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« Ruminations – 5jul12 (updated 6jul12) | Main | Reinette on a Roll »

06 July 2012

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Russ Steele

Antony Davies is an affiliated senior scholar at the Mercatus Center at George Mason University wrote an article on Why the Education Bubble Will Be Worse Than the Housing Bubble. Link HERE.

He concludes:

In the end, this bubble will be worse than the last. Even when homeowners got hopelessly behind on their mortgages, two options helped. First, they could declare bankruptcy and free themselves of their crippling debt; second, they could sell their houses to pay down most of their loans.Students don't have either of these options. It's illegal to absolve student loan debt through bankruptcy, and you can't sell back an education.

The simple fact of the matter should be obvious by now: Government created this mess, in both instances, by forcing the market to provide loans it would not have granted otherwise. As is its custom, government did by force what no private lender would have ever done by choice. This is the breeding ground for bubbles, and this one will burst just as they all do. As with the last bubble, politicians will blame the “greed” of the marketplace. How many more bubbles must we endure before we realize that the problem isn't greed and it isn't markets? The problem is government interference.

The higher education bubble is discussed on a regular basis at Glenn Reynolds' Instapundit Blog.

Gregory

"And finally, the lazy and inept are rewarded more than the hard-working and capable. A student who takes six years to complete a degree gets twice the Pell grant money of the student who blasts through in three years." Except for that, George, you were right on.

I'm not sure either lazy or inept are appropriate all that often here, nor is "rewarded". Students that need to hold down jobs to meet the rest of their expenses often take longer, and many colleges do a poor job of scheduling required classes so that it becomes difficult to fulfill the demands of a degree in even 5 years even if majors are not changed midstream, with 3 being nearly impossible. And I'm not sure being saddled with three times as much debt that cannot be discharged by any bankruptcy judge should be called "rewarded".

I do know one Pell grantee who could have finished in 3 1/2 at a UC (helped along by 6 high school AP classes with an average of 4.83 on the exams) but stayed a student for one last semester in order to take some useful electives in computer science and economics.

I do have a couple of young relations in my extended family that have significant student loan debt. They're about 30 years old, starting a family and while both are practicing attorneys earning a living, the student debt they took on to get their JD's is significant and burdensome. It is akin to indentured servitude at the hands of the Federal government and *all* colleges and universities who grew like topsy to soak up the dollars that were diverted to student loans.

Fortunately, I don't know anyone in as bad a shape as one dentist that made the news in the last year. She was sold a bill of goods by the financial aid officer at her dental school, who presented a wholly false budget that showed the couple hundred thou it would cost would be covered by expected earnings... only that the numbers were pure fancy. She's in default, and is further hobbled by the fact that (iirc) the default means she can't take medicare/medicaid patients or Federal employee plans which further hinders her ability to work.

Student loan debt in the USA exceeds credit card debt in the USA. Madness.

Douglas Keachie

If you can't do the math to figure out prices per oz, you are doomed to pay through the nose in the supermarkets. Of course, there are those for whom that is hard science calculus, and we are treated to:

WalmartMath

Funny, I only see three hands, and the sign says 15 items???

Account Deleted

I like all details that you provide in your articles.
http://www.bestunsecuredloansonline.com/

TomKenworth

George, you've got SPAM.

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