Twenty Years of Change

A neat summation of why current college graduates are well and truly screwed: posted in a Chronicle thread on debt-spurred suicides.

Have a cheerful morning!

7 Responses to “Twenty Years of Change”

  1. Pitt says:

    I was thinking about something along these lines the other day. Let’s say you have two adults, a man and a woman, and they get married. Now, if both of them have college loans, and they decide to have kids, and further decide to have one of the couple be a stay-at-home parent, they now have one parent essentially sitting on x0,000 of debt that provided no added value to their household. Sure, they might be able to go back to work in 10 or 20 years, whenever they decide that they don’t need to be a stay-at-home parent anymore, but that loan still isn’t going to pay off itself, and the interest will continue to accrue during all those years. So there’s several hundred dollars per month going right out the window, or down the toilet, whichever is your preference.

    The other option for that couple is for them both to work, which then involves spending thousands every year on child care. And remember- every dollar you earn isn’t another dollar you can spend. By the time you pay taxes on that dollar, and pay for your transportation to and from your job, and all the other expenditures required with having a job, and you’re lucky to net fifty cents on that dollar.

    Moral: It’s a lot easier to spend less than to earn more.

  2. matt says:

    Moral number two: If you’re trying to spend less, having kids isn’t the way to do it.

  3. Pitt says:

    The money that flows through Universities these days is staggering. RPI, my undergrad alma mater, got 300 million from ONE donor a few years back. Yet, their current tuition is (looks up on interweb) $43,350 per academic year. That’s more than DOUBLE what it was back in 1995 when I was a Freshman.

    Did I miss something? Are new engineering graduates making six figure incomes now?

  4. matt says:

    No, but they’re staying in nicer dorms.

    Canisius has essentially tripled its tuition since I was a freshman, in addition to jacking up the price for housing and meals. Someone who stays on campus is probably looking at nearly $200k for four years, once you include everything.

  5. Pitt says:

    Just got back from lunch, and this topic came up…one of the younger engineers here (I’d put him at about 25 years old) said he had $140,000 in student loan debt. That’s most of my mortgage. I almost spit up my water.

    I left RPI with about 19k in loans…which I thought was a LOT…and they’re all paid off now. Do you think in 10 years he’ll have 140K paid off? Hint: his salary is about what mine was in 2000, when I took my first engineering job.

  6. Pitt says:

    College debt is weird because the “asset” it’s being loaned against is intangible. The thought is that the collateral put up to borrow that money is the future earnings potential of that college degree. Sort of like how many people borrowed crazy money to buy houses they were upside-down on because “everyone knows” that housing prices only go up.

    There’s still a belief, despite recent events, that college is still the best bet out there, so I can’t see tuitions falling anytime soon. And all these debtor graduates are up against the wall- bankruptcy doesn’t wipe away student loan debt anymore. Although there are ways around it- one person recently told me he’d thought of paying off his student loans with his credit cards, and then declaring bankruptcy. Credit card debt is wiped clean with a bankruptcy.

  7. matt says:

    Unfortunately, if student debt were dischargable by bankruptcy, the increased risk would drive up the interest rates on the debt to cover the cost of those who take that route. TANSTAAFL.

    Sue and I had about 30k in student loan debt, as I recall, which also seemed like a lot at the time. My kids are going to state schools.

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