Many Americans now believe college education should be a public good. In the 2016 elections, the Democrat candidates, especially Bernie Sanders, made this policy popular. Bernie used the student loan crisis to gain support for this plan. He has convinced millions that a college education should be a welfare program, rather than an investment.
This however is a faulty and dangerous policy. A college degree is not a public good or entitlement. College is a private investment, and must be viewed that way.
“An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future.” In other words, it’s paying money now for something that will hopefully increase in value, or create more money than you paid for it.
Colleges and majors are strongly correlated with salary after graduation. The money and time put into a college degree has a clear return on investment. You can see what you spent and how much you end up making, in comparison with the expected salary if you hadn’t gone to college.
Treating a college degree as an investment helps students because it makes schools compete.
When the government pays for college education, costs rise because colleges know the government will always pay the bill. Schools are happy to spend money irresponsibly to attract more students. They will get more government money, without necessarily improving the quality of education.
When people pay their own way through college, schools must balance any bells and whistles with the increased cost to students. Obviously they want to make students comfortable, but they are limited by what students are willing to spend.
Additionally, students should be more involved in the loan process at the beginning, so they understand the costs before going to college. Getting private loans would require more attention to detail before spending all of their money. Students will understand what they’ll owe after graduation, and care more about their investment.
Students would look at the costs of the degree, and decide if their degree is worth their time and money. It incentivizes students picking majors with a better chance of resulting in jobs or high salaries, aka the return on investment.
When the government promises to pay the bill, students have no incentive to look at their investment. They don’t understand the costs they’re incurring, but still get stuck with the bill after graduation.
Students need to be involved in the loan process at the beginning, understand that their education is an investment, and work to maximize the returns.