Student debt, a reality check?

Parents Forum
121

<p>"I have no idea how we're going to continue being a dominant country when we are already starting to undo the huge gains in expansion of education. What this really comes down to is a de facto reversal of the massive de-gentrification of both college and professional schools. The professional schools are the canary in the mineshaft; you'll start to see the same issues with undergrad, as scholarship money and federal loans cover an ever-decreasing proportion of the costs of school and state schools get out of reach of the non-wealthy. College costs should sting, not maim."</p>

<p>Ariesathena, take your understanding of what is happening to law students and expand it to what is happening in the economy. The lower and middle class in this country have been getting killed with tax policies and other economic policies for over 25 years.</p>

<p>Kluge has been sounding the alarm about this for years on this board (So have I). </p>

<p>At least law students have a chance to make it financially. Most of the people in this country are in trouble and they don't even know it yet. We are distributing the economic pie to fewer and fewer people. The pie is growing for only those at the top and for the rest, the economic pie is starting to shrink.</p>

<p>We used to view higher education as a social good. Individuals benefitted by their education and policies started to change. We now view education as a social and a private good. If it is a private good, the individual has to pay. As a society we are shifting more of the cost burden to individuals. </p>

<p>We are also shifting more of the cost of health care to individuals. We are shifting the costs of pensions to the individual. Since most individuals are not seeing their incomes go up in real terms they are getting squeezed. What you are feeling as a young person, millions of Americans are feeling right now. But these Americans don't even have a chance. You have a choice and a chance. Unlike millions of Americans, you are choosing to take on the debt. You are choosing to take an economic chance. Hopefully, it will work out for you.</p>

<p>I'm more worried about the people that are getting squeezed and have their future health care at risk. That don't know how they are going to take care of themselves in old age because their pensions are being gutted.
They see the CEOs of their companies make millions while their standard of living goes down and down. Fewer than 800 people in this world are worth, in aggregate, over 1 trillion dollars. That's mind boggling to me and has implications for the future that are treacherous for the masses.</p>

<p>Reeze, as you know, the financial world is one place where getting a degree at a certain place matters (especially if you want to work on the east coast). Customers like to think that people handling their money are smarter than they are and they use a financier's alma mater as an indicator of this fact.</p>

<p>Can you work in the summers and make some money? Can you work 10-20 hours a week during the school year and not have it affect your studies?</p>

122

<p>Reeze, I think anyone with a head for finance would not take on a very high debt load in today's economy. Basically you are using 90's logic & planning -- that is, you want to emulate the success of students who graduated 10 years ago, but when you come out of college it is going to be a different world.</p>

<p>All you have to do is look at current economic trends and indicators to know that interest rates are going up and the US economy will face tremendous challenges in the years to come. </p>

<p>You really would do better to go to UConn for undergrad, keeping your grades up, with the hope that you could later get an MBA from a more prestigious college -- because the MBA is always going to trump the BA in any case. And if you don't take on too much debt, then the MBA is going to be in reach a lot sooner for you. </p>

<p>So yes - I understand that the pull is toward the Ivies for kids who think that's the entry point to the top jobs.... and for kids from affluent families, it certainly makes sense. But then, those kids are rich already - they can probably get great jobs through family connections. But if you need to take on more debt that you could reasonably manage on a non-elite entry level salary, you are not going to be able to weather an economic downturn when jobs are tight.</p>

<p>This is where you just have to trust that older adults might know something. We've lived through tough economic times with double-digit interest rates and a tight job market -- but at least in our day it was possible to discharge student loan debt in bankruptcy. Unfortunately, there is going to be no way out for the kids taking on the massive debt. </p>

<p>Keep in mind that for every Harvard grad who got the coveted job with a prestige firm, there are probably half a dozen kids who applied for the same jobs and didn't make the cut. Maybe more - I honestly don't know what the level of competition is, but I do know that the major investment firms don't hire everyone. That's not to say that those kids are going hungry -- but they may very well be ending up in jobs that are in no way better than the ones they would have had coming out of their flagship state u.</p>

123

<p>"...and for kids from affluent families, it certainly makes sense. But then, those kids are rich already - they can probably get great jobs through family connections."</p>

<p>Then what about the kids who are in the middle? Upper-middle class? What if you can get out of Harvard undergrad without any debt whatsoever, but then have to finance your entire law school education yourself? Is it worth it then, to go to ivy undergrad?</p>

<p>Or would it better to attend state and hope for the miniscule chance that your hard work will get you into HYS law school? (difficult because of grade deflation) Especially if state school is wonderful, such as UC Berkeley or UCLA?</p>

