college ave student loans

Ave College Student Loans Debt Is Crushing An Entire Generation

Description: This passage is about college-ave-student-loans. Student debt is crushing an entire generation of Americans. Some will have no problem repaying their loans but many others won’t have that experience.

Improvement is the basic promise of American life. In this country you can do better than your parents did. The main driver of upward mobility in America is to get higher education.

We tell our children go to college and make something of yourself. For more than a hundred years that has been true. But is it still true? is college still worth it? For some the answer obviously is yes.

Our physicians engineers research scientists are still the best in the world. For them College is essential and well worth it. But what about the rest of us? How about your average sociology major or a political science major at fill-in-the-blank State? How about a Russian Studies major at Trinity College in Hartford Connecticut?

That remains an open question. We’re going to spend the next month trying to answer it. There are a lot of ways to assess the costs and benefits of college, its effect on students and the many ways it changes the society.

We’ll get to all those in this series which is every Wednesday night. But tonight we want to begin with the economics of college numbers. College is expensive. That’s the first thing to know about it.

Over the past thirty years the cost of a four-year education that a public university has risen by two hundred and thirteen percent, a rate far faster than inflation. A lot of that cost is financed with debt. About 40 million Americans now have student loans.

Outstanding student loan debt in this country amounts to about 1.4 trillion dollars. That’s equal to more than a third of the entire federal budget and the numbers are rising fast. In 1993 for example the average student loan holder owed about ninety four hundred dollars.

Today the average balance is more than thirty four thousand. Studies show that most kids who take loans never bother to calculate their monthly payments when they apply for the loans. The majority say they would not do it again.

About half of loan holders worry they won’t be able to pay off their loans over the course of their lifetimes. Some will and some won’t. But lenders don’t appear to make those decisions when they loan the money. They don’t seem to care.

Almost a third of students who sign up for student loans drop out before getting a degree and that makes it much less likely they’ll earn enough to pay back the money. Even if they graduate, there aren’t enough jobs to support them.

More than 40 percent of young college graduates work in positions that do not require a college degree. Certain majors lead to better jobs and higher incomes. But lenders don’t seem to take that into consideration either especially the government.

Over the school year 2015-2016 the federal government handed out more than four billion dollars in loans to psychology majors and handed out another three and a half billion to students majoring in Visual and Performing Arts.

Some of these students will go on to high-paying jobs probably. Some will have no problem repaying their loans but many others won’t have that experience. Student debt is crushing an entire generation of Americans. Young people with student loans are far less likely to buy cars, buy homes, get married, have children than their parents generation was.

Their attitudes are very different as a result. When you see those polls showing that young people prefer socialism to capitalism you’re probably horrified. You should know that student loan debt is one of the big reasons why it was also a major factor in Bernie Sanders is sudden rise to national celebrity.

It’s also a big factor in our country’s drift toward populist economics. Our elites mostly don’t notice any of this because it doesn’t affect them. But student loan debt is making our politics far more radical.

If you like capitalism you ought to be very worried about student loan debt. What are we getting in return for all of this? We need a well-educated population. But now 2003 study by the Department of Education for example gave a literacy test to 18,000 adults with college degrees.

Fewer than 1/3 were found to be proficient. That was a measure of a humanities education. At Harvard a researcher took a close look at students studying the hard sciences. Among the findings quote students who receive honor grades in college level physics courses frequently are unable to solve basic problems and questions encountered in a forum slightly different from that in which they have been formally instructed and tested.

In other words when they got outside the classroom they failed. If you’re going to send an entire generation deep into debt, that is not an adequate return on investment. But it’s not surprising when you consider how college students spend their time.

It’s been studied a lot. One survey found that the average full-time college student spends less than three hours a day on education related activities of any kind. Students spent almost three times as much time shopping, eating and hanging around as they did go into class or doing homework.

It’s a nice life if you can get it but in the end it’s a very costly vacation for all of us. Is it worth it? Brian Kaplan has thought a lot about that question. He’s a professor at George Mason University. He’s the author of the book the case against education. He joins us.

There are people for whom college is a great investment. They would be physicians, research scientists and professors perhaps in your case. But for the average humanities major, is it a good idea to spend all this money go this deeply in debt for the diploma?

Selfishly speaking the key issue is that are you likely to graduate? If you have a very high chance of graduation then I’d say if you look at the numbers selfishly it’s a good investments. But there are a lot of kids that go to school have a very low chance of finishing.

Kids that did poorly in high school and then predictably do poorly in college as well or generally don’t finish. The payoff for college comes from crossing the finish line from graduation. That is the most important question of on your mind is that can I do the job of finishing?

Why wouldn’t our lenders particularly the US government, the biggest of all lenders take student loans into consideration? When the government is lending my milennia money to students they’re not thinking about return on investments. It’s about trying to be popular. But it crushes the kids.

