Tuesday, August 14, 2012


"Of the 241 million people in the United States who have a credit report with Equifax, our data provider, about 15.4% -- or 37 million -- hold outstanding student loan debt,"
-The US Federal Reserve

In the past, I've written about how colleges and universities are not supposed to be glorified trade schools that help you get a higher paying job, but a place of education that makes you a better citizen and wiser human being. I've written about how colleges and universities are often highly biased to the left, shutting out ideological diversity and blocking out non-leftist professors. I've written about how the cost of colleges does not match the quality of education.

And I've written about how the presumption that everyone should go to college is simply foolish and actually damaging to a culture both by lowering standards and quality of education to fit everyone in regardless of academic ability, but by dreaming of a world where nobody sweeps streets or digs ditches.

Well here are a few numbers to consider. The fastest growing group of people taking out student loans for kids in college is the upper middle class:
Between 2007 and 2010, the percentage of households taking out loans to pay for college grew fastest within the group earning between $94,535 and $205,335 a year.
That article by Jordan Weissmann at the Wall Street Journal also notes that between 1990 and 2010, the average cost of tuition alone at private and public institutions of higher learning doubled. In that twenty year period, inflation went up by about 1.6 times, which means that colleges and universities increased in cost by 40% more than inflation.

And these are families that cannot comfortably pay $50,000 a year or more in tuition, room, and board plus travel costs, fees, and supplies, nor do they qualify for grants and special programs for assistance to poorer students. My family was so poor I was able to get so many grants and loans the only thing I had to pay for at college was the meals. When you make $90,000 a year you can't burn half of that on college, but neither do you get much in the way of financial assistance.

And that's been true a long time. Becky Yerak and Kristin Samuelson at the Chicago Tribune write:
A report released Wednesday by Barclays notes that 15.5 percent of outstanding student loan debt is owed by people 50 and older, including 4.2 percent held by people 60 and older. Those are staggering amounts given that outstanding student loan debt has surpassed $1 trillion, exceeding the amounts owed on credit cards and auto loans.

The older borrowers also account for a larger share of the past-due balance outstanding, with those older than 50 responsible for 16.9 percent of the past-due balance, Barclays analyst Cooper Howes said in the report.

The average student debt burden for borrowers older than 60 is $18,250.
As these people close in on retirement, they're not going to be more likely to afford to repay these loans. Now whether the loans have been unpaid because they simply choose not to or because its quite a financial burden and they haven't been able to yet is unclear. I know it took me more than 20 years to get mine paid off, and I didn't complete 4 years.

Just a few things to consider while you save up to send your kid through college somewhere. When you started saving, how much was tuition? Is your savings keeping up? And honestly, is it really worth it to send your kid to present day colleges and universities?

There was a time when you had to get a degree in something, anything, to get a decent job of any sort. It didn't matter if that degree was related to the field or not. These days, I'm not so sure. And is it worth saddling yourself with up to over $100,000 in debt, just walking into the job on the first day? You have to add that expense to your balance sheet. Maybe you can't get as high a paying job without college, but you don't start out in the hole as much either....

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