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No Income? No Problem! How the Gov’t Is Saddling Parents with College Loans They Can’t Afford

As college costs continue to climb, families are turning to federal Parent Plus loans to fill the gap. But with no checks on their ability to repay, many parents are left overburdened, and others set up for failure.

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Stephen

Oct. 4, 2012, 9:23 p.m.

Sub-prime student loans crisis?

John

Oct. 5, 2012, 9:03 a.m.

The cynic in me always relates student loans to the manorial serf system.  A free man, in a time of need, goes to the lord of the local manor for protection.  In exchange, he’s bound as a servant to repay the debt.  On paper, he’s free, and he’s allowed to have his own income, but paying rent (to the manor) and interest not only makes the servile state permanent, but creates a debt that’s inherited by the children.

Here, we have a (social) demand on parents that drives them to banks to deal with skyrocketing costs, in order to “get an education” for their children that doesn’t get them near any jobs.

Ideally, I’m just being paranoid, but keep in mind that the foreclosure binge left a lot of former homeowners as permanent tenants, with one of the big plans to turn foreclosed homes into rental properties.

Anyway, there are two things really worth briefly mentioning, in this context.

First, as high as the price rises, remember that the instructors are generally getting paid one student’s fee for the class.  The rest of that money?  In a well-run school (anyplace we’ve all heard of), it doesn’t go to operations.  You run a school off of donations and grants, not tuition.  In all the years associated with my school, I haven’t the foggiest idea of where my students’ tuition goes.  It’s not to me and not to keeping the lights on, though, which tells me you could probably safely lop a zero off the end of the price and nobody would notice the difference.

Second, I won’t say that the end of formal college is over, but I will point out that there are only two things a college can give you, and neither is “an education.”  A college can offer you motivation, by putting you in groups of highly-motivated, competitive students and deadlines to keep you on track.  A college can also offer you personal and professional networking opportunities, by putting you in classrooms with your future coworkers and putting (ideally) experienced professionals up at the board.

But “an education”?  In almost every field, that’s free.  There’s very little a professor can tell you that can’t be found and read more easily at a library, especially at big schools with formal curricula.  There are very few laboratory experiences that you can’t replicate at home, today, from chemistry to manufacturing.  Advice from professionals?  If you meet some professionals and show an interest in their field, they’ll spill.  Or find them ranting on the Internet, because they’re on YouTube, blogs, and Twitter.

What horrifies me about colleges is that, as they see competition—free competition, like Khan Academy and other complete, curated online courses—their reaction is NOT to enhance what they’re good at (networking and motivation), it’s…to offer free online courses.  Competing on price with free is a good way to lose business, so it’s going to lead to an increase in tuition to the paying customers.

The upshot is that prices are climbing for less and less, with fewer job prospects and more noses in your business who want you to sign away your life.  I wouldn’t change my college experience, but I can’t say I’d recommend it to anybody today.

It’s a shame, and the government using taxpayer money to enable this is a serious problem.

Joe P

Oct. 5, 2012, 9:33 a.m.

I have to say I see this as a non-system issue. This has to do with someone who makes $25k a year taking out a $17k loan. I grew up not poor, but at the lower end of middle class. My father worked in construction, which provided a good income, but not steady work. Therefore, you budgeted, first come necessities, then savings, then splurges.

Should the program have a cap on borrowing, yes, but I think that should be a combination of current income, and projected income based upon the education being sought. If you are poor, and are studying to become a doctor you should have a higher cap available to you than someone from the same circumstances studying business management.

I think in this situation, if she could not afford to go to NYU, then either she or her mother should have made the adult decision to enroll in CUNY from the start. Everyone should have the opportunity to get a higher education, not everyone needs to go to Yale.

This is the same situation as the recent housing bubble, where people earning $50k a year took out loans and bought houses for $600k+. Purchasing decisions should be made with a firm grasp of reality, not based on wants.

And if you want to know, I put myself through school earning a degree from State University of New York (SUNY).

John

Oct. 5, 2012, 10:12 a.m.

Joe, things have changed since when we passed through (I’m guessing it’s been a few years for you).  The high schools push the kids into thinking that nothing but a “name-brand” school is worthwhile.  They feel horrible that they can “only” manage to get into a school like Stonybrook (which, y’know, has Nobel laureates on the faculty and a research hospital on campus—worthless place, right?).

I don’t know where that comes from, but it’s there.  My coworkers tell me their kids are going through it, and I hear the same from the teenaged supermarket clerks and restaurant staff.  And the parents get the same pressure, that sending their kids to (gasp!) community college is condemning them to a life of mediocrity, somehow.

It’s easy to say “just make better decisions,” but there’s substantial pressure upstream to deal with.  And that’s probably not very surprising, considering how much money is at stake to fleece the families of.  Who wants a few thousand dollars to go to the state coffers when ten times that could go to a private corporation, right…?

To me, the solution is obvious:  It’s cheap to teach people (you need chairs and an instructor), and there’s a clear need for cheaper colleges to bleed the high end dry.  It’s one of my many pipe dreams to make that happen, one day, since—as I said—the first student enrolled pays for the professor.

HENRY A. TURNER, ATTORNEY AT LAW

Oct. 5, 2012, 10:58 a.m.

Notwithstanding the Department of Education making those loans without proper underwriting, the Parents signing up for these misguided loan programs so the Children can get a degree in Music or Art is outrageous. Once they graduate there are no jobs available. These folks need to go to 2 year Technical Colleges where there are good jobs available upon graduation.

