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The Ongoing Inflation Of The Higher Education Bubble

Tyler Durden's picture




 

We have been vociferous in our discussion of the looming student loan debt debacle (just as we have been over high frequency trading). With credit creation limited to just student (and auto) loans...

in 2013 just student and car loans alone represented 108% (that's right, more than all) of total household debt created.

 

We thought the following charts would clear up once and for all just how bad the government's heavy visibl ehand of 'help' has been for the average household in America with childrean aiming to pursue the American Dream...

Originally posted at Political Calculations blog,

How much has the average cost of attending college at four-year degree-granting institution in the U.S. risen since the 1969-1970 school year?

For an American student who enrolled in a four-year college in the fall of 1969, the average they paid for their tuition, required fees, room and board totaled $754, which when we adjust for inflation be be in terms of constant 2011 U.S. dollars, works out to be the near modern day equivalent of $4,619.

But a student enrolling in the same kind of institution in the fall of 2011 for the 2011-2012 school year would pay $13,608. Nearly three times as much.

Tuition and Required Fees (In-State for Public Institutions) for All Four-Year Degree-Granting Institutions, 1969-2012

To get a better sense of how affordable, or rather, unaffordable attending college has become, we next calculated the percentage that the average cost of tuition and fees for college would consume of the typical income earned by American households:

Ratio of Average Tuition and Required Fees for All Four-Year Degree-Granting Institutions to Median Household Income, 1969-2012

In the chart above, we see that after holding basically flat from 1969 through 1982 at a range between 8.6% and 9.0% of the median American household income, the ratio of the cost of attending college with respect to that income began rising rapidly, with the cost of college having reached 26.7% of the American median household income in 2011-2012.

We also see that there would appear to be certain periods where the cost of attending college rose considerably faster than median household incomes, which we've shaded in the chart above.

Let's next look at how the cost of attending college has grown against median household incomes from 1969 through 2012:

The Inflation of the Higher Education Bubble: Average College Tuition and Required Fees vs Median Household Income, 1969-2012

Here, we see that there have been three major inflation phases for the cost of college: the first running from 1990 to 1994, the second from 2000 to 2003 and the third from 2007 through at least 2012 (and likely, the present).

We should note that each of these periods coincide with periods of recession or extended underperformance for the U.S. economy. But what is perhaps more remarkable is that we do not observe the same pattern for earlier recessions, the major years for which we've also indicated on this third chart.

That's largely the role of increased government subsidies for higher education after 1989, in the form of grants and guarantees for student loans, which enabled colleges to continue jacking up their prices well above what a typical American household could afford to pay, because now Uncle Sam is increasingly stepping in to pay a growing share of the bill.

+++++++++++

Of course, the rise of unaffordability has been juiced by the ready availability of credit to purchase said 'knowledge'... however, as we noted previously... student loans are NOT being used for education...

When one averages out the numbers, how many students are said to abuse their loans and use the proceeds to fund "other" uses? "About a quarter."

Research suggests a fair chunk of that is going to non-education expenses. In 2011-12, about a quarter of student borrowers took out loans that exceeded their tuition, after grants, by $2,500, according to research by Mark Kantrowitz, a higher-education analyst and publisher of the education site Edvisors.com.

And the one take home paragraph that summarizes this latest capital misallocation clusterfuck which has Fed bailout written all over it:

Mr. Selent, of Fort Lauderdale, knows he is getting himself deeper in a hole but prefers that to the alternative of making minimum wage. In his 20s, he earned a bachelor's degree in communications from a local for-profit school but couldn't find a job in the field after graduating and began falling behind on his student-loan bills. He is now taking courses for a degree in theater so he can become an actor.

What else is there to say?

Except that... that free money source comes with a weight problem... delinquencies are soaring...

What's worse, while the 90+ day student debt delinquency rate did post a tiny decline from 11.8% to 11.5% in Q4, on a total notional basis due to the increase in outstanding balances, as of this moment the amount of heavily delinquent student loans has just hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter.

 

 

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Sun, 04/06/2014 - 15:42 | 4630300 knukles
knukles's picture

Where else you gonna get a 4 year free ride saturated with Drugs, Sex and Rock & Roll?
Not mom's basement.
Well, except fonestar .... less the Drugs Sex and Rock & Roll

Sun, 04/06/2014 - 15:48 | 4630313 economics9698
economics9698's picture

Confirmation the government fucks up everything it touches.

Sun, 04/06/2014 - 15:57 | 4630345 jbvtme
jbvtme's picture

the local re-ed camp is up %10 in the last four years...$58k per

Sun, 04/06/2014 - 16:13 | 4630373 Gringo Viejo
Gringo Viejo's picture

True Story: A teacher spent 30 years teaching inner city schools in the LAUSD. On his last day he addressed his students:

"You are the future! And that is why....
I'm leaving the United States."

Sun, 04/06/2014 - 18:48 | 4630681 Supernova Born
Supernova Born's picture

"Family" courts can order fathers to pay for college for adult children no matter what it costs.

No need to discount when the check is written or the father goes to jail.

Sun, 04/06/2014 - 23:51 | 4631339 NoDebt
NoDebt's picture

Let me give you a little context on that, courtesy of personal experience.  I am from a divorced family.  Mom and Dad split when I was 10.  Dad was ordered to pay for my college.  (And my brother's and sister's)

One of the most "real" conversations I ever had with my father was when he explained that he was required to pay for 4 years of my college.  Not until whenever I happened to graduate.  Just 4 years.  And just tuition.  Not "everything elese" that goes with it.  He said to choose wisely and asked me if I understood what he was saying.

I said yes.  And I graduated in 4 years, paying for my own room and board, books, incidental expenses, etc.  I ran my own landscaping company to pay for that.  I cut a LOT of grass.  I planted a LOT of plants.  I cleaned a LOT of gutters.  I wish I could have partied more, but those are the breaks.  Villanova was NOT a cheap school.  Neither was Embry Riddle Aeronautical University, where my brother became a pilot.  He worked his ass off, too, puttng cheap roofs on cheap houses.