If you’re giving a massive loan to a kid who’s not going to graduate or ever make the money to pay it back, you’re creating deep instability in your own society. Aren’t you? Deep instability is overstating it.

There are a lot of kids or it’s a bad idea for me to go. But the thing is that for government it is to weed out to do anything different. They would have to profile people and say we don’t think you’re likely to succeed. So we’re not giving the money and think about the populist backlash.

How about you say you don’t qualify for a loan unless you’ve got demonstrated effort in school? I mean because it’s not good for kids to give them loans. They can’t repay. Is it? I think that’s a great idea. Back in the old days when you go to your guidance counselor’s should they go to college. They would say I don’t leave your college material.

Nowadays it would be almost impossible for a cut for a guidance counselor to say that every kids college material. Everyone is be told that you should go and get up your Gray’s Infiniti college and everything. It’s very hard to go and tell someone bluntly the statistics to say you’re very unlike that finished so you should try something else.

We’ve got over a trillion dollars of outstanding student loan debt, some of which will be laid on the feet of taxpayers because we don’t want to hurt anyone’s feelings. Professor thank you. You didn’t make me feel better but it was nice to hear a same voice on the subject.

Every year millions of people borrow tens or hundreds of thousands of dollars to get degrees from colleges. When policymakers talk about how to improve the economic well-being of Americans their ideas almost always include providing more education and upping graduation rates whatever the cost.

Brian Kaplan thinks this could all be a massive waste. He’s got a PhD in economics. He’s a professor at George Mason University. But despite all that he’s not entirely sold on the value of sending everyone to college. He published a book called the case against education. Professor Brian Kaplan joins us tonight.

What’s so striking is not your views which I share but the fact that as a college professor you’re making this case. I mean if I’m an AC repairman and they argue against air conditioning. I mean I’m arguing against my own interest. Why are you arguing that college is not for everyone well?

I think myself as a whistleblower. I mean if I were someone running in a basement who would take it seriously, you have to be a professor. You have to be someone who’s done a lot of research to say this with any credibility.

People who go to college have bachelor’s degrees make more than those who don’t. Isn’t that kind of the end of the argument? Not at all. There are years you could talk about it but the main thing that I push is realizing that because individuals making more money does not mean that it’s a good investment for society.

The heart of my story is something called the signaling model of education but in common-sense terms it says a lot of the reason why education pays, isn’t that your learning useful job skills, you’re showing off, you’re jumping through hoops and you’re impressing employers.

But if everybody jumps through the hoops that can’t impress employers, you’ve got to jump through more hoops and the whole process is wasting. The costs are high. The cost is not to the individual but to society now to a whole generation of young people. How do those match up against the benefits?

For the individual overnight, if you are a strong student then college is a good deal for you especially if you do one of the higher learning majors. On the other hand if you are weaker student someone who struggles to get through high school. Then college is probably going to be a waste of money even for you personally.

I always try to turn it around to not thinking about what’s good for the individual but thinking about it from the point of view of society that we should be encouraging more people to go. If people are acquiring a lot of useful skills in school, it is an investment in our human capital.

On the other hand if the main thing you’re doing is jumping through hoops and showing off, it’s a socially wasteful process to a large degree. It is extremely wasteful for society. A lot of people are picking up addictions and mental illness. You can do that other places but in a way you might say there’s the addiction to getting more education which is fairly rampant.

This is speculative. But what percentage of any society specifically ought to be going to college? They’ve got five percent. That would make you an elitist and a bad person. Because you’re writing off the other 95 percent. Correct?

You might say that it’s a lead to think that you have to be a good person or you might think that you’d have to be the leaders to think that you aren’t a good person if you don’t go to college. College is kind of thing a lot of people go through, punch the clock, sit through classes and get a degree in something or other.

I don’t see that improves them as a human being. It’s a big burden on society. It’s a burden on the individual to feel like if I don’t accomplish this then my whole life is a waste of time. There are many different paths to success. I’m a big fan of vocational education, the kind that you see in countries like Germany and Switzerland.

It is very notable how little of an underclass who is in the u.s. would say I hate school, I’m sick of being here, maybe I’ll go and drop out and be a criminal in Switzerland or Germany you’re getting trained to be an auto mechanic or to be a plumber.

You learn skills. You get a peer group of skilled craftsmen instead of a peer group of criminals and dropouts. It seems like an obvious point that we have models in other countries who works quite well. Do you think the effect of tens maybe hundreds of millions of dollars in lobbying by higher education? Lobbies has obscured that truth.

Ultimately the problem is the American people. People love the idea of education if you go and look at survey evidence. The share of Americans who favor cutting education is almost minuscule. The main things that I’m pushing are spending less on education, saving money on something that doesn’t deliver the goods especially from a social point of view and thinking about better ways of spending it.

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