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Next: Bankruptcy For A Whole Generation (that's what America's University System is doing)
Testosterone Pitt ^ | 03/07/2012 | Wolf Richter

Posted on 03/07/2012 10:34:45 AM PST by SeekAndFind

Another student protest, another mass arrest. Monday, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds of students then flooded the Rotunda of the Capitol, a somewhat raucous affair. Eventually, the California Highway Patrol cleared them out, and 60 were carted off and thrown in the hoosegow for trespassing and resisting arrest.

Their problem: tuition increases. Already, tuition in California's state schools has tripled over the last decade, and state budget cuts will induce universities to jack up tuition again. But the state is out of money. And so it's struggling in a weird and ineffectual way with its red ink. For more on California’s ongoing debacle, read.... Search For The Missing Moolah.

The same day the students were arrested, the New York Fed released a report on the consequences of incessant tuition increases across the nation: ballooning student loan balances that are increasingly difficult to bear:

- 27% of the borrowers who had to make payments (not current students) were past due.

- $870 billion in student-loan balances at the end of the 3rd quarter 2011 (higher than credit card debt of $693 billion and auto loans of $730 billion), up 2.1% from the 2nd quarter, while other consumer debt declined or remained flat.

- Average balance: $23,300. That includes the millions of student loans that, after years of payment, have much smaller balances or are nearly paid off. Average balances owed by recent graduates are much higher.

The report lauded President Obama’s executive actions of October last year designed to ease the repayment burden of federal student loans. Laudable as they may be, they only soothe the symptoms for ex-students by shifting more of the costs to the taxpayer. But they don’t deal with the cause: the system itself. It has become dysfunctional.

Universities as businesses, in an environment that is devoid of price competition. For example, when the University of California system demands higher tuition, the whole system falls in line to support those increases, rather than resist them.

Captive customers. Students have to get their education within the higher education system. When tuition goes up, they can’t massively drop out because it would jeopardize their dream (by contrast, if air fares jump, customers react by flying less). They can choose cheaper colleges, but all colleges are jacking up tuition and fees. And the nationwide existence of “out-of-state tuition,” while plausible on a state basis, stifles cross-border competition. So students fight tuition increases the only way they can: by obtaining more funding.

Finance. The student-loan industry profits from processing student loans. Naturally, they encourage students to take on more debt. The amount is a function of the cost of the school, not of the ability to pay back the loan. While risk serves as a natural brake in making loans, in the student-loan industry, risk is transferred to the taxpayer who guarantees the loans.

The ultimate enabler. The government, in constant need of voter support, will fund and guarantee whatever it takes to allow students to get their education regardless of how reckless tuition and fee increases are. Thus, Obama’s executive actions make repayment less onerous, but they don’t do anything to contain tuition increases.

There are no price pressures on universities—except student protests (so, keep at it). Outrageous clockwork-like tuition increases are met not with resistance but with an unquestioning, endless, and ever increasing flow of government-guaranteed student loans. The beneficial forces of market discipline have been wrung out of the system, and governments have not stepped in to exercise alternate controls.

University administrator salaries, bonuses, benefits, golden parachutes, and pensions have shocked the public when they’re exposed in the media. Programs that have little to do with education swallow up more and more money. And sure, everybody loves to have well-equipped labs in fancy buildings. But the system needs to be restructured, either by opening it up to competition or by exposing it to effective checks and balances. Solutions won’t be easy, but there isn’t much room left before it will bankrupt an entire generation.

And just when the information age demands more from education than ever before! In this respect, an insidious and at once funny information-age issue with worldwide implications erupted, of all places, in a tiny village in France. Read....  Can't Even Urinate in his own Yard Anymore.


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: bankruptcy; college; university

1 posted on 03/07/2012 10:34:53 AM PST by SeekAndFind
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To: SeekAndFind
LA City College (excellent IT program): "The required tuition fee is only $36.00 per unit for California residents ( one year residency in California). "
2 posted on 03/07/2012 10:45:07 AM PST by Bill Buckner
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To: Bill Buckner

That’s what I paid over 30 years ago at a CC ...


