Friday, March 4, 2016

The Burden of Student Loans Comes Full-Circle

One item that is oft-repeated on the scamblogs is the burden of student loan debt, and how it can be  life-altering.  With all the emphasis on million-dollar degrees and sophisticated consumers, many within and without the establishment place the blame on the student marks themselves, rather than asking why tuition costs have grown so high, or why graduates struggle to find meaningful opportunities to service that debt.
 
That would require sober introspection and analysis, however, something that few who benefit directly from the receipt of student loan dollars are willing to engage in.  A new data point, however, is the increasing costs that non-lawyers are also dealing with:

When Samuel Smith graduated with a master's in engineering from Cornell, he thought the $190,000 in debt he incurred would pay off. But it took him a while to land job at a software firm in Austin, Texas. And now, after paying $1,750 a month in loan payments, rent and food, he says he doesn't have much left over.

He doesn't own a TV and says "it'd be nice to go out for drinks once in a while."
 
 
Wait, someone who graduated with an oh-so-vaunted STEM degree is struggling to pay their student loan debt?  Wasn't it just a few years ago that detractors were saying, "well, you liberal artist law students deserve what you got, because you didn't get a REAL DEGREE!!!"  As readers of the blog know, as an ex-STEMer myself, I certainly heard all about how great tech was decades ago, though the dollars were not materializing for me fully, either, at the time. 
 
Samuel Smith appears to be paying his debt down aggressively, though, so maybe if he went on the thirty-year repayment plan and ate a ton of interest, he would have more money to drink with, I hear some say.  Well, how about another engineer:
 
Greg Deckard and his wife are trying to do all that. They live in Mobile, Ala. And he recently went back to school to get a software engineering degree. But now they owe $126,000 in student loans on top of a mortgage and day care for two kids.
 
"If I go with a 20- to 25-year plan, then I'm in my 60s when I finish paying. I'm 42 and I have very little saved for retirement," he says, let alone for his kids' college education.
 
Hello, fellow non-trad Gen-X student!  You're coming in loud and clear with the family obligations, mortgage obligations, and student loan debt.  I hear some say "well, you should have just been working harder this whole time.  You were greedy for going back to school to try to improve yourself, so what did you expect?  Start boot-strapping!"  But I fully appreciate the quandary that you and many like you find yourself in.
 
Not to leave out our fellow liberal artists, however:
 
[IBR-type programs] would benefit Rosette Cirillo, an inner-city teacher in Chelsea, Mass., who is the first in her family to go to college. She jokes about the $120,000 in college and grad school debt: "Oh, it's my tax on trying to become part of the middle class."
 
Every joke indeed has a kernel of truth within it.
 
In sum, did you notice the numbers?  While the article states the average debt has "only" grown to $35,000.00, the issue is that more and more students are graduating with six-figure debt, even in the "sure-fire winner" category.  It appears lawyers are not alone anymore, and we in the scam movement have always said that law school is the canary in the coal mine.
 
Not to be outdone, Northwestern University has hit upon a novel concept:
 
Starting next fall, freshmen who ordinarily would have to take out loans will instead receive a combination of grants and scholarships, along with earnings from work-study and summer jobs, to cover their expenses. Current undergraduate students who already have $20,000 or more in loans will have that debt capped starting next fall, and receive a scholarship instead of having to borrow more, according to spokesman Alan Cubbage...
 
"We know that the fear of loans chases people away," Northwestern President Morton Schapiro said in an interview about the new policy. "It might attract some students who might otherwise not go here, but I think it's more about treating the students who come here better. We have a very successful capital campaign, we have a large endowment. We have the resources. The question is do we have the will — and we do."
 
Charge.  Students.  Less. 

Brilliant!  That thing that "couldn't be done!"  If only the law school cartel had "the will" previously to "treat students better."  Then perhaps there would have been no need for Law School Transparency or the scamblogs, or thousands upon thousands of debt-riddled lawyers.  I wonder how the Pritzker School of Law is taking the development... 
 
 
In any event, friends, while the rest of the academic world is apparently waking up to the consequences of high tuition, know exactly how and why you are going to school, be it law school or any other endeavor.  Do your research.  Ask hard questions.  Don't be a lemming.


28 comments:

  1. Like Nando, you all are truly doing the Lord's work. Please accept my thanks and my admiration.

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    1. (I posted this on an earlier entry but it was not published until well after the entry was followed by a new entry or two, but it bears reposting.)

