I came across a column this morning in The Washington Post by George Will entitled, "Subprime College Educations." In it he argues that a university education is fast becoming a new economic bubble, replacing the sub-prime mortgage crisis that contributed to the 2008 recession. As Mr. Will is quick to point out, the basic argument he makes is not new, having such advocates as Glenn Reynolds and Peter Thiel. In sum, Mr. Will concludes that "college costs rise while quality declines."
I agree that college costs are rising, but I am less certain of a decline in quality. The opening salvo of Mr. Will's argument paints a picture of the modern college education as primarily a status-making experience with diminishing demands on participants' time. He cites the same data we discussed in an earlier post involving study time, in which average study time for college students seems to have declined from 24 hours a week in the 1960s to 15 hours a week today. As stated in the earlier post, one should probably be careful when making conclusions regarding this number. For instance, a wide variation appears to exist between different institutions, as well as different majors; on average, architects tend to study more than history majors. There is also the matter of full-time workers taking on full-time studies in an environment where upward economic mobility requires higher-education, but in which higher-education requires considerable economic activity to fund. There is also the matter of technology, and the way it alters--in positive and negative ways--the manner in which students today go about studying, researching, and finishing assignments. This isn't a point I considered in the previous post, but one that probably warrants discussion someday.
At any rate, while I can see why Mr. Will and others look at college today as somehow declining in "quality," there are reasons to believe the data he cites (albeit, in a limited fashion due to the medium in which he's writing) does not necessarily support his conclusions. It's not to say his points are wrong, only that the issue is probably more complicated.
Mr. Will goes on to discuss what I think is a more relevant issue of declining value in higher education, which centers on the matter of unsupportable student-loan debt. In strictly dollar terms, taking on a big loan to finance an education makes sense if the returns on that education can pay the loan back. One might argue that an expensive education which profoundly changes one's life, but yields no additional economic benefit, is still worth the cost; a matter of personal valuation. That is, unless the profoundly-changed-but-heavily-indebted student defaults on their student loan. Alone this is a relatively small manner between an individual debtor and his or her creditors. Multiply the scenario by a sufficient number of cases however--or so the argument goes--and such defaults lead to a freeze in credit, stymied investment, slowing economic growth, and reduced employment. What was once a matter of personal valuation thereby becomes a matter of significance to us all. These are the types of scenarios both Mr. Will and I wish to avoid.
This is because of a dilemma I have yet to resolve to my satisfaction; namely, how does one maintain a free society when the bad or unlucky choices of some--given an unfavorable convergence of events--lead to pain for everyone? If we are free to act as we see best according to our circumstances, are we also free to act in a manner that could turn out well but also badly, both for ourselves and others? It is a difficult question, particularly given the increasing degree to which our individual well-being is, for better or worse, linked with others. How do we protect a person's liberty to make choices for themselves while protecting against the possibility of too many choices going badly?
These are questions for which I have no answers, but which come to mind when considering the matter of student loan-debt as an economic bubble. Whether we assess the issue as a bubble or not, it seems likely that we stand to benefit by reducing the amount of debt students currently hold, and are likely to hold for education in the future.
Some people argue that the government should accomplish this by forgiving student loan debt. While I think certain individuals would be far happier (and far more productive) citizens if they did not have a mountain of debt to repay, the cost-benefit analysis of such a move would probably be quite complicated. Furthermore, doing so does not assure less debt years from now, as the underlying incentives would remain basically unchanged. Rescuing a drowning swimmer is a noble act, but does comparatively little good if the rescued person does not learn from the experience. It's hard to assume everyone, once rescued, will avoid the maelstroms which ensnared them in the first place.
Another solution, which I favor a bit more, is developing what Peter Thiel calls a "counter-narrative" to the idea that college is the only way to make it in the world today. I wrote about Mr. Thiel's idea in a post late last year. Fed up with an increasingly-popular message that everyone needs to go to college to make something of themselves, Mr. Thiel, a co-founder of PayPal, launched the "20-under 20" program in 2011, giving competitive grants of $100,000 over two years to twenty 20 year-olds who showed promise by developing a good business plan, and agreeing to drop out of college to implement it.
It's a controversial program, but it points in what I believe to be a favorable direction. The college experience, so far as I can tell, is highly variable. For some it is precisely what they need, both in terms of experience as well as learning, while for others it simply isn't. The same can probably be said for any educational experience, except that in the case of college the matter is more of a choice than say high school. At least it's suppose to be more of a choice. Yet over the last several decades everything, from job prospects to experiences for personal growth seem to point toward going to college. It is in opposition to this narrative that Mr. Thiel strives. College is helpful for many people, but well-understood alternatives may also be helpful.
The cost of going to college today is indeed high, but so is the cost of not going; we "pay" a lot in either case. Student loan-debt is a tricky subject, and makes calculating the "value" of a college education more difficult. I personally found my college experience to be highly transformative, but have yet to reap significant economic benefit from it. It was and remains very useful to me, whatever anyone else may say. Yet perhaps we should be cautious when encouraging people to partake in higher education no matter the cost. Higher education, like exercise, typically has great benefit; both, however, can be overdone. Maybe.
Happy Sunday, friends :)
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