Millennial's growing poorer

Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes

Listening to people beat up on the young folks for having their student loans paid off. Look at this people born between 81 and 96 are getting poorer while the rest of us are getting richer. What this is really saying is people who own assets like real estate are getting wealthier and people with no assets are finding less and less opportunity. I imagine any group whether it be blacks, hispanic, whatever that had a disproportionately lower share of assets is getting disproportionatley poorer. Yes, buy real estate and cash-flowing assets, but next time you are complaining about a kid having their stupid transgender studies loan paid off be considerate of the fact this kid does not have the opportunities of the generations before him. And as mighty and righteous as you are maybe don't lecture these millennials quite as much about how hard you had it and all the jobs you had when you were 12 years old, they didn't invent helicopter parenting they are the victims of it.

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

I believe that this data is about 8 years out of date. Millennial wealth has been skyrocketing, especially in the last few years. And, I believe Millennials are in great position to benefit from the economic realities that are ahead of us (in a relative sense).

Millennials are benefitting disproportionately from the great resignation. Millenial's net worth has doubled since the start of the pandemic.

Lower asset values mean that higher millennial paychecks buy a greater share of GDP per capita.

Fed policy of easy money ballooned asset values for the older generations over the past 10 years. That's coming to an end and was the real insidious evil that kept millennials down and ballooned inequality. Jerome Powell will inflict pain on everyone, but millennials will be hurt the least as they are entering their prime earnings years, finally getting out of debt, and will be able to buy assets in a period of higher interest rates and lower real asset values - an economy that is more "sane" than the one we just experienced for the last 5-7 years.

Older generations, particularly boomers, are exiting their prime earnings years. They must spend that wealth at some point. And the providers of those goods and services will be millennials.

None of this really addresses your point, which seems to be to sympathize with student loan forgiveness. I think that's a tricky issue. I think it's great for the folks who receive the forgiveness, and a bit unfair to taxpayers who repaid similar loans or who did not receive a college education. I don't think people will ever agree on this one.

One thing that I do think will be a benefit from the student loan debate, is that it seems that both sides can clearly agree that student loans are inflicting terrible damage on millions of individuals and society at large.

We need to stop giving them out. And significantly reform them. If we care about this problem enough to spend $300B to forgive debts for current borrowers, surely we care enough about the next generation to prevent them from taking on unreasonable student loan debt the next time around?

My vote:

1) End all federal student loan programs, privatizing the student loan market

2) Establish usury protections for borrowers (can't allow a 17/18 year old to get completely swindled as a "welcome to adulthood...")

3) Allow student loans to be discharged in bankruptcy. Eliminate that exemption.

Within a few years, or perhaps overnight, the 80/20 of the absurdities in higher education would be eliminated. Tuition would plummet, worthless degrees would cease to exist (because no sane lender is giving an 18 year old $100K to study "fashion design" if that student can declare bankruptcy), colleges would eliminate the focus on "experience" classes would be harder, tens or hundreds of thousands of administrative positions at colleges would be eliminated, and ROI would be carefully considered by students, parents, lenders, and colleges.

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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
4y
One funny thing is that the so called 'uneducated immigrants' , in our area are still buying a million dollar home hahaha lol I'm also surprised by their buying power.
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Charles Clark
Member since 2022 · 36 posts · 26 votes
4y
Millennial here, just to say having the student loans forgiven angers me greatly. As someone who worked very hard in high school to go to a good university with good aid, and then worked hard during that time to get a STEM degree with a reasonable GPA, and worked through college to avoid taking on any debt this is a slap in the face. The message this sends to me is I should not have bothered to work in college, I should have just accumulated debt and let the taxpayers pick up the tab down the road.
Instead, as someone who graduated and got a job (because I studied in a field that was actually relevant and in demand) and pays income taxes, I get to watch my tax dollars go to people who partied through college, got a worthless degree, and are complaining that they owe the government money. All this does is reward sloth and stupidity.
If the government is going to hand out opportunity it should be to people who have demonstrated they can use it well, instead of squandering it on people who have shown the opposite.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Carlos Ptriawan:

One funny thing is that the so called 'uneducated immigrants' , in our area are still buying a million dollar home hahaha lol I'm also surprised by their buying power.

