Josh Mercer posted a story below about Mark Cuban and student loans, so I thought it only fair that the opposite argument should appear here.
Full disclosure: In order to write this post I’m taking a break from trying to figure out how the next fiscal year budget will stretch to meet my department’s needs at the college I work for. So consider this post “the college counter-argument” if you must.
Also, let me be clear: Student loans are too high; they should be lower. This hits large families especially. As I said before, if I win the lottery, the first thing I will do is endow college scholarships for struggling Catholic families.
But let’s start with a quick reality check, to put the “crushing” student debt in perspective.
- The average student loan debt is $29,400.
- If you pay that off in 10 years, your monthly payment is: $280
- In America, the average monthly car payment is: $460
So when we talk about student loans, we are talking about an extra car payment for 10 years.
Now, I am fully aware that an extra car payment is no small thing. But four years of college is no small thing, either — and college has always been an expensive proposition. For a National Catholic Register article I searched the New York Times’ archives to demonstrate this.
- “Colleges Stress Rising Costs Increase … Protests on Many Campuses” said a 1946 headline.
- “School Costs Up 119% in 12 Years” — 1953
- “Tuition and other costs may appear prohibitive to many parents,” —1955
- “Relatively few people can accept or cope with the spiraling costs of [college] education” — 1966
- “Heavy Burden of College Debt Raises Anxiety for Young Families’ Future” — 1987
Maybe it really is true this time, but this boy has been crying wolf for a very long time.
What is different now is the language. Now, we don’t just say “college is expensive” we raise the specter of the dot-coms in 2000 and the housing market in 2008 to point to a “higher education bubble” brought on by easy government loans leading to inflated college prices.
But remember: A bubble only happens when prices rise disproportionately to real value. The bubble is only true if the cost of college degrees does not deliver value.
As I put it in the Register article:
A February 2014 Pew Research Center report on higher education suggests that attendance at a four-year college (public or private) is a better economic bet than it has been in decades. Polling data showed that those who have earned a ‘bachelor’s degree and more’ make an average $15,000 more a year (using constant 2012 dollars) than ‘two-year degree’ community-college graduates. But those community-college alums have only a $2,000 average advantage over high-school graduates.”
… So that “extra car payment” of $280 a month will make you, on average, $1,250 more a month over the course of your career.
If you go to the right kind of college, it might also save your soul.
Even Mark Cuban should agree that this is not a bad investment at all.
I agree that student loans are a problem: I wouldn’t pay them at all for many universities in America. But if you’re going to a good college and you can keep your loans close to the average, then college loans are truly worth the sacrifice.