A startling statistic caught our attention this week: For the first time ever, the New York Times reported, student loan debt has outpaced credit card debt.
“The key problem is that student loan debt tends to be repaid over a 20-year term now, which means more and more students are going to still be repaying their own student loans when their children enroll in college,” said Mark Kantrowitz, publisher of FinAid.org and Fastweb.com, who compiled the figures. “That may make those families less willing to borrow to pay for their children’s educations. It also means that they aren’t going to be as capable of saving for their children’s education or even for their own retirement.”
[EXPAND More]As we’ve noted before, Peter Drucker worried for a long time about the ever-increasing cost of college tuition. “The financing of higher education affects everybody’s pocketbook,” he wrote in Harper’s Magazine in 1956. “It is the central problem of American education.” Decades later, he was still expressing very similar concerns.
“Going into debt for a sizable amount at the very beginning of one’s career is frightening,” Drucker wrote, “especially to young people from low-income backgrounds.”
Indeed, while some economists maintain that taking on debt to pay for school amounts to a wise investment, others fear that “all the news about unemployed 20-somethings mired in $100,000 of . . . debt might discourage some young people from attending college,” as the Times put it.
That, of course, would be disastrous for individuals in a knowledge society. Just a couple of generations ago, “the smart thing was to drop out at age 16 and go to work in the steel mill or the automobile factory or the rubber factory,” Drucker noted. “And six months later, you would make more money than you had a chance of making by sitting on your rear end and getting a high school degree, let alone a college or a graduate degree. That’s over.” In fact, Drucker added, “from now on increasingly, in order to earn a middle-class living, you have to have formal schooling.”
What do you think: Will a steadily rising load of college debt discourage people from attending school—and, if so, what can be done about it?[/EXPAND]