CAROL’S SUMMARY:

In the last twenty-five years, average college tuition in the United States has increased 440%, more than four times the rate of inflation and twice the rate of medical care, states the article below from today’s Chronicle of Higher Education. With the stock market decline of more the 30%, many parents and students are asking if Higher Education might be the next bubble to burst as they scramble to seek lower priced options for learning. Many
students will live at home and go to community colleges this fall, the applications of which are up nationally by 40%.

Colleges are also looking at innovative ways they could avoid a bubble burst. Some are recommending year-long programs and many are already offering more nighttime and weekend classes. Colleges are also looking at increasing on-line course offering to up to 20% or more to compete with
non-traditional establishments like the University of Phoenix. But more institutions need to see this situation as urgent and morph to new, more workable models.

What we can learn from the dot com burst and the current housing crisis, which has sent markets world-wide roiling, is that no established institution is immune from reinventing itself–including education. The earlier we can take charge to establish new, more efficient learning options with higher quality of delivery at more affordable prices, the more we will
be able to educate the masses. Those who need this most to improve their lives and fuel our economic future–low income students who can least afford these sticker prices–will stand to gain the most over the course of their lives if we can turn this around now. As a nation, we stand to have few people in prison, fewer people in low earning jobs and more people contributing to the betterment of their own lives, their community and the world as a whole.

ARTICLE
By JOSEPH MARR CRONIN and HOWARD E. HORTON

The public has become all too aware of the term “bubble” to describe an asset that is irrationally and artificially overvalued and cannot be sustained. The dot-com bubble burst by 2000. More recently the overextended housing market collapsed, helping to trigger a credit meltdown. The stock market has declined more than 30 percent in the past year, as companies once considered flagship investments have withered in value.

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CAROL’S SUMMARY: This spring, as the article below indicates, graduates will face a tough economic climate. But the smartest grads who actually have the discipline to be conscious of their spending, saving and ability to delay gratification will set themselves up for long term financial success and open the greatest number of job options during thick and thin. Grads need to avoid credit card debt and realize that their credit score in life will be with them forever. So, taking the bus or riding your bike to work or walking if that is possible, may be better than being saddled with car payments each month.

Second, grads need to think carefully about who they decide to live with, sign leases with and know fully the tiny print in legal documents that may be binding. If you are not with trustworthy friends, don’t agree to share an apartment with them when they may eat your food or default on the rent which will then impact your credit. Choose your friends wisely and protect yourself.

Finally, think about the most creative ways you can earn money and save it. Work two jobs this summer. Live off the income from one and use the other job to pay down student loans and/or save for the future. Developing financial discipline is not only good for you personally, but it will be expected of you in any job you secure at a level which pays more than minimum wage.

ARTICLE:

By KAREN BLUMENTHAL
May 3, 2009

This spring’s college grads are heading out into a world where jobs are tough to come by. The economic outlook is uncertain and all the older people they know are feeling the pain of stock-market losses.

Worse, there are all kinds of nitty-gritty details to deal with: opening bank accounts, choosing health insurance, finding an apartment, lining up transportation and figuring out how to invest. How is a young person supposed to get ahead in this environment?

It’s not easy to master money management during the best times and it’s especially hard to navigate the challenges of a recession. Still, many of the same basic principles apply in good times and bad. And getting a taste of a downturn at the start may make current graduates smarter and more thoughtful than those who graduate during boom times.

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