That is very atypical as you know. Most of the hordes are not buying any houses at all....
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
I just hope it does give some that are worthy a hand up.

I also hope they prioritze payoff of higher interest private loans, etc.

Loans aren't just one lump like a mortgage if you didn't consolidate. There are dozens of separate loans. How will it be allocated?

Yeah, you don't have to be a millennial to have worked hard to pay off or avoid student loans. You also don't have to be one to feel the pinch, but they are the largest and the ones always talked about so there's that.

I know at least a dozen people who would love to retire in the older end of the X gen but can't. They had families when the GRC hit so parent's basements werent an option. It's not just the me me me millenial feeling this.
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Eric Bilderback
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Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
@Charles Clark

Hey man thats great and I am not trying to take anything away from you your accomplishments etc. I'm just saying the government is creating environments where certain thing work and certain things don't. The current environment that has been created is disadvantageous to people who do not own assets. Which should be the people we want to encourage the most to be invested in communities, families, our nation etc. And to be clear I am not for forgiving student loans but I also don't like seeing a generation be ridiculed by people who may not have the entire picture.

@Jay Hinrichs

I know you have been around the block a few times, I hope I did not come across as dismissive of you. When guys like you disagree with me it does give me pause. I was attempting to present something that I don't think is talked about enough or at least look at it from another angle. And I always appreciate what you (and most everyone else) has to say.

@Travis Oneill
It sounds like you are in a situation I believe there are many people in. Yes there is more technology, it is easier to do many things, and America is still the land of opportunity. But just going off of statistics young people are behind from where generations in the past have been. And that is a direct consequence of financial engineers helping to push asset prices so high. I don't think anyone should ***** about it (maybe a little), but at the same time lots of people thump their chest about how rich they have gotten from owning assets. The number one thing I believe we should focus on is making it as easy as possible for all people who work their *** off to achieve the American Dream which is a nice family, a safe community, and a comfortable home. It may even have the side benefit of having less obnoxious *** TikTok stars! LOL
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
4y
Quote from @Eric Bilderback:

@Charles Clark

Hey man thats great and I am not trying to take anything away from you your accomplishments etc. I'm just saying the government is creating environments where certain thing work and certain things don't. The current environment that has been created is disadvantageous to people who do not own assets. Which should be the people we want to encourage the most to be invested in communities, families, our nation etc. And to be clear I am not for forgiving student loans but I also don't like seeing a generation be ridiculed by people who may not have the entire picture.

@Jay Hinrichs

I know you have been around the block a few times, I hope I did not come across as dismissive of you. When guys like you disagree with me it does give me pause. I was attempting to present something that I don't think is talked about enough or at least look at it from another angle. And I always appreciate what you (and most everyone else) has to say.

@Travis Oneill
It sounds like you are in a situation I believe there are many people in. Yes there is more technology, it is easier to do many things, and America is still the land of opportunity. But just going off of statistics young people are behind from where generations in the past have been. And that is a direct consequence of financial engineers helping to push asset prices so high. I don't think anyone should ***** about it (maybe a little), but at the same time lots of people thump their chest about how rich they have gotten from owning assets. The number one thing I believe we should focus on is making it as easy as possible for all people who work their *** off to achieve the American Dream which is a nice family, a safe community, and a comfortable home. It may even have the side benefit of having less obnoxious *** TikTok stars! LOL

