One of the big issues debated recently is whether or not a four-year degree is worth the cost. The cost of education continues to rise at a pace that outstrips inflation — and definitely outstrips wage growth.
But why is education so expensive? There are various explanations for the rising cost of a higher education, and two that I think are likely contributors are:
- The idea that everyone needs to go to college
- The ease of obtaining student loans
Does Everyone Need a College Education?
We are used to thinking that everyone needs a college education. Indeed, here in America, basically everyone is on a college prep course. We don’t see a lot of apprenticeships, and there isn’t a lot of encouragement for students to consider vocational schools.
I think this is too bad. There are plenty of good jobs out there that can be done with a vocational degree or certification (welding and car mechanic come to mind). And, indeed, some students are far more interested in developing more hands-on skills than they are interested in toiling through a four-year program at university.
While everyone needs an education, at least in terms of acquiring some sort of marketable skill, that education doesn’t need to be college. College isn’t for everyone, and there’s nothing wrong with that. Instead, students should be encouraged to explore their interests and develop compatible skills, rather than being pushed toward college without regard to personal preferences.
The idea that every should go to college means that there is more demand for a college education, and that means prices go up. Plus, more people have to get four-year degrees — and go on for advanced degrees — as the market is flooded with graduates. The bachelor degree is the new high school diploma, but you have to pay a lot more for that degree.
Student Loans and the Education Bubble
Of course, if you are going to tell everyone that they have to attend college, they have to be able to pay for it. This is where the student loan racket comes in. Even if you go to an inexpensive school, chances are that you will need to borrow money to help pay for your education. Student loans are readily available, and that means that this easy financing contributes to higher education prices.
After all, if everyone qualifies for student loans, then everyone can “afford” to pay higher costs for a higher education. This only encourages higher prices. However, we could be in an education bubble. Student loans exceed $1 trillion now. Graduates end up saddled with tens of thousands of dollars in debt, and in tough economic climates, they are unable to find jobs that can allow them to keep up with student loan payments.
The result could very well mean, at some point, that students become over-leveraged as a group (if they aren’t already!). But that doesn’t matter too much because student loan lenders, guarantors and even the government make more on defaults than they do on properly paid loans.
And it’s this state of affairs that means things will go on as they are — unless we get involved and start demanding a change in the way higher education functions.
What do you think is the cause of growing higher education costs?