College and Debt

When writing my previous post, I got to thinking about some things I've read in This Fine Place So Far from Home about how people from different socioeconomic classes viewed student loans differently.  This book is a collection of essays from working-class graduate students, professors, and other PhDs about their experiences in higher ed.  A common theme that struck me was the opposition on the part of the authors' families to student loans.  The reasoning was sound.  The belief was that once one borrows money from the wealthy, it becomes nearly impossible to break free from debt.  It's easy to see why a family barely scraping by would discourage the children from taking out tens of thousands of dollars for college, even though the loan would be an investment.  The problem, however, is that it is impossible for many students to receive a college education without the help of loans.

With all the recent news about student loans exceeding credit card debt in America, coupled with high unemployment, many students today may opt to forgo a college education to save money.  Now I don't want to advocate the idea that all students should go to a traditional college, but surely there are many young people out there who want to attend a university and have the dedication to succeed, but are held back by financial worries.

What we as a society need to do is educate these people on the risks and rewards of a (hopefully only partially) loan-funded college education.  Colleges should send loan literature to high school students that is heavy on the information and light on the legalese.  College orientations should have mandatory sessions on managing student loan debt.  Additionally, students should be presented with data regarding job placement for their major so they know the risks of taking out large loans for majors that generally result in low paying careers.  I place the burden on the university because I don't trust that Sallie Mae or the federal government would always have the students' best interest in mind.  We already know that many for-profit colleges aren't looking out for students, but I'm going to give the rest of higher ed the benefit of the doubt.  With the proper education, students should know that they shouldn't take out excessive loans to attend an expensive private school if they can receive an great education somewhere cheaper.  This type of academic frugality will ultimately help both the students and the economy.

I also favor legislation to make student loans dischargeable.  I'm not sure how to accomplish this and I won't pretend to be an arm-chair economist.  But it seems to make the most sense to not punish people for trying to better their lives by attending college.  College is an investment which may or may not pay off financially in the long run.  But a college education is something that should be an option for all who wish to obtain it.