So the bad news is that the student loan default rate after two years continues to rise. Ah, but there’s a silver lining — defaults after three years have gone down slightly. Then again, how silver is that ling? After all, if more people are defaulting after two years, well, that reduces the number available to default after three now doesn’t it?
We’ve been arguing for some time that virtually everything about how higher education is packaged and delivered is undergoing (or is about to undergo) a much-needed change. Surely there can be no better place to start than doing something about this business of enabling young people to mortgage their futures on an over-priced education of questionable economic value.
Unfortunately, most of the “remedies” applied so far have addressed making it harder for students to get out from under the debt: exempting student loans from bankruptcy, garnishing Social Security disability, etc. Nice. But even as lenders (now the government) are working on better ways to collect on those outrageous loans, other forces are rapidly shaping up to make them superfluous.
We’ve been over it all before. Education is being X-ified. How we award and receive credentials is changing. Everything is becoming a coffee shop. In the near future, the decision to pursue higher education may likely be as important as it ever was, but the financial commitment will be more along the lines of deciding whether or not to get cable than whether or not to buy a house.
For good or for ill — and I see mostly good, here — higher education is about to be commoditized. Kids currently paying tens or hundreds of thousands of dollars for a degree are in the same basic position I was in when I got a brand new iPhone 4S nine days before Apple announced the 5. I paid to much for a product that was about to be steeply discounted.
I could have listened and should have listened. So let me offer some similar advice to students and soon-to-be students. There is actually nothing novel about this advice; it has always applied. But it’s fair to say that it’s more urgent than it was in times past:
Think. Think very carefully before you make a financial commitment related to education. Get an idea of what the whole program is going to cost, and then spend some time looking at how well people who completed that program are doing at 1) getting a job and 2) getting paid the kind of money that justifies the expense. Look for lower-cost options. And if you can stand to wait a few years, it might be in your best interests to do so.