College Educations Over Rated AND A Debt Bomb

This is just another reason to get the government out of the education business or any business for that matter. Also, students need to be better informed as to why they want a higher education, and if they do get a degree, will it help them get a good job or will just drive them in debt.

As I have mentioned here in the past, a huge number of students have no business going to college in the first place. Some sort of tech school to learn a useful skill would probably be a better fit and make it much easier to find a job. Oh wait, working with your hands and maybe getting dirty, that's not cool.

But it's the draw of a 'college education' and pier pressure to go to the big university with all the cool people and parties. In the end when the partying is over, and after 5 years of your life gone, you find your self unemployed and living in your parents basement. Now that's cool.

Student Loans: Debt for Life
Source: Peter Coy, "Student Loans: Debt for Life," BusinessWeek, September 18, 2012.

September 27, 2012
The cost of going to college has skyrocketed and has resulted in more students taking out loans to pay for their education. Indeed, there is a lot of speculation that college debt is the next bubble after housing, says Peter Coy, economics editor at Bloomberg BusinessWeek.

•In 2010, student debt exceeded credit card debt for the first time.
•The accumulation of student loan debt has surpassed $1 trillion.
•On average, two-thirds of college graduates ended up with student loan debt of $25,000.
•Under extended repayment plans, many students take 20 to 25 years to pay their loans, allowing interest to accrue.

As a means of attracting more students to attend school, colleges use the financial aid process to distort the cost of college for many. For instance, schools practice a form of legal price discrimination, where they use a family's financial statement to determine how much a student should pay for college. In this situation, a poorer family would have to contribute less than a wealthier family.

Most of the aid a family ends up receiving is in the form of loans. Some schools abbreviate "loan" as L or LN on financial aid letters as a means of creating some ambiguity on what the students are accepting when they accept a loan. The Education Department is attempting to remedy the situation by giving standardized forms that include information about how much debt a student will owe once they graduate along with the school's loan-default and graduation rates.

One other problem to the rising cost of college is the choices that students make. Some students end up staying in college longer than the typical four years, forcing them to take out more loans. Moreover, some students get degrees in subjects that there is a low demand for and don't require degrees in the first place.

Educators around the country are attempting to reduce the cost associated with getting a degree. One promising method of doing so is to create online classrooms where thousands of students can enroll and watch a prerecorded lecture on a subject.