Sanders supporters, what do you make of this?

[BonzaiDuck]

It looks like you're describing a symptom of the "free money" being rammed into the system. These high salaries wouldn't be getting paid if they couldn't charge these absurd tuition rates. Why can they charge these rates? Well, "free money" the government guarantees they will be getting.

I don't think that's it, though. The NDEA loan program during my college years served a lot of students. Technically, before Reagan, the semester fees weren't even called tuition.

You remember the scandal involving Robert Rizzo and the City of Bell a few years back? Rizzo and the city council were giving themselves enormous salaries. I had concluded that even these "thefts" were a result of an ethic trying to keep up with the growth in CEO pay in the corporate sector.

It seems obvious to me in the CA university system that tuition began to rise as the tax base supporting the universities was capped by Proposition 13. So they shifted the burden to students.

Or would it be some shift in admissions policy? That wouldn't have been so much a factor, since the college-age population was declining after the boomer-era.

Of course, the same thing had been said about the real-estate market -- before the "creative financing" that led to the crisis of 2007. Before Roosevelt, I don't think there was an FHA, and I remember being told that my grandparents purchased their first and only house because Grandma was astute at saving money. A few things would affect the market-value of a home besides just location, size and amenities: the tax-burden, the interest-rate and so on. One economist noted that a nation of homeowners were simply bidding up the price on each others' homes -- expecting to cash in and yet find that the market-price over everyone else's home had gone up.

And the same could be said of the automobile market.

You might actually have something there, but if suddenly student loan programs ceased to exist, tuitions would not automatically adjust. Wages and salaries are "sticky." Of course, with no students to fill classes, all the market signals would be there.

However, there is something else to figure. Public employee pensions. The old myth about federal employees dies hard: they were never allowed to negotiate wages through their unions. When I retired, I came back to California to find a circle of friends who had worked for the city, county and state. Some of the counties had retirement programs that provided annuities of between 80% and 90% of the high-three-years' average wages! This was absolutely insane. At the federal level, retirement benefits were set at 55% for 30 years of service, adding something like 2% for each additional year.

And this has been a major issue both in CA and in the nation. Since state university employees and administrators also participated in the same pension system, they, too, would have these obscenely high retirement annuities; taxes were not increasing to support the costs; and the focus was on increasing tuitions.

Then there was the idea that a superb university system focused on teaching had to be a world-class research university, and they began offering salaries to top-name people in their field to compete with other schools.

 

[buckshot24]

I don't think that's it, though. The NDEA loan program during my college years served a lot of students. Technically, before Reagan, the semester fees weren't even called tuition.

I don't think "that's it" either. I think it is a factor though. I find it strange that you don't.

It's easier to get into schools and it is easier to get financed to go to school than ever before. How could this NOT inflate prices?

You remember the scandal involving Robert Rizzo and the City of Bell a few years back? Rizzo and the city council were giving themselves enormous salaries. I had concluded that even these "thefts" were a result of an ethic trying to keep up with the growth in CEO pay in the corporate sector.

I'm sure this is happening but to think anecdotal cases of abuse is contributing so much to the in inflation of educational cost is absurd.

It seems obvious to me in the CA university system that tuition began to rise as the tax base supporting the universities was capped by Proposition 13. So they shifted the burden to students.

Rates have gone up all over the place and did CA cut their contribution to these institutions, if so by how much?

 

[brycejones]

Yeah, fucking bull shit. My parents told me about how life was good in the 70's. You could find a job within a week and groceries didn't cost an arm & leg, etc. Point is you HAD money in your pocket. Now people struggle to make ends meet and both god damn parents have to work placing their kids in the care of someone else. Mean while all that great change that's suppose to take place at the dinner table has gone right out the fucking window and we have a collapse of society as we know it.

What is your view on unions? Were your parents members?

 

[MongGrel]

Yeah, fucking bull shit. My parents told me about how life was good in the 70's. You could find a job within a week and groceries didn't cost an arm & leg, etc. Point is you HAD money in your pocket. Now people struggle to make ends meet and both god damn parents have to work placing their kids in the care of someone else. Mean while all that great change that's suppose to take place at the dinner table has gone right out the fucking window and we have a collapse of society as we know it.

