Dirty Secrets of College Admissions

Parents Forum
461

<p>hmom5, I obviously don't know the profiles of all the borrowers, but I have seen and heard many interviewed in the media and they all struck me as stupid and naive enough to believe that they could afford "a million dollar home on a $70K income." After all, the banks were encouraging them to do just that. And I don't think they had to be sophisticated borrowers to "remove the equity and refinance." We are constantly getting offers in the mail to do the same, though it would be a very bad economic choice for us.</p>

<p>I believe that the average American caught up in this was pretty darn stupid. But it was the banks who were greedy and guilty of predatory lending -- after all they would not have been promoting these loans if it was not profitable for them, even though it was going to ultimately be disastrous for their clients. But by that time, the loans would be re-packaged and resold, and lenders would not be held accountable.</p>

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<p>I have more faith in the intelligence of the average American. That and I've seen the facts laid out on paper. The typical liar borrower was an educated middle class person who knew how to play the game which worked as long as home prices kept going up.</p>

<p>To believe what you're saying, again, you would have to blame the commercial bankers and mortgage brokers, not Wall Street who had no contact with the end user.</p>

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<p>I think you're talking about two different markets. The subprime loans were sold to relatively unsophisticated investors by brokers and bankers who often (though not always) flat out lied to the borrowers. The borrowers didn't always understand the implications of the mortgages they were being sold.</p>

<p>The Alt-A and Option ARMs were sold to more educated buyers who took a calculated risk that the housing market would continue to increase in value. These buyers included investors/speculators who thought they could make a profit by getting out before the bubble collapsed. Option ARMs were simply a speculator product only viable in a real estate mania. That is, many of the borrowers never expected to live in their home forever and they would simply sell the home off to a greater fool before the loans reset. </p>

<p>Where are most of these Option ARMs and Alt-A mortgages? California and Florida. This is going to be the second wave of the foreclosure crisis and the reason that housing prices haven't nearly bottomed out.</p>

<p>The</a> Growing Foreclosure Crisis - washingtonpost.com</p>

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<p>BTW, Bill Clinton is not Harvard related--blame Georgetown and Yale.</p>

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<p>This is all very complex and everyone has good points, several types of loans were involved, but if you want to really get to the heart of what happened and where the blame starts, here's a quote fom the article posted by Vballmom:</p>

<p>The federal government played a central role in the boom. The Fed cut a key short-term rate to rev up the economy following the tech bust, enabling lenders to borrow money at low rates, lend that cash to home buyers at higher rates and then sell the mortgages to other institutions, said Esmael Adibi, an economist at Chapman University, south of Los Angeles/</p>

<p>And a quote from one of the poor, naive borrowers:</p>

<p>We came in with eyes wide open," he says, standing in the kitchen. "We knew what kind of loan we had." </p>

<p>"Oh, really," Robin Bohnen says. She darts him a look from the living room couch before launching into a series of questions that gives some hint of the tension that inevitably comes with financial trouble. </p>

<p>"Did you know that the housing market was going to collapse?" she says to her husband. "Did you know I was going to lose my store? Did you know you were going to lose your job? Come on. There was no reason to believe any of this would happen. It's not like we did anything impulsive. You've been doing this job for 10 years and making good money."</p>

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<p>
[quote]
To believe what you're saying, again, you would have to blame the commercial bankers and mortgage brokers, not Wall Street who had no contact with the end user.

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<p>Wall Street is clearly to be blamed. Who do you think was funding the bankers and mortgage brokers?</p>

<p>"Subprime lenders marketed unaffordable subprime loans aggressively in recent years, mostly because Wall Street buyers were eager to invest in these higher-interest loans." Subprime</a> Mortgage Meltdown - Center for Responsible Lending</p>

<p>Greenspan is to blame for keeping interest rates low, leading to the housing bubble.
"But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more 'paper. The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said. <a href="http://www.nytimes.com/2008/10/24/business/economy/24panel.html%5B/url%5D"&gt;http://www.nytimes.com/2008/10/24/business/economy/24panel.html&lt;/a&gt;&lt;/p>

<p>"Wall Street investment firms recognized early on that vast sums of money could be made from almost $10 trillion worth of mortgage debt at play in the United States, so they bought billions of dollars worth of mortgages from lenders and created a vast array of mainly subprime mortgage-backed securities to sell worldwide. As housing prices skyrocketed, as much as 20% a year in some locations, these mortgages became more valuable, and Wall Street demanded more and more mortgages, encouraging lenders to focus on volume rather than quality and regulators and ratings agencies to look the other way.
Wall Street's thirst for profits and its near-total disregard for loan quality inflicted massive damage on the U.S. and world economies."
CHAIN</a> OF BLAME: HOW WALL STREET CAUSED THE MORTGAGE AND CREDIT CRISIS | North America > United States from AllBusiness.com</p>

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<p>
[quote]

[quote]
Northwestern isn't chopped liver, but the outcome list you posted, taken as a whole, is distinctly lower-echelon than the one from Harvard a few posts earlier, in the same way that both schools have high and overlapping SAT score ranges, but with differences also being visible.

