The Education Bubble Has Burst

[4est_4est_Gump]

The Education Bubble Has Burst
Frank Ryan
June 11, 2013

The student loan debate in Congress is bringing to the forefront the student loan crisis plaguing our nation, as well as the financial instability of academic institutions in the United States.

Relative to the student loan crisis, the New York Federal Reserve concluded in its 2012 report that the obligations for student loans total approximately $1 trillion, or approximately $25,000 per graduate.

The report notes that there are over 15 million borrowers under the age of 30, while the total number of borrowers is almost 39,000,000. The delinquency rates on the loans range between 10% to 20% for the various age categories.

Surprisingly, the report indicates that there are 2.2 million borrowers over the age of 60, with an average balance due of $19,000. The delinquency rate for these borrowers is approximately 12%.

Concurrent with the higher student loan balances, college enrollment rates for students have declined 2.3% in 2013 compared to 2012. This decline is the first downward trend in enrollment in decades.

There are many factors which have contributed to the decline in college enrollment. Major factors include rapidly increasing tuitions, higher unemployment rates for recent graduates, and the debilitating effects of student loan repayments on students and their parents.

The 21st century is the first time in our nation's history in which the parents have had student loan debts and obligations and now have children considering entering college. The experiences of these parents as well as the debt obligations themselves have discouraged their children from incurring too much debt.

Additionally, tuition increases for the period 2001 to 2011 have averaged 42% for public institutions and 31% for private institutions. Such increases have significantly outpaced increases in income for the families supporting students as well as for the students themselves. The net result is that the affordability index for college, meaning the ability to pay relative to income and funds available for education, is widening and making colleges relatively more expensive than they were decades ago.

Concurrently, Moody's in 2013 gave a negative financial outlook for all universities. Recent studies have indicated that over 50% of all colleges and universities are projected to close, merge, or shut down in the next 50 years.

The consolidation, failure, and decline have already started, and the pace will accelerate.

The causes of the insolvency for universities include:

Continued escalation in college tuitions and fees compared to the overall rate of inflation.
Limited growth in incomes of parents and students in recent years and continued high levels of unemployment of graduates.
Extensive outstanding student loan debt already amounting to $1 trillion.
Development of alternative education systems such as remote classes and internet systems.
Growing debt of colleges and universities.
Extraordinarily high fixed costs of colleges and universities, making the education system very susceptible to losses from reduced enrollment.
Growing trend to "discount" tuition at major universities. This is very similar to the problem that faced hospitals with "contractual allowances."

The sum of all these factors will cause a collapse of the education systems as we know it.

Obviously, schools that are well-funded and well-endowed will be little affected by this change.

However, marginally profitable schools, or schools with high debt loads which depend upon taxpayer support, will find survival difficult at best.

The economic realignment of education will occur due to the factors above, such that the following will most likely take place in the next five to ten years.

First, to stem declining enrollment, tuition will decrease. Schools will struggle to maintain enrollment and in order to cover their fixed cost will be forced to reduce tuitions to encourage students and enrollment.

Second, faculty tenure and burgeoning cost of academic instruction will come under question and will be changed. While existing tenured faculty will probably not be affected, the probability of getting tenure for other professors will be significantly more difficult, except at well-funded academic institutions. Pay will likely decline as well.

Third, entire educational institutions will begin to file bankruptcy. There has already been a major bankruptcy of a university in Atlanta, Georgia. Other institutions that are not well-funded will meet the same fate.

Fourth, it is very obvious that academia will be forced to justify its cost relative to the value garnered from the education. This will be one of the first times in history that the value of education relative to the cost will come under scrutiny.

The education bubble has burst! It appears that it is only the university and government that do not understand the magnitude of the problem.

Parents and students alike are demanding accountability and results. Once the system has been critically scrutinized by educators, students, taxpayers, and parents, improvements and cost reductions will finally be achieved. The result will be a much stronger academic environment once the "cleansing" process has been completed.

Col. Frank Ryan, CPA, USMCR (Ret.) served in Iraq and briefly in Afghanistan. He specializes in corporate restructuring and lectures on ethics for the state CPA societies. He has served on numerous boards of publicly traded and non-profit organizations.

 

[RobDownSouth]

All together now, class...

EDUCATION BAD!!

 

[4est_4est_Gump]

 

[RobDownSouth]

Tell the truth, chief, did you or did you not cheer when Rapepublicans voted to raise the interest rates on student loans?

 

[mercury14]

All together now, class...

EDUCATION BAD!!

Education leads to social mobility. AJ dislikes when uppity poor and middle class folks start thinkin' they're better than their birthright so what better way to push his plutocratic agenda than making education less accessible?