It would be nice if he did not look like a fool almost every single time he posts, but is just par for the course i guess.

The 70s with high inflation, mortgages that were double digits, gas lines, and we had high unemployment in the middle? I think your parents are looking too fondly back on a crapastic economic decade.

 

[BonzaiDuck]

I don't think "that's it" either. I think it is a factor though. I find it strange that you don't.

It's easier to get into schools and it is easier to get financed to go to school than ever before. How could this NOT inflate prices?
I'm sure this is happening but to think anecdotal cases of abuse is contributing so much to the in inflation of educational cost is absurd.
Rates have gone up all over the place and did CA cut their contribution to these institutions, if so by how much?

I had never heard of any draconian changes to the state retirement system. It's only established that it is straining the entire budget across the board. There had been stories that "CAL-PERS" was in trouble due to the economy or how the money had been invested, but there were no cataclysmic changes. The issue is frequently visited in the papers.

I would have to examine the state budget over several years to see how much had been allocated to the university system. But with the attenuated increase in property taxes, it would only be logical. I mentioned the state road system. As much as Governor "Moonbeam" Brown has been a disciplined budget-master, it has been no picnic with more wildfires in the state, the roads and other factors. I understand the state can expect an increase in state income tax. Right now, state sales tax is at 8% and people have continuously complained about that.

Admissions are not easier here in CA, but not because of high-school grades or test scores. They have followed a pattern of accepting more out-of-state students, and fewer from within the state. Out-of-state tuition is considerably higher.

I understand your point about "anecdotal" examples, but looking at public administrator salaries, the salaries of police-chiefs, city-managers and so on, it's a general job market and it would be affected by executive pay in the entire economy.

Did anyone ever read an autobiographical novel by Jack London entitled "Martin Eden?" In that book, he explores something of "class struggle" and class barriers, with the female character born into a middle- or upper-middle-class family who spurns Eden. She gets to "go to the university" -- he doesn't. I think the story ends in his suicide, after achieving success as an author on his own.

One more point, about CA's junior-college system. Tuition increases even in the junior-colleges had been newsworthy, and said to cause some hardship. Further, I think there was in issue about budgets and cutbacks in class-offerings, making it difficult for students to complete their requirements in the usual timeframe.

 

[Sheik Yerbouti]

College professors are paid off the grants that they receive for their research, not tuition. Their grants also pay for support administration within their departments (overhead costs like HR, purchasing staff, facilities costs, etc--which is generally squeezed out of their funding by upwards of 60% of total rewards that they bring to the university).

Tuition costs have nothing to do with professors--who are the ones that actually bring operating money into the university.

how dare you bring logic and reason into his basement?!!

 

[BonzaiDuck]

how dare you bring logic and reason into his basement?!!

What he introduces there is true -- for the research dimension -- but teaching professors are simply paid a salary on a scale or schedule, not funded by research grants.

 

[Mercennarius]

Haven't met many people with an Economics/Finance degree that support Sanders...

 

[TheSlamma]

Haven't met many people with an Economics/Finance degree that support Sanders...

I've met plenty of Bankers that support the rest of the field. We should support bankers, they are looking out for all of us.

 

[BonzaiDuck]

I've met plenty of Bankers that support the rest of the field. We should support bankers, they are looking out for all of us.

There were exceptions. One of the cable-news channels interviewed a Wall Street banker who was supporting Sanders. He gave his reasons, and you could call it a matter of "enlightened self-interest" contrary to what the establishment perceive as their political interest.

 

[buckshot24]

I had never heard of any draconian changes to the state retirement system. It's only established that it is straining the entire budget across the board. There had been stories that "CAL-PERS" was in trouble due to the economy or how the money had been invested, but there were no cataclysmic changes. The issue is frequently visited in the papers.

I would have to examine the state budget over several years to see how much had been allocated to the university system. But with the attenuated increase in property taxes, it would only be logical. I mentioned the state road system. As much as Governor "Moonbeam" Brown has been a disciplined budget-master, it has been no picnic with more wildfires in the state, the roads and other factors. I understand the state can expect an increase in state income tax. Right now, state sales tax is at 8% and people have continuously complained about that.

