patrick.net

HousingWatcher says

Not if they don’t have any wages to garnish! And since student loans are guaranteed by the govt., guess who picks up the tab when someone defaults.

Student loans are a special case. You cannot write them off in bankruptcy, they stay with you until you pay them off even if you default. They will garnish wages for life if they have to get their money back on these.

Engineering can most certainly be outsourced easily. It already has been outsourced to some the Indian shops in Bangalore. Not to mention that engineers are regularly replaced with H1-B slaves.

terriDeaner says

So would you rather be employed at minimum wage at home depot with a increasingly outdated bachelors degree and 80K of student loan debt (non-recourse, mind you), or a plumber with a union pension collecting unemployment benefits that keep getting extended by the federal government?

Talk about a false choice there...

terriDeaner says

The point that seems to be getting lost on some folks here is that well-paying, good quality career paths exist for those who choose not to go to college. And a lifetime of hard work will be generally be required for success in either career track.

The point isn't lost on anyone. It's just that even with those career paths, statistics show that you are much more likely to have a job if you have a degree. And you will earn significantly more over your lifetime. Last I checked there wasn't a severe shortage of plumbers...

Having said that, I agree with others that going to an expensive Uni for political science or Art degree is probably a waste of money...

It's not really debatable that College grads are doing better than non-college grads.

That said, I'm not entirely convinced of the causal effect. Getting into and graduating from a decent college takes some smarts, and a reasonably good work ethic. So they are already more likely to be successful. In some cases going to college also makes you part of a peer group that give you connections to help to succeed.

It's highly dependent on the field. Some fields you really do need the knowledge and skills you get from a degree program, and you won't even be considered without one.

In on the flip side, getting a higher degree is often financial suicide if it doesn't actually lead to a well-paying career, and you have to take out big student loans. And private student loans lenders are just as unscrupulous as sub-prime credit card or payday lenders. I know somebody who had $25K of student loan debt, went through a rough period, and the debt has now ballooned to $100K due to penalties and an absurd interest rate. Not a good place to be for a 55 year old.

"Last I checked there wasn’t a severe shortage of plumbers…"

Nor is there a severe shortage of lawyers or accountants.

One thing that nobody talks about is that white collar jobs are now being outsourced at an alarming rate. Everyting is going overseas... lawyers, accountants, engineers, radiologists, acturaries, etc. For the next generation of college graduates, the jobs they were promised are not going to be there. If anything, blue collar jobs are safer because the remainig blue collar jobs can't be outsourced (ie: plumber, truck driver, road paver, etc.). Blue collar job that can be outsourced have already bene outsourced. However, the outsourcing of white collar workers is accelerating.

So, HousingWatcher, I guess you're just going to ignore Nomographs graph of who's unemployed and who's not?

Let's look at that again:

I've already addressed that graph... it includes college graduates who are employed in minimum wage jobs. It does not tell the whole picture. I am counted as being an employed college graduate even though I don't work in a job that requires a degree.

Consider two childhood friends, Ernie and Bill. Hard workers with helpful families, each saves exactly $16,594 for college. Ernie doesn't get accepted to a school he likes. Instead, he starts work at 18 and invests his college savings in a mutual fund that tracks the broad stock market.

Throughout his life, he makes average yearly pay for a high school graduate with no college, starting at $15,901 after taxes and peaking at $32,538. Each month, he adds to his stock fund 5% of his after-tax income, close to the nation's current savings rate. It returns 8% a year, typical for stock investors.

Bill has a typical college experience. He gets into a public college and after two years transfers to a private one. He spends $49,286 on tuition and required fees, the average for such a track. I'm not counting room and board, since Bill must pay for his keep whether he goes to college or not. Bill gets average-size grants, adjusted for average probabilities of receiving them, and so pays $34,044 for college.

He leaves school with an average-size student loan and a good interest rate: $17,450 at 5%. The $16,594 he has saved for college, you see, is precisely enough to pay what his loans don't cover.

