Student loan debt is massive and expanding. It’s a huge problem to future growth in the US. Why? Because when you are just starting out and you can’t afford to take risk on different jobs because you are worried bill collectors are breathing down your neck. Collectively, it forces people into safer choices.
Instapundit has been chronicling the student debt debacle for over a year now. The topic was one of the points of the Occupy movement. Forgiveness of student debt. Big debt limits choice. Kids out of college won’t be able to buy homes. If I were someone of that age, I’d like to see their personal finances before marrying them. Why marry someone with a massive debt to pay off? Marriage is risky enough.
I took out a student loan myself. The only reason I did it was at the time I was able to borrow from the government at 3%, and reinvest it in short term rates at 19%. It was a no brainer. I doubled my money. The government eliminated that loophole in the 1980's. Smart move.
However, there doesn’t seem to be any economic marketplace around schools, debt and outcomes. College tuition and costs have skyrocketed over the last fifteen years. The reasons behind that are many. They can be summed up in a few thoughts. First, the demand for a college education rose world wide as barriers to entry fell. More foreign students are enrolled at US schools than ever before. Also, it’s been economically proven that people with a college education tend to do better financially than people without one. Second, we haven’t increased the supply of schools, so “price” has to rise with increased demand. Third, the federal government has subsidized the heck out of education, driving up prices even more.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 24th, 2014 | John Ransom