Admissions are not easier here in CA, but not because of high-school grades or test scores. They have followed a pattern of accepting more out-of-state students, and fewer from within the state. Out-of-state tuition is considerably higher.

I understand your point about "anecdotal" examples, but looking at public administrator salaries, the salaries of police-chiefs, city-managers and so on, it's a general job market and it would be affected by executive pay in the entire economy.

Did anyone ever read an autobiographical novel by Jack London entitled "Martin Eden?" In that book, he explores something of "class struggle" and class barriers, with the female character born into a middle- or upper-middle-class family who spurns Eden. She gets to "go to the university" -- he doesn't. I think the story ends in his suicide, after achieving success as an author on his own.

One more point, about CA's junior-college system. Tuition increases even in the junior-colleges had been newsworthy, and said to cause some hardship. Further, I think there was in issue about budgets and cutbacks in class-offerings, making it difficult for students to complete their requirements in the usual timeframe.

Do you have a simple answer for why tuition rates wouldn't go up when the demand for your product is greater and there is "easy" money being spent on it? I'm not saying any of your other points are wrong but how could easy student loans guaranteed by federal money not affect price of education?

 

[BonzaiDuck]

Do you have a simple answer for why tuition rates wouldn't go up when the demand for your product is greater and there is "easy" money being spent on it? I'm not saying any of your other points are wrong but how could easy student loans guaranteed by federal money not affect price of education?

I'm not entirely discounting your own observation.

But it isn't as though a "demand" for education, particularly from state universities, is like the demand for potatoes.

There is an additional "currency." Admissions requires grades and PSAT/SAT scores. So demand would find expression in other ways, after potential students found that they really needed a college degree to get any number of jobs. Thus, the emergence of for-profit degree-mills.

As a quasi-public good, the Cold-War-era U of California was getting much more generous subsidies from the state, and it had a mandate to provide affordable education to resident students. This took the pressure off students to assume the debt liability, and tuition was relatively low.

One professor I had, during a discussion seemed to describe the NDEA loan program as something more like a "scholarship." In fact, now that I think about it, you couldn't qualify for those loans if your family's income exceeded a certain level. So it was indeed a type of scholarship, but you had to pay it back. I don't think NDEA exists anymore.

The loan programs that exist today for any choice of schools, don't have those constraints.

There are federal PELL grants, but those are grants -- not loans -- for less than $6K/annum. Especially with that, there is a financial need requirement, and I think you're limited to a maximum 12 semesters of aid.

https://studentaid.ed.gov/sa/types/grants-scholarships/pell

Either way, it requires three things to "inflate demand" for public post-secondary education: loosening admission requirements in grades and SAT scores; growth in financial hardship; and what you call "easy money" with higher interest rates. If you want to go to some particular school that has high standards, you either get admitted or you don't. If you do, then you might take out loans, or you might get PELL grants. But if your parents are earning more than some base-level income, no free money for you.

Thus, I think there may be more to this equation than we've discussed. Unemployment rates, the recession, loss of assets, a hollowing-out of the middle-class -- suddenly, there's a higher number of students who might meet standards for PELL grants, but < $6,000/annum would only cover part of the cost. If you wanted to go to a private non-profit university, I much doubt that a PELL grant would add even one layer to the cake.

Maybe we've added to our understanding of this hot political issue, but even our reasoned discussion cannot be at an end here.

 

[UglyCasanova]

Haven't met many people with an Economics/Finance degree that support Sanders...

There's a reason for this. He's as delusional about economics as the GOP is about science.

 

[werepossum]

I'm not entirely discounting your own observation.

But it isn't as though a "demand" for education, particularly from state universities, is like the demand for potatoes.

There is an additional "currency." Admissions requires grades and PSAT/SAT scores. So demand would find expression in other ways, after potential students found that they really needed a college degree to get any number of jobs. Thus, the emergence of for-profit degree-mills.

