Tuesday, May 1, 2012

The Lack of Debate on the College Cost/Benefit Analysis

The Balkanization of the Web continues apace.

I am part of an interesting discussion group over at Facebook. One of my childhood friends recommended inviting a friend of his, so I "friended" him on FB. We were short of an uber-Liberal in our group (we had several, but they each in turn became angry and left rather than support their positions... so I invited this gentlemen).  He declined to participate, but I did comment a couple times on his threads. In each case "the line went dead" (that is Facebook speak for when the owner of the thread messages the other participants to cease communicating - this "Balkanization, or complete rejection of ideas, fairly sums up the American Body Politic at this time).

So.... I commented on the above photo as follows:

Me: I think that the larger issue is that the availability of the loans drove the price of tuition at several multiples of inflation for 2 or 3 decades... much the same as mortgage availability drove housing prices to unsustainable levels... How this works out will be fairly interesting, as under no circumstance will the debtors (the student borrowers) be capable of paying the nearly $1Trillion in student debt. As a practical matter, if I were in this position, I would repudiate the debt. Currently, less than 40% of student loan debtors are paying down their balances... the lower that number goes, the higher the probability of some kind of "forced" forgiveness of the debt. 

Moving forward, we need to address the out of bounds costs of higher education and the harm caused by "prestige" educations rather than those that are measured empirically. After all, if the methods employed by the top institutions were truly better these institutions would want to expand their franchise... since that is not true, these institutions limit the supply of their graduates to maintain exclusivity - a logical strategy for the institutions... but not for our society.
correct: should have read "will the debtors be capable of paying the $1Trillion debt PLUS INTEREST".
Of course, by extension, this holds for nearly all debts... in 40 years, the credit system has expanded from $1 Trillion to $50 Trillion (50X increase), while world GDP has expanded 5X... like I said, should be fairly interesting.

At this point my comments were returned by an individual I have dubbed the "Professor".

The “Professor”: Not sure what's driving your argument there about the top institutions wanting to expand the franchise, Greg. They certainly do not, a significant portion of the value vests in the exclusivity - and consequent access to alumni networks, etc. It's not really possible to manufacture the kind of model most people are thinking about when they consider market forces and apply that to higher ed.
My answer is fairly clear (and polite). 
Me: I was saying that the top institutions have no incentive to reign in prices given the availability of student loans... and that they were charging an exclusivity fee, not a performance fee (other than the "performance" of exclusivity).
After all... if it was the empirical quality of the system of education that was resulting in better outcomes, then these institutions would be best served by "franchising", if you will, their "better" system. Of course, if it is exclusivity that they are selling franchising would only dilute the "exclusivity" value.

The “Professor”: It is certainly the latter. But, I should point out, that the higher ed product is not something that lends itself to franchising. Teaching college is an art, not a science, and is not replicable.
(Of course its the latter! That is the very essence of my position!)
Me: The "benefits" accrued to alumni of "exclusivity" peddlers has a mirror image.

The Professor: “Eh? The benefits accrued to alums of exclusive colleges is access to social strata and consequently to lucrative employment.”
This just blows me away... I am pointing out the fact that we have an "Establishment" sprouting from the higher education system... one that certainly contributes to the 1% at the expense of the 99%... one that is not "of merit" prima facie (remember, this is an uber Left thread...)
Me: Precisely! And it crowds out other individuals that lack the cache.
(People that took the exact same classes with the exact same grades and the exact same IQ will be held in lower esteem by virtue of the cache their institutions lack.)

Me: ‎"Teaching college is an art, not a science, and is not replicable." Not sure I agree with this statement.
After all, art is not measurable... and science is. But the last thing these folks want is to be measured.
The Professor: “Welcome to disagree, dude, but I gotta warn you, I'm not only a college professor, I'm the incoming editor of the primary education journal in my field.”

("Be Quiet!! Listen... Strange women lying in ponds distributing swords is no basis for a system of government/education..." Cue the scene from Monty Python and Holy Grail "Well, I am King!")
Got that? "I am SMARTER than you." She has yet to debate me, or take my positions to task, or to support her own arguments... there is no need. She is my better ("Shut up!!... Now we see the violence inherent in the system!"). And it does not matter that I am a self-made multi-millionaire that has succeeded in spite of a very low start in the world

