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Old 08-22-2013, 04:06 PM   #1
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Article & Discussion: Obama Takes on the College Cartel

http://finance.yahoo.com/blogs/daily...161300288.html

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“College has never been more expensive,” Obama declared during today's campaign-style speech in Buffalo. “Higher education cannot be a luxury. It’s an economic imperative.”

Maybe so, but higher education has been one of the last protected industries in America, even if most universities are technically nonprofits that supposedly serve the public interest. More people are going to college, since a college degree is directly linked to higher lifetime pay and a more rewarding career. But the supply of slots at four-year schools is relatively fixed, which is one big reason why the cost of higher ed has been rising by considerably more than inflation. Readily available student loans, many backed by the government, have only added to the gusher of money flowing into higher ed. The overall supply-and-demand dynamic has given universities the sort of pricing power typified by cartels and oligopolies.

Students (and their parents) haven’t necessarily been getting their money’s worth. Taking on debt to pay for education makes sense when you can graduate into a decent job that allows you to start paying back what you owe. But with jobs scarce, as they are now, the equation breaks down. The total amount of student debt has tripled since 2004, to nearly $1 trillion, with the average borrower owing more than $26,000. That’s a huge bill if you’re barely earning minimum wage as a barista or retail clerk.



Obama wants students to get a better return on their investment, so he’s proposing a new “college scorecard” that would be published by the Dept. of Education and rate colleges by the value they offer to students. Here are some highlights of the plan:

Rank colleges based on performance. Unlike the “best colleges” rankings published by a number of private organizations, the government’s scorecard would measure things such as affordability, a school’s outreach to disadvantaged students, graduation rates and the real-world earnings of graduates once they enter the job market. Obama wants these rankings to be in place by the time the 2015 school year begins. The Dept. of Education already provides some affordability data on colleges; under the rating system, there would be even more info and it would be easier to compare colleges.

Link government-backed financial aid to college performance. Once the ratings have been established for a few years, Obama wants Pell grants and other types of federal aid to be targeted more toward schools that have a proven record of graduating a high proportion of students who get good jobs.

Encourage states to fund public universities and community colleges based on similar performance measures.
Some states, such as Tennessee, Indiana and Ohio, are already doing this. A push from Washington could encourage more to do so.

Create new incentives for “innovative” types of education. Universities that offer accelerated three-year degrees, new types of online learning or other programs that help cut costs and boost return for students will be rewarded with higher ratings, “regulatory flexibility” or perhaps a public shout-out from the president.

Ease the burden on borrowers. Obama’s plan would cap payments on student debt at 10% of a worker’s monthly income. Some students who recently took out loans are eligible for this “pay as you earn” program, which Obama wants to extend to everybody carrying student debt.

What’s refreshing about Obama’s higher-ed reform plan is that the administration can do some of these things right away, without partisan bickering or tortured efforts to pass controversial legislation. The Dept. of Education can set up a college rating scheme without any need for Congressional approval, for instance. That alone could force universities to start paying more attention to the needs of their customers, if the way they react to rankings published by U.S. News & World Report, the Princeton Review and others is any guide. University administrators typically complain that such rankings are an abomination --while making sure their schools rank as high as possible. It’s a good bet that most schools would change whatever they could to earn the best possible rating on the government’s scorecard.

Linking financial aid to a school’s rating would require new legislation passed by Congress, as would an expansion of “pay as you earn.” Obama aides argue that the overall reform plan ought to have bipartisan appeal, making it more likely to get through a cantankerous Congress than other Obama proposals. It certainly has populist appeal, since it’s hard to argue against measures that make college more affordable for middle-class students and their parents.

Still, Washington is the place where good ideas go to die, and some universities may lobby against the new measures or try to get them watered down. So while costly colleges may get a presidential thrashing, tuition may remain higher than many students can afford. Perhaps there should be a scorecard rating Washington’s effectiveness.

What does everyone think? I like most of the bolded headline ideas EXCEPT for the last one. If these kids/parents decided to take out that amount of debt, they should be responsible for it just like any other loan program. The "pay as you earn" idea removes the burden from those taking out the loan....they should think about what the product is of that amount of debt.
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Old 08-22-2013, 06:00 PM   #2
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Re: Article & Discussion: Obama Takes on the College Cartel

As the old saying goes, "Think education's expensive? Try ignorance."

As a country and society, I think our single most important long term investment is in the education of our citizenry for it is what undergirds everything else, everything. Without a well educated citizenry, every other investment is wasted.

