http://www.prudentbear.com/index.php/thebearslairview?art_id...We learned last week that bad debts on U.S. student loans now exceeded those on all credit card debt. Yet politicians, educators and economists continue to advise American youth to aim for a college degree, on theory that it represents a job for life. However according to the Economic Policy Institute the unemployment rate for college graduates aged 21-24 is 9.4% and the underemployment rate is 19.1%. This trend, of declining employability and rising debt, has worsened substantially in recent years and isn't about to improve. Thus at some point we will come to recognize: the four-year college model is broken.Middle-skill jobs are plentiful in many sectors, and employers are having difficulty in filling them. Part of this is economic illiteracy on their part; a New York Times story recently described the CEO of a small manufacturing company in Minnesota, who was having great difficulty attracting welders with today-level skills, whom she was proposing to pay $10 an hour. Mostly, that's her ineptitude; with the minimum wage now $7.50 per hour, you should not expect to recruit highly skilled operatives for only $10. According to Symonds, increasing numbers of employers complain that students lack 21st century skills, yet it's not for a lack of resources devoted to their education. Clearly the entire higher education system operates with an inefficiency that would not be tolerated in any walk of life in which the free market was properly operational.Housing bubble chart:http://2.bp.blogspot.com/_otfwl2zc6Qc/TA0AfV6FpCI/AAAAAAAANo...Housing bubble vs Education Bubble:http://3.bp.blogspot.com/_otfwl2zc6Qc/TA0AhcCyh0I/AAAAAAAANo...Double whammy of employers unwillingness to pay adequate wages & soaring inflation of the cost of higher education that does not prepare the student with the proper skills. Sounds like a failure of a business model to me. The author also points out that high schools are set up for the college bound student with little regard to those that will pursue that avenue. Back in the dark ages [1960's] my high school had shop classes teaching welding & wood working & secretarial [administrative assistant] skills. I wonder if they still do that?
Double whammy of employers unwillingness to pay adequate wages & soaring inflation of the cost of higher education that does not prepare the student with the proper skills. Sounds like a failure of a business model to me. I always thought that Prudent Bear guys weren't particularly sharp, and that article didn't change my mind.My wife works in higher education and these the types of problems she deals with every day. However, there seems to be a great deal of confusion on a number of points. Tuition costs indeed are rising rapidly. However, public higher education spending per student has actually been going down in recent years. Obviously, costs are being shifted from the public to private sectors, mostly to the students themselves. By contrast, private college spending per student has been going up. Also worth noting is labor is a major portion of educational costs. Wage inflation is a higher than regular inflation, so you would expect educational costs to rise faster than the CPI. Basically, a not a useful comparison.The skills gap mention in the article is real. So how do you fill it? Colleges need to shift focus of curriculum. That requires is recruiting new, qualified staff, developing curriculum in conjunction with community partners etc. Now try doing that if your budget is cut 10% every year--which has happened each of the last three years here in Washington State, even though enrollment is going up. Adding new programs is very difficult in even in the best of times, and is almost impossible right now. And just for grins, try to hire some instructors from private industry when the state doesn't even give cost of living wage increases.Hutchinson's solution of course is that if you cut the budget some more, all those problems go away. Sure they do.The article mentioned there should be shift to community colleges. Great idea, however there already is a shift to community colleges. Even thought the population is growing, university enrollment has been flat the last few years while community college enrollment is exploding. There are a lot of reasons for that, but the main one is that it is cheaper for everyone and that has been a major policy of the Obama administration. Just for fun, I checked to see the Prudent Bear funds were doing, and the still stuck. No surprise given they hire great thinkers like this guy.
