Friday, September 14, 2012

Is College a Lousy Investment?

Why are we spending so much money on college?  And why are we so unhappy about it? We all seem to agree that a college education is wonderful, and yet strangely we worry when we see families investing so much in this supposedly essential good. Maybe it’s time to ask a question that seems almost sacrilegious: is all this investment in college education really worth it?

The answer, I fear, is that it’s not. For an increasing number of kids, the extra time and money spent pursuing a college diploma will leave them worse off than they were before they set foot on campus.

For my entire adult life, an education has been the most important thing for middle-class households. My parents spent more educating my sister and me than they spent on their house, and they’re not the only ones ... and, of course, for an increasing number of families, most of the cost of their house is actually the cost of living in a good school district. Questioning the value of a college education seems a bit like questioning the value of happiness, or fun.

Donald Marron, a private-equity investor whose portfolio companies have included a student-loan firm and an educational-technology startup, says, “If you’re in a position to be able to pay for education, it’s a bargain.” Those who can afford a degree from an elite institution are still in an enviable position. “You’ve got that with you for your whole life,” Marron pointed out. “It’s a real imprimatur that’s with you, as well as access to all these relationships.”

That’s true. I have certainly benefited greatly from the education my parents sacrificed to give me. On the other hand, that kind of education has gotten a whole lot more expensive since I was in school, and jobs seem to be getting scarcer, not more plentiful. These days an increasing number of commentators are nervously noting the uncomfortable similarities to the housing bubble, which started with parents telling their children that “renting is throwing your money away,” and ended in mass foreclosures.

An education can’t be repossessed, of course, but neither can the debt that financed it be shed, not even, in most cases, in bankruptcy. And it’s hard to ignore the similarities: the rapid run-up in prices, at rates much higher than inflation; the increasingly frenetic recruitment of new buyers, borrowing increasingly hefty sums; the sense that you are somehow saving for the future while enjoying an enhanced lifestyle right now, and of course, the mountain of debt.

The price of a McDonald’s hamburger has risen from 85 cents in 1995 to about a dollar today. The average price of all goods and services has risen about 50 percent. But the price of a college education has nearly doubled in that time. Is the education that today’s students are getting twice as good? Are new workers twice as smart? Have they become somehow massively more expensive to educate?

Perhaps a bit. Richard Vedder, an Ohio University economics professor who heads the Center for College Affordability and Productivity, notes that while we may have replaced millions of filing clerks and payroll assistants with computers, it still takes one professor to teach a class. But he also notes that “we’ve been slow to adopt new technology because we don’t want to. We like getting up in front of 25 people. It’s more fun, but it’s also damnably expensive.”

Vedder adds, “I look at the data, and I see college costs rising faster than inflation up to the mid-1980s by 1 percent a year. Now I see them rising 3 to 4 percent a year over inflation. What has happened? The federal government has started dropping money out of airplanes.” Aid has increased, subsidized loans have become available, and “the universities have gotten the money.” Economist Bryan Caplan, who is writing a book about education, agrees: “It’s a giant waste of resources that will continue as long as the subsidies continue.”

Promotional literature for colleges and student loans often speaks of debt as an “investment in yourself.” But an investment is supposed to generate income to pay off the loans. More than half of all recent graduates are unemployed or in jobs that do not require a degree, and the amount of student-loan debt carried by households has more than quintupled since 1999. These graduates were told that a diploma was all they needed to succeed, but it won’t even get them out of the spare bedroom at Mom and Dad’s. For many, the most tangible result of their four years is the loan payments, which now average hundreds of dollars a month on loan balances in the tens of thousands.

A lot of ink has been spilled over the terrifying plight of students with $100,000 in loans and a job that will not cover their $900-a-month payment. Usually these stories treat this massive debt as an unfortunate side effect of spiraling college costs. But in another view, the spiraling college costs are themselves an unfortunate side effect of all that debt. When my parents went to college, it was an entirely reasonable proposition to “work your way through” a four-year, full-time college program, especially at a state school, where tuition was often purely nominal. By the time I matriculated, in 1990, that was already a stretch. But now it’s virtually impossible to conceive of high-school students making enough with summer jobs and part-time jobs during the school year to put themselves through a four-year school. Nor are their financially shaky parents necessarily in a position to pick up the tab, which is why somewhere between one half and two thirds of undergrads now come out of school with debt.

