The Indentured Servitude of Student Loan Debt: Serve Your Sentence

Someone at an Occupy rally once told me, “student loans are a form of slavery.” I won’t go into how that is horribly wrong on so many levels. But in the literal sense, I will argue that student loan debt is a form of indentured servitude. It’s a horrible thing isn’t it? You’re told your whole life that you have to go to college. Going to college will mean that you will make more money so that you can live out your dreams. A college education will lead you to the money you need to buy a house, some toys, pay for a marriage, and support children. You were conned. Why should you have to pay for a lie? You were 18 years old. Beyond that, you’re overwhelmed. You can’t pursue any other dreams because of this debt. You are indentured. What should you do? Serve your sentence. I was conned too. I paid tens of thousands of dollars for an education that set me behind. I paid my debt (on point with the national average at the time) in three years. I worked as hard as I could at a job that I hated. I lived with my parents. This is not a “woe is me” comment. I am telling you this because it is the first of three reasons why government relief of student loans is immoral and selfish. I served my sentence. I will not serve anyone else’s. The second is because our country is 16 trillion dollars in debt. No different from the graduate who is paralyzed by his debt, our country will soon feel the same suffocation. Especially because the fundamental problem has not been corrected. It is a quadrupedal bypass with a high trans fat diet,  a prohibition from exercise, and all the tasty cigarettes we can smoke, prescribed for recovery. The third is because, despite and in spite of this, we do need to invest MORE in  education. That education is in skilled trades, engineering, language, renewable energy, medicine, technology, and environmental science. We cannot add to the bill by retroactively covering debt for useless education. It is paying twice. We MUST spend money on education, but that of the future and not of the past. The student loan crisis is a generational test. Please, let us pass this one.

http://www.usnews.com/education/blogs/student-loan-ranger/2012/03/21/learn-what-the-student-loan-forgiveness-act-could-mean-for-you

Studying For the Wrong Test

A bachelor’s degree in the social sciences is a relic of the late industrial age. There were few learned scholars. Books and manuals were scarce. There was little to no way of broadcasting to and sharing that information with the rest of the world. A college degree may have been the only way to preserve certain knowledge in that era. It is not an investment, but a liability in the digital age. It is a liability because the likelihood of employment is decreasing, while the cost of a college education is increasing. To pay for a four year college education in French history in 2012 is like paying for a boat to take you from New York to London to deliver a hand written message. You could exceed bachelor level knowledge in most social sciences or humanities through online videos, digital archives, and Skype interviews with experts from around the world; all free to little cost. Are we losing nuance, rigor, and perhaps even a bit of thoughtfulness? A little. But mostly we’re just reducing time and cost. Before my thoughts are misrepresented, let me be painfully clear. Knowledge of French history (just an example, not picking on anyone) has an intangible value. The cost of a bachelor of arts has a much more tangible price. Therefore, a bachelor’s degree in that or any similar field is ineffectual. Knowledge of current medicine, engineering, and technology have a tangible value (as well as an intangible one), partly because its cost can be justified by employment and income. The world has changed. The speed at which it is still changing is ever increasing. The new economy favors precise and technical knowledge. There is an increasing pool of available jobs in this country that employers cannot fill because there are not enough Americans with the matching skills to apply. These are well paying jobs. Most of them are high-skilled manufacturing or trade jobs, but not all.  A former client of mine had to use his advertising budget for hiring because he said “there are more accounting jobs available than there are qualified accountants”. These are the fields on which we have to focus our efforts and resources. We are economically crippling ourselves otherwise. More on that in the next post.

Are you a skilled tradesman? Please share your thoughts.

http://www.bizjournals.com/birmingham/print-edition/2012/06/22/but-manufacturers-cant-find-enough.html

Kids: It’s Okay Not to Go to College

If you’re number one reason for going to college is not for better employment thereafter, don’t go. The Pew Research Center reports that nearly half of students say the main purpose of college is to teach work related skills (count me in that camp) . Just under 40%  say it is to help the student grow personally and intellectually. Fiat me this: most of those people believe that by growing personally and intellectually, they have a better chance of  being employed, and earning a higher income. This assumption is being exposed by the broader weak economy. In a bubble era of inflating home prices, surging public spending, untenable tax cuts, and the booming stock market they all supported, a bachelor’s degree in liberal arts MIGHT have been an adequate point of differentiation. It never will be again. One of Paul Harrington and Neeta Fogg’s characteristics of malemployment is when a person has more education than his or her position requires. More than a third of people with humanities and liberal arts degrees are malemployed. Do not expect this to improve more than temporarily if at all. The last four years have made employers experts in paying only for people that they perceive as directly influencing their top or bottom line. This is why you hear about major corporations shedding thousands of jobs, while recording year to year profits. They have figured out how to be profitable with less people. Thus a liberal arts degree competing for lower paying jobs is less valuable than when competing for higher paying ones. Go to college only to get a job. Growing personally and intellectually is my continuing dream. I hope it’s everyone’s. There are simply better ways to do it than to attend a four year college. Most of them are considerably less expensive. You can volunteer on an organic farm in exchange for room and board, (http://www.wwoof.org/), you can truly develop your sociological or anthropological insight (http://www.volunteersouthamerica.net/), or you can still work at the same job you might have if you had paid for four years of tuition. You can do any or all of these while studying for your own betterment online (http://www.loc.gov/library/libarch-digital.html). Those are a few ideas out of thousands that will leave you with less debt, (none if you do it correctly), real experience, and consequently more marketable skills.

