While everyone was screaming about the rising cost of medical treatment, America’s leftist incubation chambers—colleges and universities—robbed us of our economic future. And the federal government’s misguided student aid program is to blame.
What allows this growth?
- Increased per student government funding
- Massive private and public debt
- College administrators
- Unions working on college campuses
- Political causes that college administrators like (liberal)
Check out these statistics:
- College tuition increased 799% between 1978 and 2007 (source)
- Student loan debt has increased 511% since 1999 (source)
- Government per student increased 246% between 1978 and 2007
- In the past 20 years, college tuition has increased about twice as fast medical costs
- The education bubble makes the housing bubble look like a pimple (source)
- Recent college graduates are no smarter than graduates of 40 years ago (observation)
On that last point, I’m not alone. From contraryinvesting.com, Brett writes:
Did this increase in spending do any good? Not on the available evidence. Test scores — measuring achievement — have not budged in 40 years. In other words, the additional investment over the last 40 years has been wasted. We might as well have thrown the money down a well.
Read Brett’s piece in its entirety. The arguments against everyone going to college are important. Seth Godin raised similar questions in 2010.
Most colleges are organized to give an average education to average students.
Check out these graphs from www.mymoneyblog.com:
And Tuition vs. Healthcare
There is great value in a college education, but not at any price. Not when the lifetime economic value of an education is about to become a net negative. According to the rating agency Moody’s:
Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place."
Personal finance coach Dave Ramsey shows families how a child can complete a 4-year degree without a penny of debt. But that formula might not work today. Tuition has gone up 16 percent in the two years since I first heard of Ramsey’s plan.
So what’s Obama’s prescription?
You guessed it: Obama wants more government spending. More borrowing. More forgiveness of debt.
While some on the right want to vilify students, in most cases, I disagree. Kids born near or after me grew up with “college education” pounded into our heads.
“You’ll be nothing! without a degree,” we heard.
We scorn people who don’t go to college. (Look at the recent flap involving St. Louis County Executive Charlie Dooley.)
But the government has encouraged colleges to drive their costs through roof. For years, the federal government promised to fill the gap between what a student could afford (according to the government) and what a college charged.
Seriously. What if the government made the same deal with car buyers?
The solution isn’t simple. There’s a big bubble in the higher education market, and it has to burst. Families, students, and governments have no more money to lend. The ROI on a degree is falling fast.
Kirsten Winkler of the blog big think shares one alternative to college degrees as credentials.
I see only two possible solutions: we continue to bail out colleges by feeding borrowed money to the bubble, or we unwind our addiction to traditional higher education.
Exit question: Do we do as Obama says and borrow more money to endow colleges, or do we begin dismantling the “college or death” mantra? Or is there a third way out?