Want a good scare? Student loan debt is now $1.1 trillion, $85 billion of it past due, owed by 14 percent of borrowers. Yes, that’s what the Federal Reserve blows through in a month, but they can print money. Student debtors can’t — at least not legally.
Sixty percent of students — about 12 million of them — have loans. Average indebtedness is more than $28,000, with about 10 percent owing above $58,000. In 2011, the federal government disbursed more than $108 billion in student loans, roughly double that of ten years ago. Increasingly, debt and education are joined at the hip, a troubling phenomenon as both costs and defaults continue to rise.
Outstanding student debt seems fairly small compared to $6 trillion lost in real estate during the Great Recession. But those worrying over it know it has the potential to knock the bottom out of the economy, both by crippling college graduates’ participation in commerce and by threatening another financial collapse through massive default. Nor is this the only issue on which we ought to be focusing.
The recent tempest-in-a-teapot over the rates on student loans — 3.4 percent? 6.8? Prime rate plus 2.05 percent? Plus an additional 4.6 percent? — obscures a basic question. Why is it necessary to have a government subsidized student-loan program to begin with?
The short answer is that college education has become an entitlement. Practically from the day we are born, the necessity of a college degree has been pounded into us; perusal of the “help wanted” section of any local newspaper will confirm this popular prejudice. As a consequence, everyone must have access to higher education, regardless of ability to pay; anything else would discriminate against those of meager means, since working one’s way through school is just so ... 1960s, isn’t it?
As for those who spend their money in other ways, well ... We can’t judge other peoples’ lifestyles, so almost-free money has to rain down.
Except that it doesn’t. There is no provision of the federal constitution requiring the government to provide a subsidy for education, which disproportionately benefits the individual being educated. Colorado’s governor and legislators argue that such subsidies are really “investment” which profit the state as a whole, thereby justifying the expenditure. But this is a smokescreen for their political objective of buying the youth vote, and it is nonsense.
While there are a number of fields — chemistry, physics, mathematics, engineering, electronics — in which “investment” in a degree will pay a good return both to the individual and to the state, it is very clear that there is also an abundance of fields in which such “investment” is akin to giving one’s life saving to Bernie Madoff. While a barrista quoting from “The Fairie Queene” while preparing one’s triple mocha half-n-half Macciato with an extra shot may be charming, the opportunities for Elizabethan English Lit majors to have sufficient gainful employment to quickly repay a $28,000 student loan are not abundant.
I know “discrimination” is a dirty word, but why not treat student loans the same way one treats wine? Remember, what a government gives away it must first confiscate from productive citizens, so perhaps we ought to demand more for our money. Why not choose those fields that have the most to offer, and subsidize them? America has a need for more Freeman Dysons and Linus Paulings; more Ward Churchills, not so much. Or maybe we should demand public service from those who take student loans — not as a means of payback, but as a condition of borrowing. Remember: it’s not the government’s money to give away: it’s ours.
Many also complain about the “rising cost of higher education,” without taking time to connect the dots between rising costs and the growing pot of money to pay them. This is just one way in which government — the Feds above all — sees that its friends in academia are well cared-for. If the easy money dried up, would it be so simple to foist annual double-digit price increases off on the public? Until people figured out that their pockets were being picked for nothing, maybe. After that there would be pushback.
Another solution involves currently available alternatives to the usual suspects in higher education. Consider, as more and more Coloradoans are, that tuition at CU/Boulder costs between $4,380 and $5,148 for 12 semester/hours; engineering is slightly higher, as is chemistry.
But at CMC, Summit County’s community college, 15 semester hours of fully-transferable classes will set one back $1,425, about 30 percent of CU’s cost, for more hours. And classes are generally smaller, with more student/teacher interaction. So why not encourage this avenue for the first two years of all undergraduates’ education?
“Pay less, get more.” It seems a good motto for our times.
Morgan Liddick lives in Summit County and pens a weekly column for the Summit Daily.