Two thirds of all U.S. college students borrow to pay for their educations. According to the September 3rd Wall Street Journal, the “average” debt on graduation number above is increasing at an alarming rate. The “new” economy has accelerated debt into the 2008-2009 academic year over the previously year by a staggering 25%, a whopping total of $75.1 billion dollars. Undersecretary of Education, Robert Shireman, noted that his growth in debt was “definitely above expectations… But we’re also in an economic situation that nobody predicted.”
The fact is that young folks are borrowing more to get the same level of education. Twelve years ago, the average debt was $13,172 and only 58% of students borrowed. Add to this horrific mix a job market that defies description and you can most definitely see these recent grads postponing marriage, having kids, buying houses or generally participating in our consumer marketplace. With older folks not able to retire in this meltdown, savings at levels that most certainly have delayed if not eliminated retirement for so many, the job prospects and the opportunities for advancement haven’t been this bad in half a century. 39% of “indebted” students surveyed (the above WSJ article) tell us that it will take them a decade or more to pay off their educational debt. In this economic environment! And six figure debt for those in professional school is all too often the norm.
Debt is what got this nation into the depths of economic catastrophe. Education is the only path we really have to being a nation of value-producing workers. Linking education to debt of necessity limits opportunities and choices. And as states face new levels of local deficits, two-year community colleges and four-year and graduate-level state colleges and universities are cutting the levels of service and increasing total student costs to cover the difference. The net impact is a reduced quality of education, reduced American competitiveness and a decreasing ability to generate the earning power to deal with the massive federal deficit that, one way or another, is going to have to be repaid.
We are dealing ourselves a bad poker hand of bad future inflation, a continued decreasing standard of living, and a slide down the comparable scales of economic well-being enjoyed by our Western brethren. In short, we are accelerating the decline of the America I grew up believing in. It’s time to understand where we invest – infrastructure and education – and where we waste. Tell me where our incursions into Afghanistan and Iraq have actually improved our security and boosted our economy? Explain to me why executive bonuses structures paying top corporate managers vast multiples of their international counterparts have increased American competitiveness and value-building for the nation as a whole?
The cost of education is going up, even as the economy is sliding into a sustained period of limited if any real growth, especially in employment and the quality of available American jobs. It’s time for us to look at alternative mechanisms for paying for post-high school education. For those unable to pay the required tuition, room and board, it’s time for government to design an “education tax,” based on the type and cost of the education delivered, where a fixed percentage of a person’s income for life (adjusted gross income for those who care), is paid in exchange for covering the cost of the underlying education, with forgiveness to those who opt for true public value service jobs (like teaching in public school). It’s time to rethink the system.
I’m Peter Dekom, and what are we doing to ourselves?