College, credit, crunch

A recession should tip the scales in favor of attending college, yes?  It’s part of every Econ 101 course:  the opportunity cost of attending college includes the income you’d making at whatever job you’d be working at otherwise.  So as career opportunities fail to knock, college or grad school looks like a much better option, yes?

Well sure, except you still have to pay for it.  And that seems to be a lot harder than it was a year or two ago.  And that’s apart from the smaller pool of savings for college, thanks to the $6.9 trillion lost in the U.S. stock market in 2008 and the 1.9 million jobs lost in 2008.  I’m thinking in particular of the tightening of the markets for student loans and credit cards.  Colleges and credit card companies have had something of a symbiotic relationship for years, as this New York Times article describes.

Excessive credit card debt seems to have been a major part of the bubble that just burst (and may still have some bursting to go), so it might not even be a good thing if banks were to relax their current credit-card standards.  But a broadening of federal student loan and grant programs might be a sensible investment in human capital, as part of the forthcoming stimulus package.


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