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02/17/2014

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Mattnotda

Reducing principal of student loans based on income will provide some pretty perverse incentives. Students should consider the cost of their education when deciding how much to borrow, or whether to go into that field at all. Income-contingent loans will both increase the cost of education in the fields that don't pay as well, and may well increase the number of people who go into those fields, further depressing pay in those fields.

Terry Bennett

College is the new high school, today's baseline of achievement, and this change has been market driven. Employers have imputed value to a college education by implementing policies such as, "We won't hire you to sweep floors unless you have a bachelor's degree." College is an obstacle course, and a degree is proof of an individual's wherewithal to navigate it - to get up and show up for four years and meet a goal. Whether he learned anything is of little consequence. It's just one more bureaucratic requirement, like a vaccination.

A rule is substitute for thinking, and through this rule HR departments are relieved of the task of looking for diamonds in the mud - and there no doubt are some very talented people lacking degrees who could contribute if given the chance, but the transaction cost of finding them is probably prohibitive, and so employers have opted for this shortcut en masse in recent years. It also means you can get by with less talented HR people who no longer need to have an eye for talent but merely need to check paperwork. Government is one of the biggest proponents of this approach, which further objectifies candidate search and shields against claims of discrimination. This is also why there may be a certain amount of skill to be found in the government workforce, but notoriously little talent - it is not rewarded, and so tends to go elsewhere.

Colleges meanwhile have reaped the windfall of this systematic attempt to exclude the losers from the workplace, as they have morphed from providers of a luxury into providers of a necessary product, and they thus can and do charge more, in response to market conditions. Colleges have also overbuilt, and some of them have taken it on the chin, notably law schools, as demand fell during the fiscal meltdown.

I think the issue is thus more aptly framed not as the value of having a college degree (as distinct from a "college education", which is a diaphanous hypothetical), but rather as the cost of not having a college degree.

Jack

Terry, you nailed it on this one! Yes! Employers all too often use a costly college education as an indicator of the literacy that both the college grad and many of his school chums would have coming out of HS.

Another similar effect is that of the 18 year old HS grad not being as mature as the mid-20 something college grad.

Again indicative of too many years of a labor surplus that I'm increasingly convinced is structural, will be with us permanently and that public policy is going to have to deal with.


It seems the legal/liability paranoia plays into it as well. For example if a woman who has raised several kids and took care of ailing parents too wanted to work in elder care but lacked the Certified Nurse Assistant qualification, somewhere along the way someone is going to say "But if "something happened" it would be better (less liable) for hiring the certified person...... besides there are plenty of those with certs to chose from."

Jack

Other factors likely to have affected the different percentages of today's millennials vs boomers of the 60's and 70's:

Relatively higher numbers of Viet era volunteers and draftees having VA assistance after a two or four year hitch.

The huge increase in college cost inflation juxtaposed against a falling min and lower end wage that makes taking a part time job a nearly worthless waste of time.

Some, cleverly working the system: Why not borrow at low student rates for college while using money saved "for college" to buy a house (perhaps to rent rooms to fellow students) buy a car or let it ride in the stock market.

Eric Rasmusen

It's also relevant that an employer who uses an IQ test in hiring will probably be sued for racial discrimination, but an employer who requires a college degree--- entrance to which requires an IQ test (the SAT or ACT) will not. We are using college as a super-expensive IQ test.

(How is it that colleges get away with using an IQ test for admissions despite disparate impact but for-profit corporations do not? Ask the Harvard and Yale Law School alumni.)

Jack

Plus -- I kinda agree with your point but the "Aptitude tests" are not really IQ tests. While it's easier for a "quick study" to get a high or perhaps THE highest score applicants can study to improve their scores.... in fact there is a whole "prep" industry as many send their kids to SAT prep courses.

Harvard and Yale? Ha! When our kids were of college age we were passing around a book "Gatekeeper" that tells how one gets into "the Ivies". The most powerful of "affirmative action" is what we saw as GWB, who was turned down from a Texas U. gained admission to Yale; having an alumni as a parent, and ha! if the parent funded a chair or wing, I suspect an amoeba might make the cut.

There was a long article, maybe in the Atlantic? some years ago on "How I gave up an education by going to Princeton" that echoed some comments of a good econ teacher I had years ago. The prof got a sabbatical to teach as Princeton for a year. I asked what it was like teaching at the elite school. His answer was that WE were a far more interested and questioning student body. At Princeton, he lamented, most of the students were "fast tracking" Ha! perhaps to those WS firms that recently crashed or big law firms and ALL they wanted to know is how to get a top grade and move on.

Ha! who has been the most productive? Those carving out family fortunes on WS for polluting the world with toxic assets and lying about bond ratings or about anyone moving along a helping to create a solid product at an honest price?

Gertrud Fremling

I thought that Jack brought up some excellent points. Especially in the many female-dominated professions that deal with child and elder care, elementary education, psychology et.c. you need certification based on some type of formal education. No matter how much experience or informal studies, there really is no good way of demonstrating that you would make a great worker.

BTW, that may well be a reason why women nowadays make up a majority of college students. Without the formal qualifications, women cannot get into the types of jobs they like. In contrast, more male-dominated areas, such as computer science, management, do not have as many strict educational restrictions, even at higher levels. We can be happy that Bill Gates was not required to have a degree in computer science and business to start a company!

And, yes, it is indeed ridiculous that employers cannot administer tests for fear of being sued.

Jim McCabe

Prof. Becker is surely right that willfully foregoing a college degree in a terrible idea in this market. The unanswered question is whether or not subsidies to higher education have increased supply to the point where, as Terry notes, "college is the new high school," and therefore creates an expectation among employers that the minimally competent have checked the box of a college degree. There are many people performing jobs unrelated to their college studies who could easily have performed those jobs without the degree, with the only barrier being that they don't get the chance. We have an office manager (in her late 50's) who has had trouble in the labor market because she does not have a degree, but luckily, she gained experience at a time when a degree was not the golden ticket to the job market that it is today. I contend that subsidies have contributed to a dead-weight loss in expenditure on education by making degrees mandatory for jobs where they are not necessary, almost like occupational licensing on steroids.

Forteology

The Red Queen effect.

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