The glass I drink from is not large, but at least it is my own.
-Alfred De Musset
As the Great Recession lingers on for the hardest hit there are many suggestions to make sure we don't face this predicament again. Of course it's silly to think we can completely escape boom and bust cycles, although we can make the boom part last much longer in the future. Interestingly, President Obama has said he would undo this cycle, but he may have stopped it in the midst of the bust part. Be that as it may, what's happening these days is the notion that people should lower their aim and in the end avoid heartbreak and hard landings.
People are being told to forget owning a home-home ownership isn't for everyone.
People are being told to forget going to college-a degree isn't for everyone.
People are told to forget being rich-this should be a country with a single giant middle class.
I flat out reject all of the above. In fact, I think Americans should continuously strive to be part of an ownership society. They should own their own homes, own a large bank account, and own a great education. Yes, I get that a lot of people with no skin in the game bought homes and saw them crumble in value triggering the Great Recession. I know student loan debt has cleared $1.0 trillion, and for some it appears to be the largest bubble out there simply ticking away. I get it that the reward for greater earnings is higher taxes and public scorn-I get it.
I get all of those things have some merit, but who gets to decide on whose good enough for college and shouldn't take their last penny to buy the centerpiece of the American Dream-a home to really call their own.
I worry there is so much noise about limiting individuals and their freedoms that we will all lose something important in the process. I actually think it's people that aren't necessarily self-starters that should go through the demands and rigors of college and the geniuses like Bill Gates could actually afford to dropout and still pursue success with an early start. The other option is military service, as many people have never been pushed or never had interest and often that's mislabeled as not smart enough for college.
The fact is people should love learning and have an appreciation and pursuit of knowledge (a lifetime commitment). Sometimes such passion can be unlocked or "discovered" by a person otherwise considered too risky for college. One thing is for sure, it's not for strangers to decide.
Student Loans Tick ... Tick ... Tick
Then there's all the debt ... the mountain of debt that many graduates now say makes them wish they'd never attended an institution of higher learning in the first place. Now taxpayers are also saying they wish some of these people hadn't gone to college either. The problem is many now see student loans as the biggest bubble out there (ranking as high as the bond bubble and Fed balance sheet in terms of danger to the public) at $1.0 trillion.
News out this week will stir even greater fears of the student loan bursting. In the first two months of the year, according to Equifax, banks wrote off $3.0 billion in student loans, an increase of 36% year over year.
In the meantime, student loan delinquencies are now higher than credit cards (see chart). The good news is 70% of outstanding student loans seem to be manageable amounts- if you have a job.
> Less than $10,000: 39.9%
> Less than $25,000 more than $10,000: 29.8%
> $100,000+: 3.7%
But loans in the $25,000 to $50,000 range are now 17.5% of the total, up from $11.5%.
Worth the Investment?
I think college is worth the cost but think it's deplorable that tuitions are up so much largely because colleges can be greedy while government forks over our tax dollars and even hints at massive forgiveness. There are aspects of college not quantifiable and then there's the money that can be made with that sheepskin.
The world is evolving into one where skills and education will command a premium (sure there are a lot of college grads parking cars and bussing tables now) in the future. Despite the horror stories of college grads stuck in a rut or in their parent's basement, their overall reality is one that everyone should desire or have as an option.