Supply and Demand: Student Loan Crisis

Over 1.5 trillion dollars… This past May the total student debt in America reached this number.  That’s up by 150% from $600 billion just ten years ago.  I have a friend who recently found a receipt from college.  She went to school in the 80’s.  She said you could actually work part time/summer and pay for the entirety of college and get your degree in 4 years.  Her receipt reflected a cost of several hundred dollars for a semester of school.  If it were only still that simple…

Access to education has been a big part of our national conversation for as long as I can remember.  Higher education is commonly seen as a means by which one can achieve economic freedom.  There’s no economic freedom coming from a liberal arts undergrad degree that costs you $50-80K in student loan debt.  Now, you’re a young 20 something out in the world with a close to $600-$800/month student loan payment and maybe the highest paying job you can find is at 25K/year.  What’s worse is this recent graduate may actually love this job.  It might be the perfect fit for their talents.  It might be entrepreneurial in nature and offer a chance to learn about a business/industry in ways that creates the type of experience that could lead to higher wages in the future.  However, 25K/year is not sustainable when you’ve got a huge student loan payment to make every month.  What does this person do?

Let’s look at another example, Medical School.  In 2016, average medical school debt was up to $190,000 with 25% of med school graduates carrying over $200,000 in student loans.  Something I often tell to attendees at Grit City Monday is the difference of operating from a place of desperation versus a place of choice.  This is pure speculation but let’s imagine I am a med students finishing up 10-12 years of education and moving into the workforce with $150,000 in student loans.  Let’s say the first job I land pays me $150,000/Year.  Now, if I’m smart (which I should be because I’m a Doctor!), I’ll continue to live like a resident for 3-4 more years and knock out my student loans.  However, I’m betting that’s not what most people do.  I’m betting most people get into home buying and acquiring a nice vehicle and letting the loan repayment process spread out over a much longer period of time than it should have to take.  As someone who has worked in healthcare, I’ve met many healthcare professionals who are frustrated with the entire system and have ideas about different ways to deliver care.  I’ve heard people mention private practices where diet, exercise, and lifestyle are heavily integrated into the patient treatment plan.  Or perhaps doing work in low income communities to change long-term outcomes in health for those individuals.  The ideas about how to change things are there but I meet few healthcare professionals who are actually out there innovating with how care is delivered.  I often wonder how student loans and cost of living plays into that equation.  For me personally, if I had a mound of loan debt looming over me and I had acquired a fancy new lifestyle, I definitely wouldn’t have the head space to think about starting my own private practice as a physician.  Starting a successful business that also attempts to heal some societal disparities is a difficult endeavor.  There’s no way young Doctors under loads of stress from work and loans are going to have the mental energy required to tackle that beast.  You need a job.  And you’re likely to take whatever job is available.  You may see that there are tons of gaps in the way healthcare is delivered to the patient but you don’t have time for creating change on your own because you have massive bills to pay.  That’s operating from desperation.

Now I’m sure some of you may be saying to yourselves, “College has become a total business!”  In some senses I’m sure that’s true but I think we have to ask if that is inherently bad or unexpected in a capitalist society.  Flat out, we are Americans and we compete.  I want to be the number one personal development coach and teacher in the world.  I want to win!  I love people and I want to see as many people as possible live the life they want and have the impact that they want to have.  I’m in business and my product is, change.  A university wants to be the best university in the land and attract the brightest, hardest working students in the land.  I’m guessing this helps to establish a culture of work ethic among the students that perpetuates itself.  However, in order to attract people you have to sell yourself.  Someone has to pay the University for the product that they deliver, a University Education.  Higher Ed is in business.  We are the consumers of that product.  Maybe we get that confused because of public education in K-12, where payment for school isn’t as direct of an exchange?  However, the way I see it, Higher Ed is in business and we need to just accept that.  Why?  Supply and Demand.

Supply-and-demand

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From what I’ve learned as an entrepreneur over the last 3 years, the customer is going to tell you what they are willing to pay for.  I, as a business owner, will adjust as the consumer/client tells me what they need/want.  I will also look for gaps in my market.  Gaps for me are the places where I see other personal development coaches either missing opportunities to help clients or not providing something that the client really needs or wants.  I’m going to try to get customer feedback and I’m going to try to add exceptional value with my services.  Why?  I’m competing to be the best at what I do, fundamentally, because I love what I do.  I think most educators want to deliver what their students want and need but how many kids are going off to college because it’s just the thing to do.  You have to get ‘the piece of paper’ or you have to get ‘the college experience’ (whatever the hell that means).  In my opinion, if we demand education that is cost effective and teaches us skills that are relative to the current economy, the higher education institutions will have to adjust.  Of course, due to the pace of change in technology, the current economy moves fast.  Stagnant institutions that charge too much for degrees that don’t produce a correlating financial upside, won’t be able to compete, based on the customer’s demand.

This is all well and good but we must face certain realities with it.  This may mean that some kids who want to become doctors may have to sacrifice the MD title and become Physician’s Assistants or Nurse Practitioners.  There are efforts these days to allow PA’s and NP’s the ability to deliver greater levels of care because they don’t cost as much.  This means that the kid with hopes and dreams of going to the giant well known state school is going to have to choose going to the local community college and perhaps finding an employer like Starbucks, that will pay for them to get the rest of their education while they work.  This means thinking outside the box of what real education is.  If you are a recent high school graduate or maybe you are still in high school and you have a love for computer programming, this means you start learning everything you can through free and online courses and you also do freelance work when possible.  You do this while working another 9-5 to pay the bills.  You volunteer to do work for startups or maybe even bigger companies and eventually you become valuable without the degree.  All this to say a couple of things:

  1. I think the change in this scenario has to be a grassroots effort. I believe it must start with the individual consumer of educational products demanding a cost effective solution as opposed to looking for some nostalgic experience that ends in an imaginary golden ticket.  Uuuummmmm… smells like ownership.
  2. As people who aren’t planning to go back to school we have to be bold enough to advocate for a different route. Yes, higher education has been billed in the past as ‘the primary path to success’.  It’s not.  We need to have the courage to acknowledge that reality and encourage people to consider alternative solutions for making themselves valuable in today’s economy.

A college degree was once thought to be an excellent path to financial freedom and the student loan crisis potentially could be the catalyst for the next great economic collapse.  The very thing that’s supposed to free us is enslaving so many.  The irony of it all.

Until next time…

-Travis

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