Monday, April 30, 2012

Paul Krugman's Advice for Aiding College Students is a Little Thin

Far be it from me to criticize Paul Krugman’s advice on economic issues. After all, Krugman received the Nobel Prize in economics, and I did not.  (I may have gotten the Boy Scout merit badge in Personal Management.)
Krugman, writing in today’s New York Times, reviewed the dire situation of many college graduates. As Krugman rightly pointed out, many are saddled with huge student loans and can’t find jobs.
Personal Management Merit Badge
“What should we do to help America’s young?” Krugman asked.  “We should be expanding student aid, not slashing it.”
With all due respect, Mr. Krugman’s advice is a little thin.  Expanding student aid will not do American young people any good if it is disbursed in the form of student loans that they are unable to pay back.  And pouring more money into an unreformed higher education system is a waste of resources.
The Cal State student hunger-strikers have put their finger on the problem.  We need to freeze college tuition and reform the universities.  We can start the reform effort by cutting back on the exorbitant salaries our universities pay senior executives and administrators.
Of course there are lots of other things we can do to straighten out the student-loan mess and help young people obtain college experiences that will help them get good jobs.  But simply saying we should expand student aid, as Mr. Krugman suggested in today’s New York Times, merely endorses the status quo.  That is how we got into this mess, and we now have one trillion dollars of outstanding student-loan indebtedness and 37 million student loan debtors.  

Krugman, P. (2012, April 30, 2012). Wasting our minds. New York Times


  1. In addition to the problem of expanding student aid that you've pointed out, I've had many conversations with graduates paying off their loans that recognize their naïveté (myself included) as an 18 year-old being handed money. The difference between private loans, federal loans, grants, scholarships, and other financial tools are confusing to new students already burdened by the vast amount of new things they're taking on.

    As simple as it sounds to me now, these were concepts lost on me when I entered college. The problem? No one told me! My parents were confused too because so much had changed since their day. There is a very basic lack of education when it comes to taking on this immense amount of debt.

    All of this is magnified by today's societal expectation that successful people must go to college. True or not, high school graduates work to get into a school no matter the debt they'll enter into.

    So what is being done to educate new students about debt? And, do schools even feel a responsibility to educate their customers about the risk of giving them money?

  2. While I tend to agree with the good Professor Fossey more often then not I think he too is a little thin on stating that we should cut executive salaries to make a dent of difference. Would it really matter if we cut a few people's salaries from even $500k in half? This seems more like a typical faculty response to those overpaid admin folks. I am also not one to say they are all worth what they are paid but in some cases I think a president of a college with over 3000 employees making $250k-$500k can easily show that they are still underpaid compared to those with similar responsibilities in the private sector. Furthermore, when some are managing budgets close to a $billion+/year I would hate to have a less competent leader in an effert to save a few thousand dollars.

    We need to pay for education at the same rate that we did in the 80s. We are letting legislators get away with funding the same amount of dollars for a rapidly growing population. We can also look at just getting rid of FPCUs from the student aid program so we can get some legitimate statistics on how the problem effects REAL higher education institutions.

    1. You make a good point. I need to beef up this essay and make some specific recommenddations. One good policy move, I think, would be to give community colleges incentives to ban student aid all together. Some community colleges are already doing that. And, as I have said many times, we need to remove the for-profit college industry from the federal student loan program. Politically, that is impossible, but we could reduce the misery caused by improvident student loans if the federal government would stop loaning students money to attend for-profit institutions.