Student Loan debt: The Eduscam

 

Student Loans- The Eduscam

Once again, I find myself embarrassingly in agreement, at least in one narrow principle, with John Stossell, that apostle of free market price gouging and exploitation. Unexpectedly, in a recent column he stated that success can be obtained without accumulation crushing student debt. I agree with the statement, although why he felt it a topic for an op-ed I don’t know, since I feel that statement is a priori true without explanation. But…being me, I thought I’d elaborate in several areas, especially as SCOTUS  recently dealt a case which resulted in them  kiboshing  the Biden administration’s intended “forgiveness” of some student loan debt. What is overlooked is that the "forgiveness" would apply debt remaining after the principal on the loan had been repaid.  

        The first is that far too much student debt is incurred by young folks who apparently think that there is special knowledge available in another state which no one in their home state comprehends or can confer.

        Example: The undergraduate 2021-2022 tuition & fees at the University of Central Florida was $6,368 for Florida residents and $22,467 for out-of-state students. The Florida resident got the identical educational opportunity for 350% less.

          This is orders of magnitude more skewed in private vs public universities. Example: The bright eyed young 2021 freshman at Notre Dame (where home of record is no factor) could look forward to a total tuition and fees cost of $246,800 by graduation in 2025. That’s a huge price to pay for content which is available in any university, for perspective, that amounts to a home mortgage sized debt incurred over four years while the mortgagee isn't earning!

        I found it oddly significant that there was also a promo in the news for an HBO production related to the Sackler cartel family, owners of Perdue Pharma (oxycodone’s purveyor and drug pushers to millions). Like the Sacklers, who encouraged doctors to prescribe a drug they knew to be addictive yet claimed that it wasn’t, many tuition aid offices, are more like pre pre-housing bubble mortgage brokers, and low end loan sharks, in that they routinely encourage young (and financially naïve) persons to accumulate a crushing debt load with promises that they’ll be easily able to pay it off with the “High salaries they’ll earn as grads of good old Podunk University.”

        Average 2022 Student Loan Debt in The United States among student loan borrowers in America was $32,731, according to the Federal Reserve. This is an increase of approximately 20% from 2015-2016. Most borrowers have between $25,000 and $50,000 outstanding in student loan debt. More than 44 million Americans had some student loan debt unrepaid as of 2021!

        Notre Dame is high, but not the worst and several Evangelical Christian Schools are ridiculously high. Jerry Falwell’s Liberty U, will set the borrower back $160,000 for a BA in “Bible.” Good old TCU will set you back $250,000 for tuition. But wait…living on campus will cost another $80,000, for a potential debt load of a third of a million. To live in Texas, for Christ’s sake!??

        In summary, the cost of information isn’t the same, although the quality of said education may well be. So why do so many students go to schools outside the state and accumulate such debt? Vanity is a big factor, closely followed by “Mom and Dad went there.” Bard college, a small liberal arts college in upstate New York will set you back right at $300,000 for a BA in English, but not to worry, there is no minimum SAT or ACT score requirement and they are “test optional” in classes. Needless to say, they have a high acceptance rate and graduation rate. Quality of education? Who knows? (In the interest of full disclosure, Bard did produce Donald Fagen and Walter Becker, the two guys who became Steely Dan!)

        It is, at least to me, statistically significant that a mere 3% of the UF student body are non-residents, so it is obvious that in-state tuition rates “pay the bills” and the astronomically higher out of state rates are just free money. Also remember that the head football coach at “good ole Florida” makes (I didn’t say “earns”) $7.1 million annually. This is equivalent to the tuition for more than 1000 Florida resident students!  

        Second issue – tuition aid “consumer” ignorance. Sadly, the average American is less than sagacious in manners of money at age 22, therefore, unlike the financial aid office which, in truth, “sells” loans, they are easy prey for suggestions such as “Think of it like credit card payment’” or “your U. of B.S. degree will earn you enough to cover it easily.” It is a fact that many young couples buying a first home are just as innocent and just as easy prey for those who “sell” loans. Read “The Big Short” for more validation of this statement.  

        These youngsters are frequently the first to find out that their student debt load can make them essentially ineligible for a home mortgage or even, in some cases, credit cards. Debt is debt to a banker, period. The average  required student loan payment in 2019 was well in excess of $450 monthly. A 10 year payoff on a $150,000 student loan at 7% will require a monthly payment of $1742 monthly. That’s just under half of the OCPS beginning teacher gross starting salary! Mortgage lenders typically like to see the payment at less than 25% of net salary.

        My point: knowledge is knowledge, whether it comes from a Community College or university lecture hall and, in fact, class size at the CC level is generally far better. Additionally, a diploma from a major state university will not have a notation that you did the first two years at a CC while living at home and paying the $5000 two-year degree cost from your part-time gig as a nude Jello wrestling color announcer.

        Part the second: “But shouldn’t everyone go to 4 years of college.” Nope. Currently in Florida there are numerous local two-year tech degree programs in medical fields, data systems, etc, leading to profitable employment with essentially no student debt. Technical training available even in high school is a path to financial stability. In Orange County, Florida, several High school VoTechs produce students ready to enter fields in which they will earn more than many beginning jobs requiring a four year degree. As of January of 2023, the average apprentice electrician in Florida (a non-union, low wage, state) earned over $50,000 annually, several thousand dollars higher than a beginning teacher with a four-year degree! (And no student debt!) That income also provides opportunity for further education, if desired, without accumulating a crushing debt load. Based on national averages, that new teacher might see that starting pay reduced by over $5500 annually due to student loan repayment!

Everyone should be trained or have access to training to perform a job in their field of interest which someone will pay them a decent wage to do. This may require a degree, but many do not. The plumber who bills $55 per visit doesn’t need one. Air Conditioning techs don’t. X-ray techs with a 2-year Community College diploma make $60,000 annually in Florida, 2-year degreed Dental Hygienists between $63,350 and $77,830.

 We hear a lot of bitching about manufacturing jobs being exported offshore. How many of those jobs require a college education? Approximately none! The person who can repair my air conditioning, fix my plumbing or electrical problems or repair my automobile may well make more over a career than the college graduate who becomes a teacher. That's not necessarily “right”, in my opinion, but it is true.