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March 2 2018

College: Is the Degree Worth the Debt?

by Charlotte Hays

Quote of the Day:

All good things, goes the old cliché, must come to an end. And for American higher education, the end is nigh. It will be a particularly sad finale as, before their descent into madness, America’s college campuses were a premier source of national pride.

--Greg Jones in The Federalist

"New Fed Chair Doesn't Understand Why Student Debt Can't Be Discharged in Bankruptcy," read a headline earlier this week on a story at Market Watch. Here is the top of the story:

The new chairman of the Federal Reserve questioned why struggling borrowers can’t discharge their student loans in bankruptcy.

“Alone among all kinds of debt, we don’t allow student loan debt to be discharged in bankruptcy,” Jerome Powell told members of the Senate Banking Committee Thursday. “I’d be at a loss to explain why that should be the case.”

Powell’s comments came in response to a question from Senator Brian Schatz, a Democrat from Hawaii, about whether high levels of student debt create a drag on the economy. More than 40 million Americans hold nearly $1.4 trillion in outstanding student loans.

While Powell noted that, in general, policymakers should foster the idea that Americans can borrow to invest in themselves, he said it’s important that borrowers understand the nature and risks of borrowing, and expressed concern about the treatment of student loans in bankruptcy.

Powell’s comments come as the Department of Education is looking for input on the way student loans are treated in bankruptcy. Congress passed a series of laws beginning in the INDENT 1970s that banned borrowers from discharging their student loans in bankruptcy unless they’re experiencing “undue hardship.” Congress never defined that phrase, but the courts have interpreted it to mean a relatively high standard.

Over the past few years, lawyers and even some judges have been looking for ways to make it easier for borrowers to discharge their debs in the bankruptcy process. But absent Congressional action and a change in the law, widespread change may be difficult to come by.

Student loans were sold as a way for deserving young people to get a college education (or at least a degree). Instead for many, these loans have become financial entanglements that are more likely to hamper thriving than promote it. So I have a proposal: stop taking out these loans.

Nobody should take on serious debt in her late teen years or early twenties. Is it wise to undertakesuch serious financial obligations on the assumption that a degree will automatically ensure employment sufficiently gainful that the debts can be discharged on schedule?

It may be time to rethink higher education, finding alternatives to crippling debt in exchange for a degree. American Enterprise Institute President Arthur C. Brooks wrote a seminal 2013 piece in the New York Times describing "My Valuable and Cheap College Degree," in which he described a combination of correspondence and on-site classes. Brooks, it should be highlighted, hasn't done at all badly, despite not having a degree from a prestige college.

I'd also pose the question of whether today's colleges, where students erupt at the prospect of having speakers with whom they disagree set foot on campus, represent the highest ideals of the  university as it developed in Western culture.

I seem not to be alone in raising these questions. Greg Jones of The Federalist writes that enrollment data and public opinion "suggest the college bubble is popping." Jones describes what has happened to universities:

Already the areas of scholarship that once defined a broad, well-versed college education, the liberal arts and humanities, are being passed over for more practical and profitable majors. These long-left-leaning departments have left in their wakes a legacy of groupthink that infects nearly every nook and cranny of academia. Liberal faculty at American colleges and universities outnumber their conservative counterparts nearly 12 to one.

The resultant ideological monopoly has created an environment concerned more with indoctrination than actual education and produced legions of impressionable, emboldened students intent on wreaking havoc, by violence if necessary, on institutions that refuse to cater to their increasingly insane demands.

America’s college campuses have served as epicenters of radicalism before, but this isn’t the 1960s, and the concepts of peace and love no longer enjoy their once-vaulted status in the far-left’s philosophical hierarchy. Today’s student activists aren’t asking for equal rights, but superior rights. Rather than defend the free speech their baby-boomer forebears sought, they seek to demonize it.

Market forces seem to be at work:

Student bodies are in decline across the country, and somewhat drastically. The spring of 2017 hosted 2.4 million fewer students nationwide than did the fall of 2011, or an approximately 12 percent decrease in six years.  Continued reductions in enrollment will hit the smallest, and by extension most vulnerable, colleges the hardest. But there is little even the nation’s largest colleges and universities can do at this point, as public perception of a degree’s value has created a cost/benefit crisis that, given plausible future trends, may be impossible to reverse.

A Wall Street Journal poll from last September revealed Americans to be essentially split (49 percent to 47 percent) on whether a college degree is worth the cost. A CNBC poll just four years prior was much kinder, with a 13 percent differential in favor of earning a degree.

Just as low confidence in companies and products can affect stocks, the declining belief that a college degree is a first-class ticket to prosperity will likewise hurt higher education’s marketability. By extension, this will boost the marketability of alternative forms of education such as trade schools.

The matter of college debt for people who have already saddled themselves with these loans still looms large.

But maybe there is a solution for the future: don't go into serious debt at the age of eighteen, nineteen, or twenty. .  

 

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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