Was any of this ideal?  No.  It was all fucked up, as life usually is.  I wouldn't recommend this path to anyone.  And this was 20+ years ago, when college was "affordable", in relative terms.

But what I discovered, and what has stuck with me is.... I do my best work with a gun to my head.

If you're waiting for somebody to bail your ass out, if you're waiting for this to be fair, you'll be waiting a long time.  I did what I had to do for the times.  DO NOT try the same thing today that I did 20+ years ago.  Find a different path.  Learn to be a welder or do HVAC work or something.  College is a racket and one that's got a lousy return if you need to go into significant debt to afford it.  

The world isn't what it used to be.  It barely made financial sense 20+ years ago.  It sure as shit doesn't make sense now.  I can't tell you the answer, because it's different today.  What I can tell you is that if you follow the traditional path and sink yourself in (non-expungable) debt, you're as good as dead.  STAY AWAY FROM DEBT.  It is SLAVERY.

Sun, 04/06/2014 - 23:53 | 4631350 kareninca
kareninca's picture

Why did someone down-arrow this????????

Sun, 04/06/2014 - 23:56 | 4631353 NoDebt
NoDebt's picture

My down arrows are my most loyal readers.  Don't worry about it.  I don't.

Mon, 04/07/2014 - 00:45 | 4631409 RafterManFMJ
RafterManFMJ's picture

Probably because they find the idea of a man being forced to pay for a 4 year education of his children to be disgusting and abhorrent.

I'm sure it wasn't aimed at NoDebt.

Mon, 04/07/2014 - 01:59 | 4631458 Fidel Sarcastro
Fidel Sarcastro's picture

Down arrowed? I wondered the same. 

Sun, 04/06/2014 - 23:48 | 4631342 RafterManFMJ
RafterManFMJ's picture

Whatever.

Flee with what you can carry; burn the rest to the ground.

Sun, 04/06/2014 - 16:36 | 4630397 wee-weed up
wee-weed up's picture

 

 

You ain't seen nothing yet!

Just wait till Obozo forgives all student loans...

And then lets us taxpayers foot the bill!

"Stroke of the pen... Law of the land. Kinda cool!"

Sun, 04/06/2014 - 17:15 | 4630472 Caviar Emptor
Caviar Emptor's picture

Nope. TPTB would consider that "an inflationary tax cut" . All that extra cash in the economy might inflate a bubble!

Sun, 04/06/2014 - 17:46 | 4630538 PT
PT's picture

But, but, but ... the baby boomers were in the workforce (yes, okay, they're starting to retire now, but they also passed through their peak earning years), GenXers too.  Uni costs should have been the lowest relative to the working population.  How come prices went UP?

 

In order to go to uni, you must be smart enough to get in and yet dumb enough to sign a blank cheque and an open contract.  It also helps if you don't understand compound interest.  What gives first?

Uni:  No pay, everything is a loan and an expense out of your pocket.
Trade Apprenticeship:  Paid to learn, no loans, tools are a tax deduction.

Ummmm... 

Sun, 04/06/2014 - 17:21 | 4630478 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Just wait till Obozo forgives all student loans...

Those subsidized Stafford loans, guess what? We are going to pay for those defaults. Thank you gubimint!!!

Sun, 04/06/2014 - 17:22 | 4630482 Squid-puppets a...
Squid-puppets a-go-go's picture

yer this is the last of the debt that will ever be forgiven. Remember they passed a law couple a years back that you cant get out of student loan debt even if you declare bankruptcy

Sun, 04/06/2014 - 17:47 | 4630537 wee-weed up
wee-weed up's picture

"Remember they passed a law couple a years back that you cant get out of student loan debt even if you declare bankruptcy"

------------------------------------

Ha! When has a "passed law" ever stopped Obozo!

He don't need no steenkin' laws! He ignores them every day!

Mon, 04/07/2014 - 09:51 | 4631778 Billy Sol Estes
Billy Sol Estes's picture

Want to stomp on the bloated University system's dick?

 

1) Forgive all student loans.

2) Abolish all Federal school loan programs, pell grants, stafford loans.

 

Then Preppy-Pricker University will be making cost cutting measures left and right as their coccaine hook up runs dry.

I throw all almae mater mail straight to the trash. Senior year they mailed out letters asking for soon to be graduates to donate to the "Senior Class Gift" and to donate "whatever they could." I put a penny in the envelope and mailed it back to them.

Sun, 04/06/2014 - 17:50 | 4630547 PT
PT's picture

I'm sure that the "investors" who provided the student loan money won't mind waiting for the bankrupts to earn the money to repay them ...

Actually, the loan document will probably be sitting inside the student / graduates' pension plan.
HAHAHAHAHAHAHAHAHAHAHAHAHA 

Sun, 04/06/2014 - 17:53 | 4630565 PT
PT's picture

Gotta admit - it's only fair! ...

Sun, 04/06/2014 - 20:47 | 4631002 ChanceIs
ChanceIs's picture

 

 

 

Sorry Big Guy.  You - and most - just don't get it.  I have written about this many times.  THERE IS NO SUCH THING AS A STUDENT LOAN BUBBLE.  There can only be bubbles in tradable assets, fir which a market is made.  There is no market for student loans.  (If you want to state that education costs are outrageously high and can't stay there, I would immediately agree.)

Colleges are paid for with printed Fed money.  You know....the Fed issues the credit for the student loans. That goes striaght into the economy and is immediately inflationary.  Its full effect is felt immediately.  The effect you reference is the money which won't be paid back in the future.  There is $1 trillion in student debt out there with a default rate of some 11%.  So that is $11 billion paid out annually to keep professors' salaries high and employ a bunch of college administrator fools making sure everything is equal at the college.  It is just a different form of stimulus - in this case to a bunch of liberal whack jobs who create voters for the Democrats.  (See what is going on at Dartmouth - students demanding unisex bathrooms and the like.  You tax dollars at work.)

