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dwot (32.30)

Cost Benefit of Education

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November 09, 2010 – Comments (9)

Rosey has a post where he says young people are being hosed by higher education today. (http://roseysoutlook.blogspot.com/2010/11/social-unrest-alert-are-ca-students.html)

I couldn't possibly agree more. I'd have to say the cost benefit of education has been questionable in Vancouver for a generation already. I was in my mid 30s when I went back to school for education and it was full of mid 30s people. That is simply a lot of people who haven't found good jobs with their first degree.

I think Rosey is right on in saying it will cause a divide between young and old. I feel like I am in an age group that will take the brunt of that divide, It seems that those that "have excess" is grandfathered to stay as it was and those coming up behind get the cuts.

I am very fortunate in that I am in much better financial shape then my age group peers and that is probably because of the lack of pensions. If I had a belief that I would have a comparable income stream into retirement I am sure I would have spent more. But I figured that the cost of living had to be reduce in order to require a smaller income stream, hence that trying to pay down the mortgage. But that strategy is hardly working for younger people today. The debt load is too high so they hardly make a dent even when they are trying very hard. The other thing is that property taxes and maintenance or strata fees will likely be higher so the whole idea of reducing costs is not likely to be as much as expected.

Pensions came about out of how the economy had not been good and people had not been able to provide for themselves. Somewhere I read originally there was a means test, you only got it if you had low income. Pensions have morphed into this fiscally unsustainable burden. Now what we have is a generation that already is not likely to be able to provide all that well for their pension because of under employment and not being able to find high paying jobs. This group can't pay for all the demands and something has to give.

9 Comments – Post Your Own

#1) On November 09, 2010 at 11:56 PM, BillyTG (29.61) wrote:

Have you seen Waiting For Superman or John Stossel's Stupid In America?

This guy thinks college destroys creativity and isn't worth it for intelligent folks who enjoy reading and doing independent study.

Stossel (who is awesome in my opinion!) also had a special about whether college is worth it:

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#2) On November 10, 2010 at 8:10 AM, dwot (32.30) wrote:

BillyTG,

I have stated several times that I view my life in Vancouver as living in a micro economy on the global setting of what happens with a housing bubble.  Vancouver's economy left the younger generation, of which I was part, with a very different lifestyle then those who were even 5 years older.  From 1986 to 1993 property values went up at unsustainable levels.  From 1993 to 2001 property levels declined and reached a bottom, only that bottom was far more expensive then any other bottom in Vancouver's history.

The effects of high real estate prices was to simply drag the economy along and make it sluggish.  Too much income was going to housing and in business too much was going to commercial rental or even to own the business property, hence they also needed higher prices.

In Vancouver's case a lot of this was driven by high levels of wealthy immigration.  In the late 80s a friend was telling me about a real estate agent that had taken a wealthy lady from Hong Kong around looking at 17 different houses.  She said very little the whole time and he thought he had put a lot of energy in for nothing.  At the end of the long day when he asked her what she thought she said she would buy all of them except one.

Throughout the 90s Asian immigration remained very high because of Hong Kong returning to China's control in 1997.  Vancouver was a popular place to go as it was a port international city.  The results on the local population is that my generation saw a huge decline in lifestyle relative to those who were old enough to own their homes before the massive immigration driven housing bubble, that sustained itself due to continued massive immigration.  BC has something like 12% of the population of Canada, however, it saw 40% of immigrants to Canada settle there.

This is an account of just one friend in my age group, and it was/is a common story.  He was 7 years younger then his sister.  He did a communications degree and got what by all accounts would be considered a very good job in a big company and the wage sounded good.  He did/does make more then his sister who is a nurse with a 3 year program.

She got into the housing market before the bubble.  Her home is worth twice his, it is paid for and she has enjoyed a lifestyle that includes new cars and vacations.  He is still strattled with debt from the mortgage, has never owned a new car.  He has taken some vacations, but they are modest by comparison and are usually every 2 or 3rd year.  The lifestyle differences are beyond huge for sibblings.  I call getting into the housing market prior to that 86 to 93 run up winning the quarter million dollar housing bubble.

There is a window from about 98 to 2002 where younger people who entered the housing market have done better then their peers , but overall, debt has meant a slow economy and poor return on education.

Having said that, I would never want to lose the approach to how one lives their life that education gives.  It broadens you perspective for looking at all problems well outside of just your working environment.  For example, West Vancouver has the highest level of education and income in BC and maybe Canada and having taught in the area, well, students are much easier to manage and that goes to parenting skill.  There is also lower divorce rates, which would go to relationship skills.

The benefits of education aren't just employment.  There is a huge degree of socialization which results in people making better life choices.

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#3) On November 10, 2010 at 8:35 AM, dwot (32.30) wrote:

I just watched the video and I'd say that is exactly what my generation of university graduates in Vancouver faced.  It was not all, but it truly was hit or miss.  I have another friend who about 5-6 years ago I was chatting with.  He finished his education degree at about the same time I had and we faced 4-5 years in a row where the student to teacher ratio was increased, making it going from about the average in Canada to the highest, and it killed our opportunity.  His wife had done engineering and she had just finished paying off her student loans and all he had ever covered was interest payments and had been in default for simply lacking income.  His wife was starting to help him pay for his student loans, but effect on self-esteem...  And his younger sibblings looked at him and basically said screw education.  They chose that youth lifestyle of just getting a place to sleep and enjoying life by living in a ski or beach community and ski or surf the days, just work enough to have a room and food.  Get a job with the ski resort so the lift tickets are free.  They were living life and he was buried in debt.

