Big problems arise when dealing with massive debt in any avenue of professional life, but arguably student debt, specifically student loans, is the most contentious.
Without a doubt, student loans have made college a reality for countless people who otherwise would never have darkened the door of a college campus. But increasing federal financial aid results in institutions of higher learning evolving into little more than vocational schools.
Saddled with four years of debt plus graduate or professional school expenses severely limits the prospects of new graduates taking more altruistic career paths, a mandate brought on out of necessity to turn their degree into immediate cash.
The ready availability of federal money has helped cause tuition hikes to outpace inflation over the past decade. The very need for student loan forgiveness is evidence of the unintended consequences of heavily subsidizing college and professional school education. When you subsidize the consumption of a good or service, you minimize or eliminate the need for the producer to keep costs down.
In general economic terms, the government wants everyone to attend college, therefore, more student aid is made available. Because universities suddenly have a larger pool of customers (students) who want and can afford their product (a degree), there is no pressure to keep costs down.
The customers don’t complain because they can now ‘afford’ the university’s product. Students, however, leave school with loads of debt and find a job market with some deflationary pressure on wages because now the market is saturated with workers of the same qualifications. Next stop ? graduate school and more loans.
This column is not advocating that students forgo school out of fear of loans. On the contrary, they should do whatever it takes to get as much schooling as possible. But the current system of repayment does merit some concern.
It is a real problem for our society if obtaining an education, especially a professional degree, necessitates a career in the highest-paying field, as opposed to others that don’t pay as well, but confer benefits on society.
‘ Maybe we should all write President Obama and ask for a bailout. Mr. President, if you are reading this, I will need roughly $300,000 by the time I’m done with school. Granted this is a safe estimate, but I will use whatever is left to do my part to stimulate the economy.
I’m thinking a new Camaro ought to help out a bit, but I digress. The current system encourages job lock in which taking a more rewarding and fulfilling, albeit typically low-paying, job is virtually impossible.