(I am, after all, a Self-Educated (for the expense of library card), White Trash male that grew up between a gas station and the housing projects in Greenberg... and The Professor is a Female College Professor... and not that I am Steve Jobs, either... but by any measure, and especially given my origins, my "qualifications", such as they are, would be apparent to anyone other than the class that extorts from the masses for the purposes of handing out "qualifications")

and despite having absolutely no qualifications, that I have traveled the world, excelled in chess and music, maintained my health and weight with zero medications past the big 5-0(the ultimate qualification of one's intellect), read extensively, taught myself well enough in economic and security analysis to succeed at a place where people of my ilk are NOT welcome (only thing Wall Street hates more than an "uppity" and "Qualified" black person is a White Trash man with absolutely no qualifications (I did have all my teeth, and I looked good in suit... that did help) - well, all except for the quirky Jews at Bear Stearns who said they were looking for guys with PSD's (Poor, Smart, with Deep desire to be rich - I had that qualification in spades) that took a chance on me and to whom I am ETERNALLY grateful - much love to those guys), raised children (and in the process stroked many a tuition payment check), went broke (twice) and still came back three times... this "Professor" has none of these "Qualifications"... yet she is my superior. Go figure.

Me: I am confident in my capacities, too...
Ready to debate the issue.
The Professor: On what grounds?
"I am your superior, damn it! How dare you question your betters?!"
Me: Do not understand your question. But given my own background, I am speaking to the economics and cost/benefit analysis of higher education.
Trying to give this hard case a way out. 
The Professor: You're confident in your capacities to speak to the matter of whether college teaching is an art or a science and the degree to which it is replicable...based on what qualifications?
She simply doesn't take the opportunity. After all, I am an idiot and she is a "College Professor". Never mind that on my worst day - drunk, feverish, and without sleep for days - I couldn't think as slow as this nit-wit... not even if I tried. And never mind that I am the "customer".  You know, the guy that has spent hundred's of thousands on my children's tuition (with much more to go). Never mind that the student debtors are not capable of servicing the debt on their education (bells should be going off over that little data point). My point of view is without merit. Because the emperor has new clothes!
Me: I am confident in my capacity to speak on the cost benefit analysis of the education. The balance is anecdotal, and cannot be measured.
An attempt to bring it back to the empirical.
At least, I cannot measure it.
And then the "line goes dark" (defined above).
Me: We are speaking about the debt incurred on student loans, are we not?
Or the measurable benefits for those able to pay without debt.

Me: The subjective value of being "educated" I leave to the individual... measuring the earnings outcome versus the costs in time and money is empirically measurable.

Me: sorry... that was from the department of redundancy department.

Me: Oh, well... you seem to have lost interest in this discussion... I would have liked to hear the perspective of an insider. Given that less than 40% of the loans within the student loan system (total of nearly $900 Billion) are paying down their balances (this metric negates the "deferment" versus "default" argument) it would seem to me that the economic value of what the students' received was insufficient to finance their investment. This is akin to an investor in real estate whose rent roll is insufficient to service the debt on a particular property. It then follows, given the sheer size of the problem (amount of debt in default or deferment) that the costs/price of the education are out of proportion to its economic benefit... I would assert that what brought that unhappy circumstance about was access to too much credit (student loans) in much the same manner that too much credit (mortgages) poisoned the well of the housing market.
And in the final analysis, like the housing market, the student loan debt will NOT be repaid as agreed. The implications for the higher educational system could not be more stark.

So... as the owner of the thread prefers to halt debate on his page (which he certainly has every right to do) I have taken the time to invite this individual (the Professor, that is... the thread owner is clearly not interested in co-examnation of any facts in contradiction of his belief system) here for a full and open discussion. Not in anger but in the search for truth. I look forward to the debate with GREAT anticipation.

That this is what has happened to us and our abilities to listen and reason with each other leaves little doubt in my mind about the health or our Body Politic. We are very sick. Our establishment brooks no dissent. There is "The Way", and everything else is base and course and without merit. We all know the definition of insanity... yet the Keynesian and Social Policy Left has been in de facto control for over 40 years. What has been the outcome? Why is it verboten to question the outcomes?

Because the 2 headed 1 party, the REAL 1%, benefits at the expense of everyone else and they have perfected an environment that neuters all debate.


Joseph said...

Unfortunately you're pissing into the wind, best of luck. You know you live in a society which encourages mediocrity and the status quo....confirmation bias to the core.

Look up PPD and it all becomes clear ;)

Anonymous said...

Hi Greg,

Great post. I wrote my last tuition check last December. Free at last! The next oldest daughter is racking up some debt. But, she'll be a pharmacist, and have the ability to pay them off. I pity the poor slobs that have $150k debt and $30k jobs. Doomed and done at 22 years old. It is a horrible tragedy. There is going to be civil unrest over this.

