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Nope, not referring to godzilla, robots, 2012 or laserbeams!.... Something much more mundane but just as serious. Student debt.
Quote;
"It’s been called a debt bomb waiting to explode. The next bubble on par with the subprime mortgage mess. A crisis that’s taking a toll on an already-weak economy.
Whichever scary word you prefer, there’s no doubt that student-loan debt looms as a major long-term problem facing the country’s population of college graduates and beyond. The economy might be seeing a modest recovery of late, but there doesn't seem to be any relief for this pocket of borrowers.
There’s no shortage of data that tell the story.
Outstanding student loan balances rose to $956 billion as of Sept. 30, an increase of $42 billion from the second quarter of 2012, according to a Federal Reserve Bank of New York November report on household debt. And that’s an 80% increase from five years ago, when total student loan debt totaled $530 billion. (Meanwhile, in October, the Consumer Financial Protection Bureau clocked outstanding student loan debt in the U.S. at $1 trillion.)" -
Source- http://finance.yahoo.com/news/scope-of-student-debt-crisis-holds-generation-back-221008826.html
So here's the intuitive problem for me, the U.S. is continually going to trend toward a service side economy, especially for White Americans, then it will trickle down to Hispanics and some AA's and NA (Natives) here and there. Everyone wants a piece these days instead of settling for lower end jobs. This is logical, and completely rational so no one needs to feel bad about it.
What's worse is that this collegiate demand is also contributed towards by corporations and small business who are increasingly cutting training programs and in house education off towards FULL degrees to save a buck, and are simply demanding higher education for even mundane jobs (like machine shop ect) so collegiate demand isn't going to end soon. So here's the question, what are some ideas to resolve this? There are no easy answers so I hope to see some hard answers 
Someone pointed to the problem of the degree shoppers/consumers who crowd the degree field for no practical purpose other than to go to school, so self blame must be evident and pointed out in education somehow.
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dont have enough grasp of the economic theories to give a rationale answer.
All I know is that college education system doesn't make sense. Go out and enrich your lives with education and become skilled but be buried in debt.
Then again, a lot of these debts have a high correlation with the degree and field chosen.
I know people who go get loans, student loans mind you, and use that money to go pay off a car, trips to Europe. I know people who have degrees in English and some bs in business and wonder why they cant land a job or hold a non-minimum wage job. People have this wrong illusion that if you hold this magical paper called degree then you are entitled to some 6 figure salary despite the quality of the degree...
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If this continues, then in the future either:
a. People will stop going to University. University will once again be for the rich, outstanding students, legacy, ect, and most people will probably go to tech schools to get a degree.
b. Government gets it's shit together and improves the education system of this country.
I hope b.
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On December 12 2012 10:12 heroyi wrote:
dont have enough grasp of the economic theories to give a rationale answer.
All I know is that college education system doesn't make sense. Go out and enrich your lives with education and become skilled but be buried in debt.
Then again, a lot of these debts have a high correlation with the degree and field chosen.
I know people who go get loans, student loans mind you, and use that money to go pay off a car, trips to Europe. I know people who have degrees in English and some bs in business and wonder why they cant land a job or hold a non-minimum wage job. People have this wrong illusion that if you hold this magical paper called degree then you are entitled to some 6 figure salary despite the quality of the degree...
I agree, some people just go to college for the loans or to put off working on the farm or continuing the job at Wal Mart (who can blame them lol?). Fault certainly must attributed towards some of the degree consumers there taking an easy or BS art/business/architecture (sorry man.. gotta start somewhere) degrees. Some of these people earning these degrees don't know any better, some do but don't think far ahead of personal or aggregate societal consequences.
Perhaps then part of the solution is absolving or alleviating debt in degree areas that are important economically for the foreseeable future. However that too runs risk of over saturating those degree areas and putting strain on colleges nation wide to handle the incoming demand of those students switching over.
On December 12 2012 10:15 FeUerFlieGe wrote:
If this continues, then in the future either:
a. People will stop going to University. University will once again be for the rich, outstanding students, legacy, ect, and most people will probably go to tech schools to get a degree.
b. Government gets it's shit together and improves the education system of this country.
I hope b.
Those may be natural or even desirable consequences but it does nothing to defuse the bomb of debt. It's there, waiting....
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Pretty logical progression really. Death of blue collar jobs that afford middle class style life style ---> growing importance of college degree as a signal for employers 'look, iam more qualified' ---> growing demand for college ---> growing exploitation of people's hope for a better life by colleges to jack up tuition --> dilution of just a generic college degree --> increased competition for 'elite' degrees ---> higher costs all around.
