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Thread: weekend commentary - Bankruptcy for a Whole Generation

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    Default weekend commentary - Bankruptcy for a Whole Generation

    from


    (snip)"Another student protest, another mass arrest. Monday, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds of students then flooded the Rotunda of the Capitol, a somewhat raucous affair. Eventually, the California Highway Patrol cleared them out, and 60 were carted off and thrown in the hoosegow for trespassing and resisting arrest.

    Their problem: tuition increases. Already, tuition in California's state schools has tripled over the last decade, and state budget cuts will induce universities to jack up tuition again. But the state is out of money. And so it's struggling in a weird and ineffectual way with its red ink. For more on California’s ongoing debacle, read.... Search For The Missing Moolah.

    The same day the students were arrested, the New York Fed released a report on the consequences of incessant tuition increases across the nation: ballooning student loan balances that are increasingly difficult to bear:

    - 27% of the borrowers who had to make payments (not current students) were past due.

    - $870 billion in student-loan balances at the end of the 3rd quarter 2011 (higher than credit card debt of $693 billion and auto loans of $730 billion), up 2.1% from the 2nd quarter, while other consumer debt declined or remained flat.

    - Average balance: $23,300. That includes the millions of student loans that, after years of payment, have much smaller balances or are nearly paid off. Average balances owed by recent graduates are much higher.

    The report lauded President Obama’s executive actions of October last year designed to ease the repayment burden of federal student loans. Laudable as they may be, they only soothe the symptoms for ex-students by shifting more of the costs to the taxpayer. But they don’t deal with the cause: the system itself. It has become dysfunctional.

    Universities as businesses, in an environment that is devoid of price competition. For example, when the University of California system demands higher tuition, the whole system falls in line to support those increases, rather than resist them.

    Captive customers. Students have to get their education within the higher education system. When tuition goes up, they can’t massively drop out because it would jeopardize their dream (by contrast, if air fares jump, customers react by flying less). They can choose cheaper colleges, but all colleges are jacking up tuition and fees. And the nationwide existence of “out-of-state tuition,” while plausible on a state basis, stifles cross-border competition. So students fight tuition increases the only way they can: by obtaining more funding.

    Finance. The student-loan industry profits from processing student loans. Naturally, they encourage students to take on more debt. The amount is a function of the cost of the school, not of the ability to pay back the loan. While risk serves as a natural brake in making loans, in the student-loan industry, risk is transferred to the taxpayer who guarantees the loans.

    The ultimate enabler. The government, in constant need of voter support, will fund and guarantee whatever it takes to allow students to get their education regardless of how reckless tuition and fee increases are. Thus, Obama’s executive actions make repayment less onerous, but they don’t do anything to contain tuition increases.

    There are no price pressures on universities—except student protests (so, keep at it). Outrageous clockwork-like tuition increases are met not with resistance but with an unquestioning, endless, and ever increasing flow of government-guaranteed student loans. The beneficial forces of market discipline have been wrung out of the system, and governments have not stepped in to exercise alternate controls.

    University administrator salaries, bonuses, benefits, golden parachutes, and pensions have shocked the public when they’re exposed in the media. Programs that have little to do with education swallow up more and more money. And sure, everybody loves to have well-equipped labs in fancy buildings. But the system needs to be restructured, either by opening it up to competition or by exposing it to effective checks and balances. Solutions won’t be easy, but there isn’t much room left before it will bankrupt an entire generation."(snip)


    Arguably, the important take-aways from this are as follows ...

    - student loan debt has now become the number one financial 'burden' for many younger Americans

    - 27% of existing student loans are already in default, with the default rate heavily skewed towards younger Americans

    - the overall average $23k in student loan size understates the average amount owed by younger Americans

    - under current law, the vast majority of student loan debt cannot be discharged via bankruptcy ... only 'postponed' repayment for another 3-5 years ( with added interest accumulating ).

    - at current after-tax pay rates for younger American college graduates, student loan payments consume a large fraction of their after-tax income

    - with little or no after-tax income remaining after making student loan payments, many younger Americans have near zero credit / ability to be approved for additional borrowing, and have near zero 'discretionary income' to fund consumption


    Thinking a few years down the road, from a demographic standpoint there are a huge number of baby boomers nearing retirement age. Classically, this has translated into people transitioning into retirement selling off their big house, selling off their stocks and bonds etc. However, with the current student loan situation, it's very doubtful if very many younger Americans will have the credit or 'discretionary income' to buy those houses, stocks and/or bonds. This will create downward pressure on future housing, stock and bond prices.

