Americans crashed the Selective Service Agency’s website in early January because of a false rumor that signing up for federal student aid through FAFSA also meant signing up for the draft. Luckily, it turns out that 18-year-olds don’t have to go to boot camp when they apply for student loans. But they could be signing up for burdensome debt.
Student debt increased by a whopping 107 percent between 2009 and 2019. Americans now owe $1.6 trillion in education loans. Policy wonks and politicians respond by concocting flashy plans that hardly solve the debt crisis.
Debt forgiveness plans like Sens. Elizabeth Warren’s and Bernie Sanders’s will encourage colleges to increase their already pricey tuitions. Proposals to restructure repayment programs or dip into retirement accounts don’t prevent students from taking out dangerous amounts of student loans in the first place. We need to help students before they’re drowning in debt.
These ideas don’t address the root problem. They assume that all 18-year-olds benefit from a college education. But this assumption is wrong. Many high schoolers don’t know what they want to do with their lives. Others enter college unprepared. Parents, teachers, and other leaders need to encourage alternative options for these students. These students are the least likely to get well-paid jobs that will allow them to repay their college loans. This will leave them in a terrible financial trap.
It’s a trap because a college education doesn’t guarantee a good job. For years, the return on investment for higher education has steadily declined. More than 40 percent of recent college graduates are underemployed and work in jobs that do not require a college education. Underemployed graduates get stuck in such positions, drastically shrinking their lifetime earnings.
Given these bleak prospects, students who go to college to “find themselves” are likely to waste precious time and money because they lack a clear vision. Thirty-three percent of students change majors and 10 percent switch majors multiple times, which prolongs the completion time and cost of a bachelor’s degree.
College also exacts a high cost from students who lack sufficient academic preparation. Between 40 and 60 percent of high school graduates are placed into remedial courses during their first year of college. Many of these students drop out and never earn bachelor’s degrees. College drop-outs earn far less on average and are almost four times more likely to default on student loans than college graduates. Defaulters destroy their credit scores and damage their borrowing ability for a house or a car.
Parents, teachers, and other leaders should carefully note these trends and consider tailoring their career advice to each student’s specific needs. Most American policymakers say all students should attend college, but that’s a bad recommendation for unsure and unprepared students. Alternative paths to success exist.
Students without direction should first discover their strengths and interests through internships, apprenticeships, volunteer positions, or directly entering the workforce. Ideally, they should earn money while they “find themselves,” not borrow money in pursuit of a college degree that may not benefit them. These students would profit from putting off college until they know how they want to use the education.
Some high school students know they aren’t interested in college. Policymakers should support these students by encouraging them to attend a vocational school or enter the workforce. Trade jobs such as electricians or carpenters are in demand and provide steady salaries. Policymakers shouldn’t deter students who know a good job when they see it.
Some students want jobs that require a college degree, but aren’t prepared for the work. The worst choice they could make would be to spend or borrow money to attend college when they aren’t ready. These students should delay college enrollment until they are academically prepared. Students can study online, read books in public libraries, take remedial courses at community colleges—and, most importantly, work and earn money while they prepare.
Americans should, however, recommend students to attend college if they are ready and have a clear understanding of what they want to do with their education. Many lucrative careers require at least a bachelor’s degree, and these students should pursue college as soon as possible. But it’s not a good investment to encourage unprepared students to drift into debt slavery.
Policies that tighten loan eligibility requirements for college-bound students will discourage unprepared students from drifting into college. For example, federal student loan programs should be reformed to restrict eligibility to applicants with above-average high school GPAs and family incomes below 150 percent of the poverty level.
Above all, we must give high schoolers personalized post-secondary educational recommendations before they get caught in the quagmire of student debt. If we don’t, a whole generation of Americans will be sucked under.