Student Loans Exceed Credit Card Debt

kw: book reviews, nonfiction, lending, student loans, debt

A good friend of mine was "killing himself by degrees" prior to age 30: he has four degrees, the familiar BS - MS - PhD in science, and a MS in Computer Science. He married a woman with two degrees in Fine Arts (and she is indeed a fine artist). They entered upon a new marriage and new careers with loads of student debt. However, he landed a job at the company I worked for, in a well-paying position, so in addition to making payments on their student loans, after a couple of years they were able to buy a house. It took them until their mid-forties to pay off all their student loans. I count them lucky.

Equally lucky are those who at least partly "work their way through". They finish a BS or BA degree holding debt that is no more than half a year's pay at a reasonably good job, say, $25,000 or less (The median wage in 2015 was $56,500). Over ten years at low interest, the payment would be about $220 monthly. That's only about twice what many folks pay for cable TV.

A growing number would not consider themselves lucky in any way. They borrowed $30,000 to $80,000 to fund an education that prepared them for years of unemployment or a "desperation job" (a McJob) that doesn't pay them enough to rent a tiny apartment with three roomies that is "only" a 10-minute walk from a bus stop. Car? You gotta be kidding! They live in their parents' house and borrow their car.

Let's face it. The job market for English and History and Anthropology majors, not to mention majors in Women's Studies, Social Science, Art, and almost any other "liberal art" is next-to-invisible. A few hundred college professors in "humanities" departments, at most, retire yearly. Not all are replaced (the student body is shrinking). If you have a degree in History, nearly the only jobs in History are that tiny pool of college professorships, for which you need to get a PhD anyway, at even greater expense. Or you can get a MS in Education and try for a teaching job at a high school or middle school. That job market is pretty small also, and shrinking.

OK. So you're lucky. You got a degree in a STEM discipline: Geology, Physics, Engineering, Math, even Industrial Engineering. You're marketable. Whew! The book probably isn't for you anyway.

Let's take a side tack for a moment. I am about to have a pair of roofers fix some squirrel damage to our church's roof. They'll probably work most of a day. The estimator's bid is $875. Considering that some of that money goes to the company and some to the boss, still, each worker will get around $250-$300 for the day's work. That comes to $60,000 to $72,000 for a year, as long as their company can keep them fully employed. And you know what? Nobody in India or China or Mexico or Vietnam can take that job. You can't "outsource" roofing! Nor plumbing, painting, carpentry, electrical work, landscaping, paving, and a host of other "trades". None of them require a college degree. Most of them pay better than teaching school, which these days requires two degrees (the low pay for most teachers is an injustice I'll take up on some other occasion).

For me, the hero of America's prosperity is not the college professor in the ivory tower, but the people interviewed by Mike Rowe for the Dirty Jobs series on the Discovery Channel. Mike is an actor, but the people doing the work sure aren't. To me they are heroes. And it would be a good idea if people had to work at a tough trade for several years before they were admitted to college!

This is all a riff on recently finishing the book Game of Loans: The Rhetoric and Reality of Student Debt by Beth Akers and Mattew M. Chingos. I don't really have much to say about the book itself. It saddened me, but not for the usual reason. I know enough already to be sad about abusive student debt, which is why we struggled to get our son through college debt-free. No, I am saddened by the lengths to which the authors go to minimize the reality, and they all-too-frequently "blame the victim".

I am a political conservative, though that term is losing its meaning these days. But I am also a social liberal, in the old sense of making people free, of giving them a hand up but not a handout. "Handout" politics is actually socialism, and there are darn few non-Socialists in today's Democratic party. I am not sure I would count Toni Morrison as a socialist. She is definitely a social liberal, and when I heard her speak at the commencement for our son's BA degree, she said this (not an exact quote; it has been a few years), "Will the day come that people will look back on our generation with astonishment that we required the best among us to pay for their own educations?" I agree with this, in part. Our system needs to re-gear itself toward having every student exit the "halls of academia" debt free. But I think it is healthy for a student to have some skin in the game. That means doing some work to pay for part of their education.

It is unhealthy for someone to finish college with a degree or three or four, having never worked at a job people were willing to pay them to do. It is unhealthy for massively unprepared 17-year-olds to be dropped into a super high-school environment with no parental oversight, and with no understanding of the source of the funds hidden behind the meal card they swipe at the all-you-can-eat buffet many colleges now have in place of the "food service" I "enjoyed" at Kent State in the 1960's. (P.S., There was no "freshman 15" then. Most Frosh lost weight their first year of college.) It is unhealthy for students to find themselves faced with 20 or 100 options for "student aid", most of which involve debt under terms they haven't been educated to read with any understanding, and confusing qualifications that waste their time when they apply for things they can't get anyway.

I say "unhealthy". Debt-ridden college graduates are sick. Job-unprepared graduates are sick. We need a culture shift and I am not sure how to even describe it.

The authors of Game of Loans decry the difficulty of finding information about the cost-benefit ratio of most college degrees. This is true: Congress has passed laws specifically forbidding the gathering of such information! Guess which lobbyists supported those laws? But we don't really need information in such detail. Just look at the job market. Go to any employment agency and ask for a breakdown by job type.

