I am amazed and upset. I just received an article from the New York Times titled “A Generation Hobbled By The Soaring Cost Of College”. It is written by journalists Andrew Martin & Andrew W. Lehren.
The article discusses the student loan problem from various angles – individuals, public schools, for-profit schools etc – but ends with the students/graduates who are stuck with the loans. I want to share with you a few lessons and points that pop out from my first read of the article.
Most students graduate with debt that is equivalent to an expensive car, rather than a house. Although this is good, it highlights the fact that if they had good-paying jobs, it wouldn’t be so bad that they have loans. In fact, the bad jobs affect even people without loans!
Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education…the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000.
Nothing is worth having at any price – not even an education. I asserted that college is for rich people before, and there are never rich people in these articles! We need to start deciding on how much we can spend before going shopping – we do this for cars, houses, but apparently not for education.
…the extraordinary growth in student loans has caught many by surprise. But its roots are…enabled by a basic economic dynamic: an insatiable demand for a college education, at almost any price, and plenty of easy-to-secure loans, primarily from the federal government.
It’s a bad idea to go to college to figure out what to study. That’s like buying an SUV before you decide what kind of car you really want, and then getting upset that you’re in the wrong kind. This person only has herself to blame for being in college five years – do the math, and you’ll see how much she “over-spent”.
…she would have to borrow about $10,000 a year. But the tuition increased every year, and because she didn’t declare a major until her junior year, she needed five years to graduate. A social worker, she now owes $80,000.
My favorite – why I write this blog, and am committed to my mission. Financial education for people with student loans is woefully inadequate. I’ll let you guess how many colleges and universities have financial planners or Certified Public Accountants in their office of financial aid.
[Financial Aid] counseling typically consists of making sure [students] complete a brief online course about student loans and repayment. Beyond that, it is up to the college to decide what, if any, debt counseling to provide. With a few exceptions, their track record is not very good…Until Congress banned the practice a few years ago, some colleges outsourced counseling to private lenders, the same ones offering loans. Now many colleges do little beyond what is required by law, experts say.
Please read the rest of the article here. If you haven’t read my articles about college education as a commodity and about college education as an investment, please do – consider them “buyers’ advice”.
If you have any initial reactions, please comment!