      Nando's legacy is that he will be recognized as the harbinger of the demise of the fraud. And the lead agent in the downfall. Unlike bobsledders who jump aboard for the ride, I suspect Nando will be pushing the sled to the finish line. And Godspeed to him. 38 year solo.

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    2. Captain Hruska Carswell, Continuance KingMarch 5, 2016 at 8:24 PM

      Here Here, a 26 year broke Solo who just lost a gig because some other broke schlub will do a traffic ticket for well under 2 bills.

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  2. There is absolutely no reason why college, law school, or any part of "higher education" should cost so much. It only costs as much as it does because the people running the show are a bunch of greedy porcine monsters.

    And for another thing: Enough with bashing the liberal arts people. There's nothing wrong with being creative of having interests in art or literature or history or philosophy or even *gasp* LAW. While they may not be so much in demand now, even society could use some of those folks every now and then. I just think it's absurd how people made it this pissing contest between fields like STEM and lib-arts, and deemed the STEM stuff the better choice because it's *supposedly* more likely to get you a job these days. News flash: Even the STEM people aren't doing so well themselves. This whole thing with trying to find the "right" major is like everyone running around a sinking ship, trying to find the section of the ship which will go down last.
    It's truly pathetic.
    My proposed alternative: Avoid boarding and being on the doomed-to-be-sinking ship in the first place.

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    1. The liberal arts bashing may go too far at times. And there's nothing wrong with having interests like art or literature or history or philosophy or even law. However, it's no supposition that STEM degrees are more likely to get you a better job (assuming higher paying and more stable is what is meant by "better"). Georgetown University's Center on Education and the Workforce has done a tremendous job analyzing the impact college major has on earnings and unemployment rates. As per their recent paper "From Hard Times to Better Times: College Majors, Unemployment, and Earnings", STEM majors dominate most other courses of study in terms of higher pay and lower unemployment rates. This is not only true when comparing recent graduates, but also experienced graduates. The implication is that choice of major has both an immediate and persistent impact on employment prospects and income. "The STEM people" seem to be actually doing quite well for themselves, certainly in relative terms to the "liberal arts people". I would encourage you to read the study for yourself: https://cew.georgetown.edu/wp-content/uploads/HardTimes2015-Report.pdf

      Nonetheless, your point about college cost is spot on. There is no reason that 12 semester hours should cost $24,000, even at Harvard.

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    2. I hate the term STEM, because prospects vary heavily between those fields. A Math major might do better on average than a Literature major, but their lot in life is still a far cry from that of a CS major.

      Not all fields within STEM actually see a healthy level of demand for their degree-holders, yet its boosters act as if any STEM degree is needed in ever greater quantities.

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    3. That STEM claim is BS. I and many others are STEM grads. It's the same nonsense as the million dollar premium. It's BS peddled to the masses that stuck and seems impossible to counter no matter what facts and what data anyone uses.

      The truth is everything operates on macroeconomic and demographic trends. It is not a young person's duty to figure out how to navigate the shark infested waters of lies and deceit spun by their elders; it is in fact society's duty to guide and place the young.

      Everything is backwards today. There is no need for higher education for the vast majority of jobs and the vast majority of students. The number of jobs didn't increase, they've only shrunk, and the costs of education have only actually lowered with the advent of technology.

      Without the government inflating tuition and without so much media propaganda, usually paid for by higher education and which the government is complicit, it is highly doubtful costs would be this high or attendance this great. I suspect though even with a massive reduction in attendance, the results still wouldn't be as great as they were in the past simply due to technological advances and a globalized economy.

      Whatever though, I wasted my time writing this and it's impossible to get through to people.

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    4. Sorry @1:26, you are dead wrong. If you were right, you'd have examined the "facts" and the "data", and shown us that STEM degrees don't generate a premium. Your claim is BS.

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    5. Like I said, I hate this whole one-up thing with some people sneering at others, "Ha ha, my degree is (supposedly) better than yours!"

      Also, don't get mad at the kids for foolishly marching off to college; get mad at their stupid elders who brainwashed them and made them and forced them to go in the first place.

