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From Vanity Fair in an article entitled 

California and Bust

http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111

 In 2010, for instance, the state (California) spent $6 billion on fewer than 30,000 guards and other prison-system employees. A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary. The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. The same fiscal year that the state spent $6 billion on prisons, it had invested just $4.7 billion in its higher education—that is, 33 campuses with 670,000 students. Over the past 30 years the state’s share of the budget for the University of California has fallen from 30 percent to 11 percent, and it is about to fall a lot more. In 1980 a Cal student paid $776 a year in tuition; in 2011 he pays $13,218. Everywhere you turn, the long-term future of the state is being sacrificed.

Jobs Market Picks Up for Graduates

• JUNE 2, 2011

Financial-Services Companies, Consulting Firms Lead Hiring of M.B.A. Students After Declines

• By MELISSA KORN And JOE LIGHT

After two years of sharp declines in hiring, M.B.A. students are having more success landing jobs, and getting them earlier, than during the depths of the financial crisis.

Bruno Mallart

The increase comes as companies become more optimistic about their opportunities for growth, gaining confidence that new hires now will pay off down the line.

While there remain some pockets of weakness in industries such as health care, hiring at many traditional career destinations for M.B.A. graduates, including finance and consulting, are nearing pre-recession levels. Hiring is up by double-digits at consulting firms such as Bain & Co. and Accenture PLC, compared with 2008 troughs. Similar gains are being seen at financial-services companies, including Goldman Sachs Group Inc. and Morgan Stanley.

Overall, 57% of full-time M.B.A. students in the U.S. had offers by mid-March, compared with 40% a year earlier, according to a Graduate Management Admission Council survey released last month of 905 companies and 127 business schools nationwide. And the improvement continues as the latest school year closes out.

"More companies are wanting to dance," said Cheri Paulson, director of the center for career development at Babson College's F.W. Olin Graduate School of Business. The school saw listings for full-time jobs increase 39% over last year.

Consulting firms have reported especially robust hiring as demand—and funding—for their services rebounds. Recruiting for that sector "came back with a vengeance" in the past 12 to 18 months, said Fred Staudmyer, assistant dean and director of career services at Cornell University's Johnson Graduate School of Management. Nearly one-quarter of the school's graduating class has received offers in the industry.

Boston-based Bain & Co. said it plans to hire more people this year than it did pre-recession, in order to meet new-client demand in areas including energy, financial services and private equity. "And we'll hire more people next year than we did this year," said Mark Howorth, the company's head of global M.B.A. recruiting.

Bain will bring on first-years numbering in the "mid-hundreds" this summer, drawing from a core of 25 business programs, Mr. Howorth said. The incoming class is 40% to 50% larger than last year's and is "far and away" the largest incoming M.B.A. class Bain has ever had, he added.

Enlarge Image

Accenture has also picked up the pace. The management-consulting firm hired about 64,000 new employees globally in the 2009-2010 academic year and is on track to add the same number this year. That figure, which includes experienced hires and new graduates, was a record well above the 25,000 figure from 2008.

Though a "relatively small" percentage of Accenture's new staffers are from M.B.A. programs, Senior Director of Global Recruiting John Campagnino said the company has increased its M.B.A. hiring by about 50% from last year.

Andrew Snyder, who graduated from the University of Virginia's Darden School of Business this spring, chose Accenture over five other offers. Mr. Snyder, 29 years old, said he was impressed with the consultancy's culture and was encouraged that "they had expressed interest in me as much as I had expressed interest in them." A salary in the "low six-figures" didn't hurt either, as he turned down offers from multiple consulting firms and government agencies.

Recruiters for finance and accounting jobs have also been busy. According to the GMAC survey, 71% of companies in those fields plan to take on 2011 M.B.A. graduates with an average of 19 new hires per company. That compares with 67%, hiring an average of 14 new employees last year.

The overall number of business-school graduates that Goldman Sachs hired this year was about even with the past two years, but that is still more than 25% higher than 2008 figures, said Sandra Hurse, global head of campus recruiting. She said strong candidates received offers from more companies this year than they did in 2010, but the company hasn't yet been forced to increase compensation.

This year, Morgan Stanley recruited about as many students for full-time jobs and internships as they did last year, said Keisha Smith, global head of campus and experienced hire recruiting. She said that although the number of students they've recruited is up from 2009, it is still not as high as before the downturn.

As more financial-services and consulting companies come back to campuses, competition for M.B.A. talent is also pushing salaries higher—though not quite in line with inflation. The average starting salary is expected to be to $91,433 this year, according to the GMAC survey.

Some companies are also sweetening signing bonuses. The University of Michigan's Ross School of Business saw that perk increase by one-third to a median $20,000 this year, said Damian Zikakis, director of the office of career development.

Companies outside of consulting and finance also saw an uptick in hiring. For example, General Electric Co. will hire about 100 students from business-school campuses this year, up from about 80 in 2010 and about 70 in 2009, said Steve Canale, manager of global recruiting and staffing. Mr. Canale said that during the downturn, the company cut back mostly on its direct hires, placed in segments such as GE Capital, rather than the company's leadership program.

Although Mr. Canale said that he has noticed increased competition for students, so far, that hasn't caused upward pressures on salaries or signing bonuses.

To be sure, not all companies are clamoring for new talent. According to the GMAC survey, just 68% of health-care and pharmaceutical companies are looking to hire M.B.A. graduates this year, with an average of 11 openings per company. That's down from 24 spots last year. And just 39% of companies overall are interested in expanding in marketing and sales.

Saloni Desai, a recent graduate of Pepperdine University's Graziadio School of Business and Management, has been looking for a marketing position or work in the health-care and biotechnology industries since the beginning of 2011. She has submitted about 30 formal applications and received four or five interview offers, but she isn't yet employed.

But for the most part, schools and students are benefiting from the renewed activity.

The University of Virginia's Darden has seen a 10% to 15% increase in companies on campus, with firms like MasterCard Inc. and Novartis AG now appearing as well as regular visitors like McKinsey & Co. and Danaher Corp. hiring more freely, said Jack Oakes, assistant dean for career development.

