Now picture how the economics work for an institution of higher learning. They need students that can afford a 2 to 4 year degree. They are not promising jobs, they are promising an education to get you a better job (this is the most important sentence, and nobody really comprehends it-- a college degree does not mean more pay, it implies it). With a lot of two year schools, the education received wouldn’t buy a cup of coffee, but the dollars the student spent are real. The school needs students, and a lot of ”would be students” don’t have the dollars to attend. Here is where the school will offer services, free of charge, to help you finance your education with them.Don’t be surprised to read about the divorced mother of two who signs up for the 2 year dental technician course for $12,000, graduates only to find out she can’t get a job with her new training. She still has the 2 kids and now in addition, 12K in school debts. If she’s flipping hamburgers, her hours will probably be cut because of Obamacare, and her wages will be garnished to pay off the student loan. FYI, that trade school is still turning out dental technicians by the 100's ---financing is in place for your future degree.
Our youth has been told that a college education guarantees a better paying job. Students with large student loans will have to look at the bottom line before they accept a job—it might not pay all the bills. There is always the chance your girlfriend will have just as much debt as you do. 20 years ago, the consensus was a person with a college degree would earn a half million more than the guy without one (I sure hope that amount has increased somewhat).
The choice for a graduating senior in High School is obvious; flip hamburgers, or get that college loan and go to college. The real irony, is that you get the loan, and the education, and then you learn how to flip hamburgers for the rest of your life. Not every college degree is in demand. Plus you might not want to work in Butte Montana or in Detroit Michigan.The student debt bubble could be deflated if Congress would allow students to file for bankruptcy on the ridiculous amounts loaned to them. It’s a noble gesture to offer everyone the money to pursue a college education. It’s insanity to think that most will have the opportunity let alone the desire to pay it back. The underwriters of these loans are turning our kids into indentured servants. If you can’t afford something you do without---what if the government offered guaranteed loans on lottery ticket purchases? I'd love to have sold the guy that thought up the student loan program a toll bridge or two.
We saw how free money caused a real estate bubble. When that bubble collapsed, bankruptcy was a way out of a bad mistake. Right now, the student loan bubble is fueling the economy ---1 trillion dollars’ worth of consumption so far and Congress is still pumping air into it. Can we count on these college grads to be consumers when they graduate? Will they be too busy paying back their loans or fighting to keep their wages from being garnished?Everyone at the age of 20 has dreams of success and wealth. The rest of the world will play on those dreams, they are a vulnerability. Two kids a wife and a house payment are a reality, and there isn’t much room for a large student loan. The more bills you have, the less you sleep at night. A college education could become your worst nightmare. We can be very sincere when we say; “The road to hell is paved with good intensions.” Another 10 years of these super fantastic student loans, and one will need a Master's Degree to get a job cleaning toilets or a PhD to flip hamburgers.
As a post script, you can always move to Australia and forget about the debt. Being broke and having a new start will work miracles on your state of mind and you'll sleep a lot better. Now might be the time to invest in surfing posters about Australia and New Zealand for the dorm room. However, it wouldn't surprise me to see them distributed free of charge, with a visa application for the Down Under, printed on the back side. No "go figure" on this one, we saw it coming and did nothing.