As a quasi-public good, the Cold-War-era U of California was getting much more generous subsidies from the state, and it had a mandate to provide affordable education to resident students. This took the pressure off students to assume the debt liability, and tuition was relatively low.

One professor I had, during a discussion seemed to describe the NDEA loan program as something more like a "scholarship." In fact, now that I think about it, you couldn't qualify for those loans if your family's income exceeded a certain level. So it was indeed a type of scholarship, but you had to pay it back. I don't think NDEA exists anymore.

The loan programs that exist today for any choice of schools, don't have those constraints.

There are federal PELL grants, but those are grants -- not loans -- for less than $6K/annum. Especially with that, there is a financial need requirement, and I think you're limited to a maximum 12 semesters of aid.

https://studentaid.ed.gov/sa/types/grants-scholarships/pell

Either way, it requires three things to "inflate demand" for public post-secondary education: loosening admission requirements in grades and SAT scores; growth in financial hardship; and what you call "easy money" with higher interest rates. If you want to go to some particular school that has high standards, you either get admitted or you don't. If you do, then you might take out loans, or you might get PELL grants. But if your parents are earning more than some base-level income, no free money for you.

Thus, I think there may be more to this equation than we've discussed. Unemployment rates, the recession, loss of assets, a hollowing-out of the middle-class -- suddenly, there's a higher number of students who might meet standards for PELL grants, but < $6,000/annum would only cover part of the cost. If you wanted to go to a private non-profit university, I much doubt that a PELL grant would add even one layer to the cake.

Maybe we've added to our understanding of this hot political issue, but even our reasoned discussion cannot be at an end here.

For the NDEA it was not just family income, but family wealth. My family used to own an auto parts store. My grandfather started it in partnership with a wealthy man - John provided the capital and did the books, my grandfather provided the labor. By the time I started college my grandfather had passed and my father and uncle owned my grandfather's half. Since it was not formally divided up into stock, it was interpreted as my father owning it outright, so I qualified for nothing more than a $250 loan per year - literally not worth the application.

 

[werepossum]

There's a reason for this. He's as delusional about economics as the GOP is about science.

How many of our political caste are not delusional about economics? Even for those who hold private sector for-profit jobs, that experience is generally decades in the past by the time they have a serious shot at the Presidency.

 

[BonzaiDuck]

There's a reason for this. He's as delusional about economics as the GOP is about science.

Actually, he does have support from "experts" in those fields.

Economist Richard Wolfe would see Sanders as a vanguard of some new grass-roots movement to address the problems that actually exist.

Wolfe also noted that there are really two economics departments at most universities: the traditional teaching of the social science we know (or don't know); and your typical business school.

To that, the media interviewed a Wall Street banker who supported Sanders because Sanders was at least addressing the problems.

I'd suggest, when discussing something like "Economics/Finance," that you don't mix up your navel oranges with blood oranges.

 

[BonzaiDuck]

For the NDEA it was not just family income, but family wealth. My family used to own an auto parts store. My grandfather started it in partnership with a wealthy man - John provided the capital and did the books, my grandfather provided the labor. By the time I started college my grandfather had passed and my father and uncle owned my grandfather's half. Since it was not formally divided up into stock, it was interpreted as my father owning it outright, so I qualified for nothing more than a $250 loan per year - literally not worth the application.

Well, one thing is a flow, the other is a stock which can generate the flow. Except in correcting my use of concept and words, I'd like to know how that made a real difference in that program.

I'm also wondering how real-estate market-value figured into those calculations. You wouldn't figure on making people give up their domicile so they could pay for the education of their progeny. Or would we? And I don't see how a "soft number" like market-value would enter into the accounting. My family lived in a modest middle-class neighborhood at a time when the value of those homes was less than $20,000.

I'm not arguing a point, but only making an observation with that.

There was another thing that helped me pay for my own post-secondary education. If, for instance, a parent was deceased, his/her social security benefits would provide a small stipend to children for college until they reached the age of 19 or 20.

For me, in those days, it was about $110/month over the first two years of college. Those are nominal "1965 dollars."