So if the Fed through its "Quantitative Tightening" is providing $20 billion per month - $240 billion per year - less stimulus.  Nobody ever expects that back.  That money is flushed into bubbleicious stock prices - which can collapse.  What is the difference between that and students not paying back their loans.  Of course 50%, but the money is flushed anyway.  And if the Fed cuts it all back, then college defaults will be in the noise.

The whole issue here is gross misallocation of resources.  I gauarantee that if the Fed gives me - or any other ZeroHedge reader - $1 million, there really would be a multiplier in the economy.  For staters I would get the wymens studies majors out of the schools and into cutting my grass.  After a year, I might start teaching them how to fix my car.  Then they could go apprentice for a real auto repair shop.  Eventually they would become self sustaining.

Sun, 04/06/2014 - 20:59 | 4631028 libertus
libertus's picture

The whole higher ed system in the USA needs a drastic overhall. These guys have quite the interesting business model that lowers costs and creates incentive pay. Its all about the teachers. Check them out OPLERNO.com

Sun, 04/06/2014 - 15:52 | 4630328 BandGap
BandGap's picture

10 years of college, 2.2 million in earnings so far. Only cost me 18K.

Quite a return for the US, and they didn't do dick. One year I paid 50K in federal income take, been roughly 15-30K for 20+ years. And what do I get for this?

Leave fonestar alone, he bleeds as much as any of us. Maybe more so lately.

Sun, 04/06/2014 - 15:53 | 4630335 Son of Loki
Son of Loki's picture

<<Where else you gonna get a 4 year free ride saturated with Drugs, Sex and Rock & Roll?>>

 

Could be why every peasant [and non-peasant] in the civilized [and non-civilized] world is flooding across our bordes and via plane, car, boat and train to get to Merika to join the FSA.

Sun, 04/06/2014 - 16:05 | 4630352 fonzannoon
fonzannoon's picture

Fwiw I ran into a guy a few weeks ago who was some sort of consultant to several Universities on their finances. We got into this whole discussion and he said the Universities already know where this is going. I had my 4yr old with me and he said "don't worry about college planning". When I asked him why he said that by the time my daughter is a senior in high school there will be an aptitude exam and whatever level my kid scores will be the level she enters "college". meaning she could start at the sophmore level etc. if she scores well enough.

90% of "College" will be done online. The next several years colleges will cannibalize each other until there are only a handful left that people would be willing to pay to attend. The university system will implode upon itself and many a college campus will be a ghost town as well as the surrounding area that existed solely due to the University. He said there is a huge migration happening to the south right now and the North will feel it the worst, abd first. Again, he said the university's that he consults for have already accepted this and are planning accordingly.

Sun, 04/06/2014 - 16:34 | 4630400 ebworthen
ebworthen's picture

The campuses would make good FEMA camps, but most are too nice; more likely Stormtrooper training camps.

Sun, 04/06/2014 - 17:48 | 4630540 RaceToTheBottom
RaceToTheBottom's picture

Stormtroopers training will be filled with residents of the FEMA camps.  That sort of Darwinian dynamic always results in the best/worst situation...

Sun, 04/06/2014 - 16:35 | 4630402 rtalcott
rtalcott's picture

It will all be online for most kids...their education will even be worse than it is now and the university's margin will be better....so who 'wins?"

Sun, 04/06/2014 - 16:36 | 4630405 Skateboarder
Skateboarder's picture

That's only ten years away fonz. We're talking about a radical shift from the current 'competitive' (lol) system - a paradigm change from the false acceptance of university degrees as competence certificates, to certification levels determined by aptitude tests.

It's hard to imagine, but so were a lot of things once, that have manifested into what is today.

Sun, 04/06/2014 - 16:40 | 4630409 nightshiftsucks
nightshiftsucks's picture

So what will that do to the economy ? I can see the govt stepping in and making online courses illegal.

Sun, 04/06/2014 - 16:42 | 4630414 fonzannoon
fonzannoon's picture

"So what will that do to the economy"

That was what I asked him. He punted the question. No way that can happen and everything else remain constant. Not a chance.

Sun, 04/06/2014 - 18:51 | 4630689 Greenskeeper_Carl
Greenskeeper_Carl's picture

Well, obviously the govt can't get out of the loan business, that would be 'draconian'. I see it taking a little longer than that for the average person, or the average parent finally stepping in and saying NO. Kids are indoctrinated every day in public schools that they have to go to college, that's the only way to have a future. And they are told this by public school teachers who probably owe 50k+ in loans themselves. It will be interesting to see how this plays out. Too many professors and administrators whose income depends on this scheme to allow this to go away quietly. The gov will probably continue this charade for many years, after all, "it's for the children"

Sun, 04/06/2014 - 18:55 | 4630702 fonzannoon
fonzannoon's picture

By the time this thing is over the free shit army is going to be so big we will be unable to comprehend it.

Mon, 04/07/2014 - 08:54 | 4631812 Billy Sol Estes
Billy Sol Estes's picture

Billy Sol Estes' girlfriend is working on her Phd and has gone non stop from undergrad-grad-phd. She will have about $150k in student loans when she finishes. Her parents are dirt poor and are paying for her sisters hoarding hobby and shitting up the parents' house with her two kids and worthless un-wed baby daddy. Her other sister is a failure in life too. They have only helped her on some medical bills and gas money. Tuition and the rest were all through loans. When we first started dating I was a bit apprehensive to the amount of debt she would have at graduation but I slowly realized she was trying to jettison herself from the shit-hole life her 2 sisters lead where they leech off her parents.

She worked in restaraunts for 10 years, from high school to grad school, and taken out loan after loan every year. I met her at a lower end public school I went to for my masters that literally cannot turn away any student with a cash flow or loan eligibility. The whole masters program was a joke where thesis topics like "what is the probability of catching a foul ball at the Univ. baseball field" were constantly being rejected by graduate affairs.

I originally thought I would ask her to pay a hefty sum of money toward the loans to get them paid off in our lifetime, but at this point I want her to pay the bare minimum and just wait for the SHTF year or mass debt forgiveness. Laissez les bon temps rouler!

LOL!

