When work doesn't pay for the middle class

[Airhog]

When Work Doesn't Pay For The Middle Class - Forbes.com

[JonInMiddleGA]

Originally Posted by SteveBollea

First thing that sets up my bullshit detector. I wasn't aware $120,000 for a household with a single person working is considered middle class.

Yeah, several models would peg that as being part of upper middle.
Here's all sorts of graphs & charts & tables to play with if you're so inclined.
Household income in the United States - Wikipedia, the free encyclopedia

In a more real world sense, that's also quite middle in a number of markets around the country, which brings into play the question of whether "middle class" has a hard & fast economic definition only or whether lifestyle issues/standard of living issues come into play when using it as well.

[JonInMiddleGA]

Originally Posted by SteveBollea

I mean, I don't doubt the actual facts in the article are correct, but it's the worst case scenario in each and every example.

{shrug} When you're the worst case, that's often what matters to you.

[JPhillips]

Her daughter could always go to a public school where she wouldn't need $19000 in aid.

[JonInMiddleGA]

Originally Posted by JPhillips

Her daughter could always go to a public school where she wouldn't need $19000 in aid.

Why should she have to?

[Ronnie Dobbs2]

You mean the college shouldn't have the right to charge what it wants, and distribute financial aid how it sees fit? Should the government get involved in this?

[sooner333]

Of course she shouldn't have to go to a public school, but you make choices based on what is good for your family. If people can't afford it, those schools will be faced with the prospect of either a) taking applicants with lower scores, or b) lowering prices.

[JPhillips]

Originally Posted by JonInMiddleGA

Why should she have to?

She can go to whatever school she likes, but I'd prefer not to hear complaints about how expensive it is when there are cheaper alternatives.

[JPhillips]

And this part is bullshit, too:

Not, however, the new system for college loan repayments. The program, passed by Congress in 2007 and launched this past July, will probably be around for a long while. Graduates electing this option face up to 25 years of income-based payments that act like an additional 15% marginal tax.

Paying back student loans is now a tax?

[JPhillips]

Is my cable bill a tax?

[JPhillips]

This part I agree with:

Instead of providing a big universal exemption, Congress has created a grab bag of family-friendly-sounding tax goodies, almost all with income-based clawbacks. Both liberals and conservatives have bought into this--the former because it concentrates relief at the bottom of the income scale and the latter because it helps hold down the advertised top marginal rates, says Steuerle.

Add in fees, gambling taxes, deductions etc. and nobody is willing to just let income taxes be clear as to how much money the government is collecting.

[Icy]

I haven't fully read it as it's too related to USA economy and taxes, but based on Spanish economy/taxes i have that feeling too.

Being in the middle a lot of times means no benefits or any kind of government help, and if you discount those possible benefits from your earnings, you can feel you are not getting that much for the work you are doing.

Extreme example but let's say the cut to get helps is earning $200 per week, if you earn $210, you are actualy losing money compared with those who work less than you, earn a little less, but get all the benefits and help from the government.

Anyway that is probably just our perception and simple way of seeing things and it's not as simply math anyway.

[Young Drachma]

End federal student aid programs. Especially the student loan boondoggle. It's far outlived its usefulness and is the #1 reason college tuition has skyrocketed well beyond inflation. College tuition goes down, more schools merge and close as they should've ages ago and higher ed stops sucking the teet of Uncle Sam's mistress.

[miked]

Originally Posted by JonInMiddleGA

Why should she have to?

There's Lars Ulrich, the drummer for Metallica. This month he was hoping to have a gold-plated shark tank bar installed right next to the pool, but thanks to people downloading his music for free, he must now wait a few months before he can afford it. Come. There's more. Here's Britney Spears' private jet. Notice anything? Britney used to have a Gulfstream IV. Now she's had to sell it and get a Gulfstream III because people like you chose to download her music for free. The Gulfstream III doesn't even have a remote control for its surround-sound DVD system. Still think downloading music for free is no big deal?

[molson]

Originally Posted by miked

There's Lars Ulrich, the drummer for Metallica. This month he was hoping to have a gold-plated shark tank bar installed right next to the pool, but thanks to people downloading his music for free, he must now wait a few months before he can afford it. Come. There's more. Here's Britney Spears' private jet. Notice anything? Britney used to have a Gulfstream IV. Now she's had to sell it and get a Gulfstream III because people like you chose to download her music for free. The Gulfstream III doesn't even have a remote control for its surround-sound DVD system. Still think downloading music for free is no big deal?

Ah yes, the "everyone with more than me has too much and should be taxed more, and should lose all of their property rights to the benefit of anyone who makes as much as I do or less" school of economics. That's a popular one.

And of course, if those rich people didn't have their music stolen, maybe they'd have more money to tax at a higher rate. So when you download music, you're really just robbing poor people of government benefits. It's all connected. It's not just rich v. poor.

[JonInMiddleGA]

Originally Posted by miked

There's Lars Ulrich, the drummer for Metallica. This month he was hoping to have a gold-plated shark tank bar installed right next to the pool, but thanks to people downloading his music for free, he must now wait a few months before he can afford it. Come. There's more. Here's Britney Spears' private jet. Notice anything? Britney used to have a Gulfstream IV. Now she's had to sell it and get a Gulfstream III because people like you chose to download her music for free. The Gulfstream III doesn't even have a remote control for its surround-sound DVD system. Still think downloading music for free is no big deal?

See, I've got no problem with Lars buying what he wants with his money, nor Britney with hers.

[gstelmack]

Originally Posted by JPhillips

Her daughter could always go to a public school where she wouldn't need $19000 in aid.

This sounded a lot worse when I read your quote, thinking it was public vs private elementary/middle/high school, where it's $19,000 vs $0. That is not the case here, they are talking a university, where her choice might be $19,000 vs like $12,000 or even more. Even public universities are getting expensive as they ratchet up tuition to pay for the downturn in the economy.

