The Student Indebtedness Dilemma

The problem of student debt is finally getting high-level attention in Virginia, as evidenced by a panel discussion on the subject hosted in Richmond over the weekend. It’s less clear that anyone has a realistic idea of what to do about it.Some one million Virginians owe a total of $30 billion in student debt. The indebtedness is disproportionately concentrated among African-Americans who tend to come from lower-income families, borrow more, take longer to graduate, are less likely to complete their degrees, are more likely to miss repayments, and are more likely to see their credit scores suffer as a consequence.
Although this was not a theme of the conference, as reported by the Richmond-Times Dispatch I would argue that, insofar as institutional racism is a reality today, the most oppressive institution in the United States is the system of higher education, which creates unrealistic expectations for poor, academically unprepared students and loads them up with life-crippling debt. While extremely liberal in ideology, higher is highly illiberal in practice, and it is creating a new class of indentured servants. Even in the early plantation economy of the American colonies, indentured servants could work off their debt in seven years. Student loan debt can last for decades.
Speaking at the Richmond event, Sen. Glen H. Sturtevant Jr., R-Midlothian, described his prospects as a Millennial with three young children. “By the time they’re ready to go to college, I’m going to be paying for them to go to college and still be paying off my student loan debt from when I went to law school.”
At least Sturtevant completed his law degree. The underlying cause of student debt is the high cost of attending college. Due to escalating costs and stagnant contributions from the state, increases in college tuition and fees over decades have relentlessly outpaced the growth in household incomes of all but the most affluent Virginians. But that’s not all there is to the story. Colleges, driven by their commitment to racial and ethnic diversity, are especially aggressive in their recruitment of blacks with the consequence that blacks on average are less prepared academically than their peers, more likely to struggle, take longer to graduate (assuming they do graduate), and more likely to accumulate large debt obligations.

Another part of the problem is a powerful cultural belief that college is the only entry ticket to a middle-class life. Anne Holton, Virginia’s Secretary of Education, alluded to it in her panel remarks. “It’s a bit of a leap of faith,” she said, but research shows that the return on investment makes a degree worthwhile, resulting in up to $1 million in additional income in lifetime earnings.

Holton acknowledged that the $1 million figure is an average figure, and it does not apply evenly to everybody. Needless to say, a degree in engineering, computer science or business will lead to more remunerative employment prospects than a degree in education, social work, history or anthropology.

What Holton did not say (or was not quoted as saying) is that literally millions of jobs are going begging in the American economy that pay handsome middle-class wages and don’t require a four-year college degree…. Which brings us to a CNN Money story, referred to us by our friend Tim Wise (El Growler Grande), which says that the U.S. has a near-record 5.6 million job openings. American companies are looking for workers. The trouble is, they can’t find workers with the right skills — and those skills are not taught in four-year colleges.

While the number of students in college has increased from 15 million in 2000 to 20 million today (great news for the educational-industrial complex), what the economy needs is more truck drivers, electricians and plumbers. People may fret about the impact of self-driving Google cars on demand for drivers a decade from now, but the American Trucking Association says the economy could absorb 50,000 additional truck drivers today. The median annual wage for a trucker working for a private fleet is about $73,000.

Here in Virginia, 90% of all jobs in the future are forecast to require some education and training beyond high school but 50% to 65% will require less than a bachelor’s degree, according to “Workforce Credentials: The Pathway to Virginia’s New Middle Class,” a publication of the Virginia Community College System.

Put another way, for every one job that requires an advanced degree, there are two jobs that require a bachelor’s degree and seven jobs that require an associate’s degree or industry-recognized credential. The Virginia economy produces about 175,000 of those jobs each year.

Community college is cheaper than four-year residential colleges, it requires fewer years of study, and it provides degrees and/or credentials that lead to solid middle-class jobs. Lower-income students — especially those coming through school systems that did not provide them solid academic preparation — should consider an alternate, low-debt path to a middle-class life.

Nothing less than a wholesale reorientation of priorities is sufficient to fend off the social calamity of indebtedness.

(This article first ran in Bacon’s Rebellion on February 15, 2016)

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