The school read as a positive sign that consulting firms and investment banks were increasing their activity. If companies are willing to spend on outside consultants, Mr. Oakes said that was a good indication they would be willing to spend on new talent, too, he said

As of mid-May, about 85% of Darden students reported job offers, compared with 77% reported at last year's graduation.

The Johnson Graduate School of Management at Cornell has also seen a sharp uptick in hiring as companies sign on multiple students rather than just one top pick. Mr. Staudmyer expects "close to 80%" of students are graduating with job offers this spring, compared with a pre-crisis level of 93% to 96%. The job offers in 2009 were in the high 60s, he said.

At the University of Michigan's Ross School of Business, 76.5% of M.B.A. graduates have received at least one offer this year, up from 63.3% last year, said Mr. Zikakis. Still, more than 82% of students had offers in 2008, before the downturn set in.

 

25 B-schools that lead to the most student debt

• April 26, 2011: 10:48 AM ET

Wharton can lay claim to top ranking in a category it might rather not publicize: highest student debt load. Why does this elite B-school outpace rivals Harvard and Stanford by such a wide margin? 

By John A. Byrne, contributor

(poetsandquants.com) -- MBA students at top business schools are borrowing more money than ever to pay for their degrees.

The Wharton School of the University of Pennsylvania

The average debt carried on the back of graduating MBAs at Wharton increased by nearly $5,000 last year to a record $109,836, the highest debt burden reported by any business school. Wharton MBAs now graduate with debt that is more than a third higher than their counterparts at Harvard Business School and Stanford's Graduate School of Business.

The largest year-over-year increase in student debt was at Dartmouth's Tuck School, where the average debt burden of a class of 2010 MBA rose by more than $10,000 to $96,292, second only to Wharton grads.

Financial aid officers at B-schools attribute the rising debt levels to the recent recession, which led to pay freezes at pre-MBA jobs and caused applicants to tap into personal savings, as well as the increasing costs of tuition.

"Two years ago, the class came in with much greater financial aid," says Diane Bonin, director of financial aid at the Tuck School. "People coming in made a little bit less and had much less in available savings due to the economy."

After Wharton and Tuck, the highest debt loads were carried by graduates of Duke University's Fuqua School of Business ($92,827), the University of Michigan's Ross School of Business ($92,734), Northwestern University's Kellogg School of Management ($87,256), and Cornell's Johnson School ($86,900). These staggering levels of debt are far in excess of averages for undergraduate student loans -- $27,803 in 2007-08, the latest reported year -- and have fueled widespread concern.

Most MBA students at top schools eagerly take out what many would regard as crushing levels of debt because they are confident the degree will pay off in the long-term.

"In purely financial terms, the payback period is still short relative to a lot of graduate degrees, despite the large numbers," says Richard Lyons, dean of the University of California's Haas School of Business at Berkeley. "And they get a fine graduate education as well."

At the Haas school, average debt for MBAs in the class of 2010 jumped by 14.6% from a year earlier to $73,186. "Though our tuition remains a bit below our peers, it has risen toward market a lot in the last five years, particularly for California residents," explains Lyons. "That's an important contributor, though not enough to explain all of it." The increase in debt levels, he adds, coincided with an increase in fellowship funding to students.

These large numbers, moreover, are averages for graduates who borrow money. At the Tuck School, for example, some 25% of the graduating class last year got their MBAs without a loan. Some of those students received funding from their pre-business school employers.

The Tuck grad with the highest debt racked up $156,820 in loans. The graduate with the least amount of debt (aside from the lucky debt-free grads) accrued $13,000. This year, says Bonin, the class of 2011 will graduate with average debt of about $98,500, yet another year-over-year increase, but modest compared to the rise from 2009 to 2010.

"The numbers scare me," concedes Bonin. But she says that about 48% of the full cost of attending Tuck is paid out of students' personal savings, and the default rate on MBA loans has been extremely low. "Historically, our default rate on institutional loans has been between 0.4% and 1.7% over the last seven years. Our students have been very successful in their careers."

Perhaps the biggest surprise in these overall debt numbers, reported by the schools to U.S. News & World Report, is the handful of B-schools that bucked the indebtedness trend altogether. Averaged debt for individual graduates of Yale's School of Management, for example, decreased by more than $12,000. Last year, Yalies left New Haven with MBA debt of $86,895, down from $99,418 a year earlier. At Stanford, average debt fell by more than $9,000 to $71,403. Debt loads also fell at Harvard, UCLA, Carnegie Mellon, and Pepperdine.

Conspicuously absent from the list are the debt numbers for Columbia Business School, MIT's Sloan School of Management, the University of Southern California's Marshall School, and Washington University's Olin School. Those institutions apparently did not disclose this data to U.S. News. But it's a sure bet that all of them would be among the top 25 if they had provided the information, given their high tuition rates and similar student pools.

Another question raised by the numbers: Why do MBAs at Harvard and Stanford graduate with more than a third less debt than those at Wharton?

Wharton officials declined to respond. One conclusion: Harvard and Stanford are far more generous with their scholarship packages than Wharton, so the sticker price of an MBA at Harvard and Stanford is more likely to be discounted. Harvard, for example, says that its students receive average scholarships of $48,200 over their two years at the school. Stanford's average scholarship in the last year was $20,644, or roughly $41,288 for the two years of the MBA program. Wharton does not disclose this number.

Once you add an effective interest rate of 7.65% from government loan programs, these debt burdens grow quickly over the years. If a Wharton MBA paid down his $110,000 debt over the next 10 years, the total cumulative payments would come to more than $180,000. With a repayment schedule over 25 years, the debt would balloon to more than $280,000 -- not accounting for any deferrals or penalties for missing a payment.

 

Winds of Economic Change Blow Away College Degree: Peter Orszag

Illustration by Dylan C. Lathrop

By Peter Orszag Nov 8, 2011 7:00 PM ET 

About Peter Orszag

Peter R. Orszag, vice chairman of global banking at Citigroup and an adjunct senior fellow at the Council on Foreign Relations, was President Obama's director of the Office of Management and Budget.