    On a more immediate basis, heavily student loan indebted younger Americans with near zero credit, and near zero after-tax 'discretionary income', will not be able to afford to start families ... thus will not purchase houses, cars, furniture, appliances etc. This is already affecting retail sales statistics ... with the 'middle class' retailers now hurting badly while the high end is doing great and the low end is doing OK.

    At some point, US taxpayers are going to be presented with the 'tab' for the large number of defaulted student loans. It's time to recognize that a large number of majors from teacher to music to law ( and many others ) now present a 'losing' scenario ... where the amount of after-tax income available to workers in those professions is simply is no longer sufficient to service the $100,000+ student loan debt they have taken on to qualify for those professions.
    Last edited by Melonie; 03-23-2012 at 03:36 AM.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Students who take out loans from private lenders to finance their education should have the same right to discharge their debt in bankruptcy that other borrowers enjoy, Illinois Senator Dick Durbin said today.

    “While the overall growth in student indebtedness is troubling, the most pressing concern is private student loans,” Durbin, the No. 2 Senate Democrat, said in prepared remarks at a Senate judiciary subcommittee hearing. “These private student loans are a far riskier way to pay for an education than federal loans.”

    Outstanding student-loan debt reached an estimated $867 billion in the fourth quarter, and is greater than total U.S. credit-card debt. The student debt includes private loans, which don’t offer options as some government-backed loans when borrowers become financially distressed, including income-based repayment. Durbin introduced a bill in May to eliminate a 2005 provision that made privately issued student loans nondischargable in bankruptcy.

    Five years after graduating from Harrington College of Design in Chicago, Danielle Jokela has yet to find a job as a designer and struggles to repay more than $98,000 in student loans.

    http://www.businessweek.com/news/201...-in-bankruptcy
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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    ^^^ yeah, well, lots of senators and representatives propose lots of things !

    The kicker with Sen. Durban's proposal is that 90 odd percent of 'private' lending institution student loans would never have been approved in the first place were it not for US taxpayer guarantees given by the gov't to those 'private' lending institutions. Thus from the point of view of the 'private' lending institutions, the fact that student loans aren't ordinarily dischargeable via bankruptcy is the ONLY thing that stops them from declaring delinquent student loans in default and going back on Sallie Mae to collect the guaranteed payments. If this were to actually pass, Sallie Mae would immediately be standing in line at the US treasury right along with Fannie Mae and Freddie Mac, all pleading for more taxpayer bailout money.

    Also, if this were to actually pass, the ability to obtain future student loans would soon involve the would-be college students ( or their parents ) actually having sufficient credit to warrant approval of the loan. This would soon disqualify the vast majority of would-be 'middle class' college students, with eligibility for future student loans then more or less confined to gov't programs for children from low income families plus the children of the 'rich'.

    In the way of an analogy, today's student loan situation is very similar to the subprime mortgage loan situation, except the gov't / bank can't foreclose on the college graduate's 'brain'.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    So there will be an instant crash to more sights like SA looking for SD's to help pay down their loans. Wow our society is turning out their little girls .

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Let's look at this at the core and that is colleges are pushing everyone to attend, even unqualified students. The fact is when you have students who don't have the grades this happens because often these "disadvantaged" students often take scholarships that should go to the smartest kids. Why is this happening? because many schools are shifting scholarships to become more needs based than smarts based so you have plenty of qualified students unable to find jobs. Not to mention there is a shortage of college graduate jobs and many entry level jobs won't pay enough so students can pay off the loans. Oh and many of these students are lacking in skills even after college. The simple fact is when too many people have something like a degree and many are unqualified it brings down the value.

    Let's not forget that many students are majoring in fields that just don't have enough jobs or any at all. Many unemployed students have degrees in worthless fields like womens studies or art history. How many jobs are in these? while there used to be a time when any degree could get you into a job, many employers are quite specific what they want. I have a communications degree (minor in business)and I see many jobs requiring one of these. Yet colleges lie to students that any degree is fine. I couldn't begin to tell you how many alumni at my former college (an art school)that are unemployed or working in jobs that don't require degrees like bus drivers or salesclerk.

