Richard Vedder at Bloomberg says end student loans, don't make them cheaper. He asks why nearly 54 percent of college grads are unemployed or underemployed, when employers complain that they can't find skilled employees.
The Bureau of Labor Statistics tells us that we now have 115,000 janitors, 83,000 bartenders, 323,000 restaurant servers, and 80,000 heavy-duty truck drivers with bachelor’s degrees -- a number exceeding that of uniformed personnel in the U.S. Army.
Was college worth it? A huge part of the problem relates to federal financial-aid programs. Annual student loans, Pell Grants, tax credits and other federal assistance totaled some $169 billion a year in 2010-11 -- more than 1 percent of national output. These programs are based on two erroneous premises: that almost everyone needs higher education for vocational success, and that they reduce student costs.
More than 25 years ago, Education Secretary William Bennett argued that federal aid programs benefited colleges more than students. Recent studies by Stephanie Riegg Cellini of George Washington University and Claudia Goldin of Harvard University, as well as by Andrew Gillen for the Center for College Affordability and Productivity, support that hypothesis. A new study by Nicholas Turner of the Office of Tax Analysis in the U.S. Treasury Department argues that when tax-based aid goes up, institutional scholarships go down, dollar for dollar.
An acquaintance of mine Scott Kirwin, who is college educated, and lived and worked in many parts of the world writes about the loan vs indebtedness tradeoff.
As an intellectual, college educated adult and the parent of a teen, I’m concerned about the split between the job market and the educational system. Like every parent I want to provide the best start to my kid as possible. But when I look at the academic world, its cost in terms of time as well as money, I’m wondering if the path that I followed still makes sense. Vedder estimates that students spend 30 weeks a year in school and less than 30 hours a week on academics. In the best quote I’ve seen on the expense of higher education he echoes Churchill when he concludes “never have so many dollars gone to teach so many students for so little vocational gain.” With the average cost of a year of public college at $22,000 and of a private one at $43,000 a quick bit of (high school) math nets the per-hour cost of the education using Vedder’s hours spent at $24.50/hour (public) and $47.77/hour (private).
Is there a better way? For many parents and potential students there must be, but if so what?
At those rates one could realistically hire a full-time private tutor – and good ones at $48/hour. But if you do would you demand him or her teach your child about Happiness or watch HBO? If not, why would you as a parent allow your child to waste his time on such fluff – especially when he is bearing more of that cost by becoming indebted?
Indebtedness is one of the worst possible burdens one can put on one’s child. ...It’s much more difficult to pursue a once-in-a-lifetime career opportunity while an existing job makes the student loan payments.
I'm retired now, but my schooling was GED and technical college. I did ok except for retirement (lost my most of my retirement fund in the 90s Dot-com/Tech Bubble crash). Sure I probably would have done better with a degree: if my parents or myself could afford it, but being from a poor family, at what price? For that matter at what price for any family?
For many, I think high school and technical college is a better way to go, rather than spend half their working life paying for student loans.