Pethokoukis, Economics, U.S. Economy

Parents, don’t look at these terrifying charts on student debt and college tuition! Turn away now!

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Is the rising level of student debt — The Wall Street Journal reports that the “average student who borrows has piled up about $40,000 in debt by graduation, including parents’ loans, nearly double the levels of a decade ago” — a big obstacle to recent graduates or dropouts starting their own companies? Says a Stanford Law School fellow quoted in the WSJ article: ”I mentor students all the time. The single largest inhibitor to entrepreneurship is the student loans.”

The following charts show the worrisome explosion in college tuition and debt:

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081413college3And some further historical context:

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7 thoughts on “Parents, don’t look at these terrifying charts on student debt and college tuition! Turn away now!

  1. Ooh, recent graduates are being discouraged from starting their own companies. We’re supposed to worry about that? Excluding the extreme outliers (Gates, Zuckerberg), how many recent grads have the chops to actually start a company that amounts to anything? And I’d argue that any recent graduate who is able to start something decent probably didn’t need to go to college in the first place. Studying English Lit isn’t a prerequisite for starting a cupcake toothpick company. Most recent grads would be far better served taking a job and learning the skills (technical, financial and managerial) needed to succeed.

    And as it’s been pointed out elsewhere, the key isn’t that they have debt, it’s that they’ve gotten so little in return for the debt. Taking on $60,000 or more in debt in return for a degree in theater? Or women’s studies? You couldn’t convince me that any of those degrees were worth four years of my time let alone four years and five figures worth of debt.

  2. Whether it’s student debt, home debt, or municipal debt, the Federal Government is subsidizing it — with its own ginormous debt, of course.

  3. I would like to say I simply don’t understand why public and especially private college tuition have been rising at 2x-6x per annum multiples of inflation, but the reason is obvious: Because it can. And it can because of a massive higher education bubble. And that is happening because of massive Federal subsidization of higher education – which of course the U.S. Government is simply writing down as debt. As an experiment let’s just stop the subsidization for the next 5 years and then let’s see how quickly tuition either stays at its current rate or drops significantly.

    I can’t fathom how I will pay for my oldest child to go to school in the next 4-5 years. She either better get straight-As and/or be a top athlete (preferably both). Other than that, junior college is looking good even if she gets into a good university.

  4. Obama/the Democrat party wants every one of these kids, and this crushing burden, so he can wave his magic wand called Student Loan Debt Forgiveness.

    Let’s see, government drives up the price of tuition, takes over the student lending market, drives prices higher, all the while the product deteriorates, and prices continue to rise.

    You idiots think this only happens in health care delivery, and housing?

  5. I wonder why the ~$26,000 average student loan debt figure is the one that’s often tossed around in the news – the $40,000 one actually makes more sense to me, given the cost of attendance for many universities. The higher figure is certainly a lot less misleading.

    I think all that indebtedness might have an impact on recent grads’ workplace demeanor, too… why rock the boat at work that much if the downside is potentially becoming insolvent? There’s likely a decreased appetite for risk in a whole bunch of areas. (And I say this as a fairly recent grad.)

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