This is isn’t good:
Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy, then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants’ faith in the value of higher education has only increased, employers’ has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt.
What kind of incentives motivate lenders to continue awarding six-figure sums to teenagers facing both the worst youth unemployment rate in decades and an increasingly competitive global workforce?
During the expansion of the housing bubble, lenders felt protected because they could repackage risky loans as mortgage-backed securities, which sold briskly to a pious market that believed housing prices could only increase. By combining slices of regionally diverse loans and theoretically spreading the risk of default, lenders were able to convince independent rating agencies that the resulting financial products were safe bets. They weren’t. But since this wouldn’t be America if you couldn’t monetize your children’s futures, the education sector still has its equivalent: the Student Loan Asset-Backed Security (or, as they’re known in the industry, SLABS).
SLABS were invented by then-semi-public Sallie Mae in the early ’90s, and their trading grew as part of the larger asset-backed security wave that peaked in 2007. In 1990, there were $75.6 million of these securities in circulation; at their apex, the total stood at $2.67 trillion. The number of SLABS traded on the market grew from $200,000 in 1991 to near $250 billion by the fourth quarter of 2010. But while trading in securities backed by credit cards, auto loans, and home equity is down 50 percent or more across the board, SLABS have not suffered the same sort of drop. SLABS are still considered safe investments—the kind financial advisors market to pension funds and the elderly.
(more via link above)
While full, economic fees will have to return in some form – student loans as the mechanism are on this evidence not a good option…
The third episode of our Scibernia science podcast is now live, kicking and online for your pleasure. Just press play below or click ‘Download’ to save it for later.
In this episode:
- What neuroscientist and Memory Lab curator Prof Shane O’Mara plans to do with all the data collected during the recent Science Gallery exhibition.
- A debunking of Moon myths with Astronomy Ireland’s Lee Hurley.
- The answer to the question on everyone’s lips: Do Venus fly-traps poo? UCC lecturer and Communicate Science blogger Eoin Lettice talks us through his role in the ‘I’m A Scientist, Get Me Out of Here‘ student engagement project.
- What Prof Jim Al-Khalili has in common with Sinead O’Connor in the BBC astrophysics programme ‘Everything and Nothing’, and why Prof Brian Cox‘s ‘Wonders’ reminds us of 1990s pop videos.
- Upcoming events, including student science festival SciFest and a talk about atom-smashing by CERN’s Dr Stephen Myers.
- News from Ireland and abroad, including how robots are set to become more human-like and the latest developments in ‘lab on a chip’ technology.
On Facebook, the Employment Control Framework and root gardening | An eye on science and what makes it going
In 2003 Mark Zuckerberg created Facebook, an idea now worth 65 billions dollars that has changed the way people communicate. This is probably the most successful venture in the history of capitalism, hence in the history of modern economy.