Kim Andrews

Oct. 5, 2012, 11:05 a.m.

I’m drawn to this statement:

“If we leave a huge gap in the financial-aid package, families could reach the wrong conclusion that they cannot afford to send their children to this institution,” says Munier, who is also chair-elect of the National Association of Student Financial Aid Administrators. “The other side,” he says, “is we package in a loan they can’t afford, and they make a bad judgment and put themselves into debt they can’t manage. You can second-guess either decision.”

How is it both the “wrong conclusion” that a family can’t afford a particular school AND a “bad judgment” to borrow the money to fill the gap? That kind of doubletalk adds to the confusion.

Any decision you make about your kids is inherently an emotional decision, and it seems to me that schools are taking advantage of both the high levels of emotion and the ease of the Parent Plus borrowing. I would be interested in knowing if the increased parent borrowing since 2000 is corresponded by a decrease in actual real aid like grants (I like to call them “tuition discounts”) from the schools. Using a car-buying analogy, why wouldn’t the schools charge sticker price for their education if all the prospective buyers can afford to pay it, thanks to the easy financing?

I looked back over our records and in every case for 3 children at not only the 3 schools they wound up attending, but also for the initial package offered by their 1st year prospect schools, ALL the loans were packaged as part of “financial aid.” And that’s all since 2000.

I don’t blame the folks who wind up borrowing Parent Plus money they can’t afford anymore than I blame those who wound up with ARM mortgages they couldn’t pay. Both situations involve emotional decisions, complicated forms and contracts, and very little objective counseling. Here’s the thing you want more than anything and here’s this expert (your government in both cases) saying “YES” you can have it…it’s easy to see how folks are misled.

Mr. Munier et al, you need to leave the “huge gap” on your offers of financial aid, or else lose the word “aid.”

David R Yale

Oct. 5, 2012, 11:16 a.m.

Henry Turner, are you suggesting that this country is too poor to allow for careers in the arts, but technical careers are OK? In the richest nation on earth, we should demand that our future artists and musicians become technicians because there is no funding for arts jobs? What a grim future awaits us with no music and no art!

Walter D. Shutter, Jr.

Oct. 5, 2012, 11:32 a.m.

I was wondering whether anyone (other than myself, of course) has noticed a similarity between the financing of our current health care system and the financing of post highschool education.  No one really cares about the costs because, in the case of health care, a third party pays the bulk of the costs while, in the case of higher education, loans are readily available and the payment thereof is effectively kicked down the road.
In the end, providers of goods and services will always charge what the market will bear. Subsidies are not the answer.

HENRY A. TURNER, ATTORNEY AT LAW

Oct. 5, 2012, 11:43 a.m.

TO: Mr. David Yale. Thanks for the response. All that I’m stating is the reality of our Free Market Capitalist Economy (particularly in these days of multi-trillion dollar government debt) that public funding of artists and musicians has effectively vanished. Further, even in the best of times only the the top few per cent could actually make a living in these fields. To add to that getting sold a bill of goods on these Student Loans is outrageous.

Kris Alman

Oct. 5, 2012, 11:46 a.m.

Sallie Mae proudly compares their loan offerings with this federal program. https://www.salliemae.com/student-loans/smart-option-student-loan/parent-plus-loan-comparison/

Sallie Mae benefits from ALEC supporter Lumina Foundation.
http://www.sourcewatch.org/index.php?title=Lumina_Foundation_for_Education

Chartered in 1972, Sallie Mae was a public-private partnership that became fully privatized in 1995. Lumina is a “conversion foundation” seeded by Sallie Mae stock that boomed after the dot-com bubble burst.

At the April 2012 annual meeting of the American Educational Research Organization, Cassie Hall and Scott L Thomas argued that Gates and Lumina “have taken up a set of methods—strategic grant-making, public policy advocacy, the funding of intermediaries, and collaboration with government—that illustrate their direct and unapologetic desire to influence policy and practice in numerous higher education arenas.”
http://www.insidehighered.com/news/2012/04/13/study-assesses-how-megafoundations-have-changed-role-higher-ed-philanthropy

So how does the government “compete”?

With another equally crummy product, engineered by the “free market.” All “consumer driven,” of course.

Gintaras

Oct. 5, 2012, 11:51 a.m.

And the funny thing is that a plumber makes more money than these lib arts grads. And has better job security to boot.

John Wright

Oct. 5, 2012, 12:17 p.m.

To David Yale:

I believe we need to get throw the “the richest nation on earth” saying into the dumpster as it implies that the USA can afford to do “something” but the median American household hardly views themselves as wealthy.

At the median net worth level, the median American family is not worth much, the median net worth of all households fell to $77,300 from $126,400 in 2007. see http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html

Note this is at the household level, not at the individual level and it includes home equity, personal property value and financial assets.

It is no wonder that the median level household struggles with student debt.

The “must go to an expensive college to succeed in American life” accepted wisdom could be as financially damaging as is the “can’t go wrong by buying a house” due to the non-dischargeability of student loans.

We all know successful college dropouts such as Jobs, Wozniak and Bill Gates, that seized the opportunities they saw rather than finish their degrees.

Perhaps America lacks suitable opportunities for the young and encouraging more students to get expensive degrees isn’t going to help with this.

Maybe we need to downsize the college degree industry, along with the military and financial industries to move America to a better economy?

