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Infinite Growth

Discussion in 'Political Discussion' started by Drewski, May 16, 2012.

  1. Drewski

    Drewski Rookie

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    Rather than completely hijack both the "NeoNazi in Greece" thread as a whole as well as PR and Titus's discussion within it, I figured I would start a conversation on idea of infinite growth.

    There are situations occurring in many of our "safest investments" which have eroded much of was built upon them. Real Estate got you 8% a year...until it didnt anymore. Oil was cheap....until it no longer is.

    Saw this blog by chance the other day on Marc Cuban's site. He was writing how College Student Loans are the next "bubble" (with the idea being infinite growth)

    Not sure of Mr. Cuban's politics and I don't care honestly...but I found it to be an interesting, thought provoking article.


    The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon « blog maverick
  2. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Why he all-capped "BRANDED" is beyond me. The operative word here is "unaccredited," followed perhaps by "high end."

    Sounds like the diploma mills -- with diplomas nobody trusts -- are supposed to (by virtue of having no objective trustworthiness, I suppose?) offer "better educations for far, far less" than real universities.

    News flash: it is possible that something can be inexpensive yet not out-perform something that is expensive, no matter how loudly we insist that all incentives are perverse and you get the opposite of what you pay for.

    What seems to hold the most water in this blog is what we all agree on: lots of people are in lots of debt and tuition is really high.

    The rest of it seems badly unsupported rubbish.

    For example: "Right now there is an endless supply of buyers..."
    UC, CSU Enrollment Rates Fall 20 Percent for State’s High School Grads (PPIC Press Release)
    MBA programs face decline in applicants, enrollment | Crain's New York Business
    Inside the Law School Scam: The reckoning
    The Daily Pennsylvanian :: Like Penn, other Ivies see fall in applicant numbers
    Then our intrepid pundit "predicts" that "sooner or later" the tuition-payer will revolt. He's predicted something that's already happened.

    Then, it's on to pimping for unaccredited BRANDED education. In his edit he stipulates that he doesn't mean Strayer or Phoenix, and tells us he'll explain what he does mean in a later post.

    Oh and one more coda: among the maligned departments that have new buildings (gasp!) on college campuses somewhere are English and Business programs.

    Neither of those is a lock for a happy productive life; however, English, at least, is curiously in demand in the real world, given the horror with which we react at news that someone has just received a degree in it. I don't know whether "Business" has taken a big nose-dive in employers' eyes, but I don't think so.

    Mark Cuban hires in the sports/entertainment biz, and I'm sure it's a great environment to say to yourself "Hey, looks like he can hustle. Piece a paper, who cares." And that's the PR staff we're talking about, never mind the players.

    Not sure you want unaccredited educations for doctors, nuclear physicists, or some other fields.

    PFnV
  3. PatriotsReign

    PatriotsReign Rookie

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    I don't know how college loans could be considered a bubble. The price of college tuition can be considered a bubble and it certainly is.

    One of the biggest factors that has ALLOWED tuitions to go up so dramatically is that college loans are easy to get. Pretty much everyone who wants one can get one and that's wrong. So our universities know that no matter how much they raise tuitions, potential students will be able to get loans to pay them.

    So the price (tuition) isn't based upon "charging what the market will bear", but rather to charge whatever they want to.

    If the economy is not going to add many jobs for these people, the money will never get paid back and most of the loans are backed by the federal gov't. Sound familiar? Once again, our tax dollars will bail out any unpaid loans.

    Another bubble that has resulted from inflated college loans is the pay of top university administrators....

    As student loans grow, so does university leadership pay

    "Students graduating with mountains of debt this month might want to ask why their university presidents make so much money."

    As student loans grow, so does university leadership pay - The Term Sheet: Fortune's deals blog Term Sheet

    The system is royally screwed-up and needs to be changed soon.
    Last edited: May 17, 2012
  4. Drewski

    Drewski Rookie

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    My take on what Cuban was saying re: the "bubble" PR was exactly how you mentioned it above.

    Tuition keeps rising and rising, partly because schools know kids/parents will get the loans to pay for it.

    Similar to real estate - when mortgages were "easy" to get, prices went up and up and up, beyond what the realistic market was. Now, one could argue that the market is whatever someone is willing to pay, but that isnt exactly true.

