Default: The Movie
What's everyone's opinion on the next coming financial crisis: Student loans?
I really want to go back to school but there is so much anti-education stuff out there and I pretty much agree with all of it. How can anyone justify a mortgage just to get a job?
Let's face it, the average high school student isn't going to a "Target" let alone have the aptitude to make it through even the most easy UG business program, which to some maybe considered the easiest form of vocational education available to undergrads and in some cases, the most competitive.
It's only a matter of time before it becomes the next big thing and everyone will be talking about it. I've been talking about it for a while now but it will only keep getting worse before it gets better.
I've been waiting for a couple years for conventional universities to go belly up. All the new buildings you see around your local university are paid by BONDS. That's right, bonds which means "growth" in the education system is a requirement.
As Universities from Harvard to your local community college churn out degrees that do not make graduates more employable it will lead to a decrease in enrollment which will cause the rise of BOND DEFAULTS.
Yes, student loan debt is very high all thanks to government intervention. Since 2000 tuition prices on a yearly basis are 5% above the rate of inflation. In other words, tuition rates are skyrocketing. Keep in mind the rate of inflation is much higher than reported thanks to hedonic modelling, substitution effects and geometric weighting calculated by Fed, BLS, BEA etc.
Have some concrete advise to you. Do not under any circumstances take out student loans even if your attending a target in field where there's a lower propensity to obtain a worthwhile job. Banking jobs will continue to skrink and the base salaries will continue to decrease and thats in nominal dollars! Imagine assessing the real value of the salaries. M & A will be a good area but all the rest of IB etc is crap.
Take it from me, I had around $80K in loans but thankfully I was able to pay them off with help from God. It was a lot of stress but thankful its gone now. I dont want you to experience the same thing I did.
Thanks for your post.
When I tell people I refuse to take out loans to finish my degree they look at me like i'm stupid. Even if I got a job that paid $40,000 a year I would barely be able to make the payments living at home with no bills.
College is a scam.
how about this...
if you're not smart enough to get into a half-decent public school, and need to pay 50k to get into some private POS... go learn a trade.
this isn't to the OP, but all these spoiled bitches are crying like someone owes THEM something... what the fuck?
Id say it really depends on what you want in life. Of course most young adults cant figure this out, so they go to college to do it for them. BIG mistake in my opinion. And when one starts comparing the cost with the rest of life expenses, its absolutely ludicrous.
Ive always said, there are a lot more factors that create a successful career than school. Ive always believed you can be very successful/wealthy without college, but that requires persistence and intelligence that I feel only 1% of the population is willing to exercise. I think higher education is totally dependent on an individual basis, its not correct to assume everyone is the same (financially, work ethic, smarts, and even physical difference) all which can have a substantial impact on a career.
Yea sure college grads make more than high school grads. But statistics can be a slippery slope.
To the OP, Yea something is going to have to change in the next decade. I read somewhere,1/3 Americans don't even have a savings account, how the heck are people going to handle 5-6 figure debt?
A close friend of mine got a useless degree and came out of undergrad in 2008 when everything went south.
He just paid back his loans by working a lowly trade job and eventually started his own business. It took him the better part of 5 years and living at home with his parents..he was only making $11 an hour or so and this is in the tri-state area.
He's doing good now but he would of made so much more money if he had just never went to college in the first place. Or if the economy didn't take a shit as soon as he got out.
I wouldn't say the bachelors is outdated (okay, it is to some extent) but the price of it is ridiculous and unrealistic.
The price for a Bachelor's isn't ridiculous. It's the premium that many people are willing to pay for prestige. If you just want an education, why aren't you at a CC or state school if you didn't receive scholarships. there is a post still on this first page right now where someone applying to schools is debating whether he should attend UM with a near full ride or U of Chicago where the tuition is at least 50k without aid.
Of course the education system is going to keep the sham going if idiots are willing to play along.
