
A panel of economists, bankers and investors gave their perspectives on putting the evolving economic crisis into real terms, and CSULB President F. King Alexander encouraged students to switch from private to federal loans Wednesday at The Pointe.
Alexander said the return on investments in the education system remains sound for students and others because it produces individuals who attain higher incomes and, in effect, generate the revenue so vital to California’s economic structure.
“The most stable investment that we’ve seen for [the past] 50 years,” Alexander said, “is actually in [students].”
To maximize the return on their investments, Alexander said, students should switch from private loans to federal direct student aid loans with interest rates that will not fluctuate with the credit market.
“They have income contingent payment programs that are also embedded within the system,” Alexander said, “and those dollars that are available for you to get through college are there and are protected [by the Department of Education].”
Despite his predictions of fee increases, he assured the students that they “are in a relatively protected zone here.”
He urged students to educate themselves on their career prospects.
“Know your field. Talk to your professors. Talk to your faculty about what’s going on in the market,” Alexander said. “Ask, ‘Are the graduates that went before me getting good jobs or are they coming back to grad school?”
He suggested grad school as a way for students to remain in this “protected zone” while waiting for job markets to improve.
Alexander expressed his dissatisfaction with the amount of attention given to education in Sacramento and on the campaign trail, and emphasized the high return rate of investing in education.
“Education has become a backseat issue … behind Afghanistan and Iraq, behind health care, behind security, behind Medicaid and now behind Wall Street,” Alexander said. “We find very little attention to the thing that’s perhaps the most foundational issue that we deal with as a society.”
Lisa Grobar, economics professor and director of the economic forecast project, advised students to keep in mind that recessions are short-term events.
Rather than abruptly changing course in order to enter fields with job surpluses, like engineering and nursing, students should think about careers with a sense of the long-term.
While Grobar predicted revenues would begin to recover in approximately six months for California, Alexander said the CSU system is looking at something more like a two-year recovery period.
While acknowledging that we are in turbulent times, panelists’ remarks toward the bailout remained optimistic and positive. They frequently cited the Great Depression, arguing the measure’s preferability to a more lengthy process of allowing free markets to right themselves.
Tim Anderson, principal of the Halbert Hargrove Investment Council, attributed the current disorder in the stock market to a “self-fulfilling psychology.”
When investors lose confidence in the market and pull their stocks with decreasing value out of the market, it only drives the value of remaining stocks further down. Anderson said this trend began a little over a year ago and was exacerbated over the summer.
Anderson said the financial media, who tends to have no use for business-as-usual news, fueled the downturn, but that, the stock market will no doubt recover with time.
“It is a matter of history,” Anderson said. “[The] best thing to do is be bold.”