If the U.S. Treasury was awash in surplus cash, forgiving student loans would still be a bad decision. The fact we are $30 trillion in debt turns what would be a bad decision into a totally irresponsible decision. It is estimated that student loan debt equals about $1.5 trillion, and that debt is owed by something north of 40 million people. That is about 1 in 8 Americans. Don’t be fooled by the doomsday reporting emanating from the main stream media. Adam Looney, writing in the liberal Washington Post, reports that approximately 56% of student debt is owed by people who hold masters, or professional degrees. The top 5 degrees responsible for the student debt are medical and law degrees, masters and bachelors degrees in business, and bachelor of science for nursing. He further reports that 35% of outstanding debt is held by those individuals in the top 20% of income earners. To ask taxpayers who didn’t go to college, or those who have repaid their college loans, to help repay the debt incurred bythose who won’t is eminently unfair.
It is more than unfair. It is wrong. If 56% of the student debt is owed by professionals, then 44% is owed by nonprofessionals. Too many of our young people graduate with nearly useless degrees, or degrees that have minimal economic value. Graduates in Communication, Political Science, Gender Studies, Art History, Culinary Arts, Egyptology, and many others may find it difficult to repay student debt According to a September 2019 report from Next Generation Personal Finance, only 27% of college grads end up working in the field of their majors. Worse, a May 2020 Outside The Beltway report claims that as many as 62% of college graduates are working at jobs that don’t require a degree!
I mention the above statistics to begin a tangential conversation. In a relatively free country, people are responsible for making their own basic decisions. That college degrees have become ridiculously expensive is a matter for our elected representatives to resolve. If Bernie Sanders, Elizabeth Warren, Alexandria Ocasio-Cortez, and their ilk, really care about student debt they would be working to reduce the insane amount of money it costs to earn a degree. The fact is, they don’t really care. They survive by making it look like they do. I am interested in discussing the things that students can do something about.
First, if you are smart enough to be accepted into college, you should be smart enough to research what majors will be in demand when you graduate. Do that research. If you are truly worried about the amount of debt you will graduate with, consider earning credits at a fully accredited Junior, or Community, College. You can earn two years of fully transferrable credits for less than half the cost of a 4 year school. If you work part time while attending the Junior College you’ll have zero debt when you transfer to the 4 year school of your choice. Be wise, don’t let your ego get in the way of making a well informed decision of which 4 year school you attend. I am not suggesting that students should choose a major solely for economic purposes, and I know it isn’t “cool” to go to a Junior College. It is inconsistent, even disingenuous, to whine about how much debt you have while not doing everything you can to minimize it.
I don’t do this very often but I thought it appropriate to mention an example from one of my presentations. During the Q & A portion of one of my presentations I called on a lady. She admonished me for not being an advocate of forgiving student debt. She went on to explain that her daughter was a teacher who was drowning in student loans. I empathized for a moment, then asked her a couple of questions. Did your daughter consider attending a two year school out of high school? She said that her daughter was a 4.0 high school student and didn’t want to do that. Then I asked her what 4 year school her daughter attended. She beamed with pride as she said Harvard. Harvard? I didn’t ask her if she went to Harvard with the goal of becoming a teacher. I’d bet she didn’t. (I didn’t know Harvard offered a major in education). I asked if she knew there were perhaps hundreds of choices she could have made that would have been significantly, tens of thousands of dollars, less expensive. She said yes. Then, being the smart ass that I am, I said the following: I am sorry to hear about the stifling debt situation your daughter has put herself in. If she is a teacher of finance I will pray for any students who take her class. Next question please.
I won’t spend much time discussing the lack of fairness involved in wiping away this debt. There are millions of graduates who worked while going to school to keep their debt load manageable. We all know people who worked 2 or 3 jobs to pay off their loans after graduation. Millions of parents took out second mortgages to help their children avoid college loans. All of these honest, responsible, Americans would, in effect, receive the middle finger from Congress, or President Biden. Their diligence would be mocked by those who are less responsible.
The simple fact is that these young people signed their names on a dotted line. That signature committed them to repay the money they borrowed. Decisions have consequences. Those who chose majors that were in demand should have no problem repaying their loans. Those who chose 19th Century Russian Dance may find meeting their obligations more difficult. Either way, their choices are theirs. The rest of us should not be obligated to make good their commitments.
I appreciate your taking the time to read my blog. If you think it has value please share it with your friends. Thank you, Bob
Amen