    For instance, my wife and I recently bought a home. It was our "number 2". Our number one was a lovely home, with lots of character. Great layout, nice wood work etc etc etc. It last sold in 2005 for 370K. The next most expensive house in that neighborhood, sold two weeks prior to our number one, for 100K less. The market "bared" the 370K price, because someone was willing to go that high, but in reality, the market for that home was much much less. But the couple that bought it got a loan for the amount and all is happy.

    They are now so underwater it isnt even funny. We put 3 "market fair" offers into them and after the last their agent came back and said if we raised our offer 40K, they would think about it because they would still have to come up with 20K at close.

    My college degree says UMass Amherst on it. I know a quite a few kids who have papers that say Harvard, Amherst College and BC to name a few. All of those schools cost exponentially more than what it cost me to go to college. However the salaries they are making are less than what it cost them to go for that degree, while I am fortunate enough to have done fairly well in my field with no real school experience for it. I graduated with a degree in Consumer and Family Economics, and I am a SQL Dev for a living. The two aren't even close to being related.

    The ROI on my college investment, to date, has been great, even through the recession. But people who paid 45K a year to go to Harvard (or whatever it costs now) aren't finding jobs that will pay them enough to pay back that investment in a fair amount of time, thus the bubble.

    I have a tough time arguing for the OWS point about forgiving college loan debt, in fact I am against the idea on principle. Similar to people under water on their homes, they all have my utmost sympathy for their situations, but at the end of the day, choices were made by people, and now that "infinite growth" has slowed - in RE and Tuition/Salary ROI, they are stuck holding the bag.

    There is an argument to make that getting people out from debt of their homes and student loans would help the economy. But all investments have consequences. Whether it is the stock market, housing market, or your college tuition, sometimes everything works out peachy-keen, and sometimes it doesn't.
  5. PatriotsReign

    PatriotsReign Rookie

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    The biggest argument against helping/bailing out people who are in deep debt is that we would be rewarding people who screwed up and punishing those who didn't.

    There is no rationale for helping people who got themselves into deep debt...none at all.
  6. Drewski

    Drewski Rookie

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    In case I wasn't clear, I agree completely PR. While I am sympathetic to their situ, rewarding a poor choice, or a choice that was made when realities where different is not something you would get agreement from me on.
  7. PatriotsReign

    PatriotsReign Rookie

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    I was actually agreeing with your post Drewski...I prolly should have started it with, "I agree and here's why..."

    We're on the same page.
  8. IllegalContact

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    many will think I am wrong on this one, but I don't care......

    the student loans happen and the schools charge more partly because they need to generate the cash somewhere to get the attention of the students they really want to attend their school.

    I have 2 in college now and 2 more on the way......one is finishing up at ohio st. where he got 21K/yr to go there. the next one got 17K per year to go to UVM. The next 2 are on the same curve.

    hitting the books is the best deal you can get.......let the B student get loans to pay for part of their schooling
  9. Drewski

    Drewski Rookie

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    IC, can you expand your point a little bit, having trouble following it.

    I am reading it as though you find tuition rates justified at the levels they are at and you feel that A students go for free or should?
  10. IllegalContact

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    they don't go for free....ohio st was 38K/yr for out of state....my son got 21k/yr from them...still had to shell ou tthe rest.

    the point is that there are other ways than loans to get the money, but that money is going to come from somewhere.

    the fact that it makes it easier for schools to give out academic money because they can charge a higher tuition can be taken advantage of.

    people can complain if they want to, but there is plenty of free money available when it comes to colleges......just need to be a very good student, that's all......and if you're not a very good student, then you should go to a less expensive school.....at least for undergrad, anyway. my oldest will likely go on to grad school at OSU and it will cost next to nothing......

    to me it is no different than any other system......you need to make sure the legwork is done to have work for you in th ebest way possible.

    as for the point regarding there being a bubble in this regard, I don't buy it......the secondary school system produces way too much competition for a lack of students to ever be a money.

    there's a reason northeastern (my alma mater) is so much more selective now than it was when I went there.....and its because everyone and their brother is going to college compared to earlier times
  11. Drewski

    Drewski Rookie

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    Fair enough. Thanks for clearing your point up for me.

    The only reason I view "a bubble" is:

    We are seeing it now, but the costs of say a Harvard Education (Ill est. 40K/yr *4 = 160K) is in many cases leading to work for kids making significantly less do to the job market, or out right not finding a job. That is a horrible rate of return (sorta like buying a house at 370K that is only worth 290K).

