Student Loans and STEM

Blog 21 Oct 10 student debt

Random thoughts generated by observing all the PYTs (pretty young things) in the grocery store on a Sunday evening:

How many of the people just graduated from universities are hamstrung by their student loans? Anecdotally, most students graduating from college are saddled with about $20,000 worth of debt. If they’ve just graduated from law school, or earned an MBA, or gotten a Ph.d. in the sciences or liberal arts, it is likely double that. At a minimum, they have to figure out a way to come up with about $300 every month, for at least 5 years.

Easy enough if they are computer science majors, or hard science types whose diploma is in high demand. Not so much for your basic English Lit. major, or, even worse, those gender studies folks. For the latter, it’s likely a struggle to find any job, let alone a job that comes with a salary sufficient to meet the debt obligation.

So, for a lot of them, it’s a future that doesn’t include a shiny new car, or saving for a few years to accumulate a down payment for that first house. No, it’s back to the parents, or slumming with a few room-mates in that edgy part of town where the rents are low enough for a group effort to pay the landlord. Last year, the Washington Post reported that the total outstanding student loan debt was $865 Billion.

Every year, our institutions of higher learning churn out thousands of graduates whose educational achievement, for the most part, doesn’t promise a future of movement up the social ladder.

It is such a waste.

Here’s what I think. First, instead of wasting more money on crony capitalism, investing in solar panel plants, and lending money to Brazilians so they can sell oil to China, let’s write off existing student loans, subject to a few simple rules. Give each debtor a 2-1 tax credit for ever dollar invested in short term Treasuries. Suspend debt repayment while saving is occurring. Once the debtor has accumulated sufficient savings and tax credits, write off the debt. Allow the student to transfer the accumulated funds to savings program created for the establishment of a 10% down payment on a house or condo. I don’t think I have to spell out the benefits to our economy of such a program.

STEM2

Second, going forward, student loans would only be offered to students enrolled in a STEM degree. Remember, STEM stands for science, technology, engineering, and mathematics. Those degrees just happen to have the highest starting salaries for new employees, represent the hardest degrees at most universities, and are those programs most needed for the US to continue as a dominant player in the world economy.

Want to major in gender studies, women’s contemporary literary issues, or African-American history? Feel free, but don’t expect a dime from the US taxpayer. Because you likely won’t be able to pay your debt, and you most likely won’t be able to find a job to support yourself. Which means the degree is essentially worthless. And that is a luxury this country cannot afford any longer.

TaxMan

The first day of classes for the fall semester. A heavy load of business oriented classes, mostly as a requirement for my minor. The most daunting is Taxation, an upper level accounting course. The professor is a seasoned veteran of the public accounting wars who returned to the (relative) safety of academe to earn her PhD. in Accounting. Tax, she proudly proclaims, is her baby. To set the tone, she provides in the syllabus her most favorite quote:

People think taxation is a terribly mundane subject. But what makes it fascinating is that taxation, in reality, is life. If you know the position a person takes on taxes, you can tell their whole other philosophy. The tax code, once you get to know it, embodies all of the essence of life: greed, politics, power, goodness, charity. Everything is in there. That is why it is so hard to get a simplified tax code. Life just isn’t simple. – Sheldon Cohen, former IRS Commissioner

I open the book and see 29 chapters, 13 appendices, tables on inside front and back covers, a glossary that’s about 15 pages, all written in a font that requires my most powerful reading glasses.

She also points out that accountants learn, on the one hand, to maximize wealth in order to impress bankers, while simultaneously minimizing income to deter the IRS…

This ought to be good.