Many parents in the U.S. are legitimately concerned about the prospects for their college-age children. After all, today’s students face three overlapping challenges: a long-term structural shift as the world’s effective labor supply expands; rising tuition and growing concerns about the quality of public higher education; and the misfortune of graduating into a weak labor market.

The first challenge arises from rapid shifting of the tectonic plates that underlie the world labor market. Over the past 25 years, the effective global labor supply has at least doubled and by some estimates has quadrupled. This has suppressed wage growth in the developed economies and reduced the share of national income accruing to labor. So far, people without a college degree have primarily borne the consequences. As a result, globalization has widened the inequality between workers at the 90th percentile of wages and those at the 50th percentile.

The effects of globalization are already moving up the wage scale, though, and that trend will likely continue. As Alan Blinder of Princeton University trenchantly noted in 2006, “Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less-skilled) people -- doctors versus call-center operators, for example.” Instead, the crucial distinction is between those tasks that are easily digitized (and thus subject to substantial competition from workers abroad) and those that are not.

Widening Wage Gap

As a result, in the future, a college degree by itself will be less likely to guarantee a high wage. Ongoing economic globalization may even reduce the gap between the 90th percentile and 50th percentile, but continue to widen it between the 99.9th percentile and the 90th percentile. As Blinder argues, “Since the distinction between personal services (likely to remain in rich countries) and impersonal services (likely to go) does not correspond to the traditional distinction between high-skilled and low-skilled work, simply providing more education cannot be the whole answer.”

The second challenge for college-age Americans involves falling state government support for public higher education. Almost three-quarters of all college students attend public schools, and state governments have provided primary support for these institutions. But revenue constraints, combined with rising Medicaid expenditures, push states to reduce spending on colleges and universities.

The experience of the past few years has been consistent with what the economist Tom Kane of Harvard University and I showed in a series of papers several years ago: Pressure from rising health costs causes states to cut back their relative support for higher education, especially during economic declines. And the education funding never returns to its pre- belt-tightening level.

In 1977, state appropriations for higher education averaged $8.50 per $1,000 in personal income. By 2002, after cutbacks during recessions, it had fallen to $7 for every $1,000 of personal income. And last year, after further reductions during the latest recession, it had declined to $6.

The most recent spending cuts have tended to be largest in those states with the sharpest increases in Medicaid spending, as Kane and I had found for previous business cycles. For example, from 2008 to 2010, for every percentage-point increase in the share of a state’s general-fund budget devoted to Medicaid, funding for higher education was reduced, on average, by 3 percent.

Rising Tuition

With less money from state coffers, public colleges and universities are under pressure to both raise tuition and reduce the quality of the education they provide. In general, despite significant tuition and student-debt increases, spending per student at public universities hasn’t kept pace with that at private universities. And this, in turn, manifests itself in various quality indicators.

Kane and I had documented, for example, a decline in assistant-professor salaries relative to those at private universities from 1980 to the early 2000s, driven by the cutbacks in state support. Data from the American Association of University Professors indicate this trend is continuing.

In 2000, an assistant professor at Stanford University earned an average of 9 percent more than an assistant professor at the University of California at Berkeley. By this year, that gap had widened to 17 percent. Eventually, these differentials will affect where top professors choose to teach.

Some admittedly imperfect indicators suggest the quality of public higher education is already fading. For example, in 1987, both UC Berkeley and the University of Michigan were included in U.S. News & World Report’s ranking of the top 10 universities. By this year, there were no public universities in the top 10 -- and UC Berkeley, the top-ranked public school, had fallen from fifth to 21st. For students who can’t get into or afford private universities, this is a problem.

The final challenge for college graduates is to enter a labor market with a higher-than-usual unemployment rate. A recent study estimated that every percentage-point increase in the jobless rate depresses wages for new graduates by about 6 percent. Even 15 years post-graduation, this effect fades only a bit, to about 3 percent. Since the unemployment rate is currently roughly three percentage points higher than its long- run level, after 15 years today’s graduates can be expected to earn about 10 percent less than if they graduated into a normal employment situation. Weak labor markets knock young people off course for years.

Responding to Globalization

Our ability to address these three problems is inversely related to the order in which I have presented them: With very aggressive action to boost the economy today (including through ambitious policies on housing and by coupling additional stimulus with long-term deficit reduction), we could significantly strengthen the labor market today. By moving toward an emphasis on quality rather than quantity in health care, we could help slow the upward trajectory of health costs, which are crowding out state support for higher education.

The hardest problem of all, though, is the first one. Even assuming away the dysfunction of our political system, for most new college graduates, we have precious few serious strategies to offset the increasing digitization and globalization of the labor market.

One place to start would be to focus on raising productivity in public higher education, so that we could do a better job of delivering quality with constrained budgets. Would we be better off if research dollars were even more concentrated in fewer institutions, and a larger share of faculty specialized in teaching (which is often given short shrift at research universities)? Can more businesses partner with public colleges to create curriculums to teach specific job skills? Can remote learning and online coursework, especially for remedial subjects, finally realize their potential?

The present situation for college kids is so uninspiring, we should experiment aggressively to find the best ways to improve it.

(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com

To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net

 

Generation Jobless: From Ivied Halls to Traveling Salesman

• 

• NOVEMBER 8, 2011

Weak Job Market Pushes More College Grads Into Commission Sales; They're Hawking Knives, Insurance

By DANA MATTIOLI

You don't need a college degree to sell insurance for Aflac Inc., but college graduates are flocking there, desperate for income in the rough job market.

Daymon Gardner/The Wall Street Journal

John Dodge leading an Aflac team meeting in Baton Rouge, LA.

John Dodge, a 2009 graduate of Louisiana State University was gunning for a career in marketing. But when his job search came up short, he turned to the insurer. "It was more like, 'Whaddyagot?' because there wasn't much out there," Mr. Dodge says.

Where debt-laden college graduates once might have resisted commission-based sales positions, the 14% unemployment rate for 20- to 24 -year-olds means fewer grads are turning up their nose at sales jobs.

Companies say they don't keep figures on the educational credentials of their work forces but that the national unemployment rate of 9% means job applications are up generally in the last few years.