    My grad school has another dirty secret that other schools do too and that is most of the TAX PAYER funded work study are going to foreign students. Yep and when I asked I was told that it's because they can't work other jobs or don't qualify for other assistance. Why should foreign students be able to receive any form of taxpayer aid when it denies American students help? When I was in grad school many of my classmates would speak out against this but nothing was done.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by Melonie View Post
    ^^^ yeah, well, lots of senators and representatives propose lots of things !
    .
    Yeah well, we can hope...... The idea of the bought and paid for Congress, biting the hand that feeds them is attractive.
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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Sounds to me like a combination of supply/demand and overeager buyers (students)

    Students don’t think to shop around for a better deal, or even bother to understand the deal they’re in. What’s the incentive for good deals in these circumstances?

    More generally, the existence and price of college itself is a perfect trap for students. It’s been a growing assumption in the past few decades that one needs a college education to get a good job, and certainly in a poor job market like the one right now that is certainly true. And yet, the student debt load is increasing faster than the opportunities higher education provides.
    http://mathbabe.org/2012/03/22/the-h...cation-bubble/
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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    ^^^ agreed that 'over eager buyers' have played a role. Arguably, as was the case with the subprime mortgage situation where recent history led to an ( incorrect ) assumption that real estate prices levels could never go down, the subprime student loan education situation was also driven by recent history that lead to an ( also incorrect ) assumption that salaries for graduates could never go down. But unlike subprime mortgage homeowners who are legally able to 'walk away' from their mortgage payments via a bankruptcy filing, subprime student loan burdened young Americans are, under current US law at least, saddled with a 'mortgage's worth' of student loan payment every month that cannot be discharged via bankruptcy.

    Because of this, the author's choice of title is actually a misnomer. The bankruptcies the author is referring to probably involve bankruptcies for auto loans, credit card loans, utility bills etc. racked up by recent graduates with large student loans once their student loan deferments expire, their student loan repayments must start ... which essentially forces the recent graduate to allocate a large percentage of their available after-tax income towards a student loan payment first and all other bills second. This de-facto result essentially creates a situation where the first 10 years of a recent graduate's career may now involve living at a near-poverty level as a result of absolute priority student loan repayment having 'first dibs' on their paycheck. And if that student loan payment involves an ( after-tax ) $1000 a month for the next 10 years versus a ( pre-tax ) $40,000 a year job, that translates into driving a 10 year old clunker and living in their parents' basement until they are in their mid-30's !

    While the above situation is certainly bad for the individual involved, it also has larger ramifications throughout the economy. First, it means postponement of the normal 'consumption' that would take place. 20 years ago, after college graduates had secured a 'decent paying' job, they would typically 'celebrate' their success by spending their earnings on things like sports cars, VIP room visits, upscale clothing, nice apartments / condos, and other 'discretionary' items. After a few years of the 'single' life, they would then typically 'settle down' thus spending their earnings on things like a family car, a home, appliances and home furnishings, etc. In comparison, today's graduates facing mortgage payment sized student loan payments plus a comparatively low paying job market are instead transferring a major percentage of their earnings to the government ( via student loan payments ) instead of private sector 'consumption' of goods and services for ( at least ) the first 10 years after graduation. And that, of course, assumes that they do not allow their student loans to go into default.

    For the 27% ( and rising ) of Americans who HAVE allowed their student loans to go into default, between the deferred / compounded interest and the 'collection fee' percentage tacked onto the original student loan debt, it's now becoming commonplace for the 'artificial poverty' period imposed during student loan repayment to extend for 20 years or 25 years. This situation results in a permanent 'loss' to the private sector economy, since it's very difficult to transition to the previous generation's 'normal' life of a house, a nice car, and 2.3 kids, when you can't begin to repair your credit rating or save down payment money until reaching age 45 or 50.

    Some 'futurists' out there are already becoming concerned about the reverse 'moral hazard' that increasingly exists due to the relative costs of college ( thus relative size of student loans and monthly repayments ) versus the available standard of living achievable from today's college graduate paychecks less income taxes less student loan payments. Or put another way, a college graduate with a $50k per year job may be no better off net of income taxes and student loan repayments than a high school graduate with a $30k per year job. And this is particularly the case if the college graduate earned near zero during their four years at college, while the high school graduate collected four years worth of paychecks. Throw in the fact that, in some cases, the high school graduate may be eligible for certain social welfare benefits that the college graduate is not, and also throw in the fact that the 'stress level' typically accompanying the college graduate's job is higher than the 'stress level' of the high school graduate's job, and a real question begins to emerge as to whether the college graduate will be any 'better off' in the long run than the high school graduate.

    Also, as pointed out in the original post, US taxpayers have yet to see the effects of an impending wave of student loan defaults. If bailing out Sallie Mae translates into a future income tax increase, that will negatively affect the $50k per year college graduates far more than the $30k per year high school graduates !


