A Reader on the Higher Education Mania
College is not inexpensive, and for-profit and online institutions have not been able to change this (even while they offer an inferior product in terms of academic, social and extracurricular offerings). Perhaps college was not meant to be a bargain, not meant to be distilled to economic bottom lines.
We’ve been slow to adopt new technology because we don’t want to. We like getting up in front of 25 people. It’s more fun, but it’s also damnably expensive.
Far from being “priceless,” as the promoters of ever-more spending on higher education would have Americans believe, both undergraduate and post-graduate education is turning out to be a catastrophic investment for many young and not-so-young adults.
In 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years. By contrast, the average credit card balance and the average balance on car loans owed by U.S. consumers actually decreased during the same period.
I think what the student loan crisis comes down to are issues between anecdotes and averages. As long as there are anecdotes of people graduating with six-figure debt and flipping burgers, journalists will write about them with so much passion that you’d think they’re the new normal. But they’re not. The average college grad is more employable and earns far more than those without degrees, and the average student loan is less than the average new-car loan — a debt few seem bothered by.
The “free market” in this case was never anything close to lean and efficient. To the contrary, it was (and still is) inefficient and frequently corrupt, dominated by players who found it easy to bribe college officials, wring favors from politicians by means of campaign contributions, bilk the Department of Education, and live off generous subsidies.
In Austrian business cycle parlance, students and their parents are investing in the higher-order good of a college degree, believing that skills-required, higher-paying jobs await college students after they have spent four to six years honing their skill sets. However, time preferences haven’t changed. The demand for consumer goods remains, and that’s where the jobs are.