Politicians, economists and educators continue to trumpet the importance of a college education. At the Montana Conference for Education Leaders in Billings this week, academic experts nodded to each other that in our modern knowledge-based economy, finding a job without a degree will become increasingly difficult.
Yesterday we learned that two-thirds of college graduates last year had student loan debt, averaging $27,000. Half of recent graduates can’t find jobs, and if they do, they find starting salaries have declined.
The issue is pretty complex. College tuitions have increased at a greater rate than inflation. Few students now work while at school. Employers say colleges are not preparing students to meet their needs. Americans have become less nervous about debt and more comfortable with relying on government financial help. Parents and students have not saved for college. Many students use loan proceeds for all kinds of spending that is unrelated to school. Some who receive loans and grants are not really students at all.
Add it all up and we face a $1 trillion student loan bubble. And if you think all of that debt will be repaid to the taxpayers, I have a bridge . . .
Like the housing bubble, there will be a hue and cry to forgive the debts. Some will say college education should be free – just like (gulp) Greece.
Is it a hopeless situation? I don’t think so. Here are just a few of many course corrections for our state universities that could turn the college cost/benefit dilemma around in fairly short order:
- Limit student loans to educational costs only – tuition, books, perhaps on-campus room and board, and monitor recipients’ school attendance and performance
- Take a hard look at the cost-drivers at our state-funded universities – is that new stadium necessary? Are professor salaries commensurate with student benefit?
- Eliminate the kickback corruption in the textbook industry – replace printed texts costing over $100 each with electronic media
- Require student borrowers to have a documented plan for their educational path that leads to economic success – would a commercial bank make a business loan without a plan?
- Allow and encourage employers (yes, those terrible profit-hungry abusers of the common people) to collaborate on-campus to make a direct connection between education and employment
- Break up the radical left-wing academic bloc, eradicate their failed social engineering objectives and culture, and replace it with economic realism – the understanding that the reason one attends a university is to improve one’s ability to generate wealth for him or herself, a potential employer, and our nation.
Most important of all – we must prepare our K-12 students with a fundamental working knowledge of economics so that they are equipped to make rational career decisions at graduation.
Tom Balek – Rockin’ On the Right Side
You load 16 tons –
What do you get?
Another day older
And deeper in debt
4 thoughts on “You Take 16 Credits, What Do You Get? (Another Day Older and Deeper In Debt)”
Yes, I do believe that this will be the next “bubble”
I started a comment on this but it turned out to be quite long and I wasn’t anywhere near the end. So I erased it and wrote this instead.. Perhaps we will run into each other somewhere and we can discuss this. As with many of your blogs, I find myself both agreeing with part of it and disagreeing with part of it, which I think is a good thing.
I agree, you may be naive, Dave. If all of our graduates are educated and wise (major in Russian Lit and minor in Philosophy) but unable to generate their own wealth or add value for an employer, life in America as we know it is pretty much over. The world is full of educated people who can’t feed themselves.
Sorry to say, life IS all about making money and taking care of ourselves. What do you do when you get up in the morning? Look wise? Self govern? No, you go to work so you can improve your family’s standard of living.
As to why you are required to pay for someone else’s education – it’s good to question that. You might prefer to keep that money and use it to feed your family, or pay for your own child’s education. Or you might appreciate that the university has generated some rich people who pay taxes, employ people and create GDP for our nation. Most will look for some balance. Fortunately in our democratic republic we still have some say about that. The Greek model hasn’t worked out very well.
Keep coming back, Dave, we’ll have you on the RIGHT side before you know it!
Thanks for your post.
Don’t forget the interest rates for student loan debts is more than 8%. Why so high on a debt that can’t be discharged in bankruptcy and that lasts beyond your death? To pay for Obamacare.