Even for alot of state schools the tuition is getting out of hand for in-state students as well.
Would you pay 8K a year for a 2nd tier state school in tuition alone? Even doing college on the cheap will still set you back 40K if you have to take out loans.
If/when I do go back I will work and go part-time, the job market is too volatile for someone like myself (who isn't a 3.9 gpa at a 'target' school)
Don't take it like i'm complaining or anything, I chose to forgo my education due to other issues but I've been having a hard time justifying the cost.
I would understand if it were HYP, but other than that...
A good friend of mine from college decided to drop out 3 credits short of a Mech E degree to become an actual mechanic. He's built a business as a motorcycle mechanic and probably makes more money than 50-75% of our classmates, who have degrees from a top engineering school. This is a great example of what Mr Lemon is talking about.
My friend is a very smart guy (he was basically a 4.0 student) that walked away from his degree, which would have required one more summer school class, to pursue a passion. He now has a paid-off house, tons of crazy toys, his own business, and a completely flexible schedule...plus, he's actually happy in life.
In contrast, I had drinks the other night with a former colleague that has a direct and adversarial relationship with the CEO of his BB investment bank. He has enough sway and P&L that he's allowed to go toe to toe with the big guy. He could retire tomorrow, but he wouldn't know what to do with himself. And what's worse, he basically hates his life. Because of the new equity comp structures, he feels that he can't leave or he'll leave too much money on the table.
Solid post , my $0.02
You can either live life according to your own rules or play by someone else's. But its easier said than done, in order to dictate life by your own terms you have to risk loosing everything.
It's easy for us to forget that the average person in the US is completely different from the people we regularly work with. Most in finance are from top colleges, and likely were friends with people who were at least decently driven. Now we work in highly competitive jobs, surrounded by those same people.
But, even at top colleges, there are several people who idle away their 20s trying to "find themselves" for every one person who gets a decent f500 job. These people really weren't ready to use their degrees.
Then the people who are attending poor colleges are another problem entirely. They are pursuing a degree that will not qualify them to do anything in particular. I think its entirely possible that we could just see mass-nonpayment of these loans. There is no debtor's prison in the US...and these people don't have any assets/income streams to collect against.
Blame our shitty public education system and society in general for filling kids' heads with bullshit about college. I honestly don't blame kids who were brainwashed from an early age that if they don't go to college that they'll be an utter failure and that taking out loans is all good because you're guaranteed a job after you graduate.
I have a shit load of student loans and I don't feel bad for anyone complaining about this type of thing (unless your interest rate goes from 9% to 17% like the guy in the video). That said, professors should be more transparent about the ACTUAL job prospects available to them in the respective field. For example a marketing professor talking about the awesome careers and opportunities available with a marketing degree from a shitty state school.
I think in many people's experiences, they are obviously geared towards getting a decent grade in the class. For most of us this means taking in information from the book/powerpoints and only using the short term memory tactic we have developed for the purpose of the test called "data dumping." Rarely do we think about material outside in an outside of the classroom view, unless a genuine discussion takes place on the topic. Looking at my transcript I wish I had retained some of the information.. maybe I killed all those cells during the process? Is that an actually science fact that can happen?
Anyways, real learning I think comes from self motivated endeavors like reading books and following tutorials (like the wall street prep ad below).
I think you need to get your head checked out, because you have some screws loose.
When I go to my classes I don't give a fuck what the professors says I can and can't do, if you let some one set limitations on your self you are only setting your self up for failure.
It isn't the tuition but room and board that are the bigger problems.
In this regard, it will get worse before it gets better:
http://www.snl.com/InteractiveX/article.aspx?CDID=A-13887542-11054
Sorry, bad link above. Here you go:
http://tinyurl.com/czhb9d8
That paragraph is why I hate my generation sometimes. You should be able to choose whether to live in better or worse housing. Of course people would complain thts that is discriminatory to poor people- but isn't leaving them saddled with $100k of debt worse?