As the American economy continues to remove middle class style jobs and income inequality continues to grow and accrue to the top there will be an even higher premium to enter that class.
Anyway, here is a good article on Harvard's tuition costs in the context of Harvard's endowment: http://www.theamericanconservative.com/articles/paying-tuition-to-a-giant-hedge-fund/
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One of the problems is no accountability for people's majors. Really, anyone majoring in art history/English/ liberal arts better have a really good fucking idea what they're getting themselves into. Another issue is EVERYONE thinking they need to go to college. There is a stigma attached with not having a degree, and it's disturbing. We need to adjust our thinking to believe that trade-schools are just as worthy of an investment of time as a degree. Owning your own plumbing business is not an awful thing, and at this point plumbers are doing better than most 9-5 desk jockeys.
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On December 12 2012 10:16 forgottendreams wrote:Show nested quote +On December 12 2012 10:12 heroyi wrote:
dont have enough grasp of the economic theories to give a rationale answer.
All I know is that college education system doesn't make sense. Go out and enrich your lives with education and become skilled but be buried in debt.
Then again, a lot of these debts have a high correlation with the degree and field chosen.
I know people who go get loans, student loans mind you, and use that money to go pay off a car, trips to Europe. I know people who have degrees in English and some bs in business and wonder why they cant land a job or hold a non-minimum wage job. People have this wrong illusion that if you hold this magical paper called degree then you are entitled to some 6 figure salary despite the quality of the degree... I agree, some people just go to college for the loans or to put off working on the farm or continuing the job at Wal Mart (who can blame them lol?). Fault certainly must attributed towards some of the degree consumers there taking an easy or BS art/business/architecture (sorry man.. gotta start somewhere) degrees. Some of these people earning these degrees don't know any better, some do but don't think far ahead of personal or aggregate societal consequences. Perhaps then part of the solution is absolving or alleviating debt in degree areas that are important economically for the foreseeable future. However that too runs risk of over saturating those degree areas and putting strain on colleges nation wide to handle the incoming demand of those students switching over.
See now you sound like Rick Scott, gov. of FL, who wanted to inject more into the STEM classes and kill off other "non-important" majors like anthro, arts, etc...
People dont realize you CAN get a job with any degree but they don't realize that if you have/chose anthropology major...don't expect to have:
1) a high paying job out of school
2) a salary in that field in which that will comfortably help pay off your living conditions AND debts
Instead, to get a 6 figure salary with an Anthropology degree you gotta work your ASS off to get there. Because those are usually reserved in very high positions in that job field.
Again, people don't understand when you have, for example, a business degree you aren't going to be using that degree as a ticket to riches. Instead you have to use the education you experienced while obtaining the degree to help you go take the initiative (working on resume, job experiences, insight to start a business etc...) NOT "oh hi, i got a bachelor in business, can i has 40000000000 dollar paycheck."
edit:
On December 12 2012 10:28 Klipsys wrote:
One of the problems is no accountability for people's majors. Really, anyone majoring in art history/English/ liberal arts better have a really good fucking idea what they're getting themselves into. Another issue is EVERYONE thinking they need to go to college. There is a stigma attached with not having a degree, and it's disturbing. We need to adjust our thinking to believe that trade-schools are just as worthy of an investment of time as a degree. Owning your own plumbing business is not an awful thing, and at this point plumbers are doing better than most 9-5 desk jockeys.
Agree with everything said here.
People don't know how to feel when someone goes on about how they dont have formal education like college but yet do well financially cause of their job they own and run. It is always funny since education is so highly valued (which it should be however people shouldn't be/feel berated for not going to college)
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Can someone with a good grasp on economic theory attempt to describe how this bubble would burst? The subprime mortgage crisis dealt with tangible assets such as houses, cars, land, etc and massive overleverization, but this bubble does not seem to have tangible assets aside from an item that would occasionally be required to be put down as a security for mortgage (or loan in this case).
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On December 12 2012 10:31 Skeltons wrote:
Can someone with a good grasp on economic theory attempt to describe how this bubble would burst? The subprime mortgage crisis dealt with tangible assets such as houses, cars, land, etc and massive overleverization, but this bubble does not seem to have tangible assets aside from an item that would occasionally be required to be put down as a security for mortgage (or loan in this case).
My body is ready for some economically inclined members here like ParallelUniverse or JohnnyBno who seem to be proficient on the subject but just have philosophical differences (saying that very lightly).
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On December 12 2012 10:30 heroyi wrote:
Again, people don't understand when you have, for example, a business degree you aren't going to be using that degree as a ticket to riches. Instead you have to use the education you experienced while obtaining the degree to help you go take the initiative (working on resume, job experiences, insight to start a business etc...) NOT "oh hi, i got a bachelor in business, can i has 40000000000 dollar paycheck."
