Right Thinking From The Left Coast
I find that the harder I work, the more luck I seem to have. - Thomas Jefferson

Wednesday, September 15, 2010

The Road to College Serfdom

Mish posted an interesting article from the New York Times a couple of days ago, dealing with college debt and the impacts it has on people’s lives.  Quoted in part:

Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days.

Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.”

A little further is this howler:

Ms. Tidwell feels no guilt about the $250,000 in debt she will probably run up, including some from a master’s degree program she completed in London, where she and Mr. Kogler met. “I didn’t acquire it because I go out and shop a lot,” she said. “It’s because I’m doing something that I’ll love for the rest of my life.”

As one of Mish’s commenters pointed out, she better love paying debt for the rest of her life, because that’s what she’s going to be doing.

Although the focus of the article is social, this is really a much deeper problem, and one with a relatively simple fix--the rapidly increasing cost of tuition.  My first year of college, back in 1994, a full year’s worth of credits at the local urban commuter college I went to cost less than $2,000.  When I went back for some credits after leaving the military in 2007, going half-time cost the same amount.  This is ridiculous, quite honestly is unsustainable, and is symptomatic of the rot that’s infecting the American university system (to say nothing of the largely Marxist-sympathetic professoriate that inhabit most of the teaching positions).  The Bankruptcy Law Network blog reported that the National Center for Higher Education and Public Policy found that college tuition has grown four times faster than inflation since the early 1980s.  That’s even greater than the rise of health care costs, yet no one in government is trying to figure out how to make college more affordable, just how to cram even greater numbers of students into an already overwhelmed and underperforming university system.

The massive increase in tutition costs is largely the result of two key factors: 1) The government backstops all of these loans, and 2) Student loan debt is not dischargable in bankruptcy. 

The first is the most critical.  With the US government guaranteeing payment of all these loans, colleges have NO incentive whatsoever to lower their tuition rates.  Why should they, when they know they will be getting their money regardless of whether or not the student can actually afford to pay for it?  The second allows the student loan industry to keep these individuals in perpetual debt peonage, putting college graduates in the same debt class as deadbeat parents and felons. Obama made some noise last March, when he signed the Health Care and Education Reconciliation Act, that the bill would “help make college more affordable, but like a lot of things Obama says, it’s a bunch of bullshit.  All it really did was cut orgs like Sallie Mae out of the loan profit loop, and replace them with non-profit agencies like EdFund who act as a proxy for the government to do the same thing that the Sallie Maes were doing.

The whole situation is beyond unacceptable, and to me is a clear-cut case of the government committing an immoral act by stealing thousands of dollars in future wealth creation from college graduates.  We are essentially creating an entire generation of debt slaves, on the hook for what in many cases is the equivalent of a mortgage and in most cases the cost of a luxury vehicle, before they’ve even reached their mid-twenties--which gets even more expensive the longer they take to pay the loan.  All to keep feeding the educational complex and create a massive underclass of paper-pushers and desk jockeys, which is all most college graduates these days are good for, while simultaneously watering down college degrees until they no longer are useful as a standard of excellence.

The immediate fix is pretty damn simple--the government needs to eliminate ALL backstopping of college loans immediately, eliminating the incentive to keep raising tuition, and allow student loan debt to be discharged in bankruptcy, which will force both lenders and the schools to figure out ways to graduate students while lending money and keeping tuition at reasonable levels.  Shoveling more money in tax dollars to colleges at this point is fiscally pointless--you might as well take all those FRNs and light them on fire like the Joker did in Dark Knight


I fully understand that this fix would likely prevent thousands, if not millions, of young people from attending college, because schools would have to become more picky as to who was accepted in order to keep costs down.  Millions of poor people will either have to put college off or go part-time, taking longer to finish their schooling. 

To me, that’s fine.  A stint in grad school grading papers opened my eyes to the fact that there are a lot of young adults out there who absolutely do not belong in college--they simply don’t have the intellectual capability to handle a traditional university course load.  And we are not doing the poor any favors at all by putting them $20K, $50K, $100K or more into debt when they are barely into their wealth-creating years.  We can’t continue setting up entire generations of young people to fail for the false promise that a piece of paper provides.

Long-term, reform would be trickier because a complete cultural paradigm shift regarding education is required.  Schools need to stop brainwashing kids that the only way they will ever be happy and successful is to shoot for a PhD, and that they are complete failures if they don’t get a dual-BA in Poverty Studies and Art History.  We need to start emphasizing that blue-collar occupations such as plumbing, carpentry, and electrician are viable, fulfilling career choices, and develop programs in the schools to bring back vocational training for kids who might not be academically inclined.

The bottom line is that this system is no longer sustainable, and needs to be massively overhauled immediately or it’s fuxored.  The math over the long term simply does not support it.

Post-script:  Check out the graphic here for a nice breakdown of how we got to this point.

Posted by on 09/15/10 at 09:08 PM in Decline of Western Civilization   Life & Culture   Politics   Law, & Economics  • (0) TrackbacksPermalink
Page 1 of 1 pages