    In regard to the points made about the 'education bubble' at Person's link above, indeed it's a sad situation that most 'new' college students, as well as their parents, either don't understand or don't care about running the numbers in regard to what a $100,000 student loan balance at a 5% interest rate really means upon graduation. It means a $1061 monthly student loan payment ... which at typical tax rates means $ 1250+ per month = $15k per year of their gross earnings being allocated with priority to student loan repayment for 10 years after graduation. Arguably, the 'don't care' attitude indirectly stems from the relative ease of bankruptcy filings 'curing' superficially similar unaffordable subprime mortgage payments, car payments, credit card payments etc. However, under current US law at least, there is no similar 'cure' available for unaffordable student loans. And returning to the subprime mortgage analogy, a large number of Americans returned to college as a by-product of the 2008-2009 economic downturn. Many of those college students are now just starting to graduate ... with their student loan deferments soon ending and their $1061 per month payment schedules soon kicking in over the course of the next couple of years. Thus student loan defaults in 2012-2013 will essentially be where subprime mortgage defaults were in 2007-2008 !!!


    On a very different side note, I am beginning to hear comments from many of the younger 'successful' guys who typically vacation down here way south of the border about the 'ramifications' of an entirely different aspect of student loan debt. They have basically established that, for the purpuses of evaluating the possibility of 'wife-ing up' a girlfriend, the existance of $100,000+ worth of girlfriend student loan debt now constitutes a huge 'negative' liability. Of course these younger 'successful' guys are used to evaluating profits and losses, balance sheets etc. But if their pragmatic viewpoint expands to encompass other younger guys balking at the prospect of 'merging' with a younger woman who brings with her a large amount of non-disposable debt burden, this could have a significant social impact on said younger women !
    Last edited by Melonie; 03-24-2012 at 05:24 AM.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Since February 1, I have been volunteering at a free tax preparation clinic. (It's the only accounting I'll be doing this year.) Lots of poor people are just getting by with very little. Lots of low wage people who tell me they had better jobs before 2008. In Durham, Duke University and North Carolina Central University have had layoffs (Duke) and a hiring freeze (NCCU) for four years. More over, wages have largely been stagnant. Duke is officially on a 80% wages. A real pay cut. NCCU, like all state universities in NC has not had a pay raise in four years. They probably won't have one next year either. That's the low end here. (Universities have lots of high wage jobs, but they have even more low wage jobs.) In the middle, research has rebounded some. Drug development is seeing a fair amount of money flowing in, though not like it was from 2000 to 2008. I have written here a couple of times about our regional economist confab. They say it's a mixed bag. As long as wages stay stagnant, inflationary pressures will remain minimal. However, as Mel points out, commodity prices have risen and show no sign of abating. That "builds in" an inflationary expectation in the middle term. The question is, will rising commodity prices cause another recession?

    That, I do not know.
    Z

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    As long as wages stay stagnant, inflationary pressures will remain minimal. However, as Mel points out, commodity prices have risen and show no sign of abating. That "builds in" an inflationary expectation in the middle term. The question is, will rising commodity prices cause another recession?
    ^^^ True in principle about stagnant wages. However, in today's globalized economy, price inflation pressures for US consumers who are 'just getting by' are no longer solely based on the costs of US labor, but the costs of Chinese labor which produces their lowest cost option tires and electronics, the costs of Singapore labor which produces their lowest cost option clothing and generic drugs, the costs of Vietnamese labor which produces their lowest cost option furniture and food, etc. And ALL of these offshore labor costs increase immediately when the purchasing power = exchange rate value of the US dollar goes down versus the Chinese Yuan, the Singapore Dollar, the Vietnamese Dong, etc. in which these offshore labor costs are actually 'paid'. Thus the US dollar denominated labor costs included in the price of Chinese tires sold at WalMart, or Singapore clothing sold at Target, or Vietnamese rice sold at ALDI, have increased significantly in the past two years. If you then add in the fact that US dollar denominated commodity prices for rubber, cotton, rice etc. have also increased as the result of a declining US dollar, you reach a conclusion that those US consumers who are 'just getting by' are bearing the brunt of higher price inflation for the lowest cost option products they depend on to continue 'getting by'.

