by Bruce Dunlavy
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The sorting-out of the potential candidates to challenge President Trump next year started early, and it has already begun to delineate some of the issues Democrats will stress in the 2020 elections. For those who are policy-oriented, this is important; for those who are personality and electability-oriented, not so much.

Most of the Democrats in the race have some sort of policy – for some inchoate, for others elucidated – about the burdensome debt taken on by many of the nation’s college students. There are proposals for debt forgiveness, free college, free community college, debt reduction for public service, and other remedies for the situation, which is itself almost universally viewed by Democrats as both unfair and untenable.

Where did the problem come from? There are numerous causes. First and foremost is the increasingly common perception that a college diploma is a requirement for a decent middle-class life. This is largely a true judgment, but it is not just because the things one learns en route to a bachelor’s degree are necessary. It is also because the old paradigm of middle-class employment is and has been in steep decline.

It used to be that one could walk into an auto assembly plant and acquire a steady job with substantial pay having no more skills than the ability to turn a wrench. Similar results could be obtained at steel mills or other factories. Automation and the decline of labor unions put a stop to that. As a result, so-called “college jobs” became the aim of the generation who could not follow their parents onto the factory floor.

One could look around and see right away that the people now entering jobs that earn good money had, by and large, gone to college. It was then assumed that since all the successful people were college-educated, it was a college education that had made them successful. Unfortunately, that was (and still is) not true. College doesn’t make people successful; people who are likely to become successful are the same people who are likely to go to college. Until the post-World War II GI Bill opened college doors to many of those previously excluded, almost all those who went to college fell into one or both of two groups: rich people and smart people. And those who are rich and/or smart are likely to be successful whether they go to college or not.

The devaluing of education in favor of the appearance of education is another factor. That started in the 1970s, when it was noted that a high school diploma was becoming an expected educational outcome (the 1970 U.S. Census was the first one which found that at least half of Americans had graduated from high school). At that point, the aim of public-school education shifted from the acquisition of learning skills to the acquisition of a diploma. If everyone could get a diploma, the reasoning went, then everyone could get a better job, so the educational system went about ensuring that possibility. By 1985, anyone could get a high school diploma if they could show up most days and stay in the seat until they were eighteen.

Alas, if you lower your standards enough that anyone can meet them, then you don’t have any standards. The result was that a high school diploma came to mean nothing in terms of what its holder had learned or was capable of doing. So the burden of learning was shifted to the college level. Nowadays, we find that the same thing that happened to high school is happening to college. In order to fail, you almost have to make failing a goal. If present trends continue, by 2050 one will need a Ph.D. to mop out toilets at Cracker Barrel.
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Meanwhile, since most students and their families cannot pay for college out of pocket, a whole new industry arose – supplying college loans. The Federal government arranged for private banks to provide student loans, and ensured that the banks would participate by guaranteeing those loans with Federal funds should the borrowers default. Defaults were made difficult by laws excluding student loan debt from discharge in bankruptcy and linking other government services to the timely repayment of those loans. The students who took them out are stuck with them until they are paid off or until the end of time, whichever comes first.

Compounding the problem of student debt is the fact that the cost of college is rising at a rate faster than inflation, faster than wages. One of the primary reasons for that is the easy availability of student loans to cover increasing tuition and fees. The colleges know that students can find loans even as the cost of attending goes higher and higher.

Millennials and those in adjacent demographic cohorts find themselves in a double bind. Middle-class jobs pay less than they used to at the same time the people seeking them are burdened by the debt acquired in getting the degree presumed to be necessary to qualify for those jobs. A frequent complaint is, “I was made to take useless Algebra II in high school while I was taught nothing about personal finance.”

The U.S. Department of Education has suggested that colleges include Financial Literacy among required courses, in order to help students understand and manage their debt. About 20 States already require it for high school graduation. Unfortunately, as study after study shows, it doesn’t help much, if at all. Incidentally, it has been found that what actually can help is increased math skills such as algebra.

There are a number of reasons for this, such as the well-established fact that merely having information about something does not do much to change people’s behaviors about it. In addition, the traditional lessons of financial literacy do not apply to today’s economic conditions. Calculating interest rates doesn’t help you when your income is inadequate to meet basic needs. Making a budget and adhering to it is impossible when you don’t know how many hours you will be scheduled for from week to week or how much money you will make from your second job. Being able to balance a checkbook is of no value for avoiding being gouged by predatory “payday” lenders or slippery car dealers.

The solution is elusive, because having good control of one’s finances requires the kind of sufficient, predictable income that used to be nearly universal but no longer applies to half the working population. As Reinhold Niebuhr pointed out long ago, a functioning democracy needs a large and stable middle class. The American economy will work better for all if wages and job security are increased such that no one working all day, every day, lives in poverty and uncertainty.