The Unbearable Lightness of Being Indebted

“Fat, drunk, and stupid is no way to go through life,” counseled Faber College’s Dean Wormer in “Animal House.” For the collegiate class of 2013 -- until next year the most indebted ever – add “in hock” to that immortal list. 

Compared to their parents, current graduates are paying four times more in inflation-adjusted terms for their diplomas while suffering substantially inferior job and income prospects. Like Animal House’s witless frat-brothers, those who believe college is a “last hurrah” before plunging into adult reality must Think Again.

For generations, Americans practiced what Benjamin Franklin preached – “an investment in knowledge pays the best interest” – believing a college degree was an affordable yet golden ticket to independence, a satisfying career, financial security and an “open sesame” to American society. Even students without credit histories or clear plans for the future could borrow the necessary sums to pursue impractical majors like ethnic studies, take six years to graduate, and still land jobs with incomes sufficient to pay down debt.

Today however, a college degree is substantially riskier due to mushrooming global supplies, ever-inflating U.S. diploma prices, and a more selective, chaotic and stressful market for college graduates. Though a B.A. carries a certification premium with employers, it conveys little about actual qualifications, especially considering recent studies of higher education outcomes (surveyed in the 2011 book “Academically Adrift”) which show how little knowledge, critical thinking and skills acquisition occur between an undergraduate’s freshman and senior years.

Because its risk/reward ratio is out-of-whack, it’s no longer a truism that you’ll get out of college what you put into it. Among those under 25-years-old, 53 percent are either unemployed or in jobs that don’t require a bachelor’s degree, a high for this demographic since record keeping began in 1948.

As in the housing bubble, easy credit and expectations of ever-increasing returns on education investments buoyed demand for college diplomas. To capture federal money, academic institutions hiked tuition causing students to incur more debt, diminishing the degree’s reward. Since 1978, tuition has grown 7.5 percent annually, far outpacing inflation and family incomes, which increased 3.8 percent and 5.0 percent respectively.

Because many colleges operate like mortgage brokers, even encouraging students who are academic risks to take on debt, two-thirds of freshmen borrow while one-third of those with loans leave degreeless. Consequently, the portfolio of federally guaranteed student loans has grown to $1 trillion -- up 70 percent since 2008, exceeding total credit card debt. Considering government loans aren’t dischargeable, even in bankruptcy, many are sacrificing their dreams including further education, marriage, kids and homeownership.

The biggest victims are those the system was designed to bolster – marginal students. Just as federal lending policies helped inflate the housing bubble undermining the ability of low-income home buyers to ascend into the middle class, federal student loan policies have backfired, consigning indebted and degreeless Americans to the low end of the labor market without incomes sufficient to pay off debts.

Given these sad realities, former Education Secretary Bill Bennett poses a frequently asked question in his book “Is College Worth It?” Students whose lifetime earnings potential comfortably exceeds their debt -- achievable with sought-after degrees like petroleum engineering or prestigious credentials like a Stanford diploma – should go. However, “two-thirds of people who go to four-year colleges right out of high school should do something else,” especially considering Bureau of Labor Statistics predictions that 7 of the top 10 fastest-growing jobs require on-the-job training, not higher education.

At the heart of America’s education crisis is the implicit goal to leave no child behind without a college degree, as if the college campus were the optimal garden for all children to flourish.  Parents and teachers appreciate how distinctive and diversely talented kids are. Yet our K-12 “one-size-fits-all” system emphasizes and tracks academic abilities -- often at the exclusion of non-academic aptitudes – and without great success considering reading and math scores are no higher for 17-year-olds than they were in 1970, despite an inflation-adjusted tripling of K-12 education spending.

The consequence of our misplaced focus on college is that many brilliantly talented and creative people believe they’re not because their unique abilities were devalued at school. Wouldn’t our kids be better served if educational success meant enabling students to reach adulthood aware of their native abilities and passions and inspired to realize their full potential? Wouldn’t society be enhanced by a richer conception of human capacity that appreciates diverse talents and rewards what one knows and can do, not one’s salary?

New education start-ups that use online technologies – like the recently announced MIT/Harvard joint venture -- have the potential to revolutionize education, offering students affordable courses to “do what you can, with what you have, where you are,” as Theodore Roosevelt urged. 

Think Again – isn’t lifting kids from where they are to a better place in life the point of education?