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<p>You must think that if someone randomly chose ten people from a an average state U, they'd be all working fast food counters, ringing up cigarettes at the 7-11, or mopping the floors.

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<p>No, I just think the outcomes would, in various senses, tend to rank lower than the Northwestern outcomes you listed, which in turn rank lower than the Harvard outcomes. </p>

<p>
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You seriously don't get that while top 20 schools (etc) do open doors, it's the people themselves who choose to walk through them, and a smart, motivated person will always wind up doing well?

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<p>I said so myself: "success is largely a selection effect (smarter students)", so I'm not sure what you think I seriously haven't gotten. The point you seem to have missed is that the more high-end the school attended, the more it protects a graduate from undesired low-end outcomes. The top schools are not selective enough to guarantee success, but they do provide a lot of insurance against certain types of failure.</p>

<p>
[quote]
Let's play a little hypothetical game. Suppose that for the next 5 years, all the investment banks, mgt consulting firms, etc. all decided they weren't going to recruit at Harvard. Would that make the value of a Harvard education less? Would it drop in the ratings? Should it drop in the ratings?

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<p>Anything that reduces the graduates' menu of options, reduces the value of the degree. That should be obvious enough.</p>

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<p>
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No, I just think the outcomes would, in various senses, tend to rank lower than the Northwestern outcomes you listed, which in turn rank lower than the Harvard outcomes.

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<p>Are you explicitly ranking the outcome of being an at-home parent lower than the outcome of being a doctor, lawyer, etc.? </p>

<p>
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The top schools are not selective enough to guarantee success, but they do provide a lot of insurance against certain types of failure.

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<p>I disagree. Someone who is book-smart but people-foolish, who is arrogant, who can't get along with others, gets found out pretty quickly in the workplace, no matter what the name on his diploma. </p>

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Anything that reduces the graduates' menu of options, reduces the value of the degree. That should be obvious enough.

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<p>So then the value of the degree is highest amongst those schools that offer the MOST amount of options (fields, concentrations, majors). Is that what you're saying?</p>

<p>Let's make a hypothetical: There are 8 careers that someone could go into, and here are the starting salaries:
I-banking: $100K
Mgt cons: $90K
Engineering: $80K
Insurance: $70K
Journalism: $50K
Hotel mgt: $40K
Musician: $30K
Acting: $20K</p>

<p>Which is the better school? School #1 that places the vast majority of its students into IB, MC and ENG ... and grads have a starting average salary of $90K?
Or School #2 that places equal numbers of its students into each of the above buckets ... and grads have a starting average salary of $60K?</p>

<p>It's funny - you would consider the grads of School #2 as having "lower-echelon" outcomes vs the grads of School #1, but isn't School #2 actually better in terms of the breadth of the students' options? I'm not sure which you value more. Could you clarify? Thanks.</p>

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<p>
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Are you explicitly ranking the outcome of being an at-home parent lower than the outcome of being a doctor, lawyer, etc.?

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<p>I answered that already: it depends on what the at-home parent's alternatives and preferences are.</p>

<p>Some people leave a dream career to raise children, while others are glad to have a higher-earning spouse relieve them of the need to continue in a crummy job.</p>

<p>What careers did your stay-at-home friends abandon to become full time parents?</p>

<p>By the way, the echelons are not of income, but of degree of choice and control in one's career. It's no accident that the Harvard graduates gravitated toward jobs that are highly autonomous or individualistic.</p>

470

<p>I posted a rather long post where the choice of work or stay home is addressed. But just briefly.. It is not an either/or (dream job vs dream stay at home)</p>

<p>I have a very hard working and driven spouse. I guess we "chose" our roles in the marriage and as parents. But it wasn't like I had much of a choice to be a part time executive nor was there such a think as job share in 1984, much less 1990. Heck, there wasn't even the family leave act. My career in marketing and advertising included long hours and last minute problems that, if my husband was traveling, there was no way I could get to daycare in time to pick up my oldest daughter. When my son came along, it only compounded the problem and there wasn't so much as choices for me as much as the least offensive options. Perhaps had I postponed having even my first child it would have been different, but the second was a complete shocker and honestly, for a long time I believed in immaculate conception. :)</p>

<p>Granted I was younger than some when I had my daughter (24) and still pretty young when I had my son (I had just turned 30), so perhaps I wasn't as far along in my career as I could have or should have been to afford the whole live in nanny option, so timing is everything!! And I wouldn't say I abandoned anything... ever.</p>

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<p>
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People were buying into homes with absolutely nothing to even prove they were who they said they were. We've all read about the foreclosure on the loan that when traced was made to a guy five years earlier who had been dead for 10!

