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Geoman

25% of college students will not be returning to school this semester. They will seek jobs, or take a break, whatever. Harvard, Yale, etc. will be fine - they have large endowments and can dip into their waiting lists. UCLA, Berkeley are state sponsored and will be struggle, but survive. Small liberal arts colleges will face widespread ruination.

For my three kids:

One is at a small expensive liberal arts college that is unusual because it has a massive endowment. They are charging standard prices and will survive. They added $3k to her scholarship (already $40k a year) to get her to return. That puts her all in cost at maybe $11k a year.

One is at a state school charging exactly the same despite 40% of classes being on-line. Lots of complaints from parents, but it was never a super expensive school (Maybe $14k a year all in) so I'm not as up in arms as some people.

The other is charging the same, but offered a massive increase in scholarship support. Seems like, with 25% fewer students, they can offer much more scholarship money. Since she got straight As lasts semester, with her new scholarship, her school year is likely to be <$5,000 all in. Crazy cheap. Hell, they even gave her an $850 allowance for books. And most of her courses will be on-line.

Interesting times. You could say that 2 of the three schools is participating in massive discounting via scholarships.


Kartik Gada

Geoman,

Thanks for the real-world info.

I was speaking to a well-known retired CEO who is a trustee of a university. He said that until now, they had a mandate of saying their costs rose at a rate 2% higher than inflation, each year. He told them that any company that operated under that mandate would go under. They refused to change, except that now, for the first time, they are being forced to back away from that stance.

As adaptations with online learning happen, along with tighter control on Chinese students coming here, the entire sector has to shrink, with Tier 3 institutions bearing the brunt.

Geoman

College is all about the "college experience."

This year, what is actually left of that experience? If classes are on-line, and there are no dorms, no sports, no recreational activities, what then? What is the college experience anyone is going to miss out on? Getting COVID19?

And once these kids are gone, that 25% that leaves this semester, will they ever come back? Statistics say no, only a small % will ever return to traditional college. once you quit you rarely go back.

Kartik Gada

The 'college experience' has been a myth rather than a reality, for a long time. Past nostalgia is the only thing keeping it going.

The institutions are now entirely dominated by radicals who are completely disconnected from mainstream American life.
The horror stories are rife, and entire (kangaroo) court systems now exist, for the purpose of instituting their own 'laws' independent of US laws in the areas around them.

Economics Professor barred from teaching class critical of Marxism :
https://www.thecollegefix.com/economics-professor-barred-from-teaching-class-critical-of-marxism-to-student-body/

The drift away of the college experience from career preparation is very high. The institutions may never recover.

Kartik Gada

The GA Tech MSCS has crossed 10,000 students :

https://iblnews.org/georgia-techs-omscs-program-surpasses-a-milestone-10000-students-enrolled/

Recall that this was an early ATOM AotM in Feb 2017 :
https://www.singularity2050.com/2017/02/atom-award-of-the-month-february-2017.html

The question becomes, why not to a BS degree as well, and combine the two into a BS/MS that trims the fat and is compressed down to 4 years and just ~$25,000 in total cost ($6250/yr)?

Jay

Kartik,

Good analysis.

Do you think the rising cost of education (and resulting massive resource misallocation) has been a major factor in offsetting the decrease in technology-driven costs, keeping overall inflation for the US in the 1% to 2% range?

And if you're right about education now heading toward a deflationary mode, aren't we about to see misallocation and price increases in another industry given the Federal Reserve's 2% overall inflation objective?

Care to speculate which one that might be?

Drew

It's interesting to see the divergence between k-12 and college - I think it shows how K-12 is daycare as much or more than education. Parents have many more and less expensive ways for 17 yearolds and above to take care of themselves.
I think that eventually there will be more specialized focus on the college experience as it becomes less of a career focused step - how do parents want their children to transition to living outside the home, but focusing on this makes it harder to justify ever increasing costs.
On Jay's question, this may reflect my stage of life - but there is more that enough entertainment out there for me and I could keep busy just dipping into the backlog rather than anything new being produced. I expect that entertainment has peaked, especially as AI apparently can already do mediocre writing and it won't be long before it can do mediocre animation/acting/music.
Medicine is the big one that we don't know when it will deflate.

Kartik Gada

Jay,

Pls refer to the ATOM publication. There is always net technological deflation, hence the need for ever-rising QE.

Kartik Gada

Drew,

Yes. Remember that the Prussian model of education is from 1870.

I do think families can form clusters where one parent just keeps an eye on 10 kids who are all learning online. If the parents take turns and 'timebank' (thereby removing the ridiculous layer of income tax, where the payer has to pay $2 for the recipient to receive $1), it can work, and as a 12-months-a-year model, is better than schools. As with everything, upper-middle-class communities will pull away from lower class due to the discipline needed for this model.

Plus, the videoconferencing revolution might enable families to live where a sufficiently large home can be financed on the husband's income, and the wife can spend more years at home, if so chosen. Silicon Valley engineers earn $300K these days. That is more than enough for a home anywhere in the other 95% of the United States, and is fat city relative to housing costs even in Dallas, Cleveland, Pittsburgh, most of Florida, etc.

Medicine is the one sector where there may never be net sectoral deflation, since while individual procedures can deflate and commoditize, we have a practice of spending half of a person's lifetime healthcare money to extend their life by an extra three months. As more advanced treatments emerge, all that advancement goes into another 3 months of life. Hence the deflation in basic services (MRIs, blood tests, genomics, etc.) is to no avail for the entire sector in combination.

There should be a market of choice, where the insurance company says :

a) We can cover the costs to keep you alive for 3 months, or
b) Choose to die now, and your family gets $300K

The insurance company/medicare would come out ahead with option b), but as it is a choice, it is not a 'death panel'.

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