Bill will have higher pay than Ernie his whole life, starting at $23,505 after taxes and peaking at $56,808. Like Ernie, he sets aside 5%. At that rate, it will take him 12 years to pay off his loan. Debt-free at 34, he starts adding to the same index fund as Ernie, making bigger monthly contributions with his higher pay. But when the two reunite at 65 for a retirement party, Ernie will have grown his savings to nearly $1.3 million. Bill will have less than a third of that.

http://www.nypost.com/p/news/opinion/opedcolumnists/item_M3e5tqm90kfvWDU0BD4tOL#ixzz1IVAuTMfM

HousingWatcher says

It returns 8% a year, typical for stock investors...

This silly little story assumes Bill is a dumb ass and doesn't start saving until he's 34. He's got enough income that he could set aside 10% of his income to pay down debt or save, STILL have much more take home pay than Ernie, still pay off the student loan in 12 years, and have FAR more saved at 65 than Ernie.

Ernie wouldn't be able to afford to save anything. Bill on the other hand could be putting away maximal amounts in to 401k (around 16K til 50 then over 20K when over 50), and still have a life style better than Ernie's if Ernie saved nothing.

Also, the numbers don't account for the chance that either are particularly successful. If successful and in a big city, Ernie's peak pay would be more like 50 or 60K. Bill would be into six figures.

Also, not included in your analysis: job satisfaction, the learning that occurs in college that is not related to future income, the social aspect of college, to name a few.

>>Pimco “has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden,”

This sounds like another one of those analyses where someone has extrapolated the current debt and deficit to infinity.
Ah , yes, this is exactly what they did. To quote the original story completely:

"The U.S. has unrecorded debt of $75 trillion, or close to 500 percent of gross domestic product, counting what it owes on its bonds plus obligations for Social Security, Medicare and Medicaid, Gross wrote in his monthly investment outlook."

As you can see, PIMCO also held NO fedral debt as recently as 2009:

"Prior to the cuts, Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009."

Now, given that Gross/PIMCO has switched all 237B of PTTRX to other and/or shorter term investments, I guess that is a signal to the Fed that it is ok to increase interest rates again. I wonder what Goldman Sachs have to say. They may disagree with Bill Gross on that topic.

Back to the topic of how large the debt really is:

President Barack Obama’s government has increased the U.S. publicly traded debt to a record $9.05 trillion, leading Gross to compare the nation to Greece, which had its credit ratings cut two steps by Standard & Poor’s on March 29.

Oh so the traded debt is really 9T, not 75T. Alrighty then. Y'all realize that when Bill Gross talks he is just taking whatever position is good for his bond fund. He is "talking his book", as they say.

After inflation and taxes, it's hard to make money with safe investments that do not require leverage. The people who require income can either buy: bonds, cds, an apartment building, immediate annuity. I refer to people who do not or cannot work.
If I had a lot of dough, I would seek bonds from countries that have great stable currencies, like Switzerland. Of course, I don't know if they even exist. I almost doubt that Switzerland borrows money ;)

Amid the self-serving dishonesty of Bill Gross (and maybe Warren Buffet), it may very well be that the Fed hawks will concquer the Fed doves (there is a mixture of them in the Fed openmarket committee) and will eventually succeed in getting interest rates raised.

By the way, who did Bill Gross sell all his Government bonds to? Most likely a lot of them were bought by the Fed via QE2. The bllomberg article mentioned none of that, did it.

HousingWatcher says

it includes college graduates who are employed in minimum wage jobs. It does not tell the whole picture. I am counted as being an employed college graduate even though I don’t work in a job that requires a degree.

OK, well then how about stats that DO include people with college degrees working at jobs that don't require a degree?

Median annual earnings of full-time, full-year wage and salary workers ages 25–34, by sex and educational attainment: Selected years, 1980–2008

Year High school diploma or GED Bachelor's degree or higher
2000 26,300 44,400
2005 26,500 44,100
2008 25,000 45,000

http://nces.ed.gov/fastfacts/display.asp?id=77

Getting a college education is worthwhile in many ways, but going deeply into debt to get a degree from UCSC in "history of consciousness" (true degree title) may be bad financially if you can't get a job somewhere soon enough. Once upon a time UC was free. Too bad those days are gone.
I know some guys who graduated college in the 70's and they run the gamut of careers. One was married right away and his wife's dad wanted him to make more dough, he became a NYC fireman. Of course, he got himself promoted and made a very safe living. I knew another guy a few years older and he is a retired San Quentin prison guard. He sold his house in Berkeley and boy is he shitting in tall cotton today, traveling around on that pension. Several guys became lawyers (popular in the 70s), another started a painting business in California, sold it about 15 years ago. Another was a mechanical engineer, he is retired, also a guy who worked for a pharma company in sales, retired. One became an MD but works at pharma, another girl who had worked in regular jobs but sold a house or two along the way and now is retired in the Virgin Islands (darnit, she worked for me once!) I also know a few guys who are retired who got into construction during the 70's (no jobs). Everyone has a college degree but few or none had much college debt as far as I know.
Today the picture is much gloomier, because of the 1. college debt 2. outsourcing 3. trades full of ilegals
If I were 18 today I would have no idea what I should do.
The guys I know who were most successful working for others got jobs in large successful companies or government.
The other guys who were lawyers or self employed professionals are also fine (except one who has been married three times!)
There are lots of rich plumber anedotes, they might be true. HVAC maybe too.
Go to community college and then transfer to a college could be a strategy to avoid college debt bombs.

I did a small search on this thread: I found 48 instances of the word "degree" and 21 instances of the word "education".

It is problem is that too many people go to college to get a degree rather than to get an education.

The former is a piece of paper that says you spent 4 years there. The later is a body of knowledge and techniques that have been embedded into your brain.

Gross should also not lump social security, medicare and medicaid in with bonds. Bonds are debt obligations, social security and medicare are promises that can and probably will be broken or "bent". Of course there will be adjustments in entitlements. They have already broken a social security "promise" and there were no riots in the streets when they raised the age of retirement. Also, although it is alarming and true that Social Security is a Ponzi scheme, it can actually still function because no one can demand their social security payments back in a lump sum.
Debt is bad and our total debt is a time bomb. The bond market itself will make this fact clear.
I do share the gloom and doom about the dollar value.

APOCALYPSEFUCK says

Worthless, criminally insane engrossers can be put to work doing useful things and regain their self respect.

they will never have my respect, never.

Well said kimboslice. As I said earlier, some degrees are worth getting... mainly healthcare. But other than that, most degreees have questionable job prospects. Liberal arts majors might as well as be given a welfare application along with their degree since they are not going to find jobs anytime soon. Pre-med students pursing biology degrees are also screwed because if they don't get into med school (and over half of them will NOT), they now have a worthless degree and dim job prospects.

And, according to some recent news reports I read, job prospects are about to get a whole lot worse for college graduates, especially for our CS friends, as the House is currently considering legislation that would "staple" a Green Card to the degrees of foreign students.

The one thing a liberal arts degree is good for is getting accepted into a Master's program.

And after the mater's program, your still unemployed... except with more debt. Before the economy cratered, liberal arts majors could un-do the damage by going to law school. But now law school won't help one bit.

you are asking for a gambling advice on the investment forum.

@Apocalyse,

You're getting too tame these days in your punishments...

What people need to realize is that
everything finite is rationed in some way...by money or other means....

Gross and Buffet can be correct that there is danger owning bonds. China may be worrying even more. The lie that Gross made is lumping bonds together with entitlements. They both cost the government money, but one is a debt obligation, the other is a political promise. The democrats did not have an honest discussion about medicare and medicaid yet. Pelosi famously said "we have to pass it to see what's in it." Eventually the issue will be raised because it's going to be broke and all those fat slobs I see at McDonalds when I get my coffee will be showing up in hospitals soon. Incidentally, it was rare for me to see a fat surgeon a couple of years ago. They must know something.

