Of course, there is an obvious linkage between jobs requesting a college degree when neither general nor major-specific skills represented by the college degree are necessary for the job and the tendency for more high school graduates going to college even though it should not be necessary for their job and career goals.
Also, jobs that traditionally required college degrees have increased requirements (e.g. accounting 150 credit hours for CPA, occupational therapy bachelor’s->masters as the first professional degree, physical therapy master’s->doctoral as the first professional degree, etc.) and an increasing trend toward occupational licensing that require new entrants to go through education / training / certification at their own expense before entering the profession.
Basically, there is a trend toward increasing education / training / certification requirements for entry-level jobs. Since the expected education / training / certification must be provided at the job seeker’s own expense, it means that a high school graduate who typically has no means of paying for it up front must depend on others (typically parents, with some from the government or scholarships), borrowing, or working one’s way through school (typically only able to pay for a small part of school these days) to pay for the opportunity to earn the credential needed for many entry-level jobs. The trend will lead to increasing dependence on parental financial circumstances and choices as a factor determining what post-high-school education is available and therefore what jobs the high school graduate can try to qualify for.
And that is at least part of why people accumulate more educational debt.
I have read somewhere that in Germany higher education is all free, UG, Masters and so on. That encourages people to study without worrying of debt and focus on what a student is suppose to focus, study. That also eliminates any social/economic barriers denying opportunities.
I do believe that student loans are next time ticking bomb for next recession/financial crisis…
Due to some level of diversification among the debtors (different stages of life, different types of jobs, cosigners, etc.), a synchronized default of private student loans burning down major banks or finance companies seems unlikely as a primary cause of an economic downturn, unlike a synchronized real estate crash in 2008.
However, the burden of debt could make an economic downturn from other causes worse (including by driving some debtors into default), and slow the recovery, due to debtors not spending to stimulate the economy because they are paying down the debt.
All of that student debt is the result of the parents of the millennials demanding tax cuts, at the expense of state funding for colleges.
So, instead of adults paying for their kids’ education through taxes, these parents have saddled their kids with debt for their entire lives. And now those same parents are fighting to make sure that their kids stay saddled with that debt. The same people who demanded that their taxes be cut and stay low are blaming the government, the colleges, and the students themselves for this.
Tax cuts at the state level are not the problem. True some states cut taxes but populous ones like California and NY have not. Costs for higher ed have far outstripped inflation. Easy loan availability has removed incentives for colleges to keep costs and administrative bloat under control. Combine that with “credential creep” for job qualifications
Actually, NYS and CA are pretty accessible for higher ed, combining excellent financial aid and a variety of relatively affordable options.
Look at the flagship costs, instate, for Pennsylvania, Vermont, Alabama, Illinois, New Hampshire, Arizona.
Then consider the availability of state aid and/or institutional financial aid to alleviate the cost for lower income and middle class residents.
(Note it’s not a party matter but a political choice, regardless of party affiliation).
There were budget cuts and financial aid cuts in 2009 on. AFAIK NO State had reinstated its (updated) 2007 per-student expenditure in 2019 and is unlikely to do so now. Many public universities have become much more tuition dependent.
Loans and credit cards are not as easy to get for college students now as they used to pre-2010. I don’t see how loans can be seen as the culprit for rising college costs. For such a complex issue anyway there isn’t just one culprit.
@ucbalumnus, if students having their debt paid off is going to allow them to stimulate the economy, wouldn’t those paying for these debts (taxpayers, most of which didn’t go to college) then have less money to stimulate the economy? I mean the money is coming from somewhere. It’s just transferring debt from one person to another.
If loans aren’t as easy to get now then why are they still a problem? They obviously are.
State aid may have been cut per capita. So a university could either cut costs or raise tuition. The universities raised tuition because students would pay fueled in part by easy credit
It’s a mistake to compare schools in the EU or U.K. that are free or less expensive to the American model because it’s comparing apples to oranges. Many students still graduate with debt over there. UK students pay around £9500 a year (which they complain about too) tuition with R&B additional. Many students live at home or in apts and commute to school. The residential campus model isn’t as common as in the US. Not everyone goes to university and competition for acceptance is more intense. In England college is 3 years and you study 1 subject, in Scotland it’s 4 years and you study maybe 2 subjects. No liberal arts education where you find yourself and you can change your major 3-4 times. If you want to change your major you must start over so kids are more careful in choosing. You are responsible for much more independent learning. Professors can go on strike at anytime and do, and there’s no refund for lost class time. Office hours are minimal as are assessments. Semesters are 10-11 weeks not 14. Dining options are basic: no all you can eat buffets 24/7 or using dining dollars at 24 additional eateries. A majority of students cook for themselves. The athletic facilities are fine but hardly the multimillion dollar ones expected by American students.
