If you want to claim that the world economic crisis was started by a slight blip in housing prices, you're going to need more evidence.
I never claimed that. I merely pointed out that the dip in housing prices caused many problems. Maybe you weren't paying attention to news headlines for the past several years about people being underwater on their mortgages, bank foreclosures and construction workers losing their jobs because there was no demand for new houses etc.
And if you want to claim that something is unsustainable, you're going to need more evidence as well. As it is now, it's sustained.
Funny how things are "sustained" right up until they aren't. Just like how the world's financial system was "sustained" up until it wasn't. When someone says something is "unsustainable" it means that they think that things cannot continue on as they are indefinitely and that some things will have to change significantly in some way to get the system back into balance. Exactly what sort of change is required are generally unspecified. It usually doesn't take a genius to spot a problem, but it may take a genius to solve it.
Private universities can set their tuition to a million dollars if they want, it doesn't have a negative effect on the economy as long as public universities are there to provide an alternative. A nice little chart is not enough to prove unsustainability.
Pity you didn't actually read any of the evidence I already linked you to.
Quote from Yahoo news story
Tuition and fees at both public and private universities have been steadily increasing and some higher education institutions are cutting financial aid, reducing class offerings or even freezing enrollment at campuses because of state and federal funding shortfalls. California State University, for example, announced in March that it was not accepting new students at 15 of its 23 campuses for the spring 2013 semester and will wait-list all applicants the following Fall after a $750 million funding cut.
Seems I'm not the only one that thinks the cost of college education is unreasonable:
President Obama wants to overhaul the college education system and proposed a new financial aid program during his State of the Union address in January, saying higher education isn't a luxury. Rather, Obama says "It's an economic imperative that every family in America should be able to afford." In a recent speech at the University of Michigan, he told students that colleges were being put on notice. At the heart of the problem: "If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down," he says.
What are not oftentimes mentioned in the statistics are the implications of defaults on student loans as well. For all intent and purposes they might as well be taxes. They cannot be discharged through bankruptcy proceedings like most other types of debt, and are unsecured as well. The bank (now the government) can’t repossess your other belongings to satisfy student loan debt. It is literally an albatross that cannot be escaped. Defaulting will make it much more difficult to get other types of credit too – at least at a reasonable rate. And the interest rates on certain types of student loans can be upwards of 15% if a parent or guardian isn’t willing to cosign the note.
So if high taxes are bad for the economy, then a student loan that acts like a tax (when there is no commensurate increase in salary to go with the debt) must also be bad, right?
Quote from Huffington Post
A new report from the Pew Research Center released Thursday found the employment rate for young adults at a 60-year low. In addition, fewer parents are now expecting their children to be fully independent by age 22, making it even more difficult to pay off those student loans.
Quote from Huffington Post
"Student-loan debt has ballooned and may turn into a bubble," the S&P said, as reported by Bloomberg. "There are more defaults and downgrades for some student-loan asset-backed securities."
S&P joins a growing chorus of economic observers warning that student-loan debt could become a significant albatross on the overall U.S. economy.
In 2011, Moody's Analytics issued a similar warning. In a report, Moody's concluded, "The long-run outlook for student lending and borrowers remains worrisome. Unlike other segments of the consumer-credit economy, student loans have not demonstrated much improvement in performance despite some improvement in the broader economy. ... [T]here is increasing concern that many students may be getting their loans for the wrong reasons, or that borrowers -- and lenders -- have unrealistic expectations of borrowers' future earnings."
You know how the financial crisis was (in part) about banks taking sub-prime mortgages that were unlikely to be paid back, wrapping them up into AAA-rated securities and selling them as investments to various institutions like hedge funds and 401K retirement plans? Then when the mortgages went sour, those hedge funds and 401K retirement plans lost a lot of money? Exactly the same thing could happen again with student loans. That's why the $1 trillion figure is bad.
You haven't shown that tuition is rising unreasonably fast. You've shown that tuition is rising faster than other things in the economy. That's a very limited data set. What if the percentage of students receiving financial aid had increased by a similar amount, meaning that rising tuition has enabled universities to give more financial aid to students who can't afford to attend but need it? What if the true cost of education has increased, as the amount of material to be taught has? What if universities started counting food and housing into their tuition figure more and more as time went by?
In short, you lack evidence.
Initially, Fuller wanted a school in New York (Columbia University was one) and Pennsylvania, but with many programs topping $30,000 per year for tuition alone, she decided on a more affordable option—The Netherlands. A comparable degree in health economics cost less than $17,000 for a one-year program.
To finance her education at Erasmus University in Rotterdam, Fuller took out a $30,000 loan through her mother’s home equity line of credit, which covered tuition and fees, as well as air travel, an apartment in Amsterdam, and living expenses for her year abroad.
....
The cost may be lower, but is the quality of education overseas is just as good as an American university?
Jessica Fuller says in her case, yes: she landed a consulting job with Marsh Inc. as an International Knowledge Manager shortly after she graduated from Erasmus University, and says that the university – and its location – were definitely a factor.
Seems other countries can do it much cheaper than the US can.
Simply put, we have a society that by and large feels a college education is both a necessity and an entitlement. This creates a huge demand. However, much of that demand would not be satiated were it not for government. The idea of guaranteed student loans has monetized virtually all of the demand. This guarantees income for universities and they similarly behave as if their cash stream is not dependent on performance, market factors or anything else. They treat their cash flows as an annuity in perpetuity. And unfortunately, we’ve taught them that they can raise their tuition at double or even triple the rate of the cost of living and all the seats will be full at the start of each year.
This clearly links the student loan scheme to the ramp up in prices, as I've suggested. The graph also shows the cost of tuition - we should assume therefore that it is talking about tuition, and not tuition + any other number of things.
A lot of the world is still feeling the aftereffects of the financial crisis. This entire phenomenon can be explained away by poorer economic conditions than in the past.
Of course. Yet the price of tuition keeps rising when on average people are clearly receiving less benefits from getting educated and racking up the debt. Why bother getting a $30k student loan if you end up working at burger king next to someone else who didn't go to college at all?
And I'd say that any engineers that are unable to find employment are pretty bad engineers. Well, or in a not-in-demand field of engineering, I suppose.
Or, maybe the jobs just aren't there. Maybe they are perfectly fine engineers, but are competing with people that have 5 years experience for the same entry-level job, just as Kame above said she'd experienced.
I don't disagree with this. What's your point here?
You're saying there's no problem with the cost of tuition and the loans wracked up, and I gave an example of why it's a problem and you agree with it. Seems a bit contradictory.
Again, I don't disagree with this. American for-profit colleges have a very bad reputation as well, and those graduating from them are considered to be below par. I don't know whether the government provides any sort of subsidies for these programs, though. And if it did, I would assume that it would make sure that the college turned out quality graduates first. So I don't think there's anything really to be done there.
Except that this in itself is a problem:
Quote from CNBC article (Secretary of Education Arne Duncan)
“Where we have huge concerns is where you have for-profits that are misrepresenting the facts, who aren’t being straight, who are piling up students with debt that they can never begin to repay and we’re going to challenge that status quo very clearly,” Duncan said.
Post has been edited 2 time(s), last time on Sep 10 2012, 1:14 am by Lanthanide.
None.