Michael Karnjanaprakorn

I have not much time, but I’ve got many useful things here, love it!n

Excellent write up Mike – I think that some of things like protection in Bankruptcy I do not agree with, but I think the rest is spot on.

Like the website!

Now that schools allow seniors to take college level courses and credit be given for those courses during the senior year of high school, one could easily knock off a good chunk of time spent in college. The other thing is to send the student to a community college to get the undergrad classes/basics done, then to switch to a university to complete the last two years, thereby saving quite a bit of money.

In most cases the prestige of college is for the parents, they are living their lives vicariously through their children. it is amazing how they hover and get involved in every aspect of the kids lives, calling professors when grades arent good and so on.

Sorry, as a criminal justice professional I couldn’t disagree more. Most of the problem cops in this country DON’T have a college degree.

I do not regret my education one bit or the loans that I used to obtain one. I use my education everyday. George was right about a lot of things, but off on that one.

That said, you didn’t hear the Ivy League schools Bush attended bragging about him being “one of theirs” , did you? LOL

Everyone should watch PBS Frontline: College Inc in it’s entirety. You can netflix it.

I can remain irrational longer than the UNITED STATES (corporation) can remain solvent.nnIn plain English: I ain’t paying shit!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!nnnP.S. My local commuter college is public property. That means I am gonna go back to school in a few weeks!!!!!!!!!!!

Great article. Speaking of documentaries that shed light on rough economic times, you should check out Iron City Blues on Netflix. It’s a biker doc, but the town is something you have to see!

I have a better idea. Don’t go to COLLEGE or UNIVERSITY. As George Carlin stated, you don’t learn anything! The government wants to keep you stupid and in debt for life. Learn a trade. Simple.

1-4 seem correct to me, especially #1 & #4. 5-7 is dodgy. #5 is age 7-16 and I’ve not heard of any public high school, not college, that charges tuition — anybody care to clarify? #6 is basically expanding government welfare for people who aren’t competitive in the free market. #7 is partially correct, but the inflation has also been massively fueled by the “go to college” meme feeding expansive corporate interests — the mass of colleges are adding seats faster than high schoolers can graduate, never mind pay to sit in them. And High Schools facilitate this by focusing just on academic achievement, where academic achievement for a High School is shipping its graduates off to college. Put another way, the American public education system has bought into the claims of inadequacy leveled against it and thus punts to our universities.nnThe way you solve for #4 is first to increase the investment in vocational programs and apprenticeships for High Schoolers, followed by stopping with the development-arresting “everybody needs to be in 20 extracurricular activities to succeed!” nonsense which prevents kids of moderate talent from focusing and developing actual skill in something that appeals to them. Once you’ve got #4 down, 2-year vocational degrees should be a lot more practical for an awful lot of work.nnOne thing I don’t understand, though — why does student loan default rate matter to other people? The money is spent, the service rendered. There is no property that a bank can reclaim, so it’s not like they’re losing money they haven’t spent anyway. I mean, it is concerning that the banks might wise up and stop loaning so much to students which would result in a (imo, necessary) contraction of the academic market, but it’s not like that’s money the banks are actually holding at the moment so I’m hoping that it wouldn’t impact the stock price of the bank, you know? Put another way, it seems like just the bank is getting screwed, instead of the bank turning around and, oh say, foreclosing on a house and auctioning it off and destroying whatever equity the “owner” had in it — so where’s the real impact going to hit?

“If I had to produce a documentary, I would shed a light on the inevitable student loan crisis, and the collective action we can do to prevent it from happening.”nnWhen I read that, it made me think of this movie. http://www.defaultmovie.com/

PS Think about it: would you think it was either fair or legal if your cellphone company were able to require you to give them a complete statement of both your and your parents’ income and assets, before deciding what price to charge you?nnI didn’t think so.

