Archive for the ‘College economics’ Category

Forget the $10,000, it’s Biden’s repayment plan that’s the killer.

August 31, 2022

Great analysis by William Gsldton  in today’s WSJ
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Galston writes:

A largely neglected dimension of Mr. Biden’s order changes to the program allowing borrowers to repay their loans as a percentage of their discretionary income over a fixed period (“income-directed repayment,” or IDR).

That provision might prove even more consequential (than the $10,000 loan forgiveness).

The president has:

  • Increased the amount of annual earnings not counted as discretionary income by about $30,000
  • Reduced monthly payments from 10% to 5% of what does count as discretionary income
  • For borrowers with original loan balances of $12,000 or less, Biden has reduced the repayment period from 20 years to 10
  • For borrowers whose payments are too small to cover interest as well as principal, the unpaid interest will no longer be added to the loan balance.
  • At the end of the 10 years, the loan balance is written off.

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The results will be dramatic.

The average starting salary for students with two years of community college is less than $35,000.

That means that loan payments will be based on only $5,000 of discretionary earnings.

So, the monthly payment is less than $25, including interest.

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So what?

“Through the back door, the president will come close to fulfilling his promise to make the first two years of community college free, and almost all borrowers in this category will be debt-free after 10 years.”

That may be a good thing, but…

The repayment plan applies to all students (current and future) with Federal loans,

Accordingly, the Penn-Wharton model suggests that this feature of the president’s program could cost as much as $450 billion over the next decade.

That’s more than the estimated cost of the $10,000 loan forgiveness … and raises the total cost of Biden’s program to a trillion dollars.

All with the stroke of a pen…

Ouch.

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Flashing back, Galston noted that his 1963 annual tuition at Cornell was $1,700 … and that students attending Ohio State were grousing about paying $375 annually.

Fresh look: Is college worth the price?

January 13, 2020

New Fed study raises some red flags
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Everybody knows that folks with college degrees outearn those without them, right?

In fact, a recent study by St. Louis Fed researchers confirms that college graduates earn nearly twice as much as their peers without a college degree.

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But, the Fed researchers found that the degree-earners’ earnings aren’t translating at historic rates to higher wealth …

(more…)

What’s the ROI of a college education?

November 26, 2019

The Georgetown University Center on Education and the Workforce recently published a study on the ROI of college educations.

Billed as a “first try”, the report estimates the Net Present Value of a college education — taking into account the “price” of a college’s degree, the interest on student debt incurred, likely future earnings and the time value of money.

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Among the reports key conclusions….

(more…)

“Half of all U.S. colleges to close or go bankrupt in the next decade”

March 1, 2019

That’s the gloomy prediction of disruption guru Clayton Christensen
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And, it’s not just the tidal wave of online programs or ballooning college tuitions.

Moreso, Christensen’s prediction is on track, according to a WSJ recap of economist Nathan Grawe’s “Demographics and the Demand for Higher Education.”

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Grawe’s central thesis: Birthrates have plunged 13% since the Great Recession … and that “birth dearth” will cost America 450,000 fewer college applicants in the 2020s.

Here are some of the specifics….

(more…)

What do high healthcare costs and high tuitions have in common?

April 14, 2017

Let’s connect a couple of dots today …

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A NY Times article explored “Why the Economic Payoff From Technology Is So Elusive”.

One example:

Look at this disconnect is in the doctor’s office.

Dr. Peter Sutherland, a family physician in Tennessee, made the shift to computerized patient records from paper in the last few years.

There are benefits to using electronic health records, Dr. Sutherland says, but grappling with the software and new reporting requirements has slowed him down.

Dr. Sutherland bemoans the countless data fields he must fill in to comply with government-mandated reporting rules…

He sees fewer patients, and his income has slipped.

The bottom line: over the years, due legal compliance and technology complexity, administrators (think: bureaucrats) have been added at a far faster rate than healthcare providers (think: doctors and nurses) …

clip_image002

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Hmmm.

Wonder why healthcare costs are so high …

What’s the link to college tuitions?

(more…)

What do high healthcare costs and high tuitions have in common?

June 13, 2016

Let’s connect a couple of dots today …

A recent NY Times article explored “Why the Economic Payoff From Technology Is So Elusive”.

One example:

Look at this disconnect is in the doctor’s office.

Dr. Peter Sutherland, a family physician in Tennessee, made the shift to computerized patient records from paper in the last few years.

There are benefits to using electronic health records, Dr. Sutherland says, but grappling with the software and new reporting requirements has slowed him down.

Dr. Sutherland bemoans the countless data fields he must fill in to comply with government-mandated reporting rules…

He sees fewer patients, and his income has slipped.

The bottom line: over the years, due legal compliance and technology complexity, administrators (think: bureaucrats) have been added at a far faster rate than healthcare providers (think: doctors and nurses) …

clip_image002

=======

Hmmm.

Wonder why healthcare costs are so high …

What’s the link to college tuitions?

(more…)

College: Nobody pays retail anymore …

October 14, 2015

Lots of talk these days re: skyrocketing college tuition prices.

That’s certainly true of list prices, but these prices are becoming more and more like new car sticker prices – maybe even worse.

According to the latest annual studies done by NACUBO (National Association of College and University Business Officers), approximately 89 % of first-time, full-time freshmen at institutions surveyed received institutional grant aid.

English translation: in most cases, “institutional grant aid” is simply a discount from the tuition’s list price.

And, the discounts aren’t trivial amounts … they are approaching 50%.

Think, half-off sales at Kohl’s

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So, who is paying retail any more?

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College life: Off-campus housing goes resort-style …

September 8, 2015

Will the aged 3-to-a-room dormitory go the way of of the dinosaur?

A growing trend is local privatization of student housing.

And, I’m not talking about the pest-infested, party-trashed places that populate most college towns.

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Nope, we’re talking serious upscale residences …

(more…)

Another look: Is a college degree is worth it?

November 5, 2014

Lots has been written recently re: the economic value of a college degree.

Let’s boil it down to 3 key charts …

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First, the cost side of the equation …

Sky-rocketing tuitions are loading students with an enormous amount of post-graduation debt.

While other forms of consumer debt have held relatively constant for the past 10 years, student loans have soared from “only” $200 million in 2004 to over $1 trillion today.

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That’s the cost.

What about the benefits side?

(more…)

Another look: Is a college degree is worth it?

June 3, 2014

Lots has been written recently re: the economic value of a college degree.

Let’s boil it down to 3 key charts …

======

First, the cost side of the equation …

Sky-rocketing tuitions are loading students with an enormous amount of post-graduation debt.

While other forms of consumer debt have held relatively constant for the past 10 years, student loans have soared from “only” $200 million in 2004 to over $1 trillion today.

image

That’s the cost.

What about the benefits side?

(more…)


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