It's time to rein in college tuition costs
As with most issues, President Obama is wrong about the student loan situation. The problem is not that college graduates cannot pay the money back.
The problem is they bought the wrong thing. They didn't buy houses.
First, the facts:
* 4.5 percent of college graduates were jobless in August. The overall rate was 8.1 percent.
* 72.1 percent of college graduates were in the labor pool. The overall average was 63.5 percent.
* $54,756 was the median income for college graduates in 2009. The median income for high school graduates was $33,176.
"While the unemployment rate for recent four-year college graduates is 6.8 percent, according to researchers the unemployment rate for recent high school graduates is nearly 24 percent," wrote Kayla Webley of Time magazine.
College graduates are probably good for the money, and they will provide society with an educated class.
However, the availability of cheap student loans led many students to take the bait.
All students had to do was sign a piece of paper that said they will pay someday.
Colleges are not run by dummies, so they raised tuition exponentially.
In the first decade of this century, college tuition increased a whopping 80 percent - or 35 percent above the rate of inflation.
Wall Street did the same in the 1920s with cheap unsecured loans. This drove prices sky high until the market crashed in 1929.
Sub-prime mortgages also torpedoed the housing market a few years ago. Unfortunately, those buyers were not good for the money.
Now the people best able to bail out the housing industry - recent college graduates with high earning potential - are reluctant to buy houses because they will be paying for college for 20 years.
Student loan debt now tops $1 trillion - more than all credit card debt. That represents a generational change.
Of the five children my mother raised, four had houses and mortgages by the time we were 25.
None of us had student loans; I went to college under the GI Bill.
The money we borrowed went to homeowners who either bought a new house or retired.
Eventually, all five of us bought homes. Only two of us have degrees but each of us has a nice house.
My four sisters have retired comfortably on very modest wages. I am quite proud of them and their financial acumen.
They could teach economics.
None of my three children have houses. The youngest is 26. All took out student loans.
I am sure my children will scrimp and save and eventually buy houses, as their aunts did on less education and smaller wages.
Elsewhere among today's 20-somethings, I am not so sure.
During last fall's Occupy Wall Street protest, the New York Times ran a sympathetic profile of Joe Therrien, a New York City arts teacher who took out a $35,000 student loan to enroll in the masters of puppetry program at the University of Connecticut.
(For the record, Jim Henson's degree was in home economics.)
When Therrien returned home with his master's degree, the school system had eliminated his position in a budget cut, forcing him to work as a substitute at half the pay and no fringe benefits.
We have too many Joe Therriens. This means baby boomers cannot sell their houses and move someplace warmer or at least into some place smaller when they retire.
It also means the nation's construction industry will continue to slug along.
That does not bode well for our nation.
Surber may be reached at don email@example.com.