Tell me in the comments section, what would you have done to better yourself if you hadn’t gone to college?

http://www.drexel.edu/provost/clmp/docs/CLMP_RisingMal-EmploymentandtheGreatRecession.pdf

http://www.pewsocialtrends.org/2011/05/15/is-college-worth-it/

Not Earning Enough? Pay More

http://www.cartoonstock.com. Cartoon by Ed Fischer. Blog not for commercial use.

So if 30% of college graduates under age 25 (not including the unemployed) are working in a field that doesn’t require a degree, what does that do to the rest of the labor market? It requires a degree by default. In other words, part of the reason why the unemployment rate is higher for those without a degree is not because of training or learned skills in college. It’s because there are so many people flooding the job market with degrees not in demand that an employer might as well choose them over someone without. But that’s not good for anyone. A perfectly qualified person can’t get the job that would sustain their living and the college grad is saddled with debt (over $25,000 as of 2010 for the national average). It gets worse. Now, someone with a bachelor’s degree needs an even more expensive point of differentiation to earn a job. Take marketing for instance. A quick scroll on monster.com or CareerBuilder will show most available marketing positions requiring an MBA. The positions pay an average of around $40,000, yet  the average MBA program is over $60,000. Graduate school costs can range well into the six figures, and this doesn’t take into account room, board, fees, and lost income. The person that is overwhelmed with undergraduate debt has to incur even more debt to get his or her master’s degree because a bachelor’s  is unremarkable—and they still won’t be able to earn the income that justifies such expense. The point of differentiation continues to rise in cost, so the pundits continue to make unsubstantiated claims like this one: people with college degrees make 83% more than those with just a high school diploma, so more people should go to college. Lamb Chop could sing a song about it.

Next: Why people go to college. What was your chief reason for going to or not going to college?

http://www.nytimes.com/imagepages/2011/05/19/business/19gradsGraphic.html?ref=economy

http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html

http://businessmajors.about.com/od/bschoolrankings/a/How-Much-Does-It-Cost-To-Earn-An-Mba-Degree.htm

The Starving Liberal Artist

Let’s dig into this a little deeper. The Princeton Review reports on the Top Ten most popular majors in the country. They even preface their list by warning that these jobs are not necessarily the most in demand in the work force. RED FLAG. How is every top 10 major not included in the top 10 most in demand for the work force? People are going to college to get a job. Period. They’re being mislead. More on that later. Of the top 10 majors, I will leave Education and Business alone. Although they both prepare students for disappearing jobs, and not how to create them for themselves, they are the least of the culprits. Coming in at #9, Political Science: Going to law school? No? Yikes. #8. Communications. This illustrious degree afforded me the opportunity of working in a field for five years where no degree is needed or even helpful, and I’m among the luckiest of my peers. #6 English. The public library is free. 20 to 40,000 dollars a year at private university is not. #2, my personal favorite, Psychology. How many people do you know have a B.A. in Psychology? How many of them are Psychologists? These four (really six) degrees are among the most popular fields of study yet they have virtually no demand in the work force. Of college graduates under age 25 with a college degree in humanities more than a quarter are unemployed. Less than half are working in a position that requires a college degree, and of them, there median annual income is less than $21,000 per year. I loved debating Kant and Mill in my college philosophy class.  I see the value in the humanities and the social sciences.  But value is trumped by cost against $8,244 (average annual 2011 public university tuition) or (wait for it) $28,500 (average annual 2012 private university tuition) per year. Neither of these figures include room, board, fees or books. In my next post I will discuss what this trend does to the labor market and to the greater economy. At this point, anecdotal insight is very helpful. Please comment on what you studied in college and your luck with employment after graduation.

http://www.princetonreview.com/college/top-ten-majors.aspx

http://trends.collegeboard.org/college_pricing/report_findings/indicator/accessible/Tuition_Fees_Over_Time

http://www.nytimes.com/imagepages/2011/05/19/business/19gradsGraphic.html?ref=economy

The Next Bubble To Burst

Cartoon from St. Louis Post Dispatch/http://www.caglecartoons.com/

In the last decade we’ve seen a number of different business categories peak and quickly decelerate, housing, the stock market, auto. The recession that began in 2007/2008 turned those categories on their heads but ironically it compounded a different bubble that has been growing for some time; Higher Education. The Department of Education estimates the total number of undergraduates in the United States at over 15 million. That’s a bubble. And just like housing it is going to burst. The parallels are not so subtle. To begin with,  it is built on a notion fair or unfair of the American dream. Every American should be able to own their own home. Every American should be able to send their child to college. That brings us to the second parallel, it’s completely unsustainable. 15 million undergraduates are going to college this year. It’s likely because everyone from their parents to the President of the United States is telling them they need to go. President Obama says for instance “Today, the unemployment rate for Americans with at least a college degree is about half the national average.  Their incomes are about twice as high as those who only have a high school diploma”. Like the other categories before it, the student loan debt crisis is perpetuated by the same formula: try to sustain the unsustainable. I believe whole-heartedly in public and continued education. I believe in spending money on it more than almost any other public investment. But over the next several posts, I will explore why  and how as a country, we’re cementing a system of indentured servitude, and how our attempts to remedy it will inevitable make it worse.

http://abcnews.go.com/US/story?id=93914&page=1#.T2qV1sV1IbQ

http://www.educationnews.org/education-policy-and-politics/president-obama-urges-nga-for-more-education-funding/