Pgathome

Oct. 5, 2012, 12:40 p.m.

The whole education system has bastardized the English language and have a new paradigm that they follow that would not be accepted anywhere except in these institutions. Let me explain. First, these colleges have basterdise the term “non-profit” when Ishould be very hard pressed to name companies that are sitting on 15-25 billion dollar surpluses, oops, endowments, in the private industry. Also, their definition, as an example, of financial aid is odd to say the least. They actually state that they are providing aid if you take a loan. Next time they call for a donation say “borrow the money and credit me with the donation” I am sure they would object. Also, how can a corporation run these ways. As an example assume the professor to student ratio is 10:1 ( this is very optimistic) and tuition, no room and board books etc. only tuition. assume tuition is $40,000 ( highly optimistic). Three tuitions are equal to $120,000 enough to pay professor. What are the universities doing with the other nine ($360,000) tuitions? If the institutions have a 75% overhead they are not managing their business correctly.

Stephanie Palmer

Oct. 5, 2012, 12:55 p.m.

These student loans situations are not hard to understand. Parents and their kids need to understand the reason for the community colleges. They make a college education affordable for all.  Now I would have liked to send my kids to Harvard or Stanford, but my kids and I realized that there was no way that we could afford it.  State schools are a lot cheaper than any of the private colleges. Parents need to make their kids understand that you just can’t have everything you want. That’s the bottom line.  All these parents are doing is setting themselves and their kids up for a big fall. Maybe this reasoning doesn’t do anything for these people now, but maybe it will help someone in the future.

Shahislam

Oct. 5, 2012, 1:04 p.m.

When computers and robotic arms can better do most of both kinds of refined jobs -mental and physical, then, who’s going to pay the costs of for needless certification programs?
Able body-labor is as important in this century as is minimum & basic education!
Any government can no longer afford to pay for presently not viable bad investment on a outdated concept of a educational system.

John

Oct. 5, 2012, 2:10 p.m.

Stephanie, let me reframe the problem for you:  We spend our lives taught that “you get what you pay for,” and brands earn their reputations.

Now, you’re faced with a decision that may literally change your (or your child’s) entire life.  Do you go with the Ivy League college that’s going to cost you fifty thousand dollars (yeesh!) a year, or do you risk that paying only a tenth of that (SUNY tuition is less than six thousand, for example) is “good enough”?  Keep in mind that we have example after example of Yale graduates who change the world, and little to no examples of the leader who graduated from community college.

I’m not saying that the value IS proportional to the price, just that it’s suspicious to a lot of people.  I doubt you’d buy a new BMW if some government bureaucrat offered to sell it to you for three thousand bucks.  Would you risk letting your children drive it…?  A lot of families see picking a “discount” college as equally bad.

Also, don’t forget that, for some career paths that involve networking with powerful people, there’s a huge advantage to be had at a big-name school.  How many NFL pros or Presidents or Bank CEOs graduated from a state school?  You don’t run into many useful contacts, there, so not many doors stay open for you.  It’s not an excuse for the price, but it is a consideration for some families.  Increasing the chances of starting out with a higher-paying job might be worth the tradeoff of high tuition.

Again, you can read a textbook anywhere for free, but meeting someone who’ll take you on as a mentor doesn’t happen much when the faculty is paid peanuts.

Hugh

Oct. 5, 2012, 2:51 p.m.

As long as we believe everyone is entitled to a college education, the standards will continue to drop, the graduate will feel short changed because he can’t get a job, and somebody has to pay.

John Wright

Oct. 5, 2012, 4:42 p.m.

Yet some more information is from the original study (and updated in 2011) by Alan Krueger and Stacy Dale that concluded that students, who were accepted into elite schools, but went to less selective institutions, earned salaries just as high as the selective school grads.

The latest update of this study is from Feb 16, 2011 in which they conclude that applicants, who shared similar high SAT scores with Ivy League applicants, but may have been rejected by the Ivy schools,  enjoyed similar average salaries as the graduates from elite schools.

You can read the abstract at “http://www.nber.org/papers/w17159.pdf”

There is one exception to the no excess financial return to attending Ivy League observation, If the student is black or Hispanic, the financial return of attending a selective college is “large”.

The early Kreuger/Dale paper is “Estimating the payoff to attending a more selective college: an application of selection on observables and unobservables” August 1999.

One strange result is their finding in the earlier paper:
“The characteristics of schools that influence students’ subsequent income appear to be better captured by average tuition costs than by the school’s average SAT score.  Indeed, we find that students who attend colleges with higher average tuition costs tend to earn higher income years later.” (August 1999 paper, page 30)

This leads to a conclusion that a college could justify raising its tuition to high levels as benefiting its graduates in their future years..

But one must not confuse correlation with causation.

Grim Reaper

Oct. 5, 2012, 4:46 p.m.

Hugh,
You make a valid point regarding the degradation of a system of entitlement but that’s not the issue.  The educational system is in a bubble.  Costs are well out of line with ability to pay.  This is because society has not seen wage growth in thirty years.  Instead the corporate state is keeping those wages in the form of a profit bubble and lending those wages back to people as usury and economic slavery.  Additionally, corporate capitalism is denying people jobs that pay a living wage without a college degree by rigging the rules to the game.  So, people are essentially forced into college if they want a living wage.  And, then the system preys upon them through looting. 

I would suggest people read University in Chains.  It is the corporate takeover of our university system that helps define these dynamics.

ibsteve2u

Oct. 5, 2012, 5:56 p.m.