I was not disagreeing with you just pointing out my day in day out interactions with my millennial clients. Who for sure are not the majority. On the Student loan thing I think its 10k per student so its not exactly paying for college but in the total dollars are stunning and I can see how others dont like it.. I paid to put my kids through College myself so they would not have student debt and that was something I was very proud of. So you budget accordingly and make the sacrafices for your kids.. And for me it paid off my Daughter is an executive at Intel making a SF BAy AREA Tech salary but living in Beaverton . And my son is self employed in the Trades so all good.
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Eric Bilderback
OP
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
@Jay Hinrichs
I think we have a disagreement whether or not you disagreed with me. LOL
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
4y
@Eric Bilderback really? Loan forgiveness is NOT about millennials it is about anyone being responsible for what they signed up for.
In 2020, 13% of student loan debts in the U.S. were held by Gen Z. 11% were held by millennials while 5% were held by Gen X. (Northwestern Mutual, 2020) so not just millennials. And maybe a learning curve on borrowing..

As for opportunities you can look at college education over time. The percentage of college educated individuals doubled between 81 and now. Not sure how much junk degrees account for that but isn't that supposed to be an opportunity that benefited millennials more than previous generations? https://www.statibsta.com/stati... yes, they have more debt but greater earning potential. And you are telling us that a more college educated population is not doing better financially despite what is supposed to be a key opportunity? And the millennials who didn't go to college what about them? they got no loan buyout and have lower earning potential then the college educated. And we should be considerate of the fact that that they don't have the opportunities of generations past? I am not seeing it. For the most part I think their financial delay is a delay you see in marrying and house buying in the college educated.

I value my education more I think because I paid for it. My son got some loans for college, it was part of his contribution but they won't benefit him as intended because they were "forgiven" and his brother who didn't go to college subsidized this with his taxes? We are robbing future generations with debt.
As for being victims of course now the federal government is doing the helicopter parenting for those whose parents didn't do it and that is right?? I ask you what are they victims of?
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
4y
Quote from @Bruce Woodruff:

Quote from @Carlos Ptriawan:

One funny thing is that the so called 'uneducated immigrants' , in our area are still buying a million dollar home hahaha lol I'm also surprised by their buying power.

That is very atypical as you know. Most of the hordes are not buying any houses at all....

Yes , it's also probably why they don't want to move out from CA, especially moving to AZ. I'm bit surprised as well by their answer.

0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
4y
Quote from @Eric Bilderback:

@Charles Clark

Hey man thats great and I am not trying to take anything away from you your accomplishments etc. I'm just saying the government is creating environments where certain thing work and certain things don't. The current environment that has been created is disadvantageous to people who do not own assets. Which should be the people we want to encourage the most to be invested in communities, families, our nation etc. And to be clear I am not for forgiving student loans but I also don't like seeing a generation be ridiculed by people who may not have the entire picture.

@Jay Hinrichs

I know you have been around the block a few times, I hope I did not come across as dismissive of you. When guys like you disagree with me it does give me pause. I was attempting to present something that I don't think is talked about enough or at least look at it from another angle. And I always appreciate what you (and most everyone else) has to say.

@Travis Oneill
It sounds like you are in a situation I believe there are many people in. Yes there is more technology, it is easier to do many things, and America is still the land of opportunity. But just going off of statistics young people are behind from where generations in the past have been. And that is a direct consequence of financial engineers helping to push asset prices so high. I don't think anyone should ***** about it (maybe a little), but at the same time lots of people thump their chest about how rich they have gotten from owning assets. The number one thing I believe we should focus on is making it as easy as possible for all people who work their *** off to achieve the American Dream which is a nice family, a safe community, and a comfortable home. It may even have the side benefit of having less obnoxious *** TikTok stars! LOL

Yes totally agree, I said to Jay the other day. Having asset like houses is even more important than having good job as by having house you're set for life and hedged for inflation or any Fed's action. If you only have job but no asset, you will be guaranteed poorer year by year.

