Student Loan Debt is Rising while Household Incomes are Falling

Posted by PITHOCRATES - September 30th, 2012

Week in Review

Universities are doing well.  They rarely suffer during a recession.  Because one thing government does during a recession is encourage people to go back to college.  And get a new education.  So there is always money flowing into our houses of higher education.  But the people getting these degrees aren’t making out as well (see Number of U.S. households with student debt surges by Tiffany Hsu posted 9/28/2012 on the Los Angeles Times).

The share of American households with student debt has more than doubled in the last two decades, soaring to a record 19% in 2010 from 9% in 1989, according to a Pew Research Center analysis of government data…

In addition, overall household incomes continue their decade-long slide, according to the government. The median annual income slipped 1.5% last year to $50,054 compared with 2010. That’s 8.1% below the income level in 2007 and 8.9% less than the median in 1999.

More people are going to college.  Yet household incomes fell this last decade.  What can we conclude about this?  A couple of things.  A college education is not a guarantee to higher wages.  For it matters what that degree is in.  A degree in math or science will probably get you a high paying job.  A degree in philosophy or women’s studies is not likely to get you a high paying job.  If it can get you a job at all.  So a lot of universities are encouraging kids to go into debt to get a degree that will bring money into the university.  But it will probably not get them a job.

Another thing to take away from this is that even college students apparently want to earn a lot of money.  Despite the fact they typically vote for Democrats.  Who attack those who earn a lot of money.  So these newly degreed kids should not be surprised that their costly degrees are not bringing them higher earnings.  Because their political party makes it difficult for businesses to do well so they can hire new employees.  And provide high earnings and generous benefits.  Because high taxes and costly regulatory policies increases the cost of business.  Reducing what businesses can spend on employees.

If newly degreed kids out of college want high paying jobs (and want to more easily repay their student loans) they would be better off voting Republican.  Something to think about with the 2012 elections around the corner.  And kids going to college should consider getting a degree that has market value.  Even if these degrees are harder than degrees in philosophy or women’s studies.

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