124

<p>upper middle class gets screwed mycornerofparadise</p>

125

<p>Reeze, do you have a job?
Are you planning to work in college?</p>

126

<p>I work like 2 hours a week doing web design, and I plan to work in the summer. I already spend like 25 hours a week on sports, so it's hard to work during the school year. I'll probably do work-study in college. I'll probably have to do like 10k-15k a year in loans for a 45k college</p>

127

<p>Reeze, it sucks but work as much as you can without letting your school work suffer. I worked almost 40 hours a week for the first 2 1/2 years of college. My grades suffered (But I didn't care). I wouldn't recommend this, but working 10-20 hours a week during the school year may help you financially and not hurt you in other things.</p>

<p>I don't like debt.</p>

<p>Which schools are you looking at that cost the big bucks?</p>

128

<p>Working more than a small numbers a week outside your acedmic area (paid research) is a misapplication of your time and squanders a part of the benefit of attending a good college. In any case, it won't bring in enough money to make a difference. Even more so if you participate in a substantial EC.</p>

129

<p>mycorner, the prestige law schools take lots of students from the flagship state universities -- but career wise, the law schools at the leading publics are often a better choice in any case, at least if you know where you want to live & practice. For example, the Calif. bar is one of the hardest to pass in the US -- if you want to live & work in Calif, then UCLA or Boalt education will give you a top-flight, prestige law school education, coupled with an excellent foundation for passing the Calif bar -- but a Harvard-educated law grad would have a lot of studying to do to prep for the exam. The top Boalt grads go right into the top SF-area firms; the top UCLA grads go into the top LA firms. As far as I can tell, and east coast education would be a disadvantage -- aside from the education, there simply are more <em>connections</em> to be made in state when the alma mater is the state U. Now obviously that would be different if the goal is to work in New York or D.C. </p>

<p>But I don't think the rationale is any different. If you have enough money to pay for it all... then you might as well spend what you've got. If you have enough money to pay for a private undergrad, but that will leave you short for law school or medical school -- and you know that you plan to pursue an advanced degree -- then you are in the same boat as the student who needs to take out huge loans: you have $X -- you have goals that cost $X+$Y -- so to the extent you deplete $X (or turn it into a negative -$Z), you undercut your ability to meet your goals. </p>

<p>Again, to me the irony is that anyone with a head for finance woud understand all of this intuitively, and tend to make plans that maximize the purchase value of whatever assets are available. So I have to shake my head at kids who would take on unconscionable levels of debt to go to Harvard for an undergraduate degree for their career in "finance" - I just woudn't trust anyone who thinks like that to give me good investment advice. It's kind of like someone who spends all their savings on lottery tickets -- the odds may be better, but the bottom line is that there is no guarantee whatsoever that the Harvard grad ends up with the job or pay scale that justifies the added expense of the degree. (My extended family is filled with Ivy grads whose careers are at the same level & pay scale as the people who went to public u's -- it really does NOT make much of a difference in the long run for the majority of students who graduate from the top schools.)</p>

<p>Do keep in mind that for graduate level work, you will qualify as an independent student, and so parents assets will not be counted in determining levels of financial aid. So the kid who emerges debt-free from undergraduate work and goes straight into grad school may have the ability to qualify for a good deal of grant-based financial aid, and at least is in a better situation to consider taking on debt.</p>

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<p>Calmom, what about students who want to attend graduate school but already have student loans from undergrad? Does financial aid take this into consideration? That the student cannot take on more loans than they can afford???</p>

<p>I think it's a shame that graduate degrees in social work, teaching, humanities and social sciences cost more than the actual yearly income of the occupation. There needs to be educational reform!!</p>

131

<p>Boalt and, I'm sure, UCLA, take some amount of pride in NOT providing a particular foundation for the California bar exam. In fact, it might be the case that the best bar exam preparation (as opposed to the best legal education) would come from a much lower rated school. Nevertheless, graduates of prestige out-of-state law schools do not have much difficulty with the California Bar or getting jobs with top California firms.</p>

132

<p>As a current senior, I'm also torn between accepting a full-ride (4-years) to University of Maryland's Smith School of Business or going to a school like NYU-Stern or CMU-Tepper. </p>

<p>Here's the two opposing arguments.</p>

<p>1) If I go to UMD, I'll save a LOT of money. NYU is probably the worst school for financial aid. Over 4 years, it'll probably add up to about $180,000. I can use that money to buy a car or save it for an MBA or whatever I want. AND, Smith is ranked 18th in undergraduate business.</p>