Sun, 04/06/2014 - 17:22 | 4630480 Caviar Emptor
Caviar Emptor's picture

Nope. Govt will encourage the trend to downsize student loan bubble and make sure that kids are only trained in one skill. Dumb down the serfs

Sun, 04/06/2014 - 17:32 | 4630506 centerline
centerline's picture

I have been watching this space for years now.  Without a doubt it is heading into oblivion.  A complete mess.  Got to run right now - but remind me sometime and I will give a few details about how what the schools are telling people and what they are actually doing are completely opposite!  As usual - it's all about the cash!

Mon, 04/07/2014 - 08:58 | 4631826 Billy Sol Estes
Billy Sol Estes's picture

I can tell you in Texas all the universities get paid for the # of dimwits they churn out, regardless if they pass or not. Even present at the graduate level.

A is awesome

B is bad

C is for credit

D is for DIPLOMA!

and F is for Free Semester next year!

Sun, 04/06/2014 - 18:38 | 4630661 Greenskeeper_Carl
Greenskeeper_Carl's picture

Very interesting. I have a 6 month old, he is our first child, and I have been thinking about that. My family and my wife's family gave him money for the holidays and his baptism (she and her family are catholic, and consider that a big deal), and have been telling me I should start a savings account for him for college. I take that money and buy silver with it, and put it in my safe in a seperate stack since I refuse to let his purchasing power disappear over the next 18 years. My plan is to either let him use that towards college of he wants, or, when I think he is responsible enough, just give it to him as a start on his savings. I'm not paying 20k a year for him to waste 4 years of his life to earn a useless piece of paper. I did three years there, majoring in kegs and condoms, lost my lottery-funded scholarship (in GA) and enlisted in the coast guard rather than put myself into debt like that. That was almost 10 years ago.

Sun, 04/06/2014 - 16:38 | 4630408 Aussiekiwi
Aussiekiwi's picture

LOL, friend of mine entering the US was queried about his aussie passport as it did not have long to run, the immigration officer was concerned he might try to stay, my friend fell around laughing, pointed out to the officer the free health care he has in aussie, the weather, the lifestyle, the cost of living the 140k plus he earns against the 50k he would earn in the states and asked him why he would possibly want to stay....the officer was not impressed....which made it even funnier. 

Not every non peasant in the civilised world wants to live in the US, some of us feel a little sorry for you.

Sun, 04/06/2014 - 17:32 | 4630501 First There Is ...
First There Is A Mountain's picture

Yawn....haughty comments from some clueless Aussie are entertainment enough but I thought I'd toss some cold water on your little screed. You've just postponed your day of reckoning but when your immense RE Bubble pops and China goes into a tailspin, I doubt you'll be so smug. Aussies have been living WELL beyond their means for a good long time and like the US and Europe, you will soon start circling the drain. And given you are now very close to if not the fattest nation on earth, that -ahem- free health care sure is going to come in handy. Face it, you're a giant strip mine for China and little else and America is their dumping ground. Your pathetic trade deficit is a testament to that and the only reason it narrows is because you're maxing out your credit cards and cannot continue to consume so conspicuously. Otherwise, Australia is a nice place as I've had the pleasure of vacationing there several times. I don't feel sorry for Aussies except to say that the heretofore strange and entirely innacurate depiction of Australian women as blond hair/blue eye surf goddesses couldn't be further from the truth. On the contrary, they're some of the more homely women on earth except for maybe the swamp donkeys native to New Zealand. lol. I guess that's a double whammy, eh mate? 

Sun, 04/06/2014 - 18:05 | 4630592 FredFlintstone
FredFlintstone's picture

I was in NZ last summer for about a week on business and never did notice even one woman that made my head turn. Granted most of my time was on the south island, but even up in Auckland there was never a hot chick. I had a theory that they had to take whatever they could grab on the docks of England before leaving port.

Sun, 04/06/2014 - 19:42 | 4630829 First There Is ...
First There Is A Mountain's picture

I was in Rio for Carnaval years ago and a British friend had arranged for us to stay with EIGHT KIWI women in a Copacabana rental house. Long story short, he knew one of them from other travels and so she invited us to stay with the group, mostly because they were scared shitless of Rio. I thought to myself, wow, pretty good odds for a couple of single guys. Surely one of them is relatively attractive. Boy was I in for a major letdown. Every single one of them closely resembled Shrek to some degree. They were fun enough as they could drink like no one's business but that was about it. And when in Brazil, why even bother with anyone other than the stunning local talent. Also traveled around with some cool Kiwi guys in Argentina - they were the first to admit that NZ was hopelessly devoid of attractive women. Said they went to the UK to make $$ and get laid. If you're going to the UK to get laid, things are worse than they seem. 

Sun, 04/06/2014 - 22:36 | 4631219 FredFlintstone
FredFlintstone's picture

"scared shitless of Rio"... not afraid of being raped I suppose.

Sun, 04/06/2014 - 23:45 | 4631334 kareninca
kareninca's picture

All of the New Zealand men I have met have looked just like the Beagle Boys from the old Donald Duck cartoons; there must be a serious genetic bottleneck there.

And our (male) neighbor from Australia is very sweet, but he has the physique of Patrick Starfish, from the Spongebob cartoon.

I guess you can't have a bunch of homely women in a region, without the men being homely too.

Mon, 04/07/2014 - 00:04 | 4631365 RafterManFMJ
RafterManFMJ's picture

As a man who breeds the Amish in Lancaster, PA for some serious side income (and I promise you, I don't come cheap) what could I expect in payment to improve the Kiwi blood line?

Currently I make as much as 200 dollars per session or am often offered my weight in chickens.

Mon, 04/07/2014 - 11:02 | 4632247 Zerozen
Zerozen's picture

lol wut?

Sun, 04/06/2014 - 17:16 | 4630474 Exponere Mendaces
Exponere Mendaces's picture

@knukles

See you're living up to your "Zippy the Pinhead" avatar. That's the problem with prior generations, they're so smugly sure they've played it all right, they can't help but be a bunch of gloating douchebags.

