Are you a college student?
A reader is preparing a report on the costs of college, and has asked me to share this survey. Just click the link to participate.
Being able to pay for college is an important long-term financial goal for most parents.
Are you a college student?
A reader is preparing a report on the costs of college, and has asked me to share this survey. Just click the link to participate.
“The idea that people can retire at 62 and walk around holding hands on the beach, it’s not realistic.”
Alicia Munnell’s new book warns about the upcoming retirement crisis in the United States.
Munnell, director of Boston College’s Center for Retirement Research, has completed a new book that concludes the golden age of retirement is over and Americans must adjust their practices and expectations. In the book, “Falling Short: The Coming Retirement Crisis and What to Do About It,” Munnell and her co-authors argue that retirement security in the 21st century means working longer, saving more, and passing fewer assets on to heirs.
The book, to be released Dec. 12, serves as a clarion call for new thinking and policies on retirement, including making it easier for workers to save and shoring up Social Security, which, in less than 20 years, will be unable to meet all its obligations.
If nothing is done, the book warns, “millions of retirees will find that they are too old to return to work and have little in savings — and no one to turn to for help.”
Traditional pensions are a thing of the past for most workers.
… In 1983, nearly two of three workers with retirement plans enjoyed a traditional pension; in 2013, less than one in four depended solely on such pensions, according to the Center for Retirement Research.
Most should continue working until age 70.
By delaying retirement until 70 from 62, individuals can increase Social Security checks by 76 percent, she said. Working longer also delays spending retirement nest eggs while providing more time to save. Munnell and her co-authors propose raising the earliest age for collecting Social Security to 64 from 62.
“People need to understand that one of the most potent levers is staying in the workforce,” she said.
This solution works for many, but some jobs that require manual labor simply cannot be done by older people.
The controversial recommendation of reverse mortgages may be opposed by potential heirs.
One of the book’s more controversial recommendations is to use reverse mortgages, which allow seniors to take equity from their homes to pay for retirement. When they die or leave the home, the property goes to lenders.
Today’s college graduates should understand that 73 is a realistic retirement age.
NYU professor Jonathan Zimmerman’s essay in the New York Review of Books asks “Why Is American Teaching So Bad?”
Going back to the early 1800s when most teachers were trained in ‘specialized “normal schools”’ that were considered academically inferior to liberal arts colleges, there have been many critics of what Zimmerman describes as the “tedious, anti-intellectual practices of American teaching”. Changes over the years have failed to produce appreciable improvements.
Who becomes a teacher in America? The answer keeps changing, and not in ways that should make any of us proud. In the first half of the twentieth century, as Goldstein notes, bookish urban immigrants used the profession to catapult themselves into the middle class. During the Great Depression, especially, teaching attracted people of outstanding academic achievement—including some with Ph.D.s—who couldn’t get work elsewhere. Since the 1960s, however, the proportion of top college students who have entered the field has steadily declined. Part of the reason lay in the feminist movement, which created new occupational opportunities for women outside of teaching. Rather than enhancing the profession’s status, as Susan B. Anthony had predicted a century earlier, this harmed it considerably, as many high-achieving women went into other professions.
Recent attempts to create stronger academic goals have seemingly backfired.
… When teachers were hired for their inborn ability to “nurture” schoolchildren, many derided or disregarded their intellectual capacities. Now we’ve created a system that is so firmly tied to scholastic achievement—as narrowly defined by standardized tests—that no serious scholar would want to teach in it.
Teach for America exposes the profound lack of professional standards in teaching.
… Imagine if an Ivy League student started Nurses for America, giving highly qualified recruits a quick five-to-seven-week training (which is all that TFAers receive) and then sending them into hospitals to draw blood, administer vaccinations, and monitor life-support machines. Newspapers and patients’ rights groups would immediately mount a strong political protest, and personal injury lawyers would see fertile new ground for lawsuits. Everyone understands that you can’t be a nurse without attending a nursing school with carefully developed standards that must be met if candidates are to be systematically inducted into the profession. Most of our schools of education lack such high standards. If they did, TFA and other “alternative routes” into teaching wouldn’t exist.
Education journalist Elizabeth Green believes schools of education fail in their mission of preparing teachers for the classroom.
… Green’s thesis is simple: most teachers are never actually taught how to teach. After encountering a very thin introduction to the theory and practice of teaching at education schools, they’re sent into classrooms to learn on the job.
What is the solution to bad teaching? It is not found in ‘the much-heard platitude that teachers need to “love” their students’? Rather, the U.S. needs “to design and develop an entirely different system of teacher education”.
… Do lawyers have to love their clients? Must doctors adore their patients? What American teachers need now is not love, but a capacity for deep and disciplined thinking that will reflect—and respect—the intellectual complexities of their job. It won’t do to simply strip away our insipid accountability systems and leave everything in the hands of present-day teachers, who are mostly unprepared for the tasks we have set before them. The US badly needs to design and develop an entirely different system of teacher education, stressing cognitive skills above all else. Anything less will leave our teachers languishing in “intellectual stagnation,” as Elizabeth Cady Stanton told Susan B. Anthony, and our schools mired in mediocrity.
