Posting in Education
Is an entire generation of entrepreneurs being silenced by educational debt?
Daniel Honan pulls no punches in a new Big Think piece on the toll soaring educational costs have on our society: It's an innovation killer that is draining resources of potential talent:
"There is now more student loan debt in America than credit card debt (it is estimated to be $903.6 billion). According to [NYU Stern School of Business Professor Scott] Galloway, 'it’s getting to a point where no graduate of a four-year college or graduate degree program can go out on their own and start their business because they have this incredible weight, this Albatross around their neck called student loan debt.... the key to innovation in the most powerful economy in the world is letting young people have the freedom to start their own businesses.'"
An entire generation of entrepreneurs is essentially being silenced, Galloway fears. And, entrepreneurship is the most promising path -- or perhaps the only path -- with the massive shifts taking place in the global economy, . A new US Census report finds only 55% of young adults 16-29 were employed in 2010, down from 67% in 2000.
This may also be one more factor in the coming creative destruction of the economics of education, in which coursework is offered on a more cost-effective, incremental basis as part of lifelong learning.
Now is not the time to price people out of college, or silence their entrepreneurial visions. More accessible and cost-effective forms of education are needed if North American companies are to secure the talent and innovation needed to compete in the emerging hyper-competitive global economy.
Sep 22, 2011
"When someone else is paying the bill, the price will alway go up." I just wish that person was not me and the other 60% of working people who actually pay taxes in the US.
There's also an element of supply-and-demand. The big school down the street, The University of Texas at Austin, turns down thousands of qualified applicants every year, students who are in the top 10% of their high school class, because with 50,000+ undergrads already, there's just no more room. They could increase tuition 50% and still be over-filled. Of course, that would "deny" higher education to "economically disadvantaged" students, which would then mean that the Federal Government would make more low-cost loans available at taxpayer expense.... which would mean more students would apply at UT... which would mean that they would have to raise tutition again... and on and on we go. When someone else is paying the bill, the price will alway go up. College tuition... health care... insurance... retirement... Someday, people may realize this. Meh, probably not... they went to public school and watched ABC, NBC, and CNN.
Most colleges and universities are simply profit making diploma mills. You would think infrastructure, buildings, etc, would be the biggest expense for a school, but it is not. For most institutions of higher learning the biggest expense is teachers pay and benefits follow by administrative expenses. In most schools infrastructure runs a distant third on the expense list. Most of the money goes into peoples wallets. Then you have the textbook scam where the teachers at the school write most of the textbooks. The average student pays over $900 a year on textbooks feeding US teachers and schools over $6.5 billion in PROFITS in just 2010.
This is not true...you cannot silence the flame of the entrepreneur...it just means you need to be more creative. I graduated college with a Mechanical Engineering degree 3 years ago (and have tons of student loan debt still), got a full-time job at Boeing, and now I'm involved with two startups in my off-time. One is my private real estate company, and the other is a startup in the commercial space arena. It's true you can't focus all your time on your company, but that just makes it that much sweeter when your company succeeds to the point where you can quit your full-time job and transition to your own company.
Just as government policy created the "housing bubble", with cheap money and subsidized and easily available loans, they've also created the "education bubble", which has allowed the exact same thing to happen in upper education. For generations now, the cost of a college education has been consistently exceeded the rate inflation by a factor of at least 2, as consumers (students) have continued to be able to bid up the price of a college education because of the continued availability of seemingly easy financing. The only question is how long we will continue with the current policy. Once the easy money is gone, I assure you tuitions will come down as well.
I wanted to start my own business, but the loans have at the very least pushed that dream years down the road. I wanted to start a hydroponic greenhouse, but the costs of starting that are quite high, and with all the debt I'm in, it seems smarter to get a job and pay of my college debt before I gather more debt by starting a business...
You're just _lucky_. It's not impossible, we all know that...but the argument remains that you're still under that mountain of debt. I'm sure that without that debt, you'd probably be able to get those start-ups going faster than you can now.