Take the Money and Run?

Choices, choices: what do today's college graduates see as more attractive, a lucrative job on Wall Street or the chance to serve those less fortunate? Check out this New York Times article:

Big Paycheck or Service? Students Are Put to Test

A prominent education professor at Harvard has begun leading “reflection” seminars at three highly selective colleges, which he hopes will push undergraduates to think more deeply about the connection between their educations and aspirations.

The professor, Howard Gardner, hopes the seminars will encourage more students to consider public service and other careers beyond the consulting and financial jobs that he says are almost the automatic next step for so many graduates of top colleges.

“Is this what a Harvard education is for?” asked Professor Gardner, who is teaching the seminars at Harvard, Amherst and Colby with colleagues. “Are Ivy League schools simply becoming selecting mechanisms for Wall Street?”

Although others have expressed similar concerns in recent years, his views have gained support on the Harvard campus with students, faculty and even the new president, Drew Gilpin Faust, who made the topic the cornerstone of her address to seniors during commencement week. Dr. Faust noted that in the past year, whenever she has met with students, their first question has always been the same: “Why are so many of us going to Wall Street?”

I graduated from an Ivy League school and I know that a large percentage of my classmates are now working at these Wall Street jobs, or in corporate law firms or consulting companies. But most of the people I kept in touch with or hear about are working in the non-profit sector, or government, or journalism or teaching or the arts. I can't think of a single person who didn't burn out on that fast track big money lifestyle really fast.
It's been almost 20 years since I graduated, and I wonder if things have changed at my school. From what you hear, today's college students are a socially conscious bunch. You'd think college students of my age would have been more influenced by the "greed is good" 80's, and I know many were: one guy I met freshman year quite bluntly told me that his goal was to work on Wall Street and make a ton of money, no ifs, ands, or buts about it. But I guess I just didn't stay friends with him and his ilk. And perhaps what has changed in the 20 years since is that people think they need even higher levels of wealth just to stay ahead. And as the article points out, kids who go to Ivy League schools are by nature (and necessity) very competitive. The prestige of lower-paying jobs is not as evident: and when you're done competing in the classroom or with the other artistic or athletic talents that count in college, money is the obvious prize that's left to win.

The Latest (Late) Links

An Explanation of the Credit Crisis

Raise your hand if you don’t quite understand this whole financial crisis.

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

Teachers Can Make $125,000

“The money, as funny as this may sound, is not about the money,” he says. “The money is a signifier. Because money, in our culture, is a signifier of how jobs are valued, and right now schools are telling teachers that they are not valued. The great and talented people who go into teaching are incentive-ized in every possible way to leave the classroom for jobs in administration or jobs outside of schools altogether. What we are trying to do is reverse those incentives. We want the best teachers to keep on teaching, to be challenged and valued.”

Tuition Breaks at Harvard Law

For years, prosecutors, public defenders and lawyers in traditionally low-paying areas of the law have argued that financial pressures were pushing graduates toward corporate law and away from the kind of careers that they would pursue in the absence of tens of thousands of dollars in student loans.

“The debt loads that people are coming out of law schools with are now in six figures,” said Joshua Marquis, the district attorney in Clatsop County, Ore., and vice president of the National District Attorneys Association. “When the debt load is that great, I have had a lot of applicants who’ve said, ‘I’d like to take the job, but I really can’t afford it.’ ”

More Recent News: Cost of Prison, Expensive Placebos, and Payments for Good Grades

More recent news items of interest, all from the New York Times:

1 in 100 U.S. Adults Behind Bars, New Study Says

Nationwide, the prison population grew by 25,000 last year, bringing it to almost 1.6 million. Another 723,000 people are in local jails. The number of American adults is about 230 million, meaning that one in every 99.1 adults is behind bars.
....

Now, with fewer resources available, the report said, “prison costs are blowing a hole in state budgets.” On average, states spend almost 7 percent on their budgets on corrections, trailing only healthcare, education and transportation.

In 2007, according to the National Association of State Budgeting Officers, states spent $44 billion in tax dollars on corrections. That is up from $10.6 billion in 1987, a 127 increase once adjusted for inflation. With money from bonds and the federal government included, total state spending on corrections last year was $49 billion. By 2011, the report said, states are on track to spend an additional $25 billion.

It cost an average of $23,876 dollars to imprison someone in 2005, the most recent year for which data were available. But state spending varies widely, from $45,000 a year in Rhode Island to $13,000 in Louisiana.

The cost of medical care is growing by 10 percent annually, the report said, and will accelerate as the prison population ages.

More Expensive Placebos Bring More Relief

The investigators had 82 men and women rate the pain caused by electric shocks applied to their wrist, before and after taking a pill. Half the participants had read that the pill, described as a newly approved prescription pain reliever, was regularly priced at $2.50 per dose. The other half read that it had been discounted to 10 cents. In fact, both were dummy pills.