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Old 08-22-2013, 06:19 PM   #3
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How much of that education needs to take place at the extremely expensive college level, though? It seems to me that college is overkill for many, if not most, jobs in the US.
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Old 08-22-2013, 06:41 PM   #4
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How much of that education needs to take place at the extremely expensive college level, though? It seems to me that college is overkill for many, if not most, jobs in the US.
you are right, but more and more industries are looking for the completion of increasingly higher levels of education.
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Old 08-22-2013, 06:55 PM   #5
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you are right, but more and more industries are looking for the completion of increasingly higher levels of education.
I find that baffling. What does a secretary do, for example, that requires a bachelor's degree?
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Old 08-22-2013, 07:59 PM   #6
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college is expensive BECAUSE of government, god people are retarded
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Old 08-22-2013, 08:21 PM   #7
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college is expensive BECAUSE of government, god people are retarded
Explain please.
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Old 08-22-2013, 08:23 PM   #8
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Explain please.
Really? You need me to explain supply and demand laws and how federal student loans shift them?

I'll give you one more chance to just understand the obvious
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Old 08-22-2013, 08:32 PM   #9
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How much of that education needs to take place at the extremely expensive college level, though? It seems to me that college is overkill for many, if not most, jobs in the US.
Not necessarily in a college/university setting, per se, but also advanced technical and vocational training amongst other advanced educational avenues. Germany, IIRC, has a very extensive advanced technical/vocational education system that seems to serve them quite well -- perhaps a model to look at. Even many/most factory/production and even service jobs demand much greater technical skill sets than, say, fifty years ago when a basic high school degree was more than enough.

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Old 08-22-2013, 09:05 PM   #10
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Really? You need me to explain supply and demand laws and how federal student loans shift them?

I'll give you one more chance to just understand the obvious
Yes, I understand supply and demand in theory and the abstract, but how precisely does that apply, empirically, here? I think the reality is more complex than Econ 101 assertions.

Is it too much demand and not enough supply driving up prices? Should we, as a society, then throttle back demand by making higher education less accessible by restricting college aid to try to drive down costs?

Was higher education more affordable before government tuition supports, starting with the GI Bill and subsequent programs? Higher education used to be reserved for but a sliver of the most economically elite prior to WWII.

What about broader societal costs and benefits to increasing access to higher education in its various forms, especially in our much more high tech, high skilled economy? Even our manufacturing sector requires much greater skills, and thus, education levels, than say even 50 years ago.

This is not to argue that higher education is somehow immune from supply and demand, but neither should that analysis be applied too simplistically as a sole driver or aspect of higher education costs, affordability and value, both individually and societally.

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Old 08-22-2013, 09:53 PM   #11
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Article & Discussion: Obama Takes on the College Cartel

Universities are a cesspool filled with an endless money pit of narcissist employees and over blown idea of self worth. A racketeer and biggest rip off in America.


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Old 08-22-2013, 10:24 PM   #12
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Universities are a cesspool filled with an endless money pit of narcissist employees and over blown idea of self worth. A racketeer and biggest rip off in America.


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lol, that's a bit of an extreme statement.
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Old 08-22-2013, 10:47 PM   #13
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Originally Posted by Act of God View Post
college is expensive BECAUSE of government, god people are retarded
At least one person gets it.

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The 90/10 rule requires for-profit colleges to get no more than 90% of their revenues from Title IV federal student aid. This discussion is technical and is unlikely to be of interest to consumers.
This is one of the main things that keeps tuition and college spending on the up and up. Colleges wasting money building things just to spend money...so that they get more money.

Second, the huge loans given out by the government keep tuitions sky high. If there were no loans, or only tiny private loans, no one would be able to afford college, and as a result, they would plummet by 90%. A private institution (without government backing) would lend an average student MAYBE $3000 for a 4 year degree. College loan debt is today's slavery.

The student loan bubble is going to make the real estate bubble seem like a poppy seed. It is so toxic, so unmanageable, that one would be crazy to think it's sustainable.
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Old 08-22-2013, 11:05 PM   #14
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Originally Posted by Rhumb View Post
Not necessarily in a college/university setting, per se, but also advanced technical and vocational training amongst other advanced educational avenues. Germany, IIRC, has a very extensive advanced technical/vocational education system that seems to serve them quite well -- perhaps a model to look at. Even many/most factory/production and even service jobs demand much greater technical skill sets than, say, fifty years ago when a basic high school degree was more than enough.
I agree with this. I would love to see a greater emphasis on quality technical education programs.
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Old 08-22-2013, 11:39 PM   #15
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Universities are a cesspool filled with an endless money pit of narcissist employees and over blown idea of self worth. A racketeer and biggest rip off in America.
The end must be nigh....Green Shine and I actually agree on something.
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Old 08-22-2013, 11:43 PM   #16
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I agree with this. I would love to see a greater emphasis on quality technical education programs.
I would do. There is just one fly in the ointment.
(do they even make ointment a fly could get into anymore?)

However, until the employers are willing to step up to that plate, it won't happen.

They keep asking for "did you check the box like I did" bull cookie bachelors & masters degrees.
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Old 08-23-2013, 12:08 AM   #17
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lol, that's a bit of an extreme statement.
Not really. Most colleges are huge rackets when you consider the cost of attendance and the value returned.

