BY subsidizing student loans, the federal government has helped the cost of higher education soar since the early 80s. Subsidized loans create higher demand for a limited product. When politicians say they want everyone to be able to afford college, they mean they want the government to underwrite the higher education industry’s growth and escalating prices.

At Zero Hedge, Tyler Durden writes:

The higher education industry in the U.S. operates as a central state-enabled and funded cartel, limiting supply while demand (based on the fantasy that a college degree has critical value) soars. This enables the cartel to keep raising prices even as the value of its product (a diploma) sinks to near-zero.

Durden provides links to other pieces on student debt.

Zero Hedge

—- Comments —-

A reader writes:

You should check out Captain Capitalism’s blog. He has written a book called Worthless that talks about this situation and student debt.

Art writes:

I am loath to support the quantitative approach to college education. That is in general a disgusting approach to education. And the student loans system only accentuates this by making higher education into a cost calculation on the part of students.

Many people major in elementary education and counseling only because they want an easy path to employment after they graduate, not because they find those subjects more interesting or challenging than geology or history.

Sad to say, we should not be allowing poor or unambitious people into college, and particularly people who are only there to increase their income. Those people need to be sent to a technical education. And we should certainly not be saddling them with loans, loans that may be difficult for them to pay back.

Karen I. writes:

I would like to ask what you or your readers would advise a high school student to do as far as future plans. If college isn’t worth the money, student loans are a trap and low paying jobs go nowhere, what does that leave? I have two children at the top of their classes, and they excel at math, science and technology classes. They are also talented at art, especially drawing.

My oldest is going into high school and has been placed in “honors” classes in math, science and history, and “college” level (one step down from honors) in other classes. He will be eligible to take college classes while still in high school, for free, in his three honors subjects. He had been placed in a computer class for an elective, but he is such a good artist I suggested he sign up for art instead, which he did. He is exposed to computers constantly, so I did not see any harm in that. My son is clearly on a college path, and I don’t see any good alternative. I agree that the system is severely flawed in many ways, but I also see that people who have not attended college often have more limited prospects and other significant difficulties. I think the best I can do at this point is to encourage my children to at least seek degrees which have a potential to lead to good employment. Any other suggestions would be greatly appreciated. Homeschooling is not an option for several reasons.

 Laura writes:

My point was that government loans cause the price of college to go up, not that college is worthless for everyone.

Ideally, most students would have a good foundation by the time they are 18 and then concentrate on vocational learning or not go to college at all. The brightest would go on to study the humanities and avoid vocational learning in those college years.

Obviously college is necessary for certain careers and post-secondary liberal arts education is important for the minority of students with the aptitude for it. My advice is to send him somewhere you can afford or have him work for a couple of years first. I know a middle class couple who just spent about $240,000 to send their son to a New England college. With that money, they could have bought their son a house. He could have rented out the house and lived at home for a few years while going to community college or the local campus of a state school. He would have had security for the rest of his life.

Art from Texas writes:

One good option if there is limited funding is trying to make sure you can find scholarships, although that can be hard. Some are major specific, but that can make them quite easy to get if you want to pursue that field and have an excellent aptitude in that area. I know some of the smaller state universities will throw money at engineering students to get them to come, even if their programs are limited.

Karen responds:

Now I understand your issues with higher education. It is astounding that someone actually spent $240,000 to educate his child. I completely agree with what you wrote about that situation. Many of the credits earned at our local community college can be transferred to four-year universities. Depending on the degree, it is my understanding that half of the credits needed for most degrees can be earned at community college. In the case of a general studies degree from a certain state university, there is a program that allows students to earn three quarters of the credits at the community college.

Many parents in my area, including those who could afford to do otherwise, have started keeping their children home for a year or two and then allowing them to transfer, saving the family tens of thousands of dollars. There is an added benefit of the child being older and having better judgment when they finally do leave home and live on campus. Also, admission to our state university has become very competitive due to rising costs at other universities. Students who have an associates degree from the community colleges are guaranteed admission to the state university.

I appreciate Art’s comment, because my son is interested in becoming an engineer. Having me at home has definitely helped my children do well in school, but it also makes financing college more difficult. I think that is a reality for many one-income families, though I don’t think it is a reason to panic and start leaving the kids in the care of others.

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