Hmmmm . . . I'm not convinced the attack on college education is yet properly focused. The first step in better understanding the why so many college degreed people are also unemployed people needs to look more closely at those degrees. Today, we have top tier private and state universities. We have second tier private and state universities... We have community colleges. And increasingly, we have pay-for degree, for-profit, mail-order universities. Now, not everyone might agree on the exact list of first tier, second tier and third tier schools, but a set of criteria could be established that would lead to a rank order in pretty close correlation to most expert opinions. Similarly, degrees are offered in science, engineering, accounting, political science, anthropology, philosophy, . . . Not all of those degrees is equally likely to lead to employment - especially with only a four year degree.So, if we look at unemployed college graduates by degree type and university type, what pattern emerges? And how does that pattern correspond to recent trends in college enrollment?Not every college degree needs to lead to employment for it to have value. There are plenty of people who obtained degrees in Philosophy or History or . . . who probably never directly used the knowledge gained in the classroom in their eventual careers. Many of those people still valued their education and what they got from the college experience. They might also claim that the indirect knowledge they got from the college environment was very worthwhile to their later career path.Still, it should be clear that they got jobs not because of what they studied in college, but because employers were in need of employees and an applicant that had shown the discipline to get a college degree had an edge over one that did not. Today, employers are not expanding their workforces as rapidly as they have in recent history. If job placement is the goal, then college enrollies need to be armed with the facts about how valuable different degrees and different schools diplomas really are.
salaryguru writes,Today, employers are not expanding their workforces as rapidly as they have in recent history. If job placement is the goal, then college enrollies need to be armed with the facts about how valuable different degrees and different schools diplomas really are. A lot of good schools offering valuable degrees have priced themselves out of the market.WPI in Worcester MA where I got my Civil Engineering degree is a case in point. When I graduated a year early in 1977, three years worth of tuition and room and board was about equal to the starting salary I received from my first employer. Today tuition and room & board is $56,000/yr and the average starting salary for graduates is about $65,000/year. My advice to WPI applicants today? If they're not offering you a big scholarship, find someplace cheaper to get your degree, bank the difference, and Retire Early.One of my former Exxon colleagues who has more Exxon stock than he knows what to do with bankrolled $250,000 college funds for each of his 6 grandchilden. Five of the six are spending the money on expensive Liberal Arts colleges likely to consume the value of their account in 4 years or less. The sixth grandchild took an ROTC scholarship to attend a state college and will graduate with the $250,000 college fund largely intact. Grandpa jokes that he's going to make sure the kid has a prenuptial agreement when he gets married because of his wealth.intercst
The skills gap mention in the article is real.I'm not entirely convinced that a skills gap exists, at least to the extent that everyone bemoans. It's a multi-dimensional problem, including employer expectations vs. the labor pool requirements.I can't find the article, but the NY Times published a piece a few months ago about small businesses not being able to find qualified applicants. One owner said he'd love to hire 5 or 10 experienced machinists. When asked what he was paying, he responded that he was willing to pay $10/hour. Sure, a guy trying to support a family is going to take that job, when they could get a job at McDonald's as a manager that pays $14/hour.For recent college graduates, another issue surfaces.Surveys of actual hiring managers have shown for decades that they are not complaining about academic skills among applicants. Few are interested in hiring recent graduates because they do not want to train them. The candidates they want are already employed, doing the job in question someplace else. What is in short supply is work experience specific to the immediate job, and no one wants to give anyone that experience, a Catch-22.http://www.nytimes.com/roomfordebate/2012/07/09/does-a-skill...For others, there's a computerized application screening problem.In practice, though, employers have tried to get those systems to take over the entire hiring decision, getting rid of the human recruiters altogether. The hope is that a long list of requirements, often generated by hiring managers with high expectations, will mean that the perfect candidate will come out the other side. What happens instead is often that no candidates get through the screening process. The few that do usually are already employed somewhere else doing a job with exactly the same job title as the one being filled.http://www.pbs.org/newshour/rundown/2012/10/if-job-boards-do...PM
A lot of good schools offering valuable degrees have priced themselves out of the market.That's for sure.I was really lucky. My coal miner father and stay-at-home mother offered me $85 per month support when I went to college. That was pretty generous of them considering neither of them got a chance to go. I won a $1000 per semester scholarship and worked 20 hours per week during the semester - at the campus book store and washing dishes. In Summers and during breaks, I worked full-time in the coal mines. All together, that got me through my undergraduate degree at one of the best engineering schools in the country without debt.Once I got the initial opportunity, I feel like I made a lot out of it. Schools competed for me to attend their graduate school and my career was successful enough. My contributions to my field are still cited and the basis of some significant modern research. More importantly to me, my career allowed me to retire comfortably at age 49 without having to work any longer in the coal mines.When I look at the cost of college education now, I'm forced to conclude that I would end up a coal miner if I were starting today. All of the funding sources I used combined wouldn't buy two weeks tuition into a good school. I doubt I would find it worth the massive debt to attend if I were starting today with the equivalent resources. I just would have been way too afraid to take on that massive debt risk to try something that no one in my family or anyone I knew had ever done before.
