10 October 2011

Student Loans

The Atlantic | Megan McArdle | Debt Jubilee? Start With Student Loans

As much as it would benefit my family, I can't support a plan to forgive student loans. Making them dischargable in bankruptcy is more appealing, but I still think the moral hazard it too high. Reforming the student loan system for the future is a whole other story though. That I can get behind. This is a one of those "if it can't go on forever it won't situations," and we still have -- just barely -- the chance to make sure it winds down in a somewhat orderly way.
If the degree caused pain now rather than pain later, they might also think harder about whether what they were studying was likely to deliver a solid return on that investment. I'm not faulting the students--the future is a pretty hazy concept when you're eighteen. I'm just arguing that it's not necessarily helping to enable them. [...]

Moreover, I take seriously the arguments that no everyone who currently goes to college should be there. Calm down--I'm not arguing for some society of morlocks and eloi where many are born to labor in the dark without end.
I see two subsets of morlocks. One group probably shouldn't go to college. You don't need a college degree to be a mason or a nautical welder or even an accounts receivable clerk. The other group should go to college. That's your engineers, actuaries, chemists, etc. We need more morlocks of both types.* The problem isn't morlocks. It's Eloi. That's all the people who go to college but shouldn't,** consuming education rather than investing in it.

"Morlock" is a term I, and others [1, 2, 3], use favorably. Not unlike the transition "geek" has undergone in the last decade. I even, coincidentally, spent 15 minutes I don't really have drafting a morlock tattoo a couple of nights ago. (Don't worry, Dad. I'm not getting one. It was just a self-imposed design exercise.)

** Okay, I'm in no position to say who should and who shouldn't go to college. But I feel comfortable saying who I should and shouldn't have to subsidize going to college.


  1. After some thought, I think I'd be on board with making student loans dischargable in bankruptcy only after they'd spent at least ten, maybe fifteen, years in repayment (or forebearance). This gives the bank a significant chunk of earning years to recoup their investment, without making the loans a permanent albatross that can never be shed. Such a restriction would probably also help reform the front-end of lending; insofar as inherently useless degrees are unlikely to earn sufficient money to repay much of the loan before the no-discharging window closes, banks will be forced to discriminate more among degrees they're funding.

  2. Thanks for the foot-note shout-out!