How is it possible that college tuition can increase every year at a time when we have almost no inflation and less than 2% GDP growth depending on what economic numbers would have you believe? The reality is that college tuition is going up because the government is guaranteeing student loans and building that bubble. Because so many people have been led to believe that going to college is the path to a successful future and career, they will spend almost anything to go to college. It’s amazing how much people will spend when they’re using someone else’s money.
What’s really unfortunate is that we don’t teach economics in college to the extent that we should, and we almost never teach it in high school. Most kids who graduate from high school can read and write, they can do basic math too, but very few of them can legitimately balance a checkbook or do accrual-based accounting. That is a real problem. What’s worse is when those kids grow up and go to work for the government. Apparently our graduating college students are not alone when it comes to balancing the books. Our own federal government spends more than a trillion dollars a year than it collects in taxes. I really hate to bring this up because I don’t even like this buzzword, but that’s simple; untenable!
If children come with money in hand in the form of a student loan to enroll in college, that means demand will continue to be very high. Because demand is high, colleges can and do charge more money. They’re also overpaying teachers and giving them unbelievable pensions and benefits, yes, including health care, and piling up all the legacy costs are putting our colleges and universities on the same path and pace as many of the municipalities and indicate which governments are on the verge of bankruptcy.
What has happened is that we have burst a huge bubble in the academic industrial complex. Instead of coming clean about the challenges and problems that lie ahead, we are not being honest about the economic realities of this. The Obama administration wants to raise taxes and continue on this strange and unsustainable path forward. If kids graduating from college right now can’t find jobs, sending more kids to college and increasing tuition sounds like a bad idea to anyone who stops to think about it.
Apparently no one is, while default rates topped 9% in 2012 on their way to God knows where or how high. And so the trillion dollar student loan dilemma will present an explosion of epic proportions not unlike the housing crisis of 2008, thankfully it will only be in one sector, albeit a very important one: education.
It is amazing that the Obama Administration does not address this or do anything about it. It’s not working, and the problem is getting bigger, not smaller. In fact, I hope you will please consider all of this and think about it.