# Some Much Needed Perspective in the Student Loan Debate

It’s a common misconception by some conservatives that only liberals are pro-college. The reality seems to be the opposite. Liberals such as Elizabeth Warren are leading the charge against higher education, laying blame on the overpaid faculty, the student loan lenders, and the colleges for failing to guarantee good job prospects for students. While the left was resolutely pro-higher education as recently as the Clinton administration, those days seem to be gone. Nowadays, you can find many instances of conservatives such as Marc Andreessen and Google’s Eric Schmitt championing the virtues of higher education; but if you go to sites such as the HuffingtonPost or the NYT, you can find droves of liberals disparaging higher education as a poor value, less important than ‘street smarts’ or lending anecdotal evidence of people that have dropped out of college and wildly succeeded – without fail, referencing the overused examples of Steve Jobs, Bill Gates and Mark Zuckerberg. No one is denying that it’s possible to be a success outside of college, but the college loan debate has often been predicated on lies and partisanship, rather than an objective look at the facts. The preponderance of evidence suggests a STEM degree (which should also include economics) – especially at a prestigious college – is worth the money. Let’s look at some famous dropouts. Yes, they didn’t finish, but notice they still enrolled in college, and in addition many of them attended prestigious colleges. The last point is important because entering a selective college typically means you’re the top five percent of intelligence and furthermore, attending college – even if you don’t finish – can give you connections that can serve you later. This is especially true with prestigious colleges that have large donors and resources that no-name colleges typically don’t have. Being exceptionally smart increases your odds of success without college; however, for everyone else, they are left with little choice because having a degree signals to employers that you are competent enough to get a degree and hence should be hired over someone who doesn’t have one. And as in the case with STEM, degrees are not always a bad value. But finally, what about those who never got accepted to a prestigious college or who aren’t majoring in STEM? A recent article (A Little Student Loan Debt Never Hurt Anyone) by Megan McArdle – using actual data instead of doom and gloom rhetoric – shows that the student loan situation isn’t as dire as those on the left are making it out to be. She writes:

Nonetheless, I do not think that we should use taxpayers’ hard-earned money to make their debt cheaper. Driving down the interest rates on education debt should not be a policy priority.

Agree. It’s the student’s responsibility to finish (As many as 50% don’t and not too many of them going to create the next Facebook, but more likely a burger with the toppings of your choice), to understand the terms of the loan, and to choose majors that will pay well, such as STEM and economics. The problem is too many people are being pushed into going to college that are not college material due to immaturity, a lack of interest, or to put it bluntly, simply not being smart enough. Advisors should encourage students that are unlikely to succeed in college to pursue vocational training, but in our politically correct world, this is easier said than done. To even intimate that someone isn’t smart enough to benefit from college is heresy and could possibly cost the advisor his or her job, or in the words of Upton Sinclair- ‘It is difficult to get a man to understand something, when his salary depends upon his not understanding it!’

It’s good to remember, as we discuss these plans, that people with college degrees are the best-off people in the U.S. They are a cognitive elite with substantially more earning power than almost anyone else,

The creative class and the cognitive elite are the most important people of all. In today’s hyper-competitive meritocracy, being smart is more important than ever. Stocks will keep going up and the treasury yields will remain low because the U.S. is still a safe haven full of smart, talented people and multinationals and elite institutions such as Harvard, Stanford and MIT that are the envy of the world.

Also included is this graph that puts the individual loan debt situation in perspective. In contrast to the six digit figure quoted by anti-college pundits, the majority of students borrow less than $10,000 and about 72% borrow less than$25,000, or about the same as new car.

The overwhelming majority of borrowers have less than \$25,000 in debt, which is to say something more like a car loan than a mortgage. Yet we do not argue that we need to reduce the cost of car loans lest the Toyota Camry should keep yet another generation of Americans from the precious boon of homeownership.

Note how she gives the car example. This blog was the first to make the comparison; now others are seeing that we were right all along, that student loan debt is not much different than buying a car, yet no one on the left is castigating the auto industry. A new car losses half its value when you drive it off the lot – where is the outrage?

At the end of the article, making student loan debt dischargeable in bankruptcy is a bad idea because it absolves personal responsibility. Why should tax payers front the bill of your free education? Second, if everyone is discharging their debt, it will only make tuition rise even more, hurting those who do pay.