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#4) On November 10, 2010 at 9:34 AM, BillyTG (29.61) wrote:

Having said that, I would never want to lose the approach to how one lives their life that education gives.  It broadens you perspective for looking at all problems well outside of just your working environment...The benefits of education aren't just employment.  There is a huge degree of socialization which results in people making better life choices.

 

I agree.  The cost benefit of college might not be worth it, especially nowadays in private US colleges (where grads might face years of high debt, unemployment, menial employment, underemployment, low pay), but the exposure to new ideas, new cultures, and new ways of thinking is priceless.  I loved university!

It's interesting to hear about Vancouver.  I've never been there, but have had it for a long time on my list of places to live when I retire!

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#5) On November 10, 2010 at 9:49 AM, miteycasey (29.73) wrote:

And his younger sibblings looked at him and basically said screw education.  They chose that youth lifestyle of just getting a place to sleep and enjoying life by living in a ski or beach community and ski or surf the days, just work enough to have a room and food.  Get a job with the ski resort so the lift tickets are free.  They were living life and he was buried in debt.

 

I've always wondered what it would be to live this life style.

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#6) On November 10, 2010 at 11:12 AM, willmaster01 (97.29) wrote:

And his younger sibblings looked at him and basically said screw education.  They chose that youth lifestyle of just getting a place to sleep and enjoying life by living in a ski or beach community and ski or surf the days, just work enough to have a room and food.  Get a job with the ski resort so the lift tickets are free.  They were living life and he was buried in debt.

 

Whats the long term affect of this I've always wondered..?

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#7) On November 10, 2010 at 11:24 AM, BillyTG (29.61) wrote:

@miteycasey, willmaster01, I sometimes wonder if that's not the better way to live.  Americans work like crazy, become obese and doped on antidepressants, and for what, to feed a system that defines happiness and success for us?

Read this fun, little story if you have a minute. It really gets to the heart of things and puts it all in perspective.

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#8) On November 10, 2010 at 1:51 PM, angusthermopylae (46.47) wrote:

BillyTG,

Love that story.

Right now, I'm in school to get my graduate degree in Computer Science.  I'd like to believe that I'm a pretty smart guy, and I've taught myself that quite a bit about computer systems over the years, but there are some things that a formal education system can provide that self-study doesn't--lots of "holes and blind spots" that develop over the years.

But being a 40-year-old grad student gives me a different perspective. I've already had two or three careers of various types, and my purpose is to fill in those gaps--take the time to learn things that my self-education hasn't provided...and yes, the little piece of paper won't hurt.

There are a couple of older guys and gals in school with me, but the majority of them are the kids--22-26 years old, and just starting out.  For them, there is both a weariness and intensity that doesn't seem to hold with the older students.

The intensity seems to come from the simple fact that these kids are staking their whole future on their studies.  They work hard in groups, put tons of effort into each project, and dedicate ungodly hours in the belief that their entire future rides on what they do now.  A relative success portends money and safety; a relative failure means falling short of their (sometimes vague) definitions of doing well.

The weariness seems to come from two things:  Living too long in a game where the only feedback  comes in the form of periodic scores (0.00-4.00) and an uncertainty about what's really going to happen.  I often ask what their plans are or where they want to end up.  Much of the time they reply, "I don't know" or "Somewhere near [city/state/family]."

There are always a few who end up saying, "I can't wait to get the hell out of this place."

For me, I'm more of the fisherman from BillyTG's story.  Living in the country means that my costs are pretty low.  My wife has a good job, and both she and my family have been extremely supportive of their "starving grad student."

My goals are actually fairly simple:  I have a (surprisingly low) income I wish to make, and as long as the work doesn't require me to be away from home too much, I can be happy.  (Easier to do in IT than other new careers.)

Most of my schooling is being paid for with the Post 9/11 GI Bill, so money isn't a huge problem.

But the big difference between me and the younger crowd is that I  am not staking my entire life on these classes.  Win, lose, or draw, I can enjoy the process, enjoy my family, and still have the depth of experience to do something different if it all falls through. 

What Rosey talks about is true, and he doesn't even address the fact that, at the end of the process, these young people may end up qualified for a narrow range of jobs that may not be there.  They then have to look into other fields (which produce their own oversupply of experts), and then everyone has to race for the bottom:  Low-wage jobs requiring basic skills not taught in college...and there they compete with everyone else who didn't go to school.

...all while dragging a mountain of debt.

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#9) On November 10, 2010 at 7:12 PM, dwot (32.30) wrote:

miteycasey, I have wondered as well...

Willmaster, that is a good question.  I bet there is a huge range of where they go and what they do as they get older.

BillyTG, good story.  

August, the not being competitive with those who didn't go to university is a real killer.  Certainly when I did a cost benefit analysis of where I'd be had I stayed in waitressing, well it seems because of tips that was one of the few occupations that I tend to think people did much better.  Compare it to retail for example.

 

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