think the problem with America is primarily:
1. America doesn't produce anything that 'productive' anymore unlike in 70-80's generation. Almost everything is just financially-engineered by Wall Street. Both in the financial sector and tech stock. I know for sure Tesla should not have stock price of $1000 or Google stock price worthed more than thousand dollar. Every asset is inflated including our own houses.
2. The rise of the asset bubble only happened when you have uncontrolled wall street and Fed that keep printing money until the music stopped 5 months ago.
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Sam YinPro Member
Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
4y
@Eric Bilderback
That was a long thread to catch up on, but an interesting one. An awsome sideline conversation by real estate enthusiasts. Great personal perspectives and a good general indicator of the diversity of this forum.
To add my .02, I'm a refugee out of Cambodia. No English, no money, no network. Worked lots of illegal factory/piece work as a kid to support the family. Earned money to support family since I was 12 years old. Joined the Army to help with citizenship out of fear. Messed up and did not take advantage of Montgomery GI Bill in time, nor did I use the VA loan system.
My wife and I are barely GenX... 1979. She made me go back to college to get a degree a few years ago and I graduated in 2017 from ASU. It does NOTHING for me. But she felt it would be an example for our kids to follow. I disagree. I paid for all of it, with zero help or loans. 8 years of long days after a long work shifts at night. It set me back A LOT, but it was worth not having to hear her nagging.
We both came from meager beginnings. Wife came from immigrant family, living in a one room rental with five adults. She finally got out when I married her and moved her in with me. I've held jobs as welder, jeweler, diamond cutter, Baker, postman, motorcycle/watercraft mechanic, etc... wife had several odd jobs as well, from swamp meet concessions, to house cleaner, to Gym Juice bar, to telemarketer, to Librarian.
Without the guidance of internet technology, we end up with 5 rentals while we raised our three kids. We were on track to grab another 5 to 10 before age 50. However, after stumbling onto Bigger Pockets in 2020, we purchased over 50 rentals in the last 2 years. Will probably grab another 50 to 200 rentals by age 50 and call it a day... or may be keep going... not sure yet.
Point is, I do not believe we are an anomaly. I do tend to believe that the demographic trends are plotted using data collected as easy as possible and missing those that would buck it because they did not have the time go participate nor the inclination to. It is also my belief that may be due to social/cultural evolution in America, the Millennials are poised to become wealthier at a later time, of their own choosing and by default. A lot was said about how they will inherit it after us and they just want to live a different lifestyle, with or without as many children. At the end of the day, are they proportionally as happy or satisfied or wealthy as we are at the same time frame? Taking into context they will live a little longer, I think they are just as well off or better than us.
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Eric Bilderback
OP
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
@Colleen F.

Both of these can be true: I don't believe that anyone should have their debts wiped away unless they are bankrupt, and people with no assets got hosed bad and alot of these people are the same folks who are having their college debt wiped.

As far as college degrees go I would put it this way I don't think people with college degrees outside of the STEM fields add to the productivity of the country (quite the opposite actually) and therefore our country should not be financing kids or anyone else to take on all this debt.

Uncle Sam paid for my schooling after I enlisted in the military.  Hoorah! But I'm not going to lie I thought college was stupid and I don't value my degree.

@Sam Yin
Thats a great story. It maybe typical in some places but I would say that is an outlier in the vast majority of areas. You do have some good points here. That being said I am not convinced, and I think the people without assets have gotten hammered which has benefited people with assets.
Congrats on all that success,

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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
4y
@Eric Bilderback people with no assets got hosed bad by what? not sure what this means.
1 Reply
Matthew McKee
Real Estate Coach · Boise, ID · Member since 2022 · 177 posts · 285 votes
4y
Quote from @Scott Trench:

I believe that this data is about 8 years out of date. Millennial wealth has been skyrocketing, especially in the last few years. And, I believe Millennials are in great position to benefit from the economic realities that are ahead of us (in a relative sense).

Millennials are benefitting disproportionately from the great resignation. Millenial's net worth has doubled since the start of the pandemic.

Lower asset values mean that higher millennial paychecks buy a greater share of GDP per capita.

