Should the government be subsidizing student loans when the economic return from the underlying degree is less than its cost? From Tyler Durden at zerohedge.com:
What is a college degree actually worth? We know what secondary schools charge for the “opportunity” to study with them, but this does not really tell us much about the value of the services they offer.
On average, college tuition costs around $10,000 per year for a person studying in their home state, and $25,000 a year for those studying out-of-state. Federal student loans can cover these costs, but this is the application of public tax dollars with the expectation of returns; it is not supposed to be free money. And to be clear, NO ONE is entitled to a secondary education, let alone for free.
The average interest rate on a student loan is around 5% these days, and such loans include stipulations that they cannot be erased through bankruptcy. The argument among people who support loan forgiveness is that the cost of a degree is too high and the loans are impossible to pay or escape. On top of that, many of these graduates can’t even get a job once they leave college.
Surveys over the past couple years show that at least 45% of college graduates are unable to find a job once they enter the private sector. Those that can find a job usually end up working outside the scope of their field of study. Keep in mind this is happening during a period of very low official unemployment.