Every Scooby Doo villain wants to scare you off so they can swoop in and take that old rundown amusement park off your hands for a pittance.

Lead people to flee the bond market, then swoop back in later when it's cheaper.

OK maybe not but I trust neither of them to give me the TRUTH only what serves their interests at this moment.

HousingWatcher says

I would skip college all together and learn a trade or get an entry level govt. job and work my way up, even if I have to drive a bus or something of that kind. A college degree only makes sense if one wants to pursue healthcare.

HousingWatcher says

Engineering can most certainly be outsourced easily. It already has been outsourced to some the Indian shops in Bangalore. Not to mention that engineers are regularly replaced with H1-B slaves.

I used to be an engineer, and it's been outsourced far longer than other fields.

kimboslice says

If I were 18 today I would have no idea what I should do.

I agree. but at least today using the power of the internet it's much easier to evaluate potantial job prospects before potentially going into college and picking your major. That, and if I had to guess, the thing to do is to go to college (without any job expectations) if you can do it without getting into any debt (I.E. - work your way though it). Then get some experience someplace in a an appropriate field and then start your own business. Either that ot get a government job if you think govenrmnet employees will still be paid above average and have pensions oong into the future.

And the third option for those who don't pursue college nobody mentioned yet is enlisting. Join any branch other than the Army or Marines (too dangerous), work your way up, and retire after 20 years with a decent pension. Then take your vet prefence and get a govt. job. And if you want a degree after those 20 years, no problem. You can get it for FREE under your GI benefits. If you got to a cheap college, you can actually pocket the difference between the tuition and your GI benefits. So you are essentially getting PAID to go to college. No, I am not making this up.

In my opinion, someone who enlists in the military tody and makes a career out of it will be in much better shape down the road than someone who goes to college.

tatupu70 says

terriDeaner says

So would you rather be employed at minimum wage at home depot with a increasingly outdated bachelors degree and 80K of student loan debt (non-recourse, mind you), or a plumber with a union pension collecting unemployment benefits that keep getting extended by the federal government?

Talk about a false choice there…

EXACTLY!... and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can't you figure out that YOUR misleading job=happiness/no job = misery perspective is irrational???

tatupu70 says

terriDeaner says

HousingWatcher says

Yeah, most plumbers and electricians are not rich. I never argued that. But those who own their own plumbing or electrical businesses are making VERY good money… even the smaller ones.

And does one need to be rich to have a good and fulfilling life? No.

It certainly helps if you have a job though…

and

tatupu70 says

It’s just that even with those career paths, statistics show that you are much more likely to have a job if you have a degree. And you will earn significantly more over your lifetime. Last I checked there wasn’t a severe shortage of plumbers…

For example, one COULD have a shitty job with lots of debt and not be happy. Go figure!

tatupu70 says

The point isn’t lost on anyone. It’s just that even with those career paths, statistics show that you are much more likely to have a job if you have a degree. And you will earn significantly more over your lifetime. Last I checked there wasn’t a severe shortage of plumbers…

I still think you're still missing the point: DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!

DEBT!

If college was free then I'd suggest nearly everyone should go for the experience.

I think that Kimboslice provides a nice personal, historical perspective to this issue in his commentary:

kimboslice says

Getting a college education is worthwhile in many ways, but going deeply into debt to get a degree from UCSC in “history of consciousness” (true degree title) may be bad financially if you can’t get a job somewhere soon enough. Once upon a time UC was free. Too bad those days are gone. I know some guys who graduated college in the 70’s and they run the gamut of careers. [...] Everyone has a college degree but few or none had much college debt as far as I know.