Commission-based employers say that out of that bigger applicant pool, they have been able to scoop up more talent with college degrees. And companies say such employees are especially dedicated workers.

Robert Pizzo

Aflac, which is based in Columbus, Ga., has seen increased interest from college graduates since 2008 and has hired 11,000 agents overall between the ages of 21 and 25 over the past four years, says Chief Operating Officer Paul Amos.

Hiring at New York Life Insurance Co. was especially heavy from 2009 through this year, says Rich Simonetti, a vice president. That includes an influx of college and M.B.A. graduates applying for jobs, he says.

Sales-oriented companies have been able to ramp up hiring as other companies cut back in part because commission-based jobs are less of an investment then typical salaried positions.

In many cases, new commission-based hires are given no base salary or a low one. Some are not eligible for health-care benefits.

Young Men Feel Job-Market Pain

Cody Preston, 25, searches online for jobs at his parents' home in Milwaukie, Ore.

Leah Nash for The Wall Street Journal

Mr. Dodge, the Louisiana State alumnus, began selling accident, life and dental insurance in Baton Rouge, La., by cold calling companies.

At first, he was rejected 15 times for every face-to-face appointment he secured. He had no base salary, no health insurance and no other benefits. In his first year, Mr. Dodge brought in $40,000 on commissions.

He soon learned a sure-fire way to warm up potential clients: sports.

"There's always a connection you have to make with people because you're selling them an intangible item," he says. "Louisiana State University is big around here, as are the Saints" football team, he says.

Within a year he was promoted to district sales coordinator. Mr. Dodge projects he'll make $100,000 this year on commission, plus a bonus.Cutlery distributor Cutco Corp. has long been a mainstay of college students looking to earn cash by selling knives during the summer. Lately, the company has been receiving more interest from graduates, says Sarah Baker Andrus, director of external relations and academic programs for Vector Marketing Corp., a Cutco subsidiary.

Andrew Wong, a 23-year-old University of Pennsylvania graduate with a math degree, started selling Cutco knives as a summer job and stuck with it after going through the company's management training.

"My husband said to him, 'You know Andy, we didn't send you to an Ivy League school so you could sell knives,' " says Ann Wong, Andrew's mother.

Her son is now a manager but still sells Cutco knives and accessories. He says he now closes sales on four out of five appointments, dazzling clients with shears that cut a penny and knives that slice rope.

Mr. Wong nevertheless moved in with his parents in September after not being able to afford his $1,000-a-month apartment rent. He is back in his childhood bedroom, the walls covered with posters of a teenager's favorite athletes and of movies like "Pulp Fiction."

"It's not as bad as I thought," he says.

Vector's Ms. Andrus says recent college graduates are more driven than their counterparts without degrees.

"It's not at all uncommon for someone who worked with us for a few weeks to ask how to become a manager," she says.

From College Major to Career

Here's a look at how various college majors fare in the job market, based on 2010 Census data.

• More photos and interactive graphics

New York Life finds much the same. "The agents we hired [between 2009 and 2011] have been our most productive agents in the history of New York Life," Mr. Simonetti says.

Elizabeth Bauer, 23, leaned toward seeking a financial-analyst position. But the dismal job market when she graduated last year from Siena College, near Albany, N.Y., made her change course.

Ms. Bauer now sells insurance and annuities for New York Life, working about 55 hours a week.

"I'm young and meeting with people older than I am, I wondered if they'd trust me," she says.

But she has been able persuade potential clients that her youth means she would be able to work with them for years to come.

She also sends birthday cards to her clients and checks in for informal chats. When Ms. Bauer got married last month, many clients emailed congratulations, she says.

"I absolutely love what I do," she says. "The sky is the limit" on earnings potential. "I haven't asked my parents for a dime."

About Generation Jobless

Americans 25 and under face one of the toughest job markets in modern history. This week, The Wall Street Journal explores their stories.

Also in the Series:

• Is an Ivy League Diploma Worth It?
• Speeding Through College to Save Money
• Young Men Suffer Worst as Economy Staggers
• Among Minorities, a New Wave of 'Disconnected Youth'
• For Those Under 24, a Portrait in Crisis

Brad Souder, who graduated from Virginia's James Madison University in 2009 with a degree in sports management, had a different experience. He took a position with Northwestern Mutual Life Insurance Co. but found the ups and downs of sales too stressful. "You face rejection every day," he says.

In August he quit and began studying for the law-school entrance exam. And he has started a full-time job as a sales associate at men's retailer Jos. A. Bank Clothiers Inc.

He makes slightly above the minimum hourly wage—plus commissions.

Write to Dana Mattioli at dana.mattioli@wsj.com

 

U.S. Job Openings Grow

• 
• NOVEMBER 8, 2011, 10:44 A.M. ET

By ERIC MORATH

The number of available jobs in the U.S. grew by 300,000 in September, a sign of continuing slow improvement for the sluggish labor market.

The U.S. jobs recovery has been the slowest since the Great Depression. Eight million jobs were lost during the last recession, but after more than a year of steady growth, we're still more than six million in the hole. WSJ's Phil Izzo explains

Bureau of Labor Statistics data released Tuesday showed there were 3.4 million job openings at the end of September, up from 3.1 million in August.

Last month, U.S. economy created 80,000 jobs on top of 158,000 jobs added in September. The job growth allowed the unemployment rate in October to edge down to 9.0% from 9.1% the prior month.

The private sector is adding jobs, but that's being partially offset by continued cuts at all levels of government.

Among those hiring is United Parcel Service Inc., which said Monday that it will add 55,000 seasonal employees to assist with expected heavier volumes this holiday season.

Still, the elevated unemployment remains a major challenge for the U.S. economy. Last week, the Federal Reserve projected that unemployment will remain near or above the 8% mark through 2013.

Fed Chairman Ben Bernanke said that forecast was "unsatisfactory" and called on Congress and the White House to assist the central bank in boosting employment.

President Barack Obama has proposed a nearly $450 billion package of spending initiatives and tax cuts intended to create jobs. That plan, however, has met resistance in Congress, mainly from Republicans who oppose new spending.

