Student Debt Mounts To Scary Levels, But America Just Shrugs

Oct 20, 2018 by

Total student loan debt in our country has hit $1.5 trillion.

I read somewhere that most people have a hard time relating to big numbers without putting them in context. So, here’s some context:

  • In the five minutes it takes you to read this article, student loan debt in America will have increased by $1.2 million.
  • The total U.S. student loan debt exceeds the GDP of 95% of the countries on Earth.

To paraphrase the immortal Jay-Z, if millennials had 99 problems, student loan debt would comprise at least a third of them.

For someone who hasn’t stepped foot on a college campus in recent years or doesn’t have any student loan debt of their own, this may not seem like a problem that should concern them. But with each person who defaults on their student loans (right now there are 4 million of those people), the negative impact on our economy — and society — is huge.

Look at discretionary spending habits: millennials today spend $20 a day less than young adults did ten years ago. Throw in the stark downturn in homeownership rates among millennials and the realization that 40% of all student loans — most of them government backed — have the potential to default by 2023, and one can see the economic impact that will be or already is being felt by us all.

Student Debt Ball And Chain

“Free” college tuition for everyone just isn’t a solution. If anything is going to work, it must be centered around lowering the cost in the first place.

Since 1997, tuition rates in the United States have increased by 197%. It’s certainly not because the quality of education has improved. Scroll through the average college course catalog and you’ll be sure to find offerings like ‘Demystifying The Hipster,’ ‘What If Harry Potter Is Real?,‘ or ‘Queering The Bible.’

Meanwhile, over the past 25 years, the number of nonacademic administrators hired has more than doubled, while the rate of academic hires has remained roughly the same. In case you were wondering, these are not inexpensive roles. Take “Diversity Officers”: nearly every University has one, and on average, they make above $160,000 a year — just a bit less than the average dentist.

While plenty of experts have exposed the role the government has played in driving up the cost by making money easy to borrow, few have focused on the lack of personal responsibility that contributes to this impending disaster. After all, it’s the individual who signs on the dotted line.

As media director for Leadership Institute Campus Reform, I have visited campuses across the country and talked with thousands of young Americans. It’s striking how unaware most students are of financial matters in general, not to mention the risks associated with taking out tens of thousands of dollars in loans. Ironically, in an education system that issues “trigger warnings” before any content that might upset students, you won’t find any such warnings about the dangers of amassing student debt.

Encouraging young people to educate themselves about personal finance and the potentially crippling side effects that come with taking out huge loans, would go a long way in fostering better decision-making.

Missing Curriculum: Personal Finance

And that leads us to our next problem: students taking out loans to pay for degrees that will never lead to profitable jobs. For reference, a gender studies degree at Harvard costs about $268,000. The median salary for someone with a degree in gender studies is $47,000.

For any prospective college students reading this, brace yourselves, I’m going to give some advice that could make you a bit uncomfortable: It’s your responsibility to know what you’re getting into. Research future job opportunities in your desired industry, meet with people already working in the field, and find out if that degree in feminist dance theory is worth going $100,000 in debt for.

My generation has been taught to turn to the government to fix our problems. It’s why we see the rise of candidates like Alexandria Ocasio-Cortez and socialist policies like “free” health care and college tuition. While it’s tempting to turn to the government to “fix” the student debt crisis, we should start by encouraging young Americans to take responsibility for their decisions.

Ultimately, our higher education system is a market where universities serve the students, not the other way around. If enough students refuse to attend schools that overcharge for an underwhelming product, universities would have to improve their product and lower prices to attract students.

It’s time for young Americans to take responsibility and hold universities accountable with their pocketbooks. Otherwise, the next generation will be debt in the water.

Source: Student Debt Mounts To Scary Levels, But America Just Shrugs | Investor’s Business Daily

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