Fed policy of easy money ballooned asset values for the older generations over the past 10 years. That's coming to an end and was the real insidious evil that kept millennials down and ballooned inequality. Jerome Powell will inflict pain on everyone, but millennials will be hurt the least as they are entering their prime earnings years, finally getting out of debt, and will be able to buy assets in a period of higher interest rates and lower real asset values - an economy that is more "sane" than the one we just experienced for the last 5-7 years.

Older generations, particularly boomers, are exiting their prime earnings years. They must spend that wealth at some point. And the providers of those goods and services will be millennials.

None of this really addresses your point, which seems to be to sympathize with student loan forgiveness. I think that's a tricky issue. I think it's great for the folks who receive the forgiveness, and a bit unfair to taxpayers who repaid similar loans or who did not receive a college education. I don't think people will ever agree on this one.

One thing that I do think will be a benefit from the student loan debate, is that it seems that both sides can clearly agree that student loans are inflicting terrible damage on millions of individuals and society at large.

We need to stop giving them out. And significantly reform them. If we care about this problem enough to spend $300B to forgive debts for current borrowers, surely we care enough about the next generation to prevent them from taking on unreasonable student loan debt the next time around?

My vote:

1) End all federal student loan programs, privatizing the student loan market

2) Establish usury protections for borrowers (can't allow a 17/18 year old to get completely swindled as a "welcome to adulthood...")

3) Allow student loans to be discharged in bankruptcy. Eliminate that exemption.

Within a few years, or perhaps overnight, the 80/20 of the absurdities in higher education would be eliminated. Tuition would plummet, worthless degrees would cease to exist (because no sane lender is giving an 18 year old $100K to study "fashion design" if that student can declare bankruptcy), colleges would eliminate the focus on "experience" classes would be harder, tens or hundreds of thousands of administrative positions at colleges would be eliminated, and ROI would be carefully considered by students, parents, lenders, and colleges.

You can be empathetic to a student loan forgiveness recipient while condoning the practices which allowed that recipient to put themselves in egregious debt.

The forgiveness seems to be an expensive bandaid that won’t prevent other young adults, that are only moments away from children, in the same position.

we’ll emphasized @Scott Trench
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Eric Bilderback
OP
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
Quote from @Colleen F.:

@Eric Bilderback people with no assets got hosed bad by what? not sure what this means.

The Fed policy of Quantitative Easing and low interest rates which has caused asset prices to more then double. That would be my main complaint however there are many others.
2 Reply
Account Closed
Real Estate Agent · Auburn Hills, MI · Member since 2022 · 45 posts · 67 votes
4y
@John Cassel hit the nail on the head to the original post of “Millennials Growing Poorer”. Very well stated.

Quote from @John Cassel:

@Eric Bilderback This is unfortunately how the system is designed, people with hard assets like Real Estate are just smartly using the system to their advantage. Fiat money, money backed by nothing, like the US dollar is set to go to zero over time. It is nothing more than math. As the debt grows, the Fed will be forced to print more and more to have the same economic effect. A huge majority of that money goes into assets like real estate. Over time wages don't keep up which is why you see purchasing power of each generation getting worse over time. The next gen will be worse off than the current, barring a complete global collapse and a reset.
Google James Lavish's article on the debt spiral
We do have a looming problem on our hands though. With technology advancing by leaps and bounds we have a exponentially growing deflationary pressure. Technology makes things easier and cheaper to produce and our system cant handle deflation due to the debt. Governments will be forced to print more and more to keep some sort of inflation around as it erodes the debt. Eventually the technological deflationary pressure will be too strong leading to collapse of currencies around the world. The main currencies will most likely collapse as will but the top 2-3 will be around for a while.
Check out Jeff Booth's book The Price of Tomorrow
Real Estate will always be a great investment and it produces cash flow. That's why I buy multifamily to increase my wealth and income in today's world while also investing in Hard Money aka Bitcoin (long time horizon) for tomorrows world

