Traditional University Is Dying in the Wake of Uncontrollable Student Loan Debt
Sooner rather than later, you will likely witness a shift in secondary education and the signs are everywhere. The cost of education is rising to astronomical levels, online courses are diluting brand, and many careers do require some form of education but the lack of practical experience is limiting the types of careers people can begin out of college.
Setting The Stage
To set the stage, according to Federalreserve.gov, in 2012 the Federal student loans total stood at $1.05 trillion and in 2016 the total was $1.4 trillion. Student loans are increasing to levels unseen, surpassing credit card debt in a nation that thrives on consumer spending. Credit card debt in the United States in Q4 of 2016 sat at $779 billion according to Nerdwallet.com. Thus showing the gap between consumer debt and student loan debt is indicating an issue.
Issues At Hand
The cost of the university is appreciating to levels that have people questioning is college worth the investment. Obviously for degrees such as nursing, law, and other medical practices, traditional schooling is a must. However, for professions such as business and computer programing, these skills can be learned from on the job training or self-education. People underestimate the power of an associates degree and hard work outside of the classroom. Alternatively, finding a mentor to take you under their wing and show you the ropes is grossly underestimated.
Switching gears to brand, universities are growing using brand. For example, people think highly of Harvard, Yale, and Stanford, regardless of what course you may take at these universities. The exclusivity of these schools allows them to play off their elite brand status. With the introduction of online courses, many of these large universities are on the edge of losing their brand image because people can earn a degree online, rather then attending the university itself. The positive to this is it may begin to make smaller, lesser-known schools become a more attractive option in the market. Online courses are not less, but the current market sees online courses as easy access compared to the traditional acceptance process.
Pulling this all together, you must remember that student loans are with you forever. Bankruptcy, loss of job, or any other extreme event does not make them disappear. While many have carried this weight on their shoulders, people who have co-signers need to be cautious. The cosigners are just as liable as your are if you fail to pay or become delinquent.
What To Expect
The cost of education plus the time spent learning in the classroom does not equate to a proportional output for all. It very well could be in our lifetime that we begin to see a shift in traditional education. What exactly looms on the horizon remains to be seen. However, the current model will not stand with the direction it is headed. People are graduating with large sums of debt, limiting their spending, and thus adversely affecting our economy.
The notion of a student loan bubble is a stretch. Unlike the housing crisis bubble, student loans would remain no matter how bad the debt pile grows. Alternative and less expensive educational routes could be our future. It will offer a practical and affordable education that provides skills necessary to transition into a company and become a productive asset to their business.