Is Higher Education Destroying America’s Future Economy?
The issue of the cost of getting a college education has been in the news for a few years now. Competing sides are debating which is the better way of handling this growing problem and the solutions come in many forms and sizes. But what has not been mentioned is the very disturbing question, “Is Higher Education Destroying America’s Future Economy?”
The heart of this issue is that for almost 75 years now, our children have been told that the way forward to financial success is by getting a college education. This mantra was given legitimacy by the fact that the federal government gave the returning WW2 GI’s a chance at a free college education as part of the wartime benefits. Initially the GI Bill was a huge success. And as the GI’s had families of their own they made sure that their children followed down the path of higher education by helping their children financially.
It wasn’t until the late 1980’s that cracks in that formula began to appear. The cost of that higher education had been rising at a much higher rate than that of inflation. No longer did the children go to college, get their education and graduate with a degree without the addition of being saddled with a huge college tuition debt. Now that debt has grown to epic proportions. It’s that high level of education debt that has the potential to change the entire economy of the United States.
Now because of the huge amount of student debt, the spending habits of these college graduates have been altered. If they are one of the lucky ones who graduate and are able to find employment immediately, they still have to be frugal in their spending due to the monthly repayment of their loans. Couple this with the high level of inflation in areas like homes and automobiles and many find themselves unable to qualify for mortgages and loans. This forces them to push back the entry into what once was the American dream of owning a home and new car and starting a family.
Keep in mind that if those graduates that were able to immediately find a job after graduation are struggling, just how much more difficult is it for those that had to wait to find a job in their field. It’s this wait time that has the potential to change the way the entire US economy behaves.
By pushing back the starting of their adult life, huge areas of the economy have the potential to suffer. What happens to the housing market if these graduates can’t qualify for mortgages due to the heavy debt levels they have? What does that do to the businesses that relate to housing, like furniture, remodeling, landscaping and others?
This pause in their lives pushes back every other stepping stone in their financial future. The longer they wait to be able to purchase their first home, the longer it is before they move up to a more comfortable home. Will they be able to ever reach the level that their parents did? And because of the high level of debts they had as they entered the beginning of their financial life. Will they be able to save enough for their retirement, especially since Social Security may only be a shell of itself when they retire? This has the potential to change the way the entire economy operates.
The Democrats want to use forgiveness as a way to solve the problem, but without reigning in the huge yearly increases in tuition all that does is increase the national debt. And currently, every 100 days the Treasury Department is forced into financing one trillion dollars of new debt just to pay the interest on our current debt. As more and more of the debt that we had previously financed at 1% or 1 ½% comes due, the government is forced into pay higher interest rates which currently stand at around 5%. This will at some point in the near future require that every penny collected by the federal government will go towards paying just the interest on our national debt. There will be nothing left in order to fund our military, fund any safety net programs or social security.
If there ever was a need for some antitrust action, it is now and it is with the higher education system. Colleges and universities have no incentive to keep their costs down. Building state of the art buildings and stadiums that are paid for with fees that are automatically tacked on to the tuition bills all contribute to the huge debts students incur. Not to mention the sky high salaries university presidents and administers and tenured professors are paid. What’s even sadder is that many times, graduate students teach the classes of those high paid professors and are paid minimum wage to do so.
What has also been left out of the discussion about the out of control tuition increases is that a huge number of these universities have huge endowments. Those endowments insure that the status quo is maintained for those who benefit from high tuition costs. Students only receive a tiny benefit of these endowments.
It seems there is a lot wrong with our higher education system, but unless tuition is brought down to levels that students can graduate with a minimum or no amount of debt our entire economy could be impacted in a serious way. Also this idea that everyone should have a college degree in order to be successful is sales pitch being foisted on the public. There is a lack of skilled workers in all the trades. The trade workers in many cases earn more than their counterparts that went to college. Need proof, just look at the labor charges for auto repair, painters, plumbers, even landscapers. It’s time to fix our problem.