    As to US 'wage compression' ... which in the context of this thread has already covered the fact that the 'starting' wage rates for new college graduates are, in many cases, much lower than in the past ... certainly contributes to the future likelihood of 'bankruptcy for a whole generation'. We also covered one corrolary of wage compression, i.e. the fact that a non-college educated semi-skilled worker with a job paying $30k per year may now actually share the same standard of living as a college graduate 'skilled' worker earning $50k per year, net of income taxes, student loan repayments, and gov't benefits. And both face the potential 'double whammy' of rising commodity prices plus rising foreign labor costs ( as denominated in US dollars ) reducing their present standard of living, or pushing them into bankruptcy, as the price they must pay for lowest cost option products which they absolutely need to purchase continue to increase as a result of a declining US dollar.

    Stagnant US wages mitigating price increases really only come into play for products which ( still ) have a significant US labor component ... such as 'organic' foods, 'upscale' cars and motorcycles, 'upscale' household items, etc. Granted that this reduces the 'plight' of tenured college professors whose $120k a year salary has been frozen. But it is more or less irrelevant to the non-college educated and college educated but heavily indebted Americans discussed above who are 'just getting by' ... and are thus limited to buying lowest cost option imported Vietnamese food, Korean cars, and Chinese household items.

    In the way of futurist speculation, some have pointed out that with today's global wage 'arbitrage', by one means or another the future standard of living for an unskilled US worker will untimately have to fall to nearly equal that of unskilled Asian foreign workers ... and that the future standard of living for a highly skilled college educated US worker will ultimately have to fall to nearly equal that of highly skilled college educated Asian foreign worker. The former is not likely to happen thanks to US gov't intervention i.e. minimum wage laws, social welfare benefits etc. subsidizing the standard of living of unskilled US workers. However, the latter is arguably a growing problem already, given that highly skilled college educated Asian foreign workers can 'afford' to accept lower pay rates. Part of the reason this is so is because, unlike highly skilled college educated US workers, the Asian foreign college graduate workers do NOT have a huge student loan debt that must be serviced by their paycheck earnings. Another reason this is so is because, unlike highly skilled college educated US workers, the Asian foreign college graduate workers do not face a stiff gov't imposed income tax ( to fund gov't subsidies for their lower earning, less educated neighbors ) reducing their net 'spendable' paycheck before they receive it. This latter point again refers to the reverse 'moral hazard' that potentially exists for college educated US workers ... i.e. that the end result of sacrificing four years worth of studying versus working, and the assumption of a mortgage sized student loan debt, may in fact leave them no better off standard of living wise than the non-college educated US neighbors which their own heavily taxed future paychecks must subsidize !
    Last edited by Melonie; 03-25-2012 at 09:25 AM.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    I'm getting back into dancing to save up money for when I'm in grad school to lessen the student loan amount. If I went into grad school right now without any money of my own, I'd be looking at $200,000 by the time I graduated. I had a great job which was high in demand and never planned on going back to college. Now the wonderful state of Ga decided to go open lots of new schools to offer the career program I have a degree in. Now there's waaaay too many of us and I can't get a job. It sickens me to hear we professional women (and small amount of men) are cleaning houses and working as cashiers at grocery stores because our profession has become oversaturated. I'm 35 and now back living with my parents (never thought that would happen). I'm currently having to take and re-take science classes in which I've been paying for as I go. I'm very lucky that I have this opportunity living with my parents so I can save. Another great thing is I don't qualify for financial aid because I already have a bachelor degree! However, my school did say "you can get student loans", like it's free money or something!
    Quote Originally Posted by Susan Wayward View Post
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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by leogirl876 View Post
    my school did say "you can get student loans", like it's free money or something!
    Lol.... There was a time, people used to go to school and work part time and summers to afford it..... Which reminds me.... There was also a time doctors made house calls.

    Can't understand how college & heathcare got so expensive..... It couldn't be our desire to have govt help with these things.... Could it?
    The country has been looted.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by mikef View Post
    Lol.... There was a time, people used to go to school and work part time and summers to afford it..... Which reminds me.... There was also a time doctors made house calls.