It's funny about the 1%. We are both part of that. Me, just barely. We're remnants of the middle class. Me thinks it is really the 0.01% that are the problem. That is, those with the juice to buy Congressmen and Senators and not give a rat's A$$ about the consequences as long as their wealth and power increase.

Best Regards,

Coal Guy

Anonymous said...

Just a note, my daughter's last tuition check was 25X my last tuition check. Makes you wonder.

Coal Guy

Greg T. Jeffers said...

Coal Guy:

Of course you are correct that it is the .001%... It ain't us.

Greg T. Jeffers said...

What strikes me most is the hard ass approach taken by The Professor... and the "line gone dead".

I have found this almost universal on Facebook. Out of hundreds and hundreds of "Faces" only a very few were capable of rational co-eamination of the evidence.

Anonymous said...

Just watch these clowns on tv, you will never hear them say "I think..." It is always "I believe - outragous BS goes here." They aren't being flippant or facetious; if you disagree you are a heretic.

Also some of my engineer friends are of the opinion that level of education and capacity for thought are inversly related.


Greg T. Jeffers said...

The thing is, Dan... I am HIGHLY educated. I am as well read as anyone on the planet.... and on a wide variety of subjects... I refused to pay an institution to oversee and approve my reading list. "F**K OFF" was my response.

In 1998, I was applying for a Broker/Dealer license with the NASD (now FINRA). In order to get my Membership, I had to have a licensed CFO who had passed the industry version of the CPA. I took the books home for 8 days, and passed on my first shot by a comfortable margin. I met other folks during the test... they were all CPA's and were astonished that I was sitting for the exam - especially given my period of study (and this is NOT a multiple choice test... if you get anything on the balance sheet, income statement, changes in capital computations on the exam, it is not possible to pass).

The NASD folks couldn't believe I passed, and I went on to be the CFO as well as CEO (it was my firm) for 10 years, going thru 6 government audits without any sanctions for failure to keep accurate books and records.

I told the NASD that I was not going to pay $4000 per month to some jag off rent-a-CFO.

Now, of course I was not walking into the material cold... I had been in business for 15 years... the point is, I did NOT NEED the university system's CPA coursework to educate myself to the level needed to function.

But that ain't what they want to hear.

Greg T. Jeffers said...

Now The Professor's response will be something like: "well, just because you are very bright does not mean that everyone can do that".

Of course. The bright and brilliant do not need your "help", and the dimmer bulbs can't grasp your "help".

What the system hasn't done is send everyone home with the books and said "if you can pass this test you don't need to take NOR PAY FOR this course"... my bet is college would get a great deal cheaper - and quickly.

Some might argue about physicians, lawyers, dentists.... stay tuned for my next post.

Anonymous said...

I reckon I should have been more specific, I was talking about formal education. The ideal is that a Phd. is more likely to come up with a expensive textbook solution instead of doing some original thinking than a master, and a master more likely than a batchlor.

Also, I coulden't agree more on the benefits of being self taught. It worked for me. It also avoids the institounalized thinking outlined above. With the exception of higher level math, intellegence doesn't have much to do with it, it is mainly drive anf motovation.


tweell said...

What colleges generally provide is a modicum of discipline and help, available knowledge and peers to network with. For this, colleges are now extracting a huge amount of money. Historically, I don't believe that it's ever been higher, even discounting inflation.

At the same time, knowledge and information has become much more widely available. Before the advent of computers and the net, colleges were the best if not only places to go for knowledge of many disciplines; public libraries can only go so far. Now, that isn't the case, I have access to just about any field of endeavor from my home PC.

The discipline provided by modern colleges is minimal, less than any high school or elementary school. There's even less help available. Every professor has hundreds of students, so chances of getting one to assist with understanding an problem area is low. Perhaps there's a graduate student available, but folks mostly get through by themselves.

A peer network can be a huge advantage, but only if you're in the 1%. Face it, a peer network of rednecks just isn't going to be that great. We don't got much of anything, after all.

What colleges have been selling most of all is the certification, the degree itself. With the government making employment examinations illegal, a degree is one of the few ways that you can differentiate yourself. It's not as good as those targeted exams, but the company has a better chance of getting a useful person if they have a degree.

So the government, having made college all but mandatory for just about anything, then provides loans for everyone to go to college. With more folks going to college than ever before and with money guaranteed to the college, there has been minimal bounds set on the total cost. And so that cost has skyrocketed. Supply and demand, government style.

