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Debt is like a shackle around a wrist, like a ball and chain. And today, higher education means that many a student has a significant amount of debt and nothing but an informed mind to show for it.
Even though the market is actually relatively stable, considering, for young workers and college graduates, it is still a scary place to be considering a move or starting a career.
And, the situation is getting more and more complicated because of student debt. College costs have increased by 300% in the past thirty years. Incomes have only increased by about half that. Endowments are plummeting during this time period. Scholarships are suffering as a result. And the federal government isn't giving more money to students as a response to the increase in costs.
The increase in debt means fewer choices for students when they graduate. This could discourage individuals with gifts for areas that doesn't pay as well, such as academia or non-profits. Graduating with debt will make students more risk adverse in their career choices. You will see fewer start-ups from individuals outside of the monied America, the individuals in a position to challenge the status quo. Entrepreneur-ship is important, because it keeps industry moving forward. Once an idea becomes established, and the individuals running this idea maintain little incentive for progress, young entrepreneurs are the ones who push the envelope. But the new crop of graduates, saddled with house-sized debt, will be much more reluctant to push anything, except paper for a paycheck.
And finally, greater debt will cause a much more conservative graduate, especially after witnessing the fast and hard fall of the generation before it. This economic downturn will probably squeeze whatever little entreprenual spirit is left out of the recent and soon to be graduates. They will find a job, and work, keeping their heads down and below the radar. Perhaps it is how the media tells the tell, but specials on failing small businesses and giant news stories on ailing business giants make it seem that this climate isn't a good one for a new idea, or even some old ones. Perhaps a few current students will take heart, and go start the next Microsoft. But a young Gates successor seems unlikely in the generation that may be known for having significant debt before buying anything.
I also wonder if the mountain of debt recent and future college graduates have will further forestall important life events like marriage and home ownership. But only time will tell.
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Comments
12.08.08
I think you hit the nail on the head. It feels like college costs are rapidly increasing while the quality(career prep, number of courses, student-teacher ratio, etc) seem to be decreasing.
What you said about entrepreneurship is sad but true. The media and the SBA are not very encouraging when it comes to small business stats. Also, many companies employment agreements include a provision that enables the company to own any intellectual property you develop - even if its unrelated. Entry-level employees can also expect to be very busy. Adding these factors to the debt situation makes it very hard for new college grads to focus on entrepreneurship.
12.08.08
Great insight!
I'd like to think this debt will force us to become extra crafty and figure out some way to 'make it work'.
12.08.08
Thanks Keith and Marie.
I think that ideally this situation would present a wonderful opportunity for the newly graduated generation to flourish. But I wonder if we are falling victim to a downright sky-is-falling media, and the negative vibes of older workers.
12.08.08
If you are lucky you graduate with an informed mind.
12.09.08
I like this post and its a subject I have pondered myself. Although I loved learning and attending college, the mountain of student loan debt I accumulated to finish college is no fun at all. I will try my best not to let this debt deter me from my goals.
01.21.09
Actually, debt is why you and others have a job after graduation. Companies typically cannot exist without borrowing for inventory, cash flow, payroll, and other needs depending on client revenues.
But I guess you are only referring to debt due to college tuition. But even that currently allows many millions of student to attend schools they otherwise would not be able to.
I think health care costs and insurance, housing costs, transportation costs, and taxes will be a much bigger burden upon future students than educational debt.
Not ALL debt has only a downside, only that debt which is not part of a plan to generate revenue to utilize and remove that debt.
01.21.09
Paul,
I don't know if you actually read what I said. I am not talking about all debt; I am talking about how students incur so much more debt than ever before. And the impact that this debt has on those students and their career options.
I am addressing ideas that came to mind after reading a recent article on CNN about college costs. The astronomical rise in education costs, and subsequent rise in debt, doesn't have an upside, at least not for a student!
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