However, progress has been made this week on a portion of the plan that would provide employers with a credit of $4,800 for hiring veterans who face unemployment of six months or longer and a $9,600 tax credit for hiring soldiers who have a service-related disability.

 

College Students' Borrowing Hits An All-Time High

NPR.org

by LARRY ABRAMSON

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EnlargeKevork Djansezian/Getty Images

College students who graduated in 2010 carried 5 percent more debt than in the previous year, according to new data. In this photo from last December, a student fills out an application for a chance to win a scholarship worth $30,000, at a Cash for College event organized by the California Student Aid Commission.

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November 3, 2011

Students are borrowing more money to pay for college than ever before. New data show that students who graduated in 2010 carried 5 percent more debt than in the previous year. And education debt is expect to grow in the coming years, as students struggle to pay higher tuition costs.

Last week, we learned that college tuition costswent up around 5 percent. This week, theProject on Student Debt reports that student debt went up by about the same amount.

Average Debt Tops $25,000

Lauren Asher tracks loan amounts for the student debt project, a California nonprofit. She says that in 2010, the debt of the average student was $25,250.

The figures are gathered from more than 1,000 colleges and do not include for-profit schools, where enrollment has been climbing, and where loan levels tend to be much higher.

Now, you might expect the most expensive schools to have the highest levels of debt. Asher says that's not necessarily the case.

"Even colleges with the same sticker prices and similar student bodies can have very different shares of students with debt," she says, "and very different average debt for those who borrow."

So, a low-cost, public school like Alabama A&M produces graduates with an average debt of more than $31,000. The school says that it's simply a result of shrinking state support for the historically black college.

Meanwhile, the sticker price for Williams College, in Massachusetts, is around $55,000 a year. But students there only borrow around $8,000 on average. Spokesman Jim Kolesar says that's a result of a $1.7 billion endowment. It's also part of the school's commitment to admit everyone who qualifies, regardless of need.

Kolesar says "the vast majority of the way the debt need is met is through grants." Only families making around $75,000 a year or more are expected to take out loans.

Overwhelmed By The Numbers

 If these numbers are a little overwhelming to you, you are not alone. Families and students get confused by the aid process. Sometimes, they choose schools that end up costing them more than they expect, and that leads to more debt. The federal government is trying to clear up the confusion.

Raj Date of the new Consumer Financial Protection Bureau says his agency is teaming up with the Department of Education to clarify confusing terms in financial aid offers.

"You might have a loan that is called an institutional loan," he says. "In another school, the same loan might be called a private loan. But it's describing the same thing."

The hope is that the information will help students avoid a lifetime of debt that cannot be discharged in bankruptcy. The White House is also expanding programs that limit how much of their income students must pay.

Date says that it's all part of an effort to police the huge amount of debt held by students, which is now in the trillion-dollar range. "Student lending is bigger than the credit card business," he says. "It is bigger than the auto finance business."

An Uncertain Future

One big question: Will these numbers continue to grow? Lauren Asher says the numbers for the class of 2010 could have been worse. But, she says, "there were substantial increases in grant aid for students, particularly the federal Pell Grant."

Budget hawks in Congress have given every sign that students cannot expect more increases in the future. That could make substantial debt the norm for more and more students.

Related NPR Stories

School Debt A Long-Term Burden For Many Graduates Oct. 21, 2011

 

 

Mid Level Jobs Are Being Eliminated



Silicon Valley's New Hiring Strategy

http://www.fastcompany.com/magazine/160/ign-self-taught-coders

BY: E.B. BOYDOctober 03, 2011

 

In Silicon Valley, some dare to ask: Why hire a PhD, when a self-taught kid is just as good?

Adam Passey, 28
Medford, Oregon
Former VP of information and technology at a marketing agency
HIRED BY IGN

"I had one job for 10 years, and a lot of the systems I worked on were proprietary, so I couldn't show them as examples of my work. Getting hired at IGN has been a dream of mine, but I never applied because I always thought it was out of reach. It's humbling now to think that people here see something in me." | Photo by Toby Burditt

On an August afternoon, Adam Passey, 28, steps up to the front of IGN Entertainment's lunchroom in a rumpled cardigan and hipster glasses, and bounces through a presentation on a hub for mobile games that he spent the summer coding. IGN's engineering managers are impressed. Passey added features that other similar hubs don't have. But they're particularly impressed because, by conventional measures, Passey shouldn't even be here.

Silicon Valley companies have notoriously strict hiring standards for engineers. They want grads from the country's top computer-science programs, like Stanford's and MIT's, or people with sparkling résumés and deep experience. Passey, from Medford, Oregon, didn't even graduate from college. "I briefly studied computer science at college, but I wasn't really excited about the actual degree program," he says.

But he's here because IGN's president, Roy Bahat, is part of a small but growing movement of tech leaders who are rethinking what coders they're looking to hire--and for that matter, how the industry approaches coding in general. "Software is thought of as a science," Bahat says, sitting in a conference room painted to look like the underwater city of BioShock games. "But what if it's not a science? What if it's more like a craft? Or even an art? If you wanted to hire somebody who could be a great craftsperson, you wouldn't look for somebody with a PhD in that craft."

That may sound democratic, but it's also a response to a hard-learned business reality: The battle for talent in Silicon Valley has gotten expensive. Monied players like Facebook and Google regularly poach each other's employees by offering big salaries and sweet perks. Smaller startups lure those same developers with promises of greater responsibility, interesting work, and potentially lucrative stock options.

"Flipping burgers to scrape together enough cash to buyPortal 2? Blow our minds while you're here and we'll hire you."
--IGN ADVERTISEMENT

IGN is a division of News Corp. But because Rupert Murdoch isn't flooding the firm with Fox News-style cash--and nor is it well-known enough to have top grads pounding down its doors--the company has to find talent in other ways.

That's why it developed Code Foo.

The program, which ran this summer, brought in people with a core aptitude for programming, then spent six weeks "teaching them something to see if we could get them up to a level where we actually might want to hire them," Bahat says. IGN specifically downplayed the importance of experience and education. "Flipping burgers to scrape together enough cash to buy Portal 2?" read its recruitment ad. "Blow our minds while you're here and we'll hire you."