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    6. @12:14,

      I would hope someone posting on OTLSS of all blogs would understand the caveat of salary stats. Still, allow me to make my point.

      http://www.payscale.com/college-salary-report-2014/majors-that-pay-you-back

      STEM fields (and by STEM I mean Engineering) do dominate the top major fields for starting and midcareer salaries. However, I'd notice how lowly some of these fields rank in midcareer salaries:

      Geology at #29, below Economics, Government, Finance, and International Relations
      Chemistry at #30
      Biotech at #32
      Biochemistry at #41, below Telecom and tied with Marketing Management
      Molecular Biology at #50, below Advertising, Philosophy, Fashion Design, PoliSci, and Linguistics
      Microbiology at #54, below Agriculture
      Biology at #63, below Literature and History

      So it's mainly Chemistry and Biology that get shafted here. Which goes to my point about not all fields in STEM being good bets. I could go on about other factors (correlation does not equal causation, millions of Americans with STEM degrees working in other fields, &c.), but this notion some have that "STEM will save the economy" is an awful idea that needs to be discarded, if for no other reason than the reductionism of treating all STEM degrees as equally valuable.

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    7. My biggest problem with the STEM argument is 95% of the people making it don't have a STEM degree themselves, just the fortune of being born in a previous era where there was actual opportunity.

      Why are the standards higher for succeeding generations but the rewards so much lower? It's like rubbing salt in the wound.

      If everyone 50 years ago got a STEM degree they'd be worthless anyway. Supply and demand pretty much works that way. The same way the college degree became utterly worthless when everyone had it (heck, these people 50 years ago usually don't even have college degrees for their debt free six figure income stable 9-5 job with vacation, sick days and pension they got starting out of high school).

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    8. STEM, just like everything else, is only worth it if you're one of the "elite" students. Otherwise, STEM is a losing proposition.

      Consider that STEM salaries have stayed stagnant since the 1990s, and there are nearly double the number of people who graduate with STEM degrees than are actual jobs available for them. This, combined with the H-1B abuse has made STEM just as problematic as other areas of study.

      Thus, in this economy, breaking into STEM is quite difficult. It's not something everyone can do, even if you have a STEM major or an advanced STEM degree.

      Also, regarding salaries for people in mid-career (as discussed above), these figures only factor salaries of people that are actually employed. They don't consider people who could not get a job in the filed, people who are unemployed or people who had to take lesser jobs (such as the large number of PhD holders that become salespeople for drug companies).

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  3. Schools raise tuition because they can. When job prospects for graduates are good, schools can raise tuition more, because student demand for education increases. When loans for tuition are easy to get, demand for education also increases, at least as long as the student-borrowers believe they can handle the payments with their better, higher-paying post-graduation jobs. So schools, once again, "can" raise their tuition.

    When prospective students have better information about the job market for graduates, they MAY make better decisions about going to school, especially important for prospective student-borrowers who take considerably more financial risk to go to school. The combination of poor job prospects for graduates and better information about those lousy prospects, over time, has very reasonably resulted in a severe drop-off in demand for education. People learn about the experiences of last year's graduates, including those who borrowed heavily to go to school during the past few years to await a better job market, which did not arrive.

    Facing an entire country full of potential student-borrowers who are more skeptical about the value of higher education in light of the likely job market and the financial risk involved, than their peers were even 5 years ago, schools now are finally putting the concept of "charging students less" on the table. Schools do feel enrollment drops, and charging less tuition does have the salubrious effect of increasing demand for education.

    This development isn't any stroke of genius. It's just basic supply-and-demand economics that is at the core of our free-market system.

    May high-quality information about the job market awaiting graduates always be available through blogs like this one, LST, ABA Standard 509, the news media, etc.!

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  4. When I went to law school almost 25 years ago, tuition was a little over $10k a year. Now, it is $50k a year. More than quadrupled but salaries and hourly rates have not, assuming one can secure employment at the average salary or rate. Mathematically, the justification for an education has decreased and will most likely continue to decrease. But yet, law schools continue to sell with the usual "it's a career" or "there will be a shortage of lawyers".

    After reading about autonomous vehicles which are expected to be on the market in 2023, seven years from now, there will be no accidents or very few. Imagine how that will affect personal injury attorneys along with truck drivers, insurance companies, the aftermarket industry, etc.

    Anyone pursuing higher education must keep in mind that in 10 or 20 years, they might be obsolete. Their debt will persist though.

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    1. Captain Hruska Carswell, Continuance KingMarch 5, 2016 at 1:55 PM

      IF it happens. I read forecasts of 50% loss of jobs in this country IF it happens. The car is truly king. My practice alone is most auto related crimes. Autonomous vehicles will never happen. There is a vintage Chevrolet commercial that says it all: "Grab the wheel, and the Road goes on..." If I wanted an autonomous vehicle, I would just take a bus.

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    2. Perhaps I'm whistling past the grave yard, but I agree with the captain. Driving is still fun. I would burn my hair before giving up my Mustang convertible. I don't think I'm alone in my personal relationship with my car---and that comes from driving it myself. Yes, they'll be some who choose driverless cars---but not huge numbers IMHO.

