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The Spectacle Blog
Total student loan debt continues to skyrocket even as other kinds of consumer debt are slowly coming down in the wake of the financial crisis. It continues to get more expensive to go to college, students are leaving with a lot more debt, and they’re graduating with degrees less likely to see a payoff. Oh, and the federal government owns 85% of all student loan debt.
Just like housing, many student loans were made with little or no research into whether borrowers were fit. Federal Stafford loans are basically automatic for college students, and government backing for other types of loans gave other student lenders little reason to be picky… Defaults on federal student loans jumped from 7 percent to 8.8 percent in the most recent fiscal year. That measures just recent borrowers who were already behind within two years of their first payments coming due.
One of the things that has seemed to unite a lot of the 99%ers is the complaint that a college degree isn’t a ticket to universal success any more. And they’re right: it’s not! It used to be thought that just any college degree could get you a good-paying job in your field of choice. That’s turning out not to be true. The degrees that pay are called STEM degrees: science, technology, engineering and math. Sending more kids to college to get visual arts degrees does nothing positive for the economy and is a poor individual investment decision.
Alex Tabarrok last week noted a shocking statistic: more people graduated with computer science degrees in 1985 than did in 2009. There are fewer engineers and about the same number of statisticians. But more and more kids are going to college in droves. What gives?
They’re majoring in things like performing arts, communications, psychology… lots of humanities and soft sciences. And the federal government takeover of student loans - passed in the Obamacare reconciliation bill - puts the federal government on the hook for all these bad investments in humanities degrees.
There won’t be a student loan bubble like there was a housing bubble. The economy won’t completely collapse when it turns out that many of these degrees aren’t worth the debt. But the current state of affairs, in which we think that everyone should go to college no matter what their choice of discipline, is unsustainable. Somehow, I doubt the regulators are going to catch this one either.
View all comments (6) | Leave a comment
More Blog Posts by Kevin Glass
http://spectator.org/blog/2011/11/07/feds-are-on-the-hook-for-stude
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sotto voce | 11.7.11 @ 2:29PM
Obama is pushing the fallacious idea that everyone deserves a college degree for his own reasons, which have nothing to do with whether or not a person earns a useful degree and everything to do with creating an army of useful idiots at taxpayer expense. He knows universities have become indoctrination mills for the left. As anecdotal evidence, I offer this story of a dear friend who went back to school after a lengthy hiatus to earn her BA in social studies. She graduated but has been unable to find a job in social services because she fulfilled her language requirement with German instead of Spanish (where was her student adviser?). All she took away from her expensive education are dyed-in-the-wool beliefs that capitalism is inherently evil and that communism is superior to a constitutional republic. She's an otherwise smart person and old enough to know better. Her transformation was alarming and took place right before my eyes. To maintain our friendship we avoid political discussions.
jay| 11.7.11 @ 3:34PM
The site provided does not support the idea that STEM is where the money is, so much as it indicates that engineers make more. Perhaps there is other information about supply and demand that better bolsters the case, but looking at the chart, Biology majors are at $37,900 and Philosophy majors get $39,800. The methodology indicates that professors of Philosophy would not be included in that figure either.
There is also the possibility that as we succeed in encouraging students to pursue STEM, that the wages will fall.
It might be best to educate all the collegebound that the receipt of a degree will not cause a house with a Prius in the garage to be deeded to them, and that they will still have to compete for a job regardless of educational attainment.
Bob K.| 11.7.11 @ 9:23PM
And what does all this have to do with Herman Cain groping a Bimbo?
PCC| 11.8.11 @ 1:23AM
Government student loan guarantees have fueled the exorbitant rise in university fees and should be capped.
Josh Winters | 11.8.11 @ 5:47PM
If you want to look at stats then why is it that the unemployment rate is over 9% for people without a college degree and hovering over 3% for students with a degree.
A college education gives you opportunity, which is a hard word to find these days given the current state of the economy.