Tuesday, October 4, 2011

Filling the Gap - How Students Pay for College, Visualized

Having completed grad school just over a year ago, I still feel in many ways like someone fresh out of school - and I'm not sure the feeling is much different from being fresh out of undergrad or grad school. So, the following infographic caught my eye. It's kind of bleak out there, with little hope of relief anytime soon:

Via Daily Infographic.

Private student loans are growing in importance as a source of college funding, but these loans can have a raft of negative consequences, such as affecting career choice, delaying marriage or children, and/or decreasing political activism (sorry, I'm feeling lazy today - I promise those are consequences, but you'll have to do your own Google work for links if you want more info).

On the other hand, I'm not sure that having the state pay for (most of) college is a good idea either, for the same reason that forgiving student loans is just about the worst possible idea for providing economic stimulus - if you do either of those things, you're further subsidizing the people who are likely to become the richest members of society anyway (remember that only 30% of Americans get a bachelor's degree, and that lifetime income is highly correlated with education level).

So, what's to be done about this, other than living frugally as a student?

1 comment:

  1. Insurance Guy,

    I definitely agree that it's in the US's interest to have a highly educated populace, but I'm genuinely not sure how best to go about this.

    The most cost-effective option (from society's perspective, not necessarily the government's perspective) might be to make high school far more rigorous and challenging, ensuring that more students are prepared to enter college, or can get good jobs without even having to attend college.

    Then, the government could lend college students money at the interest rate the US government pays on its own Treasury bonds (so the government isn't losing money) that the students then pay back over time according to their ability to pay. It would probably be relatively trivial to administer this system through the IRS - the government could withhold money from people's paychecks to pay back their student loans on a progressive scale, just like they withhold income, Social Security, and Medicare taxes. That system would be (1) relatively easy to administer, (2) encourage college attendance at minimal cost to the government, and (3) shift the burden of paying for college to when the grads are working and can more easily afford to pay for college, without making the students pay usurious interest rates.

    Anyway, that's just off the top of my head - any other good ideas out there?

    -The Angry Bureaucrat

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