intercst:"WPI in Worcester MA where I got my Civil Engineering degree is a case in point. When I graduated a year early in 1977, three years worth of tuition and room and board was about equal to the starting salary I received from my first employer. Today tuition and room & board is $56,000/yr and the average starting salary for graduates is about $65,000/year. "I just checked RPI - where I went from 64 to '68.The 'estimated cost' now PER year is $59,470 , consisting of$43350 tuition$1125 in 'fees'$12345 Room and Board$2545 Books and Supplies----When I went, tuition was about $1150 a year.....and room and board about half of that....... in 4 years, it had gone up to $1600 a year.....My parents paid 'most' of my tuition...and I had some scholarship aid the first two years...screwed up a bit and lost that the last two years.....you had to be in the top 20% to keep it...and it was a tough school and I wasn't.....but I worked part time (up to 10 hours a week) for pocket money..and worked summers to help out.Graduated with $2500 in loans...which I repaid back in less than 18 months on my $9250 a year staring salary. The total cost of my college education was about ONE YEAR of salary at my engineering job. Now, unless you get a boatload of scholarship or grants.....to get out, you are taking on 4 years of starting salary. It's insane!......A lot of kids even then going had 'Regent Scholarships' from NY state which they got if they were in the top 20% of their high school class in NY state......which paid a chunk of the tuition. Today, that is hardly a drop in the tuition bucket.My nephew graduated about 10 years ago from RPI in Computer Science..he started at about 70K/year....and quickly got up to $100K a year or more.....but that still would be a killer for lots of folks......luckily for him, he had a rich grandmother on his dad's side who set up education trust funds for the grandkids so that covered at least half his yearly expenses (I know I was the co-trustee).....and that of his sistre...... and the parents had the assets to pay the rest....... he graduated debt free.....You'd have to be nuts to finance going there for 4 years......If you live in TX, you can do it for even less than half of that at the Univ of TX Engineering schools. Plus likely get aid if you need it. Then you could get out with maybe 130% of your first year earnings, assuming you got a degree in computer science or engineering. If you go into oil geology or similar, you can make $125,000 starting salary here.......The education bubble is about to pop.....t.
The skills gap mention in the article is real. Yes, but ...When I went into structural analysis, the company (Boeing) wanted a minimum of a MS in Civil or Mechanical Engineering. We were placed in the tutelage of a senior analyst to learn the trade. I dabbled in some computer programming to ease the onerous routine calculations. My lead engineer clucked, but allowed it.In my last years working in structures, I saw many completely incompetent people calling themselves "stress analysts". They had learned to use the available computer programs (PATRAN, NASTRAN), but they had no idea how to interpret the results. And knowing how to create a model didn't mean the model was useful. This was at Boeing and Hughes. Doesn't give me a warm fuzzy. Fortunately there is still a lot of structural testing before a product is released to the public.Count Upp
Having worked my way through college, worked in industry for about 30 yrs, and now having taught at the undergrad level for both a community college and two universities,here are a few comments:1) Students themselves are devaluing the nature of college and many of them will openly state - proudly! - that they don't read the textbooks. In their minds, a degree is "getting their ticket punched" for job search algorithms.2) Students pay attention to the teacher ratings, and ratings go up when less is asked of students. This produces a devastating feedback system. In some places I have taught, the permanent faculty has made it a point to emphasize that adjuncts should grade severely. Why? The permanent faculty can then grade easier, get higher evals, and show how much "better" they are.3) Community colleges are the best bargain, but beware of getting only what you pay for. The instructors are there to teach and, because there's no pressure to publish, focus on that skill. That's a very good thing -- but also a bad thing. To be seen as a "good" teacher, one must have good evals so.... (see #2).4) I think that in the rush to attract students, schools have taken professions which are trades and turned them into academia. 