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This is Your Investment on Drugs

May 8, 2012

Fry up another egg, and let’s talk about college education some more.  Douglas Holz-Eakin and Chad Miller have some more data for you on the education front to enhance Lynn’s last post.  In relation to whether congress and the administration should keep college loan rates low, they make this observation:

The facts, as published by the College Board are staggering:

  • The average tuition at public two-year college increased by only 5 percent in inflation-adjusted (“constant”) dollars over the entire decade from 1991–92 to 2001–02. In the most recent decade, the average constant-dollar price has increased by 45 percent — far too close to 5 percent annually.
  • College tuition and fees at public four-year institutions have skyrocketed 25 percent over the past three years. Published in-state tuition and fees at public four-year institutions averaged $8,244 in 2011–12, up from $6,591 in 2008–2009 — increases of close to 8 percent each year.

And what’s been driving the four-year growth?  Um, increases in government support, likely.  The students that I’ve talked to lately talk about colleges shoving loan paperwork at them left and right while complaining that they can’t help the students enough.  Here’s a hint: stop loaning  money to people with no ability to earn income to pay it back.  Would a car company provide financing to a person with no job and no money down?  Wait, don’t answer that…

They also note that over half of college grads under 25 are unemployed or underemployed right now.  So that investment isn’t paying off for a large amount of people who drank the Kool-Aid and took the promise that any college degree would make them more successful than just entering the workforce.

Colleges give loans to students regardless of what they take, learn, or actually can put into action.  It’s like giving a house loan to a person who you know is just going to not make payments and trash the house… never mind.  Anyway, I have no problem with a loan program that focuses on keeping students in school when they’re successful.  But driving debt to a person unprepared to take on that burden is reckless, if not immoral.

I see plenty of recent graduates at the company where I work.  Many of them are getting paid in the very high five figures to do a job that’s in high demand (i.e. nobody wants to take engineering because it’s hard, so supply is low).  And many of those same engineers have a high-five or low-six student loan burden as well.  What’s the value of money to spend when you have difficulty servicing the debt you’ve already incurred?  Oh, wait, that reminds me of something…

2 Comments leave one →
  1. Lynn Comp permalink*
    May 9, 2012 8:27 pm

    hee hee….nice jab there. The question is twofold – first, how long can the dems keep the fantasy alive that the consequences of globalization can be unwound without unwinding the benefits (i.e., the times where a highschool grad could get any job on a manufacturing line punch a clock & retire at 65 with gold benefits are over…anyone saying otherwise is selling something – to quote ‘Princess Bride’). The second question is whether they can ever acknowledge that you can’t mandate outcomes of having a college degree through policy when all people don’t have equal talents, work ethics, and interests – can you cheat gravity and ignore the fact that the reason engineering is in high demand stems from the fact that not everyone can finish a degree in it?


  1. This is Your Investment on Drugs « Finding Ponies… | My Blog

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