In my D’s hall in Scotland only dorm residents could eat in the dining hall. You are not permitted to eat in another hall’s dining room. Meals are available for an hour and a half at specific times. No lunch provided any day or meals on Saturday and Sunday. The heat is provided for specific hours each day. Hot water was turned off starting at 10:30pm.
I could go on but you get the picture. The American higher education model has gradually grown into a monster with a voracious appetite for tuition dollars. We expect everything we want but don’t want to pay for it. Then we complain about debt that was voluntarily incurred so students can have the college experience they expect.
I agree that there needs to be better information and education disseminated to the parents and students starting in fifth or sixth grade so the cost of college isn’t such a shock and people can better prepare. It also seems that many colleges are moving away from merit to need based aid a day that too needs to be broadcast before senior year.
Forgiving student debt for a specific group for tax year 2021 or 2022 will do little to nothing to fix the problem. It’s just a feel good gesture that might contribute a little blip in the trajectory of the economy.
The funding cuts to state schools definitely matter, but I don’t believe it is the main reason. A 4 year education for my DD’s in-state school acceptance (Georgia Tech) would have been completely tuition free (due to lottery money and hitting certain academic parameters), despite Georgia state schools receiving less state tax revenues than received in 2003.
I heard of other states that have worked to keep college more affordable for in-state students (Tennessee, Florida, California, and New York) and some states have more expensive price structures (Pennsylvania and Illinois), but if the inflation tied to higher education does not slow down, it won’t matter. Too many students choose private institutions when the costs dictate that they should have made a different choice. Educational tax cuts are not the main reason for the student loan debt crisis that is coming (just my opinion). The flow of easy loan money and the “facilities arms race” to draw in new students are a bigger part of what is driving up the final student loan debt costs (another opinion so it is okay that we don’t completely agree on that point).
I started saving in a 529 plan for my children the day they were born. I chose an investment option and in the end I have enough to pay for approximately 3 years of each of their expenses at our in state flagship with room and board included. If need be I could have them go to community college for the first two years and cover everything. It was only $150 a month for each of them. In my opinion it was a good investment on my part. I made a choice to put that money away to give them the best opportunity I could. I’m not saying everyone can do this but I suspect a lot more can and need to.
Yes and that is why debt forgiveness doesn’t stimulate the economy, never has and never will. It’s a debt transfer-from the person who took the loan to the taxpayers.
“Free” Ah, no. In Germany, taxes are quite high at all income levels. There are no private colleges. Kids attend universities paid for by the state/government. It’s more like an extension of the k-12 system. Kids don’t live on campus and don’t have the same experience as in the US (normally) with dorms, activities etc. The costs are much lo both for the student and the University. Research is much more limited and the programs are often more focused on a specific jobs as opposed to liberal arts. So comparing the two systems makes no sense.
It is true that there really isn’t widely dispersed debt for university in Germany. There are also no Federal loan program as far as I know. And like other European systems ( except perhaps a handful of schools) there is little to no differentiation between universities in terms of prestige. That’s a major factor in the US and drives up a lot of the prices.
So basically people who can afford college are only entitled to educate in US or buried yourself in student loan debt that you spend significant prime time to pay back.
In other words only richer can educate and continue to be wealthy while rest educate/work for student loan companies or don’t educate/work for peanuts multiple jobs and remain in that pond for life.
The “normal” college experience in the US is not necessarily the residential one, though the residential one may be more common among the forum demographic.
In California, the mostly-commuter CSU system enrolls about twice as many undergraduates as the mostly-residential UC system. The community colleges enroll more students than both CSU and UC combined.
Yes, So to clarify, I should have said the experience that many think of on CC when they discuss large loans in the 100K range.Though some take on large debts as commuters.