Monday, April 30, 2012

"Student Debt Slaves"

It has become a highly efficient racket.

Let's say that you want to provide a substandard product to people who cannot afford it.

Using the power of the media you convince them that they must have this product. Most especially, you convince them that they must provide this product for their children, lest they be considered bad parents.

Since they cannot afford to buy the product, you offer to lend them the money. They need not worry about paying the money back because the product they are buying will bring them so many monetary advantages that it will pay for itself.

When the time comes to pay back the loan they discover that the product is substandard and largely overvalued. It has roughly the same intrinsic value as a tulip bulb had in Holland in the seventeenth century.

At that time otherwise sober Dutchmen mortgaged their homes and their futures in order to buy single tulip bulbs.

When purchasers of the substandard product discover that they cannot use it to pay back their loans, the politicians get more involved.

Desirous of buying the votes of the purchasers they offer to reduce the interest rates on the loans, or else, to socialize the losses. That means that they want to have taxpayers pick up the cost.

Of course, the product in question is not tulip bulbs or Las Vegas condos or tech stocks. It is higher education.

Glenn Reynolds has been calling it the higher education bubble. He will soon publish a book on the topic. You can pre-order it here.

In a recent New York Post column, Reynolds describes how we as a nation have turned young adults into “student debt slaves.”

Student-loan debt is treated like child support, meaning that it’s almost impossible to get out of. People who paid six-figure sums to universities that happily pocketed the money in exchange for gender-studies degrees that would never produce a job are now debt slaves, like the coal miners in Tennessee Ernie Ford’s “Sixteen Tons.”

Although 37 million adults owe student loans, only 39 percent are actually paying down balances. Some 5.4 million have at least one loan past due; loans totaling $270 billion are at least 30 days delinquent.

Obviously, this is a complex problem requiring more than a silver bullet. Yet, Reynolds is correct to suggest that we must begin by allowing the free market to work on it. That is, we should allow lending institutions to offer loans only to students whose studies are likely to have real value.

In his words:

Right now, student loans are sold on the basis that “college” promotes higher earnings. But “college” isn’t an undifferentiated product. Some degrees — say in Electrical Engineering — increase earnings dramatically. Others — in, say, gender studies — not so much. A rational lender would be much more willing to finance the former than the latter.

Clearly, the hucksters who are selling the value of “college” have been treating it as an “undifferentiated product.” In a real market, Reynolds suggests, lenders would be able to differentiate between the potential value of different degrees.

Frank Bruni echoes the point:

I’d go even further than he does and call for government and university incentives to steer students into the fields of studies that will serve them and society best. We use taxes to influence behavior. Why not student aid?

Everyone knows that if lending institutions were allowed to differentiate they would cease funding Humanities majors, and, most especially gender studies and other politically correct majors.

Teachers of the Humanities bear the greatest responsibility for this debacle. By now college students have figured out that majoring in the Humanities is likely to make them unemployable. They know this because employers tell them so.

Humanists have tried to overcome the problem by inflating grades, reducing work requirements, and offering students a good time.

Many students have caught on to the scam and are fleeing these courses. Thus, humanists lust after government control over education and despise the workings of a free market that would effectively punish their failures.  

Students are migrating toward science, math, technology and engineering. Unfortunately, too many of them have not been adequately prepared for the rigors of college math.

Many people recognize the problem. One doubts that they have discovered the solution.

Bruni explains:

“That’s why there are all these kinds of initiatives to make math and science fun,” Stephen J. Rose, a senior economist at Georgetown University’s Center on Education and the Workforce, reminded me last week. He was referring to elementary and high school attempts to prime more American students for college majors in those areas and for sectors of the job market where positions are more plentiful and lucrative. The center issued a report last year that noted that “not all bachelor’s degrees are the same” and that “while going to college is undoubtedly a wise decision, what you take while you’re there matters a lot, too.”

Reread the opening sentence. It tells you why American cultural values are going to make it increasingly difficult for American students to overcome their math deficit. What could be more discouraging than that opening sentence: American educators are trying “to make math and science fun?”

Have we decided that “fun” is the meaning of life? Is “fun” the ultimate motivator? Do America’s little darlings have to think that something is fun before they will apply themselves to it? What happens when they move from fun math and science to real math and science? What will happen when they discover that real math and science involve hard work and perseverance?