The title - How the Gov’t Is Saddling Parents - is a bit misleading.

Reminds me of Fannie and Freddie in that banking (as usual) and, in this case, higher education (for-profits, most notably) are using government programs to enslave the American people.  A pursuit that is only possible, once again, because the American people have a lever they can be manipulated with:  Their desire for “the American Dream”.

The American people must learn that the banks/those who have wealth really are “out to get them”; it isn’t paranoia to think that.

ibsteve2u

Oct. 5, 2012, 6:10 p.m.

See, what the Republicans and neoliberals have done to America’s economy, government, and tax structure is like a taking a great big game of Milton Bradley’s Monopoly and giving one person in your town or city control of all properties except Mediterranean, Baltic, Connecticut, Vermont, and Oriental Avenues. 

Everybody else in your town or city - to include you - gets to split up the rents from those five properties.

The Fed has been printing more money to fill up the bank…good thing, too, ‘cuz everybody in your town is always landing on that fat cat’s properties or having to ride his transportation or buy his water or energy, or send their kids to his schools, or get school loans from his banks, or…

Heard a rumor he wants to turn off the Fed, now, though..and heard Romney works for him.

Kevin

Oct. 5, 2012, 7:03 p.m.

Good bye college next gen. Hello learning Chinese. Start with this one: Good Morning my Chinese Overlords.  How are we this fine day?

Harper B Masterson

Oct. 5, 2012, 7:34 p.m.

Amazing read. To think this could happen again—just in a different arena and one that is about learning—is ironic and tragic indeed. When will we learn? As one man once told me at a festival in Pennsylvania: ” Sometimes I think we’re all out of our gourds!”

Chris Herz

Oct. 5, 2012, 9:07 p.m.

Using a number of entirely legal means, usually employed only by our corporate masters, but really available to all who would study how to use them, I sequestered enough income to educate three children who are starting their lives debt-free. 
That said, this regime values ignorance and religious faith much more than solid intellectual achievement. The whole idea is to restrict education to the the upper classes; we do not need large numbers of people asking awkward questions.
Our American leaders are the worst in the world since Nazi Germany or Stalinist Russia, and if they do not like how I describe them they can kiss my 70-year old a$$.
.

Steve

Oct. 5, 2012, 9:43 p.m.

This is a case of misplaced anger - why is college so expensive when teachers everywhere are being marginalized?  The simple fact is that colleges and universities now exist for the sole purposes of winning research grant money and attracting the best tenured talent.  It’s not unusual for a student to attend 3-4 years without seeing a single tenured professor - because they’re all doing research, which is where the real money is.

The simple fact is (and it rankles my Keynsian side to say it…) traditional colleges and universities are a monopoly that eliminate choice and create a caste system among students.

Tina

Oct. 6, 2012, 6:10 a.m.

We have a friend who just got a job at a big company that you will all know if I mentioned it. He has a bachelor’s degree from USC and he is a programmer with about 5 years experience. His signing bonus was $120,000. We dared not ask his salary but suspect it is also very good. It is okay to take on big debt if you go to a good school, major in a valuable major and are talented.

clarence swinney

Oct. 6, 2012, 6:20 a.m.

President Obama executive order has federal student loan payment cap at 10% of income.

VOTE FOR THIS—created by democrats
Social Security
Medicare
Medicaid
Americans With Disability Act
TVA
GI bill
Veterans Administration
Permanent School Lunch Program
Aid to Dependent Children
Schip
SBA
Voting Rights Act
Head Start
Dream Act
Permanent Food Stamp Program
Freedom of Information Act
Clean Water Act
Clean Air Act
Family Medical Leave Act
Minimum Wage Act
Trade Union Schools(now Community colleges)
Earned Income Tax Credit
Fair Labor Standards Act
Peace Corps
Ameri-Corps
Worker Retirement Pensions
Peace on earth-1980-2009 three Republicans got us involved in 10 foreign conflocts
Just A few of 89 name 10 by Republicans

carolyn

Oct. 6, 2012, 11:26 a.m.

High school guidance counselors are the conduit through which most college decisions are made, and even at the high school level, the “prestige” in sending students to expensive schools often plays a stronger role than directing students towards more sensible or affordable upper education choices. Also too often lacking among those who “guide” is a real understanding of the reality of the myriad loan systems available - it really requires up-to-date information and a lawyer/accountant to work through all of the fine print. Counselors are charged with working with troubled students, working with class schedules, and when they have time, they squeeze in helping students make college choices.

John accurately pointed out the primary benefits of a college education: increased motivation - taking ownership through adapting to a rigorous curriculum and networking with people who share your interests and possibly your future.

The school one graduates FROM is the one that shows up on the resume. If students attend junior colleges, transfer to state colleges, and then (if desired) transfer to more prestigious private colleges, the financial toll is much less - and allows for more experimentation/flexibility in the directions (majors) students finally choose.

The current reality of being able to pay back expensive loans for career paths to art or music is obvious. My career was in art. In our left-brained linear, free enterprise based existence, art and music taught in schools are always the first to get the ax, thus they’ve been severely wounded since 2009.

clarence swinney

Oct. 6, 2012, 1:53 p.m.

