Monday, October 31, 2011

The Limits of Higher-Education Spending as a Stimulus; Obama’s Student-Loan Flim-Flam


South Korea got a higher percentage of its young people to go to college than the U.S. But it backfired. Although “great numbers of eager students graduate from college every year,” “the predictable problem is that many of them can’t find work commensurate with their education. The government now wants to lower the number of students going to college.”

The Obama administration wants to increase the percentage of youngsters going to college in the U.S., based on the theory that this will somehow result in more skilled jobs, but Korea’s experience shows that “the idea that supply creates its own demand with regard to education is mistaken. Joanne Jacobs says that in Korea, 40 percent of new college graduates can’t find jobs (even though Korea has had healthy economic growth recently, although less so than in the past).

Economist Peter Schiff, “who was among the first people to publicly predict the collapse of the housing bubble,” criticizes Obama’s new, costly student-loan repayment scheme here, saying it will result in increased college tuitions and “moral hazard.” George Leef of the Pope Center for Higher Education Policy writes that “Obama’s student loan gambit,” just “like his politically motivated interventions in the housing market,”
is just going to prolong and deepen the problem — too many people going to college largely at the expense of others, then struggling to find jobs that pay enough to cover the debts. Many will never find such employment since the labor market doesn’t automatically create high-paying jobs just because more people have a “higher attainment” in formal education. Then the costs are passed along to taxpayers. Obama’s move might reap him some political benefit, but it will lead to more wasted resources.

At Minding the Campus, Andrew Gillen calls the Obama administration’s new student loan repayment scheme unjust social engineering that will harm some borrowers. As Joanne Jacobs notes, “Obama’s Pay As You Earn plan limiting loan repayment encourages students to borrow more and colleges to charge more, writes a business analyst. Taxpayers will get the bill.”

A credit rating agency, Moody’s, is now warning student borrowers that college may not be worth the money for some majors. As Reason magazine notes, there is now a looming higher education bubble:
A growing chorus of economists and educators think that the higher education industry will be America’s next bubble. Easy credit, high tuition, and poor job prospects have resulted in growing delinquency and default rates on nearly $1 trillion worth of private and federally subsidized loans. Now the ratings agency Moody’s has weighed in with a chilling diagnosis: “Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.”

We wrote earlier about the higher-education bubble here. In the New York Post, John Podhoretz suggests that the administration’s recent student-loan repayment scheme will fuel that higher-education bubble, and
enrich one of the sectors within the American economy most responsible for the profound financial pressure on the middle class — higher education. The staggering inflation in the cost of higher education since the federal government got involved in lending money to Americans for college in 1965 beggars description. One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.


Britain's crazy university admission system to be rationalized

What the Brits are just getting around to doing, Australia has been doing for generations -- so it's not hard. But for lazy Brits it may be hard

Students will apply for university once they have received their A-level results in a shake-up designed to end the ‘inefficient, stressful and confusing’ admissions system.

Teenagers currently choose courses based on predicted grades even though half turn out to be wrong.

Under proposals to be published today prospective students can only apply after they have been awarded the marks necessary to secure a place at their university of choice.
No time to celebrate: Under the proposal, students will need to find a university course after they receive their exam results

It will see students sit their A-level exams in early May, 15 days earlier than at present, with results published before the end of the summer school term in early July.

Candidates will then apply, in the third week of July and accept offers by the third week of September.

University start dates, for the first year students, will be pushed back to the second week of October.

It will involve exam boards dramatically increasing the speed of their marking and universities processing applications during the summer holidays.

The changes, set to be introduced in 2016, have been recommended in the first major review of admissions in 50 years, conducted by the University and College Admissions Service(UCAS).

They are likely to be met with some resistance from Universities and exam boards, which will have to adapt fast.

And following the chaos of recent university admission rounds, with thousands of students with straight A grades failing to get a place, there are fears teething problems with the new system could jeopardise the university career of even more students.

However, Universities Minister David Willetts has signalled his support.

The overhaul comes as the current system, which has been in place since 1961, has in recent years, failed to deal with the volume of applications, which now total some 2.7million.

The review found it forces applicants to make decisions about higher education at least six months before they receive their results. In addition is it ‘complex and many applicants find it ‘hard to understand’ and clearing is ‘inefficient, stressful and confusing’.

The review also found that fewer than 10 per cent of students are applying to university with three accurate grade predictions.

And an estimated 20 per cent to 40 per cent of university applications have predicted grades which fail to meet the minimum entry requirements of the course applied for.

Almost half, 42 per cent, of applicants hold a so-called ‘insurance’ or back-up place that require them to get the same or better grades than their first choice course.

Under the proposals, the application process would be split into three windows’ to accommodate mature and overseas students and those who fail to get an offer first time round.

The first process would be open all year for students who already have their grades.

Brian Lightman, general secretary of the Association of School and College Leaders said: ‘Predicted grades are never completely reliable and at the moment students are forced to narrow their options far too early in the process.’


Australia: More overpaid and under-worked unionists determined to bleed the taxpayer even more

And I am a former teacher so I know all about teaching work -- JR

MOST of the state's 50,000 full-time teachers are expected to walk out of their jobs on Wednesday to attend stop-work meetings.

NSW Teachers Federation deputy president Gary Zadkovich said the stop-work meetings would force most of the 2230 public schools across NSW to close from 9am to 11am on Wednesday.

It's expected that 270 separate stop-work meetings will be held across NSW and that teachers would return to work in the afternoon and classes would continue as normal.

Mr Zadkovich said salary negotiations typically took many months, but the state government was yet to table an offer for teachers with two months left on the current awards agreement.

"If we get to the end of the year and there's no award negotiated and in place the government will be saving millions of dollars every week the process is delayed," Mr Zadkovich said, warning that further industrial action was on the cards before the end of the school year.

But Justice Frank Marks in the NSW Industrial Relations Commission told the federation the stop-work meeting was without justification.

Justice Marks said on Friday the stop-work meeting would disrupt many students for far longer than two hours and questioned why students needed to have their education interrupted when the government had offered to start wage negotiations this week.

"My best guess is ... that this strike action is not going to endear this government to this federation and it will only create even greater resolution to do what it can to win the ultimate war," he said.

Mr Zadkovich said they are calling for a fair and reasonable offer from the government.


No comments: