Friday, February 20, 2015

Are the feds helping students with easy loans? Hint: NO!

I always worry about my paycheck.

No, not the way the "comrades" do.  But, I worry that my paycheck is dependent more and more on the tuition and fees that students pay.  "Blood money" as I have referred to it in the past.  Over the years, I have started worrying that I am less an educator and more a mercenary.

As I have often blogged here, and written in op-eds, we are unnecessarily pushing students to college.  Right from the middle school years, we make sure to convey to students that not going to college is a sign of a loser, and that picking up a trade is evidence of being a loser.  Simply awful.  Just awfully distorted and condescending this is.  And so destructive to the human that a young person is.

The federal government does not help when on top of all the screw-ups it has managed to create in K-12 and higher education.
The federal government will lend money to anybody who goes to school, no matter how poor their chances of completing their degree and finding a job that will position them to repay their debt.
That is no exaggeration.  It is true.

The more the government says it will loan, well, is it any mystery that the costs continue to go up?  And, therefore, should it surprise us that the student debt is shattering records month after month?

Even worse--yes, there is even more of a horror story here--is the default rates in student loans.  Consider this chart:

You see how bad a story this is?  A horror story!
Of borrowers who began repaying their debts in 2009, 26 percent have already defaulted—meaning they fell at least 270 days late on their debt—according to new data from the Federal Reserve Bank of New York. Of those who went into repayment in 2005, when the economy was somewhat decent, 25 percent have defaulted.
You see why I am worried and guilty about my paycheck?


Mike Hoth said...

Sriram, you are one of a few professors that truly earn your paycheck. All of those teachers have one thing in common: they really want their students to learn.

It isn't enough for a hard-working student entering your class to leave with an 'A' because they understood, but that student must feel that they've gained something for you to be happy with your class.

This former student is awake at 2 AM writing papers on subjects that will quickly pass from memory afterwards. The fact that I choose to return to your blog to learn more from you should be evidence enough that your paycheck is not 'blood money'.

In a piece that I am much to lazy to hunt down and source right now, I heard that college is still worth it from a monetary standpoint; in a 50-year career, the increased pay will cover the cost of the degree. That is good news for my wallet, but it is even better to know that I will leave college with a greater appreciation of the world. Classes such as yours give me that, and that is priceless.

Sriram Khé said...

Oh, you made my day, Mike.
You have no idea how much such feedback mean to me--as a faculty and as Sriram.

Good luck with your papers.

Anne in Salem said...

I understand your points but wish to offer two different perspectives.

How much of the loan default issue is caused by parents who cannot say no? How many of these students were raised by parents who spent credit cards up to the limit and took out second mortgages to pay for things they could not afford just because they didn't want to say no to their children? I'm talking about simple things like going out to dinner weekly or buying expensive clothing as well as grander things like annual trips to Disney. The parents never taught the children that some things are financially out of reach; the children never heard, "we can't afford that." As such, the children attend colleges wwaaayyyy out of their price range and take out loans they may or may not pay back until they are 40 because 'not being able to afford' something is a foreign concept.

I wonder how much of this is caused by poor budgeting as a result of skewed priorities. When I was just out of college, I drove a ten year old car because it was paid for, and I couldn't afford a new one. I couldn't have afforded an IPhone. How many students consider new cars, new phones and brand name clothing as necessities rather than luxuries and therefore have no money left to pay the loan? Is the so-called entitlement generation causing its own problems?

Ramesh said...

Love this post as well as the two commenters who have immensely enriched this discussion.

Oh you earn your paycheck allright, but the issue you raise is a very rich one. How right is it to earn a salary, doing good work, when the ultimate end result is dodgy in some respect. Its been an issue that has troubled me too in the corporate world - would it be right to work in a cigarette company ??

Anne - completely agree with you. I am not sure what exactly are the social circumstances in US families, but priorities are a big part the issue.

Sriram Khé said...

Anne, yes, families' priorities and the priorities that the young adults have are certainly a factor. But, only one of the factors.
The "wwaaayyyy out of their price range" is why we started public universities in the first place. Back in the 1950s, 60s, even through the 70s, public university costs were remarkably low because they were highly subsidized by taxpayers. But then, when the "others" started attending college in huge numbers, we started reducing the taxpayer support. Who were the others? First the white females. Then the non-white males. And then the non-white females too.
Thus, back in the 1960s, attending a state school, while working minimum wage jobs, was possible and graduating loan free happened. Not anymore. If you look at the ratio of public tuition+fees to minimum wage rates, it is a shocker on how much it has grown.
Anyway, now the whole damn thing is messed up :(

Ramesh, when you are done with the road trip, watch the movie "Thank you for smoking" ...