Looking like higher education doesn't pay after all

AP has cranked the 3 year default rate on government student loans and discovered a 21.1% default on for profit schools vs. a whopping 12% 3 year default rate from government student loans overall.

According to this Wikipedia article, 9% of all college students attend for profit schools. There is also an issue of transferring credits to a non-profit educational system, although some for profits have been accredited. A list of for profit schools is here.

New data shows more than 300 colleges — more than 85 percent of them for-profit schools — had three-year default rates higher than 30 percent.

There are new rules, kicking in 2012, where higher education institutions with a 3 year default rate of 30% or higher will be cut off from obtaining government student aid.

The Time Magazine article asks The Job Market: Is a College Degree Worth Less?

Employers and career experts see a growing problem in American society — an abundance of college graduates, many burdened with tuition-loan debt, heading into the work world with a degree that doesn't mean much anymore.

Even worse, the article claims a Bachelors degree is now watered down. Well tell that to the people who graduated 10, 20, 30 years ago! And if this is true, why not just award those with high quality Bachelors degrees the now equivalent Masters? Talk about devaluation after the sale! There is also a huge difference between schools.

What few mention is the offshore outsourcing of services, in particular occupational sectors that require a college education.

Also, the article amplifies for profit schools, but look at that real number, a 12% overall student loan default rate in just 3 years. Now tell me the Professional worker, usually defined by those with college degrees, doesn't need labor representation and some help these days.

To find a loan default rate per school, click here.

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It's even worse than it seems

These statistics don't even account for the income-based repayment programs by which the taxpayer subsidises those borrowers who don't earn enough to pay the entire balance of their federal loans. If it were not for these plans, the default rate would likely be upwards of 50%. Meanwhile, if you someday make a lot of money, you'll be rewarded by having to pay the full cost of your overpriced education at a usually high interest rate. It's not exactly fair.

I find the notion that everyone should get a higher education to be ridiculous. The market for education is flooded. Just like the housing market, it's easy access to credit that drives the prices up. Then an oversupply of graduates drives the value of a degree downwards. The whole thing is an unsustainable bubble waiting to pop.

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I don't think they should be waterering down degrees

That's for sure and from the articles it sure sounds like they are watering down the Bachelors these days, which is extremely uncool for all of those who earned a real one.

I think we need to stop offshore outsourcing and insourcing of jobs which displaces Americans.

I don't think one can have too much education. Take Finland for example, they have the highest number of PhDs and it's because they offer support for study. Real support. That makes their society way more economically competitive but they are not importing workers to displace their citizens either.

They have a very strong labor union and laws.

I think the costs are absurd and there was another article or study showing university administration is bloated and they are lining their pockets. It's the students, professors who are not being paid enough or have enough resources.

Bear in mind in the U.S. pretty much any foreigner can come to study and that never mentions the squeezing out of U.S. citizens, state residents when these very universities get huge subsidies and are supposed to educate it's citizenry first and foremost. So, in terms of supply and demand, your claim is possible.

But they should not be lowering the quality bar to graduate.

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Education - Careful what you wish for

“I find the notion that everyone should get a higher education to be ridiculous. The market for education is flooded.”

If there were not easy access and money to get in and stay in college, then the unemployment rate would go through the roof. Colleges and the military are absorbing a phenomenal ‘potential’ labor force. I recently took a course at the local community college. It was a giant recreation center. I lost count of the basketball and hand ball courts, weight rooms, etc Students by the thousands literally sitting around with laptop computers watching movies and playing games, everyone had an ear plug in their ear listing to music, texting, etc. Many students were getting second Associate Degrees (e.g. criminal justice and business administration). One student I talked to with those two degrees was interviewing with the ‘dog pound’ (i.e. dog catcher).

If a small fraction of them left school and hit the labor market we would be facing a revolution. Government and economic oligarchs know this. They flood the market with student loans and combat games/movies with a mind to keep young people in school or military and out of the job market.

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Degrees and Fuzzy Logic

While I readily concede that Harvard and Hopkins have some first rate minds (and spend more money on research), the "Ivy League" mentality that considers one degree better than another (i.e., apples to apples) seems odd at times. Yes, a Wharton or MIT pedigree help you land that first job, but from then on it matters less than what you do with your opportunities. The annual ranking of schools and departments gets almost nonsensical. At the private university where I got my PhD, we were in the middle of the "quality" range while Harvard, Columbia, and Berkeley were considered more desirable. But where did our professors get their doctorates? From Harvard, Columbia, and Berkeley, of course. The differences were perhaps price of admission. But once in a professional career, no one ever asked me where my degree was from -- the guy in the next office had his Harvard pedigree on the wall, but we made the same salary and published in the same journals. I was even asked to serve on advisory boards at the "better" schools, which blew my mind. I am reminded of Malcolm Gladwell's "Outliers," in which he observed that above an IQ of, say, 130, your chances of getting a Nobel are not statistically improved by being a lot smarter.
When I hear that a degree from Harvard or Yale means a better education, I have a four letter response: "LTCM." Or maybe Bush.
But then, I did not get an offer from Goldman Sachs -- so my opinion may carry less weight among the elites. Perhaps it's just as well.
Frank T.

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Frank T.

agree with you there

that entire "soup can label" mentality drives me bats. as if "brand name" guarantees "quality"....but on the other side and this does include some ivy schools, they appear to be watering down the difficulty of a Bachelors these days and moving it to a Masters which hurts all of those who got the original difficult Bachelors.

But on that entire "elite" institution thing, yeah right.

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Webmaster, thank you. Was a

Webmaster, thank you. Was a good article. I wish you continued success of

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