HOW CONSERVATIVES RUINED A GREAT DEMOCRACY
A NEW CORPOCRACY

Ruined our great Savings and Loan Institution
Closed Fairness Doctrine that has Limbaugh types on our public airwaves
Closed Revenue Sharing
Since 1980, initiated our involvement in 10 foreign conflicts
Repealed Glass Steagall—took deposits in over 7000 banks and put 50% in 5 (Too Big To Fail)
and 80% in 10 (Too Big To Fail) Banks.
Modernization of Commodity Markets—from investment to Casino Derivative Of America
2 very dumb invasions of two of most unarmed and destitute nations.
Ruined our International reputation as a Do Good Christian nation to Big Bully Devil
Stood by as freak marketeers ruined our housing industry
Stood by as Casino Derivative Of America ruined the world financial industry
Impeached a great president for petty political gains that created a long term animosity between the parties
Attempted to destroy the safety nets that make a great middle class
Implemented Tax Codes that permitted a redistribution of Wealth to top (10%) who now own (73% )of Net Wealth and (83%) of Financial Wealth and take (50%)of all individual income
They have taken America to a rank of (#2) as Least Taxed in OECD nations; (#2) as least taxed corporations; and sadly to (# 4) on Inequality.
Since 1980, their Spend & Borrow policies, mainly, were responsible for adding 14,000 billion to our 1000B Debt when they started in 1981.
Fought the Great GI Bill.
Fought the WWII Draft
Installed strict laws which have loaded our prisons with non-violent offenders which make us world leader in prison population

CONCLUSION-WANT TO VIEW END OF AN EMPIRE THEN YIELDED TOTAL CONTROLOF GOVERNMENT TO REPUBLICAN CONSERVATIVES AS WAS DONE IN 2001-2002-2003-2004=2005-2006- WHICH WILL BE JUDGED AS, OUTSIDE OF THEIR GREAT DEPRESSION, THE SIX WORST YEARS IN OUR HISTORY

IMAGINE THEM IN CONTROL FOR 12 YEARS????

Rob R.

Oct. 6, 2012, 7:06 p.m.

Students should be on the hook for their own college loans, not their parents.  Being personally accountable is the incentive to pursue a career or work hard enough that will enable them to pay it back.  Parents can still help, but the burden should be on the student.  If the burden is on someone else = no incentive to work or excel.

Ross W.

Oct. 6, 2012, 7:48 p.m.

Rob R.: I agree, with you to a point, but if we’re going to do that then the “Expected Parental Contribution” line from the FAFSA needs to go. I’m $25,000 in debt (graduated last year) now, because the dept. of ed. assumed my parents would be giving me around $15000 a year, thus disqualifying me from most scholarships. Sure, we were a comfortable household, but I never saw a penny - I paid my own tuition, mostly with non-subsidized loans. Fortunately I “saw the light” and dropped out of the 10K-a-year state school and went to a technical college for my last two years - otherwise I’d be much deeper.

Anyway, this doesn’t really pertain to the matter at hand but I figured I’d point it out.

John Wright

Oct. 6, 2012, 8:16 p.m.

On the college loan/college education debate, there has been some research done by Alan Krueger and Stacy Dale with papers in August 1999 and a follow-up paper in June 2011.

I hope I am summarizing the findings correctly:

1. Getting accepted by an elite university and choosing to go to a less selective school doesn’t change lifetime earnings.
2. The one exception to this is for Hispanic and Black students and for students that come from less-educated families, they did see an earnings enhancement by going to an elite school.

The later study found that students that applied to elite schools and were rejected also did about as well income wise, this was evidence of their aspiration level, which is a factor in their future earnings..

The papers are http://www.nber.org/papers/w7322 (1999), which anyone can download

and at http://www.nber.org/papers/w17159 (2011), this is $5.00 to download.

The earlier 1999 paper may have provided the justification for ALL colleges to increase their tuition levels as on page 30, they found “Indeed, we find that students who attend colleges with higher average tuition costs tend to earn higher income years later.”

Was this sentence significant in furthering the college tuition inflation over the last decade as colleges raised their tuition levels to help the college’s current and the student’s future bottom line?

But one must be careful to not confuse causation with correlation.

ibsteve2u

Oct. 6, 2012, 9:55 p.m.

They also need to tie the ability to get out from under student loans to the eagerness with which Corporate America is offshoring jobs, banks are financing offshore factories, and the government’s unwillingness to address trade inequities such as rigged currency exchange rates and tariffs that handicap American competitiveness.

I.e., if the system is rigged to ensure that students will graduate with massive debt and then cannot get jobs…well, that’s not an economic system - that is a criminal racket.

ibsteve2u

Oct. 6, 2012, 10:03 p.m.

The bottom line is government policy increasingly prioritizes the greed of the 1% before “Justice, [...] domestic Tranquility, [...] the common defence, [...] the general Welfare, [...] the Blessings of Liberty” in all things.

To include the education of our kids, which affects all categories mentioned above.

It cannot continue.

Dr Fun

Oct. 7, 2012, 11:32 a.m.

It sounds like the first responsible thing to do was not apply for these loans in the first place.

The second responsible thing would have been to attend a school you can afford, rather than go to an overpriced, over-rated college.

The third responsible thing would have been not to have children you can’t afford.

I only blame the irresponsible parents and their progeny for falling into this circumstance.

Harper B Masterson

Oct. 7, 2012, 11:39 a.m.

