Tuesday, May 15, 2012



All my young life, I knew I was going to college. College had propelled my father from a sharecropper’s boy to a clinical psychologist with a Ph.D. by about age 27. That changed the trajectory of our family and greatly influenced my early thinking.

There was just never any doubt about that. College, at that time, represented several things to me:  a “university experience” away from home, lots of friends in a Greek fraternity, and a good job afterwards.

With my academic scholarship, my working, my parent’s college funding and a few student loans, I was able to get through my four year degree at the University of Arkansas, Fayetteville, in just 3.5 years, even while working 40-56 hours a week.  Then I completed law school at what was then called Memphis State University.

I always have wanted the same for my children if they felt led to pursue a degree. However, college has changed a lot in the 25 years since I enrolled.

For one, student loans are no longer an added help for many, but a way of life. It’s worse than most of us realize. Americans' outstanding student loan debt obligations now exceed $1 trillion! (It takes one thousand billion to make a trillion.)  Parents have mostly divorced, which often decimates any savings plan for college. Due to some abysmal public schools, many parents use any extra to get their kids in private schools, which prevents college savings as well.  Or Mom may stay home and homeschool and thus forego another income, which curtails any saving for higher education.  Other parents are themselves facing a bad recession with pay cuts or unemployment. Thus, students borrow more money to pay rising costs of tuition. The average borrower graduating from a public or private institution owes an unprecedented $25,250.00 each.

Rutgers University did a study and found that only 53 percent of recent U.S. four-year university grads were even working full-time jobs. Fewer had jobs where their degree was required at all. In fact, I have heard that many Starbucks employees actually have a college degree.

More than one new source has started to see a striking similarity between student loans and the height of the real estate bubble, yet a student borrower cannot discharge or even refinance his debts in bankruptcy. The Student Loan Forgiveness Act of 2012 has been proposed as yet another federal bailout that is supposed to create jobs.

As drafted, this new law would create full loan forgiveness up to a limit of $45,520.00 for current borrowers who have paid the equivalent of 10 percent of their discretionary income for 10 years or who are able to do so over the coming years. It caps interest rates on federal student loans at 3.4 percent and converts many private loans into federal loans.

Universities and colleges get that student loan money in tuition, which goes up every single year. Some think they play the same modern role as some real estate agents and mortgage brokers played during the housing bubble that burst so violently in 2008.
Since all major colleges were founded as Christian institutions, this slide toward shady business on the backs of debt-ridden students does smack of hypocrisy. If you are surprised to learn that our nation’s oldest and most respected colleges were founded to teach people to best apply the Bible, just look at the
Ivy League’s mottos:

Brown University
In Deo Speramus (In God We Hope)
Columbia University
In lumine Tuo videbimus lumen (In Thy light shall we see the light)
Dartmouth College
Vox clamantis in deserto (The voice of one crying in the wilderness)
Harvard University
Veritas (Truth)
Princeton University
Dei sub numine viget (Under God's power she flourishes)
University of Pennsylvania
Leges sine moribus vanae (Laws without morals are useless)
Yale University
Lux et veritas (Light and truth)

It appears that the “university experience” of these days is different from 1987—lots  of crushing student debt, almost no job options using the degree, and a bankrupt government that will have to do more with less.  There are certain intangibles that going away to a university can provide, and well off families will always be able to pay for those. But, for the more average family, it does not appear so.  In fact, if you look at economics, college may not be such a wise investment these days.

If you get your diploma and serve a two-year electrician’s apprenticeship, at maybe $25,000.00 a year in whatever part of the country is hiring (at the moment it’s North Dakota and Montana), you are paid to learn the trade. You will be earning an average of $43,000.00 in year three.  By year seven, many in the field are making $60,000.00 yearly.

If you get a degree in business, you give up four years of working many true full-time jobs. You might be able work some, but you are likely not to make much during college.  Following college, you will likely be unemployed for a while. You might decide you have to work at an $18,000.00 a year retail job for a year. Then, if you are selected, you might become a branch management trainee for something like a rental car company. That would net you $36,000.00 in years two and three of that job on average. However, if you graduated with $35,000.00 debt, your net worth suffers severely. And remember, the electrician started earning much earlier than you did.

The net spending ability of the electrician after year seven totals $296,000.00.

Conversely, the trainee has had $98,000.00 minus monthly payments with interest that are higher than the electrician’s payment on his new Camaro.  If the trainee paid off the student loan straightaway, he has had only $63,000.00 to spend.

Are we seeing the death of widespread college education? The rise of online courses seems to suggest that the brick and mortar places are fading fast. Branded courses that are tied closely to industries (like aircraft engine maintenance) seem to place many of their graduates.

Is the education bubble the next to burst? What do you think?
Mr. Peel seeks justice for those injured in car accidents, work place incidents, medical malpractice, and nursing homes. He often addresses churches, clubs and groups without charge. Mr. Peel may be reached though PeelLawFirm.com wherein other articles may be accessed.