 

[RobDownSouth]

Education leads to social mobility. AJ dislikes when uppity poor and middle class folks start thinkin' they're better than their birthright so what better way to push his plutocratic agenda than making education less accessible?

It's simpler than that: the more educated you are, the less likely you are to accept that incoherent pastiche of a political philosophy known as glibertarianism (aka "one from column A, one from column B, rules for thee but not for meeeeeee!"0

 

[Wat_Tyler]

Did education teach you girls to think? Then why do you think like cunts???


Epic motherfucking failures, the both of you.


Now shut the fuck up and go do something, and whatever that is, stay out from under my feet today.


Twatwaffles.

 

[mercury14]

Did education teach you girls to think? Then why do you think like cunts???


Epic motherfucking failures, the both of you.


Now shut the fuck up and go do something, and whatever that is, stay out from under my feet today.


Twatwaffles.

Wat valiantly rushes to defend his man crush.

 

[Wat_Tyler]

Wat valiantly rushes to defend his man crush.

Yeah, be sure to go for the homo, as usual, thereby proving my contention that you simply emote and react, as opposed to thinking and acting.


Game, set, and match, moron.

 

[RobDownSouth]

Wat valiantly rushes to defend his man crush.

"He" sounds like "he" is PMS-ing in a major way today.

 

[Wat_Tyler]

"He" sounds like "he" is PMS-ing in a major way today.

Why don't we go have a few drinks when I come to H-town later this year? Then we'll see how you make stupid comments when the object of your attempted derision is close enough to put "her" foot up your fat ass.

 

[mercury14]

Yeah, be sure to go for the homo, as usual, thereby proving my contention that you simply emote and react, as opposed to thinking and acting.


Game, set, and match, moron.

You have no credit - zero - to accuse people of making non-thinking posts. You run around holding AJs stuff and make stupid content-free posts every morning. And you spam the same jpgs every day. And the same boob pics as you two titillate each other. You'd rather engage in cat-boob spam than talk rationally.

Even when you jump in to defend AJ's politics you keep your defense free of rational content.

 

[Wat_Tyler]

You have no credit - zero - to accuse people of making non-thinking posts. You run around holding AJs stuff and make stupid content-free posts every morning. And you spam the same jpgs every day. And the same boob pics as you two titillate each other. You'd rather engage in cat-boob spam than talk rationally.

Even when you jump in to defend AJ's politics you keep your defense free of rational content.

Ooooooooooooo, deep come-back.


Now, if you had any ability to read for content, you'd notice that I almost never defend any of AJ's political posts. In fact, he and I rarely discuss politics at all. But you, in your if-it-ain't-what-I-said-then-profile-it manner have lumped me in with what he says, hook, line and sinker.


Every morning? What pics did I post today? I've posted a boob this month? Wow, didn't know that. Wait . . .didn't happen, not today, and the pics are not the same, unless you mean this one:

There, enjoy your Vanity Pic. Now explain how you're the epitome of seriousness . . . or not . . . because frankly, my dear, I don't give a damn.

 

[JAMESBJOHNSON]

Education isn't about education; education is about admission to the optimal social network that opens doors on Wall Street and Pennsylvania Avenue.

 

[ChinaBandit]

Education isn't about education; education is about admission to the optimal social network that opens doors on Wall Street and Pennsylvania Avenue.

A typical conversation:

#1 - "Wharton, '84. How about you?"

#2 - "Tuck, of course it was easier to stay in Hanover after the undergrad."

#3 - " I understand Jack went to Sloan but Dave got an 'Executive' from Smith."

#1 - "Smith? What the fuck is that?"

#3 - "The University of Maryland."

#2 - "Invite Jack then but fuck Dave, unless his wife is hot."

 

[unregistered]

 

[Busybody]

"Education" in the US is nothing more then keeping the UNIONS fully employed

and to send money on DUMOH groups

and to keep the beasts (bad kids) off the streets


no one cares about the kids

 

[LiFeNdEaTh]

welcome back 4est!

stick wit that name foo

 

[JAMESBJOHNSON]

A typical conversation:

#1 - "Wharton, '84. How about you?"

#2 - "Tuck, of course it was easier to stay in Hanover after the undergrad."

#3 - " I understand Jack went to Sloan but Dave got an 'Executive' from Smith."

#1 - "Smith? What the fuck is that?"

#3 - "The University of Maryland."

#2 - "Invite Jack then but fuck Dave, unless his wife is hot."

You cant get folks to understand that prosperity is based on who you know NOT what you know, unless youre a marvel brainiac with the Midas touch. And first hire last fire is always the CEOs kid.

 

[LiFeNdEaTh]

You cant get folks to understand that prosperity is based on who you know NOT what you know, unless youre a marvel brainiac with the Midas touch. And first hire last fire is always the CEOs kid.

uh oh.. get'her!