3 posted on 03/07/2012 10:46:13 AM PST by Bill Buckner
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To: SeekAndFind
University administrator salaries, bonuses, benefits, golden parachutes, and pensions have shocked the public
Don't forget the endowment funds. Some schools' funds are well into the billions. The top 5 combined = $100 billion dollars.
BTW, when students can't pay off their loans, they now owe the government. Think 0bama is going to use that as a "club" someday? Bet your bippy he will.
4 posted on 03/07/2012 10:50:06 AM PST by oh8eleven (RVN '67-'68)
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To: SeekAndFind

Don’t be a moron, be a:

Lifeguard: $200K
Cop: $125K
Police Chief: $300K
FireMAN: $125K
Fire Chief: $300K
City ‘Manager’: $800K

[Sigh!] “If only the rich would pay their share...”


5 posted on 03/07/2012 10:55:37 AM PST by Darteaus94025
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To: SeekAndFind

bankrupt right off the bat...then you’d need a bailout right? Who would ever think that’s a good idea....uh..oh, never mind...


6 posted on 03/07/2012 10:56:22 AM PST by bigbob
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To: Darteaus94025

RE: Lifeguard: $200K

Where is this?


7 posted on 03/07/2012 10:59:14 AM PST by SeekAndFind (question)
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To: SeekAndFind

govt loans unlimited $$ to students
schools collect ever increasing tuition
pay liberal profs and administrators big $$
liberal profs and admins contribute to Dems

and repeat


8 posted on 03/07/2012 11:02:59 AM PST by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: SeekAndFind
All of those examples are from the formerly great state of Kalifornia. Lifefguard
9 posted on 03/07/2012 11:08:39 AM PST by Darteaus94025
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To: SeekAndFind

I know a couple of university teacher/researchers in my area. In their fifties, living together, female. Between the two of them they gross 265,000 per year.


10 posted on 03/07/2012 11:11:20 AM PST by listenhillary (Look your representatives in the eye and ask if they intend to pay off the debt. They will look away)
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To: SeekAndFind

Hey California.......SUCK IT

You’re getting what you paid for and voted for.


11 posted on 03/07/2012 11:17:55 AM PST by qaz123
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To: SeekAndFind

Heinz Kohut, a psychoanalyst who founded the Self-Psychology school, focused on the development of pathologic Narcissism. He and his adherents predicted that this would increase with each passing generation in our society, as each generation of increasingly Narcissistic parents raised children. This has also been fueled by the infiltration of Marxists into all our societal institutions, who encouraged such pathologic Narcissism through the media and academia and public policy, with the hope of undermining and weakening our founding attributes to the point that our society will collapse, and their revolution can succeed. We are now seeing the fruition of these factors.

When people who have nothing of value to offer others in exchange for goods and services feel entitled to simply use others by taking from those who have earned their way, the system will collapse, and looks likely to do so violently. When it does, the entitled are likely to learn too late that their demands will either not be met, or will be met with lethal violence.


12 posted on 03/07/2012 11:35:11 AM PST by dagogo redux (A whiff of primitive spirits in the air, harbingers of an impending descent into the feral.)
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To: qaz123

Did you actually read the title or just jump on the fact that CA is being used as an example of what is happening across the country?


13 posted on 03/07/2012 11:47:20 AM PST by SZonian (Throwing our allegiances to political party's in the long run gave away our liberty.)
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To: SeekAndFind

Perhaps it should be illegal to increase tuition once a student is enrolled.


14 posted on 03/07/2012 12:36:53 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: SeekAndFind

RE: Lifeguard: $200K

if that’s true David Hasselhoff would still be doing it...


15 posted on 03/07/2012 12:38:28 PM PST by Buckeye McFrog
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To: longtermmemmory
Perhaps it should be illegal to increase tuition once a student is enrolled.

The last thing we need is more laws.

Offering massive amounts of credit to anyone with a pulse to attend college/trade schools is the problem.

It totally insulates the schools from any price/value relationship.

16 posted on 03/07/2012 12:42:06 PM PST by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: nascarnation

And thanks to Clinton and Bush, with much money from Sallie Mae and other lobbying groups, student loans cannot be discharged in bankruptcy. Creating indentured servants out of college students, who don’t have a clue to financial responsibility nor the uselessness of that degree in Mayan Underwater Calendar Reading, with access to almost unlimited financing to continue their high school experience for four more years while believing that they are entitled to a six figure job just because they have a college degree.