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Sherri Stokes
Real Estate Agent · Los Angeles, Palm Springs CA · Member since 2016 · 190 posts · 65 votes
4y
👏🏽👏🏽👏🏽👏🏽👏🏽
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Susan Maneck
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
4y
Boomer here. My generation hardly had to pay anything for our education. We may brag about "working our way" through college, but that is because it was possible to do that back then. Nowadays when even a historically black state university in Mississippi costs nearly 20K a year, how can that be done? Those who try end up failing in school, I can tell you that as a professor. It used to be that states supported their own universities and colleges and tuition was minimal. There was no tuition at state universities in California before Reagan became governor. Tuition was $600 a year when I attended the University of California and it was waived if you had an SAT score above 1100. States got out of the business of funding higher education which left more and more students having to rely on massive student loans to get by. Mind you, these are loans being handed out to teenagers barely in a position to understand what they are getting themselves into. Yes, this student loan forgiveness is just a band aid. The real solution is to join the rest of the developed world in offering state-funded higher education to all who qualify.
2 Reply
Susan Maneck
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
4y
Quote from @Colleen F.:

@Eric Bilderback really? Loan forgiveness is NOT about millennials it is about anyone being responsible for what they signed up for.
In 2020, 13% of student loan debts in the U.S. were held by Gen Z. 11% were held by millennials while 5% were held by Gen X. (Northwestern Mutual, 2020) so not just millennials. And maybe a learning curve on borrowing..

As for opportunities you can look at college education over time. The percentage of college educated individuals doubled between 81 and now. Not sure how much junk degrees account for that but isn't that supposed to be an opportunity that benefited millennials more than previous generations? https://www.statibsta.com/stati... yes, they have more debt but greater earning potential. And you are telling us that a more college educated population is not doing better financially despite what is supposed to be a key opportunity? And the millennials who didn't go to college what about them? they got no loan buyout and have lower earning potential then the college educated. And we should be considerate of the fact that that they don't have the opportunities of generations past? I am not seeing it. For the most part I think their financial delay is a delay you see in marrying and house buying in the college educated.

I value my education more I think because I paid for it. My son got some loans for college, it was part of his contribution but they won't benefit him as intended because they were "forgiven" and his brother who didn't go to college subsidized this with his taxes? We are robbing future generations with debt.
As for being victims of course now the federal government is doing the helicopter parenting for those whose parents didn't do it and that is right?? I ask you what are they victims of?
Do we not understand that not all kids have parents who can afford to save for their children's education. I taught for twenty years at a historically black college in Mississippi. One day a parent called me up and asked me to call on her daughter more so she would feel more engaged. I told the parent that her daughter's problem was that she hadn't bought her textbook and I would only humiliate her if I called on her. After a long pause the mother answered, "I'll try and scrape together enough money to buy her textbook as soon as I pay the light bill." These are the students we are burdening with tens of thousands of dollars in student debts.
This idea of "junk" degrees is a bunch of nonsense in my opinion. It comes from people who think STEM degrees are the only ones that count. Technocrats are not necessarily the most well-educated people. Often they lack in basic communication skills, something that those with liberal arts degrees are much better at. And these are people who will be educating your children.
It is the whole system that needs to be rethought. Higher education should be available to everyone who would otherwise qualify regardless of ability to pay and without having to be overburdened with debt. Most of the developed world manages to do this. The increase in tax revenues alone by the college educated alone is sufficient to pay for this.
Okay, I'm done ranting.

2 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Susan Maneck:

The countries you are probably referring to have a much higher tax rate than we do.
And show me the current (reputable) study that shows we can give everyone free college paid for by only the tax on their earnings.
1 Reply
Susan Maneck
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
4y

The countries you are probably referring to have a much higher tax rate than we do.
And show me the current (reputable) study that shows we can give everyone free college paid for by only the tax on their earnings.
Yep, but they also provide other services like universal health care.
According to the College Board the average college graduate pays $7000 a year more in taxes than the average high school graduate. Over a 30 year work history that would come to $210,000. That's not quite enough to attend the Ivy League, but almost.
0 Reply
Jon Martin
Member since 2022 · 1k+ posts · 1k+ votes
4y

It's not so much that that the fields of study themselves are junk (although some are), it's that they have very little ability to generate economic value. Which makes it hard for those graduates to pay back their loans because they provide no added value to the job market. One thing that capitalism does very well, especially the less it's manipulated by government, is price the value of different types of goods and services. Despite what is taught in the liberal arts fields, there is not a group of white males sitting around a table deciding who and what types of people get paid and how much. The market, as in all of us, determine that with the dollars we spend every single day.