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<p>Oh, that's just great! Blame the dead guy! ;)</p>

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<p>
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What careers did your stay-at-home friends abandon to become full time parents?

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<p>I guess I don't fit any of the above molds. I left a career as a nurse practitioner (Master's from UPenn) twenty-one years ago to be a stay at home mom/homemaker....or as we like to call it, Domestic Goddess. Given our current circumstances, I may go back to work someday or not. I am just starting to think about what I want to do with my life. My MIT educated husband is not using his college degrees (Chem E/Business) in his current career and lifelong passion trading commodities. DH feels the degree was worthwhile for the lasting friendships and networking alone.</p>

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<p>I met my brother's best friend from MIT a few weeks ago, a very successful trader (50% return in 2008). The only thing he remembered about MIT was his fraternity. He said it was the best 4 years.</p>

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<p>Yes, the fraternities were/are? very big at MIT. They were short on housing and so the freshman moved into their frat houses right after they were initiated. My husband, also a very successful trader ;) , is still bff's with his frat brothers.</p>

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<p>"I answered that already: it depends on what the at-home parent's alternatives and preferences are."</p>

<p>So the "worth" of the stay-at-home parent is more if the SAH parent was previously a doctor / lawyer / etc making big bucks versus an actress or journalist who wasn't making big bucks?</p>

<p>"What careers did your stay-at-home friends abandon to become full time parents?"</p>

<p>The same kinds of careers that some of us continued. Not just Northwestern, but I absolutely know quite a few women with Ivy or other Top 20 degrees, both undergrad and grad, who left well-paying careers in marketing, law, public relations, and banking to be at home.</p>

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<p>"By the way, the echelons are not of income, but of degree of choice and control in one's career. It's no accident that the Harvard graduates gravitated toward jobs that are highly autonomous or individualistic."</p>

<p>Autonomous does not necessarily equal flexibility, though. I am guessing that you are a recent college grad - I think you'll find out as you get older that flexibility can often be just as important as autonomy. And the two are not the same.</p>

<p>Example: My spouse is an OB-GYN. He is "autonomous" insofar as he owns his own practice, sets the hours, the parameters and the mission of the practice, and built his organization accordingly. However, he's not "flexible" insofar as if a patient calls at 2 am or 2 pm and needs him, he has to be there, whether that interrupts a sound sleep or the children's school play. He can't offload that to his receptionist the same way the business exec can delegate a meeting to his assistant so he can see the school play. See the difference? You'll find that a lot of people begin to value flexibility over autonomy to meet their family needs. Which is why people with more sophistication and life experience don't automatically assign "better" to "job that pays more."</p>

<p>Take the lawyer who decides to join a corporate law department versus a law firm where she's going to be chewed up and spat out. The corporate law job may pay less, but it may be more amenable to a family life. Who's to say that that's "lower echelon"? Only someone with a low level of sophistication about the world makes that judgment. As for me, I'm raising my children with a higher level of sophistication than that. If they want to be i-bankers / management consultants / whatever -- great! But they certainly aren't going to be raised to be so gauche as to think that those jobs are inherently better or superior to following one's passion to be a musician or teacher or journalist or whatever just because they pay more.</p>

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<p>"DH feels the degree was worthwhile for the lasting friendships and networking alone."</p>

<p>Of course. I agree completely. There's something so absolutely pretentious and wannabe about valuing the educational opportunities at top schools solely or primarily for their money-making capabilities. It's the hallmark of someone who values all the wrong things in life. And all the money in the world can't erase that character flaw.</p>

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<p>"By the way, the echelons are not of income, but of degree of choice and control in one's career. It's no accident that the Harvard graduates gravitated toward jobs that are highly autonomous or individualistic."</p>

<p>In my hypothetical example, the acting and musician careers are highly autonomous and individualistic -- certainly more individualistic than being an IB or MC (do you KNOW how much scutwork is involved in those jobs for 60-80 hrs a week for years on end to get anywhere?); but you didn't value them, because they didn't pay well.</p>

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<p>Hi! I'm new to this. My daughter is a sophomore and we need to be ready. What's an adcom?</p>

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<p>I'm interested in a little demographic detail. None of mathmom's Harvard friends seemed to have chosen SAHM status, and between my friends and my wife's friends from an equivalent rival university at exactly the same time as mathmom, there's only one woman who has been a SAHM. And she had a pretty good reason: Four children in seven years, a husband who at the time had a job that paid approximately the GNP of a sub-Saharan country but required absences from home measured in weeks and months, and then had seven years of sequential postings to offices in two different Asian countries, in positions that required that he do substantial business-related entertaining. </p>

<p>Obviously, I meet well-educated SAHMs in my real life. But the people (women) I knew in college really didn't go that route at all. Well, a couple of them have quasi-SAHHs -- men who have significantly restricted the amount of paid work they do in order to spend more time with their school-age children and to support their wives' high-powered careers.</p>