Sun, 04/06/2014 - 18:03 | 4630587 knukles
knukles's picture

"Are we having fun yet?"
  -Zippy the Pinhead, Bartletts Familiar Quotations

Sun, 04/06/2014 - 15:44 | 4630302 Eireann go Brach
Eireann go Brach's picture

How much will it cost to attend college in Kenya, so I can become the next president of Amerika?

Sun, 04/06/2014 - 15:50 | 4630319 Skateboarder
Skateboarder's picture

A communist CIA mom.

Sun, 04/06/2014 - 15:50 | 4630320 SmilinJoeFizzion
SmilinJoeFizzion's picture

Don't forget your stint in the Indonesian madrassa

Sun, 04/06/2014 - 17:01 | 4630450 wee-weed up
wee-weed up's picture

 

 

Then when you get back to the states...

Be sure to somehow obtain a mysterious SSN...

That is from a state other than the one you were born in!

What's that you say?... You weren't even born in the US?...

No problemo... Hell, you'll win in a landslide!

And get re-elected 4 years later to boot!

Is this a great country, or what!

Sun, 04/06/2014 - 17:08 | 4630458 Skateboarder
Skateboarder's picture

You can't spell doobie without Obie. ;-)

Sun, 04/06/2014 - 15:44 | 4630304 syntaxterror
syntaxterror's picture

Thank god inflation is only 1% or I'd be worried right now.

Sun, 04/06/2014 - 15:44 | 4630305 I am Jobe
I am Jobe's picture

All the loans to train to be hookers and pimps for the future jobs in Amerika and then blame the system. Shows the inbreeding in Amerika . Uggh 

Sun, 04/06/2014 - 15:47 | 4630310 SmilinJoeFizzion
SmilinJoeFizzion's picture

Got to fund those pensions and bloated salaries of staff and profs. Janitors are making 6 figures. That's a crime

Sun, 04/06/2014 - 17:16 | 4630473 Comte d'herblay
Comte d&#039;herblay's picture

Bingo!

Sun, 04/06/2014 - 17:33 | 4630509 EggSlayer
EggSlayer's picture

What janitors? Point me in the direction to those jobs please

Sun, 04/06/2014 - 18:01 | 4630581 FredFlintstone
FredFlintstone's picture

One spring break I changed filters in all of the AC units in a high rise dorm. The housekeeping staff was watching TV in the stdent rooms, playing cards in the housekeeping closets and even sleeping on the beds! The janitor was mopping a floor in a tee-shaped building. He would start in the middle and mop to the exterior. He would then sit on a bucket and watch it dry, walk across and the mop the other two hallways in the same fashion.My buddy and I actually worked up until quitting time. The first day we arrive at 3:30 and there was a line of 80 or so waiting to punch our time cards. Each day of that week we quit a few minutes earlier than the day before. Always the same long line. I think they all quit working 15 to 20 minutes beforehand and waited in line.

My guess is that they could pay 15 to 20% more to the top third of their staff and fire the rest and do just fine at most state colleges.

Sun, 04/06/2014 - 23:31 | 4631314 jerry_theking_lawler
jerry_theking_lawler's picture

And why does this happen? There is no 'profit motive' in this for the person 'supervising' them. They are just a worker bee as well (excep they get paid big bucks and a pension)......if the person at the top was looking after the bottom line then there would be procedures in place to get the most out of the workers.....trust me, I know, I am in private industry.

Sun, 04/06/2014 - 15:48 | 4630312 globozart
globozart's picture

I don't see the problem, it did double every 10 years exactly in line with all central bank targets. 

Sun, 04/06/2014 - 15:51 | 4630322 papa_lazarou
papa_lazarou's picture

More expensive, yes, but well worth it! After all, students are paying for what they get--especially at Ivy League schools--everyone gets an "A" and professors who actually push and challenge students lose their tenure/job. The "completion agenda" is in full swing, and education is the last thing college is for in 2014. So lay that money down and skate through four years of minimal work and zero critical thinking. If you're lucky, the diploma "earned" will qualify you for a position in the corporate machine (probably on all fours). With all the debt a four-year degree incurs, this is a position one will assume for life.

Sun, 04/06/2014 - 17:38 | 4630526 813kml
813kml's picture

The education might be worthless, but the connections are priceless.

Sun, 04/06/2014 - 15:52 | 4630331 Seasmoke
Seasmoke's picture

How do out steal from teenagers who have no money ??? GIVE IT TO THEM. 

Sun, 04/06/2014 - 15:57 | 4630344 Skateboarder
Skateboarder's picture

They came up with a much better solution than that, many years ago: video games.

Sun, 04/06/2014 - 17:36 | 4630519 trembo slice
trembo slice's picture

but... they're so fun.

Sun, 04/06/2014 - 18:07 | 4630598 Skateboarder
Skateboarder's picture

Yeah, I love me some video games sometimes too. 15-20 minute chunk in a day. No more, no less.

Sun, 04/06/2014 - 15:59 | 4630347 Caveman93
Caveman93's picture

Loans are for drones.

Sun, 04/06/2014 - 16:09 | 4630367 blindman
blindman's picture

financialize and tax mother's milk
and then sue the bitches, that is the
thing. indenture the newborns
for what they receive
before they are born to
sustain the riches
the few have adored and bestowed
upon themselves.
.
anyway poems *tm

Sun, 04/06/2014 - 16:12 | 4630368 ToNYC
ToNYC's picture

The cost of the Adversity is cheaper than the University; they will learn the hard way, natch.

Sun, 04/06/2014 - 16:18 | 4630379 I Write Code
I Write Code's picture

It looks to me like the ratio of the elite schools to the average has also doubled, based on my example was about 2.5x in 1970 and is now over 4x.

OTOH at most schools that is only for *list* price, and if you come from a middle-class family you are generally granted a major discount, which might just take that multiple back down to 2.5x or even less.

But as everyone says, we've probably passed max university, major parts of it are going online whether you do them from your parents' basement or an elite school's dorm room.

In fact, I might want to start shopping for some online classes meself right about now ...