Sure enough, the 28 people accepted into the program (out of the 104 who applied) were a diverse bunch. One worked in a call center, another at a medical-device company, and a third managed a grocery store. Aged 20 to 30, only half of the group had college degrees in a technical field, and not necessarily in computer science.

Trevor Boone, 26
Flagstaff, Arizona
Stay-at-home dad
NOT HIRED BY IGN

"For the last two years, my wife and I have been saving up so I could take time off to learn to code on my own and eventually move into the tech world. We weren't planning on doing it for another year or so, but after the experience at IGN, we're going to do it now." | Photo by Toby Burditt

Alex Ivlev, 26
Russia
Just graduated from Wilmington University
HIRED BY IGN

"I sent resumes to every big tech company I knew. But I came from a university no one had ever heard of. The market is tough. If you don't have a degree from Harvard or Yale, you don't have a chance. I spent eight years sacrificing, hoping that one day it would all pay off." | Photo by Toby Burditt

Darren Matsumoto, 24 
San Jose
Just graduated from the University of California 
HIRED BY IGN

"I'd always built desktop software, so building things for IGN was like writing with my left hand. Coming here gave me the opportunity to learn about the tech industry in the Bay Area. Before, I was just looking for jobs in San Diego and Los Angeles. Now I think, Why limit myself?" | Photo by Toby Burditt

Amanda Garfield, 24
Spanish Fork, Utah
Works in tech support
NOT HIRED BY IGN

"I don't know if IGN realized this, but when you offer someone a job that they have the experience for, one job is about the same as the next. But when you do that for someone who doesn't have that experience, you're giving them a chance at a life that they couldn't otherwise have had." | Photo by Toby Burditt

Code Foo is hardly the only such experiment in the marketplace. In India, local offices from the likes of Microsoft and IBM swallow up the best programmers--so an online office applications company called Zoho identifies promising high-school students whose families can't afford to send them to college, then trains them itself. The program began six years ago, and about a tenth of Zoho's 1,400 employees, and 20% of its new engineers, are graduates of it.

"It's not charity," says Zoho CEO Sridhar Vembu. "It works for everybody. We find great employees, and they make us money."

At IMVU, a California-based firm, cofounder and Lean Startup guru Eric Ries scours online developer forums for potential hires. "We all want to find the next Mark Zuckerberg or Steve Jobs," Ries says, "but [the tech industry] only looks in very specific places. All kinds of people aren't on that radar."

"If you only looked at their résumés and said, 'Should we interview this person based on this résumé?', there wouldn't necessarily be a reason to say yes."
--IGN PRESIDENT ROY BAHAT

Where some see opportunity in unconventional recruiting, others just see wishful thinking. Sure, Zuckerberg and Jobs were college dropouts, but there's a reason they're in select company: There just aren't many like them.

"I don't think it's as simple as saying lots of people who don't have a lot of schooling or who were never good at schooling will be great programmers," says Rob Mee, CEO of San Francisco's Pivotal Labs, which develops applications for companies like Twitter and Groupon. "It's not that they have to go to university or go to a great program. But a lot of great programmers, even if they are self-taught, are people who end up excelling academically at some level."

Mee does, however, give the less-accredited a shot. He asks all candidates to do a hands-on coding exercise, to assess how well they express their ideas and think on their feet--an effort that can level the competition.

Of course, one could choose to see efforts like IGN's more skeptically: Less-educated workers cost less, don't they? Bahat swats that idea away. He says he'll pay atypical applicants the same salaries of regular entry-level employees. "Talent in the technology industry quickly finds its market," he says. "There is no cheap labor."

Bahat hoped that his Code Foo experiment would produce one or two good hires. To his surprise and delight, the talent pool was so deep that IGN extended offers to eight--including Passey, who presented in the lunchroom.

All eight accepted.

"It's not like if you looked at their résumés, you would have said it's impossible that they would be qualified for the jobs," Bahat says. "But if you only looked at their resumes and said, 'Should we interview this person based on this résumé?', there wouldn't necessarily be a reason to say yes. They're the kind of people we would have overlooked."

We Don't Need No Education

Not everyone at the top sported a big résumé

Common knowledge: Facebook's Mark Zuckerberg excused himself from Harvard University. He was 19, but clearly had better things to do with his time. Rare as he might be, the business world has other innovators with a dearth of degrees to frame. If they weren't so self-motivated, who would have hired them? 
--Dan Mascai

RICHARD BRANSON
Dropped out of boarding school in 1966
Age: 16

 

MICHAEL DELL
Dropped out of the University of Texas, Austin, in 1984
Age: 19

 

DAVID GEFFEN
Dropped out of the University of Texas, Austin, in 1963
Age: 20

 

LADY GAGA
Dropped out of New York University in 2005
Age: 19

JAMES CAMERON
Dropped out of Fullerton College in 1974 
Age: 20

 

WALT DISNEY
Dropped out of high school in 1918
Age: 16

 

STEVE JOBS
Dropped out of Reed College in 1972
Age: 18

 

RUSSELL SIMMONS
Dropped out of City College of New York in 1977
Age: 20

SIMON COWELL
Dropped out of boarding school in 1975
Age: 16

 

BILL GATES
Dropped out of Harvard University in 1975 (received honorary degree in 2007)
Age: 19

 

DONNA KARAN
Dropped out of Parsons School of Design in 1967
Age: 18

 

FRANK LLOYD WRIGHT
Dropped out of the University of Wisconsin, Madison, in 1887
Age: 20

A version of this article appears in the November 2011 issue of Fast Company.

 

The Sugary Secret of Self-Control

http://www.nytimes.com/2011/09/04/books/review/willpower-by-roy-f-baumeister-and-john-tierney-book-review.html?_r=2&pagewanted=all%3Fsrc%3Dtp&smid=fb-share

September 2, 2011

By STEVEN PINKER

WILLPOWER

Rediscovering the Greatest Human Strength

By Roy F. Baumeister and John Tierney

291 pp. The Penguin Press. $27.95.