This would all work better if you (and so many other documentary makers) didn’t end up presenting what amounts to a powerful argument for education in basic economics! Re your ‘crazy ideas’:nn1. (Two year degrees) is a fine idea, but without some idea how to incentivize colleges to introduce a product which would cut their revenues at least by half it’s an empty hope.nn2. (Loan counseling) is fine, but who is to run the program? The two likeliest candidates, the colleges and the government, have a big interest in keeping things as they are, so don’t expect a very effective effort.nn3. (Make college loans dischargeable in bankruptcy)? Sure except that interest rates would rise, and the problem in any case pre-dates bankruptcy reform so don’t expect too much from this.nn4. (Cultural shift away from college education)? Cultural shifts follow changes in the options people have, they are not a lever you can pull. nn5. (Make education free to the user)? More and more countries all over the world have been finding out over the past 20 years that they can’t afford this ‘solution’ (many of them in Europe, e.g. the UK). It’s just another form of wishing the economic problem away by having the government pay for everything.nn6. (Public service)? Again, economics comes into play (or should). This approach makes ‘public service’ a currency, and it’s a feature of all currency systems that ‘bad money drives out good’. For instance, a lot more people are going to start finagling themselves into programs ‘helping’ immigrants in beach communities in California than will volunteer for winterization programs in Detroit. Follow the logic, you end up with a mess.nn7. (Halt education inflation)? This means price controls, which always lead to quality dilution and a leveling down to the ‘lowest common denominator’. Last time I checked, America needed a workforce which is more globally competitive, not less.nnMy own number one would be repealing the anti-trust exemption which allows colleges to price discriminate (i.e. charge different students different prices based on ability to pay). Generally when any other ‘business’ does this in America, it’s a criminal offense. Unrestrained price competition would bring tuition down faster and more constructively than any of the (I’m sorry to say) clumsy interventions listed above.

http://video.pbs.org/video/1485280975/ << there was a documentary that’s about for-profit colleges that kind of speaks to what you’re talking about.

The faculty pay web page at the university I am attending displays gross annual salaries of $60,000+ for each economic professor. $60k to read from a power point and assign trivial tasks, such as grading papers, to undergrads such as myself. God bless this country! nn

The entire loan situation is misguided. Some of the most important jobs in the country (ex: doctor) requires between $150k and $250k of student loans just for the chance to actually practice! Can you imagine going through that and finding out you don’t want to be a doctor? nnNitpick alert: for number 5, in the title I think you mean “Finnish” not “Finish”.

The Finnish universities are free of tuition for foreigners as well. You might as well send your kids to Finland to get a degree.

Not a coincidence that Sallie Mae is the intuition behind most of the student loans.

I’ll reword it so that it’s a 20 minute session, not a class. : )

Thanks Brandon for the kind words.nnYes, that’s a good point. Tenured faculty are incentivized to write research papers that win awards. Teaching is secondary.nnAnd yes! Colleges are a business. When I went to school, the lowest grade I could ever get was a B- in some of my classes to ensure that I had a high GPA for graduation. Flawed.

Michael, you are covering such an important topic thanks for putting together all these impressive stats.nnNot only are college costs a problem, but you could go on and on with education quality problems. Tenured faculty who haven’t taught anything new in 10 years, boring expensive textbooks etc.. nnColleges are a business, and I think this is overlooked by most people. Everyone I knew in high school was worried about “what college they could get into next year”, not once did I hear someone say, “do I really need college, or are there other options that could serve my needs better”.nnA hope to God a shift in higher education is coming. Not only are we putting our future in debt, we’re not even giving them a good enough education to pull themselves out of it.

#2 Student Loan Awareness – Federal Stafford loans require that students undergo “entrance loan counseling” as freshman and “exit loan counseling” upon graduation. When I was a student 10 years ago, these counseling sessions each took about 20 minutes but drove home the point that the loans MUST BE REPAID. I think they do these counseling sessions online now, but the message is still clear.nnBesides, taking a mandatory class on college loan procedures would make it difficult to graduate in 2 years.