<p>2) However, NYU is ranked 2nd in Finance. For someone like me who wants to work on wall street in the IBanking world, an NYU degree is very highly respected. A TON of Stern graduates get into the top investment, consulting, marketing firms in New York City. Sure, UMD might have a few here or there, but Stern undoubtedly trumps it in terms of sheer numbers. While I WILL be 180K in debt, I will also hopefully be able to land an analyst job at a firm such as Goldman Sachs. Starting salary including bonuses amounts to approx 75-80K and the salary increases 20K per year. After 3 years, I'm looking at approx 140K. Now, with work experience in a respected firm, I can apply to a top Business school, get an MBA, come out and start at maybe something close to 170K (if I'm lucky). Afterwards, it just gets higher and higher each year (exponentially). Yes, I will be working my butt off, but at least student loans won't be a problem?</p>

<p>BUT....this is making a few large assumptions. 1) I can land an IBanking job 2) I don't change my mind and actually follow through with all of this. </p>

<p>I just think we need to keep in mind that college is also a time for social networking. Take Maryland for example. How many CEOs and Fortune 500s and Presidents have graduated from Univ of Maryland? Now, how many CEOs, Fortune 500s, Presidents, etc, have graduated from schools like Yale and Princeton and Harvard? You can't even START to compare those numbers. Now, I'm not saying you should make friends with people just for influence/power, but I would think that if you go to Harvard, your future friends will be a lot more successful then the ones you will meet if you go to a community college.</p>

133

<p>To attract some eyes, this is the U.S. News list of highest and lowest debt accumulated in medical school:</p>

<p>Rosalind Franklin University of Medicine and Science (IL) $167,827
Nova Southeastern U. Col. of Osteopathic Med. (FL) $163,500
Tufts University (MA) $160,344
New York Medical College $160,000
Philadelphia College of Osteopathic Medicine $157,285
U. of New England Col. of Osteopathic Medicine (ME) $154,564
New York College of Osteopathic Medicine $154,000
Drexel University (PA) $148,777
Tulane University (LA) $148,145
Col. of Osteopathic Medicine of the Pacific (Western University) (CA) $147,637
Albany Medical College (NY) $147,337
A.T. Still University of Health Sciences (Kirksville) (MO) $146,350
University of Southern California (Keck) $146,000
St. Louis University $145,000
Loyola University Chicago (Stritch) $143,582
West Virginia School of Osteopathic Medicine $141,742
Touro Univ. College of Osteopathic Medicine (CA) $141,000
Temple University (PA) $140,652
Mercer University (GA) $140,345
Oklahoma State University Center for Health Sciences $140,000
Boston University $138,743
University of Miami (FL) $138,600
Des Moines U. Osteopathic Medical Center (IA) $137,998
Creighton University (NE) $137,599
University of Chicago (Pritzker) $136,774
Mich. State U. Coll. of Osteopathic Medicine $136,614
Arizona College of Osteopathic Medicine (Midwestern University) $135,000
University of Vermont $135,000
Rush University (IL) $131,259
University of Pittsburgh $131,009</p>

<p>................</p>

<p>Univ. of Texas Health Science Center--Houston $83,635
Northeastern Ohio Univ. College of Medicine $82,909
U. of N. Texas Health Sci. Center (Texas Col. of Osteopathic Medicine) $82,807
University of Arizona $82,717
Johns Hopkins University (MD) $82,222
Vanderbilt University (TN) $81,100
Texas A&M Univ. System Health Science Center $80,000
Ohio State University $79,527
University of Washington $79,137
University of Connecticut $79,000
University of Kansas Medical Center $78,915
University of California--Los Angeles (Geffen) $78,872
University of New Mexico $78,797
Mayo Medical School (MN) $76,462
Duke University (NC) $74,766
Medical College of Georgia $74,685
University of North Carolina--Chapel Hill $74,605
University of South Carolina $71,352
University of Virginia $70,713
University of California--Irvine $68,900
U. of Texas Southwestern Medical Center--Dallas $67,000
University of California--San Francisco $66,958
Baylor College of Medicine (TX) $66,195
East Carolina University (Brody) (NC) $65,467
Stanford University (CA) $63,695
University of California--San Diego $62,806
University of California--Davis $62,421
University at Buffalo--SUNY $54,037
University of Mississippi $23,448
Uniformed Services Univ. of the Health Sciences (Hebert) (MD) $0</p>

134

<p>dylin88, I would call the business school and get a list of companies that recruit at the school.</p>

<p>If you are getting a free ride at Maryland, you are obviously very capable, and you have a good chance to shine at the school.</p>

