You Have to Pay for Your Education, Sir...

by Jeff Warzecha

Remember back in college (for some of you much longer than others, I'm sure) you found that ubiquitous quote apparently credited to Tom Petty "spend money you don't have, go out drinking when you have a paper due, spend time with friends because work never ends, but college does"? Well, it was a load of crap.

Besides being a hypocrite (Tom Petty never attended college...), Tom Petty was also likely speaking of a bygone era in which student loan debt was actually something manageable, and employment in some field even remotely related to your major was also probable. Yet the advice particularly resonated with the generation who attended college between 1997-2010, or those who are now known as the unemployed generation--those who were often last hired and first fired when the great recession hit; or even worse, some who have never found employment because their job prospects were so bleak coming out of college that they opted for another few years of living with mom and dad and many more thousands of dollars in student loan debt in order to earn a Master's degree. And its effect has become counterproductive to the American economy.

Unless you've been living under a rock (or are one of the long-term unemployed and no longer can afford a computer and/or television) you've heard the recent chatter regarding the mountain of student loan debt and the maelstrom into which many former students (read: no ALL graduates) are being sucked into. The average student graduates with their bachelor's degree and more than $23,000 in student loan debt. I have to say that's a pretty significant underestimation, though. The majority of students I know have far more in student loan debt, but the average is obviously offset by those who take several years longer to graduate because they are working full time, have spent several years at a community college first, or went back to school later in life and already had the means to pay off a significant portion of their debts. A better approximation would be $50,000, which is what the amount equals out to once interest is accumulated and added onto the original loan amount.

$50,000 doesn't seem like a lot of money when taken over a 15-20 year period, and for those who defer, earn forbearance and/or have some of their debt eliminated through grants or special work subsidies, the amount because semi-manageable. But for those who face unemployment immediately after graduation and/or a set of life skills based off of some former hippie musician's lyrics about insouciant lifestyles and amounting buckets of debt, reality is tough to swallow and that same $50,000 becomes an inescapable shackle cutting off your circulation as you struggle to enter into the world.

Is the problem that students' parents make less money than in previous years, or that things cost more? No, it is obviously that college has become, for most, a thing that is out of reach, at least money-wise. No high-schooler is able to work enough at the local grocery store or ice cream parlor to pay for four years at a state college living even the most frugal of lifestyles. It is nearly impossible to pay off school while taking classes, and it is doubly impossible to assume each students' parents have that kind of money just lying around.

So what are we, the American people, concerned for? Well, for one, student loan debt acts a lot like credit card debt. It matures, then adds interest, then matures again, then increases and becomes a juggernaut in one's path to success. So it becomes something that delays consumer spending, home purchases and everything that spurs our consumer-driven economy. Also, it is one of the hardest things to get rid of in bankruptcy court, and therefore even if a student graduates and declares bankruptcy a few years later after bleak job prospects and meager successes, there's no guarantee the debt is eliminated. But who gets stuck with the bill if it does: The American public. Furthermore, the spike and loitering of the unemployment rate drags down even the most willing and capable of payers, making it even less likely that these students with the massive amounts of debt will be able to chip away at them before they become the next generation in charge.

To fix this, this blogger has a few ideas:

1) never eliminate a person's student loan debt, but make it payable at a lower interest rate over a longer period of time. A 2% interest rate over 30 years makes $50,000 extremely manageable, still guarantees lenders their money, and keeps college attractive despite its price. Furthermore it can act as a guarantee that students cannot relinquish their debt and would lower defaults and penalties associated with them. Even if you're 50 and still paying your loans, you've at least been able to contribute to the economy for the past 30 years and haven't been living off of beans and bread. And, hey, you've probably purchased a house, too.

2) make college more affordable by offering grants paid for by school's endowments. It's essentially like a university borrowing against itself, making it nearly impossible for it to run out of money. This also allows defaults to become manageable, whereas students who dropped out, transferred or lost their GPA requirements, would be ousted from the coveted "grant positions" and more students would be allowed in. Certainly this appeals to the GOP who advocate "broadening the base," meaning to make college accessible for more students who pay more money overall but less individually. Colleges still get their money, increase their class sizes, see fewer defaults, and challenge students to intellectually succeed more often than the "Honors" programs at particularly universities allow.

3) invent and create colleges based on majors. A college which offers a number of degrees (bachelor's, master's, doctorate in Biology) is sure to encourage the right type of people to apply and attend, seeing as how they can pursue their degree to its ultimate end and therefore become better trained for a higher paying and, usually, in-demand career. They would also have the freedom to design majors differently, thereby allowing those who are diligent and persistent the ability to take more courses in a shorter amount of time without worrying about applying for graduate programs, considering transfer credits or having a lapse in coursework or coverage. Designing smarter majors means smarter, better prepared employers, which means America will begin to fill in the educational gap between other countries who shoot ahead of us while still in grade school and then skyrocket above us when college hits.

4) create more work-study programs. While it certainly eliminates a lot of easier jobs in the short-term at colleges and universities, opening up those $20/hour jobs to 3 students who will each make $8/hour is sure to help alleviate the debt load of student loans and ensure that work around campus is completed. Does a university really need four employees working in the mail room along with 2 students, or would one supervisor and 7 students who are working for less, achieve the same or greater service? It's a win-win for colleges and students. The only loss in this case are those $20/hour mail room jobs, which, over the course of a few years, would likely be replaced in a healthier economy with a lower unemployment rate and more recent college graduates starting up their own companies.

5) have colleges invest in our economy and the stock market. If companies and individuals are doing it and are making money, why can't colleges do the same? Sure, it might seem like a conflict of interest for colleges to invest in particular companies, but many politicians, including presidential candidate Mitt Romney have large portfolios invested in a various stocks, bonds, and markets and while they personally are not privy to what they own, they do see profits returning from them in nearly any economy. Seems like a good idea to grow college endowments and thereby reduce the overall cost of college for the individual student. Plus, investing in our country though short and long-term bonds is pretty much what colleges already do through training students for domestic-based jobs.


There's plenty to be done to solve student loan debt, the least of which is to forgive it and bail out all students over the past 5-10 years as a way to spur the economy. The economy will be able to grow successfully without saddling taxpayers with billions of dollars in student loan debt in what would be known as "the great bailout." Give students and colleges options, and lower rates to make things are manageable as possible. If everyone is being forced to tighten their belts, allow their debts to be stretched like their incomes must now be. Once they find employment, it's actually very likely many of these debts will be paid off ahead of time, too, thereby ensuring companies receive all of their money prior to when they anticipated. This will therefore cause more businesses to be created and will bloom a new spirit of entrepreneurship, improving the job market exponentially.

So take some of my recommendations, and improve the country through improving our higher education system. Only the best education will lead to the best jobs, and the best quality of life. Because the work never ends...unless you're unemployed. Yeah, then it pretty much does. But the bills won't end, no matter what Tom Petty tells you.