Dear Reader,
Student Loans are again in the news; President Obama has suggested capping the interest on one kind of Federal loan at 3% instead of allowing it to go up to 6%. Many students can't pay back their debt and are demanding debt forgiveness. Major news outlets are covering the story --- this article from CNBC is an example.
And third is the question of how to keep future graduates from accumulating a mountain of student loan debt just as large, if not larger, than the one just leveled.
It is this third issue which perhaps is most pressing — and most vexing —and which also offers the most opportunity for innovation. Levying an “education tax,” making college free and assigning students to institutions based on a lottery system? Abolishing “college” altogether for more specialized trade institutions instead, while at the same time requiring a “gap year” of liberal arts prior to entry? Offering high-school grads the choice between student loans or business loans to fund new ventures? These all seem ridiculous, but then so too is our current state of affairs.
What is interesting is that the most reasonable proposal available for solving this problem in the future is so rarely discussed. There's a report out from Georgetown University on the value of different majors.
The median engineering income: $75,000. The median mathematics major income: $70,000. With graduate degrees afterwards those go up to $99,000 and $89,000. Humanities and Liberal Arts? $47,000; Arts, $44,000, and Psychology and Social Work, $42,000. That is, of course, among people who are employed full-time.
Want to guess who is having an easier time finding a full time job after college? The Engineer or the Pysch major?
The basic issue here is that the loan availability is not actually helping to direct students into things that are actually profitable. It should not be possible --- i.e., under no conditions should such a person be able to get a loan, since they'll never be able to pay it back --- for a person at a lower quality university to go on to get a psych major. Someone who wants to and can pay for it on their own - fine. Someone who wants to be a psych major at Harvard - fine. But there are some major/university combinations that are the equivalent of swampland in Florida and unsuspecting 18 year olds are being allowed to mortgage their future to buy it.
That is not to say that we should get rid of student loans. We should just make them conditional on what major the person wants to select. Majors with a clear career path for professions that are in high demand --- great, give out those loans for sure. Engineering, Mathematics & Computer Science, Hard Science, Economics (median $70,000 with an expected 50% boost from going on to get a graduate degree) are all great majors. We should stop loaning people money and enabling them to make worse choices which burden them with debt and risk the government's finances.
As The Daily Stag Hunt argued earlier: learn math.
--- Stag Staff
Update on April 30, 2012 at 10:09 AM by
Stag Staff
And more on this subject:
For years, long before the Great Recession and today’s almost 9 percent unemployment rate among new college graduates, I’ve been begging students and their parents to consider the fallout from their choice to borrow heavily to attend a school when the student has no clue about the expected career opportunities of a chosen major.
Too many students aren’t sure what job they could get after four, five or even six years of studying a certain major and racking up education loans. Many aren’t getting on-the-job training while they are in school or during their semester or summer breaks. As a result, questions about employment opportunities or what type of job they have the skills to attain are met with blank stares or the typical, “I don’t know.”
And don’t get me started on people who borrow heavily to get an advanced degree without really knowing whether it will lead to a fatter paycheck that can easily service the debt...
