American education too expensive now!

UNAffordable US education!

Higher education in US is almost becoming unaffordable as per the recent survey by new york times.This is the result of commercialization of the education system.Education is a must for nay country to develop and prosper.Any nation consists of people and people should be taught newer skills and research based technical knowledge.If you don’t do it than you have to import immigrants who got their education at a affordable price.The best example of this trend was when many pass outs of the Indian institute of technology who paid peanuts for quality education as these were funded by Indian government.However America benefited from this trend.However US educational institutes charge you a bomb in some cases a entire year salary of a medium wage earner annually.The best example would be increasing taxes for corporates and bring that money in medical and technical education.The dream of any father is to see his off springs through the college,but instead these kids end up working for pizza deliveries or McDonald's to earn their pocket money.MBA in a decent university may put you back by almost US$40000.To top all this is that job market is very poor and will remain so till 2011 if all goes well.Banks will charge high interest rate due to credit crunch.May be the college fee should come down and thats a solution not a recomendation though.

While tuition has risen at public universities, his report said, that has largely been to make up for declining state appropriations. The report offered its own cost projections, not including room and board.
“Projecting out to 2036, tuition would go from 11 percent of the family budget to 24 percent of the family budget, and that’s pretty huge,” Mr. Shulenburger said. “We only looked at tuition and fees because those are the only things we can control.”

MBA LOANS GET SCARCE

College students in need of private loans to pay for the coming academic year will have to grapple with higher interest rates and tougher credit checks. Even then, some who have qualified for such loans in the past probably won't this year.
"Private loans are going to clearly be harder to come by for many students," says Sandy Baum, senior policy analyst for the College Board, the nonprofit entity that administers the SAT admissions test. That's bad news at a time when grants and loans available under government aid programs have failed to keep up with rising college costs. Many students have had to rely on variable-rate private loans to fill the gap. Tighter terms for private loans will most affect students with low credit ratings and those who attend colleges with low graduation rates.
Private loans have been one of the fastest-growing ways to pay for college. In 2006-07, students and their parents took out an estimated $17.1 billion in private loans, up from $1.57 billion in 1996-1997, according to the most recent tally from the College Board. The $17.1 billion represents 22% of all the borrowing to pay for college that year.Concerns over private loans come as the federal government is trying to make sure federally guaranteed loans in its Stafford and PLUS programs will be readily available in the fall. A growing number of banks and other lenders have said they will stop making such loans because they have become unprofitable amid cuts in federal subsidies and troubles in the credit market. In response, some congressional leaders and advocacy groups are pushing for broader use of the government's direct-lending program, wherein students borrow from the government through their schools.
Private college lending faces a number of obstacles. Lenders and other institutions in the student-loan field are struggling to raise the capital to finance their activities amid a broader credit crunch. The latest to run into trouble is the Education Resources Institute Inc., or TERI, the nation's largest insurer of private student loans, which filed for bankruptcy court protection on Monday.
TERI insured more than $17 billion in privately issued student loans against default for First Marblehead Corp., a Boston-based company that acquired such loans from Bank of America Corp., J.P. Morgan Chase & Co., and other lenders. First Marblehead then bundled those loans into trusts that issued notes to investors. TERI relied on the bundling deals for its revenue, which has dried up as borrowers have been skeptical of securitizations of all kinds. So far, First Marblehead hasn't announced plans to end or curtail student loans. The company has said it's looking at "self-guaranteed loan products and products guaranteed by another third party."
Bond insurers that guarantee securities backed by packages of student loans have also run into trouble. But industry observers say that few large private lenders actually insure the loans themselves, the way TERI does. Most large private lenders simply bear the risk of the loans.
Asked about the impact of TERI's troubles, Thomas Kelly, a spokesman for J.P. Morgan Chase, said his bank has been reducing its business with First Marblehead and will continue to make private student loans using its own systems. "The lack of a secondary market is not an issue to us because we have a balance sheet we can put them on," he said. A spokeswoman for Bank of America, another First Marblehead customer, said TERI's bankruptcy filing would have "no impacts on the vast majority of our college loan customers."
TERI officials have said they hope they have sufficient reserves to cover defaults. If that isn't the case, it could have a negative psychological impact on a student loan market already in turmoil, said Richard Vonk, president of Key Education Resources, a unit of Cleveland-based KeyCorp.
Aiming to reduce the need for private loans, which typically come with higher interest rates, Congress last year slashed more than $20 billion from subsidies paid to private lenders in the federally guaranteed lending program and raised the limits on the amount of federal loans a student can get. Wednesday, the bipartisan leadership of the House Education and Labor Committee is expected to introduce legislation that would raise those limits again and give the Department of Education new authority to pump liquidity into the student loan market.
While students typically don't begin taking out loans until the summer for the fall term, college officials and others say they are already getting indications that private student loans will be harder to come by.Both federal and private lenders have passed their higher capital costs along to borrowers. Mark Kantrowitz, publisher of FinAid.org, a financial aid Web site, estimates lenders have increased private-loan interest rates by nearly a percentage point since Oct. 1, adding that he expects more increases over the summer.
Other lenders have gotten more selective about their lending. Some have stopped making loans altogether, including more than 30 involved in the federally guaranteed loan program."We have heard from a number of our institutions that some of the sources of private loans for our students have dried up," said David Baime, vice president for government relations of the American Association of Community Colleges.Tony Erwin, director of financial-aid services at Northeastern University in Boston, said most large lenders say they still plan to make private loans, but as for lending to families with poor credit histories, he added, "I don't think you are going to see that."
Credit agencies rate consumer credit-worthiness on a 300-to-850 point so-called FICO scale. In the past, borrowers with scores as low as 620 points could usually get a private student loan, but this year that threshold is likely to rise to about 650 points, according to Mr. Kantrowitz. While the difference is only 30 points, about 10% of all borrowers of private student loans fall into that gap, he said.Industry executives say lenders are also less likely to make loans to students going to schools with low graduation rates and high loan-default histories -- many of them for-profit technical schools. Financial-aid professionals advise students in search of private loans to first make sure that they have exhausted all of their loan possibilities under the federally guaranteed programs, which usually involve lower interest rates. Under the federal PLUS program, parents can borrow up to the entire amount of their unmet education costs, although a credit check is also involved.

