understanding politics, considerations

Parent College-Loans: Still Worthwhile?


December 4th, 2008 · Business, Economics, and Finance, Israel and the Middle East, World Affairs

parent college loansRISHON LEZION, Israel — The New York Times reports that higher edu­ca­tion in the United States is increas­ingly an illu­sion for many Amer­i­cans, espe­cially if they are rely­ing on par­ent college-loans:

The ris­ing cost of col­lege — even before the reces­sion — threat­ens to put higher edu­ca­tion out of reach for most Amer­i­cans, accord­ing to the bien­nial report from the National Cen­ter for Pub­lic Pol­icy and Higher Education.

Over all, the report found, pub­lished col­lege tuition and fees increased 439 per­cent from 1982 to 2007 while median fam­ily income rose 147 per­cent. Stu­dent bor­row­ing has more than dou­bled in the last decade, and stu­dents from lower-income fam­i­lies, on aver­age, get smaller grants from the col­leges they attend than stu­dents from more afflu­ent families.

Sev­eral years ago, in Boston, I was talk­ing about stu­dent loans and the sky­rock­et­ing cost of homes in the city. My friend glumly sighed and responded, “I’m never going to have a home.” And he is not alone in that sen­ti­ment among peo­ple who are in their twen­ties and thirties.

Think about the sig­nif­i­cance of that state­ment. The Amer­i­can Dream always been to own a home with a white, picket fence, get mar­ried, have two cars, a dog, and two or three chil­dren. But many peo­ple our age are increas­ingly pes­simistic that we will ever real­ize that dream. We fear that, for the first time in known memory, the cur­rent gen­er­a­tion will be worse off than the prior one because of crush­ing debt from stu­dent loans and credit cards as well as an econ­omy in which wages barely match infla­tion and is now fac­ing a deep reces­sion. Many of us are hop­ing — some­times not so secretly — that the hous­ing mar­ket will con­tinue to crash so that we will be able to afford a home someday.

But the pri­mary rea­son for my generation’s sit­u­a­tion is a soci­ety that has con­structed a faulty premise around higher edu­ca­tion.  As an anony­mous pro­fes­sor writes in The Atlantic:

Amer­ica, ever-idealistic, seems wary of the vocational-education track. We are not com­fort­able lim­it­ing anyone’s options. Telling some­one that col­lege is not for him seems harsh and clas­sist and British, as though we were sen­tenc­ing him to a life in the coal mines. I sym­pa­thize with this stance; I sub­scribe to the Amer­i­can ideal. Unfor­tu­nately, it is with me and my red pen that that ideal crashes and burns.

Send­ing every­one under the sun to col­lege is a noble ini­tia­tive. Acad­e­mia is all for it, nat­u­rally. Indus­try is all for it; some com­pa­nies even help with tuition costs. Gov­ern­ment is all for it; the truly needy have lots of oppor­tu­ni­ties for finan­cial aid. The media applauds it—try to imag­ine some­one speak­ing out against the idea. To oppose such a scheme of inclu­sion would be pos­i­tively churl­ish. But one piece of the puz­zle hasn’t been fig­ured into the equa­tion, to use the sort of phrase I encounter in the papers sub­mit­ted by my Eng­lish 101 stu­dents. The zeit­geist of aca­d­e­mic pos­si­bil­ity is a great inverted pyra­mid, and its rather sharp point is pok­ing, uncom­fort­ably, a spot just about mid­way between my shoul­der blades.

For I, who teach these low-level, must-pass, no-multiple-choice-test classes, am the one who ulti­mately deliv­ers the news to those unfit for col­lege: that they lack the most-basic skills and have no sense of the vol­ume of work required; that they are in some cases barely lit­er­ate; that they are so bereft of schemata, so dis­pos­sessed of con­texts in which to place newly acquired knowl­edge, that every bit of infor­ma­tion sim­ply raises more ques­tions. They are not ready for high school, some of them, much less for college.

