How Student Debt is Damaging the University Experience
By Danielle Damper
Basic economic theory speaks about the concept of externalities—that actions taken by one firm will affect other parties and produce costs that aren’t reflected in the cost of the good. Negative externalities create negative side effects, while positive externalities are the opposite and have far-reaching positive consequences. A college education is one such positive externality, since college graduates contribute more to the economy, solve problems faced by businesses and give more to the community far more than what’s reflected in the cost of a diploma.
Therefore, the past few decades have reflected this basic economic theory, that people should discourage negative externalities and encourage positive externalities. And, we have.
A college education is now so valued that trade schools have fallen by the wayside while kindergarteners take field trips to campuses. Now, a college education is a societal expectation, however as we all know so well, college isn’t free. Thus, with the expansion of the college system, we’ve seen a corresponding huge expansion in student loans. Now, even if a student doesn’t have enough money, they can still get their degree, all for the low, low price of their entire financial future.
Because college is no longer a choice, more and more students feel they have to take on an exorbitant amount of debt just to reach a societal expectation. However, this stunts the growth of the young workforce, who traditionally shoulder much of nation’s economy. This is incredibly dangerous, especially now as our population is aging.
This has created a generation of non-starters who are faced with debt, and unable to buy cars or move into houses, simply because they can no longer afford any more borrowing. This effectively erases the positive externalities that a college degree brings into a society.
Even if a student gets a good job out of college, faced with debt, they don’t have expendable income to spend and stimulate our already lagging economy. Furthermore, we face the social cost of students chasing the dollar, seeking high income careers to pay off their debts because low-paying, socially beneficial jobs (like teaching or social work) aren’t economically sustainable positions for an indebted student.
I won’t try to argue that college isn’t still extremely beneficial to our society, but that maybe we need to reevaluate our priorities. Rather than financing an ever-rising cost of education with loans, we should be looking at ways to bring the cost of college down. And instead of creating a society where everyone goes to college, bring back trade schools so that the college industry no longer has a monopoly on our economic futures. As of right now, college will continue to get more expensive because there are no better alternatives, and students will find a way to pay the higher costs.
Like all economic decisions, we need to evaluate each and every cost— in the long and short run, and debt should be a critical factor. The student debt crisis is another externality that the college system tries to ignore; however our economy can’t afford to ignore it any longer.