Ever since Adam and Eve ate the apple, Ulysses had himself tied to the mast, the grasshopper sang while the ant stored food and St. Augustine prayed “Lord make me chaste — but not yet,” individuals have struggled with self-control. In today’s world this virtue is all the more vital, because now that we have largely tamed the scourges of nature, most of our troubles are self-inflicted. We eat, drink, smoke and gamble too much, max out our credit cards, fall into dangerous liaisons and become addicted to heroin, cocaine and e-mail.

Nonetheless, the very idea of self-­control has acquired a musty Victorian odor. The Google Books Ngram Viewer shows that the phrase rose in popularity through the 19th century but began to free fall around 1920 and cratered in the 1960s, the era of doing your own thing, letting it all hang out and taking a walk on the wild side. Your problem was no longer that you were profligate or dissolute, but that you were uptight, repressed, neurotic, obsessive-compulsive or fixated at the anal stage of psychosexual development.

Then a remarkable finding came to light. In experiments beginning in the late 1960s, the psychologist Walter Mischel tormented preschoolers with the agonizing choice of one marshmallow now or two marshmallows 15 minutes from now. When he followed up decades later, he found that the 4-year-olds who waited for two marshmallows turned into adults who were better adjusted, were less likely to abuse drugs, had higher self-esteem, had better relationships, were better at handling stress, obtained higher degrees and earned more money.

What is this mysterious thing called self-control? When we fight an urge, it feels like a strenuous effort, as if there were a homunculus in the head that physically impinged on a persistent antagonist. We speak of exerting will power, of forcing ourselves to go to work, of restraining ourselves and of controlling our temper, as if it were an unruly dog. In recent years the psychologist Roy F. Baumeister has shown that the force metaphor has a kernel of neurobiological reality. In “Willpower,” he has teamed up with the irreverent New York Times science columnist John Tierney to explain this ingenious research and show how it can enhance our lives.

In experiments first reported in 1998, Baumeister and his collaborators discovered that the will, like a muscle, can be fatigued. Immediately after students engage in a task that requires them to control their impulses — resisting cookies while hungry, tracking a boring display while ignoring a comedy video, writing down their thoughts without thinking about a polar bear or suppressing their emotions while watching the scene in "Terms of Endearment" in which a dying Debra Winger says goodbye to her children — they show lapses in a subsequent task that also requires an exercise of willpower, like solving difficult puzzles, squeezing a handgrip, stifling sexual or violent thoughts and keeping their payment for participating in the study rather than immediately blowing it on Doritos. Baumeister tagged the effect “ego depletion,” using Freud’s sense of “ego” as the mental entity that controls the passions.

Baumeister then pushed the muscle metaphor even further by showing that a depleted ego can be invigorated by a sugary pick-me-up (though not an indistinguishable beverage containing diet sweetener). And he showed that self-control, though almost certainly heritable in part, can be toned up by exercising it. He enrolled students in regimens that required them to keep track of their eating, exercise regularly, use a mouse with their weaker hand or (one that really gave them a workout) speak in complete sentences and without swearing. After several weeks, the students were more resistant to ego depletion in the lab and showed greater self-control in their lives. They smoked, drank and snacked less, watched less television, studied more and washed more dishes.

Together with intelligence, self-control turns out to be the best predictor of a successful and satisfying life. But Baumeister and Tierney aren’t endorsing a return to a preachy puritanism in which people are enjoined to resist temptation by sheer force of will and condemned as morally irresolute when they fail. The “will” in willpower is not some mysterious “free will,” a ghost in the machine that can do as it pleases, but a part of the machine itself. Willpower consists of circuitry in the brain that runs on glucose, has a limited capacity and operates by rules that scientists can reverse-engineer — and, crucially, that can find work-arounds for its own shortcomings.

“Willpower”is filled with advice about what to do with your willpower. Build up its strength, the authors suggest, with small but regular exercises, like tidiness and good posture. Don’t try to tame every bad habit at once. Watch for symptoms of ego fatigue, because in that recovery period you are especially likely to blow your stack, your budget and your diet. For that matter, don’t diet in the first place, since it starves the very system that implements self-control. Learn from Ulysses and tie yourself to the mast or fill your ears with wax so temptations are blocked out or you are unable to act on them. The authors also recommend Web sites and software that can audit, broadcast, punish or pre-empt lapses of will — a godsend, in particular, to Internet junkies and other infomaniacs.

Readers of “Willpower” are treated to triumphs of self-control, like the singer Amanda Palmer (in her first career as a living statue) and the endurance artist David Blaine, along with crash scenes like Oprah Winfrey's yo-yoing weight and Eliot Spitzer's hotel-room entertainment. The disasters reveal a limitation of the muscle metaphor: certain evolutionarily prepared drives seem to withstand even the most bulked-up powers of will. The authors note that people with the highest levels of self-control are only slightly better than average at controlling their weight, and they describe disturbing experiments that confirm the old saying “When the penis stands up, the brains get buried” (it sounds better in Yiddish).

The authors appeal to evolutionary biology to explain these anomalies, and elsewhere bring up ideas from neuroscience and economics. But the visits are perfunctory, and the authors offer no systematic account of the trade-offs the brain must make among goals that differ in their likelihood of success, their time horizons and their evolutionary impact. The old joke about the man in front of a firing squad who refuses the customary last cigarette because he’s trying to quit reminds us that deferring a reward does not always make sense, and economists and evolutionists have developed theories that predict the optimal delay of gratification in a given environment. Also unexplored is a fascinating literature in neuroscience on the role of the prefrontal cortex in inhibiting impulses. In general, the authors tilt their presentation toward human interest rather than science, apart from Baumeister’s own studies.

Nor do Baumeister and Tierney worry enough that their theory, without some precision about the relevant time spans, can be stretched to explain anything: when people resist one temptation but not another, it’s because their egos have been fatigued by exercise; when they resist temptations across the board, it’s because their egos have been strengthened by exercise.