Right now, Federal loans "subsidize" the cost of attending college but it also inflates the sticker price. Most of the subsidy is captured by the colleges themselves because 17 and 18 year old kids are universally ignorant about financial matters and most of their parents aren't that much better.

Any Federal ranking is going to be, at best, duplicative of the current rankings systems (which aren't that great to begin with). At worst, it's going to kick off an explosion of special interest lobbying and administrative gaming of the rankings system. There is absolutely no need for the Federal government to stick its nose in this issue.

If the US government wants to do something to address the declining value of college, it should eliminate the Federal Stafford loan and allow student loans to be discharged or modified in Chapter 7 bankruptcy.
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Old 08-23-2013, 07:28 AM   #18
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lol, that's a bit of an extreme statement.
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Originally Posted by rapier7 View Post
Not really. Most colleges are huge rackets when you consider the cost of attendance and the value returned.

Right now, Federal loans "subsidize" the cost of attending college but it also inflates the sticker price. Most of the subsidy is captured by the colleges themselves because 17 and 18 year old kids are universally ignorant about financial matters and most of their parents aren't that much better.

Any Federal ranking is going to be, at best, duplicative of the current rankings systems (which aren't that great to begin with). At worst, it's going to kick off an explosion of special interest lobbying and administrative gaming of the rankings system. There is absolutely no need for the Federal government to stick its nose in this issue.

If the US government wants to do something to address the declining value of college, it should eliminate the Federal Stafford loan and allow student loans to be discharged or modified in Chapter 7 bankruptcy.
Exactly, when the government guaranteed these loans the universities jacked up the rates. I would also suggest the removal of any type of scholarship that relies on others tuition to makes itself whole.
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Old 08-23-2013, 08:09 AM   #19
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Originally Posted by Rhumb View Post
Not necessarily in a college/university setting, per se, but also advanced technical and vocational training amongst other advanced educational avenues. Germany, IIRC, has a very extensive advanced technical/vocational education system that seems to serve them quite well -- perhaps a model to look at. Even many/most factory/production and even service jobs demand much greater technical skill sets than, say, fifty years ago when a basic high school degree was more than enough.

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Originally Posted by VaderDave View Post
I agree with this. I would love to see a greater emphasis on quality technical education programs.
+1
Quote:
Originally Posted by Rhumb View Post
Yes, I understand supply and demand in theory and the abstract, but how precisely does that apply, empirically, here? I think the reality is more complex than Econ 101 assertions.

Is it too much demand and not enough supply driving up prices? Should we, as a society, then throttle back demand by making higher education less accessible by restricting college aid to try to drive down costs?

Was higher education more affordable before government tuition supports, starting with the GI Bill and subsequent programs? Higher education used to be reserved for but a sliver of the most economically elite prior to WWII.

What about broader societal costs and benefits to increasing access to higher education in its various forms, especially in our much more high tech, high skilled economy? Even our manufacturing sector requires much greater skills, and thus, education levels, than say even 50 years ago.

This is not to argue that higher education is somehow immune from supply and demand, but neither should that analysis be applied too simplistically as a sole driver or aspect of higher education costs, affordability and value, both individually and societally.

Quote:
Originally Posted by rapier7 View Post
Right now, Federal loans "subsidize" the cost of attending college but it also inflates the sticker price. Most of the subsidy is captured by the colleges themselves because 17 and 18 year old kids are universally ignorant about financial matters and most of their parents aren't that much better.

Any Federal ranking is going to be, at best, duplicative of the current rankings systems (which aren't that great to begin with). At worst, it's going to kick off an explosion of special interest lobbying and administrative gaming of the rankings system. There is absolutely no need for the Federal government to stick its nose in this issue.

If the US government wants to do something to address the declining value of college, it should eliminate the Federal Stafford loan and allow student loans to be discharged or modified in Chapter 7 bankruptcy.
I actually agree. If it's an option to everyone else, bankruptcy should be an option to people with student loans as well.
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Old 08-23-2013, 08:37 AM   #20
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Not really. Most colleges are huge rackets when you consider the cost of attendance and the value returned.

Right now, Federal loans "subsidize" the cost of attending college but it also inflates the sticker price. Most of the subsidy is captured by the colleges themselves because 17 and 18 year old kids are universally ignorant about financial matters and most of their parents aren't that much better.

Any Federal ranking is going to be, at best, duplicative of the current rankings systems (which aren't that great to begin with). At worst, it's going to kick off an explosion of special interest lobbying and administrative gaming of the rankings system. There is absolutely no need for the Federal government to stick its nose in this issue.

If the US government wants to do something to address the declining value of college, it should eliminate the Federal Stafford loan and allow student loans to be discharged or modified in Chapter 7 bankruptcy.
Will never happen as long as the feds are guaranteeing the loans. However, I agree, eliminate the guarantee, as well as allowing the loans to be discharged, and lenders will provide loans that are equivalent to the applicant's income/assets (just like a mortgage) which, lets be honest, for a college student, is usually damn near nothing.
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