econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 06 November 2015

The Problem Isn't Student Loans - It's Higher Education

by Charles Hugh Smith, Of Two Minds

Forgiving skyrocketing student debt won't solve the real problem, which is the soaring costs imposed by a cartel that is failing to prepare students for the economy of tomorrow.

Everyone understands soaring student debt is a problem: burdened with $1.3 trillion in student loans, young people are unable to start businesses, buy homes and start families. The high cost of housing and meeting regulations to launch businesses add additional burdens, but the weight of $1.3 trillion in debt right out of the starting gate is crushing.

The "solution" being pursued by the federal government is obvious: take over most of the student debt and then eventually bury it in the zombie-loan graveyard (i.e. defaults are ignored but the debt isn't officially written off), write it down via forgiveness programs, or some other mechanism to reduce the burden.

If this wasn't the plan, then why has federal ownership of student loan debt skyrocketed from zero to $900 billion in a few short years?

This is a decades-old problem that's finally reaching critical mass: student debt has leaped from less than $500 billion in 2006 to $1.3 trillion today, a mere 9 years later:

The problem isn't student loans--it's the explosive rise in the costs of higher education. This chart depicts the exponential rise of higher education costs:

Apologists claim the student-loan crisis is the result of underfunding of colleges by states. While it's true that some of the cost burden has been shifted from taxpayers to students, the real problem is soaring costs of the higher education cartel, which fixes prices via the artifical scarcity of accreditation.

The extraordinary rise in administrative staffing and costs and the boom in building costly temples of higher education are well-known. This chart depicts the rise of the educrat class, at the expense of teachers/professors:

I cover the rise in costs and the the equally extraordinary failure of the higher education cartel to prepare students for work in the emerging economy in my book The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

So the problem is two-fold: it isn't just the insane cost of higher education that's the issue; the cartel is failing to prepare students for an economy that requires the 8 essential skills in addition to whatever technical skills are needed in a particular field.

Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that :

"American higher education is characterized by limited or no learning for a large proportion of students."

New Analysis Shows Problematic Boom In Higher Ed Administrators:

In all, from 1987 until 2011-12--the most recent academic year for which comparable figures are available-universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.

"There's just a mind-boggling amount of money per student that's being spent on administration," said Andrew Gillen, a senior researcher at the institutes. "It raises a question of priorities."

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

Paying a bloated institution for the privilege of sitting through four years of lectures, online courses and a few labs no longer makes sense for the vast majority of students. What makes sense is dispensing with the entire bureaucracy of the cartel and costly campuses altogether, and designing directed apprenticeships which combine the best of online coursework with on-the-job training in workplaces.

The top research universities (numbering around 125 out of thousands of colleges and universities) can continue to train the relatively small cadre of academics and researchers the economy can support. (Just issuing STEM (science, technology, engineering, math) degrees doesn't magically create jobs for the graduates.)

The vast majority of student are better served by mastering the 8 essential skills required in the emerging economy--skills that students can acquire on their own, a process of accrediting yourself that I address in detail in Get a Job, Build a Real Career and Defy a Bewildering Economy.

Forgiving skyrocketing student debt won't solve the real problem which is the soaring costs imposed by a cartel that is failing to prepare students for the economy of tomorrow.

Of related interest:

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Opinion Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Opinion


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Is Free Trade Harming the Economy?
Bank of England Endorses Post-Keynesian Endogenous Money Theory
News Blog
Early Headlines: Asia Stocks Mixed, Oil Mixed, Dollar Up, Gold Down, Microsoft Growth, US Cities' Homicides Up, Battery Age, Higher-Priced Carbon, Sweden Crime Data, Russia Passes Saudi Arabia And More
February 20, 2017 Weather and Climate Report - Transition to Spring can be Cruel
More Buck For The Chuck
More About What's Going On In Retail
Your Dog Has A Better Memory Than A Chimpanzee
Where Shadow Economies Are Well Established
What We Read Today 20 February 2017
Successful SpaceX Launch &amp; Landing Of Falcon 9 + Dragon CRS-10 Mission To The ISS (2017-02-19)
Investor Bulletin: Savings And Investing Basics For Military Personnel
Does Growing Mismeasurement Explain Disappointing Growth?
Why Does Economic Growth Keep Slowing Down?
Houses As ATMs No Longer - Part Three Of Five
Infographic Of The Day: What It's Like To Live On Minimum Wage
Investing Blog
Market And Sector Analysis 19 February 2017
Dollar Looks To Head Higher
Opinion Blog
Fascism Defined And Described By Oswald Mosley
Charity Is Not How We Solve Poverty
Precious Metals Blog
Deflation And Gold: A Contrarian View
Live Markets
20Feb2017 Pre-Market Commentary: US Markets Closed Today In Observance Of The Presidents Day Holiday, US Dollar Slips, European Stocks Rise
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved