There is no college bubble

Megan McArdle’s Newsweek cover story, “Is college a lousy investment?” is an odd beast. Parts of it are really great, and there are some very important observations throughout to which my colleagues and fellow progressives should pay attention. But the title, framing, graphics, and many of the arguments are just silly, which makes it a bit odd that she accuses others of “mythomania” (i.e. pathological lying.)

She says, for instance:

The price of a McDonald’s hamburger has risen from 85 cents in 1995 to about a dollar today. The average price of all goods and services has risen about 50 percent. But the price of a college education has nearly doubled in that time.

It’s just not true. The sticker price has risen dramatically, but the net price (what families actually pay on average) has remained fairly constant. What we have more of is price discrimination: families with more money pay more, as do students with better prospective income.

McArdle also claims that:

the amount of student-loan debt carried by households has more than quintupled since 1999. These graduates were told that a diploma was all they needed to succeed, but it won’t even get them out of the spare bedroom at Mom and Dad’s. For many, the most tangible result of their four years is the loan payments, which now average hundreds of dollars a month on loan balances in the tens of thousands.

These sentences are literally true, but deceptive when accompanied by the graphic that shows atypical students with larger than average debt. Students aren’t taking out a lot of loans per capita: there’s just more people taking them out than ever and there are some really egregious examples especially at for-profit colleges (which abuse the false sticker prices to extract high real tuitions) and in some professions, like law. The average college graduate has a small car payment’s worth of student loans, which they can pay off in ten years. The guy in the image with $75,000 in debt went to Georgetown and Harvard Law; he’s not typical, and he’s going to be able to pay that money back with those credentials. Certainly, in some cases, students without sufficient merit buy their way into superior colleges and universities, generally at private schools. But the students using debt to finance educations for which they are inadequately prepared and from which they’ll gain nothing are at for-profit institutions (which are absurdly expensive) and community colleges (which are cheap already and need to be better-subsidized.)

Still, there are things McArdle gets right: credentialism is a huge problem. We’re overtraining for a variety of skills that simply aren’t in demand. I don’t mean we have too many poets, I mean we have too many students majoring in business and marketing. And the degree treadmill has a cost: some of our smartest citizens devote all their youth and entrepreneurial energies to coming up with publishable papers, ways to impress their advisors, and grant-worthy research programs rather than getting to work trying to solve their communities’ and our nations’ problems.

It shouldn’t take a libertarian to remind us of that; after all, it was America’s preeminent progressive, Jane Addams, who warned us of the “snare of preparation“:

which… we spread before the feet of young people, hopelessly entangling them in a curious inactivity at the very period of life when they are longing to construct the world anew and to conform it to their own ideals.

Worry about the shift in college spending from instruction and faculty salaries to lifestyle and administration. Worry about the lack of good apprenticeships. Worry about youth unemployment, especially among non-college youth (that’s most of them.) But don’t worry for the poor folks who’re going to make a million more dollars over their lifetimes than their counterparts, don’t worry about Harvard-graduates with a bit of debt, and–for Münchausen’s sake!–don’t worry that we have too many poets. We need more poets, otherwise the pundits will bore us to death.

Mythomania about college, indeed.






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