Reference:By ROBERT TOMSHO and KEITH WINSTEIN(wall street journal)

Is MBA degree worth it?

A MBA graduate's account of his MBA aspirations.
Each month when I make a payment on the student loan I took out to get an M.B.A. degree, I wonder if going to graduate business school was the right decision. My wife and I are struggling to raise two small children, and I think about what we could do with the money if we weren't making the loan payment. I think, too, about all the money I could have earned if I had attended school part time instead of full time. Perhaps the way I attended was wrong, too.
I feel certain that I blew it when I read the advice of personal-finance columnists. They nearly always say to not give up your job or income entirely. After reading their suggestions, I tell myself I should have kept working and forgone the degree. But I resent these experts, because they also say that having children isn't a wise financial strategy. Clearly, we have different values. At any rate, here's my full accounting of why I went to b-school, why I attended full time, what I expected from the degree, what I got, and how this decision has affected my life.
Why I Went?
When I decided I wanted to get an M.B.A., I simply was ready for a change -- a big one. My career had consisted of a series of mildly related jobs and then self-employment. When I sought work, most employers couldn't figure out what I was qualified to do, and I wasn't interested in the jobs that seemed most obvious for me. I wanted a break from working for myself.
Attending graduate school had been a goal of mine, but I didn't know what to study. I wanted to show I was smarter than my mediocre undergraduate grade-point-average would indicate. My grades had suffered due to my overinvolvement in extracurricular activities (only some of which involved alcohol -- really!). I wanted to prove I could shine academically. One day, it struck me. I loved business. I would go to business school. Funny thing, my future earnings potential wasn't a factor in my decision.
Full Time vs. Part Time?
My biggest concern about attending graduate business school was a seeming lack of aptitude for numbers. Would I be able to handle quantitative work? Since my goals were to learn as much as I could and to be successful academically, I thought attending full time would be best. My wife and I were ready for the adventure, so, with her blessing, full time it was.
A few months into school, I was glad I made this choice. I could see that the part-timers weren't getting as much out of the program as we full-timers. We took the same classes, but they were less present. They were often tired and unfocused. On teams, they were less valuable than the full-timers, regardless of their age or experience. They were busy trying to survive going to school while holding down a job, not maximize their learning.
I was less prescient on the financial side. While I had qualified for an academic scholarship, that didn't mean I had brains enough to recognize that living and opportunity costs would be such big drains. (Actually, I probably ignored these issues so the decision would be easier. From a purely financial standpoint, it might not have been justifiable.) So, by graduation, I was $55,000 in debt, and we had little savings. Debt, like body weight, is best managed preventatively; it's easier to never put it on than it is to take it off. We didn't sacrifice much while I was in school. Perhaps we should have.
I expect to be paying off this debt until 2011. Still, bottom line, I'm glad I went full time. Although I hate making those loan payments, it was probably a wise financial decision. I earned twice as much in my first job after business school as I'd earned in my most recent salaried position before b-school. Unless I decide to give up business and make pottery, getting the degree should continue to make sense financially.
What I Expected ?
I expected the M.B.A. to compensate for gaps in my experience and allow me to compete for senior-management opportunities. I also thought my opinions would be more respected and have more clout and that I'd grow a lot. I'd learn new things, integrate them with what I already knew and confirm many business assumptions. This would give me new confidence. When competing for jobs or business, I wouldn't have to fear competitors who'd worked for big companies.
