And prices will rise
From 2000 to 2010 total student debt rose from about $200 billion to $830 billion; it now exceeds $1 trillion. Over the same period, student enrollment rose 37 percent while the number of degree-granting institutions increased by only 7 percent. And throughout, the rise in college tuition and fees has consistently outpaced the rise in overall consumer prices.
Greater
aggregate demand (more people seeking a college education)
and the resulting tuition inflation have caused much of this 300 percent increase in
aggregate student loan debt. Is this something more than a tuition
bubble? Perhaps colleges were paying premium salaries for "star"
professors or institutions were unprepared to efficiently manage the
huge influx in students. But the law of supply and demand is impossible
to escape.
There is a link between the popular draw to and political push for college and homeownership: they are parts
of the American Dream, a hope to be better off than the preceding
generation. In his book The Epic of America, author James Troslow Adams
wrote that "life should be better and richer and
fuller for everyone ... It is not a dream of motor cars and high wages
merely, but a dream of social order in which each man and each woman
shall be able to attain to the fullest stature of which they are
innately capable."
But let's separate dreams from needs. The dream that everyone deserves a college education differs
from the need for a well-educated, capable labor force that makes us all
smarter and more prosperous. The dream that everyone deserves to own a house differs from the need for a well-housed, mobile populace that
isn't burdened with cumbersome, wealth-destroying debt.
We must realign government
to help students align the education and labor markets. We must remove direct subsidies for indebtedness and eliminate all
indirect subsidies such as tax credits and deductions. The supply
of higher education has not kept pace with demand, and below-cost student loans pump up demand. Some college students
graduate with debt and no job partly because their degrees don't satisfy employer needs. If capable students need tuition
assistance, let's offer educational grants that provide the economy with
vital skills while moderating post-graduate financial obligations.
Education can provide the tangible skills and critical thinking needed to help our economy grow;
let's find ways to expand that supply. But if college for some is instead a dream
with no roots in the realities of the job market, let's make students wiser to set their expectations so they can become the next Greatest
Generation.