Sun, 04/06/2014 - 16:21 | 4630384 Rising Sun
Rising Sun's picture

two biggest make work industries today - education and healthcare

 

what drives high priced education?  government loans

 

what creates higher costs in healthcare?  government management

 

And when the government gets involved, it's only a matter of time before IT GETS ALL FUCKED UP!!!!!!!!!!!!!!!!!!!!!!

Sun, 04/06/2014 - 17:31 | 4630499 Caviar Emptor
Caviar Emptor's picture

Cant wait till people actually have to pay for their healthcare! They might have to forgo meds, vaccines, surgery, prosthetic legs and go for the cheaper alternatives. We'll start to see disabled people again like in the good ole days!

Sun, 04/06/2014 - 17:40 | 4630528 FredFlintstone
FredFlintstone's picture

85 year old woman who never made $200/week in her life is popping pills to the tune of $400/week, for what? Because big pharma has her and her doc convinced it will make her live a little longer? This all unsustainable. But it keeps going because "Medicare" is paying.

Good times!

Sun, 04/06/2014 - 16:29 | 4630389 BigRedRider
BigRedRider's picture

College

Eating

 

Which can I do without?

Sun, 04/06/2014 - 17:35 | 4630507 813kml
813kml's picture

Why not have it all?  Go to college and eat some coeds.

Protip:  Get 'em before the freshman fifteen.

Sun, 04/06/2014 - 17:53 | 4630562 22winmag
22winmag's picture

Finally, some sound advice around here.

Sun, 04/06/2014 - 16:42 | 4630415 XRAYD
XRAYD's picture

Another measure of inflation:

 Augusta National's founder, Bobby Jones, might have been stunned at what his beloved Masters has become. He attended his last tournament in 1971, eight months before his death. That year Charles Coody, a drab but personable Texan, beat out Jack Nicklaus and Johnny Miller by two strokes. His winner's check of $25,000, adjusted for inflation, equates to $145,000 today, or one-tenth of this year's $1.4 million for the winner

http://online.wsj.com/news/articles/SB1000142405270230398700457948148319...


Sun, 04/06/2014 - 16:49 | 4630430 thomasco
thomasco's picture

The $124 B that's late is equivalent to about half the GDP of Ireland--just to add some perspective.  

This misallocation of capital is a screaming problem in plain sight.  "Nothing to see here," say our Ivy League, government, financial experts.

 

We'll see.

Sun, 04/06/2014 - 17:13 | 4630465 blindman
blindman's picture

eat the young, it is the financial calling....
the steam of the political forbearing front,
and then elect me!
and forget your past and integrity,
poetry and history, simple.

Sun, 04/06/2014 - 17:13 | 4630468 game theory
game theory's picture

A couple of years ago I saw all these people bailing from the private sector heading for university where they were actually getting pay raises. Now, these people were decent folks...but they were NOT what I considered to be university teaching material. But the universities were hiring anyone with a pulse at the time. And I wondered to myself when it would end...thinking it couldn't last long especially with the private sector struggling to absorb all those debt-laden college kids.

Now here I am reading more about the bubble STILL wondering how long it can go on. Even the housing bubble lasted years longer than many critics thought it should. Perhaps we have another few years of this too?

Mon, 04/07/2014 - 00:12 | 4631372 RafterManFMJ
RafterManFMJ's picture

Iffin u dun be sendin' yo kids ta collage den u dun be lovin' them. Iffin dey dun have a collage dagree den dey gonna starv!

Yo owe yo kidz a collage degwee n a $25,000 weddin'

Sun, 04/06/2014 - 17:26 | 4630488 Mr Giggles
Mr Giggles's picture

Kids are prisoners, same people guarding, same buildings. no free thought no question off the status quo,all part off establishment. why no money educ no tax edu You lazy parents.

Sun, 04/06/2014 - 17:29 | 4630495 therover
therover's picture

'7 years of college down the drain. Might as well join the fucking Peace Corps.'

Sun, 04/06/2014 - 17:32 | 4630503 EggSlayer
EggSlayer's picture

OK.. being a college student.. I think we all know that there is a major problem with student debt. In my eyes this topic is close to being beaten to death. But what is to come of it???????? I've still yet to figure that out.

Sun, 04/06/2014 - 17:51 | 4630555 22winmag
22winmag's picture

Mass starvation and civil war.

Sun, 04/06/2014 - 17:52 | 4630559 FredFlintstone
FredFlintstone's picture

The average is like $20k, which is not too bad assuming they are able to get a decent job. It is a millstone around the neck for others. Take someone with $40k in debt and no hope of making more than $12/hr. They will suffer under the weight. Some will struggle for decades, others will go nuts and become societal outcasts.

There have always been some government programs to relieve the debt, such as becoming a teacher or doctor on a reservation or something. Maybe those will be expanded somewhat.

I had $10k of debt from 1988, which I paid off by the time my oldest was 13 (12 years after I graduated). I would have paid it off earlier, but it was a real weird situation trying to communicate with the loan company. Basically they did not want it paid off sooner since interest rates were dropping throughout those years.

 

Sun, 04/06/2014 - 18:34 | 4630649 22winmag
22winmag's picture

You forgot to mention all the suicides directly and indirectly attributed to student loan debt.

Sun, 04/06/2014 - 18:53 | 4630695 FredFlintstone
FredFlintstone's picture

Sad, I was not aware. I have 4 children 20 to 27 yo, 3 graduates, one half way through. have not heard of any stories from them.

Sun, 04/06/2014 - 18:01 | 4630584 RaceToTheBottom
RaceToTheBottom's picture

Treat your college time as an investment.  Cost VS Benefit.

Research what degrees pay the most.   Disregard anything about Law programs. They are liars.

Enroll in a STEM related program that supports that area.

If you view yourself as having trouble with the subject matter, study harder.

If you view yourself as a communication person and not a math person, learn math.  Once you graduate, your communication skills will be come valuable.  Now develop math skills.

 

Punch anyone in the mouth who mentions college is a time for personal exploration, taking hard classes is hard, and someone that says you can mindlessly take on debt.