    Can't understand how college & heathcare got so expensive..... It couldn't be our desire to have govt help with these things.... Could it?
    One of the reasons is because of the push for everyone to attend college. As a result many of these for profit schools popped up (no my school was not for profit). Also, many schools spend more on administration fees than faculty and student expenses than anything else.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Now the wonderful state of Ga decided to go open lots of new schools to offer the career program I have a degree in. Now there's waaaay too many of us and I can't get a job. It sickens me to hear we professional women (and small amount of men) are cleaning houses and working as cashiers at grocery stores because our profession has become oversaturated. I'm 35 and now back living with my parents (never thought that would happen).
    Well, this is another aspect that really needs to be included in the cost vs benefit analysis of obtaining a college degree these days. With America's rapidly changing economy, the economics that exist today in regard to a particular high demand major may very well NOT still exist by the time a degree in that ( formerly ) high demand major can actually be obtained. Thus the original equation of assuming say $100,000 in student loan debt plus forgoing four years worth of paychecks at a lower paying full time job in exchange for the future 'promise' of earning $60-$80-$100k per year after graduation could quickly turn into a 'reality' of $100,000 in student loan debt plus an anemic work history resume plus the same lower paying full time job after graduation as before starting college.


    people used to go to school and work part time and summers to afford it.
    True, but that was before the US gov't forced would-be employers to start paying $7.50 per hour minimum to any person ... including those with zero experience and zero job skills ... like high schoolers and undergrads. This rapidly prompted 'former' employers of part-time high schoolers and undergrads to eliminate many such jobs in favor of increased automation ( self-checkout lines, automated warehouses etc. ), temp services, or $7.50 per hour full time employees ( who will remain on the job long enough to learn skills thus increase their productivity ) etc.


    Can't understand how college & heathcare got so expensive..... It couldn't be our desire to have govt help with these things.... Could it?
    With the partial exception of Ivy League colleges with deep pocket alumni plus billions of dollars worth of investments, the vast majority of colleges are heavily dependent on state and federal gov't dollars for their immediate financial futures. Obviously community colleges and state colleges are a direct extension of the gov't ... with college staff from professors to janitors being on the gov't payroll.


    One of the reasons is because of the push for everyone to attend college
    ^^^ this conveniently brings us directly back on topic. Some skeptics have argued that the recent push toward 'everyone should attend college' is actually based on a gov't desire to classify unemployed young Americans as 'students' rather than unemployed. Thus easy to obtain gov't backed student loan money essentially takes the place of unemployment checks or welfare checks ... in the short term. However, once the unemployed young American drops out of college or graduates from college, unlike unemployment benefits or welfare benefits the gov't money must be paid back !!! With a large increase in the number of current college students resulting from the 2008 'crash' and resulting 2009 lack of job opportunities, we are about to experience a large increase in the number of 'former' college students / new graduates who will suddenly face the prospect of starting to make $500-$1000- whatever per month student loan payments. Under current law these student loan payments CANNOT be disposed of via a bankruptcy filing. As such, many of these 'former' college students / new graduates will face a situation of having > 50% of their lower paying job paychecks having to be paid to the gov't in order to stay current on their student loans. Besides creating a potential situation of having to move back in with parents for the 'forseeable' future, this will have the de-facto effect of keeping the 'former' college students / new graduates in a 'poverty' situation for the next 10 years even though their paychecks are well above poverty level.

    And for some, i.e. those who wind up facing a reality of the only jobs being available actually having near 'poverty' level paychecks, the interest payments due on their student loans alone will potentially keep them in a 'poverty' situation forever !!! And if they default on their student loans, welcome to paycheck garnishment, seizure of assets, long term trashed credit rating, i.e. permanent 'poverty'. At this point, how many will realize that they are essentially 'working for nothing', that they would actually be better off quitting work altogether in favor of becoming a career social welfare benefit recipient, etc ?
    Last edited by Melonie; 03-26-2012 at 04:16 AM.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by Kellydancer View Post
    Let's look at this at the core and that is colleges are pushing everyone to attend, even unqualified students. The fact is when you have students who don't have the grades this happens because often these "disadvantaged" students often take scholarships that should go to the smartest kids. Why is this happening? because many schools are shifting scholarships to become more needs based than smarts based so you have plenty of qualified students unable to find jobs. Not to mention there is a shortage of college graduate jobs and many entry level jobs won't pay enough so students can pay off the loans. Oh and many of these students are lacking in skills even after college. The simple fact is when too many people have something like a degree and many are unqualified it brings down the value.
    Grades are just a measure on effort. Often times because they were born into low socioeconomic statuses and need to work a lot, or they can't afford a tutor, or they are focusing on a major life event at hand (death of a family member, illness, injury, etc. So they definitely deserve the scholarships. There are several scholarships for high GPA. There's scholarships for anything if you look hard enough and put in effort.