In a normal market, prices would be constrained by the disposable income available to pay them. But we’ve bypassed those constraints by making subsidized student loans widely available. No, not only making them available: telling college students that those loans are “good debt” that will enable them to make much more money later.

It’s true about the money—sort of. College graduates now make 80 percent more than people who have only a high-school diploma, and though there are no precise estimates, the wage premium for an elite school seems to be even higher. But that’s not true of every student. It’s very easy to spend four years majoring in English literature and beer pong and come out no more employable than you were before you went in. Conversely, chemical engineers straight out of school can easily make triple or quadruple the wages of an entry-level high-school graduate.

James Heckman, the Nobel Prize–winning economist, has examined how the returns on education break down for individuals with different backgrounds and levels of ability. “Even with these high prices, you’re still finding a high return for individuals who are bright and motivated,” he says. On the other hand, “if you’re not college ready, then the answer is no, it’s not worth it.” Experts tend to agree that for the average student, college is still worth it today, but they also agree that the rapid increase in price is eating up more and more of the potential return. For borderline students, tuition hikes can push those returns into negative territory.


Third of Britain's elite universities still looking for students

Almost a third of Britain’s leading universities still have places available with less than a week to go before the application deadline, following a sharp drop in student applications, The Daily Telegraph can disclose.

Seven out of 24 institutions in the elite Russell Group are still advertising vacancies on more than 1,000 courses days before the start of the academic year.

Thirty thousand more places have been made available through the clearing system than at this time last year, increasing suspicions that £9,000-a-year tuition fees have put off many school-leavers.

Despite the unexpectedly high level of vacancies for British students, places are likely to go unfilled because fewer pupils have achieved the entry requirements for leading universities.

One Russell Group university, Queen Mary, University of London, was yesterday advertising spaces on 178 of its 194 courses that are available through the Universities and Colleges Admissions Service.

Sheffield University had places to spare on 257 of its 326 courses, including English literature and law. Exeter was yet to fill 191 out of 316, including psychology and classics.

Overall demand for university places is down by seven per cent on last year, with many blaming the new higher fees. Leading universities have also been hit by a decline in the number of teenagers gaining good A-level grades following a drive to make exams harder. David Willetts, the universities minister, said that this summer there was a fall of 5,000 in the number of pupils believed to have gained at least two As and a B, the threshold for many courses at leading institutions.

If the places are not filled, some universities could suffer multi-million-pound losses.

Lecturers’ leaders warned that the decline represented a rejection of the new fees regime, which has seen the price of courses almost treble at some universities.

Sally Hunt, the general secretary of the University and College Union, said: “Fewer students at UK universities this year represents the predictable failure of the Government’s attempt to create an artificial market for the most highly-qualified students.

“The minister’s recognition that higher tuition fees forced a scramble for places last year highlights the unfair nature of this Government’s hike in fees. At a time of high unemployment, we should be making it easier for people to get to university, not pricing them out.”

Mr Willetts said evidence from previous higher education reforms showed that “individual institutions can face a temporary jolt when changes like this are introduced”, with students applying early to get around the fees increase.

This will lead to declines in entry rates at some institutions, creating “real pressures”, he said. Speaking at the Universities UK annual conference at Keele University, the minister said: “I think we are likely to see fewer students going to university this year because last year’s figure was partly artificially inflated by fewer people taking a gap year. But I still think we will have very high numbers of students going to university.”

Universities have been given greater freedom to take unlimited numbers of students with at least AAB at A-level. Previously the Government operated strict controls on all student places, threatening universities with fines if they over-recruited. The move was designed to create more competition between institutions and free up places for the brightest students.

But a decline in the number of teenagers gaining top grades has actually led to some leading universities facing shortages.

Mr Willetts said that 80,000 students gained AAB, compared with a previous prediction of 85,000.

The decline in applications can also be put down to a fall in the number of 18-year-olds in the education system over recent years.

Figures from Ucas showed that the number of students who accepted places at English universities by Sept 11 was down by 30,076 on last year.

There were 26,997 courses with vacancies in clearing, and eligible candidates have until Sept 20 to apply. Some 642,654 people applied to study this year, compared with 692,358 last year.

In a separate disclosure, Times Higher Education magazine carried out an anonymous survey of universities to find out how many students with grades of AAB had been admitted.

One Russell Group university said it was 500 short of predictions, while three others were down by 400, 260 and 160. Another “less selective” university said student numbers were down by 700.

