Paul L. Caron
Dean




Tuesday, August 10, 2010

More on the Higher Education Bubble

Wall Street Journal:

Consumers now owe more on their student loans than their credit cards.

Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today — both federal and private — total some $829.785 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.

“The growth in education debt outstanding is like cooking a lobster,” Mr. Kantrowitz says. “The increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you’re already cooked."

If you have a child in college, or are planning to send one there soon, Craig Brandon has a message for you: Be afraid. Be very afraid.

The Five-Year Party provides the most vivid portrait of college life since Tom Wolfe's 2004 novel, I Am Charlotte Simmons. The difference is that it isn't fiction. The alcohol-soaked, sex-saturated, drug-infested campuses that Mr. Brandon writes about are real. His book is a roadmap for parents on how to steer clear of the worst of them.

Many of the schools Mr. Brandon describes are education-free zones, where students' eternal obligations—do the assigned reading, participate in class, hand in assignments—no longer apply. The book's title refers to the fact that only 30% of students enrolled in liberal-arts colleges graduate in four years. Roughly 60% take at least six years to get their degrees. That may be fine with many schools, whose administrators see dollar signs in those extra semesters.

In an effort to win applicants, Mr. Brandon says, colleges dumb down the curriculum and inflate grades, prod students to take out loans they cannot afford, and cover up date rape and other undergraduate crime. The members of the faculty go along with the administration's insistence on lowering standards out of fear of losing their jobs. ...

The Five-Year Party is a useful handbook for parents to pack when they take their teenager on a college tour, and its list of suggested questions is smart. My favorite: How many of the school's professors send their own children there? More broadly, Mr. Brandon urges parents not to assume that their child is college material and to consider community colleges and vocational schools, whose curriculums tend to focus on teaching specific job skills.

See also:

https://taxprof.typepad.com/taxprof_blog/2010/08/more-on-the.html

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Comments

Have greatly enjoyed your posts over time. Thank you for the content.
I believe that education is an investment. Students, and parents, need to carefully compare schools (tuition, housing, transportation, etc.) and find the best potential return (graduates getting jobs in their fields, average starting salaries, etc.) for the cost. Right now I worry that the ever increasing costs are outweighing the potential returns. For many young adults, this might mean that technical schools, trades, apprenticeships, etc. are a better career option. I would also suggest that unless you have a large trust fund, skip the majors with poor career options. A Fine Arts diploma might be nice, but does not usually assist in paying down your debt.
On my own website, www.personalwm.com, I have previously discussed issues relating to education as an investment.

Posted by: jmw | Aug 10, 2010 1:44:01 PM

Not to mention all the inflated grades these law schools have been giving out lately: http://lawblog.legalmatch.com/2010/07/16/law-schools-are-inflating-grades/

I went to school when getting As were hard!! Joking aside, I think both parents and students would be a lot happier with lower tuition than fake grades.

Posted by: Kerrigan Jim | Aug 10, 2010 10:36:03 AM

Thomas Sowell says it even better in his http://www.amazon.com/Inside-American-Education-Thomas-Sowell/product-reviews/0029303303/ref=dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1

"American Education" - the fact is that American Colleges and Universities and our undergraduate education systems SUCK. American students and parents are getting robbed by the Educators at all levels.

Posted by: jgreene | Aug 10, 2010 8:43:15 AM

One son going into his senior year at a top 20 university (my alma mater) - both when I was there and now there are kids who party more than they study. He'll graduate on time with a double major in biology and business. If your child is taking a sufficient course load with challenging classes and pulling good grades, you can assume they are not just going to parties.

The armed forces might be a good idea for some, but others mature just as well away at school.

Posted by: Over50 | Aug 10, 2010 7:40:38 AM

I'll echo Cavan's point about the armed services. Unless you *choose* to be a rifle-toting grunt, you're usually able to sign up for specialized training that is often excellent, followed by real-world jobs that can kickstart your career. For instance, back in my Army days I worked alongside several enlistees who attended the Army's journalism school--a 14-week crash course that seemed to cover the same territory as two years of regular journalism school--and who then spent the rest of their hitch editing newspapers, conducting interviews, and occasionally even covering a war (Vietnam). No fake internships, no student loans, and you get a paycheck besides.

Posted by: jt | Aug 10, 2010 7:30:47 AM

My daughter just finished her first year at Rice University. I have nothing but great things to say about her experience so far. Of course it is in engineering so the LAS complaints do not really apply.

Posted by: Bob | Aug 10, 2010 7:27:13 AM

You give advice to parents of students. What is your advice to college professors without tenure? Advice to freshmen thinking about academic career?

Posted by: George Volski | Aug 10, 2010 7:24:57 AM

Your son would have been better off going into the armed services. After four years in the service kids become adults and know what they want to be now that they are grown up.I know this from personal experience, three of my sons and one daughter served (recently) in the army.
They have all graduated from the university state) with no debt and they now have careers.
A better olption than college and debt is to invest the college money or start a business with the money.That would be a real education.

Posted by: cavan | Aug 10, 2010 6:53:37 AM

Instead of using their credit card, more and more students are now using student loans instead. that's good news!

Posted by: Kelly | Aug 10, 2010 6:24:25 AM

I think you have to be careful about all of this gloom-and-doom stuff. My son just completed his freshman year at U. of Pittsburgh and--while there are plenty of things I don't like--he learned a lot, participated in numerous meaningful activities, and grew a lot as a person, as well. Other parents describe similar bittersweet, but hardly unproductive, transitions. Maybe some of the kids who are wasting time in college have parents who did the same thing?

Posted by: mike livingston | Aug 10, 2010 3:33:10 AM