The best solution I know of is to halt education inflation (http://bit.ly/anl1hM) at the source: the US government / Sallie Mae. There’s no way tuition would be up 10x in 30 years if there wasn’t a huge, mandated buyer and guarantee on student loan debt. Regulate that better and most of the other problems go away. nnThat said, college is hugely overrated and people should be learning more by doing/traveling.

The student-debt story cries out for attention. rnrnTake Senator Stevens, the New York Times said he paid for his Harvard Law tuition helped by the GI Bill but also by bartending, selling blood and other odd jobs. There’s a huge generation gap in these conversations because of the shift from education to business which accompanied the rise of endowment managers etc. Until Reagan took over, the UC system was free; The CCNY system where General Powell went to school also free until the 70′s. rnrnDan Brooks ‘The Trap: Staying Afloat in Winner-Take All America’ discusses the impact of debt on lifestyle choices and Anya Kamentz ‘DIY U’ discusses some of the problems in edu-business and why government can’t solve it with $ alone. Compare and contrast to Clark Kerr’s ‘Uses of the University’. Times have changed. rnrn rn

Mike, I know a dozen people who have racked up sooo much college debt that their only solution was to continue to go to school. These people are on their fifth and sixth degrees so that they don't have to pay off the others until “they are out of school.”

I can see this being a trend and major problem. It would be like buying a new home every time you couldn't make your mortgage payment.

I agree. I think the amount of people getting college degrees will skyrocket in the next 5-10 years.

I know of hundreds of people that go back to school because they don't know what they want to do with their lives. That's kind of counter-intuitive isn't it?

Another thing that might help curb the problem would be more programs like ROTC whereby the government would pay for your education in exchange for public service (teaching, software engineering, accounting, etc).

That's so brilliant!

Especially if they'll be the originator of student loans moving forward, it makes sense for people to exchange an education for public service.

LOVE IT!

The student-debt story cries out for attention.

Take Senator Stevens, the New York Times said he paid for his Harvard Law tuition helped by the GI Bill but also by bartending, selling blood and other odd jobs. There's a huge generation gap in these conversations because of the shift from education to business which accompanied the rise of endowment managers etc. Until Reagan took over, the UC system was free; The CCNY system where General Powell went to school also free until the 70's.

Dan Brooks 'The Trap: Staying Afloat in Winner-Take All America' discusses the impact of debt on lifestyle choices and Anya Kamentz 'DIY U' discusses some of the problems in edu-business and why government can't solve it with $ alone. Compare and contrast to Clark Kerr's 'Uses of the University'. Times have changed.

The best solution I know of is to halt education inflation (http://bit.ly/anl1hM) at the source: the US government / Sallie Mae. There's no way tuition would be up 10x in 30 years if there wasn't a huge, mandated buyer and guarantee on student loan debt. Regulate that better and most of the other problems go away.

That said, college is hugely overrated and people should be learning more by doing/traveling.

#2 Student Loan Awareness – Federal Stafford loans require that students undergo “entrance loan counseling” as freshman and “exit loan counseling” upon graduation. When I was a student 10 years ago, these counseling sessions each took about 20 minutes but drove home the point that the loans MUST BE REPAID. I think they do these counseling sessions online now, but the message is still clear.

Besides, taking a mandatory class on college loan procedures would make it difficult to graduate in 2 years.

Michael, you are covering such an important topic thanks for putting together all these impressive stats.

Not only are college costs a problem, but you could go on and on with education quality problems. Tenured faculty who haven't taught anything new in 10 years, boring expensive textbooks etc..

Colleges are a business, and I think this is overlooked by most people. Everyone I knew in high school was worried about “what college they could get into next year”, not once did I hear someone say, “do I really need college, or are there other options that could serve my needs better”.

A hope to God a shift in higher education is coming. Not only are we putting our future in debt, we're not even giving them a good enough education to pull themselves out of it.

Thanks Brandon for the kind words.

Yes, that's a good point. Tenured faculty are incentivized to write research papers that win awards. Teaching is secondary.

And yes! Colleges are a business. When I went to school, the lowest grade I could ever get was a B- in some of my classes to ensure that I had a high GPA for graduation. Flawed.

