The College Loan Crisis

I just got around to read the piece in March’s The Atlantic in which the authors, Nicole Allan and Derek Thompson reported on the myth of the college loan crisis and try to justify the the 150 percent rise in college costs since 1995 and the 300 percent jump in college loan debt since 2003. The authors happily report that the investment in higher education is perfectly acceptable, based on their data which is totally thrown off by students who attend schools such as Harvard or Yale. It seems these students leave with less debt and get higher returns than students attending less prestigious schools. Who would have guessed, the system works best for the elite among us? But this tiny percent of students is enough to through off educational data regarding the cost to value ratio of college.

What the authors fail to point out is that the cost of a bachelor’s degree rose much faster than inflation last year while its average value fell. This has happened EVERY YEAR this century. If it doesn’t send off alarm bells in the middle class, it should. For many jobs today, even clerks and administrative assistants, a BA is a requirement, and the cost of that BA far exceeds the value of the job compensation the college graduate will obtain. Further, many college students are being driven out of college before they can finish because of the costs.

For middle class families, it’s no longer a matter of starting to save for college when your child is born. Many families do that. The fact is, most families cannot save enough to keep up with the rate of college costs. As a result, those kids who do graduate, frequently do so in debt, even if they go to public universities.

Maybe the next time you go on a college tour and oh and ah over the beautiful dorms and fine athletic facilities, you should tally up what those facilities add to your bill. Unless your child is getting a full ride to Harvard, look for schools that offer full time-professors and excellent program offerings in the field your child wants to pursue. Your child really doesn’t need a suite that rivals a penthouse in Manhattan and a climbing wall to succeed. That college degree is important, but graduating with crushing debt is a terrible price to pay for it.