Higher Education and Reform

Our leaders, educators, the media and commentators love to sign the hymn of going out and getting a college education.  Don´t worry about the cost or the degree you get.  Just get a 4 year degree and your future will be set.

The reality is that the value of higher education has been steadily declining while its cost has been steadily increasing.  As more people go to college is becomes less and less exclusive and colleges have to accept more and more mediocre and poor students.  In the past only the elite went.  Now almost everyone goes.  What used to be special is increasingly ordinary.  Unfortunately the cost has become increasingly precious.

Don´t buy the dogma that everyone must go to college.  College is right for certain people: for those who can afford it, for those who are academically inclined, for those who will study majors (like engineering and science) that should get them a good job later.  For others they should explore further options.

We need new thinking in education, using online learning and a reexamination of the utility of the 4 year degree.  I believe that many people can be taught the basics of a profession in 1-2 years, and then build upon that with on the job experience.

I also recommend that all high school grads do a year or two abroad traveling/working to get some life experience and maturity.

Mish shows how increasingly college delivers less.

Those who think the answer to the unemployment problem is more education might be surprised to learn the Majority of Unemployed Attended College.

For the first time in history, the number of jobless workers age 25 and up who have attended some college now exceeds the ranks of those who settled for a high school diploma or less.

Out of 9 million unemployed in April, 4.7 million had gone to college or graduated and 4.3 million had not, seasonally adjusted Labor Department data show.

click on chart for sharper image

In 2011, 57% of those 25 and up had attended some college vs. 43% in 1992. Those without a high school diploma fell from 21% to 12% over that span.

But along with the increasing prevalence of college attendance has come a growing number of dropouts, who have left school burdened by student loan debt but without much to kick-start their careers.

Among everyone up to age 24 who has left college or earned a two-year degree — including those not actively searching — the full-time employment-to-population ratio has plummeted from 69% in 2000 to 62% in 2003 to 54%.

This has occurred even as student lending and enrollment at community colleges has soared, elevating the student loan crisis to the center of political debate and a rallying cry for the Occupy Wall Street movement.

Those who graduated with a four-year degree fared better employment-wise but many of those still struggle with student loans. Many other end up underemployed in retail sector jobs as opposed to the curriculum they studied.

Student loans are a trillion dollar problem, and growing every quarter. President Obama wants more student loans, but all that does is make many graduates debt slaves for the rest of their lives.

The cost of education is preposterous and the solutions are easy to describe.

Five Solutions

  1. Kill federally funded student loan program entirely. Student loans do nothing but drive up the cost of education. Anyone can get a student loan because the loans are guaranteed and cannot be discharged in bankruptcy. The beneficiaries of this horrendous setup are teachers and administrators, not the kids receiving loans.
  2. Kill state aid to colleges as well
  3. Increase competition by accrediting more online universities, even foreign universities. This will drive down costs immensely.
  4. Public unions are a huge part of the reason for driving up teacher salaries, so collective bargaining (collective coercion actually), must end.
  5. High school counselors and parents must educate kids that there simply are no realistic chances for those graduating with degrees in political science, history, English, art, and literally dozens of other useless or nearly-useless majors.

The deflationary overhang of student debt is enormous. Those in debt will postpone buying homes, getting married, starting families, and spending money in general.

The only solution is to ensure kids to not get into massive debt in the first place. The way to achieve that is to drive down the cost of education.

Sadly the Obama administration (like many before it and many at the state level as well) has done nothing but throw money at the problem, rewarding unions and administrators while making debt slaves of kids as education costs spiral out of control.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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