But there are degrees like that. Any degree from an elite university ---> easy path to consulting or banking [well, less so now] that gets you a 75-125k job that does not use anything you learned in the previous 4 years. Law degree from an elite university does the same thing. The only thing that I used from law school at work was the existence of law-search engines.
But maybe people from the hard science side can speak of their experience re: using the things they've learned in school as a valuable job skill vs. the fact that they went to school is the reason they got a job.
Learning vs. Guild-like-entry-level-gate-keeping.
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On December 12 2012 10:42 Sub40APM wrote:Show nested quote +On December 12 2012 10:30 heroyi wrote:
Again, people don't understand when you have, for example, a business degree you aren't going to be using that degree as a ticket to riches. Instead you have to use the education you experienced while obtaining the degree to help you go take the initiative (working on resume, job experiences, insight to start a business etc...) NOT "oh hi, i got a bachelor in business, can i has 40000000000 dollar paycheck."
But there are degrees like that. Any degree from an elite university ---> easy path to consulting or banking [well, less so now] that gets you a 75-125k job that does not use anything you learned in the previous 4 years. Law degree from an elite university does the same thing. The only thing that I used from law school at work was the existence of law-search engines. But maybe people from the hard science side can speak of their experience re: using the things they've learned in school as a valuable job skill vs. the fact that they went to school is the reason they got a job. Learning vs. Guild-like-entry-level-gate-keeping.
Usually this happens if you choose a specific business degree. The example I use is of one where the majority of people get a very general and broad degree. Also it depends on the extracurricular things they have achieved (internships etc...) and even connections (a lot of times if you have connections and hold a degree from somewhere reputable, you can easily get a nice job like you described above).
I am talking about the people who get a degree in who knows what and do the bare minimum (strictly does only classes and graduate). These people will most likely not land a nice job that they keep envisioning themselves.
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On December 12 2012 10:55 heroyi wrote:Show nested quote +On December 12 2012 10:42 Sub40APM wrote:On December 12 2012 10:30 heroyi wrote:
Again, people don't understand when you have, for example, a business degree you aren't going to be using that degree as a ticket to riches. Instead you have to use the education you experienced while obtaining the degree to help you go take the initiative (working on resume, job experiences, insight to start a business etc...) NOT "oh hi, i got a bachelor in business, can i has 40000000000 dollar paycheck."
But there are degrees like that. Any degree from an elite university ---> easy path to consulting or banking [well, less so now] that gets you a 75-125k job that does not use anything you learned in the previous 4 years. Law degree from an elite university does the same thing. The only thing that I used from law school at work was the existence of law-search engines. But maybe people from the hard science side can speak of their experience re: using the things they've learned in school as a valuable job skill vs. the fact that they went to school is the reason they got a job. Learning vs. Guild-like-entry-level-gate-keeping. Usually this happens if you choose a specific business degree. The example I use is of one where the majority of people get a very general and broad degree. Also it depends on the extracurricular things they have achieved (internships etc...) and even connections (a lot of times if you have connections and hold a degree from somewhere reputable, you can easily get a nice job like you described above). I am talking about the people who get a degree in who knows what and do the bare minimum (strictly does only classes and graduate). These people will most likely not land a nice job that they keep envisioning themselves.
I guess thats true. But when you mean bare minimum, do you also mean get crap grades? Again, I know plenty of people who did 'the bare minimum' of just doing decently in school and getting high paying jobs for just showing up. Of course I suppose they did work hard to get into those elite universities in the first place but I always thought that was strange about the world -- that the decisions you make as 16-17 year old will have staggering ramifications for your earning potential just because you got into Brown or Harvard over Michigan or Cornell.
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People holding degrees fared significantly better during the recession than those without:
![[image loading]](http://2.bp.blogspot.com/_pMscxxELHEg/S5UkLdAl0eI/AAAAAAAAHtQ/a4ItZ6m9UcM/s320/UnemploymentEducation.jpg)
I agree with the sentiment that going 80,000 in debt for an English degree doesn't make any sense. Of course, English majors aren't finance majors for a reason. Nevertheless, people holding a degree on average will make significantly more income over the course of their life. I don't see how the a "bubble" could burst. High debt levels that are not dischargable in bankruptcy will hinder consumer spending, but not wipe out billions of dollars in wealth. Loans can now have longer payment structures, which lowers monthly bills and provides slightly more relief through inflation. Banks betting on students still have one of the safest investments around (compared to the lauded small business for example, which often fail).
