Young People Have Too Much Debt and Not Enough Marketable Skills
Ten years after the financial crisis, banks may be safer and the economy more resilient but many young people are saddled with huge student-loan balances. Too many are stuck in low-paying dead-end jobs, delaying marriage and children, and may never own a home.
The financial crisis brought home two fundamental realities. Low interest rates, flooding financial markets with liquidity and an $831 billion stimulus package would not quickly create high-quality jobs, and many good-paying opportunities for semi-skilled workers and college graduate generalists were permanently lost.
Simply, the economic contraction accelerated many of the structural changes in the broader economy and labor markets that globalization and technological innovations-computerization, automation and artificial intelligence-were imposing.
President Barack Obama responded by encouraging young people to borrow to attend college and graduate school. That took millions off the jobless rolls and aimed to upgrade the quality of the labor force.
That strategy did not work quite as well as expected.
To send most everyone to college, nearly everyone has to receive a college-preparatory high school education. Pressures to “pass them through” resulted in what even The New York Times admits are counterfeit high-school diplomas. Fewer than 40% of secondary school graduates have the math and reading skills to do college-level work.
State governments – pressured by rocketing Medicaid costs, the needs of K-12 education, and flagging tax revenues – slashed support for higher education and raised public college tuition. That enabled private colleges and for-profit schools to do the same and compelled bigger student loans.
Faced with tight budgets and pressures to absorb inadequately qualified applicants, colleges and universities lowered standards.
About 70% of high-school graduates now enroll in two- or four-year programs, student-loan balances now top $1.5 trillion, but many young people don’t get the quality education they are promised.
