It should come as no shock that college graduates are having a hard time paying back their student loans, but it is not for a lack of trying. Indeed, it is getting harder and harder to pay back student loans and there are many reasons for this.
For example, Michele Raneri says, “Student loan balances are on the rise, which is a result of the increasing cost of higher education.” Raneri is the vice president of analytics for the credit reporting agency Experian, and goes on to say, “I expect that the price of getting a higher education will continue to increase, so I wouldn’t be surprised if the loans increase also.”
The data actually shows that college loan balances in the United States have increased by more than $833 billion to an all-time high, of course, of $1.4 trillion. Spreading that out across all of the college loan holders, the average balance is up 62 percent over the last decade, at $34,144 per person. In addition to this, though, the percentage of borrowers who owe more than $50,000 has tripled over the same decade, as described in reports from the United States Consumer Financial Protection Bureau (CFPB).
Obviously, college loans are a big part of personal expenses. In fact, getting a college education is now the second-largest expense that an individual can incur. The only thing that outpaces college loan debt is buying a home.
Now, it is important to also note that delinquencies are down 3 percent over the same ten year period. Raneri goes on to say that this means “consumers are managing their student loan payments better than they have in the past,” perhaps in part because they are better educated about credit as we recovered from the Great Recession.
Many college graduates have actually expressed something like buyer’s remorse over how much their education actually cost versus what they had expected. In fact, 57 percent say they regret taking out as many student loans as they did while 36 percent admit they might have reconsidered attending college at all had they really understood the financial hardships.
Experian director of public education Rod Griffin comments, “In most cases, higher education is worth the investment because student loans pay off in the form of higher income over time. However, it’s especially important for young people to understand the terms of their loans.”
Amazon Emerges As A Top Destination For MBAs
Online retail giant Amazon has emerged as a top recruiter in renowned business schools across the United States. In business schools such as those of University of California, Berkeley; Duke University and Carnegie Mellon University, Amazon is the top recruiter. At Massachusetts Institute of Technology, Duke University, Dartmouth College and University of Chicago, it is the destination of choice for students seeking internships.
According to the dean of University of Chicago Booth School of Business, Madhav Rajan, Amazon accepted more interns from the institution than either McKinsey & Co or Bain & Co, which were previously the top intern hirers from the school. Per Amazon’s university programs director, Miriam Park, the online retail giant has hired about 1,000 MBAs in the last one year. That’s tiny in light of the fact that Amazon is planning to recruit 50,000 software developers next year.
However the scale of hiring that Amazon is conducting at business schools is upending campus recruiting and stymieing other companies who are also eyeing the hires. According to Park, MBAs understand the customer-obsessed ethos of Amazon and thus tend to be analytical, scrappy and risk-oriented. Many of them go on to fill the future leadership ranks of the online retail giant in positions such as senior project managers. This is a role that pays an average of between $120,000 and $160,000 per year. The shift of MBAs from consulting and finance has come as technology companies which were once uninterested in them, have learned their value.
In its recruiting process Amazon has employed the same strategy with which it does business in regards to how it competes with other companies looking to hire. Recruiters from the company descend on these business schools en masse and then keep in touch with the students. This contrasts sharply with other companies which typically send one or two recruiters.
The talent wars start at the onset of classes and sometimes even earlier. In June Amazon sponsored an event at its headquarters in Seattle for about 650 women set to join MBA programs as well as some returning students. Among this group some were offered internship offers set to begin in summer next year.
Despite Amazon’s popularity, the head of recruiting at consulting firm Bain & Co, Keith Bevans, said the company continues to get its share of elite MBAs who stand to learn problem-solving and strategy from the masters.
“Going to the best grocery store in the world doesn’t make you a better chef,” said Bevans.
US Education Inspectors Want to Pull Federal Student Aid from Popular Online University
The US Department of Education’s Office of the Inspector General has recently said it wants to force Western Governors University to pay back $713 million in loans and grants. The claim is that the faculty for the online university has only very small roles in the course of a student’s college education and, thus, the school is not eligible for federal student financial aid.
According to a government audit, Western Governors University did not follow higher education laws and regulations. Essentially, the audit claims that the university’s faculty only interacts with students at a very minimal level and that even the courses offered are not varied enough. As such, the office is recommending that the school must repay the federal Title IV financial aid dollars (between 2014 and 2016).
To put it another way, the audit investigates the difference between higher learning courses and correspondence courses. Specifically, the Office wanted to look at this level of interaction as previously mentioned. According to the Office of the Inspector General, a school is only eligible for Title IV funds if it offers no more than 49 percent of its courses by correspondence (limited staff interaction) or if no more than 49 percent of its regular students are enrolled in such course types.
The Inspector General report notes, “The course design materials for all 69 of these courses described courses that would be self-paced, interaction between the students and instructors that would primarily be initiative by students, and interaction between the students and instructors that would not be regular and substantive.”
Of course, Western Governors University maintains that they are not breaking any laws. Instead, WGU explains that students enroll in majors and work with faculty in an individualized program; they simply do not take formal classes.
And WGU president Scott Pulsipher confides: “The OIG for the Department of Education has no enforcement authority, so this audit, their recommendations and analysis, are only that. That is simply what they are recommending to the Department of Education, who has final authority whatsoever as it relates to whether or not they would act on any of these recommendations.”
Furthermore, Pulsipher says that the school remains confident the US Department of Education will not follow through with these recommendations. He notes, “[THE OIG] opinion is that WGU is not following the provisions of regular, substantive interaction between faculty and students. We strongly disagree with their opinion, and just because they have that opinion doesn’t make it right.”
Trump Announces New STEM-focused Education Funding
In a somewhat surprising move, US President Donald Trump issued a proclamation this week to boost education in science, technology, engineering, and math (otherwise known as STEM), with a specialized focus on computer science and coding.
And, perhaps, an even bigger focus on encouraging more young ladies to enter the field.
Yes, this week President Trump has set aside $200 million a year to address this initiative. Of course, Trump’s eldest daughter, Ivanka, has been working closely with the Department of Education on this project.
“It’s easy with computer science and technology to relegate it to simply the tech field,” she told reporters this week in a press call to preview the initiative. “But the reality of the modern workforce is that technology is innovating and disrupting every industry. It is viewed by this administration as a foundational skill to understand computer science.”
Again, the new Department of Education initiative is aimed not only on developing STEM education but also at reaching more young girls and more minority students.
One senior Trump Administration official commented, “The programs need to be designed with diversity in mind.”
Commenting on the program, Trump notes, “The workplace is changing, we need to create new pathways for our citizens to get the best jobs. Greater access to STEM and computer science programs will ensure our [children] have the skills they need to compete, and win, in the [workforce].”
Ivanka Trump echoes her father’s words, saying, “In recent years, with growing technological advancement, the nature of our workforce has increasingly shifted to jobs requiring a different skill set.”
After all, this proclamation should move towards building on Trump’s earlier executive order to encourage more apprenticeships. To help move all of this forward, the Trump Administration will release a list of private companies who will partner to help build these new computer education programs.
An administration official advises that the $200 million in funding will come to the program in the form of grants. More importantly, perhaps, this funding will not require any additional Congressional legislation. “It’s minimum of $200 million,” he comments. “It could, and most likely will, end up being more than that.”