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"The million dollar misunderstanding"

Forbes offers a sobering look at the current college lending situation, and I have to warn you, it's not a pretty picture. One key change in recent years has been the rise in private lending (now 23% of the college lending market, up from 7% a decade ago), and while it may be necessary, it is resulting in some pretty unsavory behavior at the expense of a large swath of young kids.

That said, the article title is "The Great College Hoax," and the underlying theme seems to be that, because college costs - including financing debt - are rising faster than the income gap between degreed and non-degreed workers, college is becoming a bad deal. I'm not sure I'm on board with that idea. (I encourage you to read the article and discuss this below.)

The unfortunate reality is that most of the jobs that Americans find appealing today require a college degree (at least). Concluding that college is no longer a great deal, so we should all skip it and learn a trade instead, obviously doesn't work as a comprehensive solution.

That said, there are some serious flaws in the system that need to be addressed. One big flaw is actually related to the paragraph above, namely the idea that everyone should go to college. It has become popular to encourage kids from their earliest moments that they "can do anything they want to do" and such. It feels heartless to say that really isn't true, but is it actually more compassionate to let them find that out for themselves two years into a 4-year college degree, when they're already $20,000 in debt (compounding at 12%) and about to start a job paying the same amount per year as their accumulated debt ? It seems some better screening at the high school level would save a lot of debt-induced misery down the road. It seems we need to rediscover that some kids are better suited to move from high school to vocational school/training rather than college.

Again, just to be clear, this isn't me wanting to crush anyone's dream. This is me reading that "half of students entering college never earn a degree" and "Six in ten African-Americans depart without one." Given the costs involved, those statistics can't be allowed to continue as the status quo.

Another serious issue, and the most sickening part of the article from my perspective, deals with the role of private lending to college students. I'm not against that. I do think the following is insane, however:

Education lenders, unlike other consumer financiers, are not required to provide Truth in Lending disclosures before reeling in borrowers. A law passed last year requires advanced disclosure, but not until 2010.

I won't even start on the role of the universities themselves in foisting some of these particularly ugly loans on their students. Shameful.

There's lots more in this article to unpack. Give it a read and post your thoughts below.

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