Wednesday, June 18, 2008

Borrowing to Party

By Richard Vedder

Data that I have come across in the past few days or months suggest the following:

1) The proportion of college freshmen working at a job while in college is lower today than at any time in the past 30 years (Bureau of Labor Statistics);

2) The amount of time that the typical student spends on academic matters --attending class, studying, writing papers, etc. --is embarrassingly low, under 40 hours a week for a 32 week year (National Survey of Student Engagement or NSSE);

3) The amount of time the typical student spends on entertainment, bar-hopping, watching television, etc., is much higher than for the working adult population (NSSE);

4) Students are borrowing record amounts of money to go to college; the typical student probably has a sizable NEGATIVE net worth --lower wealth than, say, the students of 30 years ago despite an overall substantial rise in national wealth (College Board, other sources).

Put bluntly, students are borrowing heavily to party --at least relative to past generations of students. As academic standards decline with grade inflation and increasing numbers of mediocre students attend college, the costs of college have soared. But instead of working at jobs more to pay their way through school, kids are simply borrowing to cover the rising costs --and a bit more so they can work less at jobs (not to mention in school).

In short, we are spoiling our children and encouraging them onto a path of fiscal irresponsibility. The government student loan program gets a good bit of the blame, as do the colleges for allowing standards to slip, and politicians for ignoring the problem and calling for greater college participation. It is no wonder that I continually get negative relationships between government higher education spending and economic growth ---we are subsidizing an adolescent leisure class more than "investing in human capital."

2 comments:

Daniel said...

A once heard a good joke that may actually bear some merit:

"College is the only bar with a $50,000 cover charge"

Dana said...

Richard, I think you make a good point about entertainment and bar-hopping going up, and that being a problem for students in light of rising academic costs.

However, I'd like to add (as a recent graduate) that while I think this may be true for a lot of students, many schools prevent students from working on-campus jobs more than 20 hours a week.

In fact, I worked an on-campus job and as an RA -- the result being that my housing was paid for, I had a small subsidy and of course, pay from work, but I was not making a substantial enough amount of money to pay for school without taking out loans.

I also worked for the school newspaper, where we were expected to work no less than 40 hours (often we worked 50/week), yet we would get paid for only 20 of those hours. The expectation was of course, that the experience would pay off eventually. This kind of work prevented me from taking on another job, as I simply didn't have the time.

Additionally, many students work unpaid internships (I did two), in which we only gain class credit for completing. The hidden bonus for college officials is that college credit must be paid for, in essence forcing students to pay for the work they have done. There are relatively few scholarships for this kind of work.

I think it is important to look at the student work numbers -- not just by paid hours, but by the total number of working hours, which includes unpaid internships and jobs in which we work longer than we get paid for.