<p>$180,000 in debt is insane for undergrad.</p>

<p>Can't you go to NYU for grad school?</p>

135

<p>the thing is, MBA's want a few years work experience from a good job. It's a lot easier to get top jobs (ibanking, consulting, management) comming from a prestigious university vs a non prestigious one.
dylin88, you should check out the business forums, i believe there's a post that lists what colleges the top firms recruit from.</p>

136

<p>Daderoo, I'm a Boalt grad. They taught California law -- for example, in Evidence, we studied the Calif. evidence code + the Federal rules of evidence. Also - I didn't take the course - but they offered Calif. family law/community property and it certainly was covered on the bar exam. So unless they have changed the curriculum, you get a strong foundation of Calif. law in the Calif. universities.</p>

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<p>Question:


Answer:
[quote]
A study by executive search firm Spencer Stuart found that the percentage of CEOs at Fortune 500 companies who were educated at Ivy League schools declined from 16% in 1998 to 11% in 2004. Even the Harvard MBA shows signs of erosion. Among large-company CEOs who have MBAs, 28% received their degrees at Harvard, according to the 1998 study. By 2004, that had slipped to 23%.</p>

<p>A survey by the Wharton School at the Ivy League's University of Pennsylvania indicates the trend extends back 25 years. In 1980, 14% of CEOs at Fortune 100 companies received their undergraduate degrees from an Ivy League school. By 2001, 10% of CEOs received undergraduate degrees at one of the eight Ivies: Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, University of Pennsylvania and Yale. The percentage of CEOs with undergraduate degrees from public colleges and universities shot up from 32% in 1980 to 48% in 2001.</p>

<hr>

<p>If anything, the CEO trend away from Ivies is intensifying. So far in 2005 there have been 24 new CEOs named to run Fortune 1,000 companies, according to public relations firm Burson-Marsteller. USA TODAY found only one, Corning's soon-to-be-CEO Wendell Weeks, with an Ivy League degree, a Harvard MBA ('87).</p>

<p>n 2004, there were 99 new CEOs named at Fortune 1,000 companies. While eight had Ivy credentials, five of those were from Harvard's Advanced Management Program, which is intensive and expensive ($52,500), but takes 10 weeks to complete.</p>

<p>Just one of the 99 has an Ivy undergrad degree: the CEO of auto parts maker ArvinMeritor, Charles McClure, went to Cornell ('76) for mechanical engineering. But when McClure decided to get an MBA, he went to night school at the University of Michigan ('84) while he continued to work full time.

[/quote]
</p>

<p>Source: <a href="http://www.usatoday.com/money/companies/management/2005-04-06-cover-ceos_x.htm%5B/url%5D"&gt;http://www.usatoday.com/money/companies/management/2005-04-06-cover-ceos_x.htm&lt;/a&gt;&lt;/p>

138

<p>AriesAthena #120: great post about false economies...among other things.</p>

139

<p>AriesAthena does make some excellent points, and as far as I can see, no one has taken up the issue that I think drives the debate on this thread: the rising cost of education.</p>

<p>I always like to ask people to consider this thought experiment: suppose the federal government loaned 100% of the cost of education (including food, rent, etc) to everyone who wanted it, and set the interest rate equal to the inflation rate.</p>

<p>Would the unhappiness on this board be alleviated? Of course not! Because the loans would still have to be repaid.</p>

<p>The underlying problem is that college education costs too much. Most of this problem is that while societal subsidies for education have gone up, cost of education has gone up much faster.</p>

<p>It's easy to say "soak the rich and make them pay." Or "the government should pay." This just increases the subsidies and kicks the can down the road, while letting the problem worsen. I'm surprised that no one has any proposals for reducing the cost of production: reducing professorial compensation, requiring educational efficiency, or perhaps moving to online (distance learning) graduate education in a big way to reduce costs.</p>

<p>Subsidies (as noted by some others) will simply make the problem of skyrocketing costs worse by providing temporary relief for students, which will encourage the next generation of students to borrow even more money to pay for even more expensive education.</p>

<p>The only good solution is a cost-side solution other than subsidies.</p>

140

<p>I totally agree with you, reasonabledad. I tried to make this very point in #88

[quote]
Instead of arguing about how we can best get around the problem of exorbitant tuitions and further stratification of society according to wealth-afforded educational opportunities, maybe we should ask WHY do colleges need to constantly raise tuition beyond any reasonable increases seen in other industries. If colleges were utilities or auto manufacturerers, we'd all be checking to see who is getting rich at our expense.

[/quote]

As long as people are willing to take on more and more debt to attend schools with runaway costs, tuitions will continue to rise. I have no data, but I don't think colleges improve much from year to year to merit the cost increases we are seeing. Where is all of that money going?</p>