 

[werepossum]

Well, one thing is a flow, the other is a stock which can generate the flow. Except in correcting my use of concept and words, I'd like to know how that made a real difference in that program.

I'm also wondering how real-estate market-value figured into those calculations. You wouldn't figure on making people give up their domicile so they could pay for the education of their progeny. Or would we? And I don't see how a "soft number" like market-value would enter into the accounting. My family lived in a modest middle-class neighborhood at a time when the value of those homes was less than $20,000.

I'm not arguing a point, but only making an observation with that.

There was another thing that helped me pay for my own post-secondary education. If, for instance, a parent was deceased, his/her social security benefits would provide a small stipend to children for college until they reached the age of 19 or 20.

For me, in those days, it was about $110/month over the first two years of college. Those are nominal "1965 dollars."

Wasn't really correcting you, just expanding your explanation. As for how it made a real difference, it kept me from getting any financial aid. By contract, half the profit went to the backer, my grandfather's salary went to my grandmother, half the remainder went to my uncle, and my father kept what was left less necessary capital expenditures. Sometimes what was left was nothing and my father drew no salary that month. My mother also worked during that time and moved up steadily so we were hardly destitute, but neither did we own a half million dollar company except in the eyes of the federal government.* Sadly, I saw many people receive financial aid who were much wealthier; there was no real mechanism for checking, so if you were willing to blatantly lie, you got free money.

* I believe this is still the case. My cousin started a retail business with his father-in-law, equal partners. Several years in the father-in-law, who had no health insurance, contracted cancer. His treatment (Medicare/Medicaid) ran a couple hundred thousand. After his death roughly a decade ago, the federal government seized his assets for his medical costs (as they should) and since there was no formal stock arrangement, their interpretation was that the business would be auctioned and their costs (medical, seizure, and auctioning) deducted from the sale, with my cousin and his father-in-law's heirs splitting the difference. Lesson here is that if you co-own a business, make sure it is properly incorporated and set up with stock shares. Took over a year to process and auction the business, and the value of a convenience store/gas station/restaurant which has been shut down for over a year is practically nil. (For one thing, all your stock is now worthless; you'll actually have to pay someone to remove and dispose of the fuel.) That far outweighs the potential aggravation of having a stranger as co-owner.

 

[BonzaiDuck]

Wasn't really correcting you, just expanding your explanation. As for how it made a real difference, it kept me from getting any financial aid. By contract, half the profit went to the backer, my grandfather's salary went to my grandmother, half the remainder went to my uncle, and my father kept what was left less necessary capital expenditures. Sometimes what was left was nothing and my father drew no salary that month. My mother also worked during that time and moved up steadily so we were hardly destitute, but neither did we own a half million dollar company except in the eyes of the federal government.* Sadly, I saw many people receive financial aid who were much wealthier; there was no real mechanism for checking, so if you were willing to blatantly lie, you got free money.

* I believe this is still the case. My cousin started a retail business with his father-in-law, equal partners. Several years in the father-in-law, who had no health insurance, contracted cancer. His treatment (Medicare/Medicaid) ran a couple hundred thousand. After his death roughly a decade ago, the federal government seized his assets for his medical costs (as they should) and since there was no formal stock arrangement, their interpretation was that the business would be auctioned and their costs (medical, seizure, and auctioning) deducted from the sale, with my cousin and his father-in-law's heirs splitting the difference. Lesson here is that if you co-own a business, make sure it is properly incorporated and set up with stock shares. Took over a year to process and auction the business, and the value of a convenience store/gas station/restaurant which has been shut down for over a year is practically nil. (For one thing, all your stock is now worthless; you'll actually have to pay someone to remove and dispose of the fuel.) That far outweighs the potential aggravation of having a stranger as co-owner.

Yes, I realize that, and appreciate your contribution to the discussion if I hadn't already said that. The concept of a corporation separates the share-holder from the liabilities of the business.

I'm hoping you "got through OK" without the financial aid. Starting in sophomore year, I was working part-time under the "work-study" program, and all I remember was that I was grateful for the employment. I never even bothered to find out how that program worked.