The pills had a strong placebo effect in both groups. But 85 percent of those using the expensive pills reported significant pain relief, compared with 61 percent on the cheaper pills. The investigators corrected for each person’s individual level of pain tolerance.

“It’s a great finding,” said Guy H. Montgomery, an associate professor of cancer prevention at the Mount Sinai School of Medicine who was not involved in the research. “Their manipulation of price affected expectancies of drug benefit, and pain is the ultimate mind-body phenomenon.”

Next Question: Can Students Be Paid to Excel?

The fourth graders squirmed in their seats, waiting for their prizes. In a few minutes, they would learn how much money they had earned for their scores on recent reading and math exams. Some would receive nearly $50 for acing the standardized tests, a small fortune for many at this school, P.S. 188 on the Lower East Side of Manhattan.

At Junior High School 123 in the Bronx, Jerome Johnson, a seventh-grade math student, also received cash awards.

When the rewards were handed out, Jazmin Roman was eager to celebrate her $39.72. She whispered to her friend Abigail Ortega, “How much did you get?” Abigail mouthed a barely audible answer: $36.87. Edgar Berlanga pumped his fist in the air to celebrate his $34.50.

The children were unaware that their teacher, Ruth Lopez, also stood to gain financially from their achievement. If students show marked improvement on state tests during the school year, each teacher at Public School 188 could receive a bonus of as much as $3,000.

School districts nationwide have seized on the idea that a key to improving schools is to pay for performance, whether through bonuses for teachers and principals, or rewards like cash prizes for students. New York City, with the largest public school system in the country, is in the forefront of this movement, with more than 200 schools experimenting with one incentive or another. In more than a dozen schools, students, teachers and principals are all eligible for extra money, based on students’ performance on standardized tests.

Does Green Go With Crimson? Financial Aid at Harvard

Harvard to Aid Students High in Middle Class

College costs aren't usually a big topic on this blog: my own student loans are a distant memory, and I won't be having any children whose education will wipe out my savings. Still, this NY Times story caught my eye.
I remember hearing a while ago that Harvard had changed their financial aid package so that anyone whose family made less than $40,000 did not have to pay for their education, other than having to make a small contribution via work-study. The income level for the free ride has since been raised to $60,000.
Now Harvard has announced expanded financial assistance for families at higher income levels as well. There is nothing in the article that spells out exactly how much aid is available to different income levels, but families with household incomes between $120,000 and $180,000 will get more aid than they have in the past. They will generally only be expected to put 10% of their income towards the child's education, and home equity will not be a factor in aid decisions.
Given that the average cost of a year at Harvard is now about $45,600, this kind of financial aid makes a huge difference for a lot of students, and other top schools are expected to begin offering similar levels of assistance. Some people might think that a family with an income of $180,000 doesn't "need" financial aid-- some might not, but of course other factors come into play, such as the number of college-age children, etc. And some people think college students should have to suck it up and pay for their own education and just go wherever they can afford. But I think what Harvard is doing is great.
When you go to a school like Harvard (and someone will probably say there is no place else "like Harvard" but for the sake of argument, let's just say that $10 billion or so more in endowment funds than your nearest rival doesn't make that big a difference), your educational experience is about a lot more than just your classes and dorm life. The resources of the university pay for so many activities and networking opportunities that go beyond that. Students who have to spend too much time working on a campus job, or who can't afford the additional costs involved in these extracurricular activities are really missing out on a big part of the whole package. This ends up meaning that students from wealthy families are the ones benefiting from that part of the university's spending, even if they aren't actually getting financial aid. What Harvard is doing should help even the playing field somewhat.
The article made me think back to my own college years at an expensive Ivy League school (which may or may not have been Harvard. Wouldn't want to narrow things down here!)
I think my father was making around $50,000 when I was applying for financial aid in the mid-80s, and if I remember correctly my yearly college costs ended up being around $20,000 on average over the 4 years. Most schools where I was accepted didn't give us a penny (except for my "safety school," a state university where I could have gotten so many scholarships I practically would have made a profit). The one I ended up attending gave me $1,200 in outright grants the first year, but nothing the next 3 years. To pay the bills, my father dug into savings and took out a second mortgage. I took out some loans myself, and worked on campus in my sophomore through senior years, as well as throughout the summers. I never considered any internships or summer programs because I didn't think we could afford it.
If you do some inflation math to convert everything into today's dollars, it seems outrageous that my father was expected to pay 100% of about $35,000 in costs, on a $90,000 salary. If I was going to Harvard today, he'd pay about $9,000 out of $45,000 in costs*. Sigh. Yet another reason to wish I was a lot younger!

*I'm assuming by "household income" they mean gross income including salary and investment income, before taxes, but I have no idea if this is correct.