Student Loans: Is College Worth It?
Student loans began with the “Higher Education Act of 1965”as part of President Lyndon B. Johnson’s “Great Society Program.” The act provided federal funds to students, teachers, and institutions of higher learning with the hope of sending the disabled, and citizens in lower income groups. to college. Congress is currently trying to decide to increase the interest rates on student loans.
It’s official; student loan debt exceeds debt owed on credit cards for the first time in history. If they have not already passed it, student loans will top $1 Trillion dollars soon. In addition, nearly $100 billion, or 10% of those, are delinquent. Also keep in mind, that student loans are not protected in bankruptcies or wage garnishments. The IRS wants their pound of flesh.
Why have student loans risen so high?
Once again, it’s the government’s way of doing a “feel good” thing on one hand, and not considering “how in the hell can we ever afford this,” on the other. The student loan program is a lot like the housing programs started under Clinton and accelerated under Bush. And we may be looking at something just as bad as the sub-prime loan program.
Are we looking at a student loan bubble?
Many economists believe that student loans might be the straw that broke the camels back in the next few months. When government alters the course of natural events people adapt. It’s why we’re still here after millions of years. We are all born with self-preservation as a basic instinct. And one of those self-preservation instincts is to protect our own personal lifestyle.
How would the bubble break?
It would happen much like the housing bubble of 2006-07. Take a group of people, and convince them that college is a right, not an earned privilege. After a period of time, the numbers of students overwhelms the demand for their areas of expertise in the private market. Which is what we are experiencing now. Which is one reason why we have people in tents, on the streets of our major cities around the country, demanding their “fair share” of the American Dream.
They are unable to find jobs because there are 200 resumes with exactly the same education everywhere they apply. As a result, you have Ph.D.’s and MBA’s waiting tables and parking cars for a living. Today we are seeing the result of those “feel good actions.” The 99% are blaming corporations and Wall Street when they should be down in Washington, D.C., camped out in front of congress.
Is college really necessary or worth the expense?
I would be the last person on earth to advise someone not to get as much education as possible. The question I would have is the risk (debt) vs. the reward (prosperous, fulfilling life). An art history degree is going to take much longer to pay for than an accounting or computer science degree. The other question to ask is what do you want to do in life, and do you need college to reach that goal. Or, is there a better way to get that knowledge, without taking on a high percentage of future debt?
People do succeed without college
There are many successful people who achieved great things without college. The most common two are Bill Gates, and Steve Jobs, who ironically, were major competitors and supporters of each other, at the same time. However, just because a handful of successful entrepreneurs happened to be in the so-called, “right place at the right time,” doesn’t mean college is not important. As I said earlier, I would be the last person to advise against a college education, provided you have weighed all the evidence, and found it to be right for you.
Is your goal to be your own boss?
If you are going to start your own business, then I might suggest that you just take some basic college courses to fill in your educational gaps. Business law (contracts, incorporation), accounting (taxes, payroll, cash flow, invoicing), economics (trends, markets), marketing (who to target and why) psychology (understanding why people buy), and speech (presenting products and selling), these should help you avoid a lot of roadblocks.
Get the basics, then, get your degree at night or during slow seasons. It will take longer but you will not be saddled with debt for the next 20 years or so. Spend 20 minutes a day reading something about your business or industry, and I can guarantee, that in one year, you will know more than 75% of the people in that industry. Whether you crack the books or crack the streets, it all comes down to risk vs. reward. What’s your opinion on the importance or non-importance of a college education?