    While college is now a business, the issue is that its built on a now outdated, poorly designed model that hurts certain students more than it helps them. Ads on TV saying "IF YOU GET A DEGREE YOU'LL MAKE A BIGGER SALARY!" That was debunked a long time ago. Those who get degrees are more motivated and therefore more connected (networking) and therefore more likely to find/take job & $$$ opportunities.

    The second real issue is that you don't NEED to go to school for most liberal arts degrees unless it leads to a trade job... which is rare. The only time you NEED to go to a university is if your degree is mandatory for a trade. Nursing, computer science, engineering. Those are trades. You are learning a skill. The only difference is, those trades require a building-block education where you must comprehend one aspect before you can move onto the next unlike most trades where you are shown how to do it & then you practice.

    Quote Originally Posted by Kellydancer View Post
    many employers are quite specific what they want. I have a communications degree (minor in business)and I see many jobs requiring one of these. Yet colleges lie to students that any degree is fine. I couldn't begin to tell you how many alumni at my former college (an art school)that are unemployed or working in jobs that don't require degrees like bus drivers or salesclerk.
    Another myth debunked is that employers only hire people who went to "good" schools or who majored in a certain thing or not. In reality, those who went to a "good" (read: expensive) school typically have more resources and therefore more time to spend networking and more money to look the part. While this myth may actually be true in a few industries like politics, research (science, psychology), and college professors (probably because all those industries are rigid & boring as fuck so there's nothing else to base it on lol), have a "name" degree is just not necessary. Its all in how you sell yourself. Any degree is fine, often times. But chances are, if you didn't major in it, you don't have the passion, experience, and innovation that is required for the job. Getting hired is 100% about sales. Selling yourself to the employer. Selling yourself as a brand. Your image: your physical appearance (sad but true) that includes grooming & health & style, how you communicate or "sell', your personality, your enthusiasm, your creativity & innovation, your talents, what you've learned, and of course your experience.

    Quote Originally Posted by Kellydancer View Post
    My grad school has another dirty secret that other schools do too and that is most of the TAX PAYER funded work study are going to foreign students. Yep and when I asked I was told that it's because they can't work other jobs or don't qualify for other assistance. Why should foreign students be able to receive any form of taxpayer aid when it denies American students help? When I was in grad school many of my classmates would speak out against this but nothing was done.
    The education system is rigged. Money talks.



    The education bubble will eventually pop. Being innovative & knowing how to brand will top a degree. Its kind of already starting to in some industries. In the future, I believe we will see a HUGE trend of small businesses and entrepreneurs. Like it will just be the new thing to start your own business. And it will fix this messy recession (depression) and probably be like a new wave early 00s economy boom. However, that's probably 15-20+ years away or something. Things have to continually collapse first.

    Thoughts, people?

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by person View Post
    Sounds to me like a combination of supply/demand and overeager buyers (students)
    Overeager buyers (students) who are only overeager because they are lied to and told a degree will give them a better life when it'll actually often hurt them more than if they never went to school. Trades are the way to go. If the job you'd like to get after graduating is not a trade-based job, the degree is not worth getting.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by GlamourRouge View Post
    Grades are just a measure on effort. Often times because they were born into low socioeconomic statuses and need to work a lot, or they can't afford a tutor, or they are focusing on a major life event at hand (death of a family member, illness, injury, etc. So they definitely deserve the scholarships. There are several scholarships for high GPA. There's scholarships for anything if you look hard enough and put in effort.

    Another myth debunked is that employers only hire people who went to "good" schools or who majored in a certain thing or not. In reality, those who went to a "good" (read: expensive) school typically have more resources and therefore more time to spend networking and more money to look the part. While this myth may actually be true in a few industries like politics, research (science, psychology), and college professors (probably because all those industries are rigid & boring as fuck so there's nothing else to base it on lol), have a "name" degree is just not necessary. Its all in how you sell yourself. Any degree is fine, often times. But chances are, if you didn't major in it, you don't have the passion, experience, and innovation that is required for the job. Getting hired is 100% about sales. Selling yourself to the employer. Selling yourself as a brand. Your image: your physical appearance (sad but true) that includes grooming & health & style, how you communicate or "sell', your personality, your enthusiasm, your creativity & innovation, your talents, what you've learned, and of course your experience.
    It depends on the school. The art college I attended often gave scholarships to less deserving students (and btw they weren't all low income either)and most of the time these students had no business being in school. They sat in the corner and usually didn't do the work or did it so poorly. Yet many claimed they were disadvantaged but were not. I got scholarships from looking outside the school but the school decided to switch scholarships from grades to other issues. If one doesn't have the grades they don't belong in school, period.

