Posted on 03/02/2010 8:53:22 PM PST by SeekAndFind
You may have seen the recent story about the 41-year-old doctor who graduated from medical school in 2003 with student-loan indebtedness of $250,000 that has swelled to more than $555,000. She is now scheduled to pay $990 per month until she is 70. Ouch!
This is an extreme example of a widespread problem. Only 40 percent of the $730 billion of outstanding student loans actively are being repaid. This isn't healthy for financial institutions or for many young Americans.
It's easy to say those who borrow to pursue their post-secondary education bear the primary responsibility. The first rule of survival in a market economy is caveat emptor ("let the buyer beware"). Nobody forced anyone to go into debt.
Still, almost all student loans are taken out by Americans too young to know what it takes to pay their bills and make a living on their own.
My wife and I recently entertained two of her former students. One owes more than $100,000 and has a bachelor's degree in theater. She has an entry-level position with a business and no realistic prospect of repaying her debt before she turns 40.
Like many young adults in her position, the price for her indebtedness is more than monetary. Very few young men are willing to marry somebody with a six-figure debt chained to her ankle. Here you have someone whose strongest desire is to be a wife and a mother, but her student-loan debt makes her a leper to most men in the marriage market. Sad.
Some suggest colleges and universities provide debt counseling to students. The reality is colleges are businesses and, like all businesses, are hungry for revenue. Expecting them to counsel students to drop out or transfer to an inexpensive junior college is like expecting a fox to warn chickens not to go into foxholes because they might be eaten.
That leaves the lenders. Let's face it, if loan officers profit from issuing loans, they have every incentive to write as many as they can.
Normally, I would say there is nothing objectionable about that, but in this case, I believe public policy once again is guilty of having altered normal market incentives. I refer to laws that make it almost impossible for student loans to be erased through bankruptcy.
Now don't get me wrong; I believe strongly that debts should be repaid. A society that makes it too easy for individuals to walk away from their financial obligations does not uphold the foundation of economic progress — property rights — and consequently jeopardizes economic progress. But in the student-loan market, government has created moral hazard. If lenders knew they might lose their loans through normal bankruptcy proceedings, they would assess risk carefully and issue fewer loans to starry-eyed kids who want to pay $30,000 per year for a degree with minimal market value.
-- Mark W. Hendrickson is an adjunct professor, economist, and contributing scholar with The Center for Vision & Values at Grove City College, Pa.
Looks like this country could stand a little TUITION REFORM. Colleges and their “perfessors” are definitely making too much money.
Lol
Yup. Just like specialties like Family Medicine, etc, are getting unpopular, I would imagine majors like Philosophy, sociology, etc should also become so.
This is the tipping point for higher ed. It has become just too expensive to be worth it.
The more the government has gotten involved the more expensive it has become.
This is not a free market. There could be many institutions doing undergrad-level instruction much more cheaply with smaller, more accessible facilities, not to mention the internet, but accreditation has been made overly complicated.
Just another example of how the liberal ivy league establishment has further choked off the prospect of college to those they deem unworthy of success.
We have created a society/culture that holds those with degrees and advanced degrees in high regards, simply because they hold a degree and nothing more. The majority of the time the degree has little to do with the job.
Never before has the saying it takes money to make money in this country been true. But now it applies to the cost of a piece of paper or professional certification and some jumbled letters after your name...
The Liberal Academia in this country are just as guilty at dividing society and driving up the cost of education to keep out those they deem unworthy.
http://www.youtube.com/watch?v=AIcfMMVcYZg&feature=player_embedded
Good video...reform on college costs would help health care costs, too.
My old roommate! I wondered what had happened to her.
lol!!!
Whats his/her/its DU screen name??
One of my buddies cousin is a Philosophy grad and owes $45,000. PLUS she’s still planning to go to Law school. When we asked how she’s going to pay for it, he said: it’s pretty much taken care of..she’s a stripper in another county.
A few years ago the alumni mag of my alma mater had as it’s cover story something to the effect of “preparing tomorrow’s theater critics.” I kid you not.
As I understand it the Obama administration has nationalized the student loan market. There are no private lenders he can rail against anymore.
The reality is colleges are businesses and, like all businesses, are hungry for revenue.
Actually they are as big of welfare queens as we have, and supply and demand means nothing to them. What we need are more colleges starting that can compete in price, and if things are that unreasonable, we should be encouraging them, not these bloated dinosaurs.
Until then, a military career can pay for your education. Back when I was going to school, and the student wasn't interested in a military career, the debt incurred was manageable, and so the GI bill was not a factor for a lot of us. But now, having 20 years of debt to pay off vs. a few short years in a military career, I think the military option is looking really good right now.
Pay up already.
Which would be better...a degree in Green Studies or one in Puppetry? Answer: Puppetry. You could put on shows in exchange for a heaping bowl of gruel. Green Studies would get you nothing.
The Doctor can pay off the loans $ 100,000 a year. No reason to make payments of $ 990.00.
How about forcing the college/university to co-sign the loan? If the student can’t afford to repay it, then the university has to. That would create a strong incentive for universities to offer degree programs that put their graduates in a position to pay back the costs of their education.
Universities are just a business. No one in their right mind should take out that much of a loan. Esp for theater. Maybe for medicine.
My college advice is this:
The only place where your college means anything is Manhattan (and how well has that worked out for the country as a whole?). I’ve worked in the tech sector in various places in the country and most of the people I’ve worked with were state university graduates. Pick a college near where you want to live and work.
Pick a major. Go to the college’s career center and look at the guide from their last job fair. Is your major listed by any company as one they’re interested in hiring? If no, your degree will be useless, so pick another major.
well, one alternative for docs is to work off part of the debt by working with poor people.
Or is she too snobbish to dirty her hands working in rural areas or with Native Americans?
I’ve seen docs lament that they “had to” either pay back their loan by working in West Virginia with prisoners or in South Dakota with the Lakota...they wanted only to stay in Boston with their arts and music snobs.
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