Okay, but how do make such a huge change? The Obama administration just proposed regulations that will try to grade teacher prep programs, but like many of these top-down attempts to reform education its chances of success are uncertain at best.
Related: ‘teaching is not yet a profession’
Where are young college graduates choosing to live? And as they age, will they flee to the suburbs as earlier generations have done?
When young college graduates decide where to move, they are not just looking at the usual suspects, like New York, Washington and San Francisco. Other cities are increasing their share of these valuable residents at an even higher rate and have reached a high overall percentage, led by Denver, San Diego, Nashville, Salt Lake City and Portland, Ore., according to a report published Monday by City Observatory, a new think tank.
And as young people continue to spurn the suburbs for urban living, more of them are moving to the very heart of cities — even in economically troubled places like Buffalo and Cleveland. The number of college-educated people age 25 to 34 living within three miles of city centers has surged, up 37 percent since 2000, even as the total population of these neighborhoods has slightly shrunk.
These trends bode well for the top cities.
“There is a very strong track record of places that attract talent becoming places of long-term success,” said Edward Glaeser, an economist at Harvard and author of “Triumph of the City.” “The most successful economic development policy is to attract and retain smart people and then get out of their way.”
The economic effects reach beyond the work the young people do, according to Enrico Moretti, an economist at the University of California, Berkeley, and author of “The New Geography of Jobs.” For every college graduate who takes a job in an innovation industry, he found, five additional jobs are eventually created in that city, such as for waiters, carpenters, doctors, architects and teachers.
“It’s a type of growth that feeds on itself — the more young workers you have, the more companies are interested in locating their operations in that area and the more young people are going to move there,” he said.
Will millenials flee to suburbia as they start to have families?
How many eventually desert the city centers as they age remains to be seen, but demographers predict that many will stay. They say that could not only bolster city economies, but also lead to decreases in crime and improvements in public schools. If the trends continue, places like Pittsburgh and Buffalo could develop a new reputation — as role models for resurgence.
Not so fast. According to New Geography, “the first group of millennials who are now entering their 30s … are beginning, like preceding generations, to move to the suburbs”.
Here’s how the geography of aging works. People are most likely to move to the core cities in their early 20s, but this migration peters out as people enter the end of that often tumultuous decade. By their 30s, they move increasingly to the suburbs, as well as outside the major metropolitan areas (the 52 metropolitan areas with a population over 1,000,000 in 2010).
This pattern breaks with the conventional wisdom but dovetails with research conducted by Frank Magid and Associates that finds that millennials prefer suburbs long-term as “their ideal place to live” by a margin of 2 to 1 over cities.
Based on past patterns, by the time people enter their 50s, the entire gain to the core cities that builds up in the 20s all but dissipates, as more people move to suburbs and to outside the largest metropolitan areas.
FavData shared the graph on the left that shows the percentage of males holding various types of jobs, indicated by bars shaded yellow. Click the graph to enlarge for details.
At the top are pre-k teachers (2.3% male) and at the bottom are boilermakers (99.8% male). Second from the bottom with 99.6% male are “drillers of earth”, an intriguing term for a job with which I’m familiar, at least those drillers who work in the oil industry. When I worked at drilling sites as a petroleum geologist, I never ran across any female wellsite workers in any category.
This graph seems consistent with BLS data showing that in 2012 “92% of all workplace fatalities were men”. The bottom section of the graph shows men dominate jobs that involve risky physical activities handling heavy equipment. I recall it was not uncommon and almost a mark of honor for an oil well worker to be missing a finger. Economist Mark Perry sees a link to the gender wage gap.
… Isn’t it realistic to assume that men naturally show greater tolerance than women for risky, physically demanding, dangerous work in extreme outdoor conditions, and women put a higher priority on office work environments that are low-risk, indoors, safe and pleasant? Higher (lower) risk = higher (lower) wages, ceteris paribus, and women on average may be perfectly willing to accept lower wages for lower risk jobs, which would contribute to the unadjusted gender wage gap.
The default rate for federal student loans dropped from 14.7 percent to 13.7 percent last year. That’s a good sign, but it is informative to look a little more closely at the reporting.
How the default rate is determined
Default rates are based on the number of students who’ve defaulted on at least one student loan three years after leaving college. It takes at least 9 months of non payment for a default to take place and show up on one’s student loan record and credit report. The default rate has nothing to do with whether borrowers will default later while on repayment plans that can last up to 30 years.
… the talk among advocates, reporters, and policy wonks on Wednesday was less about the drop than about the Education Department’s last-minute tweak of its own numbers. That “adjustment,” which spared some colleges whose high rates would have cost them their ability to award federal aid, has reanimated the debate over default rates, long derided as a poor measure of institutional quality.