I'll reword it so that it's a 20 minute session, not a class. : )

Not a coincidence that Sallie Mae is the intuition behind most of the student loans.

The Finnish universities are free of tuition for foreigners as well. You might as well send your kids to Finland to get a degree.

The entire loan situation is misguided. Some of the most important jobs in the country (ex: doctor) requires between $150k and $250k of student loans just for the chance to actually practice! Can you imagine going through that and finding out you don't want to be a doctor?

Nitpick alert: for number 5, in the title I think you mean “Finnish” not “Finish”.

The faculty pay web page at the university I am attending displays gross annual salaries of $60,000+ for each economic professor. $60k to read from a power point and assign trivial tasks, such as grading papers, to undergrads such as myself. God bless this country!

http://video.pbs.org/video/1485280975/ << there was a documentary that's about for-profit colleges that kind of speaks to what you're talking about.

This would all work better if you (and so many other documentary makers) didn't end up presenting what amounts to a powerful argument for education in basic economics! Re your 'crazy ideas':

1. (Two year degrees) is a fine idea, but without some idea how to incentivize colleges to introduce a product which would cut their revenues at least by half it's an empty hope.

2. (Loan counseling) is fine, but who is to run the program? The two likeliest candidates, the colleges and the government, have a big interest in keeping things as they are, so don't expect a very effective effort.

3. (Make college loans dischargeable in bankruptcy)? Sure except that interest rates would rise, and the problem in any case pre-dates bankruptcy reform so don't expect too much from this.

4. (Cultural shift away from college education)? Cultural shifts follow changes in the options people have, they are not a lever you can pull.

5. (Make education free to the user)? More and more countries all over the world have been finding out over the past 20 years that they can't afford this 'solution' (many of them in Europe, e.g. the UK). It's just another form of wishing the economic problem away by having the government pay for everything.

6. (Public service)? Again, economics comes into play (or should). This approach makes 'public service' a currency, and it's a feature of all currency systems that 'bad money drives out good'. For instance, a lot more people are going to start finagling themselves into programs 'helping' immigrants in beach communities in California than will volunteer for winterization programs in Detroit. Follow the logic, you end up with a mess.

7. (Halt education inflation)? This means price controls, which always lead to quality dilution and a leveling down to the 'lowest common denominator'. Last time I checked, America needed a workforce which is more globally competitive, not less.

My own number one would be repealing the anti-trust exemption which allows colleges to price discriminate (i.e. charge different students different prices based on ability to pay). Generally when any other 'business' does this in America, it's a criminal offense. Unrestrained price competition would bring tuition down faster and more constructively than any of the (I'm sorry to say) clumsy interventions listed above.

PS Think about it: would you think it was either fair or legal if your cellphone company were able to require you to give them a complete statement of both your and your parents' income and assets, before deciding what price to charge you?

I didn't think so.

“If I had to produce a documentary, I would shed a light on the inevitable student loan crisis, and the collective action we can do to prevent it from happening.”

When I read that, it made me think of this movie. http://www.defaultmovie.com/

[...] The student loan crisis will dwarf the housing market crash. (mikekarnj.com) [...]

1-4 seem correct to me, especially #1 & #4. 5-7 is dodgy. #5 is age 7-16 and I've not heard of any public high school, not college, that charges tuition — anybody care to clarify? #6 is basically expanding government welfare for people who aren't competitive in the free market. #7 is partially correct, but the inflation has also been massively fueled by the “go to college” meme feeding expansive corporate interests — the mass of colleges are adding seats faster than high schoolers can graduate, never mind pay to sit in them. And High Schools facilitate this by focusing just on academic achievement, where academic achievement for a High School is shipping its graduates off to college. Put another way, the American public education system has bought into the claims of inadequacy leveled against it and thus punts to our universities.