Dr Fun: True that we are all responsible for our choices. But part of the responsibility surely falls upon institutions that ought to fully seek to educate parents who still embrace the American Dream: providing a better life for their children. Often, we rely on those who understand The System better than we do. Perhaps you see this as a Buyer Beware circumstance. But perhaps that’s partly why stories such as this one are so important: They shed light and educate parents when the school and the government have not.

ibsteve2u

Oct. 7, 2012, 3:30 p.m.

For Dr. Fun, who emoted “The third responsible thing would have been not to have children you can’t afford.”

lolll…I always admire comments such as yours, Dr. Fun, which suggest that eugenics is a quite rational scientific and economic tool when the filter applied is wealth possessed.

An attitude that is becoming increasingly common among the second- and third-generation wealth that makes up America’s so-called “conservatives”, particularly among those portions of our medical community where the Visa and Mastercard symbols have replaced the rod of Aesculapius upon their medical degrees and, of course, their Hippocratic Oaths.

ibsteve2u

Oct. 7, 2012, 3:35 p.m.

I hasten to add that wealth is a lousy criteria for eugenics; I can find no scientific evidence suggesting that wealth can be linked to either an increase in either positive physical or intellectual attributes.  They’ve got a tendency to marry based upon the ability to control and dominate their spouses and then interbreed based upon the consolidation of wealth and power rather than mental and physical characteristics; thus, they breed weakness into their genetic pool at an unusually accelerated rate.

Like moths to a flame, the look pretty for a moment, and then Poof!

Lynn

Oct. 8, 2012, 8:18 a.m.

I agree with the Dr.

clarence swinney

Oct. 8, 2012, 9:36 a.m.

JOBS—ONE OF BEST
THE BETRAYAL OF AMERICA’S MIDDLE CLASS WAS A CHOICE, NOT AN ACCIDENT
BARTLETT-STEELE TRUTH-OUT.ORG
These two have been writing it since 1992 Book—”America-What went Wrong”
How have things changed since then for the middle class? They say “straight downhill-
Thanks to the few ruling class which is having its way.”
Wages stagnating and going down, benefits jeopardized or disappearing, and our country being divided into a nation of have-mores and have-lesses. Public policy gave incentive to corporations to outsource. They say high wages excuse is malarkey. They say main reason is incentives provided by foreign governments and, then, when companies bring their product back there is essentially no tariff on it. Trade deficits=lost jobs. The ones remaining should be saying”Look, we are really working for the best interest of American workers here and we need some help”.
“The problem is, you have the mindset in Washington, in Congress and basically with every administration, that trade should be unrestricted.”
Recent Example: Hanesbrands—biggest hosiery -men’ underwear—Winston Salem NC-
In 2010, Chinese government built them huge modern plant. All US plants closed.
Check the current retail price look for much lower price. Ha Ha Ha
The four page article tells us so much about what happened and tough choices to recapture/keep our jobs. Bartlett-Steele are Icons on Jobs. Bless them.
Tariff on imports.

John

Oct. 8, 2012, 9:38 a.m.

To follow on from what Carolyn said about college-hopping (which I actually don’t recommend due to the crapshoot of transferring credits, but isn’t a terrible plan if you lay out your plan ahead of time), another thing I can recommend is that, if you can’t manage a big name, manage your early career in a way that minimizes the impact.

What I mean is to track down companies led by alumni of your school, and try to connect with them at interviews.  It’s not an unknown school to someone else who went there, and it gives your interviewer a point of reference.

For the same reason, you should be a member of the local chapters of relevant professional societies, if they exist, to get to know the people in the industry.  A hundred or so bucks a year sounds like a lot, but you just spent at least fifty times that for school, so suck it up (or write them explaining financial hardship—quite a few will waive the fee up to a couple of years).  And go to the meetings and keep in contact with the people you meet (just about every professional I know appreciates when someone sends them an interesting article in their field with a “in case you haven’t seen this” note attached) so they understand your position.  (And continue contact even when you’re employed, jerk who’s thinking this is too much work…)

On the same theme, keep up to date on the literature.  Don’t be snotty about it, but a well-placed “Bill Ford was just writing about that in last month’s Economist; I can send you the article, if you didn’t catch it” shows an interviewer you’re not just relying on textbooks, if you can talk on the topic.  If you’re more academic, free online journals like PLoS make it a lot easier to get up to speed in quite a few fields.

On top of that, start working with or WITHOUT a job.  With retention committees reducing the weight of programs to keep kids from dropping out (misguided, if you ask me, but not my call) and so much content available on the Internet, there’s almost no excuse beyond a sick family member to not be working on your own projects to hone your skills against reality instead of theory.

Here’s the thing:  For less than a thousand dollars (a lot to a college student, but maybe not a club, local interest group, or a bunch of friends), you can build a robot to explore local waterways (OpenROV) and analyze the water with a home-made spectrometer (Public Laboratory’s design).  The Nand2Tetris online course will have you build a computer from scratch (chips to software).  It’s basically free to open up a blog and write or report or publish, depending on your goals.  Write and film your dream movie with your cellphone camera.  If you’ve been working on your own, that blows away almost anybody’s college experience, because it shows your skills and passion better than a GPA and gives the interviewer something to ask about.  Poke around, and there’s something for almost any major.

(This approach used to be resolved by getting an internship, but fewer companies will take interns and fewer give them real work experience.)

I’d also suggest starting a business.  Ideally, you want something where you can show that you understand the decisions management needs to make, can make hard decisions without a manager looking over your shoulder, and think in business terms.  If you can’t swing that (because you can’t hire employees, say, or you aspire to be a chemical engineer, where the only viable home businesses are generally felonies—no cooking meth, kids…), even summers mowing lawns as a business put you a step ahead.

