Showing posts with label COVID. Show all posts
Showing posts with label COVID. Show all posts

Monday, September 6, 2021

"If I knew then what I know now, I probably would have skipped college": Freshman enrollment is down 13 percent at 4-year schools

Freshman enrollment dropped an astonishing 13 percent last year, and overall college enrollment sank 4 percent. 

What accounts for this exodus? The COVID pandemic partly explains it. Colleges switched from classroom teaching to online instruction in the spring of 2020, which was decidedly inferior. Undoubtedly, many students have decided not to go back to college until the professors resume teaching face-to-face.

But COVID is only a partial explanation for the student-enrollment downturn.  Cost is a huge factor. It now costs about $75,000 a year (including room and board) to attend a private liberal arts college--$300,000 to get a four-year degree.

Private schools have slashed freshman tuition by more than 50 percent to lure new students through the door, and almost all first-year private-college students now get some sort of discount.  

But for most schools, that strategy has not been successful. Enrollments continue to drop.

But there is a third factor that helps explain plummeting college enrollment.  Students have figured out that a four-year college degree is no guarantee of a good job--particularly a degree in liberal arts or the social sciences.

Many employers no longer require new employees to have a college degree, including Apple, Google, IBM, and Bank of America. Young people have discovered that a vocational-school certificate may lead to a better job than a four-year degree in gender studies.

For example, CNBC carried a story about a young person who left college to enroll in a 14-week coding boot camp, "If I knew then what I know now," the former college student explained, "I probably would have skipped college."

As a guy who spent 25 years as a college professor in the higher-education gulag, I'm glad to see college enrollment declining.  Too many students ruin their lives by taking out student loans to get vacuous college degrees from institutions that don't teach students to think or solve problems. 

Colleges have hired market firms and "enrollment management" administrators to attract warm bodies back into the classroom. But young people are beginning to wise up. Small liberal arts colleges, in particular, are struggling to survive as their student enrollment shrinks.

More and more young Americans have come to realize they can have a good life without going to college. Unfortunately, some college students don't figure that out until they have destroyed their financial future by taking out too many college loans.

LSU students in a crowded classroom: Ain't we got fun!






Friday, July 2, 2021

40-year home mortgages: Is that a good idea?

 The chickens have come home to roost.  The federal government allowed millions of homeowners to suspend payments on their mortgages during the COVID crisis. Now that moratorium is ending, and all those missed payments are now due.

Many American homeowners--maybe most of them--cannot pay a dozen mortgage payments at once. I know I could not.

So what will the feds do? According to a Houston Chronicle story, the government is thinking about allowing mortgagees to refinance their home loans over 40 years. Interest rates are low right now, and monthly payments on a 40-year mortgage would be less than payments on a 30-year or 20-year mortgage.

Is that a good idea?

No, it is not. Most people who refinance their homes over 40 years will never own their residences. Essentially, they will become renters. 

Of course, many people will sell their houses long before they pay off their mortgages. If they are lucky, the value of their home will have gone up, and they can pay off their mortgage and have enough remaining equity to buy another home.

But here is the problem.  Home prices are going up right now because of low interest rates--only about 3 percent. Also, some Americans are worried about inflation, and they are scrambling to put their money into hard assets--a second home perhaps.

But interest rates won't stay low forever, and the housing market will eventually cool. Everybody knows that.

Thus, a couple who finance their home for 40 years at 3 percent may be forced to sell it someday when mortgage rates are higher--say 6 percent. Buyers who take out mortgages at the higher rate will be making bigger monthly payments on their home purchase--even if the cost of the house does not go up.

So what's going to happen? Many people who finance their homes over 40 years at 3 percent interest will not be able to sell their homes for enough money to pay off their mortgages. 

In the years to come, hundreds of thousands of homeowners who can't sell their homes after interest rates spike upward will simply walk away from them.

But hey, what do I know? I'm just a retired professor who lives in the very heart of flyover country.

But I have seen this movie. I bought my first home in Anchorage, Alaska, in 1981.  Conventional mortgage rates were 11 percent at that time, but the State of Alaska subsidized home loans to get the interest rates down to 9 percent.  

In a further act of generosity, Alaska subsidized low-priced homes--homes selling for $80,000 or less--at 6 percent. The required down payment was low--only 5 percent. Such a deal! Developers put condos and even mobile homes on the market that cost--guess what? $79,900.

Unfortunately, the Alaska economy went south when oil prices slid to $13 a barrel.  People were thrown out of work, and home values plummeted.

Many Alaska homeowners could not sell their property for enough to pay off their mortgages.  So what did they do?

They mailed their house keys back to the bank and simply walked away.  

That, dear readers, is what will happen all over the United States if people start financing their homes at artificially low-interest rates over 40 years.




Sunday, March 7, 2021

"Becker College on the Brink of Closure": Small, private colleges are sliding toward oblivion

As reported in Inside Higher Ed, Becker College is on the brink of closure. Located in Worchester, Massachusetts (no garden spot), Becker's enrollments have drifted downward in recent years, and it now enrolls only about 1,500 students. 