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What do you expect? They live in a society which rewards debt and irresponsible financial behavior. Companies which bet and leveraged too much get bailed out when things get rough, countries rack up debt and get bailed out when their insolvency threatens international markets. Government will pay for your food, housing, etc. if things get too rough for you. As the OWS crowd gains market share, the possibility of college debt forgiveness continues to rise. Not to mention our monetary policy incentivizes debt over savings. If things ever get bad enough, just tell your creditors "sorry, I'm not paying you." Likely they will give in and allow you to pay pennies on the dollar, or you will be in a big enough crowd that some government program will step in to help people out, like they did with home foreclosures.
If you aren't getting in on the debt racket in modern America, you are a fool imo. I know I am a fool at least. I got my AA at a community college, working towards a bachelor's now, and I don't have a single penny of debt yet. There are tons of cheap schools out there, but people have been brainwashed to think their life will be shit if they don't go ivy league.
This is where we blame the free market for college being expensive and call for more regulation, which was the cause of high tuition and costs in the first place.
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On December 12 2012 10:31 Skeltons wrote:
Can someone with a good grasp on economic theory attempt to describe how this bubble would burst? The subprime mortgage crisis dealt with tangible assets such as houses, cars, land, etc and massive overleverization, but this bubble does not seem to have tangible assets aside from an item that would occasionally be required to be put down as a security for mortgage (or loan in this case).
Bubbles burst when the assets turn out not to be worth what you thought they were worth. In this case, that will happen when students start defaulting on their debt, die without paying it, and so on. At that point the asset (i.e. the debt held by the entity which gave the loan) will be devalued and you will have a financial crisis if a lot of this happens at once.
The value of the student loan is predicated on that student being able to pay it back sometime in the future. If they can't, it has no value.
edit: didn't know you couldn't default on student loans. I tried 
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I don't know a single person who majored in something "worthwhile", got a good GPA, went to career fairs, and started job hunting DURING their college career that did not get a job starting at least at ~$50,000.
Not a single person. Why? Oh yeah, because I we kept up to date with each other because we continually saw each other at all the interviews out there. Interviews aren't hard to obtain whatsoever, if you know what you're doing.
Problem is there are too many student morons out there that think they shouldn't even bother looking until they graduate. Most people go to university to get a better job. Don't you think you should have fucking investigated it while you were at school, paying so much money and getting into so much debt? There's over 2,500 jobs on my college board site being offered. I've asked countless people how many of those jobs they applied to while they were still an undergrad (that didn't have jobs while they graduated). Every answer has been under 15 applications.
Go fucking figure you never got a job, and now you're scrambling and applying to everything *after* you're done.
You should not have excessive amounts of student loans if you saved money prior to college, worked 20 hours a week during college, and 40 hours a week during summer. There's also the community college option. And rent can be dirt cheap if you live with other people (split with others I've paid $250 at one place and $375 on another, at a beach front in a ritzy area).
If you don't have a job, are borrowing an excessive amount of money, etc. then you better not have your own damn room.
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United States24645 Posts
On December 12 2012 11:35 sam!zdat wrote:
In this case, that will happen when students start defaulting on their debt, die without paying it, and so on.
Well you can't default on student debt, and most students don't die for many decades after they go to college, so this doesn't seem like a looming bubble to me.
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On December 12 2012 11:47 micronesia wrote:Show nested quote +On December 12 2012 11:35 sam!zdat wrote:
In this case, that will happen when students start defaulting on their debt, die without paying it, and so on. Well you can't default on student debt, and most students don't die for many decades after they go to college, so this doesn't seem like a looming bubble to me.
Well, with any luck, that won't be the case with more fair student credit considerations.
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On December 12 2012 10:04 forgottendreams wrote:Someone pointed to the problem of the degree shoppers/consumers who crowd the degree field for no practical purpose other than to go to school, so self blame must be evident and pointed out in education somehow.
It's easy (and lazy) to blame consumers, but consumers aren't the ones who set up the system.
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Maybe they need to implement a co-op system like at UWaterloo.
Co-op helps considerably (depending on program) with student expenses from my experience. Basically I haven't had to take a student loan since my first year (they actually wouldn't give me any loans because I was making enough money from my co-op job). I made enough from my co-op job to cover rent and tuition, plus have a good amount to spare [which means I can pay off my debt as soon as I graduate]. My co-op sequence does 4 months work, 4 months study, 4 months work, 4 months study, etc. so the 4 months you work covers (or helps) with the expenses from the 4 months of study.
Edit: It also gives 2 years of work experience before you graduate!
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EPT