Furthermore, when you have a no strings attached loan for 5-6 figures with no collateral, no proof that you will be able to pay it back, and one that can never be declared bankruptcy on, then there is no DD required by the lender to be sure it's a safe bet because the federal government will get paid back one way or the other. This encourages colleges and universities to raise their tuition and turn campuses into mini resorts. Therefore the market signals are completely off. If there were less intervention, then lending rates and terms would be tied to the ability of that student to pay back that loan based on what they are studying. If you want to study the humanities, great, but you either do that on your own dime or you get less favorable terms than someone in law or engineering. Or find a less expensive school. Or just meet with a group of like minded people in the public library and discuss that stuff for free, which is basically what a typical liberal arts class is.

That said I don't disagree with a lot of what you said. Ultimately I think college will look very different 2-3 decades from now. It will mostly be a playground for the children of the upper 10-20%, not too far from what it's like now, just with a higher price tag and with less loan burdened kids because the price tag will simply be too high. Otherwise I could see far more trade schools and hands-on accelerated/focused programs for the rest of kids.
1 Reply
Susan Maneck
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
4y
The market may well determine the price of things, but I would disagree that they determine the value. I submit that a school teacher is more valuable than an engineer even though the latter may be paid more. Unfortunately the market does not always have good values. When I retired after teaching 20 years as an Associate Professor at a historically black state university in Mississippi my salary never broke 60K. Does that mean what I did was less valuable than what my colleagues did when they taught at predominantly white institutions?
I agree, however, that there should be no government backing of private loans. But campuses are hardly mini-resorts, at least none of the seven institutions of higher learning where I taught. Nor are the salaries they pay anything to write home about as I already pointed out. State universities and colleges keep raising tuition because state legislatures are contributing less and less to those institutions, leaving it to students to carry the burden. And consider this, it costs far less to educate a student in the liberal arts than it does STEM. Would it not make sense then for those students to pay half of what STEM students pay?
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Jon Martin
Member since 2022 · 1k+ posts · 1k+ votes
4y
I have no problem with degree programs being priced relative to their cost. As for the non-resort public campuses, I imagine that if they were spartan in their services then I would assume (or at least hope) that the cost of tuition would also be lower. If not, then there is probably some administrative bloat and waste somewhere. Lots of admins make well into the six figures, even at state universities. Both of the universities I attended were public and they had great amenities, along with some others I've visited.
That said, yes, I agree that the lack of state funding is a big part of it. However they would also not get away with jacking up tuition the way they do if there were not the easy loan money to pay for it. They would be forced to balance it out.
In terms of liberal arts degrees, there's no value in someone telling me how unfair the world is. We all know that and it is what it is. It's not a unique skill, which is why they end up at doing things that everyone knows how to do and that don't pay back big loans, like making coffee.
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Eric Bilderback
OP
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
@Jon Martin

College started out as a place for elite people from elite families to go and they would know about the history of our civilization etc. Today (I don't think this is breaking news) it's more about driving a specific agenda like everything else when the government gets involved.

As the Great Thomas Sowell said, "You cannot subsidize irresponsibility and expect people to become more responsible."

@Susan Maneck. I agree teachers should make more, my parents were teachers and I married one. But if people stop being teachers then in theory they will start needing to pay teachers more. But teachers unlike so many other jobs is alot more rewarding most people do not get the satisfaction of feeling they are helping kids etc. I was a CPA and know person who I ever did a tax return for has ever tried to contact me, my Mom, Dad, Grandpa, Wife all have that, and that is worth quite a bit.
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