In news releases and on social media, many said the eleventh-hour reprieve undermined what little credibility the rates had, weakening them as an accountability measure.
For colleges at risk of losing federal aid, the government bureaucrats excluded from their report “any borrower who had loans with multiple servicers and defaulted on only one of them”. Apparently the rationale for this adjustment is that it is believed borrowers with multiple accounts usually default is because it’s so hard to keep track of all their loans. Thus, colleges should not be penalized. Uh, okay. In any case, considering that the default rate is high even with excluding so-called confused borrowers means other reasons are at play.
Why students are still defaulting
It’s hard to know the exact reason why students default, but there are three reasons that are pointed to the most: not finishing college, lack of employment post graduation, and lack of financial education. The first two reasons make sense. If you don’t have a job or you don’t feel you’ve finished your education, you may be fearful of student loan repayments. However, lack of financial education is really the main reason for most defaults. Why? So many repayment plan options exist, including Pay as You Earn, where borrowers may not have to pay anything when their income is low enough. Monthly payment amounts under the Pay as You Earn plan are adjusted annually based on income and there is a 20-year cap on loan payoffs. Temporary payment breaks also exist that also have kept borrowers out of default for those first three years in repayment.
The government has made attempts to promote the various reduced loan repayment options because supporters believe ‘millions of borrowers who qualify but do not participate are “effectively leaving a rather sizable amount of money on the table”’. One of the latest promotions has been in partnership with Turbo Tax.
Turbo Tax users will see information about loan repayment options and a link to the Department of Education website in a section of the program called “My Money Tools.”
They are provided with a link to a calculator that uses tax information, including their adjusted gross income, marital status and household size to determine eligibility for income-based and other income-dependent repayment programs.
A Brookings Institution study tells us that cognitive skills are very important in escaping poverty.
87 percent of poor smart kids escape poverty
The green bar on the far left of this graph shows that 87% of children with the highest level of cognitive skills who grow up in the lowest income quintile move out of that quintile by adulthood. The orange bar for that same lowest quintile shows that only 46% of low-income children with the lowest cognitive skills escape poverty.
Furthermore, the chances for these top-scoring poor children to become rich are the same as those of comparable middle-class children.
… High-skill adolescents in the bottom quintile have a 24% chance of making it to the top quintile similar to the rate seen among high-skill students in the middle-income quintiles.
Cognitive skills were measured using the Armed Forces Qualifying Test (AFQT). The study also found that conscientiousness, measured by the coding speed section of the Armed Services Vocational Aptitude Battery (ASVAB), is similarly associated with the ability of poor children to escape poverty.
… those with a degree had a 42% higher chance of making it from a lower-income household as a child into the higher-income bracket as an adult….
This data suggests ideas for policy changes, including one that would improve the opportunities for high-achieving children from low-income families to attend college.
An important caveat from the study:
… Needless to say, adolescent AFQT and coding speed scores are far from a pure test of merit, or market ability. They simply measure certain skills that have developed up to the time of test taking. A whole host of factors—family background, formal education, and social environment—will have influenced this development. It is important to stress that our measures do not—cannot—capture innate levels of skill or ability.
Please join me at this upcoming event.
If you live in the New York City area and are interested in learning more about the rising cost of college, its impact on families, and strategies for handling college costs, I invite you to join me at a seminar next Tuesday, February 25.
The Cost of College and Its Impact on Families
February 25 at 7:30pm
Curious on Hudson Learning Center
145 Palisade Street, Suite 412B
Dobbs Ferry, NY 10522
To register, go to the Curious on Hudson site.
We’ve been hearing that young people are leaving Facebook and migrating to Instagram and Snapchat. The report on 2014 Facebook Demographics & Statistics shows some numbers behind this trend.
1) Teens (13-17) on Facebook have declined -25.3% over the last 3 years.
2) Over the same period of time, 55+ (perhaps those teens’ parents and grandparents?) have exploded with +80.4% growth in the last 3 years.
3) Of the major metropolitan areas, San Francisco saw the highest growth with +148.6%, a stark contrast with Houston which saw +23.8% growth.
Young adults age 18-24 have also been leaving Facebook, although at lower rates than younger teens.
Based on my limited anecdotal evidence, Instagram is currently one of the hottest online tools for teens.
Advice for high school seniors from NextStepU includes this important tip.
Fill out the FAFSA as soon as you can
For your freshman year, you need to send in your FAFSA very early (check specific deadlines). It is a pain, but make sure that you sit down with your parents and apply for federal financial aid as close to Jan. 1 as possible. *Note: Make sure you or your parent goes in and makes the appropriate changes to the FAFSA once the family receives its tax returns.*
Also check for any additional forms required by your state to determine eligibility for their financial aid program.
Click on Five New Year’s financial aid tips for seniors to see the complete list of recommendations.