Colleges and universities with no liability risk to enrolling students, regardless of whther the student is qualified to be in college at all, in useless majors and an endless money pipeline from the government, via student loans. While window dressing liberal dribble theory as intelligence.

Government should not be in the student loan business at all. Let the market decide the creditworthiness of a student loan borrower.

Allow student loans to be discharged in bankruptcy, but only 7 to 10 years after the student graduated and/or received their last student loan and when a student loan is discharged via bankruptcy clawback the taxpayer money from the college or university that the student attended while taking out the loans. If a college or university has more than 10% of its former students filing for bankruptcy, the university loses all government and state funding of any kind for a set period of time. And if a large number of those former students filing for bankruptcy have a degree from a particular program, i.e. psychology, sociology, general studies, ethnic studies, communications, journalism etc.... tell the college/university that if they do not eliminate that program/college/division from their university the suspended funding will be indefinitely and the entire university can lose its accredation.


17 posted on 03/07/2012 1:15:30 PM PST by CharlesMartelsGhost
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To: SZonian

thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento
Already, tuition in California’s state schools has tripled over the last decade, and state budget cuts will induce universities to jack up tuition again.
For more on California’s ongoing debacle, read.... Search For The Missing Moolah

Please accept my humble apology. Upon further review i now see that the article was about the university system in Nebraska. Thank you so much for pointing out how misinformed I was.


18 posted on 03/07/2012 1:18:24 PM PST by qaz123
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To: qaz123

Reading comprehension isn’t a strong suit with you, is it?


19 posted on 03/07/2012 1:51:29 PM PST by SZonian (Throwing our allegiances to political party's in the long run gave away our liberty.)
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To: nascarnation

not an issue of laws but of preventing deceptive practices.

Once a freshman enters a university they are trapped, for the most part, due to credit transferability and name of university.

A student is “buying” a diploma. We do not allow other purchase contracts to spontaneously change the prices why should universities have a free pass.

I would be all for removing the bankruptcy exemption of university tuition. If your graduate can’t get a job then the university should be liable for allowing a worthless student or degree.


20 posted on 03/07/2012 2:15:01 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: SZonian

No , it isn’t. I missed that class because I had to change the oil on an airplane.


21 posted on 03/08/2012 3:41:30 AM PST by qaz123
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To: nascarnation; longtermmemmory
Rather than add laws, we should instead remove laws.

The first law to remove should be the "Equal Opportunity" laws that are used to hammer employers who don't hire or promote minorities in the "right" proportions. Then employers could hire people without degrees and just test applicants for reading, writing, and math abilities, or just be allowed to look up the applicant's SAT scores and school transcripts.

The second law to remove is the one which makes student loans non-dischargable in bankruptcy, and which gives taxpayer guarantees on student loans. Suddenly, loan issuers would be reluctant to extend $150K in loans to people who want to major in Women's Studies, or otherwise look like they would not be getting a job at graduation that would allow for loan payback.

What I would like to see would be for universities to back loans from their own endowments. When professors' pension funds are on the line, they will be less willing to admit marginal students.

22 posted on 03/08/2012 4:25:58 AM PST by PapaBear3625 (In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell)
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To: PapaBear3625
When professors' pension funds are on the line, they will be less willing to admit marginal students.

Brilliant. About the same probability of happening as me marrying Salma Hayek, but brilliant.

23 posted on 03/08/2012 11:44:57 AM PST by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: nascarnation
Brilliant. About the same probability of happening as me marrying Salma Hayek, but brilliant.

Of course the universities would hate it. I could see making the universities putting their money where their mouths are by making them underwrite at least a percentage of the student loans as a condition of participating in the federal student loan program. If the feds completely exited the picture, private loan issuers might make similar demands that the university accept a penalty for each default.

In the absence of federal loan guarantees (and absence of EEOC threats), private loan companies would deny loans to people who do not meet a profile that indicates a high probability of payback (no loans unless you have a minimum SAT/GPA profile, no loans for worthless majors, no loans to schools whose graduates do not get decent jobs upon graduation).

24 posted on 03/08/2012 1:11:07 PM PST by PapaBear3625 (In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell)
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