5) Schools have streaks of envy the width of a superhighway. If one offers a particular degree, why then the school across the town, state, or in the next state has to have that degree as well. (Locally, we just opened a major health care center and teaching hospital. Almost immediately Univ. of Texas had to leap forward and say that they also needed one at their main campus - about 20 miles down the I-35.)6) Too many companies needlessly use college education as a gate for employment, even when that college education may mostly be irrelevant. 7) Schools are eager to accept the money for tuition (and alumni donations!), but don't really worry that much about helping students plan for their lives after graduation. At how many schools do you see Campus Life or the Financial Aid depts. sitting down with students and saying, "At the current pace of your borrowing, you'll be graduating with $XX,XXX of debt and in a profession where there is virtually no hiring in this state and typically only earns $xx,xxx if your relocate. Let's see what kind of life you can expect."8) Stop making trendy degrees. Don't have a "Digital MBA" program or a Master's degree in "Leadership".This doesn't directly relate to the OP, but one final observation....It has been interesting to me that MBA programs which deal with support and staff functions - finance, accounting, HR, marketing, etc. - have grown while those programs associated with production and line mgmt (e.g., operations mgmt) have been shrinking. In a number of BS (mgmt) and MBA programs, one need never take a course dealing with any aspect of production. That's scary.
Since today marks the first day of my early (semi)retirement, I'm liberal, and I've spent my entire adult life, including the last 37 years on the faculty, at a (some would say "the") top-rated public research university, I'd like to add my two-cents.Highly selective colleges and universities will always be able to pick and choose from among children of the well-to-do for whom price is, at best, a secondary concern. For the vast majority of the undergrads I teach, the Great Recession and the prolonged economic slump may as well have happened in Tibet. It's something they have read (an article) about, or perhaps seen (most of) a TED talk about.There are many wonderful students in my classes, to be sure. They study, they speak and write well, they do community service to "give back" to the less fortunate. But the median student with whom I interact these days glides through life with an attitude of deep, unthinking entitlement. A fair number of of them reside in upscale, high-rise residence apartments that rival the toniest condos in Georgetown or on the upper East Side. Laundry service and housekeeping are available for an additional charge."Research" for many of them consists of entering a few keywords into Google and assembling a word-collage from whatever few items appear at the top of the list. Surveys show that they "study" and average five or six hours/week. None of them would dream of taking a class before 11 AM, or after 4 PM, or at all on Fridays.And, no, it was not always thus. As I say, I've been here a long, long time. As state support for higher education has evaporated (we build prisons at the rate of one per week in America, and the money has to come from someplace), tuitions have risen to the point where more students matriculate to my campus from households in the top two percent, by income, than from the bottom fifty percent. True fact ... and this is a "public" university.Which is a big part of why I decided to retire early (at age 63 -- which is not all that early, I suppose, but is considered highly unusual for tenured full profs where I am). I rose out of deep, ugly poverty, and I chose my career to help others do the same. I did not sign up to assist the privileged and entitled to become even more privileged and entitled. But that's what has happened on my campus, and on others like it.Happily, for the past decade my research has consisted primarily of hands-on political power-building with impoverished folks in the most troubled big city in America. I am blessed with a cadre of undergrads and a few grad students who have chosen to work side by side with me. It nourishes my soul and has kept me sane. But I don't get paid to do that alone, and so it has become time to retire, at least from the teaching part.One last thing. Having worked at manual labor for all of my own undergraduate days, I am well aware that I've got some nerve complaining about the privileged career I have enjoyed. Being a professor is not hard work; roofing a house in the summertime is. Nevertheless, I am saddened by what has taken place in higher education over the past couple of decades.
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