babbittd
08-16-08, 05:24 PM
Below you'll find excerpts from the book Generation Debt by Anya Kamenetz, published in 2006 with just a couple of my clarifications in parenthesis. There is some valuable data in the book amongst personal accounts from young debtors and some other stuff.
She puts together quite a vicious circle -
way too many people attend four-year institutions chasing a lottery for jobs after graduation that will actually afford them to become economically independent, StateGov and FedGov grants and funding levels have decreased, private borrowing has skyrocketed, tuition has skyrocketed all around, only part-time jobs available to current students do not afford ability to pay for education, etc. FIRE economy fingerprints are all over this mess.
*********
College tuition has grown faster than inflation (author uses official FedGov numbers) for three decades, and faster than family income for the past fifteen years.
Between 1994 and 2005, the total volume of federal student loans rose 249 percent after inflation, to over $61 billion. Two-thirds of four-year students are graduating with loan debt, an average of up to $19,200 in 2004 and growing every year.
The nationwide high school graduation rate peaked in 1970 at 77 percent. It was around 67 percent in 2004.
...in 1970, the nation's largest private employer was General Motors. They paid an average wage of $17.5 an hour in today's dollars. The largest (private) employer in the postindustrial economy is Wal-Mart. Their average wage? Eight dollars an hour.
McDonald's is the nation's largest youth employer; workers under twenty-four make up nearly half of the food service, department store and grocery story workforce nationwide.
In 1981, 45 percent of all federal undergraduate student aid dollars came in loans, 52 percent in grants. By the end of the 1990s, the proportion was more than reversed; loans made up 58 percent of federal financial aid, and grants just 41 percent.
Tuition at public colleges, where 76 percent of American students are enrolled, went up 59 percent after inflation between 1994 and 1995, and 2004 and 2005; median family income went up just 2 percent.
...the "echo boom", an upturn that will lead to the largest high school class in history in 2009.
One major factor is the decline in state appropriations to public college and universities. The late '90s brought fiscal crises to forty-one states;...tuition hikes tracked closely with downturns in local economies. Higher education was known as the "budget balancer" for states cutting essential services.
New expenses, especially for technology, have contributed to price hikes.
The factor in college prices that probably gets the most attention is spending caused by increasing competition among schools.
Besides paying for new perks, pricing itself can be deployed as a marketing technique.
...an inflated price leaves more room to give incentive discounts...
During the 1990s, tuition grants themselves became the fastest growing expenditure for most four-year private colleges and universities. This phenomenon justified a masterpiece of circular reasoning; increased financial aid appropriation is driving the explosion in tuition prices.
Enrollment in higher education doubled from 7 million in 1970 to 14 million in 2002, while the total population of young people barely budged from 36 to 39 million.
...up to half of these students don't persist to graduation, but they stay enrolled long enough to cause overcrowding at state universities nationwide.
Colleges alone did not cause the student loan explosion; it would not have been possible without a change in federal policy (as I've learned, what debt explosion isn't?). The sixth reauthorization of the HEA...happened just as Bill Clinton first took office in 1992. President Clinton chose not to raise the maximum Pell Grant, the largest federal student grant program...he raised student loan maximums, made subsidized federal loans available to higher-income families for the first time, and created a new unsubsidized loan program for students of any income...Federal student loan borrowing climbed by 50 percent in just the new two years after 1992, and doubled by the end of the decade.
Pell Grants and other aid programs...are not automatically tied to inflation or to college prices and must be adjusted each the time acts are reauthorized. In 1976, the maximum Pell Grant covered 72 percent of costs at the average four-year public school; in 2004 it paid just 36 percent...
The student loan system currently does a great job of delivering billions in profits to lenders while amply protecting them from risk through generous federal subsidies and guarantees (much, much more on that topic here: Pilfered Dreams: The Story of Student Loans and Sallie Mae (http://www.itulip.com/forums/showthread.php?t=4649)).
After a decade that saw a 47 percent jump in public tuition in constant dollars, the Senate held hearings on the "college cost crisis" in 2003. They warned that half of all students who qualify for college cannot afford a four-year institution.
Except in a small number of highly specialized "career education" programs, it (a high school diploma) prepares you for very few jobs and now makes only a small difference in average employment and earnings...(AND)...two-thirds of U.S. high school collect a diploma, but less than half are actually prepared for college-level work, as measured by their scores on entrance exams.
"If you go back to the '60s, in the grocery industry for example, three-fourths of the jobs were career, full-time," Tannock (Stuart Tannock author of Youth at Work) says. "About one-fourth were part-time - students, moms, people not fully in the workforce. Now that's completely flip-flopped. The majority of the jobs are part-time, and employers are explicitly thinking of young people as they design these jobs."
"In industry after industry, as unionized high-wage jobs start to disappear, more and more young folks are turning toward higher education as the only way out," Tannock says. "One big problem is that...no more than 30 percent of jobs are going to require a college education. So what we have now is a essentially a lottery system. A lot of people are going into debt for college, and the promise is illusory."
In 2002, according to the BLS, 26.9 of the workforce needed a college degree or more to do their jobs. This share will rise by just one percentage point by 2012, says the progressive nonprofit Economic Policy Institute.
(tie-in to housing bubble) Between 1995 and 2004, according to the U.S. census, the percentage of people under age twenty-five who owned homes leapt 59 percent, while the percentage among those twenty-five to twenty-nine rose 17 percent.