The way you solve for #4 is first to increase the investment in vocational programs and apprenticeships for High Schoolers, followed by stopping with the development-arresting “everybody needs to be in 20 extracurricular activities to succeed!” nonsense which prevents kids of moderate talent from focusing and developing actual skill in something that appeals to them. Once you've got #4 down, 2-year vocational degrees should be a lot more practical for an awful lot of work.

One thing I don't understand, though — why does student loan default rate matter to other people? The money is spent, the service rendered. There is no property that a bank can reclaim, so it's not like they're losing money they haven't spent anyway. I mean, it is concerning that the banks might wise up and stop loaning so much to students which would result in a (imo, necessary) contraction of the academic market, but it's not like that's money the banks are actually holding at the moment so I'm hoping that it wouldn't impact the stock price of the bank, you know? Put another way, it seems like just the bank is getting screwed, instead of the bank turning around and, oh say, foreclosing on a house and auctioning it off and destroying whatever equity the “owner” had in it — so where's the real impact going to hit?

I have a better idea. Don't go to COLLEGE or UNIVERSITY. As George Carlin stated, you don't learn anything! The government wants to keep you stupid and in debt for life. Learn a trade. Simple.

Great article. Speaking of documentaries that shed light on rough economic times, you should check out Iron City Blues on Netflix. It's a biker doc, but the town is something you have to see!

I can remain irrational longer than the UNITED STATES (corporation) can remain solvent.

In plain English: I ain't paying shit!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

P.S. My local commuter college is public property. That means I am gonna go back to school in a few weeks!!!!!!!!!!!

Everyone should watch PBS Frontline: College Inc in it's entirety. You can netflix it.

Sorry, as a criminal justice professional I couldn't disagree more. Most of the problem cops in this country DON'T have a college degree.

I don't regret my education one bit or the loans that I used to obtain one. I use my education everyday. George was right about a lot of things, but off on that one.

That said, you didn't hear the Ivy League schools Bush attended bragging about him being “one of theirs” , did you? LOL

In most cases the prestige of college is for the parents, they are living their lives vicariously through their children. it is amazing how they hover and get involved in every aspect of the kids lives, calling professors when grades arent good and so on.

[...] Is the student loan bubble starting to burst? [...]

Now that schools allow seniors to take college level courses and credit be given for those courses during the senior year of high school, one could easily knock off a good chunk of time spent in college. The other thing is to send the student to a community college to get the undergrad classes/basics done, then to switch to a university to complete the last two years, thereby saving quite a bit of money.

Excellent write up Mike – I think that some of things like protection in Bankruptcy I do not agree with, but I think the rest is spot on.

I have not much time, but I’ve got many useful things here, love it!n

[...] I wrote an article about the ridiculousness of the college education system (that’s a different beast). But, every student should gain the skills, confidence, and [...]

[...] higher education – to get back to the core of it all: learning. His blog entry entitled College, Inc. explored some of the facts and figures surrounding the student loan crisis and floated some of his [...]

[...] more than $50,000 a year. That’s up from 58 the year before, and only 5 the year before that. Earlier this year, education debt ($830b) exceeded general consumer debt ($827b) for the first time ever. For the [...]

[...] couple months ago, I wrote an article titled “College, Inc” which shed a light on the inevitable student loan crisis, and the collective action we can [...]

[...] A couple of months ago, I wrote an essay titled “College, Inc.,” which shed a light on the inevitable student loan crisis, and the collective action we can do to prevent it from happening. As a follow-up, I’ll share with you my view about why higher education is overrated. [...]

[...] A couple of months ago, I wrote an essay titled “College, Inc.,” which shed a light on the inevitable student loan crisis, and the collective action we can do to prevent it from happening. As a follow-up, I’ll share with you my view about why higher education is overrated. [...]

[...] loans crisis. Mike Karnjanaprakorn wrote about the looming student loans crisis in his article College Inc. Americans now owe more on their student loans ($830B) than their credit cards ($827B) and default [...]

[...] (Read more about the college loan bubble in Mike Karnjanaprakorn’s College, Inc.) [...]

[...] (Read more about the college loan bubble in Mike Karnjanaprakorn’s College, Inc.) [...]