We are a nation of debtors, and there are too many enablers, including our government, who encourage us to borrow, borrow and then borrow some more. And all that 'encouragement' is not accompanied by teaching our youth the often negative lifetime effects and evils associated with taking on too much debt. That has to change.
Assets are different than liabilities. Assets are good. Liabilities undertaken to acquire those good assets represent the money (and time) invested in order to possess the desired assets.
Education is an asset. Debt is a liability which must be repaid, and interest payments on the debt are only part of the obligation. Assets without debts attached are totally different than assets offset by debt obligations. Getting an education (asset) with no or minimal short term debt attached should be the young student's goal.
The more assets we receive without incurring liabilities along the way, the better off we will be later-in-life. So let's take a look at what's happening to too many of our young college students who spend money they don't have by borrowing and then proceeding to borrow even more in order to spend more.
Yet the student and his family aren't the only ones borrowing and spending to pay for this education. Meanwhile, let's not forget the taxpayers. Because in order to pay for this public spending extravaganza, taxpayers are spending money they don't have as well. As a result, debt grows for both individuals and the nation as a whole.
For far too many of newly enrolled college students, the pursuit of higher education is largely a repeat of the high school courses that they failed to master while in high school and presumably were preparing for their college days. As a result, many new students are borrowing and paying for college but only receiving the high school instruction they failed to get earlier. Simply put, much of the money spent in K-12 is wasted.
But the waste doesn't stop there. The college will now collect tens of thousands of additional dollars from a combination of government funds and the payments and additional borrowings of unprepared enrolling students. The game is that the taxpayers keep paying, the students pay and start borrowing, and more money and time are wasted, as most of the unprepared students will never graduate from college. But in the entire maddening process, they do become indebted in a big way and at an early age.
Lots of liabilities and no assets is a lousy way to begin adulthood.
Remedial Courses in College Stir Questions Over Cost, Effectiveness has the story of how much of the money spent on education in America these days isn't money well spent or borrowed, as the case may be. Neither is it time well spent:
"College students are increasingly spending federal financial aid and taking on debt for high school-level courses that don’t count toward a degree, despite mounting evidence the courses are ineffective and may contribute to higher dropout rates.
The number of college students taking at least one remedial course rose to 2.7 million in the 2011-2012 academic year from 1.04 million in 1999-2000, federal data show. During the same span, the amount of federal grants spent by undergraduates enrolled in at least one remedial course rose 380%, after inflation, Education Department figures show. There was also a drastic rise in remedial students taking on student debt.
The trends reflect a sharp rise over the past decade in enrollment at community colleges, which disproportionately serve low-income, minority and older populations. About 40% of students entering community colleges enroll in at least one remedial course, according to the Education Department; only about 1 in 4 of them will earn a degree or certificate.
“You clearly see that a big part of the problem is that students of color, first-generation students in low socioeconomic status are getting stuck” in remedial courses, said Eloy Oakley, president of Long Beach City College in Southern California. “They’re getting placed in these courses and they’re not coming out.”
Students are typically placed in remedial courses for English and math and because they score poorly on standardized tests. Federal law permits them to spend financial aid on as much as a year’s worth of remediation....
Multiple studies have concluded that, for most students, remediation either hurts or has no effect on their odds of earning a college degree or certificate. The studies have compared the outcomes of borderline students—those just above and just below the cutoff for getting into college-level courses. . . . students who appeared to have been misplaced in remediation were 8% more likely to drop out than those who went directly into college courses.
Some critics say schools should do away with open enrollment to steer more aid toward students who are college-ready and much more likely to graduate. . . .
The amount of federal Pell grants—the federal aid program for modest-income Americans—awarded to remedial-education students, in today’s dollars, has more than quadrupled since the 1999-2000 academic year, amounting to $4.6 billion in 2011-2012. That reflected 14% of all Pell grant aid."
Taxpayers spend ~$150,000 on 'educating' our K-12 youth.
Upon graduation from high school, too many of these 'students' are unprepared to succeed in college.
Yet colleges enroll them, more taxpayer money is spent, the enrollees spend and borrow, and then they drop out in their new roles as debtors.
And this unnecessarily time wasting costly charade continues to weaken America's competitiveness while unnecessary and unproductive debt levels grow for both individual student borrowers and American society as a whole.
That's my take.