For example, NC State estimates the costs for a full-time undergraduate state-resident student for a year at $16,767 (source: North Carolina State University :: Can I Afford It?). Private universities can get a lot more expensive (tuition and fees alone top $37K for MIT, for example).

College has been getting a lot more expensive over the last decade or so, and getting harder and harder for families to afford without scholarships or financial aid. Yes, she could probably find a public institution that is cheaper, but not by much (that NC State figure only has around $6K for tuition and fees, the rest is books, living expenses, etc that have to be factored in). But that $19K in financial aid is not trying to attend a cadillac school by any stretch of the imagination, and could well mean the difference between going to college and not going.

[molson]

I don't think the point of that article is that we're supposed to feel bad that a family can't afford expensive private tuition. The point is that under the American tax code, it can occasionally be to your financial benefit to be less productive (or at least, the decision is there). It should be the opposite.

[gstelmack]

Originally Posted by molson

I don't think the point of that article is that we're supposed to feel bad that a family can't afford expensive private tuition. The point is that under the American tax code, it can occasionally be to your financial benefit to be less productive (or at least, the decision is there). It should be the opposite.

Yup, just like it's often better for a farmer to not actually farm anything.

[JediKooter]

Originally Posted by miked

There's Lars Ulrich, the drummer for Metallica. This month he was hoping to have a gold-plated shark tank bar installed right next to the pool, but thanks to people downloading his music for free, he must now wait a few months before he can afford it. Come. There's more. Here's Britney Spears' private jet. Notice anything? Britney used to have a Gulfstream IV. Now she's had to sell it and get a Gulfstream III because people like you chose to download her music for free. The Gulfstream III doesn't even have a remote control for its surround-sound DVD system. Still think downloading music for free is no big deal?

Haha, awesome! Great reference.

[flere-imsaho]

Regarding the article, the woman's complaint about her daughter qualifying for student aid is old, old news to anyone who's bothered to look at the FAFSA process for, oh, the past 20 years. If you make a lot of money (gross even, not net) and/or have a lot of assets and/or own your own moderately successful business, you're not going to qualify for the best government student loans (if at all). So suck it up and save.

Then there's this wonderful piece of math:

While the first $60,000 of her income would be lightly taxed, the next $60,000 would be hit with what is in effect a 79% tax rate. Given a choice between a part-time or easy job paying $60,000 and a demanding, stress-ridden job paying $120,000, Lederman would be wise to take the former. In the tougher job she would be contributing twice as much to the economy. But she wouldn't be doing herself much good. It would make more sense to take it easy and spend more time with her high school senior daughter, Casey.

How did a middle-class single mom wind up with a 79% marginal tax rate?

I see what you did there!

As her adjusted gross income climbs from $60,000 to $90,000, a single parent could lose some or all of the $1,000 per child credit, the $2,500 per college student credit, the $400 Making Work Pay credit and the $8,000 first-time home buyer credit, as well as deductions for contributions to an individual retirement account and for interest paid on a student loan

90,000 - 60,000 = 30,000

1,000 + 2,500 + 400 + 8,000 = 11,900

Obviously there's fudge in those numbers, but unless she hits everything exactly the wrong way, she's better off making more money (from a strictly financial standpoint), even if the real problem is that she doesn't know how to manage it correctly.

He's frustrated that the money he socked away in custodial accounts for his kids wiped out any chance of aid for their eldest son's first year. "We got totally skunked," he says.

This is the way the system has worked for 20+ years. When I was in junior high school (in the 1980s) my father, who owned his own business, did the research and understood that I wasn't going to get need-based assistance, so he worked out a way (through a lot of hard work on my part) to get me through college without that assistance. For reference, we were squarely middle class.

I'd like to give this guy the benefit of the doubt, but here's the thing: when you decide to save money for your child's education, you really need to look into the potential future fiscal ramifications of doing so (for reference, see a thread started by Flasch last year that discusses this, with many helpful inputs from Farrah). Sadly, it's clear that a lot of American's don't do this, because research is apparently beyond us, but:

Randy, 45, is a former commercial real estate broker who is in the process of launching a real estate investment fund.

I hope he is a bit more diligent in his business finances than he is in his personal ones.

"Don't think the American public is stupid," says Cheryl Morse, a tax practitioner in eastern Massachusetts with both middle- income and affluent clients. "People call me and say, 'What's the most I can earn before I lose the earned income tax credit?' [They] may not understand marginal rates, but they're shocked when they lose the college or child credits. You hear all the time, 'The harder I work, the more they take away from me.'"

Au contraire, the American public is indeed stupid, especially if they fall for articles like this, which conflate the feeling that the government is taking away more as you earn more with the reality that the government is taking away more as you earn more. In each and every example the article gives the person/family in question is unquestionably better off, financially, by earning more money. While there may be other factors in play (i.e. why have both parents work jobs when they can survive on one and the other can stay home with the kids - saving money?), that's not the point they're making.

Note also that the data the article uses is mostly sourced from the American Enterprise Institute, a think tank with Dick Cheney on its board and such luminaries as Lynne Cheney, Newt Gingrich, John Bolton, and Paul Wolfowitz as Senior Fellows. The article is clearly designed to perpetuate the hackneyed conservative trope that the government unfairly takes money from the rich and in so doing taxes (no pun intended) their desire to make more money.

In fact, no one in the article decides to not earn money because the government will tax them more. Even the first example, the lady who is now looking at jobs that pay half the $120,000 she was previously earning, is doing so "mostly because she's desperate".

[miked]

Originally Posted by molson

I don't think the point of that article is that we're supposed to feel bad that a family can't afford expensive private tuition. The point is that under the American tax code, it can occasionally be to your financial benefit to be less productive (or at least, the decision is there). It should be the opposite.

I really don't understand this. In most cases, if I make 90k, don't I take home more money at the end of the year than somebody making 60k? How is it ever to your financial benefit to earn less??

[flere-imsaho]

Having said that, I certainly agree that the American tax code is a complete boondoggle and this article does well (the only thing it does well) to highlight many of its stupid aspects.

[JPhillips]

Originally Posted by gstelmack

This sounded a lot worse when I read your quote, thinking it was public vs private elementary/middle/high school, where it's $19,000 vs $0. That is not the case here, they are talking a university, where her choice might be $19,000 vs like $12,000 or even more. Even public universities are getting expensive as they ratchet up tuition to pay for the downturn in the economy.

For example, NC State estimates the costs for a full-time undergraduate state-resident student for a year at $16,767 (source: North Carolina State University :: Can I Afford It?). Private universities can get a lot more expensive (tuition and fees alone top $37K for MIT, for example).

College has been getting a lot more expensive over the last decade or so, and getting harder and harder for families to afford without scholarships or financial aid. Yes, she could probably find a public institution that is cheaper, but not by much (that NC State figure only has around $6K for tuition and fees, the rest is books, living expenses, etc that have to be factored in). But that $19K in financial aid is not trying to attend a cadillac school by any stretch of the imagination, and could well mean the difference between going to college and not going.

Based on her 60K salary, though, the school she's looking at costs far more than 19k. The 19k is just the aid she'd lose by going up to 120k in salary.

[molson]

Originally Posted by miked

I really don't understand this. In most cases, if I make 90k, don't I take home more money at the end of the year than somebody making 60k? How is it ever to your financial benefit to earn less??

It doesn't, but because of the various deducions/credits, you can end up paying a much higher "tax rate" when you make not that much more money. That's OK to some extent, but can go too far, IMO.

I don't think people work less hard because the government takes more of every additional dollar they earn, but it can be a big part of one's decision about how productive to be, when combined with other factors.

But still, I don't think that's the close to the most compelling reason to keep taxation reasonable. Rich people are just generally going to do more with money to help out an economy than the government is (and the government doesn't even need the money to spend it).

[Young Drachma]

Originally Posted by SteveBollea

You're much more of an optimist if you don't think those same student loan programs wouldn't be replaced by worse programs run by the actual banks with even stiffer loan terms and tuition wouldn't drop a single dime.

But no, you just fix student aid programs. Obama had a good start in actually making the actual student loan agency run a whole lot of the loans instead of having banks as middlemen, but that's beside the point.

Before the 80's, the vast majority of student aid was grants and work-study. Somehow, in the next thirty years, it became more and more student loan dependent. Change that cycle and you've got half the problem licked.

I've worked in higher ed long enough to know what would happen. First, this would never happen since anyone proposing it would be vilified for hating children and their families. And it'd be made to be an argument that would keep poor kids out of college, when it'd do the opposite.

Schools that are tuition dependent, aging physical plants and are 15 miles down the road from other schools that do the same thing in rural areas that don't even have Wal-Mart and yet have 3 or 4 colleges don't need that many schools. But they're propped up by federal and state schemes that enable them.

It's more complex than a bogeyman of "the tuition will remain the same," because it won't. Schools would be bankrupted. You kill financial aid programs and it'll force trustees to put pressure on the Presidents and their cabinets to get creative and quick.

Rather than debt financing to build palatial dorms and athletic facilities or barely used art museums that no one visits, it'll make them start reinvesting that money on student aid, developing programs that prove their worth and makes school truly start to compete with each other.

Most of all, it'd close a good number of private institutions that don't need to be open if they can't muster the cash to stay that way, get states to decide which public schools should be merged with others to minimize redundancy and best of all, could be coupled with legislation that prevented private lending for higher education.

Might seem like an extreme step, but the only reason students and their parents are allowed signature loans on an academic mortgage when no one would give them that sort of money to buy property or something else of value, is said loans are usually backed by the government.

Cut lending out of higher education and it'd magically make it more difficult to saddle people in their early 20s who we don't allow to drink for close to half of their college careers with five or higher figure debts. You can talk all you want about how "they ought to know" and so forth, but this is the first generation we've done this to. If the "Greatest Generation" hadn't benefited from all of the investment in educational infrastructure, plus other schemes giving them access to low rate mortgages in an era where industrial jobs were plentiful, we'd have been bankrupt as a country a lot sooner than now.

So save for the ruse of a Silicon Valley startup, today's graduates are lost in a world where their grandparents and parents have been telling them to wait their turn for so long, that by the time they look up and realize it, they're 35 and start to wonder much of a bum deal they got in this whole situation.

In all, everyone in this country has their hand out for one reason or another, asking someone else to give them what's rightfully theirs. It's just getting worse. But at the point we're asking our kids to give us stuff, it might be time to take a timeout to assess WTF we're really doing.

[flere-imsaho]

Originally Posted by molson

The point is that under the American tax code, it can occasionally be to your financial benefit to be less productive (or at least, the decision is there). It should be the opposite.

Yet in fact in none of the article's examples, and bear in mind they are worst-case scenario examples, is this true, from a strictly financial standpoint.

[miked]

Originally Posted by molson

It doesn't, but because of the various deducions/credits, you can end up paying a much higher "tax rate" when you make not that much more money. That's OK to some extent, but can go too far, IMO.

I don't think people work less hard because the government takes more of every additional dollar they earn, but it can be a big part of one's decision about how productive to be, when combined with other factors.

I agree with what you are saying, I just think the hyperbole is silly when people think current tax rates deter people from wanting to make more money. I've never seen anyone turn down a raise because they may have a higher tax bill.

The tax code is fucked though.

[JPhillips]

Originally Posted by Dark Cloud

I've worked in higher ed long enough to know what would happen. First, this would never happen since anyone proposing it would be vilified for hating children and their families. And it'd be made to be an argument that would keep poor kids out of college, when it'd do the opposite.

Schools that are tuition dependent, aging physical plants and are 15 miles down the road from other schools that do the same thing in rural areas that don't even have Wal-Mart and yet have 3 or 4 colleges don't need that many schools. But they're propped up by federal and state schemes that enable them.

It's more complex than a bogeyman of "the tuition will remain the same," because it won't. Schools would be bankrupted. You kill financial aid programs and it'll force trustees to put pressure on the Presidents and their cabinets to get creative and quick.

Rather than debt financing to build palatial dorms and athletic facilities or barely used art museums that no one visits, it'll make them start reinvesting that money on student aid, developing programs that prove their worth and makes school truly start to compete with each other.

Most of all, it'd close a good number of private institutions that don't need to be open if they can't muster the cash to stay that way, get states to decide which public schools should be merged with others to minimize redundancy and best of all, could be coupled with legislation that prevented private lending for higher education.

Might seem like an extreme step, but the only reason students and their parents are allowed signature loans on an academic mortgage when no one would give them that sort of money to buy property or something else of value, is said loans are usually backed by the government.

Cut lending out of higher education and it'd magically make it more difficult to saddle people in their early 20s who we don't allow to drink for close to half of their college careers with five or higher figure debts. You can talk all you want about how "they ought to know" and so forth, but this is the first generation we've done this to. If the "Greatest Generation" hadn't benefited from all of the investment in educational infrastructure, plus other schemes giving them access to low rate mortgages in an era where industrial jobs were plentiful, we'd have been bankrupt as a country a lot sooner than now.

So save for the ruse of a Silicon Valley startup, today's graduates are lost in a world where their grandparents and parents have been telling them to wait their turn for so long, that by the time they look up and realize it, they're 35 and start to wonder much of a bum deal they got in this whole situation.

In all, everyone in this country has their hand out for one reason or another, asking someone else to give them what's rightfully theirs. It's just getting worse. But at the point we're asking our kids to give us stuff, it might be time to take a timeout to assess WTF we're really doing.

While I wouldn't completely eliminate school loans, I'm with you on school inefficiency and loan caused tuition inflation. The problem for me is that there needs to be some mechanism to the transition that doesn't eliminate higher ed for thousands of students.

[Young Drachma]

Originally Posted by JPhillips

While I wouldn't completely eliminate school loans, I'm with you on school inefficiency and loan caused tuition inflation. The problem for me is that there needs to be some mechanism to the transition that doesn't eliminate higher ed for thousands of students.

There would be. You could still keep grant programs, if you wanted to, though I still think that'd do nothing for tuition inflation. The Ivies proved schools with big endowments have the resources to reinvest in students. Small colleges have it too, they'd have to become more selective. States could come up with all sorts of programs at their institutions to provide for low-income families and students.

This would also increase the relevance of community colleges and initiate a whole new wave of articulation agreements. Imagine a situation where community colleges improve their programs to get quality private schools to admit their students and give them aid?

That's just one creative idea. There's a lack of creativity being employed because it's easier to leave the responsibility to someone else.

But there's no way that the eliminate of federal aid programs will result in a massive defection of poor people to college, it's a myth. 100% certain. This isn't the 1940s.

[Cringer]

Given a choice between a part-time or easy job paying $60,000 and a demanding, stress-ridden job paying $120,000, Lederman would be wise to take the former.

Yo yo yo, holy shiznit my biznitch! Hook me up with that easy part time gig for 60k baby!!!

[albionmoonlight]

LOL at several assumptions in the first paragraph in that article:

1) that $60,000/year jobs must be part-time or easy if they pay that little

2.) That someone making $120,000/year contributes twice as much to the economy as someone making $60,000/year

3.) That no one in their right mind would chose to spend time with, ugh, their family unless evil perverse economic incentives forced them to do it.

The overall point of the article, which I have seen made much better elsewhere, is one for which I have a lot of sympathy. The middle class really does get left out of a system in which the government alternates between tax breaks for the rich and aid to the poor.

But the assumptions that the article makes (which, to its credit, probably fall right into the basic assumptions of the typical Forbes reader) are so stupid and wrongheaded as to make me take the whole thing much less seriously.

[Young Drachma]

Originally Posted by SteveBollea

Hi. I'm a poor person who couldn't have gone to college if not for federal aid programs.

We're not talking about the same things. You're imagining a world where in the absence of your FAFSA, there is no other infrastructure for getting you into college and what I'm saying, is there would be other solutions to fill that void the minute it went away, because it's in the best interest of institutions to have students like you (and me, incidentally.)

Or that in the absence of such programs, there should be solutions that don't rely on students -- if not you, than your peers -- to take out mortgage level debts on their future earnings, because it's a really backwards way to do things.

[flere-imsaho]

Originally Posted by Dark Cloud

is there would be other solutions to fill that void the minute it went away

Like what?

because it's in the best interest of institutions to have students like you (and me, incidentally.)

Wouldn't it be in the best interest of institutions to have students who can pay on their (or their family's) own? All things being equal and whatnot?

[JonInMiddleGA]

Originally Posted by flere-imsaho

Wouldn't it be in the best interest of institutions to have students who can pay on their (or their family's) own? All things being equal and whatnot?

On an individual level, sure, that'd be better for the institutions. But on an industry level, it'd be a disaster since there aren't enough of those to go around.

For God's sake flere, think of the children (of the suddenly extraneous administrators and professors)

[flere-imsaho]

Originally Posted by JonInMiddleGA

On an individual level, sure, that'd be better for the institutions. But on an industry level, it'd be a disaster since there aren't enough of those to go around.

Well, OK, but DC said there'd be a contraction of schools, so presumably a lot fewer places open for potential students. Given that, it seems to me one perfectly plausible outcome would be enough spaces to accomodate a) students who can afford the tuition and b) the number of students who get grants.

So there'd be a huge chunk of near-poor to middle-class students who just couldn't afford to go to college.

This is just based on the assumptions DC has posed. I would imagine he has a more thought-out rationale for what would happen.

For God's sake flere, think of the children (of the suddenly extraneous administrators and professors)

Hippie.

[gstelmack]

Originally Posted by flere-imsaho

90,000 - 60,000 = 30,000

1,000 + 2,500 + 400 + 8,000 = 11,900

Obviously there's fudge in those numbers, but unless she hits everything exactly the wrong way, she's better off making more money (from a strictly financial standpoint), even if the real problem is that she doesn't know how to manage it correctly.

You're missing the income taxes, social security taxes, and medicare taxes on that $30K as well. I think she still comes out ahead, but it's not $18K worth, probably closer to $6K.

[Young Drachma]

Originally Posted by flere-imsaho

Well, OK, but DC said there'd be a contraction of schools, so presumably a lot fewer places open for potential students. Given that, it seems to me one perfectly plausible outcome would be enough spaces to accomodate a) students who can afford the tuition and b) the number of students who get grants.

So there'd be a huge chunk of near-poor to middle-class students who just couldn't afford to go to college.

This is just based on the assumptions DC has posed. I would imagine he has a more thought-out rationale for what would happen.



Hippie.

That's only assuming that enrollments at most schools would stay the same. They wouldn't.

According to wiki:

The U.S. Department of Education shows 4,861 colleges and universities with 18,248,128 students in 2007

This thread and people's comments have asserted the vaguely general belief in higher education for all those qualified to attend. Thus, changing the way we finance it wouldn't change their idea. If anything, it might make lots of third-parties more concerned about how to do it in a way that doesn't make people sacrifice the best years of their working lives paying some suit somewhere, rather than earning to support their newfound lives, perhaps buying up foreclosed properties, getting married sooner and having kids.

Not that folks aren't doing it now, but far fewer are and if you negate the impact the financial aid boondoggle has had on this, it's because you're not in contact with a large enough cross-section of the recent graduate populace.

But anyway, back to what would happen. Me thinks, that are rough glance and without any more research than what I already know, that my pie-in-the-sky idea would contract, say 250-500 different schools. Of those, half would be schools that straight up fail in the first decade and the other half those that merge with healthier institutions or ones that are in similar straits.

So the net loss there isn't significant. We're talking 10-20k students who'd just go to other schools. After all, I'm not suggesting many public schools would close, because the government could account for that. Thus, we're talking private schools that your tax dollars are propping up as we speak, doing a horrible job graduating kids who'll have degrees that won't make them any more marketable than they were when they started. If the graduate them at all. Bleak? Aye, but tis true.

Anyway, the 90% of those students go to other colleges that can afford to have them through aid packages they craft using endowment dollars, through direct giving from alumni that right now isn't being spent in the same ways.

I don't profess to have all of the answers, despite how I might be coming off. But I do know that much of what's being now is, is largely due to institutional inefficiency and trying to secure a future that doesn't yet exist, while screwing the ones who are there now.

The other thing, that I think would happen, is you might see a net increase in schools after that decade. Right now, so many of these for-profit institutions only traffic their goods to working adults by and large. Given an incentive to fill a market void, they'd join the traditional undergraduate market, crafting incentives for employers to pay for classes and other creative ways to ensure they make money. Is this better for consumers? Academically, probably not. But that's only if you think the 4th tier school in Outinthemiddleofnowhere, AL is doing a better job panhandling for cash from alumni and grants than a private company would providing value for its shareholders.

I think I might trust College LLC a bit more than Joe's College of Learning and Stuff, simply because College LLC has more of an incentive to do it's job better and to focus in different ways.

Oh and here's a huge example of how you know it work. There are private independent schools all over the country. We're talking non-boarding schools where parents pay as much as a college tuition to send their kids to K-12 school. These schools have endowments too, but there's no federal or state programs enabling folks to send their kids to them and yet, they manage to admit people from poor families and working class (based on the article's definition) people to the fray. If they can do it, with enrollments similar in size, but endowments that are far smaller, I have no doubt colleges can make it work too if forced to.

Wouldn't it be in the best interest of institutions to have students who can pay on their (or their family's) own? All things being equal and whatnot?

They don't exist. They didn't before and sans the notion of "borrow now, pay back later," they don't exist now. And the myth of "saving for college" is just that, a myth. With tuition inflation, you'd need the GDP of the province of a small Caribbean state to pay for school in the next 20 years anyway. So this bleak outlook will probably happen anyway, I'd just hasten the process and be proactive, rather than do it reactively.

[SportsDino]

This thread is begging for a lecture on incentive mechanisms and how they shape the economy, but I'll try to keep a simpler train of thought:

1. Article is overly biased, like just about everything in the media these days. Its best just to run with the theme and ignore the conservative propaganda 'data'.

2. It is possible to create periods of negative marginal return in the tax code, although I doubt the reality contains any particular point along the income curve where your net drops noticeably (that is, one more dollar earned, your net will go up rather than down).

3. However, if you measure some abstract variable we can call 'effort to earn' I can guarantee you that the resulting graph would get very ugly and splashed with red for the majority of Americans. Sure you come out of the equation up $3,000 a year perhaps... but you are working 40 hours a week versus 0 hours a week. My little sister is in a similar situation right now.

4. Point 2 is touted by those wanting to justify taxation.

5. Point 3 is touted by those trying to play the tax boogeyman game.

6. As far as real economic effect, I lean towards resolving 3... we want people to have clear, comfortable incentives to keep earning more (and presumably working more to the betterment of us all) rather than tell them 'well your marginal rate of return is still positive at every point in the curve, never mind it flattens a good bit every time you near some tax code shenanigans point'.

7. I don't think the answer is making every benefit scale to brackets perfectly.

8. I think a start at an answer is to start removing tax code benefits...

9. ... while generally chopping tax rates on the middle class, be it lower/middle/upper (you 50K folk, your enemies are not the 120K folk, its the 1,000,000K folk).

10. Less complexity will help with transparency, and with transparency maybe price competition will become feasible again.

11. And as a true capitalist... I think price competition is necessary for any capitalism to actually WORK instead of being an elaborate pony show for screwing the poor and middle class.

12. So in conclusion, on the surface it looks like my plan would take away all your pork... but the reality is all of that pork is why none of you can actually afford to take care of yourself anyway (pork = higher tax rates, higher college bills, higher good prices, etc...).

[CU Tiger]

Originally Posted by SteveBollea

we need to also make blue-collar jobs a job you can actually support a family on, etc. before you start destroying the college aid system.

I employ 19 "technicians" today at my company.
None of which have more than a 2 year degree (and only 1 of those) while 7 are GED/highschool drop outs.

4 of the 19 topped 75k last year and the lowest paid one was 46k, funny how the top 4 always volunteer for OT and tackle the hardest job while the bottom two or three use up their sick time by March and always have an escuse when additional help is needed.

There are plenty of "blue collar" jobs that can support a family if you are willing to work.


The remainder of the issues I just dont feel like debating

[JonInMiddleGA]

My comments are obviously going to be Georgia-centric since that's what I'm most familiar with but I don't believe we're anywhere near unique.

Originally Posted by Dark Cloud

After all, I'm not suggesting many public schools would close, because the government could account for that.

Huh? More taxes instead of loans that at least hypothetically get paid back? Because that's the only way you don't end up with significant public school closures. Right now at least half the colleges & universities in Georgia exist largely on a combination of lottery proceeds and student loans.

Thus, we're talking private schools that your tax dollars are propping up as we speak, doing a horrible job graduating kids who'll have degrees that won't make them any more marketable than they were when they started. If the graduate them at all.

I can only figure here that you're talking about the Draughon's College of Mechanical Art, Design, Broadcasting, and Criminal Forensics type of private schools. Because it sure doesn't describe Emory University, Mercer University, Oglethorpe, the entire HBCU group around Atlanta, not to mention smaller but respected institutions such as Agnes Scott, Berry, and Shorter.

If anything, it sounds more like the large majority of the 35 public schools that operate under the University System of Georgia umbrella.

Anyway, the 90% of those students go to other colleges that can afford to have them through aid packages they craft using endowment dollars, through direct giving from alumni that right now isn't being spent in the same ways.

Again here, huh? The majority of schools in Georgia don't have a non-taxpayer funded pot to piss in, much less any sort of endowment. And that's not even considering the overwhelming number of students who won't go further than X from home. Which, by the way, increases the cost dramatically for those who are currently able to live at home while going to school (both traditional & non-traditional students) but would not be able to do so if they had to travel significantly further.

Right now, so many of these for-profit institutions only traffic their goods to working adults by and large.

Okay, at least here I see something that makes me think you're looking at truck driving schools & the like ... because it describes very very few of the private universities in Georgia. Non-traditional students do, however, currently make up the majority (last I looked at least) at public institutions such as Georgia State University (the 2nd largest in the state btw).

Oh and here's a huge example of how you know it work. There are private independent schools all over the country. We're talking non-boarding schools where parents pay as much as a college tuition to send their kids to K-12 school. These schools have endowments too, but there's no federal or state programs enabling folks to send their kids to them and yet, they manage to admit people from poor families and working class (based on the article's definition) people to the fray. If they can do it, with enrollments similar in size, but endowments that are far smaller, I have no doubt colleges can make it work too if forced to.

Seems like you're grossly overestimating the number of poor/working class families attending private indy schools. And not a single one of them in Georgia is anywhere near the size of even our smallest state universities (or quite a few of the private ones). By way of comparison, state run 2 yr school Georgia Perimeter College (ever heard of it?) has about 26,000 students currently enrolled. That's more than virtually all of the private K-12's in the state combined. But their endowment ($571k) is nowhere near what even one of at least a dozen of the private K-12's has.

And before anyone does what I often do myself, which is squash the value of a 2 yr degree in today's economy, we have to remember that a lot of those students transfer those credits to 4 yr schools in state, having attended it for courses because it's cheaper.

I don't have a problem with the basic notion of reducing the number of degree giving institutions out there but what you've spelled out here is so riddled with assumptive flaws that it kind of gives an ostensibly good idea/intention a bad name.

[Young Drachma]

Originally Posted by JonInMiddleGA

My comments are obviously going to be Georgia-centric since that's what I'm most familiar with but I don't believe we're anywhere near unique.


Huh? More taxes instead of loans that at least hypothetically get paid back? Because that's the only way you don't end up with significant public school closures. Right now at least half the colleges & universities in Georgia exist largely on a combination of lottery proceeds and student loans.

No. No way. I wasn't suggesting we do more taxes. It's not what I was suggesting. I was just saying you'd have a hard time getting bureaucrats to close schools, though inevitably, that'd be the result. Or with more enrollment, more kids subsidizing with tuition dollars what your tax dollars are already paying for.

I can only figure here that you're talking about the Draughon's College of Mechanical Art, Design, Broadcasting, and Criminal Forensics type of private schools. Because it sure doesn't describe Emory University, Mercer University, Oglethorpe, the entire HBCU group around Atlanta, not to mention smaller but respected institutions such as Agnes Scott, Berry, and Shorter.

If anything, it sounds more like the large majority of the 35 public schools that operate under the University System of Georgia umbrella.

Again here, huh? The majority of schools in Georgia don't have a non-taxpayer funded pot to piss in, much less any sort of endowment. And that's not even considering the overwhelming number of students who won't go further than X from home. Which, by the way, increases the cost dramatically for those who are currently able to live at home while going to school (both traditional & non-traditional students) but would not be able to do so if they had to travel significantly further.

I know. Too many of them. Consolidate.

Okay, at least here I see something that makes me think you're looking at truck driving schools & the like ... because it describes very very few of the private universities in Georgia. Non-traditional students do, however, currently make up the majority (last I looked at least) at public institutions such as Georgia State University (the 2nd largest in the state btw).

I was just proposing examples. It's too big an issue to try to consolidate and I don't necessarily see it working that way, it's just one way of how it could work to fill the "void" some are afraid we'll have with schools closing due to the lack of federally backed student educational mortgages.

Seems like you're grossly overestimating the number of poor/working class families attending private indy schools. And not a single one of them in Georgia is anywhere near the size of even our smallest state universities (or quite a few of the private ones). By way of comparison, state run 2 yr school Georgia Perimeter College (ever heard of it?) has about 26,000 students currently enrolled. That's more than virtually all of the private K-12's in the state combined. But their endowment ($571k) is nowhere near what even one of at least a dozen of the private K-12's has.

And before anyone does what I often do myself, which is squash the value of a 2 yr degree in today's economy, we have to remember that a lot of those students transfer those credits to 4 yr schools in state, having attended it for courses because it's cheaper.

I don't have a problem with the basic notion of reducing the number of degree giving institutions out there but what you've spelled out here is so riddled with assumptive flaws that it kind of gives an ostensibly good idea/intention a bad name.

No, I'm not. Georgia isn't a good example. I've worked in higher ed, primarily at these kinds of institutions (as well having attended a wide range of them) and they make up a far larger proportion of the student body at these types of institutions than you'd think. In part because, these students are easier to recruit since they have fewer options than the kid who's parents are paying full freight.

[flere-imsaho]

I don't know, DC. I want to believe your conclusions (because I share some of your concerns about what leveraging the future earnings of students has done to the education system), but I'm having a lot of trouble with some of your assumptions.

Originally Posted by Dark Cloud

If anything, it might make lots of third-parties more concerned about how to do it in a way that doesn't make people sacrifice the best years of their working lives paying some suit somewhere, rather than earning to support their newfound lives, perhaps buying up foreclosed properties, getting married sooner and having kids.

Who's going to provide the money and why? The only idea I can come up with here is financial institutions and academic institutions (out of their endowment), doing it for altrustic reasons, and I don't find that a convincing argument.

Anyway, the 90% of those students go to other colleges that can afford to have them through aid packages they craft using endowment dollars, through direct giving from alumni that right now isn't being spent in the same ways.

OK, so colleges (a lot of colleges) are going to react to this by enabling students to come to their institution by using money from their endowment to fund financial aid.

Alternatively, colleges are going to maximize their financial health by:

1. Cut their budget. This could also let them cut the number of students, too, so they have fewer to fill spaces and can afford to focus their attention on...

2. Attract students who can pay without (or with a minimum of) aid. Good news, of course, for middle class students who can't get government aid now - colleges would rather pay 10% of your tuition than 100% of a poor kid's tuition).

3. Raise more money.

I don't profess to have all of the answers, despite how I might be coming off. But I do know that much of what's being now is, is largely due to institutional inefficiency and trying to secure a future that doesn't yet exist, while screwing the ones who are there now.

I don't disagree, but I'm having trouble understanding how you think eliminating the student loan system results in anything other than lots of closed schools, and lots of students simply not affording to go to schools.

If your argument is that the balance can be made up by colleges being more efficient and also utilizing their endowments more, then I understand that logic, but I disagree with the assumption. I disagree with the assumption because I don't think there's as much "spare money" in those endowments as you suggest that would be able, on aggregate, to cover the shortfall.

Edit: I'm sure particular schools could cover the shortfall using their endowment. Obviously any of the Ivies. And a bunch of small, rich, liberal arts colleges. But a lot of colleges across the system as a whole (the number of colleges necessary to cover the 90% of current students you refer to above)? No way. There just isn't enough aggregate money in those endowments.

The other thing, that I think would happen, is you might see a net increase in schools after that decade. Right now, so many of these for-profit institutions only traffic their goods to working adults by and large. Given an incentive to fill a market void, they'd join the traditional undergraduate market, crafting incentives for employers to pay for classes and other creative ways to ensure they make money. Is this better for consumers? Academically, probably not. But that's only if you think the 4th tier school in Outinthemiddleofnowhere, AL is doing a better job panhandling for cash from alumni and grants than a private company would providing value for its shareholders.

We may see this happen anyway. With increasing tuition costs and increasing lifespans we may see more kids wonder why they have to rush to get a college degree by the time they're 21 and then pay for it for the next 20 years. Maybe it makes more sense to try a bunch of things for the 3rd decade of your life (especially when you'll have another 6 or more decades for everything else), figure out what you want to do, save some money, and maybe even get in a position to have an employer pay for your (now very relevant) education.

Oh and here's a huge example of how you know it work. There are private independent schools all over the country. We're talking non-boarding schools where parents pay as much as a college tuition to send their kids to K-12 school. These schools have endowments too, but there's no federal or state programs enabling folks to send their kids to them and yet, they manage to admit people from poor families and working class (based on the article's definition) people to the fray.

OK, but take those numbers and extrapolate that percentage (of people who can't pay) to the population as a whole and you still end up with a huge gap of people left out with no funding options.

