Things are falling apart for American higher education: It is time to be cautious about taking out student loans
Things are falling apart for many American colleges and universities. The signs of stress and turmoil are everywhere. First, college enrollments are down significantly, putting an enormous strain on colleges that are heavily dependent on tuition revenue. Over the past decade, college enrollment dropped by more than 2 million students, dipping below 18 million students in the fall of 2019.
the for-profit college industry is on the verge of collapse. According to Forbes,
the number of for-profit institutions declined by 25 percent between 2010 and
2018, and total enrollment dropped by half.
small liberal arts colleges are slashing
tuition for their first-year classes by 50 percent. Although most small
colleges post a very high sticker price, in reality, they are
giving out financial aid and scholarships like candy. As a result, the average
net cost of tuition is only half the posted price.
business schools and law schools have rolled out new types of graduate degrees
to counteract declining enrollment.Business schools have introduced one-year
MBA degrees because the demand for traditional two-year programs has
dropped. And law schools have started offering law-based degrees for people who
do not intend to practice law. According to numbers released by the American
Bar Association, 14 percent of law school students were in non-JD programs
the coronavirus crisis has caused some college students to feel less positively
about their educational experience.The
COVID-19 pandemic forced the vast majority of colleges to cancel face-to-face
classes this spring and replace them with online instruction.Unfortunately, the quality of online teaching
has often not been good.A recent survey
found that 63 percent of undergraduate respondents reported that the quality of
their online instruction was "worse" or "a lot worse" than
the live teaching they received before the pandemic.
More than 40 percent of the undergraduate
respondents said that their view of their college had gotten worse as a result
of COVID-19. And one out of 10 high school seniors who had intended to enroll
in a 4-year college this fall said their plans will likely change.
debt has doubled from $750 billion in 2010 to $.15 trillion in 2019. Today,
45 million Americans hold student loan debt.More than one million people defaulted on their student loans last year. Almost 9 million more are shackled by long-term, income-based repayment plans
that can last as long as 20 or 25 years.
Students should do everything possible to avoid taking out student loans
For three decades, colleges and universities raised
tuition on an annual basis at twice the national inflation rate. College
students financed the rising cost of their education by taking out larger and
larger student loans.
College leaders assured students they were getting
good value for their tuition dollars. After all, they purred soothingly,
salaries for college graduates vastly exceed the wages of people without
college degrees. Taking out student loans to get a college degree seemed like a
In fact, inflation-adjusted
salaries for American workers have remained flat for the last 40 years.
"[T]today's average hourly wage has just about the same purchasing power
it did in 1978." The wage gap between college graduates and non-college
graduates has widened, but this is mostly because wages
for non-college graduates have declined.
In other words, a college degree may be a good
investment for most Americans. Still, it may not be as good as the colleges
have represented.People who take on
enormous student debt to get liberal arts degrees or graduate degrees will find
that their college education was a terrible investment if they do not land a
The coronavirus pandemic has put millions of
Americans out of a job. Experts predict an unemployment rate of more than 30
percent—higher than during the Great Depression of the 1930s.Forty million Americans may be out of a job
by the end of this year.
Our economy will bounce back, but who knows when
that will be? So if you are thinking about going to college or graduate school,
let me give you a little advice:
Now is not the time to take out massive student
loans to finance a bachelor's degree in gender studies from an expensive
Now is not the time to finance a luxury apartment
with your student loan checks.
And now is not the time to thoughtlessly take out
loans to enroll in a master's degree program without a clear sense of how that
program will increase your income.
It is a terrible thing to be unemployed—as millions
of Americans will soon be. But it is far worse to be unemployed and burdened
with student loans that you will never be able to repay.