April 28, 2011

From The Economic Collapse:

Is going to college a worthwhile investment? Is the education our young people are receiving at our colleges and universities really worth all the time, money, and effort that is required? Decades ago, a college education was quite inexpensive and it was almost an automatic ticket to the middle class. But today, all that has changed.

At this point, college education is a big business. There are currently more than 18 million students enrolled at the nearly 5,000 colleges and universities currently in operation throughout the United States. There are quite a few “institutions of higher learning” that now charge $40,000 or even $50,000 a year for tuition. That does not even count room and board and other living expenses.

Meanwhile, as you will see from the statistics posted below, the quality of education at our colleges and universities has deteriorated badly. When graduation finally arrives, many of our college students have actually learned very little, they find themselves unable to get good jobs and yet they end up trapped in student-loan-debt hell for essentially the rest of their lives.

Across America today…

Read more here.

Tuesday, June 21, 2011

by Tyler Durden

A few weeks ago we pointed out what may be the most troubling (and Marxist) observation in America’s labor arena, namely that the labor’s share of national income has dropped to the lowest in history as a record number of Americans now focus on wealth creation through assets (i.e. owners of capital) instead of labor.

In his just-released, latest letter (below), Bill Gross piggybacks on this observation in what is one of the most scathing notes blasting the traditional of higher education, and in essence claiming that college, as means of perpetuating a broken employment status quo which redirect labor to a now-expiring Wall Street labor model, is now worthless:

“The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets. Now, as that road approaches a dead-end cul-de-sac via interest rates that can go no lower, we are left untrained, underinvested and overindebted relative to our global competitors. The precipitating cause of our structural employment break is…

Read more here.

Borrowing looms large in American life from homes to cars. But the explosion of student debt in the last decade is a pernicious trend that the colleges themselves are encouraging.

How do colleges manage it? Kenyon has erected a $70 million sports palace featuring a 20-lane olympic pool. Stanford’s professors now get paid sabbaticals every fourth year, handing them $115,000 for not teaching. Vanderbilt pays its president $2.4 million. Alumni gifts and endowment earnings help with the costs. But a major source is tuition payments, which at private schools are breaking the $40,000 barrier, more than many families earn. Sadly, there’s more to the story. Most students have to take out loans to remit what colleges demand. At colleges lacking rich endowments, budgeting is based on turning a generation of young people into debtors.

As this semester begins, college loans are nearing the $1 trillion mark, more than what all households owe on their credit cards. Fully two-thirds of our undergraduates have gone into debt, many from middle class families, who in the past paid for much of college from savings. The College Board likes to say that the average debt is “only” $27,650. What the Board doesn’t say is that when personal circumstances go wrong, as can happen in a recession, interest, late payment penalties, and other charges can bring the tab up to $100,000. Those going on to graduate school, as upwards of half will, can end up facing twice that.

A fact of academic life is that the tuition-debt nexus keeps most colleges going.

Read more: The Debt Crisis at American Colleges