 

[Busybody]

when UNIONS are gotten rid of

when THUGS can be expelled

when SUPERIOR STUDENTS can be catered to and NOT shunned and dumbed down

when TEST for "TEACHERS" are done to keep em up to date

then MAYBE

"education" will work

 

[LiFeNdEaTh]

when UNIONS are gotten rid of

when THUGS can be expelled

when SUPERIOR STUDENTS can be catered to and NOT shunned and dumbed down

when TEST for "TEACHERS" are done to keep em up to date

then MAYBE

"education" will work

you're on a roll this morning i see, where did you build this all up?

 

[SgtSpiderMan]

The Education Bubble Has Burst
Frank Ryan
June 11, 2013


Col. Frank Ryan, CPA, USMCR (Ret.) served in Iraq and briefly in Afghanistan. He specializes in corporate restructuring and lectures on ethics for the state CPA societies. He has served on numerous boards of publicly traded and non-profit organizations.

You should be ashamed that you're now complaining about a problem you voted to create.

 

[koalabear]

Time for another bailout.

Not needed. the savings from obama care will cover it.

 

[Busybody]

Education Stagnation


By Andrew Stiles

June 12, 2013 4:00 AM




Over the past several decades, American teachers’ salaries and benefits have increased steadily, while the academic performance of the nation’s students has stagnated. In a new paper released on Wednesday, Sally Lovejoy and Chad Miller of the American Action Forum argue that teachers unions’ and their collective-bargaining policies are at least partly to blame for both issues.

The authors cite an array of studies examining the impact of teachers’ unions and their negotiating strategies. The majority of these studies have found that collective-bargaining agreements typically focus on higher teacher pay and benefits and greater job security, with little consideration given to student performance. In fact, teachers’ unions have historically resisted most efforts to hold teachers accountable for the academic performance of their students, and have succeeded consistently. Tenure policies, for instance, make it virtually impossible to fire unqualified or ineffective teachers. Most states award tenure automatically after about three years, and do not test a new teacher’s mastery of even the most basic reading and math skills. Perhaps not surprisingly, this has had a largely negative impact on the students themselves, especially those in large urban school districts with a high percentage of black and Hispanic students.

The paper compares student-performance data from two such districts, New York City and Chicago (both of which require collective bargaining), with data from Charlotte, N.C., and Austin, Texas, urban districts in states where collective bargaining is banned for public employees. The two different situations reveal how collective bargaining is inflating salaries, compensation, and job security while it’s strangling policies that could help student achievement.

Public-school teachers in New York and Chicago recently signed collective-bargaining agreements that increase pay and benefits, but place little emphasis on student performance. In Chicago, for example, the union fought to ensure that “student growth” counts for only 30 percent of teacher evaluations to determine performance pay. In New York, the union agreement offers pay and benefit increases for teachers based on experience and education levels without any consideration for student performance.

Data from the National Assessment of Educational Progress show that students in New York and Chicago have consistently underperformed those in Charlotte and Austin, and perform considerably lower than the national average. In 2011, only 20 percent of Chicago fourth graders performed at or above grade level in math, and only 18 percent were at or above grade level in reading, compared with national averages that year of 40 percent and 32 percent, respectively. Students in New York performed slightly better, but are still below average. Charlotte and Austin, meanwhile, saw much better results, beating the national averages. Nearly 50 percent of Charlotte fourth graders performed at or above grade level; 36 percent did so in reading. Austin was close behind.

Research indicates that high-quality teachers have a significant impact on student achievement both in school and beyond, making the teachers’ unions’ resistance to performance-based evaluation all the more frustrating. One study by professors at Harvard and Columbia found that students assigned to teachers classified as “high-value added” instructors attend better colleges, earn higher salaries, and are less likely to have children as teenagers. Furthermore, simply replacing a “low-value added” teacher with an average one can increase students’ lifetime earning by as much as $1.4 million.

The authors note, optimistically, that more states appear to be adopting policies that at least include objective student-achievement data in teacher evaluations. Twelve states now require student performance to be the primary consideration in such evaluations. Not surprisingly, right-to-work states have proven to be most eager to do so — the National Council on Teachers Quality lists Florida, Oklahoma, Rhode Island, and Tennessee as the most successful states in terms of identifying effective teachers and removing ineffective ones, and among those only Rhode Island mandates collective bargaining.

The American Action Forum authors write that these kinds of policies “are seemingly common sense,” but teachers’ unions continue to block them via collective bargaining.

But there’s hope for reform, and more achievement focused policies, the study says. Many states, especially right-to-work states, are moving in the right direction, but stumbling blocks remain. “Sadly, if teacher unions continue to oppose such efforts, our students will continue to fall behind,” the report concludes.