I never understand people complaining about student loans. Go work for a non profit and the balance will be forgiven in 10 years and during those 10 years you will have reduced payments.
What is the issue?
my cousin who is 24 right now is making close to 80k in northern CT working as a civilian for the air national guard. he never went to college. im pretty sure hes eclipsing what a lot of my college mates are making or tying them -- without any of the debt or years forgone for school
My issue is this. People go to school and decide to pursue knowledge instead of a vocation. They then complain when they can't get a job. If your goal is to get a job right after you graduate then study something like business, engineering, something tangible. If you want to study for the sake of learning, fine, but don't complain when you can't get a job.
I think a huge problem is that some colleges are too easy to get into. Random small private school will let you get a BS in Econ...with no real worth except like 150k in debt. With the exodus of blue collar jobs to the Asian countries, college degrees are more necessary than before. But the fact is that a degree from MMBinNC University isn't gonna get you a job at an accounting company over someone who worked as an intern or grunt in the same field. People want to go to college to have fun more than anything, and thats a problem. Is a liberal arts degree from any institution that isn't highly ranked gonna do anything? No. Nothin I have learned in econ will really be applicable to the job I get, but since there's a good name I do fine. Having a crappy school and a crappy major is gonna get you a crappy result- unemployment and debt. And people wonder why its not a "golden ticke" when they drank and fucked for 4 years straight.
What brain washing? You generally need an education to be successful. Ignoring outliers, a college education increases your earnings capabilities. The problem arises when kids go to college and study subjects because they are interested in something, not with the goal of getting a job. If you go to school and use it as a way to become a learned individual, awesome, but don't expect a job.
Conversely, if you go to school and see it as a professional training ground, you will study a subject that will allow you to get a job and you will come out of school with employment. Accounting, nursing, medicine, etc are all in demand fields. Philosophy or English Lit are not.
I have student loans and am aggressively paying them off. It sucks to watch a bonus go down the drain, but my education was an investment. I love history and poli-sci, but chose finance because I didn't want to be on the bread line.
I have zero pity for kids with student loan debt. I don't understand why the government should care either. Morons have been doing dumb shit since the dawn of time. They are still doing dumb shit. Fuck 'em.
Amen! You cant fix human ignorance.
ANT, I'm not disagreeing with anything you're saying but it's a much larger structural problem than you acknowledge. Kids go to college to study something they're interested in (vs something marketable) precisely because they've been told their whole life that they need to go to college otherwise they're going to flip burgers their whole life. You talked about vocational school in a previous post. That shit is straight looked down upon in our society right now and I almost guarantee you a high school counselor would get fired if they recommended someone look into becoming a carpenter instead of going to college just for the "experience."
The amount of bullshit propaganda heaped on kids plus with the general decline in quality of education leads to exactly this type of situation. When you add in student loans for all, it's very easy to enable someone who doesn't really want to go to college but has been told their whole life that they need to into majoring in fucking modern dance or some bullshit.
Probably just my gut feeling, but people who go to school to actually learn are usually the ones who get the job (as long as they do actually learn.)
It's the ones who make the bare minimum use of their time in college who are usually stuck without a job - they think the degree will guarantee it.
So, the consensus is:
^^^ to add to that
+1. Awesome advice.
The government needs to get out of the student loan industry yesterday. We saw what happened with Fannie/Freddie why can't we just let the market work.
^definitely.
But when students renege I also don't want the gov to bail these guys out.
Ok, let me clarify some points and please don't take this as argumentative or directed at you (it's not).
The majority of people in this country never go to college. In fact, like 30% of Americans have a BA/BS or better. What I meant by vocational type education is business or sciences. Whenever there is a debate about people getting a business education or a liberal arts education you always have people snidely talking about how business students studied a vocation, as compared to lib arts students who pursued knowledge in the classical sense of what a university used to be.
