Twenty years ago student loan debt wasn’t a serious problem. The “arithmetic” made sense. You could work your crummy minimum wage job in the summer and get another crummy minimum wage job for ten hours a week while you were at school. Maybe you could get a little scholarship money, and then you borrowed a few thousand, and Voila!, you had paid for college.
The average debt for a graduate was $11,385 and the Clinton economy was humming along—good jobs were there for the taking.
Unfortunately the “arithmetic” does not compute anymore.
Over the last two decades, the average debt load for a graduate has grown to $37,172. That is an increase of 226%.
Today 13.5% of the population is burdened by student loan debt—a total of $1,480,000,000,000. This exceeds total credit card debt. After purchasing a home, a college education is now the second-largest expense an individual is likely to incur in their lifetime. The Millennials have borne the brunt of this financial calamity.
How did student loan debt turn into a national crisis in such a short period of time?
Obviously, one factor is the higher cost of a college degree. For example, college tuition increased by 200% during this period of time.
Another factor is wages. For most workers, real wages have been flat for years and years. (See the Pew Study referenced below.)
And then we had The Great Recession of 2008, driven by the sub-prime mortgage crisis. This was a game changer for students graduating college during that time. Since 2008 half of all college grads have ended up under employed or unemployed. (Twenty-five percent of minimum wage jobs today are held by college graduates.)
There is another issue, i.e. Supply versus Demand.
I apologize for using a cliché:
The definition of insanity is doing the same thing over and over again and expecting a different result.
This quote has been commonly misattributed to Einstein.
In this case “insanity” takes the form of, what I call, “College Mania.”
Two decades ago thirty-five percent of high school graduates went on to college. In a certain sense colleges determined who was going to achieve financial success. If you managed to graduate, you were probably on your way.
Today that number is around forty-five percent. Necessarily, given the raw numbers, a goodly portion of these students are mediocre academically. Colleges no longer control the gateway to financial success. Many students graduate with one kind of degree or another. Prospective employers have two candidates for every good job. It is their task to “winnow the wheat from the chaff.”
Given the high cost of college, flat wages, and the scarcity of suitable, well-paying jobs, borrowing money to matriculate qualifies as “insanity” unless you are a very good student who is building a strong, marketable resume. (I concede that Kate Middleton got a good gig—duchess, but art history is a hobby.)
Before you decide to “shoot the messenger,” the economy is showing signs of finally turning around. We have just had three straight quarters of 3% GDP growth for the first time in twelve years. We are gaining sixteen thousand manufacturing jobs a month. (This is opposed to losing one thousand manufacturing jobs a month.)
You are going to need a post-secondary education to acquire marketable skills. The issue is how those skills match up with the demands of the workforce.
That paper you wrote on Kant’s Groundwork of the Metaphysics of Morals isn’t going to qualify you for a well-paying job in Fieldbus Technology.
https://studentloanhero.com/student-loan-debt-statistics/
http://www.ihep.org/sites/default/files/uploads/docs/pubs/studentloandebt.pdf
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