Thoughts on the Edububble

Seven years of student loan interest down the drain!

I haven’t had much to say here about the higher education bubble, a favorite topic of Glenn Reynolds over on Instapundit.  But with total student loan debt topping $1 trillion (higher than total credit card debt I believe), this is looking like the next major financial disaster.  Among other things, student debt is not dischargeable in bankruptcy, so many debt-happy students are coming out of college with the equivalent of a mortgage before they get a job.  The consequences of this are easy to see; among other things, it will slow the long-term prospects for the housing market, as millions of young graduates will have to put off home ownership because they won’t be able to qualify for home loans.  Meanwhile, Obama, and the New York Times, say: Let’s do more of this!  (The headline for the New York Times editorial seems written deliberately to make satire more difficult: “Subsidize Students, Not Tax Cuts.”  I mean really, do they have to make my job this easy?)

Student loans, among other factors, have contributed significantly to the outsized increase in college costs, which have risen faster than housing prices during the bubble, or health care costs.  Here’s how I explain it in common sense terms.  When I attended college in the late 1970s, tuition and room and board were a little less than $6,000 a year.  Round up slightly and you have a four-year cost of about $25,000.  If you went to a state university, your price tag was about half of that, and student loans might be, say, $10,000.  That $25,000 cost was in the ballpark for first-year starting professional salaries for a new college graduate in 1980, when I took my diploma; most banks and other businesses I interviewed with in those days had jobs starting around the $18 – $24K range.  In other words, your first year starting professional wage was about equivalent to the total cost of your BA.

Today, a good private college costs between $40 and $50K a year; many state universities will run you over $20K a year.  Total cost for four year now: $150K or more.  That’s not even close to a starting professional salary, except for the handful of top students who go to Wall Street.  I’ve run this shift by some college administrators and get the same answer: “Well, very few people actually pay those full tuition rates.  Most students get some amount of financial aid, so the real cost is much lower.”  To which I respond: “Determining what college is going to cost you ought not to be like haggling with a used car dealer.”  (Memo to parents by the way: if you have a child admitted to several colleges, you should treat the financial aid offices exactly like used car dealers, and beat the hell out of them for the best deal.  Apologies here to used car dealers; you are actually more scrupulous than college financial aid departments.)

This brings me to the latest bright idea from the higher education geniuses, reported in USA Today: Some colleges are experimenting with variable tuition rates depending on majors: higher tuition for math, science, business, and economics; lower tuition for basketweaving, communications, etc.  On the surface, this makes some sense: English, philosophy, and sociology majors aren’t worth very much, and I kind of like the implicit insult this delivers to the humanities faculty.  On the other hand, is making math, science, and other disciplines more expensive really a good idea when we’re trying to get more students to take up these harder subjects?  If part of the object of college is simply getting the BA degree that we use as a professional filtering mechanism, won’t this encourage more easy majors from students?   And what will the diversity-mongers say when the higher tuition for STEM curricula mean even fewer minorities taking up these fields?

Seems to me a better idea would be to abolish all of those diversity offices, slash the frivolous humanities courses in oppression studies and such, and lower tuition costs across the board.