The government decided that too few people owned homes/went to college, so government money was poured into subsidized and sometimes subprime mortgages/student loans, with the predictable result that housing prices/college tuitions soared and many borrowers went bust. Tuitions and fees have risen more than 440 percent in 30 years as schools happily raised prices – and lowered standards – to siphon up federal money.
And how are universities conducting themselves as the stewards of all this student loan money? Some examples:
Leo recites a few statistics from the Sallie Mae report, and they are grim:The budgets of California’s universities are being cut, so recently Cal State Northridge students conducted an almost-hunger strike (sustained by a blend of kale, apple and celery juices) to protest, as usual, tuition increases and, unusually and properly, administrators’ salaries. For example, in 2009 the base salary of UC Berkeley’s Vice Chancellor for Equity and Inclusion was $194,000, almost four times that of starting assistant professors. And by 2006, academic administrators outnumbered faculty.The Manhattan Institute’s Heather Mac Donald notes that sinecures in academia’s diversity industry are expanding as academic offerings contract. UC San Diego, while eliminating master’s programs in electrical and computer engineering and comparative literature, and eliminating courses in French, German, Spanish and English literature, added a diversity requirement for graduation to cultivate “a student’s understanding of her or his identity.” So, rather than study computer science and Cervantes, students can study their identities – themselves. Says Mac Donald, “‘Diversity,’ it turns out, is simply a code word for narcissism.”
Almost 54 percent of recent college graduates are underemployed or unemployed, even in scientific and technical fields …. The study said college grads under the age of 25 were more likely to work at Starbucks or a local restaurant than as engineers, scientists, or mathematicians.Bureau of Labor Statistics data show that as many as one out of three college graduates today are in jobs that previously or historically have been filled by people with lesser educations or none. The U.S. now has 115,000 janitors with college degrees, along with 83,000 bartenders, 80,000 heavy-duty truck drivers, and 323,000 waiters and waitresses....Current and former collegians now owe more than $1 trillion in student loans – and only 26 percent of the debtors are currently paying anything back, down from 38 percent five years ago. (These loans cannot be discharged in bankruptcy, a reform imposed to stymie borrowers who would graduate and promptly file for bankruptcy.)If the federal government has been profligate with offers of increasing tuition assistance to colleges, the administrators are just as likely to scoop it out of the trough.The cost of college rose 440 percent between 1982 and 2007, compared with cost of living increases of 106 percent and family income growth of 147 percent over the same period.“The regnant phrase was ‘Don’t leave money sitting on the table.’” … Where does all that money go? Much of it to lavish spa-like facilities and grand new construction, including $100 million or so for multicultural centers and sports stadiums. The debt taken on by colleges has risen 88 percent since 2001, to $307 billion.[A military variation that I saw (to paint a picture) was the introduction of the Variable Housing Allowance (VHA) in the early 1980s, created for service members assigned to high-cost areas (like Washington DC or San Diego) to provide extra pay to augment their Basic Allowance for Quarters (BAQ). I found myself on a visit to CINCPAC Headquarters in Honolulu several months thereafter, and the topic of conversation was how the rents in the area had increased by an amount equal to the VHA.]
Further, Donald Sensing of Sense of Events provides as usual a welcome analysis as well.
There is much more. If you think the housing bubble was devastating, stand by for the second whammy. These articles are well worth reading in their entirety. Please do so, whether you have any connection with college education – it will affect you one way or another.