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    3. Darryl Zanuck, executive at 20th Century Fox, 1946: "Television won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night."


      Ken Olsen, founder of Digital Equipment Corporation, 1977: "There is no reason anyone would want a computer in their home."


      Robert Metcalfe, founder of 3Com, 1995: "Almost all of the many predictions now being made about 1996 hinge on the Internet's continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse."

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    4. I used to love driving. But now where I am they have red light cameras, speed cameras, and a million cops spread out roughly a tenth of a mile apart everywhere. I'd much rather not deal with the costs and hassle.

      I suspect I'm not the only one either. Driving is unbearable with this much regulation, especially due to the very steep fines many counties are now setting.

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    5. If self driving cars become the norm, they will kill millions of jobs. Attorneys (personal injury, traffic, DUI), insurance company employees, auto repair shops, medical professionals, police, the prison industrial complex, etc etc. It would be yet another upheaval, to the extent that I'm doubtful it will happen in my lifetime. The consequences would be too grave for too many people.

      I would compare it to the never ending tendency to get our military involved in the internal affairs of other countries. Most people are smart enough to know we never should have started down that road, but so many millions of people depend on it for their livelihood that it will never change.

      Same thing with the tax code. Everyone knows it should be a lot simpler, but too many people depend on its complexity and/or various exemptions/deductions for anything to change.

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    6. Well, as long as we're discussing this particular topic...
      Regarding the whole thing with autonomous cars... eh, I don't know. Cars and zooming death traps which can be hacked? Terrorists would have a field day with those.
      No, I say leave the humans in charge of the driving.

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  5. Thank you, 9:22 am. It is nice to see these stories go mainstream. At some point, even the wealthy pigs/puppets in Congre$$ will not be able to hide from reality. Then again, the odds of the dung beetles solving this problem are about the same as the odds of Sofia Vergara breaking into my house and assaulting me tonight.

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    1. Nando, if you wanted her and welcomed her advances, it wouldn't be assault.

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  6. Despite your assertion that law schools charge less, it will still not resolve the issue of lawyer overcapacity. Low tuition may make it easier to swallow an failled attempt (read gamble) at obtaining biglaw since it will be easier for the mark to "get on with his or her life" without having to carry exhorbitant loans to one's death. Again, this still does not solve the problem. As it is right now, high tuition prices DO create barriers to entry. I would rather keep the costs high as opposed to literally flooding the market with people who have absolutely no business attending law school.

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    1. Captain Hruska Carswell, Continuance KingMarch 6, 2016 at 1:47 PM

      High tuition is NOT a barrier to law school entry. Ex. 1 The market is absolutely glutted with attorneys. Ex, 2 Take a look the hundreds of no name schools, "RANK NOT PUBLISHED" that charge around 35-40K per semester that students still enroll at. 3. They are told that Student Loans don't matter and are bullshit....that's the pitch.....It's the same scam as the housing crisis--see The Big Short and now the auto industry---putting poor schleppers in 50K Dodge Rams at 5 bills per month.

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  7. A tale of two families I know.

    One has a son born in 1991 the other a daughter born the same year. In both cases neither parent attended college. When it came time for college this girl enrolled in a small, nondescript private college in another state and basically borrowed herself into oblivion. The boy wanted to enroll in a small, nondescript private college in another state but his parents, particularly his mother who is very bright, talked the matter through with him. It came down to a simple question. Is the difference between having a degree from a small, nondescript out of state private college or a degree from one of our state's perfectly respectable second tier state universities worth being $100,000.00 in debt when you're 22? He got smart. Even started at a community college where tuition is dirt cheap and the credits are 100% transferable to the state university system. He's on his way with minimal student loan debt. Meanwhile, this unfortunate young woman's monthly student loan payments are bigger than my first mortgage, including the tax escrow, while adjusted for inflation she makes 1/3 of what I made back then and she doesn't get the tax deductions I was getting.

    It's taking time but people are wising up. If I were employed in higher education I'd be very, very nervous.

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  8. Off topic, but did you see this?

    http://chronicle.com/blogs/ticker/study-finds-growing-debt-related-stress-among-law-students/109440

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    1. Hey Anon 2:25,
      I did see it, but don't agree that it's off-topic! Were I a student-debtor in law school today, with a 6-figure debt hanging over my head and uncertainty about job prospects, I think I'd also worry myself sick!

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  9. Shouldn't the initial political objective here be to allow student loans to go away in bankruptcy?

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