As Americans assess the job markets
and encounter the difficulties faced in securing a job, they begin to think of
alternatives. It should be common knowledge that the United States is going
through tough economic times. The unemployment rate is significantly higher
than years passed and we have not seen a great improvement in the number of
jobs available to Americans. So, what are we do to in this predicament? Many
would answer this question with the noticeably popular alternative of higher
education, or rather, education beyond high school. Our minds have been
instilled with the idea that more education equals more money in the long term.
As years go by, we must stop and ask ourselves if this is truly the case. In an
attempt to improve the overall well-being of our economy, we must continuously
ponder these types of questions and evaluate the causes and effects of our economic
decisions. In 1965, Lyndon B. Johnson stated, “Economists tell us that
improvement of education has been responsible for one-fourth to one-half of the
growth in our nation’s economy over the past half-century.” This has been the persistent
belief of Americans and it is slowly emptying our pockets, but is this for the
better or worse? I will examine two different articles from the website
Economist.com, and discuss the two most popular stances on the issue of higher
education.
It has
been said that the next economic ‘bubble’ to burst is the higher education
market. In the past, one would not think to consider education as a market, but
recent statistics have proved adjacent comparisons even with the housing
market. In the article ‘Is it really the
next bubble?’, a known Facebook investor, Peter Thiel, is quoted saying, “To
call something a bubble, it must be overpriced and there must be an intense
belief in it. Housing was a classic bubble.” He goes on to say that people are
not getting what they paid for, in terms of job security and disposable income
averages. From our early school years, teachers, parents, family, and friends
repeatedly expressed the importance of education, graduating high school, and thus
being accepted to college. College attendance has become a societal norm among
Americans. The absence of a college education has evolved into a negative stereotype.
This can be noted as one of the reasons for the continuous rise in the college
enrollment rate. The article ‘Student
loans in America: Nope, just debt’ reveals shocking statistics. From a
report issued on October 26th by the College Board, it was shown
that “more than ten million students took out loans for the latest academic
year, and almost a third of students graduating from college, and 69% of the
ones dropping out, hold debt tied to their educations.” The New York Federal
Reserve Bank places the total amount of debt due to higher education costs at
$550 billion, and even suggests that this number could be underestimated. It
has been said that the total amount of outstanding debt from higher education
could surpass $1 trillion in the near future. The ‘Student loans in America: Nope, just debt’ article also points out
the idea of higher education as a circular process and waste of money: “The
size of the loan pool expands to enable students to pay ever higher fees to
schools whose costs expand because money is coming their way. That was just
about sustainable in the good times, a lot harder when there are fewer jobs to
be had.” So, are we really spending too much and taking on too much debt while
not receiving the jobs and incomes we expect?
“The
2008 census reported average earnings of those with advanced degrees, (a master’s
professional or doctoral degree), totaled $83,144.” Those with bachelor’s
degrees made $58,613, while people with high school diplomas had average
earnings at $31,283. These numbers show that education really does, or can, pay
off in the long run. In the article, ‘Is
it really the next bubble?’, a professor at University of California,
Norton Grubb gives his viewpoint of higher education. He believes, “The problem
is that there are no other routes to better occupations and higher salaries
anymore, except for those who have odd skills. My interpretation of his view is
that higher education is seen as the only option for better jobs and salaries.
He states that while a four year degree sufficed in the past, if we expect more
money, then we need to go beyond the bare minimum. However, this could mean
more out-of-pocket money and most likely more loans. Grubb continues in saying
that the 2008 reported average debt of graduating seniors was $23,200, which he
believes is relatively low. He also points out that the national media tends to
focus in on schools with substantial tuitions, when the majority of students
attend schools with significantly lower tuitions.
This
question of higher education has been extremely controversial and must be
explored further. If higher education is already being compared to the housing
market, then we could have a potentially devastating problem on our hands. The government has recently announced some
changes to the loan process to relieve some pressure on struggling graduates.
They must qualify, and they will receive payment relief, not debt relief.
Interest will continue to accrue to their outstanding debt. However, there will
be forgiveness after 20 years, rather than 25. This plan is said to be of no
cost to taxpayers, but we must be careful when believing those words. Whether
higher education can be considered the next credit bubble or not, it is a vital
issue that needs to be seriously considered.
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