And from the nytimes:

And how do you think most folks who don't get scholarships or pay their tuition in cash fund the gap? hint... DEBT!

thunderlips11 says

I believe that a kid who goes to a 1 or 2 year trade school for engine repair, makes $15/hour in a dealership with benefits, and 7 years later decides to go back to school to learn engineering or physics, is in a much better position than the typical college student, who picks English because they like Jane Austen novels, only to end up serving coffee at starbucks, because millions of other liberal arts majors are fighting over generic ho-hum paying office jobs they are all roughly equally qualified to do.

Well I just enjoy reading Jane Austen for her well detailed, death-defying chase sequences, unexpected twist endings, and her incredibly rauchy descriptions of explicit sex-scenes. I could only imagine making a career out of it... how delightful!

HousingWatcher says

And the third option for those who don’t pursue college nobody mentioned yet is enlisting.

Good point, but definitely not for everyone.

terriDeaner says

EXACTLY!… and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can’t you figure out that YOUR misleading job=happiness/no job = misery false dilemma is irrational???

Perhaps I wasn't being very clear. Yes, you can have a shitty job and not be happy. But I don't know of anyone who is unemployed and happy.

So, in my mind having a job is always better than not having a job. I know--stop the presses, cut in to regular programming to announce that bit of wisdom--but I don't think you are following the logic.

If college educated folks are working at Starbucks, then those are jobs that aren't available for the high school educated. Thus, they end up unemployed at higher rates.

terriDeaner says

I still think you’re still missing the point: DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!

I'm really not missing it. I promise.

Would you rather have a job and debt or no job and no debt?

Like I said--many times it doesn't make sense to go to a middling private school for liberal arts and rack up $50K of debt. But, don't paint all higher education with that brush.

the House is currently considering legislation that would “staple” a Green Card to the degrees of foreign students.

Which is probably a good idea. This is why IEEE-USA supports this change. We can do away with the indentured servitude aspect of the H1-B program (which is not supposed to exist, but we all know it does).

Morrison testified on behalf of the IEEE at the hearing.
"We are not enforcing H-1B regulations now as a country, we never really have, and despite the best efforts of USCIS (U.S. Citizenship and Immigration Service) and the Department of Labor. I doubt that we ever will," said Morrison.
But green cards don't need all the regulatory protections of H-1B workers, because as permanent residents they "have the power of the marketplace, and employers don't have any special advantage over green card workers because they are just like American citizens -- they can pick up and leave anytime they want," he said.

tatupu70 says

Would you rather have a job and debt or no job and no debt?

Hey wait... this looks like an awfully familiar dilemma.

terriDeaner says

tatupu70 says

terriDeaner says

So would you rather be employed at minimum wage at home depot with a increasingly outdated bachelors degree and 80K of student loan debt (non-recourse, mind you), or a plumber with a union pension collecting unemployment benefits that keep getting extended by the federal government?

Talk about a false choice there…

EXACTLY!… and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can’t you figure out that YOUR misleading job=happiness/no job = misery perspective is irrational???

Again, to be clear, this is not a black-and-white issue. That choice depends on the nature of the job/no job and the type and level of debt/no debt.

tatupu70 says

But I don’t know of anyone who is unemployed and happy.

I doubt that there are many that are unemployed and happy, but just because you don't know anyone who is unemployed and happy doesn't make it universally true.

Like I said–many times it doesn’t make sense to go to a middling private school for liberal arts and rack up $50K of debt. But, don’t paint all higher education with that brush.

Alas...and I had such great hope for you... just because I don't support your viewpoint it does not mean that I am anti-higher education. Try again.

terriDeaner says

Alas…and I had such great hope for you… just because I don’t support your viewpoint it does not mean that I am anti-higher education. Try again.

lol--what is my viewpoint? That having a job beats not having a job?

It has nothing to do with my viewpoint. It has everything to do with your posts... Like the one where you wrote "debt" 50 times. That seemed to indicate your thoughts on the matter.

terriDeaner says

Again, to be clear, it depends on the nature of the job/no job and the type and level of debt/no debt.

So, in your view, there are situations where you would rather be unemployed than employed?