The other thing that causes me some personal remorse some 40+ years later: UC's campuses seemed to be dispersed to make it possible for students to live at home while pursuing their degrees. Others had the burden of paying rent for attending a more distant campus. I think I could've saved $150/month just choosing to live at home through the entirety of my education, or the need to work part-time would not have been so dire.

I won't explain further the "remorse" angle except to say single parents who work full-time may be challenged to sit down and convey common sense to their progeny. There are other foolish imperatives that compel young adults to pursue a separate domicile. And they are indeed foolish imperatives.

 

[werepossum]

Yes, I realize that, and appreciate your contribution to the discussion if I hadn't already said that. The concept of a corporation separates the share-holder from the liabilities of the business.

I'm hoping you "got through OK" without the financial aid. Starting in sophomore year, I was working part-time under the "work-study" program, and all I remember was that I was grateful for the employment. I never even bothered to find out how that program worked.

The other thing that causes me some personal remorse some 40+ years later: UC's campuses seemed to be dispersed to make it possible for students to live at home while pursuing their degrees. Others had the burden of paying rent for attending a more distant campus. I think I could've saved $150/month just choosing to live at home through the entirety of my education, or the need to work part-time would not have been so dire.

I won't explain further the "remorse" angle except to say single parents who work full-time may be challenged to sit down and convey common sense to their progeny. There are other foolish imperatives that compel young adults to pursue a separate domicile. And they are indeed foolish imperatives.

Oh, I was fine - my problems stemmed far more from my enthusiastic pursuit of those, um, "foolish imperatives" than from lack of money. Having been dirt poor as a young child - and I mean pot-bellied coal stove, bathe in a galvanized washtub, bathroom thirty yards out back past the garden dirt poor - I could recognize that being affluent enough by any measure to not be granted something free is a good thing, even if it causes some pain.

 

[Bitek]

No what's funny is your support of trump despite your positions! Even funnier is your inability to see your own partisanship and your inability to see that I agreed with you. And I still agree with your underlying positions, I just disagree that helping students by giving them low or no interest loans doesn't help. It does help, it helps students. If the broken system isn't gong to get properly fixed then I at least want students to not be burdened as much, something you seem to disagree with for no reason (if you read your posts you will see that you didn't give a valid reason for not having low or no interest loans).

The problem I would expect is that this remedy would be rather temporary and only worsen the problem long-term by giving more "headspace" for costs to grow into.

It's been my experience that costs are not cut until they are forced to. It's just easier to add to the bill rather than having to invest/invent efficiencies.

The root of the problem needs to be addressed, and this proposal doesn't do it.

 

[BonzaiDuck]

The problem I would expect is that this remedy would be rather temporary and only worsen the problem long-term by giving more "headspace" for costs to grow into.

It's been my experience that costs are not cut until they are forced to. It's just easier to add to the bill rather than having to invest/invent efficiencies.

The root of the problem needs to be addressed, and this proposal doesn't do it.

I think the "headspace" in the debate shows up in these for-profit "consumer-education" enterprises. And I'm skeptical about many of the "online" schools, even though the technology has revolutionized education in some ways.

We have a population of high-school graduates seeking a better life through an education system which as often as not provides the product, but no industrial growth or jobs which tap that human capital. So you have people all competing in the labor market, thinking that the educational investment will better their material lives, all competing to get jobs at Del Taco manning the drive-through window.

I saw this in the '70s, but didn't really understand what was happening at that time. I blamed myself, found myself working in a panic to justify my own educational investment. But in simple economic terms of supply and demand, one is no better off than all the other people chasing the same myth.

And there's a really unpleasant aspect of it. Suppose eventually various industries recover, new industries arise, and much later the demand for college-educated labor expands. All those who were chasing the dream to a disappointing end aren't "there" for it. There might even be labor shortages, if the education mills had cut back, gone out of business, raised standards to draconian levels. Wages for, say, medical technicians will rise, until various types of schools produce more of them.

There was once a time when a great many high-school graduates either waited to get drafted into military service, or they enlisted. And one could wonder apprehensively if -- somehow along the way -- some sort of imperative to cull the herd made brushfire wars more feasible.