I thought an M.B.A. would make me more marketable because potential employers would see a link between my skills, abilities and potential. Finally, as a result of these gains, I expected to have more earning power.
All these expectations were realized. I would not have been considered for my first two post-M.B.A. jobs without the degree. Many equally gifted yet less educated people are stuck in lesser jobs because they're not perceived as executive material, while I've landed two executive jobs without having executive experience. There's no doubt that I'm more marketable and can generate a higher salary now. (One caveat: Personal traits like charm and experience figure heavily in post-M.B.A. success. If you're a troll before you get an M.B.A., you won't be Jack Welch after graduation -- you'll be a troll with an M.B.A.)
Where my degree has paid off most is in problem solving and critical thinking. My analytical and problem-solving abilities are so improved that my pre-M.B.A. approach seems laughable by comparison. I had been a voracious reader of business books prior to b-school, but reading clearly isn't a substitute for classroom interaction, for me, at least.
In fact, I'm shocked by how few businesspeople know how to think critically. Those with sound, well-structured analytic ability often don't know or can't apply specific business tools or methods to the situation. It's one thing to read about a technique and another thing to be able to apply it.

What I Didn't Expect?
Since I always thought of myself as a Renaissance man, I'm startled when people believe I'm capable of performing in some select, specific capacities simply because I have an M.B.A. I suppose career evolution requires some specialization, but being pigeonholed in this way makes me uncomfortable. It once amused me to learn that some academics delete their Ph.D.s from their resumes so employers will hire them. Now I understand. Specialization is empowering only to the extent that it doesn't trap you. I'm thankful that business skills are transferable. What if I had an medical degree and wanted to switch fields? Some doctors I know feel totally stuck and believe they will never do anything but practice medicine.

I didn't expect that business executives' luster would fade as the country learned about corporate scandals, executive greed and excesses, and gross mismanagement. To make matters worse, recent research suggests that the best leaders aren't flashy, theatrical charismatics, such as Jack Welch or Lee Iacocca, whom I aspire to emulate, but rather the boring, methodical bean counters whom I don't admire (I can't even name one because they're so anonymous). I joined the M.B.A. ranks, in no small part, for the limelight.

I also didn't think the market for M.B.A.s would cool. I got my degree when the demand curve was peaking; my value has fallen with that curve. I wonder what the next hot degree will be.

Finally, I didn't expect to feel animosity from others or to feel embarrassed personally for being more educated, or to be perceived as arrogant because I have an advanced degree and am confident about my thinking and reasoning.

So Was It Worth It?

One reason I wrote this column is because so many people believe that going to b-school for an M.B.A. is primarily an economic decision. I don't agree. I think you should get an M.B.A. because you want to.

I also have not seen many articles about how M.B.A.s feel about their degrees 10 or 20 years later. I'm glad to say that most days, I think it was a good decision for me. I really enjoyed b-school, and I graduated with high honors. I realized all my expectations. In the big picture, the things I didn't expect are less important.
And, most importantly, I discovered I can assimilate new information quickly, even when it's coming from a fire hose, and that I can compete quantitatively with most people. This gives me a deep and secure confidence in my ability to tackle any business problem, and that's priceless.
-- Jack Thomas is the pen name of a 40-something C-level executive.