Student Debt and Jobs
The August 2016 issue of Consumer Reports summarizes a much longer report from revealnews.org on student debt. Their headline is 42 million people owe $1.3 trillion. Their survey found that “45% of the people with student loan debt said that college was not worth the cost. Of those who said college wasn’t worth the money, 38% didn’t graduate, 69% have had trouble making loan payments, and 78% earn less than $50,000 per year.”
The US Department of Education holds 93% of the $1.3 trillion in outstanding loans, making it one of the world’s largest banks. They outsource debt collection to private firms, many of which are owned by JP Morgan Chase and Citigroup. These debt collection firms pursue the 7.6 million borrowers in default, making more than $2 billion in commissions this year.
Of course, as noted in my last post, the whole process is driven by spiraling costs of higher education, which is driven, in turn, by academia’s “cost disease,” that results in cost increases far exceeding inflation. Universities are unwilling and unable to control costs, in large part due to the bloating of administrative and support functions.
The June 25th edition of The Economist includes a special report on artificial intelligence. They project that jobs such as telemarketers, accountants and auditors, retail sales people, technical writers, real estate agents, and word processors and typists will likely disappear. I have reviewed many articles on the top ten jobs of the future. They all require technical skills. Many require advanced degrees.
These two trends are on a collision course — higher education that is unaffordable and jobs that require higher education. Further, as noted in my last post, the third trend is younger people who cannot afford to repay their debts, cannot afford to buy a house, cannot afford to get married, and cannot afford to have children. The good news is that JP Morgan Chase, Citigroup, et al. made $2 billion in commissions.
