Student loans and the unhappy campers of Wall Street

The Friday Letter / Issue # 151

By George Leef

For the last several months, the various “Occupy” (OWS) protests have gotten enormous media attention. While their many expressed grievances cover the waterfront, the one that has received the most fame is that they’ve been lured into very expensive college debts—debts they can’t pay because they don’t have jobs. Coverage of the protest has enabled many tell the rest of the world about their plight.  One handwritten sign I saw a few days ago read:

I graduate college in 7 months
with a “useless”
degree in Classical Studies. I
have worked very hard
and am on track to graduate
with highest Latin honors.
I am in a Greek organization
with many volunteer hours
under my belt.
MY JOB PROSPECTS?
0

That is plaintive.

What’s plaintive about it, though, is not the fact that this young woman worked hard in her college classes and now calls her classical studies degree “useless.” Nor is it plaintive because she is probably going to have a hard time paying off her college loans.
No, what’s plaintive about this is the student’s assumption that college graduates are
supposed to have good job prospects. Why on Earth should anyone, much less an apparently intelligent woman, think that good job prospects should automatically be chasing after anyone who has gone to college?

Answer: Politicians and higher education leaders have been suggesting exactly that. They have been doing so for decades and have convinced large numbers of Americans that going to college, no matter how much it costs, is a “no brainer.” That’s because having a college degree improves your skills and knowledge, leading to good, high-paying jobs.

Unfortunately, as the protesters will tell anyone who walks by, it simply isn’t true. Having a college degree gives you no assurance of a good job—or of any job at all. The OWS protesters aren’t hesitant about assigning blame for the bad conditions they perceive,
although they mostly get it wrong. (“Greed” and “capitalism” don’t really explain anything.) Americans who think that it’s bad for the country to have a great many un- or under-employed young people overwhelmed by debt should not hesitate to assign blame either.

Instead of pinning the blame on a  person or group, let’s start by pinning it on an idea. The mistaken idea behind  America’s  higher education mania is this: Education is always good. Stated more  precisely: People always make a wise decision when they continue their formal  education.

For  a while, at least, those ideas seemed to be true. As college  enrollments steadily increased in the 1960s, ‘70s, ‘80s, and ‘90s, most of  those who graduated found employment that paid much better than average, thus  giving rise to the idea that there was a large “college earnings premium.”

Higher education  boosters like the College Board trumpeted the  correlation between college completion and higher lifetime earnings, settling  on the impressive figure of about $1 million as the average payoff for going to  college. Federal websites conveyed the same idea that going to college was a  sure-thing “investment” that led to higher incomes. The Lumina  Foundation told people that America’s  economic and social challenges could best be met by greatly increasing the  number of people with “high quality degrees and credentials.”

More education is good. Naturally,  politicians could not resist telling voters that higher education (which they  generously supported, of course, with taxpayer money) was a tremendous benefit  to each individual and to the country as a whole. Michigan’s governor Jennifer Granholm  declared in 2003 that higher education was “like jet fuel for the economy.”  Hillary Clinton, during her campaign for the Democratic nomination, told an
audience at Plymouth  State University  that higher education “has never been more important” and pointed to that  additional $1 million that four-year college graduates supposedly earn over  their careers.

Speaking at the Universityof Texas  last August, President Obama declared  that “America
has to have the highest share of graduates compared to every other nation”  because other nations would out-compete us if we don’t. His secretary of  education, Arne Duncan,
testified before a Senate committee on June 28 that higher education “is an economic growth engine and a ticket to a middle-class lifestyle.”

The message to  young Americans was loud and clear. As the president stated in a February 2009 speech, if a student doesn’t continue education beyond high  school, “It’s not just quitting on yourself, it’s quitting on your country.”

Conversely, you  search in vain for any statement by a prominent official or education leader  that going to college might be a bad idea. Questioning the benefits of more education  was just as unthinkable as questioning the benefits of home ownership. All that
Americans ever heard was: More education is good.

Almost everyone  believed it. Even students who had finished high school with mediocre-to-poor  records were encouraged to go to college so they wouldn’t miss out on that
“ticket to a middle-class lifestyle.” Crucially, federal grants and loans were  available to nearly everyone to help defray the cost. No reason for any student  to pass up the wonderful advantages of college over a mundane cost/benefit  analysis.

Several years ago,  Nike’s advertising slogan was “Just Do It!” That’s exactly how most Americans  looked at their college decision. College grads get good jobs and make lots of
money, so Just Do It.

That attitude led  to stories like that of Kelli  Space with her sociology degree and huge student loan debts. It led to OWS  protesters like the one holding the sign above.

The closest thing to a coherent  demand from the protesters has been that their student loans should be  forgiven. It does not speak well of the education they have received that they  can’t see how forgiving their loans would encourage more irresponsible student
debt in the future.

Encouraging students to go to  college at public expense was just as irresistible to politicians as  encouraging people to buy houses they couldn’t afford. The Pope Center’s
Jane Shaw noted the similarities between housing bubble and the higher ed bubble
back in 2009. The question is how we escape from that mistake.

Unfortunately, the  Obama administration’s policy is not to escape at all, but rather to dig in  deeper. (Many writers have made that point and Andrew Gillen’s essay is especially cogent.) If we want to avoid more  college grads with large debts and no job, we have to abandon the policies that  treat college graduation as something like our national Holy Grail.

Mr. Leef is director of research  for the John William Pope Foundation for Higher Education Policy in Raleigh, North Carolina. He is  the author of  Free  Choice for Workers: A History of the Right-to-Work Movement (2005). He may be reached at georgeleef@popecenter.org.

This article appeared this week on the Pope Center’s website.