Here's a true story about college in America. In a world of unsure investments -- where home prices rise and fall by 30% and hedging can lose you $2 billion in a jiffy -- college remains perhaps the last sure(-ish) bet. The typical college graduate earns $570,000 more than the average person with only a high school diploma over her lifetime, Michael Greenstone and Adam Looney concluded in their remarkable report on the value of a higher education. With an annual rate of return of 15.2 percent, college has outpaced just about every other general investment category, including gold, corporate bonds, U.S. government debt, and hot company stocks.
But here's another true story about college in America. It's crazy-expensive and getting more so every year while middle-class incomes stagnate or worse. As states cut back on support, families are having to pick up the tab. This has sent student debt skyrocketing past $1 trillion. The share of students taking out loans to attend public college has increased from 46% in 1992 to 62% in 2008. In 1993, about 2 percent of students at nonprofit private colleges took on more than $50,000 (2008 dollars) in debt. In 2008, it was 8.6 percent.*
Both of these true stories played loudly in my head when I read the New York Times' wonderful and comprehensive front-pager on student debt. That we have record-high student debt in this country is a sign of both true stories, the good and the bad. More people investing in a college education? Great news. More people too deep in college debt to take the jobs they want, buy the cars they want, own the homes they want, and start the lives they want? Really bad news.