Lastly, I shudder to recommend this, but make sure this work is visible and visibly active on the Internet.  After receiving your resume and as soon as you leave the interview, your name is absolutely getting searched on Google, no exceptions.  Your professional interests and results should show up before the Facebook profile picture of you playing beer pong (which, ideally, shouldn’t exist—it doesn’t exactly make you seem trustworthy).

(Basically, pitch yourself as essentially being in the industry.  And after each job, your college makes less of a difference.  Well, sometimes it makes a difference, but that’s usually a sign that it’s going to be a horrible job that you don’t want.  Same goes if you’re trying to switch careers—get into the new career whether or not you can find the jobs.)

I’d have to check data, myself, but I think that the results John (Wright) cites are going to be for the general case of a graduate who only has his college, clubs, and maybe a part-time job on his resume.  As I said before, the biggest advantage you get from a big-name school is networking.  If you’re networking on your own, though, you can skew those numbers.

ibsteve2u

Oct. 8, 2012, 11:53 a.m.

@John Wright:  I wonder how those studies would have worked out had they narrowly focused on specific families associated with hereditary wealth who are alumni of specific Ivy League schools?

That is, a history of attending specific schools, and belonging to specific clubs within those schools, and then following specific career paths after graduating from those schools?

Families whose children are forever “grandfathered” into admittance into those same schools and elite private, restricted-admittance clubs?

From what I have been able to discern, in those cases their academic performance both prior to entering those Ivy League schools and while in those Ivy League schools is entirely moot; it has no bearing whatsoever upon subsequent success in either private or public life.

It does, however, go far to explain the decay in the quality of American corporate and political leadership.

Kris Alman

Oct. 8, 2012, 12:11 p.m.

The 2005 report, “Recession, Retrenchment and Recovery” funded by Lumina (“conversion foundation” of Sallie Mae) occurred when Gates, et. al. turned the tide of NCLB failures. http://centereducationpolicy.illinoisstate.edu/initiatives/recession/literaturereview.pdf

My summary: There’s too much entitlement/public services and not enough taxation from mere mortals—which of course leads to disinvestment in higher education and new innovations (i.e. privatization) to fund it.

2005 was the year that Bill Gates began the Data Quality Campaign—which has expanded to the “Early Childhood Data Collaborative.”
http://www.dataqualitycampaign.org

October 2012 Harvard Business Review: Getting Control of BIG DATA.
p. 76 “Data scientists today are akin to the Wall Street ‘quants’ of the 1980’s and 1990’s”

Ummm… That has played out very well for the .1%ers with the boom-bust “jobless recoveries” of the last three decades.

Indeed NCHEMS and CLASP have put together “data dashboards” that demonstrate “The Return on Investment to Increasing Postsecondary Credential Attainment.”
http://www.clasp.org/resources_and_publications/publication?id=1466&list=publications_states

Liar loans.

Gates has teamed up with The Annie E. Casey Foundation, the Lumina Foundation for Education and The William and Flora Hewlett Foundation as Partners for “The New Commission on the Skills of the American Workforce.” http://www.skillscommission.org/?page_id=133

One of the papers listed on that website, is a 1990 article “America’s Choice: High Skills or Low Wages!” http://www.skillscommission.org/?page_id=296

Try downloading it. Blank page!

Try it through ERIC (Education Resources Information Center). And this is the message you get:
“Dear ERIC Community,
In early August we discovered that sensitive personally identifiable information appeared in some full text documents contained in the ERIC collection. Specifically, social security numbers and other highly sensitive information were found in multiple documents and in a way that could not easily be isolated. For that reason, we had to temporarily disable access to many full text documents.”

Hmmm….

“Recession, Retrenchment and Recovery” refers to Don Boyd’s (2002) report “State Spending for Higher “Education in the Coming Decade,” who suggested that:
“[E]ven if state and local governments close their current budget gaps
with entirely recurring actions, rather than gimmicks that provide
only temporary relief, most states will face continuing difficulty
financing current services with existing revenue structures, and will
not have resources for real increases in spending. Given that state
and local governments have increased real per-capita spending
significantly in each of the last five decades, this suggests citizens
will have to either scale back their appetite for government services
or support changes in revenue structures to finance new growth…”

Wellman advised that these are short run solutions when long-term resource management strategies are needed. A five step process was recommended that included:

*“Refocusing the institutional mission to take advantage of opportunities
budget crises sometimes bring. In an era of deregulation and accountability (performance oriented budgeting) boards can gain control by “replacing rigid line-item budgets with block funds…and carryover budget authority…..”

*“Assessing and integrating the institution’s tuition, aid and outreach strategies.”

John Wiley (2004), in “Higher Education at the Crossroads” wrote: “State officials have been pushing public school education into the private model, specifically, the “high tuition/high aid” version of the private model. But private schools that operate successfully under this model usually have large endowments. The University of Wisconsin-Madison could privatize if it had an endowment of $8 billion and raised tuition to more than $20,000 per year.”

The cover of the Harvard Business Review lists highlights this article: “What Ever Happened to Accountability?”

The quants are cooking the books!

clarence swinney

Oct. 8, 2012, 1:01 p.m.

