WARNING: This video is seriously funny. And, at the same time, dead-on accurate.
Via: Phi Beta Cons
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student loans
If you borrow and borrow and borrow some more to put your kids through college, conventional wisdom says you’re doing the smart thing–ensuring them a solid financial future. But many parents are too quick to take on massive amounts of debt and overlook more affordable college options.
Tim Grant of the Pittsburgh Post-Gazette warns parents to be cautious about how much they borrow for their kids’ education:
Parents should beware of borrowing too much to pay for children’s college education
Faced with rising college costs and a shortage of savings, many parents are making difficult decisions about whether to borrow money to help fill their children’s college funding gap at a time when they themselves are approaching retirement age.
Taking out loans may be inevitable in some cases, even if parents have been putting money away and their children have received grants and scholarships. But the decision to go into debt could have ripple effects on parents’ financial security.
“Before parents borrow for college, they should look at their own financial big picture,” said Stephen Talbott, author of the e-book, “How Much Should I Borrow for College?” “They need to ask themselves how far along they are saving for their own retirement, and are they putting in enough to be comfortable when they are 75 or 80 years old?”
Read more at College Insurrection.
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The New York Times is running a story today on a problem that we all know exists. And it seems to be getting worse, not better.
The college degree is now the equivalent of a high school diploma–increasingly, it’s a basic requirement for jobs that actually do not require advanced education. And all of the debt and time that goes into obtaining a degree is a burden that even low-paid office workers must now bear.
Imagine racking up $30,000 in college debt so that you can get a $10 per hour job as an office courier. When will the madness end? Here’s an excerpt:
Consider the 45-person law firm of Busch, Slipakoff & Schuh here in Atlanta, a place that has seen tremendous growth in the college-educated population. Like other employers across the country, the firm hires only people with a bachelor’s degree, even for jobs that do not require college-level skills.
This prerequisite applies to everyone, including the receptionist, paralegals, administrative assistants and file clerks. Even the office “runner” — the in-house courier who, for $10 an hour, ferries documents back and forth between the courthouse and the office — went to a four-year school.
“College graduates are just more career-oriented,” said Adam Slipakoff, the firm’s managing partner. “Going to college means they are making a real commitment to their futures. They’re not just looking for a paycheck.”
Economists have referred to this phenomenon as “degree inflation,” and it has been steadily infiltrating America’s job market. Across industries and geographic areas, many other jobs that didn’t used to require a diploma — positions like dental hygienists, cargo agents, clerks and claims adjusters…
You have to ask yourself: Why?
Is this simply because Americans have bought into the idea that a college degree = financial security? If so, than the bachelor’s degree is less likely than ever to deliver on such a promise. Ironically, degree inflation has a kind of self-perpetuating effect on the labor market. Those without a B.A., as the NY Times, points out, are being pushed even further down the food chain.
Now high school graduates are being told that they are unqualified for jobs that they used to be able to get. So the pressure to get a B.A. is higher than ever. Yet, because everyone is getting one, the actual market value of a degree is diminishing relative to others in the market (who also almost all have B.A.’s). It’s a vicious cycle. The only winners are the high-paid college administrators and faculty who are making themselves, in many cases, quite wealthy off of the tuition dollars of young people who are destined for low-paying, entry level jobs.
It’s time for employers to wise up and offer talented workers an alternative path to meaningful careers. What if a few innovative companies, say in the technology sector, for instance, started hiring ultra talented students directly out high school with the promise of good pay and upwardly mobile career paths? That might shake things up.
Wouldn’t you know it–it’s already beginning to happen, as the San Antonio Express-News reported in this story last year:
“Information technology is so big and open and there are so many jobs, they are paying an 18-year-old good money to do this work,” said Ricky Banda, who graduated in May from Southwest High School and is already working full time in the field.
After Banda was part of a team that brought home a prize in the CyberPatriot national high school cybersecurity competition, the Air Force picked him up for a network security defense analyst internship his senior year. He made $12 to $13 an hour — with a government security clearance — at 17. Now with a high school diploma and multiple security and networking certifications, he’s making $43,000 a year interning with Northrop Grumman.
In a similar vein, billionaire Paypal founder and Facebook investor Peter Thiel has gained a lot of attention with his program to pay talented students $100,000 to drop out of college and found tech start-ups.
Mark my words–we’ll see much more of this kind of thing in the future.
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When I read this story, I suddenly became grateful. You see, I used my book advance from Sex & God at Yale to pay off my student loans. Turns out I was very fortunate–more so than some of my fellow low-income graduates, apparently.
Yale University may have an endowment in excess of $20 billion, but that hasn’t stopped it from suing some of its poorest graduates for unpaid student loans.
Bloomberg News reports:
Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania with little choice except to sue their graduates.
The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.
Yale University is among colleges suing former students for defaulted Perkins loans, which are earmarked for students with extraordinary financial hardship, court records show.
Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans — distributed and collected by the federal government — Perkins loans are administered by colleges, which use repayment money to lend to other poor students.
“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” said Deanne Loonin, an attorney with the National Consumer Law Center, a nonprofit advocacy group in Boston. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”
Debts must be repaid. That’s certain. And Yale has a legal right to sue for repayment. But I’m surprised to read about a proudly progressive, wealthy university like Yale going after low-income graduates so aggressively. Aren’t you?
Read the full story here.
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