My point is that if your family is well off, sure, study philosophy and enrich yourself. Go to Cambridge and study Latin, whatever. You don't have to go in debt or worry about a job. Such is the benefit of wealth (among other things). For us plebs, we do not have that luxury. University for us is a training ground, much like a mechanic learns his skill. We are white collar mechanics, learning accounting and finance so we can be plugged into the system and drone on. Our education is not enriching in the classic sense, but we do not have that luxury.
High school brain washes kids that a college education is necessary, which it is. Every study shows that income levels rise with an education. The problem is kids make a couple mistakes.
1) They go to private or expensive schools because of a reason which shouldn't factor into things. If you have to take loans you should be practical and realists. It sucks, but this is how people advance up the ladder in life. Immigrants broke their back, we study finance and our kids go to Cambridge and study Latin. As much as we wish we could skip a step, trying to do so pushes us down the ladder.
2) They take loans and do not have real expectations. I think this comes from the whole "college is the best 4 years of your life" bullshit. When you are paying for school, school fucking is a job. Unfortunately, poor kids try and skip a step and party as if someone else is paying for it. They consume more in T0 and have less in T1. Instead of realizing this, they graduate and are pissed that life now sucks. Well no shit.
We don't need to encourage more people to go into physical trades because everyone who is in those trades is friggin unemployed. What we need to do is teach some cold hard reality. If you have to take loans, go to the cheapest place you can and study something employable. Work part time and take 5 years instead of 4 to do it. Go to community college and transfer. Live at home, commute, etc.
Life sucks. It isn't a fucking party, no one cares about you or owes you anything. If you rack up the debt either pay it off working two jobs or work for a non profit and do something good with your life. Learn from your mistake, life frugally and make sure your kids never have to go through what you did.
Part of me says the government should get out of student loans, but that would be horrible IMO. Student loans are great if used properly. It allows poor and middle class to get educated. What needs to happen is there should be a cap on the loans or a requirement that students work to mitigate their debt. For profit schools shouldn't be getting loans either. I can't think of one for profit university that isn't a pile of shit. Many reputable schools offer online classes so that isn't an excuse either.
http://www.youtube.com/embed/OwEbO_t30cg
I wouldn't say everyone in the trades is unemployed..yes in construction maybe but there are other types of trade jobs out there that need people.
I think higher education is a waste of time honestly. In my 4 years of college, my classes have taught me 10% of what I need for my career in finance. The rest was learned on my own through experience/networking/reading on my own time.
For other white collar jobs, again you probably don't learn more than 10% of what you really need to perform the job. Most white collar jobs don't even need any education TBH.
For engineering and science/medicine jobs, I think college is important. But I think instead of creating a whole system where everyone needs to go to school when only a fraction of those attending really need it is what is breaking this system. Careers that clearly don't need a degree should require a certification, rather than a college degree, that focuses on the basics of what is needed for their job. Honestly, the Psychology course that I took as general education requirement that cost me $1300 for the 3 credits is never going to be used in anything I do in my career nor do I remember anything I learned in it.
If this was done, less people would attend college and the cost of tuition wouldn't be through the roof
Couldn't agree more.
x2 on the science/engineering thing
The B.S makes sense for those studying anything Science or Engineering related.
Anything business could be taught within 2 years IMO.
Certifications are the future, that's for sure!
Why are US college undergrad degrees 4 years long? I'm currently an undergraduate student at a British university studying economics, and it's all wrapped up in 3 years. In fact, all economics courses here are 3 years. If specialist colleges did this in the US, debts would shrink 25%. for those students. Is this viable?
They do this because they know people will pay for it and to siphon money out of the suckers who think college is going to make their life better when in reality it isn't. If anything it will lower the standard of living for a whole generation.
For real, the price of education goes up like $1500 every year, even at state schools. People will be taking out mortgages to attend school in a few years..literally. The system is severely flawed.
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