Friday, May 22, 2009

Robert Reich’s Plan for College Debt is Anti-State School

Robert Reich (Bill Clinton’s former labor secretary) gave a commentary on public radio’s Market Place this morning, that presents a solution to the growing amount of debt that students take on.

Here is his proposal:
“Any college student can get full funding from the government, with only one string attached. Once they've graduated and are in the work force, they pay 10 percent of their incomes for the first 10 years of full-time work into the same government fund they drew on to finance their college education.”

He also notes that the average graduate has $22,000 in debt. Interestingly this figures is more than 4 years of tuition and fees at Reich’s own institution (California Berkley) and mine Towson University. Many of my students work part time to pay for school. According to this report the average Towson graduate had $16,000 in debt upon graduation.

Towson students on average could pay back their loans in 10 years by paying under $1,500 a year (I don't have the figure, but I hope our graduates make more than 15k a year). Most state governments already offer an affordable alternative to private schools.

Now Reich’s plan implies it is optional, so what would the effects be? When something is subsidized then its final price tends to rise. The price consumer pay is lower than before, but part of the benefit goes to the seller. In short the plan sends money from the government to private universities.

Perhaps increasing funding for public universities would be a better policy to alleviate student debt.

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Thursday, May 21, 2009

Congratulations Graduates! Words of Advice from an Economist.

The semester got to me and I lost momentum on blogging, but I’m back. It is summer time and I’m off to see Towson College of Business 2009 Graduates walk the stage along with me in my University of Maryland Librarian Science attire (thanks Jennie for lending me the robe until I can find a used one ).

I’ve been meaning to write this post about my advice to people who are still looking (or just starting to look for jobs). With the recession you are going to find lower paying jobs, when you find them. This Wall Street Journal article discusses how even ten years later, people who graduated during the recession had lower wages.

The secret to beat this problem is to take a job in the field you hope to wind up in. By doing this you lower your future wage gap. So taking a lower paying job in the field you want to work in you get both the benefit of continuing to pursue what you want and possibly a longer higher term payoff. This not to say finding a job in this economy is going to be easy, I know several smart well qualified people still looking after a few close calls to getting a job. As Robert Reich said at my graduation at Grinnell College in 2002:

"Gaining self-knowledge often comes from failing—crashing headlong into the wall of your character. And please have no doubts about it: You will fail, in some way, at some time. In fact, you will keep crashing into that character wall again and again until you finally realize its there, and that you have either got to knock it down or figure out how to get over it."

Welcome to the real world graduates!

(Actually, let me know what it is like in case I ever quit academia)

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