Archive for August 24th, 2010

Consumer deleveraging … $6 trillion to go.

August 24, 2010

From the WSJ …

There seems to be a structural change in the American economy.

The relationship of household debt to income has proven unsustainable.

The ratio is normally somewhere below 100%, but in 2007 the debt ratio hit 131% of income.

It has now fallen to 122%, but at this pace it would take another five years to bring it under 100%.

The pre-bubble norm was 70%.

To get to this ratio again, debt would have to be reduced by about $6 trillion.

WSJ, The End of American Optimism, August 16, 2010
http://online.wsj.com/article/SB10001424052748703960004575427332237529948.html

Does college deliver what students (and parents) pay for?

August 24, 2010

Punch line: It is generally true that you get what you pay for, but not necessarily when it comes to higher education.

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Excerpted from Washington Post: Colleges come up short on what students need to know, August 15, 2010

A study about the value of a college education has found that in most cases, higher tuitions don’t necessarily don’t deliver a better education –at least when it comes to the basics.

Of the 714 four-year institutions reviewed, only 16 received an A.  Aamong them: Baylor University, City University of New York — Brooklyn College, Texas A&M University, the U.S. Air Force Academy, the U.S. Military Academy, the University of Arkansas and St. Thomas Aquinas.

Public institutions are doing a relatively better job than private schools of ensuring that students receive basic skills and knowledge — and at a considerably lower price.

Both public and private universities are failing to ensure that students cover the important subjects, notably economics and U.S. government or history.

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Among the reasons for the void in “the basics” is that many professors prefer research to teaching, and course content often reflects that.

There’s no paucity of subjects to choose from, which is part of the problem.

More courses equals more expense equals higher tuition. The question is whether the offerings are of any value.

Students given so many choices aren’t likely to select what’s good for them.

Given human nature, they’ll choose what’s fun, easy or cool — and not early in the morning or on Fridays.

And, at a time when the cost of higher education is increasingly prohibitive — emphasis tends to focus on status.

Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/13/AR2010081304468_pf.html