With average annual tuition fees estimated at £8,123, it is believed universities could be facing a £700 million loss of funding over three years.

Wendy Piatt, the directo- general of the Russell Group, criticised the Government’s decision to award more places to cheaper universities.

“The first year of the new funding system was always going to be challenging and uncertain. But the Government’s core and margin policy of re-distributing places, largely on the basis of lower fees, meant universities had fewer places to offer to students with grades below AAB and this has had a knock-on impact.

“We have consistently argued this policy of giving more places to institutions charging lower fees would neither improve quality nor enhance student choice.

“If universities couldn’t recruit enough high-calibre students they risked losing funding but if they recruited too many students with grades ABB or below they risked substantial fines. The difficult choices faced by admissions departments this year means students who wanted to attend a leading university and had the right qualifications have not been able to even though those universities wanted to accept them.”

Mr Willetts said: “Different institutions will have been affected differently; that is inevitable when making significant changes, which are intended to take greater account of student choice.”


Trivial-minded British school leadership

They can't stop REAL misbehaviour so they harass decent families

It is usually the norm that a schoolgirl would be reprimanded for her skirt being too short.  But in this case, one pupil was sent home because her trousers were not flared enough and deemed far too tight.

Teachers also made Lauren Entwistle learn in isolation at Swavesey Village College in Cambridgeshire, because the offending black school trousers did not have the correct 'flarage'.

Her mother Mandy Entwistle, 37, today said she was furious her daughter missed a day-and-a-half of GCSE lessons just because her trousers were the wrong style.

She said the school had banned various styles of trousers because they were deemed fashionable, but she had decided the bootcut version that they ask pupils to wear looks untidy and can get caught in bikes.  Bizarrely, the school has now ordered Lauren new trousers, which they deem suitable, from the same website as the original ones.

Mother-of-four Ms Entwistle said: 'I just do not understand how sending a child home from school because her trousers are too tight around the ankles is beneficial for anybody.

'Are we supposed to get a tape measure out and measure the flarage?  'I could understand if they were too tight in case they are distracting for the boys, but that is not the issue.  'I bought them from a school uniform website. I would not send her to school in leggings. I always make sure she looks smart.

'When I was at school bootcut trousers were banned because they were in fashion and now straight trousers are banned because they are in fashion.  'I think the flared trousers do not look very smart as they often get caught in their bikes or shoes.

'The school say they want the pupils to behave like young adults and then they treat Lauren like a child over some trousers.

'She wears the trousers to work at her hair salon and they are considered smart enough - so if they are appropriate for the world of work they should be good enough for school.'

The seething mother, who runs her own cleaning business, added: 'Lauren is a well-behaved pupil and despite her interest in beauty she respects the rules and does not have her nails done or wear make up to school.  'I refuse to let them put Lauren in the isolation room is like a prison cell - it is like something out of a torture camp.  'They will make them wear orange jumpsuits next.'

Lauren, who lives with her mother and stay-at-home father Allen, 40, in Swavesey, Cambridgeshire, was sent home at about 10am on Monday and missed the rest of her lessons that day.

Mandy sent her back to school on Tuesday, but Lauren had to work in the teachers’ office missing her favourite lesson, health and beauty.

She was allowed to take part in lessons on Wednesday after the school ordered Lauren some new trousers - which Mandy says came from the same uniform website she originally used.

Swavesey Village College today confirmed it has clamped down on their uniform policy, which they say helps them deliver 'very high standards.'

The school’s uniform policy states that girls must wear bootcut trousers to ensure everyone is dressed the same and to prevent girls wearing leggings.

A source at the school confirmed there is an isolation room, but said pupils are given work to do and supervised by staff.

Andrew Daly, acting headteacher at Swavesey Village College, today said the school is rated 'outstanding' and expects 'very high standards.'

He said: 'Part of these expectations is a very clear uniform policy, that in consultation with parents and students we apply fairly and consistently.  'We explained before the summer our expectations about uniform and girls’ trousers in particular to ensure they are appropriate.

'All parents were given the summer to arrange for the correct uniform to be purchased.

'Students are offered opportunities to rectify issues with uniform before going to lessons, either by being lent uniform we keep in stock or having uniform brought in from home.  'If they refuse to respond to either of these options then we do have a clear sanctions policy in place.'


No comments: