As Price Of College Goes Up, Value Of A College Education Drops

studentdebtrect02-460x307

This is what happens when government promotes something like higher education with subsidies in the form of “easy money” government loans. We get a bubble, just like the housing bubble which saw the government promoting home ownership with “easy money,” government-backed mortgages.

Soaring tuition costs, a weak labor market and a glut of recent graduates such as Mr. Vonderweidt are upending the notion that professional degrees like M.B.A.s are a sure ticket to financial success.

The M.B.A.’s lot is partly reflected in starting pay. While available figures vary by schools and employers, recruiters’ expected median salary for newly hired M.B.A.s was essentially flat between 2008 and 2011, not adjusting for inflation, according to a survey by the Graduate Management Admission Council.

For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined.

The growth in student loan debt, in particular, is shocking:

Another burdensome issue: a high debt load. Nearly 60% of graduating M.B.A.s said they expected to repay some loans after graduation, according to a 2012 GMAC survey. Among households headed by people with student debt who attended graduate school and are under 35, average student loan debt climbed to $81,758 in 2010 according a Wall Street Journal analysis of Federal Reserve data. That figure is up from $55,594 in 2007.

Here’s that point in graphical format. As the number of graduates has boomed, the value of the degrees those graduates obtained is declining:

P1-BJ812_MBA_G_20130106170304

This is a scary phenomena in our society. In addition to the trillions in debt Americans are obligated to pay, not to mention the heavy burden of entitlements younger Americans are expected to pay for the generations that go before them, we’ve created a situation where American students are encouraged to go to college and obtain degrees that are, increasingly, worth nowhere near what they paid for them.

It’s all working out great for the universities. They, of course, get their money up front. It’s the students who are wasting their time, and their money, on overpriced education when most of them would probably be better off going straight into the private sector to gain work experience while avoiding student loan debt altogether.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • igx

    Now some moron will come on here and excuse it all.

    The worst part is I’ve talked to liberals on twitter that have no idea how the billiard balls bounce around on this subject. They think general taxation should subsidize it MORE BECAUSE it’s gotten so exceedingly costly relative to ANY way to measure it.

    What a disaster. They should just teach it and charge for it like they did in the old days. Too late now.

  • SigFan

    Supply and demand – too many graduates with too few jobs to go around. Too bad while they were getting their “advanced” degrees they didn’t learn a little about economics and common sense.

    • camsaure

      Guess they will have to learn that the hard way from “the school of hard knocks”. They may also have to begin to realize that you can not believe everything the govt tells you, the govt effs up everything they touch and there is no such thing as a free lunch.

      • SigFan

        Absolutely – though there’s an article on Drudge today that talks about the skyrocketing sense of entitlement among college age youth today. All part of the “everyone is special” culture coming around to bite liberals in the behind.

      • http://sayanythingblog.com Rob

        $88,000 in student loan debt is more than a lesson.

        That’s a lifetime of debt slavery.

        • matthew_bosch

          Great article.

          Debt slavery is spot on.

        • reggy

          If you pick up $88K in student loan debt, there’s not a whole lot of hope for you in the first place. The only way you can run up that kind of debt at a public college/university is through taking maximum loan amounts and spending it on toys.

          • http://sayanythingblog.com Rob

            It appears to happen a lot.

            From the article above:

            Among households headed by people with student debt who attended graduate school and are under 35, average student loan debt climbed to $81,758 in 2010 according a Wall Street Journal analysis of Federal Reserve data. That figure is up from $55,594 in 2007.

  • Hannitized, Proofs obsession

    Rob wants more American making less and fewer Americans making more. Shocker!

    Why on earth Americans would not want more Americans making more money and fewer ultra rich is beyond me. But, that’s why the Republican party is losing ground.

    • igx

      Predictable.

    • camsaure

      What the hell, you want them all sponging, like parasites, off the govt.

      • Hannitized, Proofs obsession

        So getting a loan and education is sponging off the government? Your’e an idiot.

        • Tim

          “So getting a loan and education is sponging off the government?”

          It is when you don’t pay back the loan and the tax payers have to eat it.

          • Hannitized, Proofs obsession

            Nobody is asking for loans to be paid by the taxpayers. People who don’t pay back loans should be prosecuted.

          • Tim

            They should be prosecuted, but they’re not. The tax payers end up eating it.

          • Bat One

            People who don’t pay back loans should be prosecuted.

            Not gonna happen anytime soon. There’s still a huge backlog of unpaid, Democrat-ordered, sub-prime mortgages to be dealt with. Once those borrowers have been prosecuted then we can deal with those who default on their student loans.

          • Matthew Hawkins

            We don’t have debtor prisons in the US.

          • camsaure

            It sure looks like you got ripped off on your education.

          • Onslaught1066

            Yes, they should:

            HAWAII.GOV Bureau of Conveyances -Official Public
            Records
            Document
            Number R2007203358
            Recording Date
            Recording Date:
            Date instrument recorded.
            YYYY-MM-DD
            2007-11-21

            Document Category:
            Judgment/LienConveyanceMiscellaneousMortgageReleaseUniform
            Commercial Code
            Description

            NOTICE OF LIEN
            (INCLUDES COUNTY, FEDERAL & STATE TAX LIENS; MARITIME LIEN)

            Grantor Grantor:
            Party transferring
            interest.
            BONILLA WILLIAM
            L II
            Grantee Grantee:
            Party acquiring interest.
            HAWAII
            STATE-TAX

            So how long did you serve in penitentiary?

          • LastBestHope

            Tell us more. What did he default on?

          • Onslaught1066

            No, the way I figure it, if I do all your thinking for you, you will only end up like hanniturd, with an entitlement complex, and I wouldn’t wish that on anyone.

            Better you figure it out for yourself, it’ll improve your self esteem.

            Good luck to you, though.

          • LastBestHope

            LOL

            Maybe when I have time to waste.

        • http://sayanythingblog.com Rob

          Well, the government subsidizes the loan. And the the universities.

          But I think the students are being victimized. They’ve been sold a bill of goods.

          • Hannitized, Proofs obsession

            That’s because you hate seeing kids educated and you don’t respect the loan agreements.

            Anybody who thinks it’s a disservice to educate our children has a mental disorder. I believe your’s is radical conservatism.

          • Hal513

            The ones who don’t respect the loan agreements are the ones who don’t pay the loans back.

            “Anybody who thinks it’s a disservice to educate our children…”
            You don’t have any children.

          • LenYol

            Are you saying that Rob will hate to see his kid(s) educated? Or are you just being your typical idiotic self, again?

          • igx

            Hanitized: It’s OBVIOUSLY OVERPRICED. No one is against higher education, they charge too much for it. If they charged what it was worth, it wouldn’t matter if you got a job from it or what you were paid. It just adds risk to people’s lives without adding enough return in the aggregate.

            Do you think Rob would be bringing it up so much if college costs kept pace with inflation for the last 30 years?

          • Hannitized, Proofs obsession

            Rob’s not merely picking a bone about education pricing or the method of the loan system.

          • igx
          • Hannitized, Proofs obsession

            I’m not asking you to read my mind. READ THE ARTICLE.

            You don’t need to ask me what I “think” Rob is saying, Rob made it quite clear:

            we’ve created a situation where American students are encouraged to go to college and obtain degrees that are, increasingly, worth nowhere near what they paid for them.

            It’s the students who are wasting their time, and their money, on overpriced education when most of them would probably be better off going straight into the private sector to gain work experience while avoiding student loan debt altogether.

            If Rob want’s to keep his children stupid, then he has the right not to send them to college and he can do all he wants to prevent them from getting an education. But he shouldn’t be trying to screw it up for the rest of Americans who want to educate their children.

          • igx

            Hanitized, I’m under whelmed. He’s just highlighting the fact that going to college for personal growth or to become a better citizen is a fiscal disaster for most. I don’t like it one bit and it’s bad for the country, but that is where we are.

            Plus, he isn’t “screwing up” anything.

          • Hannitized, Proofs obsession

            I didn’t see where Rob mentioned anything about paying for a college education to become a better citizen or for personal growth. People go to college for an effing eduction.

            The statistics show that you make less if you don’t have an education. Having an MBA increases your salary substantially.

            I don’t wish for anyone to do less than what they can be.

            The education pricing and loan issue is separate from that.

          • igx

            The cost is WAY, WAY, WAY out of line with the return. IT’S A RELATIONSHIP, not just the level of revenue. THIS IS AN INSANE RIP OFF http://www.zerohedge.com/news/2012-10-01/chart-day-college-tuition-vs-real-disposable-income * https://twitter.com/ReggieMiddleton/status/288385180182396928

            Why is it worth MORE as a percent of society’s DECLINING deposable income than it used to be?

          • camsaure

            It’s just a microchasm of liberalism; they cannot or most like;ly will not see or admit to a cause or effect.

          • igx

            Hanitized, Don’t you find the DEBT- FUELED REVERSE REDISTRIBUTION going on here grotesque? Seriously.

          • Hannitized, Proofs obsession

            Had this post been merely about that, you wouldn’t see me complaining about Rob’s desire to see fewer people get a college education or MBA.

            Sorry, but you are just seeing what you want to see. Can’t see the forrest, can ya?

          • http://sayanythingblog.com Rob

            I fail to see how criticizing the way we’re doing higher Ed is equivalent to opposing education.

          • Hannitized, Proofs obsession

            That’s because you are in denial about your position. You are suggesting MBA’s aren’t for everyone, as well as suggesting fewer kids get college degrees.

            That’s more than just criticizing how it’s done.

        • http://proof-proofpositive.blogspot.com/ Proof

          ” Your’e (sic) an idiot.”

          Apostrophobic (and idiotic) to the end, eh, Tiny Socialist?

  • igx

    Just my amateur opinion, the growth rate from 1982 until about 1996 (when the Fed started goosing the economy too much) and further on to 2007 gave the appearance of college being priced appropriately. It obviously isn’t by a long shot.

  • cylde

    You should not expect this trend to end because colleges receive massive taxpayer funding thus separating the buyer from the user. Of course it will be claimed that every body benefits so every one should pay, the usual socialist meme. No cost benefit analysis will be tolerated. Assertions must not be questioned by people that are not part of the establishment. Shut up, and pay up.

    • igx

      Personally, I think if one actually learns to think critically in collage and gets some basics about the world, society is better off. The problem is it’s EXTREMELY overpriced.

  • Guest

    Wow, Rob sure posts an inordinate amount about how higher education is a scam. Insecure much? I expect soon we’ll see a lot of posts about how size truly doesn’t matter.

    • igx

      As far as I’m concerned, this is a huge problem of graft and injustice and it needs to be talked about more. Rob is very good at covering it. None of you guys have ever refuted his arguments as far as I can remember.

      • Guest

        LOL! His arguments are constantly refuted, but people like you simply double down on being wrong, ie when he couldn’t give one sentence to support his argument the common core consisted of liberal propaganda.

        • igx

          OK fair enough. it’s still overpriced for no reason. #socialjustice

    • willieB

      Size does matter…that’s why you don’t matter to anyone.

      • Guest

        Smallwillie, just because you’ve had a lot of c*ck up your ass, it doesn’t mean you’ve had everyone’s.

        • willieB

          Why am I not surprised that you’ve revealed your fag tendencies to everyone. No one was talking about homosexuality, except you, the fag.

          You don’t matter.

          • Guest

            Wow, again with the “I Know you are but am I?” comebacks. Homophobic ones at that. Bravo, smallwillie. Bravo.

            The biggest gaybashers like you are usually the deepest in the closet too.

          • willieB

            I’m not gay bashing, I’m commending you for your decision to suck co*k freely, and for free.

          • Guest

            Because everyone uses the term ‘fag’ as a commendation You can’t even stand behind your insults, what a pathetic worm. Hopefully the fact that you’ve never contributed a single thought or substantive fact to a discussion beyond your insults and gay bashing will hasten the time until you place a shotgun in your mouth and inalterably destroy your deplored, diseased mind. Seriously, how worthless are you that this is the best use of your time? Nobody will miss someone as vile and pathetic as you, so just end it soon and finally do something to make the world better because your postings here certainly are not.

    • http://sayanythingblog.com Rob

      There are serious problems in higher Ed. The bubble is almost as bad as the housing bubble.

      • camsaure

        Almost?? It soon will be, and I am not at all sure that is what is not intended.

  • joe mauer

    rob, we get it already. Just because you couldn’t make it in college doesn’t make it wrong for everyone else. You should channel your hate for NDSU, Heidi, and Obama to a worthy cause. How about obesity?

  • WOOF

    Why go to college? Here’s why.
    “the difference in yearly income for a person with a college degree
    and a
    person with just a high school diploma is $19,550,
    according to the
    2010 Census.”
    ” the unemployment rate among college graduates is less than half (4.5%)
    than people with only a high school diploma (9.7%”

    Twenty years of schoolin and they put you on the day shift.

    • Hannitized, Proofs obsession

      Exactly. I have no idea why these morons are ignoring this data in favor of their ignorant Tea Party circle jerk.

      • guest

        Do you and woof have to decide which one of you is going to pivot man each day, or do you both just say ahh and fight over it?

      • igx

        IT’S WHAT PAYING FOR THIS SECURITY / INCOME STREAM COSTS. IT’S THE DEBT INCURRED FOR IT. It’s gone way up for no good reason, that’s all. Look at the historical price data. http://www.zerohedge.com/news/2012-10-01/chart-day-college-tuition-vs-real-disposable-income IT’S OUTRAGEOUS. Government meddling has jacked up the price for no reason.

      • igx

        EARTH TO HANNITIZED….

        These facts and figures, gleaned from a fascinating article in last weekend’s Wall Street Journal, are depressingly typical of American higher education, where administrative payrolls and other nonteaching costs have been growing rapidly — without any obvious commensurate benefit for students.

        To the contrary, the bloat on many U.S. campuses is now a significant cause, along with cutbacks in state spending, of the surge in tuition, which, in turn, is an obstacle to upward mobility for an entire generation of young Americans.

        There should be a lot more outrage about this than exists — though we can hope that outrage will grow as more and more such facts come to light.

        Solving the problem, however, won’t be easy. Americans and their elected leaders have grown used to discussing college “affordability” as a matter of distributing ever more government aid — in the form of tax breaks, direct assistance or subsidized loans.

        Actually, this is self-defeating: By making it possible for students to pay higher tuition, federal and state aid reduces institutions’ incentive to make the hard budgetary choices that might hold tuition down in the first place.

        Management got so loosey-goosey at Minnesota, the Journal reports, that the school had no idea of such basic facts as how many employees report to each supervisor.

        In other words, the ultimate beneficiaries of all those government tuition subsidies are the highly paid administrators and faculty members whose hiring, and retention, it enables.

        http://www.startribune.com/opinion/commentaries/185483052.html?refer=y

        • Hannitized, Proofs obsession

          Gee, maybe you are right. I should reconsider and think about how much better off we will all be if fewer people went to college and got an education. I mean, those statistics WOOF provided mean nothing next to people getting paid a living wage in trade for Americans being educated and prepared to compete in the real world. They should all be put aside and guarantee a lower income without that education and an almost guaranteed increase in unemployment rate.

          Boy, you really got me there.

          • guest

            Another lonely night for Rob’s pet troll, hanni. Just fondling his keyboard in an attempt for attention, any attention.
            Truly a pathetic life poor little willie lives.

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