2013-05-29

Cato: Let Student Loan Interest Rates Rise


It seems simple: College is expensive and interest rates are at historic lows, so rates on federal student loans shouldn’t suddenly double. But this isn’t simple at all.
Despite constant talk about the huge value of education, and the need to get many more people into college, aid is driving massive overconsumption of higher education and squandering billions of student and taxpayer dollars.
The Associated Press just published a story brilliantly illustrating reality. Of graduates ages 25 and younger, the AP reports, roughly 50 percent are either unemployed or in jobs that don’t require a degree. In addition, despite what we hear about the economy’s imminent voracious appetite for highly educated workers, the U.S. Department of Labor estimates that just three of the 30 jobs expected to have the greatest growth by 2020 will require a bachelor’s degree or higher. Finally, right now a third of bachelor’s holders of all ages are in jobs which don’t require their credentials.
And that’s just bad news for people with degrees. Below the surface is the even more massive problem of people who enroll in college, often take on debt, but don’t get the credentials they need to increase their earnings and comfortably pay back what they owe.

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