I mean, let's say 50% of the kids at these schools have parents who can pay $40,000/year and the school uses this revenue to pay for the kids whose parents can't pay $40,000/year. That's fine, but it doesn't scale to the country as a whole because 50% of the country can't pay $40,000/year.



How about this for an alternative scenario: single-payer higher education. The government gives loans to all applications to cover tuition only with an interest rate pegged to inflation in a manner that the government gets back in real dollars what it lent out in the first place (i.e. a low, but not unrealistic, interest rate). You can't receive disbursements from these loans until you turn 25.

Benefits:

1. Students are a little older before they have to make a big decision about signing themselves up for a lot of debt.

2. Students have a little more "real world" experience, are older and more confident, and so are more likely to demand value from their education.

3. Students still have to work to cover books & room and board, emphasizing #2 and resulting in less full-on debauchery on the taxpayer's dime.

4. If you can pay for it, you can have it (for the conservatives).

5. After graduating from high school, young people get some experience in the "real world", which may make them appreciate more the opportunities a good education can get them, career-wise.

6. The program is almost cost-neutral. I'm even willing to privatize the administration of the program to further save costs, since administration of the program wouldn't be too difficult, just requiring a lot of throughput.

7. Less students graduate at 21 with six figures worth of debt and a horrifying realization that they didn't really want to become a marine biologist.

[Maple Leafs]

Originally Posted by albionmoonlight

LOL at several assumptions in the first paragraph in that article:

1) that $60,000/year jobs must be part-time or easy if they pay that little

This was the part that stood out for me too. The idea that the average $60K job is "easy" while a $120K job is "demanding" is just plain dumb, bordering on offensive.

Look, I'm all for people earning whatever the market will pay them, and I don't doubt for a second that most high-paying jobs require special skills or training. Supply and demand, etc.

But I'll bet if you asked a few people who used to make $120K and are now working for $60K (or less), they'd tell you their old job was a hell of a lot "easier" than their new one.

[JonInMiddleGA]

Originally Posted by Dark Cloud

No, I'm not. Georgia isn't a good example. I've worked in higher ed, primarily at these kinds of institutions (as well having attended a wide range of them) and they make up a far larger proportion of the student body at these types of institutions than you'd think. In part because, these students are easier to recruit since they have fewer options than the kid who's parents are paying full freight.

I think what I'm struggling to be sure I understand correctly here is what you mean by "these kinds of institutions". I'm genuinely unclear on whether you mean the Draughon's of the world, the Emory's of the world, or the Georgia Perimeter's of the world.

Now by "these students" I'm guessing you mean non-traditional students; i.e. adults in the workforce either returning to school full-time or attending part-time while still working ... but hell, that's only a guess at this point too really.

[DaddyTorgo]

Originally Posted by Dark Cloud

Oh and here's a huge example of how you know it work. There are private independent schools all over the country. We're talking non-boarding schools where parents pay as much as a college tuition to send their kids to K-12 school. These schools have endowments too, but there's no federal or state programs enabling folks to send their kids to them and yet, they manage to admit people from poor families and working class (based on the article's definition) people to the fray. If they can do it, with enrollments similar in size, but endowments that are far smaller, I have no doubt colleges can make it work too if forced to.

the vast majority of those schools don't have anywhere near the "poor+working class" enrollment of even your typical private college. they'll have a token kid or three in every class (unless it's an athletics-heavy school), and that's about it.

[Young Drachma]

Originally Posted by DaddyTorgo

the vast majority of those schools don't have anywhere near the "poor+working class" enrollment of even your typical private college. they'll have a token kid or three in every class (unless it's an athletics-heavy school), and that's about it.

In New England that's the case. Outside of there, it's less so. Obviously that's their primary audience, but 10-15% of their student bodies are surely kids who'd never be able to afford it without help.

[JonInMiddleGA]

Originally Posted by Dark Cloud

In New England that's the case. Outside of there, it's less so.

A token here & there is extremely consistent with the independent K-12's in Georgia, so definitely lump us in with New England on that one. The one exception I can think of would be the handful of Catholic schools in the state but in GA that's truly a drop in the bucket.

[flere-imsaho]

Originally Posted by Dark Cloud

No. No way. I wasn't suggesting we do more taxes. It's not what I was suggesting. I was just saying you'd have a hard time getting bureaucrats to close schools, though inevitably, that'd be the result. Or with more enrollment, more kids subsidizing with tuition dollars what your tax dollars are already paying for.

Where do these kids who can afford to pay tuition (or even partial tuition) going to come from in the absence of a student loan system?

No, I'm not. Georgia isn't a good example. I've worked in higher ed, primarily at these kinds of institutions (as well having attended a wide range of them) and they make up a far larger proportion of the student body at these types of institutions than you'd think. In part because, these students are easier to recruit since they have fewer options than the kid who's parents are paying full freight.

OK, but if you're using this as a model you're not factoring in the number of kids who simply attend public schools.

In 2006 roughly 15 million kids attended public high schools and roughly 1.5 million attended private high schools.

In 2008 roughly 13.6 million students attended public colleges and roughly 4.6 million students attended private colleges.

And of course it goes without saying that while everyone can afford public high schools, not everyone (crazy, but there you go) can afford public colleges (without financial aid). Of course I supposed you can argue that financial aid is built into the public K-12 system, but then if you're using that as a model for your "future without financial aid" then we need to find a way to fund those 13.6 million students attending public colleges (or some number, anyway), almost certainly at a higher number than we fund through taxes now. So I don't see any way in which taxes do not increase.

[flere-imsaho]

Originally Posted by JonInMiddleGA

so definitely lump us in with New England on that one

I'm going to take this statement out of context and save it for future purposes.