TAX FINANCE
The Tea Party is saying that taxes on land and financial assets punish the “Job Creators”.
The wealthy claim they need to be pampered with tax preferences to invest and employ labor, while the 90% need to be kicked and prodded to work harder and get paid lower wages.
These falsehoods are seen easily as false by looking at 1945-1980 when individual and corporate taxes were highest in history yet we had highest growth in history.
Reagan started the transfer upward of income and wealth with his 60% tax cut for the top rate plus his spend/borrow fiscal policies. He spent more in 8 than prior 50 years. He increased debt by 189%.
  How can the rich justify the Fed printing $13Trillion to bail our bankers and scream were it to do the same for federal-grants-in aid to states and cities to vitalize our economy by creating millions of jobs
Think about helping 90% not the top 10%.
  Our cities and states need revenue. Reagan axed Revenue Sharing which would be vital today.
Bush II tried to outdo Reagan on Spend/Borrow with 92% increase in Spending and 112% increase in Debt giving us a Great Recession and 2,700,000 jobs outsourced to just China. Plus destroying our Housing Industry. Plus created two awful unneeded wars. Invade two unarmed, destitute nations.
Shame on us is what history will read. Clarence disgusted swinney

LAB

Oct. 8, 2012, 2:18 p.m.

Parents DO NOT OWE their children a college education which costs so much that it will put the entire household in jeopardy.  We all must first remember that colleges are businesses and they are in the business of selling their product to those who think they need to buy it.  They get their money up front and they do not care how the student, the student’s parents or the student’s entire family repays the debt to the lender.  These schools do not have to disclose the joblessness rates for their graduates and they don’t have to disclose their student loan default rates, either.  This is truly a buyer beware situation and a degree from certain institutions will always hold more prestige than from another, but putting a whole household in jeopardy for a college degree with no job propsect for repayment is ludicrous.

clarence swinney

Oct. 8, 2012, 3:08 p.m.

PAST 50 YEARS OF GOVERNMENT TO 2010
———————————————-R———-D
Years in Presidency———28——-22
Total jobs created————24m—-42m
stock market return——-109%—992%
return per annum————2.7%—-11%
gdp growth per annum—2.7%—-4.1%
Income Growth annum-0.6%——-2.2%
Sources-
Dept of Labor
Bloomberg

ibsteve2u

Oct. 8, 2012, 3:32 p.m.

The whole inequitable free trade/destroy the manufacturing sector/we’ll become a service economy! scam was just that:  A scam.

That scam depends upon one of two things:  A uniform, college- educated population wherein everybody attains the American Dream because there are not only jobs required skills attained through affordable college educations available to all but also everybody in the American population desires that kind of a job.

Or, that scam necessitates a veneer of college-educated workers and a great mass of “disposables”:  Literally tens of millions of Americans whom we step over and around - and shoot down, as they periodically rise up in revolt due to hunger and desperation - because we have destroyed all of the manufacturing and low-level service jobs they once could and would have filled.

We must have a diversified economy that includes a broad range of manufacturing and service jobs; an economy that makes a place for those who do not have college degrees and still provides a comfortable income for them in order to provide “a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”.

Anybody that says otherwise is a liar at best and a Stalinist at worst.

Our neoliberals are the former; our so-called “conservatives” are the latter.

John Wright

Oct. 8, 2012, 8:55 p.m.

@ibsteve2u

re: the habits of the elite, “That is, a history of attending specific schools, and belonging to specific clubs within those schools, and then following specific career paths after graduating from those schools?”

This is part of the East Coast power structure, as Kurt Vonnegut pointed out, the Bush-Kerry election was a choice between “two C students from Yale, both members of Skull and Bones”.

The emphasis on the attending the “correct” University seems more pronounced on the East Coast than the West in my experience.  The West Coast has seen some very successful college dropouts as I’ve mentioned before, and Oracle’s Larry Ellison should be added to my previous list.

I see the current emphasis on college at all costs possibly producing some desparate workers that will be angry at the “college always worth it” bill of goods sold to them.

In some cases, the capital expended on college could have been better used investing in a business startup, or in public infrastructure and certainly having a lower debt gives a graduating student more job options as they are not financially desperate

I believe the educated East Coast elite naturally steered the government financial rescue package to the East Coast financial institutions for the most part.  The midwest based GM and Chrysler automakers were not as favored.  This rescue package really resulted in a transfer of wealth from the other regions to the East Coast, under the guise of “saving the (FIRE = Finance, Insurance, Real Estate) economy”.

But maybe that explains why some parents are so obsessed at getting their children into the “right schools” so they can be part of the group that takes care of their own.

The Kreuger/Dale papers seem to indicate the typical student doesn’t achieve an excess benefit from an high prestige school.

But, as you suggest,  for a member of the elite class, attending these schools might help preserve their power and influence in the USA.

Mary Emmetts

Oct. 8, 2012, 9 p.m.

College and universities have become corrupt in the current education system.  They have no incentive to control costs, to make sure loans are affordable, and to emphasize graduation rates—they take their money up front.

Of course once again our corrupt Congress is at the heart of the problem, making college loans non-dischargeable in bankruptcy—in sharp contrast to businesses which can escape every obligation, including pensions, in the bankruptcy process.

It’s all part of our rapid devolution into a world of Dickensian poverty for most Americans.

ibsteve2u

Oct. 9, 2012, 4:20 a.m.

@John Wright:  Unfortunately, the evidence to support your suppositions extends beyond the hypothetical:

http://www.salon.com/2004/09/16/tsurumi/

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