Oh, I forgot for a moment: If you have read this far you are not likely to be a Millennial, but if you are, you never "go to" any such place as an employment agency. You want everything online. OK, go to the Bureau of Labor Statistics website, the Occupational Outlook Handbook (OOH) (https://www.bls.gov/ooh/). Dig around and find out whether there is much future for the kind of job you "sorta want" (I know, Millennials are practically free of passions). Here are a couple of examples I found by digging around:

Fine Arts or Crafts. About 50,000 jobs held in 2014. Growth rate less than 2% (or about 1,000 new jobs per year). Half of the jobs are "self employed". Median pay is under $49,000/year. Digging elsewhere we find that about 100,000 new BA's in Fine Arts graduate yearly. Only 1% will be able to make it pay, and half of them will spend more of their time running the business than "making art".

Environmental Scientist. About 95,000 jobs held in 2014. Growth rate 11% (~10,000 new jobs yearly). Median pay $69,000/year. I didn't find stats on graduation rates. But there are about 20 times as many jobs available as there are for artists.

Carpenter. Just under 1,000,000 jobs in 2014. Growth rate 6%, or about 60,000 new openings yearly. No college is needed but it usually takes 3-7 years in an apprenticeship program to become a Journeyman and earn pay in the mid-$40's or more.

I picked the first item because I have a young friend who is quite a good artist and illustrator. He wants to work in animation, even Animé. That's a smaller field than fine arts in general. There is little hope that he will ever be anything beyond "self employed" (struggling/starving artist working nights at a McJob to pay rent and buy beans to eat).

The biggest and most important educational innovation that could be performed for America would be to teach our young people the meaning of "employable": You must be able to do something people are willing to pay for. Period. If you need college credentials to get such a job, dig around in the OOH web site above for a dose of reality. Is it worth $30,000 in student loans to get a ½% chance of paid employment as an artist? Or is that four or more years (5-6 is common now) better spent in an apprenticeship program for carpentry, or electrician (2/3 the jobs as carpenters but better pay)? Get a part time job teaching art and making art at a private school of the arts (like I did with music).

I am in favor of programs advocating trades. I read that three million jobs in the trades are just waiting for competent workers to fill them. People go to college for many reasons, but I suspect for many of them, it is that they don't want to sweat on the job. The Bible has two things to say about that:

By the sweat of your brow you will eat your food until you return to the ground, since from it you were taken; for dust you are and to dust you will return. — Genesis 3:19

For even when we were with you, we gave you this rule: “The one who is unwilling to work shall not eat.” — 2 Thess. 3:10

These two passages are the basis of social conservatism. But they also highlight a problem with the education-versus-work culture in America today. Our youngsters are told (as my generation also was told) that they need a college education to get a "good job." But what is a "good job?" One that doesn't involve bodily sweat? When a plumber's hourly pay is greater than that of the accounting clerk going blind at a "desk job", which one has the better job?

Colleges charge 'way too much because their "services" are in demand. That demand is part of the problem. I have been sorry to see the demise of most of the nation's Vo-Tech and Trade Tech institutions, while we churn out tens of millions of unemployable college graduates who think they "deserve" a better job than driving a backhoe. Backhoe operator is a pretty skilled occupation! It frequently requires problem solving skills that would surprise you.

Parents of students entering high school, and high school students: Think about what you really want to do. Find out how likely it is that someone will pay good money for that to be done. The fastest growing occupations for the next decade or so will be in personal care and health care for all of us aging Boomers! Think about that. Construction trades are big right now but they may enter a period of decline, because Millennials, today's twenties and thirties, aren't so much into buying McMansions, compared to Generation X. And do yourself a favor. Unless you have both the love and the talent for a top profession such as medicine (which Obamacare is destroying), take off a year or three from education and work in a trade before deciding on a college major, if any. Examples from my experience:

I am one of four brothers, and our life arc has been thus:

1. Me, the eldest. Majored in Chemistry, switched to Physics, finished in Geology after 7 years. Two of those years were working full time to pay my way through the rest of college, and part time work during the rest of college. Then I worked as a Draftsman who also did computer coding. Returned to graduate school at 32, getting a MS at 38 (another 7 years), working my way through with teaching and consulting. Worked as a coder until retirement at age 66, and was never paid a nickel to do any geology. I work part time in retirement, more by choice, but the added income is nice.
2. Majored in Physics and Art History, graduating in 4 years. Worked his way through school as an electrician's apprentice. A calligrapher and carver, worked as a "starving artist" for 20+ years, making ends meet as an occasional coder. Returned to school and got a MA in History and PhD in Archaeology by age 50, working his way through as a book illustrator. Now a college professor. Age 66, with no end in sight.
3. Majored in Mechanical Engineering. Worked in Environmental Equipment design until company folded when he was 60. Now works as a Maintenance Tech.
4. Didn't finish college. Tried various "management training" type jobs with friends, but best pay has always been handyman and home remodeler. He is good at it. Age 62, with plenty of work and quite good pay.

None of us had college loans. We would have floundered had we had such debt to pay off.

You may wonder why I didn't really review the book. That is because it misses the point so badly.