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College Graduates In 2008 Borrowed 50 Percent More Than Graduates In 1996

By Pat Garofalo on Nov 24, 2010 at 2:00 pm

At the same time that America’s educational attainment has been falling, the cost of higher education has been consistently rising. College costs are up 23 percent since 2000, and according to a new report from the Pew Research Center, 2008 graduates borrowed 50 percent more to finance their college educations than did graduates in 1996:

Graduates who received a bachelor’s degree in 2008 borrowed 50% more (in inflation-adjusted dollars) than their counterparts who graduated in 1996, while graduates who earned an associate’s degree or undergraduate certificate in 2008 borrowed more than twice what their counterparts in 1996 had borrowed, according to a new analysis of National Center for Education Statistics data by the Pew Research Center’s Social & Demographic Trends project.

And for those who prefer their data in graph form:

Once you filter out the students that didn’t borrow any money, the average loan amount of borrowing for a bachelor’s degree was about $23,000.

But even those numbers don’t tell the whole story. A growing number of students are going to for-profit colleges — which have been accused of “recruiting students with inflated promises, fudging financial-aid applications and leaving graduates with crushing debt and bleak job prospects” — and the borrowing at those institutions is astronomical.

According to Pew, “one-quarter (24%) of 2008 bachelor’s degree graduates at for-profit schools borrowed more than $40,000, compared with 5% of graduates at public institutions and 14% at not-for-profit schools.” The Obama administration has been trying to craft new rules to govern the for-profit college industry, but Congressional Republicans have been standing in their way.

As former President Bill Clinton said, “higher education institutions are pricing themselves into America’s decline.” The country is already on pace to be short 16 million college education workers by 2025, and the constantly spiraling amount of debt that students have to incur to get a degree is going to make it that much harder to catch up.

Banks Look To Make Already Weakened Volcker Rule Even Weaker

By Pat Garofalo on Nov 24, 2010 at 10:00 am

Former Federal Reserve Chairman Paul Volcker

During the final hours of debate over what became the Dodd-Frank financial reform law, lawmakers inserted an exemption to the Volcker rule, which is meant to prevent banks from trading for their own benefit with federally insured money. Added at the behest of Sen. Scott Brown (R-MA), the exemption allows banks to invest three percent of their capital in risky hedge funds and private equity firms.

This was a lousy compromise that undermined the original goal behind the Volcker rule. Former Federal Reserve Chairman Paul Volcker — for whom the rule is named — expressed disappointment at the time that the rule had been diluted. “Allowing a bank to invest in a speculative fund goes against the very intent of the bill as we seek to define those activities that are worthy of government protection,” he has said.

And now, with financial reform no longer in the headlines, the banks are hoping to make the already weakened rule even weaker:

In comment letters to regulators studying how to implement the rule, banks are seeking laundry lists of carve-outs, including broad exceptions from what is considered proprietary trading and greater freedom to invest in private-equity firms and hedge funds…The length and breadth of the exceptions being sought run the gamut.

Specifically, Bank of New York Mellon, Northern Trust, and State Street are looking to exempt certain investments from counting towards the three percent cap.

Volcker, for his part, has been warning the regulators against watering the rule down any further. “Clear and concise definitions, firmly worded prohibitions, and specificity in describing the permissible activities will be of prime importance for the regulators as they implement and enforce this law,” he said. A group of Senators led by Sen. Carl Levin (D-MI) — who was one of the Volcker rule’s biggest advocates during the financial reform debate — have also penned a letter to regulators stating that “[Congress] provided you with a clear mandate and broad authority to act. The American people are now relying upon you to fully carry out the law.”

American Banker characterized the financial services industry as desiring “so many exceptions from the Volcker Rule’s limits on risky activities that it might as well not exist at all.” If regulators give in to the industry’s demands, the rule will indeed amount to nothing.

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