    To compare, my tuition (again just tuition) at UMass Amherst ran somewhere in the ballpark of 2K a year. With that being my investment, the pressure, and economic reality to find a "really high paying job" right away is less.

    My first job out of college paid mid 30s, but with 2K*4 = 8K in debt, that was fine, because my investment was closer in proportion to my return.

    If I was making mid 30s, but had 160K+ in student loan debt....good luck with that.

    Beyond all of this...are the tax-free endowments, but that is another can of worms :)

    Again, just discussing the view, not trying to vouch that Cuban is right or anything.
  12. PatriotsReign

    PatriotsReign Rookie

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    The price of college tuition is in fact a bubble. Bubbles are defined by rapidly inflated prices due to perceived value. At this moment, the price of a 4 year college education is far above what it's worth for the average person.

    When there is no control over loans and basically 90% of applicants get approved, a bubble results.
  13. IllegalContact

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    ooops....you blinked....I think harvard is 53K now

    I don't know of any harvard grad having a hard time of making a go of life....I don't think th eivy league is a good example which is why none of my kids will ever go there......

    what I have figured out is that a strong student (and I'm not talking top 10 in a public school here....basically an honors student with 80% A's to 20% B's) can likely get in-state tuition at most any out of state public college. it is an equation that most private schools can't follow.

    Northeastern got exactly 4K of my money back in 1979.....on my 2nd coop as an EE, my boss needed someone to work a 2nd shift, so I went, got extra $$ for shift differential, became a full time employee, and then the company picked up the rest of the tab when I went back to school.....of course, there went my social life for then next 3 years

    the gist is really no different now than it was back then......but there is an added twist that benefits caucasians......they are becoming more and more of a minority at the tops of graduating classes. which actually helps quite a bit with schools seeking diversity. I think its going to help my #3 get $$ at berkeley....cal poly has already stepped up and pretty much summed it up as diversity being a factor. works for me

    don't know how old your kids are or if you even have any, but I've been on this mission from day 1....pretty simple principle.....'do your best at what's expected from you, and you'll get what you want.....and oh yeah, the books come first'


    Last edited: May 17, 2012
  14. IllegalContact

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    this sentiment is not very accurate
  15. Drewski

    Drewski Rookie

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    Hahaha.

    It was just an example, you could [insert any over priced college] in lieu of it.

    The diversity angle is an interesting one. It sorta worked in my favor, but not financially. Went I went on a tour of UMass I met one of the Admissions people who struck up a convo with me, just the general topics. She asked if I was instate or out, which I said both. I had grown up a Third Culture Kid (which she loved and wanted me as that was "diverse"), and at the same time my parents had kept their home in MA so that I we would get instate rates if I went to college here.

    Ha, no kids for me yet...in fact if you ask around here, some might say Im still one :).

    But your point is correct. School is a kids job, and to get ahead, you have to do well. My sister has always been the grade getter of my family. I have more "natural" intelligence, but didnt care enough to get straight A's. My social life in HS was far more important to me. If I could party from Friday night through Saturday and still get a B, then that was good enough for me. My sister on the other hand isnt as naturally book smart as I am/was, thus had to work her butt off. She partied like a legend at UMass, but pulled down a 3.8. Beat me by almost a full letter.
  16. IllegalContact

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    ooops....you blinked again....now its almost 55K


    this is an interesting point which begs a question......what do you think is a better deal, harvard for 55K or curry college for 46K? get my point?
  17. Drewski

    Drewski Rookie

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    If you believe in the idea that the name on the diploma is worth something, then out of those two, Harvard.

    However all things being equal, the better value is C, other.
  18. IllegalContact

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    like what? in state publics in the 20's, out of state high 30's, privates 45-55K

    and I understand that in the end it is just a piece of paper and it does not change the person, but I would spend 220K at harvard before I would spend 180K at curry....nothing against curry, but c'mon

    but all things said, I'm with C all the way....trying to get all 4 educated for less than 200K
  19. Drewski

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    I agree with your point Harvard v Curry....that is an easy one.

    I still would vote other, my state college education has done more than enough for me to date...and I didnt spend 20K a year for it (although that could be the going rate now, I graduated in '05)
  20. IllegalContact

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    UMASS is 23K now...includes room and board. first one got OSU for less......haven't bothered applying for the rest.......I don't know if it is general public school policy, but they don't give anything for in-state....its almost like MIT where they will take everything you have and still use your IRA as an asset......some schools can get away with it

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