The Massachusetts Department of  Higher Education says the school's financial situation is uncertain, and Becker and the Department are working on a "contingency closure" plan. A local newspaper says Becker "is unlikely to survive another academic year."

Becker is an expensive place to study. Tuition and fees total approximately $40,000 a year.  When living expenses are included, attending Becker will cost at least $50,000.

Thus, for students who invest four years of their lives studying at Becker College, a bachelor’s degree could cost $200,000.

Unfortunately, it takes longer than four years for most Becker students to get their bachelor’s degree.  CollegeSimply reports that only 14 percent of Becker students earn their bachelor’s degree within four years, and only 27 percent graduate within six years. (Other sources cite a higher graduation rate, and Becker's website says its graduation rate is above the national average.)

Of course, most Becker students get some kind of financial assistance that can cut costs considerably.  But few people will graduate from Becker College without taking out student loans.  According to CollegeSimply, 83 percent of Becker students have federal student-loan debt when they graduate.

And what kind of job awaits a Becker College graduate?

Today, small private colleges are sliding down a path toward oblivion.  Hundreds of these schools dot the American landscape, especially in New England and the mid-Atlantic states. 

Many are losing students, and some are closing. Atlantic Union College, located only a few miles from Becker College, shut down in 2018. Incredibly, the Massachusetts Department of Higher Education maintains a list of more than sixty closed colleges and schools in the Bay State. 

The COVID pandemic hit these colleges especially hard—accelerating enrollment declines. Federal money has propped some of them up—at least temporarily. Becker College received nearly $5 million in coronavirus aid. 

To an unsophisticated young person, a small private college like Becker may look attractive. In contrast to the public mega-universities, which may enroll 50,000 students or more, the small private schools feel friendlier. Their ancient buildings--Romanesque, Greek revival, or Victorian architecture--their leafy lawns and small, intimate classroom setting are appealing to young people searching for wisdom and guidance that will help them plan their lives.

But these colleges can be dangerous places to study. First of all, they are quite expensive. Tuition prices vary from school to school, but they typically charge about $50,000 per year in tuition, fees, room, and board.  Most students from low-income or middle-class families will be forced to take out student loans to cover those costs.

Second, a degree from a small, private college may not lead to a good job. CollegeSimply reports that a Becker College graduate’s average salary after ten years is only $46,600. That is not a very attractive salary for a person burdened by oppressive student-loan debt.

I sympathize with these small, struggling private colleges.  Some have noble histories dating back to the early nineteenth century or even earlier. Becker College, for example, traces its roots to 1784.

And many of these schools have made commendable efforts to remain relevant. Becker Colege offers a variety of job-oriented degree programs: nursing, criminal justice, veterinary technology, and forensic science. Becker's game design program is nationally recognized. According to the Princeton Review, the program ranks number 2 in the world. 

But the future of the small, private college is bleak. Young people should carefully consider the costs and benefits of attending an expensive private school compared to a public university. 

They should also weigh the possibility that the private college of their choice may shut its doors in the not-to-distance future--perhaps before they pay off their student loans.


Expensive private colleges: Think before you take the plunge.







Thursday, January 28, 2021

SUNY chancellor Jim Malatras chirps cheerily while college enrollment applications plunge 20 percent

 College enrollment applications plunged 20 percent at the State University of New York, an enormous college system with 64 campuses. The coronavirus pandemic bears most of the blame.

But SUNY Chancellor Jim Malatras is upbeat.  The coronavirus "invites us how we can do better," he assured the public a few days ago.

 "Let's ride the wave," he chortled. After all, SUNY is "on the cutting edge of the new student-focused approach." 

Of course, Chancellor Malatras can afford to be upbeat. He makes $450,000 a year and gets a $60,000 annual housing allowance. 

Where did this bozo come from? Did SUNY do a national search before it hired Mr. Malatras?

No, it did not.  According to Nicolas Tampio, writing in USA Today, Malatras is a crony of New York Governor Andrew Cuomo. Newspaper headlines referred to him as "Cuomo loyalist Malatras," and "Cuomo aid Malatras," Tampico observed. Malatras was formerly Cuomo's director of operations and one of the governor's advisors on New York's COVID response.

I feel so much better. After all, Cuomo's administration did a great job managing the coronavirus pandemic--especially at the nursing homes, where COVID deaths were underreported by 50 percent.

Merryl Tisch, SUNY's board chairwoman, stoutly maintains her board acted wisely when it hired Malatras without a national search. Why?  

[Because the board] felt it was imperative to act now in a reasonable and deliberate and socially aware moment to protect the SUNY system across the full array of challenges and help produce a model for sustainability in a post-COVID world.

What the hell does that mean? Did chairwoman Tisch pull that sentence out of her butt? Or did some hack in SUNY's public relations office pump out that swill?

But perhaps I'm too hard on Chancellor Malatras. After all, SUNY pays him half a million bucks a year to be a cheerleader--not Debbie Downer.

But here is some advice to New Yorkers about their college choices. Make up your own mind about your post-secondary education, and don't take out too many student loans to pay for it. Don't just listen to some clown blather on about his university's "student-focused approach" for spending your borrowed money.


Don't borrow too much money to "ride the wave" with Chancellor Malatras.