Young, educated, and deep in debt – College debt over 18 percent of all consumer debt. Half of college graduates under 25 are unemployed or working in a field where no degree is required.

I doubt anyone is opposed to education or advancing your knowledge in life.  Who can oppose something so valuable?  Now this lofty aspiration is great but becomes problematic especially when the cost of higher education has gotten so expensive.  How expensive you ask?  The fact that we have over $1 trillion in student loans outstanding tells us many students can only continue their educational endeavors via more debt. One of the most disturbing statistics is regarding young college graduates.  These are students that have faced the highest tuition inflation and are also entering the weakest job market in a generation.  This is an issue that cannot be ignored.  Sure, we can turn a blind eye as we did with housing but this bubble is going to burst.  We are already seeing fractures in the system and even people questioning the value of an education.  Where do we go from here with the US college system?

The tough job market for recent graduates

One dramatic figure coming out from the employment side of things is the underutilization of those with college degrees:

“(Daily Trojan) Still, California’s unemployment rate remains the third highest in the country, and the L.A. area’s unemployment hovers above the statewide rate at 10.6 percent. The slow pace of job growth could have a direct impact on USC students. Employment rates for new college graduates are very low with nearly half of all college graduates under age 25 unemployed or employed in jobs that do not require a college degree, according to a Northeastern University study that looked at 2011 data.”

Keep in mind this is coming from a selective school that has tuition costs of more than $50,000 per year.  It is an interesting figure that half of all college graduates under the age of 25 are either unemployed or are working in a field that doesn’t utilize their degree.  This is something that needs to be addressed since the future of our nation will rest on the shoulders of young Americans.  There have been a few studies examining future prospects of those entering weak employment markets and the drag on the economy can be deep and fundamental.  There is definitely a structural shift going on.  You will be hard pressed to find anyone going against education per se.  Yet what is the actual value?  Education for the sake of education can be had for free given the plethora of electronic options:

-TED talks that bring out experts in select fields

-Online learning environments like the Khan Academy

-Free open source courses

-Public libraries offering eBooks through online checkout

So there has to be more than simply the above.  There is a socialization process that goes on in higher education and it also provides a signaling mechanism to the market.  However, how much is this worth?  If half of young college graduates are not utilizing their degree directly, then what exactly was the value of the college experience?  Or more importantly, why go into massive debt for this outcome?

The massive growth of student debt

It is one thing to pursue higher education and come out with minimal debt.  It is a completely different thing going into massive debt and then having a hard time finding a job that supports the level of loans you now carry.  At the very least, there needs to be an option just like every other sector of debt to declare bankruptcy.  Student debt now makes up a sizeable chunk of consumer debt:

Student loans

The fact that student debt is such a sizeable portion of consumer debt is troubling.  While households have been deleveraging from credit card debt and other revolving debt, the growth of student debt is incredible.  The trend is apparent and you even have state funding decreasing for many state schools so many are simply rising the tuition cost.  This is becoming a big deal because of the level of debt now being taken on.

The change is probably hitting faster than you think:

“(New York Times) The University of Phoenix, the nation’s largest for-profit university, is closing 115 of its brick-and-mortar locations, including 25 main campuses and 90 smaller satellite learning centers. The closings will affect some 13,000 students, about 4 percent of its student body of 328,000.”

Change is coming whether we want it or not.  In an era of perpetual debt based bubbles, it is troubling to see so much debt being taken on for a college education.

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5 Comments on this post


  1. clarence swinney said:


    He campaigns on who can create jobs since the Republicans have no plan.
    His message that the wealthy and corporations need to pay their FAIR share of Total Income
    and the dire need for jobs is getting attention.

    He is correct to run on the economy since he was left a skeleton.
    Create jobs, protect entitlements, build the middle class, make wealth give in on more contribution.

    He must stress over and over how the opposition fought every good thing he tried to achieve no matter how much it hurt the people. Paint them as villains. Ask the people to help him get America back on a track of jobs and more equality.

    October 26th, 2012 at 4:44 am
  2. clarence swinney said:

    Are Romney and Ryan the kinds of people we want in charge?- Those like Bush but worse? Criminals and thieves? Romney the loser from MA, outsourcing king, off shore account maven, company busting brat who bullied gays and dressed up like a state trooper just to harass people. Is this the person we think will care about Main St, seniors and college kids? – Do we really want this type of person leading our nation backed by a congress who has been against Main St and that 47% of Americans that Romney was caught saying we are good for nothing lazy moochers? What kind of a person says this? Not a good one, not a responsible one, not a leader that represents all the people and not just the top- He has shown his hand over and over along with a congress that has vowed to defeat Obama at any cost to the 99%. And do we want president who is against cancer screening for women, against birth control and who things rape victims should be forced to give birth even if the mother’s life is at stake? Do we want a president supports a congress that refuses to sign the violence against women Act? These are the people who say they cherish the unborn but are willing to allow 35+ million to live in grinding poverty in our nation, vast populations of working poor and tens of thousands of college grads who can’t find work. It’s OK with Romney if our health care system is the emergency room only and who will support cutting services across that nation as the ultra -rich get richerVARDETTE

    October 26th, 2012 at 8:55 am
  3. clarence swinney said:

    BUSH II—-19
    OBAMA— 26
    BUSH I—–27

    October 26th, 2012 at 12:06 pm
  4. clarence swinney said:

    1945 -1980 we taxed high incomes and estates to pay down WWII debt.
    In those years we had fabulous economic growth.
    The Middle Class had much economic growth.
    Now, it is payoff time.
    We need to pay down the Republican Tax Cut Debt.
    Our income is $14,000 Billion.
    The 2013 budget calls for $2900B in revenue and a $900B deficit.
    It is a disgrace that we will not pay our way instead of leaving it for our kids to pay.
    We rank 4th on Inequality in OECD nations. Richest on earth. Yet! We rank third as Least taxed in OECD nations. Only Chile and Mexico tax less of GDP than America. Yes! We rank number two on taxing our corporations even though our top rate is highest. Obviously, something is crazy in America.
    Since 1980, our tax rates have been cut cut cut to favor the wealthy.
    In 2008, the top 50% got 86% of all individual income and paid 12..5% tax rate.
    That ratio has been similar for years.
    70,00,000 workers took home 14%.

    We Must return to taxing Wealth and high incomes. Would a higher estate tax hurt the ONE family which owns more wealth than 90% of our families. Romney wants to zero it not raise it to help balance our budget and pay down some of the debt that helped him get very rich.

    We CAN balance our budget. We CAN pay down our debt. The rich will fight any change.
    The Middle Class needs help to regain a good Standard Of Living. Help them. Clarence Swinney

    October 26th, 2012 at 2:09 pm
  5. Joe said:

    How would the details of being able to discharge this debt in bankruptcy work out?

    If bankruptcy is allowed for these types of loans, would the government no longer guarantee them? If that were the case, what bank is going to loan an 18 year old with no credit history all of that money?

    Then only the privileged class kids with family who have the means to pay would be able to pursue higher education. I don’t think that would end well.

    It’s such a complicated dilemma and we don’t have a way to accurately gauge what a given potential remedy would do. That’s why the can keeps getting kicked down the road and politicians don’t have any comprehensive answers.

    You’re definitely ahead of the curve on this issue. I enjoy the posts.

    October 31st, 2012 at 12:44 pm


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