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Student Loans: Whither young college graduates?

This morning the Times reports that student loan forgiveness programs are faltering. Designed to draw young people into crucial but often low-paying careers such as teaching and nursing, these state and nonprofit programs can no longer generate the cash required to underwrite the loans they agreed to help with, leaving altruistic young men and women high and dry.

The crisis in the health care system is one we’re all aware of, and one that affects virtually every American. But I’d add that we have a crisis in higher education with the potential to affect almost as many of us: if we can’t get teachers because smart young people realize the lifetime pay of a teacher isn’t worth racking up back-breaking debt, our school systems—already in trouble in many parts of this country—will wither and die. And more to the point for all young people, no matter what their career choices: we’re looking at a situation that requires all young men and women to start their adult lives under the burden of huge, potentially bankrupting debt, just to get a fairly ordinary college degree.

M’hijito’s roommate and his girlfriend are each about to graduate with master’s degrees in international business from the Thunderbird School of Global Management, one of the premier business programs in the country. A master’s degree from this institution will set you back a hundred grand. The young woman told M’hijito that when her loan payments kick in, she will owe $1,400 a month. There are programs that allow people to refinance student loans but there is no telling how much it could help M’hijito’s friend. When the school had a job fair, major corporations showed up to interview students…or not. Several told the young people that they came because they had agreed to do so, but none of them were hiring.

Fourteen hundred dollars a month! That’s more than the mortgage on the house M’hijito and I are copurchasing in a choice centrally located district. Significantly more!

Degrees in law and medicine are similarly pricey, as is any MBA from an internationally recognized private school. Less radiant graduate degrees are not cheap, either: M’hijito figures a master’s in public administration from the Great Desert University will set him back $40,000; I think that’s a conservative estimate.

The implications of this do not bode especially well for the future of this country. Something is wrong when young people have to start their careers so deep in hock it will take them twenty or thirty years to dig out, years during which even an excellent salary will leave their budgets pinched and their options narrowed.

Just as Americans need a decent health care system if we are to continue to think of ourselves as a developed country, America needs to provide higher education for its young people at a price they can afford. If we fail in that, over the long run we risk failing as a sovereignty. If we want our country to continue as a world leader, we need world-class education at affordable prices for all our talented young people, including those who have other ideas for their futures than careers in law, the business of medicine, and high finance.

Copyright © 2009 Funny about Money

5 thoughts on “Student Loans: Whither young college graduates?”

  1. I have so many thoughts about this issue. Here are some–presented in an incoherent manner as they roll around my head. Schools charge ever-increasing tuition because people are willing to pay. They are willing to pay because loans are readily available. Many undergraduates have parents who were willing to do cash-out refis based on the ever-increasing value of their homes (up till last fall!).

    My students whip out calculators when I tell them that an assignment is worth 10% of their grade! If they can’t figure this out, then how can they gauge what loan repayments will be like?

    Because students are paying with “funny money,” they tend to spend without boundaries and sustain a “life style” very different from my college and grad school life style.

    I am sorry to say that my weakest students are in education…often in English education.

    And I haven’t even touched on the “value” of many of these degrees.

  2. @ frugal scholar: The frightening thing is, these are graduate students. Very high-functioning graduate students! The young woman seems to be convinced that she’ll be starting in the high five figures or low six figures. Meanwhile, in the absence of any figures, she’s planning to move home with Mom in Sacramento, a hotbed of six-figure salaries.

    GDU actually JUSTIFIED jacking up its tuition (before the financial collapse) by stating that when tuition is higher, students are eligible for larger amounts of financial aid (read “loans”). Our university president, to a large degree, has underwritten his grand ambitions with the personal debt of our students.

    And yes, the College of Education is a scandal. Has been for a generation or more: when I started undergraduate school, my roommate announced she had decided to major in education because it was the easiest course of studies available and it would guarantee her a job when she got out. In my junior year, I met a young man who had spent four years as an education major and had never…once…purchased…a…SINGLE…book in his major! Then–this was during Vietnam, when young men could still evade the draft by staying in school–my boyfriend graduated with a B.S. in public administration and avoided being sent to the front by pursuing a master’s degree in primary education. In his first semester, he earned three graduate credits for–this is NOT a joke!–a course in bulletin-board making!

    This is not to say that colleges of education are devoid of some very bright men and women; it’s just that those bright young people are not being educated adequately.

    And then, OMG, the phony degrees! Don’t get me started!!! Suffice it to say that too many of our public universities have decided to take a leaf for two (or three) from the books of the diploma mills. In higher education today, it’s buyer beware. With a vengeance!

  3. If he hasn’t matriculated yet (I realize this post is from a long time ago)… The Bush school at Texas A&M gives a fantastic education in Public Administration and is still giving amazing financial aid. All students are given in-state tuition and scholarships for masters students go up to 15K– that’s about 4.5K over tuition and fees. Texas wasn’t so hard hit as Arizona… this coming 2010-2011 year will be the first one of no raises and cut-backs (5% across the board cuts for the state systems).

    That’s George Bush senior, not Jr, btw, and most of the faculty are democrat or centrist Republicans (a dead breed most places). College Station, TX isn’t exciting but it is definitely a cheap place to live. Unlikely he would rack up 40K in debt unless he let the AZ house sit un-rented and un-sold. Just something to think about if he hasn’t committed to GDU.

    • @ Nicole: Hm… I’ll let him know about this. It’s discouraging, that’s for sure. The future for this generation looks pretty bleak, at least for those who are not already ensconced in lucrative careers rather than the dead-end jobs that seem to be typical for too many of our young people. One of his colleagues in his present job has a law degree; others have master’s degrees, though it’s a job a high-school graduate could do (and many are doing). There’s hardly any point in going through the work and putting yourself in debt for advanced degrees if the result is just another low-paid dead-end job. If education is what you’re after (as opposed to vocational training), you can go to the library.

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