    Image means a lot but not always. The fact is there are a lot of people who lose jobs because of being older, less attractive, overweight, etc but I know many people like that who have jobs too.


    Quote Originally Posted by GlamourRouge View Post
    While college is now a business, the issue is that its built on a now outdated, poorly designed model that hurts certain students more than it helps them. Ads on TV saying "IF YOU GET A DEGREE YOU'LL MAKE A BIGGER SALARY!" That was debunked a long time ago. Those who get degrees are more motivated and therefore more connected (networking) and therefore more likely to find/take job & $$$ opportunities.

    The second real issue is that you don't NEED to go to school for most liberal arts degrees unless it leads to a trade job... which is rare. The only time you NEED to go to a university is if your degree is mandatory for a trade. Nursing, computer science, engineering. Those are trades. You are learning a skill. The only difference is, those trades require a building-block education where you must comprehend one aspect before you can move onto the next unlike most trades where you are shown how to do it & then you practice.
    True most liberal arts degrees are not needed, but the reality is with this economy employers can be picky and are. I actually did attend a name art school which helps me in art and communication jobs but many employers have told me they don't hire people from certain colleges, such a for profit. I do think college is a waste for many fields.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Oh and I am having trouble quoting on this thread but yes I believe the trend is towards starting small businesses. I am seeing entire industries, like what I do moving into freelance jobs. Employers are starting to hire people to do training jobs as needed instead of on staff.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    What do the call the student in medical school who graduated last in her class? - Doctor. Some degrees pay and others don't. Some your class ranking matters (law) others, it doesn't (medicine and nursing). Find out before you sign up. In short, going to Medical or Nursing School at Indiana University-Purdue University at Indianapolis or East Carolina University is just as good as Medical School or Nursing School at Havard and a whole lot cheaper. In the long run you'll be dollars ahead with a M.D. or B.S.N. from IUPUI or ECU than Harvard.

    HTH
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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    True, which is why it is important to find out which degrees pay. I know many law school graduates who can't find jobs.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    since nobody has mentioned the full scope of education's 'dirty little secret', I will !

    For a fact, the 'upper echelons' of lots of long established professions, from medicine to engineering to law to finance to gov't bureaucrat, revolves around a core of 'name' university graduates. While it is true that a doctor or lawyer or financier with a degree from a little-known university can certainly find 'work' almost anywhere, that same doctor or lawyer or financier has very little chance of ever breaching the 'upper echelon'. As such, with few exceptions, they aren't likely to ever gain access to the most challenging 'work' or the most lucrative pay.


    The fact is there are a lot of people who lose jobs because of being older, less attractive, overweight, etc
    Increasingly true as the 'glut' of available candidates for any open position continues. While it is never openly admitted, statistically speaking, older workers and overweight workers bring with them an implied higher price tag for future employer provided health care costs, plus an implied lower 'energy' level at work. Less attractive workers bring with them an implied restricted ability to effectively interact with the general public and co-workers. All affect the employer's overall 'return on investment' equation when hiring one worker versus another.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    I don't know about the others but I do know that is true about law. About 15 years ago I was checking into law school and heard about that.

    Very true too on how employers don't want to hire less desirable. Many don't know this but waitressing is notorious for only hiring pretty girls. There has been times I applied for a waitress job when a friend has and I got a call and she (less attractive)never even got an interview.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    ^^^ admittedly, many of the 'newer' professions, such as computer and internet based, never formed a core of 'name' school alumni ... and tend to rely much more on actual personal skills and abilities as opposed to educational credentials. Thus, with a few exceptions ( gov't funded research, gov't contractor etc.), holding a degree from a 'name' college doesn't open any additional 'doors' in these industries. But that isn't all good news either, since the same approach opens the 'door' for the hiring of talented graduates of colleges in India, China etc. ( to the limit of US work visa availability ) who are typically willing to work for low pay rates ( partly because they don't have huge college loans to repay ). Of course this now places graduates of non-'name' US colleges between a proverbial rock and a hard place.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Plus many internet based jobs can be done anywhere so many companies not only are hiring foreign workers but also people that can work at home. Sounds great until one realizes that these jobs don't pay healthcare and really don't pay much.

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    Default Re: weekend commentary - Bankruptcy for a Whole Generation

    Quote Originally Posted by Kellydancer View Post
    Very true too on how employers don't want to hire less desirable. Many don't know this but waitressing is notorious for only hiring pretty girls.
    I'm shocked. Shocked, I tell you.

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