Sun, 04/06/2014 - 20:02 | 4630887 Telemakhos
Telemakhos's picture

I upvoted you because of the statement about law programs.  There are no law jobs, unless you know someone, and hanging out your shingle right after graduating is a fast-track to homelessness.  I know recent law graduates who took teaching jobs in secondary schools, because the prospects of being able to make rent were far better.

Sun, 04/06/2014 - 17:33 | 4630508 AdvancingTime
AdvancingTime's picture

When it comes to healthcare many people see governments intrusion into the market results in higher cost, the same can be said in education. Government loans are a driving force behind tuition inflation. Low interest and easy to get loans are not the anaswer.

We would  be better off letting student loan interest rates rise and searching for other ways to drive down the cost of higher education with innovations like integration of more online classes and addressing the inflated price of books required for educational courses. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/07/interest-in-and-on-student-loans....

Sun, 04/06/2014 - 17:40 | 4630530 carlnpa
carlnpa's picture

The following link has a timeline of the changes made to bankruptcy law in regards to the not dismissable nature of student loans

Education cost increases have moved in lockstep with the law changes.  

Simply, the lender has every incentive to lend as much as possible as the borrower is destitued.  Regardless of the borrowers ability to pay, or likehood of future earnings.

http://www.finaid.org/questions/bankruptcyexception.phtml

 

Sun, 04/06/2014 - 17:56 | 4630574 AdvancingTime
AdvancingTime's picture

Student loans and low interest rate auto loans have helped push this economy forward. The nice thing is they don't even add to the government deficit. Students use this money to live on and not just for school fees and sadly a lot of the auto loans are sub-prime. the article below delves into the atuo sales.

http://brucewilds.blogspot.com/2013/04/auto-sales-spooky-signal.html

Sun, 04/06/2014 - 18:00 | 4630576 q99x2
q99x2's picture

I've been going to higher education for years. Finally got accepted into Janet Napolitano's (Big Sis) UC system for this Fall. Does this mean I have a Rothschild bubble between my ears? 

She supposedly left the DHS because she refused Obama's request to set off the stolen nukes from Dyess Air Force Base in a Globalist EMP attack against the United States of America. It is my belief that she's hunkered down in the UC system because she knows that when the DHS attacks America the UC System will be off limits to them. Anyhow that's why I'm going there. Oh and the Rothschilds are paying for it. Although I'm not sure that they know that yet.

Sun, 04/06/2014 - 18:54 | 4630700 22winmag
22winmag's picture

I don't know which is the bigger fraud, filled with hollow promises and deadly side effects... pharmaceutical drugs or student loans.

Sun, 04/06/2014 - 19:55 | 4630863 Telemakhos
Telemakhos's picture

One thing that's not mentioned but is relevant: the periods of highest inflation in tuition costs also correlate with periods of state budget austerity due to lower revenues during economic downturns.  The states pay less to the universities, who pass the difference in state funding on to the parents in the form of tuition hikes.  A better analysis would include an inflation-adjusted accounting of all institutional funding (state funding, national grants, university hospital revenue and tuition) as a per-capita figure.  

When states fund the colleges more, the cost is socialized to all citizens; when it's passed on as tuition, it becomes more of an individual risk rather than public risk.  The flip side is that loans are (or at least were) often private, so a middleman was taking a profit off that as well.

Another big and understudied factor is university hospital revenue, tied to inflation costs in healthcare: every university that can afford it is buying a hospital, and some are trying to start their own health insurance plans.  Both are major profit centers, and the accounting is largely opaque, not that you'll get an honest budget statement out of any university anyway.

There's going to be some justifiable expansion in costs to fund education in new technologies: nanoscale, aerospace, and other cutting-edge research doesn't come cheap.  But there's a lot of waste that needs to go, and there's a lot of pension plans that were never funded properly.  Interestingly, full-time professorial salaries have risen about par with inflation, although that doesn't take into account the disembowlment of full-time jobs in education -- there's a lot of amazingly low-wage, part-time work and grad student labor in colleges now, because, when full-time staff die or retire, it's cheaper to replace them with TA's or part-time labor at rock-bottom prices.  Someone really needs to do an in-depth study of where the money actually goes.  Good luck getting any fiscal transparency from the guys who teach accounting fraud, though.

Sun, 04/06/2014 - 20:14 | 4630928 franciscopendergrass
franciscopendergrass's picture

that is also the chart of the rising cost of healthcare.  The more .gov intervention the more the cost of ______ industry (fill in the blank).

 

Sun, 04/06/2014 - 20:35 | 4630973 Goldilocks
Goldilocks's picture

Fun, Fun, Fun - The Beach Boys
http://www.youtube.com/watch?v=wpP7tWXjcnc (2:20)

Sun, 04/06/2014 - 23:02 | 4631258 q99x2
q99x2's picture

Just got accepted last week into this college.

A popular spring break celebration near the University of California, Santa Barbara campus turned violent Saturday, prompting officers to release tear gas into crowds.

Santa Barbara police said in a department statement early Sunday that more than 100 people were arrested throughout the course of the day and evening.

Think I'll wait for UCLA to send out their letters before making a committment. Seems a little too much like the college that I'm at now except for the tear gas. They use pepper spray where I'm at.

Sun, 04/06/2014 - 23:14 | 4631280 Stuck on Zero
Stuck on Zero's picture

Here's part of the reason tuition is out of control .. more and more non-academic departments and bureaucrats.  Each department is organized into many sub-departments and every department is headed by a Vice-Chancellor making $300K a year.  Here's a list from a local university:

    Academic Depts, Programs, & Units
    American Indian Faculty & Staff Association
    Audit & Management Advisory Services
    Auxiliary Business Services
    Black Staff Association
    Blink
    Business & Financial Services
    CADRE
    Campus Budget Office
    Campus Research Machine Shop
    Chicano/ Latino Staff Asscoiation
    Conflict of Interest (COI) Office
    Diversity Council
    Diversity Staff Association
    Division of Innovation and Industry Alliances (DI2A)
    Donor Relations
    Donor Stewardship
    ECEC Administration
    Environment, Health & Safety
    ePD
    eRAP
    Ethics Rollout Team
    Export Control
    Facilities Management
    Gift Processing
    GRADNet
    Human Resources
    Imprints
    LGBT Staff & Faculty Association
    Library
    Marketing Council
    Native American Council
    Office of Contract and Grant Administration (OCGA)
    Office of Research Affairs (ORA)
    Organization of Department and Program Advisors (ODaPA)
    Pan Asian Staff Association
    Police
    Policy & Records Administration
    Real Estate
    Student Affairs
    Tech Transfer Office (TTO)
    Transportation Services
    Veterans Association
    Vice Chancellor - External & Business Affairs
    Vice Chancellor - Resource Management & Planning

Mon, 04/07/2014 - 05:41 | 4631585 novictim
novictim's picture

.