Nonetheless, “Willpower” is an immensely rewarding book, filled with ingenious research, wise advice and insightful reflections on the human condition. And now that I’ve finished this review, I can turn my e-mail back on, spend no more than 30 minutes replying and go out to enjoy this late summer day.

Steven Pinker is Harvard College professor of psychology at Harvard University. His latest book, “The Better Angels of Our Nature: Why Violence Has Declined,” will be published next month.

 

As State Funds Dry Up, College Costs Skyrocket

http://www.businessweek.com/printer/business-schools/as-state-funds-dry-up-college-costs-skyrocket-10262011.html

THE COST OF COLLEGE October 25, 2011, 6:54 PM EDT

The cost of a public college education is up more than 8 percent, and as the College Board reports, there's no end in sight to the tuition hikes

By Alison Damast

The cost of a college education jumped significantly this fall as recession-weary schools passed more costs onto students and families to make up for budget shortfalls, according to a College Board report released today.

This year, public school students—who make up the vast majority of undergraduate students—are bearing the brunt of the tuition increases. Tuition and fees for the current school year average $8,244 at public four-year colleges, 8.3 percent higher than in the 2010-11 academic year. Meanwhile, at public two-year colleges, tuition and fees went up a whopping 8.7 percent this year.

Low tuition at colleges and universities has been a hallmark of public education for the last 150 years, but that is starting to change, says Terry Hartle, a senior vice-president for government and public affairs at the American Council on Education (ACE). The public university sector is at a crossroads, with schools running out of easy ways to cut costs and state governments under more pressure than ever to balance state budgets, he says. Complicating matters is a spike in total postsecondary enrollment. From the fall of 2007 to the fall of 2010, an additional 2.8 million undergraduate students enrolled in school, the College Board noted.

“It is the worst of all possible worlds,” says Hartle. “What we are really seeing is not just a big price increase over a single year, but a long-term trend in that state governments are increasingly viewing higher education as a private good, rather than a public good, and they are letting the beneficiaries pay more.”

OUT OF REACH?

As states like California, Washington, and Arizona posted double-digit percentage increases in tuition this fall, the cost of public education is increasingly becoming out of reach for many families. For example, California’s 21 percent tuition increase this year was so hefty it drove up average tuition and fees at public four-year colleges nationally by an additional 1.3 percentage points, the College Board noted. Without California—which enrolls 10 percent of the nation’s public college students—the average tuition increase this year for four-year public schools would have been 7 percent, the College Board said. With budget crunches so severe, many public universities are trying to attract more out-of-state students to make up for their budget shortfalls.

Tuition and fees also continued their upward climb at four-year private colleges and universities, though not quite as dramatically as at their public counterparts. Published tuition and fees at private schools for this school year averaged $20,770, which was $1,235, or 4.5 percent, higher than a year earlier. Some private schools this year managed to keep tuition increases at historically low levels, including Princeton University in New Jersey, which increased tuition just 1 percent this fall, its lowest increase in 45 years, and Syracuse University in New York, which raised tuition 3.8 percent this fall, its lowest increase in 46 years, according to the National Association of Independent Colleges and Universities’ website. Overall, the percentage tuition increases in the past three years are among the lowest for private schools since 1972, a fact the NAICU attributes in part to the work many private institutions are doing to control costs, from consolidating administrative units to flattening bureaucratic structures.

This is the fifth year in a row the percentage increase in tuition and fees at public universities outpaced that of private schools, says Sandy Baum, a College Board policy analyst and economics professor at Skidmore College in Saratoga Springs, N.Y.

“It’s hard to be surprised that tuition went up, but when you put all the pieces together and watch tuition go up year after year, it means we do have issues that we really have to face,” she says.

INFLATION OUTPACED AGAIN

This year, both the 8.3 percent hike for four-year public in-state tuitions and 4.5 percent hike for privates continued to outpace the rate of inflation. The consumer price index rose 3.6 percent from July 2010 to July 2011, the College Board said.

The tuition increases come at a time when state appropriations for public university students continue their downward slide, the College Board said. State appropriations per full-time student declined by 9 percent in the 2007-08 academic year, and fell by another 6 percent in 2009-10 and by 4 percent in 2010-11, the organization noted.

“Families are struggling because their income is not increasing. States are struggling and one effect of the struggle is seen in the declining appropriations states give for higher education,” Baum says.

Fortunately, the sticker price for a college education is not what most students and families ultimately end up paying for college. The net price, or what the average student pays after grants, student aid, and tax benefits are factored in, is a more accurate indicator of the real cost of an education today, Baum says.

At public institutions, the average student receives about $5,750 in grants and tax benefits, bringing the total annual cost down to $2,494. At private colleges and universities, aid totals about $15,530, taking the annual cost to $12,970, the College Board said.

TAX CREDIT SAVINGS

This year, families realized significant savings from the American Opportunity Tax Credit, a federal tax credit implemented in 2009 as part of President Obama’s stimulus legislation. Through a combination of tax credits and deductions, the program saved families $14.8 billion in each of the two most recent school years, significantly more than the $7 billion families received in the 2007-08 academic year, Baum says.

“We knew the tax credit program had become more generous, but we didn’t know how extreme it was,” Baum says. “It has really changed the story of how the federal government subsidizes students. I think that is quite surprising.”

At the same time, federal grant aid is about two and a half times greater in the 2010-11 academic year than it was a decade earlier, the College Board said. But whether federal aid will continue to offset tuition increases in the future remains an open and worrisome question, says ACE’s Hartle. It is unlikely that the $5,550 maximum Pell Grant award—a federal program that gives grant aid to the neediest students—or the amount that students can borrow under federal student loan aid programs is going to increase any time soon, he says. Even more concerning, this year the government eliminated year-round Pell Grants and the $64 million federal Leveraging Educational Assistance Partnership program, which provided matching funding to states to encourage them to spend their own resources on need-based financial aid, was cut.

“Federal student aid has increased significantly over the last 15 years, and gone up faster than tuition, but the fact is you are not going to see continued increase in federal student aid,” Hartle says. “Save for a very quick return to full employment, there is no short-term fix on the horizon.”

Damast is a reporter for Businessweek.com.