Eventually, most of the educating will take place in virtual space, on the net. That's already happening, but the colleges have so far been able to keep the price up. After the student loan bubble bursts, I see many colleges going away, their place taken by computerized courses. I don't expect that my grandchildren will have to pay more than a small fraction of what my children have shelled out.

Anonymous said...

Now due to new laws passed since 2009 students can pay off loans at a rate of no more than 10% of their income. And if you make payments for 25 years the government will forgive the rest of the loan. Thank you very much President Obama.
But many American universities will go under as students and their parents realize the same education is available as good or better in other countries. Even despite the weaker dollar, you can go to an excellent school in the UK or another English speaking country for less than half of the cost of an American university. Everything balances itself out in the end.

Publius said...

Wow - what a pompous jerk "the Professor" is!

I admire your verve and tenacity, Jeff, and your willingness to engage with others.

I won't go into my personal story with academia: it ain't pretty.

I would never, ever recommend that an undergrad, and especially a grad student, go into debt.

It is true that some careers require an advanced degree, but those careers are generally horrific in terms of outcomes and back-stabbing politics. I have a friend who has a PhD in Art History from Berkeley, and she has had no success in getting a tenured position with a university of museum. It's ludicrous: and in general, those of us who have pursued the dream of a liberal arts tenured career were really going after some dream of being a genius professor, standing in the gaze of admiring beautiful young students... I've never seen more unhappy, unbalanced narcissists than I saw in Academia. Some of them even committed suicide or died of drug overdoses. Unfortunately, they drive even more students to their death or despair...

Far better to live free of the mental chains of the academy.

Want to read Plato? Go to the library. You can even learn Greek on your own. One of my friends is a worker at the local food cooop. He taught himself Greek, and even worked on acheaological digs in Greece. Had a great time... but he didn't go to grad school and waste his time being tortured by the tenure mills.

I have personally decided that we will need to emigrate, as even under IBR repayment, I'll be an old man before I pay off the debt.

What can't be repayed, won't be.

I actually enjoy my life and my co-workers far more now that I have left academia, and joined the tech/software industry. There's plenty to learn, you need to be smart and on the ball, but unlike in academia, you get paid to learn and excel.

It's only by the grace of God or or Fate that someone at my current company saw my crazy resume and gave me a chance - I will be forever indebted to that lunatic, and I will never look down on non-academic careers again. And I will never encourage my 5 year old son to go into debt for education.

PioneerPreppy said...

Greg - I have many friends on face book that are remnants of my liberal days from school. Most are teaching from grade school to PHD level and I will let you in on a little secret....

I put NOTHING political on my FB page. Despite their misguided and closed minded ways I still love those people and will not argue with them. At least not yet. And...

As you have noticed it does no good anyway. They are constantly pushed into this view that only those with THE perfect credentials have the right to an opinion. It is not simply limited to the Ivy league schools either. I know I am out of date but back in the 90's if you were an early American PHD and did not get that PHD from Indiana, Wisconsin or William and Mary you were second rate (depending on exact area that is). It also varied from school to school.

At it's base however is a problem that stems from a deeper well than education. Politics no longer need to be right or wrong because no matter how wrong the mover or shaker is there is no retribution or payment demanded for being wrong. They can shut anyone out with no accountability therefore there is no need to debate from any level of education or public service.

In a sense the ruling class made up of business, politicians and educators are secure and see no reason to be open minded.

Let them eat cake.

Anonymous said...

I think the biggest thing the universities have lost control of is the scope and sequence. It used to be all but impossible to figure out what you need to know. About the only way was to read journals that you wouldn't understand for some time. There is a bit of an S curve to learning something new, and it can be very discouraging to say the least.

the internet has put paid to that. Today you can even get the previous revision of textbooks off Amazon for a song. For fields where the laws don't change much like chemistry or physics it's more than adequate.

However I think it is much more than the credibility of the modern university that is hanging by a thread. The arrogant entitled attitude that PP is talking about is deligitimizing the state. it's the peace of Westphalia that is in the dock.


Greg T. Jeffers said...

Interesting that you folks are the people with the "Qualifications" (Engineers, Historians, Academics) and have come to the same conclusion as an "un-Qualified" Joe Schmo (me).

I invited "The Professor" directly on FB and by commenting on her blog to join the discussion... given my own hostile tone in this post I don't blame her for not joining... perhaps I should have exhibited more courtesy, just because she's a jerk does not give me permission...

I will write her again with apology and ask her to reconsider... anyone can have a bad day.

Hope to hear from you guys on the related subjects of the next couple posts.