Amer­i­cans are indeed an ide­al­is­tic peo­ple – some­times to the point of being extremely naive. (Liv­ing in Israel – where most peo­ple are cyn­i­cal, if not out­right pes­simistic – has made me under­stand this dif­fer­ence much more.) For decades, Amer­i­cans have told their chil­dren and teenagers that they will be sure to suc­ceed if they grad­u­ate from col­lege and then work hard. Well, as we learn from the Mys­tery Pro­fes­sor, that does not always happen.

But many Amer­i­cans believe that it does, and this is where the eco­nomic impli­ca­tions are enor­mous. It is sim­ple supply-and-demand. If every­one wants to go to col­lege, then the price will increase because there is a limit to the capac­i­ties of uni­ver­si­ties (espe­cially when many for­eign stu­dents want to study there as well). When demand rises and sup­ply remains level or falls, then prices will also rise. The higher edu­ca­tion sec­tor, in effect, has a monop­oly because peo­ple will pay what­ever price they set, as long as it seems rea­son­able (and, as the Times arti­cle notes, it might not be soon). The demand for the prod­uct is extremely high.

The only way to reduce the cost — or at least slow the increase in the price — of higher edu­ca­tion is to change the demand side of the equa­tion. (It is impos­si­ble to build numer­ous uni­ver­si­ties quickly enough to increase the sup­ply.) As I wrote in a prior post, more Amer­i­cans are choos­ing to attend col­lege in other coun­tries. That is a good start. But the only sig­nif­i­cant mea­sure to take is to encour­age fewer peo­ple to pur­sue higher education.

As Pro­fes­sor X rightly notes, this idea seems clas­sist. But it does not have to be. Many Amer­i­cans wrongly believe that white-collar jobs are inher­ently supe­rior to blue-collar ones. Hog­wash! Peo­ple who work at desk jobs all day sit in cubi­cles and stare at com­put­ers all day, and they can become over­weight, stressed-out peo­ple with a per­ma­nent case of blood­shot eyes. On the other hand, mechan­ics, for exam­ple, get reg­u­lar exer­cise, fresh air when the weather is warm, and knowl­edge of prac­ti­cal skills that many peo­ple do not know. Besides, local mechan­ics can never be out­sourced. (Of course, fixing auto­mo­biles is not a walk in the park — but all jobs have their down­sides. Well, except for beer testers in breweries.)

The United States needs to emu­late many Euro­pean coun­tries and estab­lish an edu­ca­tion sys­tem with mul­ti­ple tracks that can match a person’s abil­i­ties to a par­tic­u­lar field. Some peo­ple would go to uni­ver­sity to study lib­eral arts or some­thing spe­cific like law, busi­ness, or med­i­cine; oth­ers would become the afore­men­tioned mechan­ics. And there is noth­ing inher­ently wrong with either one. A life­long mechanic has prob­a­bly never read Plato’s Repub­lic, but I have no idea how to change the oil in a car.

As I have learned by play­ing the Civ­i­liza­tion com­puter game, soci­eties need experts of all sorts to thrive. (Who says video games have noth­ing to teach?) The United States needs doc­tors, lawyers, ditch dig­gers, mechan­ics, authors, sci­en­tists, garbage men, teach­ers, plumbers, wait­ers, politi­cians, busi­ness­men, and dish­wash­ers, as well as every other indus­try that exists. But Amer­i­cans sub­con­sciously encour­age peo­ple to pur­sue white-collar pro­fes­sions because they are viewed as supe­rior. And that is what is clas­sist. If every­one in the United States were a doc­tor, then garbage would pile up in the streets because there would be no one to remove it. Every­one pro­fes­sion is needed.

The opti­mism of Amer­i­cans has been a source of inspi­ra­tion since the found­ing of the coun­try, but the U.S. edu­ca­tion sys­tem now needs a dose of prac­ti­cal reality.