Unlikely.

Mostly because the large increases in inflation have almost nothing to do with student liquidity, and almost everything to do with massive decreases in state tax funding.

When I was in school, the tuition you paid only covered about 1/3 of the actual cost of education. The rest was covered by state/federal contributions and the universities large pile of donations.

Today - the cost of educating hasn't really outpaced inflation much, but federal/state funding has dropped precipitously... so much so that now tuition has to cover more like 50% of the education cost.

 

[aborgman]

Last I checked, they're not using Jedi mind tricks to get you to take out bigger loans than you need or can afford.

No Jedi mind tricks... but quite a bit of lying, obfuscation, and fraud - especially in low income communities.

A big issue was that issuers were in no way responsible for loans they originated - so there was zero incentive to not give out bad loans... heck, YOU weren't going to be holding the paper when it defaulted.

The biggest issue was related to the stupid bundling and inability of the rating agencies or Wall Street to do even basic fact checking. I mean - projection models that were completely incapable of considering negative growth in house prices?

 

[drerio]

Simple fact-
If loans were made unavailable, tuition would eventually go back down. Supply and demand.

Sounds logical, but I would counter to suggest that our society would probably gravitate toward a serfdom. We can already see hints of this already and thus your lot would be caste in your birth-rite or lack thereof.

 

[powderfinger]

Very easy to blame the financial institutions, but they didn't force people to take the money.

Heck, when I was buying a car, they told me I could afford a bigger and better car. I chose the one that suited my needs.

When I bought a house, I saved for several years to put down a nice downpayment. They actually tried to convince me to use less as a downpayment as well as try to convince me to get a bigger house.

It's more $ for them in the long run if you take out a bigger loan, at least theoretically. Last I checked, they're not using Jedi mind tricks to get you to take out bigger loans than you need or can afford. I'm hardly a rocket surgeon and saw through it all and turned down the offer.

Im sorry, but did you even BOTHER TO READ my last paragraph where I laid partial blame on those who took the loans that they could not afford?

But, the financial institutions ARE at fault. The knowingly gave these people loans that they would not afford. Just so that they could make bank and sell the loans as investments. It was all a big pyramid scheme.... and like all pyramid schemes... they all crumble eventually.

 

[spade2you]

No Jedi mind tricks... but quite a bit of lying, obfuscation, and fraud - especially in low income communities.

A big issue was that issuers were in no way responsible for loans they originated - so there was zero incentive to not give out bad loans... heck, YOU weren't going to be holding the paper when it defaulted.

The biggest issue was related to the stupid bundling and inability of the rating agencies or Wall Street to do even basic fact checking. I mean - projection models that were completely incapable of considering negative growth in house prices?

Whilest trying to sidestep being too political. Lenders made loans they shouldn't have made. I wouldn't say it was their goal to have people default on the loans, but one would think they were trying to do just that based on such risky loans.

While it's unfortunate that the poor got taken for a ride, I think it's an inherent responsibility for folks to understand their finances, which doesn't mean I take any responsibility away from the lenders, either.

Such a tragic economy based on the greed of so many.

 

[spade2you]

Im sorry, but did you even BOTHER TO READ my last paragraph where I laid partial blame on those who took the loans that they could not afford?

But, the financial institutions ARE at fault. The knowingly gave these people loans that they would not afford. Just so that they could make bank and sell the loans as investments. It was all a big pyramid scheme.... and like all pyramid schemes... they all crumble eventually.

I noted that lenders were at fault and don't deny that. Scheme or not, nobody was ever forced to take money. Not many clean hands in the overall equation.

No offense, but you like assigning blame and simple solutions. Way too many people are at fault here and there are no simple fixes.

 

[powderfinger]

I noted that lenders were at fault and don't deny that. Scheme or not, nobody was ever forced to take money. Not many clean hands in the overall equation.

No offense, but you like assigning blame and simple solutions. Way too many people are at fault here and there are no simple fixes.

Ok, this is my analogy.

If a person knowlingly gives a psychopath a loaded weapon and the psychopath turns around and opens fire on an innocent person, who is at fault?

 

[drerio]

Whilest trying to sidestep being too political. Lenders made loans they shouldn't have made. I wouldn't say it was their goal to have people default on the loans, but one would think they were trying to do just that based on such risky loans.

While it's unfortunate that the poor got taken for a ride, I think it's an inherent responsibility for folks to understand their finances, which doesn't mean I take any responsibility away from the lenders, either.

Such a tragic economy based on the greed of so many.

The real issue to understand is the structure of student loans. Most of the loan value has the backing of the US Government... so it is no loss to an institution to loan money if they know they will get paid not only the principle but the interest as well. If the customer defaults then the government guarantees payment. So what we have done is subsidize the financial institutions rather than the University themselves. If we did the later cost structures would be easier to bear and education would be more equitable. But then there would be no money in derivatives. To this day these are still the largest means of wealth for WS individuals and typically are up to 30% of most individuals retirement pensions.

 

[spade2you]

Ok, this is my analogy.

If a person knowlingly gives a psychopath a loaded weapon and the psychopath turns around and opens fire on an innocent person, who is at fault?

I know the answer you want to hear, but I see both as at fault. I also happen to know your stance on gun control, but I can't give away all of my tricks.

 

[powderfinger]

I know the answer you want to hear, but I see both as at fault. I also happen to know your stance on gun control, but I can't give away all of my tricks.

I dont think Ive ever posted on gun control here, actually.... maybe you're confusing me with someone else. I dont have any real stance on gun control... I mean, I do, but Im not passionate about it like other issues.