Mon, 04/07/2014 - 05:40 | 4631586 novictim
novictim's picture

Meanwhile, actual professor pay and benefits are going down and tenure is  being eliminated along with dissenting opinions.

This is the corporatisation of higher education in action.  Everything in our society is going this way and we are  being weakened by it.  Our society is a house of cards.

Mon, 04/07/2014 - 08:43 | 4631786 Evolution Gene
Evolution Gene's picture

Read this website for years now, learned much about economics, but the fear mongering and doomsday prepping is over the top. Most people who comment here are so heavily invested into some kind of financial Armageddon that you might as well create a new religion and wait for Jesus to drop out of the clouds, you're no different than any other wild cult... but I still love y'all ;)

Anyway, it's time to give back a bit, so many insiders post actual info here amongst the buy gold/silver/something else, I hate the FED, government sucks blah blah comments... I guess now is a good time for my first actual post.

So I'm a University Professor, in a top 5 medical school, tenured, NIH funded, running a lab, teaching medical/pharmacy/graduate students. You want the truth? Here's the truth.

Yes, the University system is somewhat warped atm. Many students come into undergraduate paying to be lectured about topics that have little chance of getting them a decent paying job in the real world... you know the ones. But as you self-professed libertarians preach endlessly, it's a free country. They want to learn it, they pay for it, and we cash their checks. Why is that any worse than anyone buying anything else? People can choose how they spend their money (or who they become indebted to).

Also, I suspect for a lot of parents having their children go to a college/university appeases any fears they have of the transition from being a dependent teenager to an independent adult. Colleges are mostly safe campuses (yes, shootings do happen, but the odds are still low given the ridiculously large number of campuses in our country), so having 4-5 years to grow up (hopefully) does serve some purpose.

Now, are there are too many administrators getting overpaid? Yes. Are there too many 65+ year old gray bearded professors making 200k a year who don't know how to create a decent powerpoint presentation that we can't get rid of because of bullshit baby boomer PC laws banning age discrimination? Hell yes. Are most academics democrats? You can bet your gold stashes on it. Is there anything we can do about this? No, not until the baby boomers finally move on and we can start undoing some of the ridiculous laws they created in the system. However, until students stop showing up every year en masse, there is no incentive for major schools to do this. Sure, the smaller, no-name fringe schools will go down. Who gives a flying fuck? But the big daddies like mine? No chance. As much as you all hate this, college sports keep the system afloat. They are one of the cornerstone fabrics that tie this country together, and that will always be the case. They've survived world wars, crashes, terrorist strikes, etc... nothing will change that. It's what makes America what it is, love it or hate it (I personally love it).

Is it right that the Fed is subsidizing this? Depends on how you look at it... sure, 11% of loans are in default, which means 89% are not. That's a helluva a lot of interest we are collecting! And I'd rather the government collect it and then redirect it, than a bank take it for a CEO bonus (and thanks to you all for educating me on how corrupt that system is!). And no, government does not ruin everything it touches (but a lot, yes)... I hope most of you realize that the majority of new drugs, treatments, and technologies are born out of basic discoveries made in Universities that would never be funded in the private sector due to excessive risk. NASA anyone?

On the idea that most college education will be online... really. How many of you will get operated on by an MD with an online education? Bullshit. When your life is on the line, just like PETA McCartney and all the other pious preachers of crap gospel, you will come crying like a little bitch and ask us to save your life. And we will. Because that's what we do. Using methods developed in a University hospital. You can't learn how to do basic science research, practice in a court of law, engineer a jet engine, etc online. Yes, crazy left wing crap is taught often at Universities, but that is only a small minority of the curriculum. If you guys keep focusing on the negative points to prove what you want to be true, you might as well rename your avatar to Michael Moore... seriously.

Ok, I've said it. Keep posting Tyler, I love ya :)

Mon, 04/07/2014 - 11:25 | 4632369 Zerozen
Zerozen's picture

They want to learn it, they pay for it, and we cash their checks. Why is that any worse than anyone buying anything else? People can choose how they spend their money (or who they become indebted to).

It's a free market but it's a very distorted market. They're free to choose to pay for it, but it's way more expensive than it should be thanks to decades of government subsidies. It shouldn't be like that. Kids aren't going to say "no" to a college degree if they can get it, because for many many professions the piece of paper is needed. So, they make questionable decisions and go into mountains of debt to get the diploma, and only learn what a mistake it was a few years down the road. It's a mess and it's getting worse and worse.

No one here is against higher education in general, and most of us approve of STEM-type majors. Most of the other stuff however is way overpriced and/or useless in real life.

For what it's worth, 11% default rates are pretty shitty generally speaking for a loan product, and I'm sure there are many many other ex-students who are making the payments but the debt is a big burden. All of this so lenders can earn interest on debt that can never be discharged and assorted college staff can make six figure salaries.

 

 

Mon, 04/14/2014 - 02:19 | 4655978 Melody7773
Melody7773's picture

It has been a while since it was time to pay attention to the rising student loan problem. When I say a while I am referring to around 5 years at least, as after the housing it is the biggest issue in the US. For some reason our government chose to ignore it and we are only left to wait until more people will get into the debt which they obviously won’t be able to pay off. Unless, of course, one day children refuse to send their college admission application writings and say that they don’t feel like obtaining  an average of $-25000-$35000 debt per a person. So I don’t even want to think about what future is holding for us

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