Kamenetz, A. (2006). Generation Debt. New York: Riverhead Books.
She puts together quite a vicious circle -
way too many people attend four-year institutions chasing a lottery for jobs after graduation that will actually afford them to become economically independent, StateGov and FedGov grants and funding levels have decreased, private borrowing has skyrocketed, tuition has skyrocketed all around, only part-time jobs available to current students do not afford ability to pay for education, etc. FIRE economy fingerprints are all over this mess.
*********
College tuition has grown faster than inflation (author uses official FedGov numbers) for three decades, and faster than family income for the past fifteen years.
Between 1994 and 2005, the total volume of federal student loans rose 249 percent after inflation, to over $61 billion. Two-thirds of four-year students are graduating with loan debt, an average of up to $19,200 in 2004 and growing every year.
The nationwide high school graduation rate peaked in 1970 at 77 percent. It was around 67 percent in 2004.
...in 1970, the nation's largest private employer was General Motors. They paid an average wage of $17.5 an hour in today's dollars. The largest (private) employer in the postindustrial economy is Wal-Mart. Their average wage? Eight dollars an hour.
McDonald's is the nation's largest youth employer; workers under twenty-four make up nearly half of the food service, department store and grocery story workforce nationwide.
In 1981, 45 percent of all federal undergraduate student aid dollars came in loans, 52 percent in grants. By the end of the 1990s, the proportion was more than reversed; loans made up 58 percent of federal financial aid, and grants just 41 percent.
Tuition at public colleges, where 76 percent of American students are enrolled, went up 59 percent after inflation between 1994 and 1995, and 2004 and 2005; median family income went up just 2 percent.
...the "echo boom", an upturn that will lead to the largest high school class in history in 2009.
One major factor is the decline in state appropriations to public college and universities. The late '90s brought fiscal crises to forty-one states;...tuition hikes tracked closely with downturns in local economies. Higher education was known as the "budget balancer" for states cutting essential services.
New expenses, especially for technology, have contributed to price hikes.
The factor in college prices that probably gets the most attention is spending caused by increasing competition among schools.
Besides paying for new perks, pricing itself can be deployed as a marketing technique.
...an inflated price leaves more room to give incentive discounts...
During the 1990s, tuition grants themselves became the fastest growing expenditure for most four-year private colleges and universities. This phenomenon justified a masterpiece of circular reasoning; increased financial aid appropriation is driving the explosion in tuition prices.
Enrollment in higher education doubled from 7 million in 1970 to 14 million in 2002, while the total population of young people barely budged from 36 to 39 million.
...up to half of these students don't persist to graduation, but they stay enrolled long enough to cause overcrowding at state universities nationwide.
Colleges alone did not cause the student loan explosion; it would not have been possible without a change in federal policy (as I've learned, what debt explosion isn't?). The sixth reauthorization of the HEA...happened just as Bill Clinton first took office in 1992. President Clinton chose not to raise the maximum Pell Grant, the largest federal student grant program...he raised student loan maximums, made subsidized federal loans available to higher-income families for the first time, and created a new unsubsidized loan program for students of any income...Federal student loan borrowing climbed by 50 percent in just the new two years after 1992, and doubled by the end of the decade.
Pell Grants and other aid programs...are not automatically tied to inflation or to college prices and must be adjusted each the time acts are reauthorized. In 1976, the maximum Pell Grant covered 72 percent of costs at the average four-year public school; in 2004 it paid just 36 percent...
The student loan system currently does a great job of delivering billions in profits to lenders while amply protecting them from risk through generous federal subsidies and guarantees (much, much more on that topic here: Pilfered Dreams: The Story of Student Loans and Sallie Mae (http://www.itulip.com/forums/showthread.php?t=4649)).
After a decade that saw a 47 percent jump in public tuition in constant dollars, the Senate held hearings on the "college cost crisis" in 2003. They warned that half of all students who qualify for college cannot afford a four-year institution.
Except in a small number of highly specialized "career education" programs, it (a high school diploma) prepares you for very few jobs and now makes only a small difference in average employment and earnings...(AND)...two-thirds of U.S. high school collect a diploma, but less than half are actually prepared for college-level work, as measured by their scores on entrance exams.
"If you go back to the '60s, in the grocery industry for example, three-fourths of the jobs were career, full-time," Tannock (Stuart Tannock author of Youth at Work) says. "About one-fourth were part-time - students, moms, people not fully in the workforce. Now that's completely flip-flopped. The majority of the jobs are part-time, and employers are explicitly thinking of young people as they design these jobs."
"In industry after industry, as unionized high-wage jobs start to disappear, more and more young folks are turning toward higher education as the only way out," Tannock says. "One big problem is that...no more than 30 percent of jobs are going to require a college education. So what we have now is a essentially a lottery system. A lot of people are going into debt for college, and the promise is illusory."
In 2002, according to the BLS, 26.9 of the workforce needed a college degree or more to do their jobs. This share will rise by just one percentage point by 2012, says the progressive nonprofit Economic Policy Institute.
(tie-in to housing bubble) Between 1995 and 2004, according to the U.S. census, the percentage of people under age twenty-five who owned homes leapt 59 percent, while the percentage among those twenty-five to twenty-nine rose 17 percent.
Kamenetz, A. (2006). Generation Debt. New York: Riverhead Books.