A school system that teaches fuzzy math and that devotes itself to raising student self-esteem will never prepare its charges to compete in fields where there are right and wrong answers, where you have to work in the real world, and where it matters whether your product works.

Of course, there must be a place for the Humanities. Where else would you learn about freedom and study the basic principles of ethics?

Unfortunately, our politically correct universities rarely teach philosophy and literature. Far too many of them prefer to teach that the classics are part of the patriarchal capitalistic conspiracy to oppress the downtrodden.

Far too many humanists no longer teach students how to conceptualize and solve a problem. They do not teach basic ethical principles or the philosophy of freedom. They indoctrinate students in the ills of America, capitalism, free enterprise, and even free expression.

The problem does not lie in literature or philosophy; it lies in the people who are teaching these subjects. Many professors have so corrupted their disciplines that they are producing students who cannot think clearly, who cannot conceptualize a problem, who cannot show up on time, and who refuse to allow themselves to be judged. Today’s Humanities grad is mostly qualified to join the Occupy movement and protest the unjust world that has not been willing to fulfill his sense of entitlement.

It’s not just that students are borrowing too much. They are borrowing money to purchase a substandard product that has little or no value in the marketplace. They are trying to buy off students by offering them a good time.

Jonah Lehrer reports on a new study:

What's worse, there's disturbing evidence that many colleges are failing to effectively educate their students. According to a controversial recent study, led by the sociologists Richard Arum and Josipa Roksa and summarized in their book "Academically Adrift," nearly half of all undergraduates fail to demonstrate significant improvements in critical thinking or writing skills during their first two years in college. Even more dismal, particular kinds of knowledge are largely forgotten shortly after the final exam.

Drs. Arum and Roksa say that college has become a leisure activity, with the typical undergraduate spending 40 hours a week socializing and 13 hours studying. In many large lecture halls, attendance rarely exceeds 55%.

Colleges are no longer in the education business. They are, Arum and Roksa claim, in the credentialing business.

But, what are these credentials worth if employers in the marketplace discover that having a degree from Brown makes you an undesirable employee.

Today’s students are not being taught the character skills required for success in the business world. They are taught to have a good time, to party hard, and to enjoy themselves. Too many of them are majoring in fun. They are not taught the virtue of showing up, of persevering in the face of difficult assignments, and in working hard to improve their skills.


Robert Pearson said...
This comment has been removed by the author.
David Foster said...

As I observed back in 2005:
Of course, we all know what the point *really* is. The point is for students to obtain a piece of paper--a diploma--which is viewed as a passport to economic success. Increasingly, the perceived value of this diploma is decoupled from any knowledge or accomplishment that it actually represents. *It is valued for the circular reason that--it is valued.*

This situation is reminiscent of other pieces of paper--stock certificates in certain companies. At the height of the boom, people were acquiring these certificates without much consideration of the current or potential business results of the companies they represented. ("I don't know what it does," said one investor of a stock, "but I know it's moving.") The hope was simply that a popular stock would become more popular and hence increase in price--that is, these certificates *were valued because they were valued.*

Anonymous said...

I broke my ass getting an Electrical Engineering degree in college. I work in defense, making things that work. Things to protect us and win our current and future wars.

I don't know if I would recommend it. I've been layed-off four times from program cancellations and in 20 years I've never had an instant of job security. It's a geriatric sport: at 44, I'm the youngest engineer on my program. It's not a happy place....


Stuart Schneiderman said...

I knew that David had written about the problem of credentialism on his blog, Photon Courier, but I couldn't find the relevant post. Thanks for offering a link.

Tero Hietalahti said...

Student loan debt can be hard to pay if after you graduated you don't have a work and it is a good term that you called it student debt slaves and i am totally agree with this blog.

Anonymous said...

I share the feelings with the EE being one for 30 years. Oh EE you flunked Understanding Capitalism. You contribute to projection Power in the world for empire not our safety. Start reading more.
How is it Mexico has free Education and we do not ? We DID have cheap Education in the 1960s but not anymore. Like the IMF does to other countries debt is a form of social control. You have little choice when you own so much. This is by design. Forget about the argument of Education only working for the gain of profit that is BS.

Unknown said...
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