Rumination on inheritance, college tuition and college loans

My parents died as paupers, so there wasn’t anything for me and my four siblings to “inherit” upon their deaths. No matter. I figure I got my inheritance on the front end, because my folks paid for my college education: tuition, room and board. Even correcting for inflation, tuition* at the University of Tennessee was cheap: ca. $160/quarter for a full load.

Yes, there’s an opportunity cost associated with college. You could be spending those 4+ years working and earning an income. The business model is that a college degree can position the graduate for a higher lifetime income than a worker without the degree. The data support that, on average.

That said, far too many people are getting loans to pay tuition at community colleges and four-year colleges and universities that they struggle to pay off but cannot discharge through bankruptcy. This isn’t happening at most industrialized nations on the planet.

Back in the day, Milton Friedman, that paragon of free market economics, proposed allowing investors to pay university tuition in exchange for a percentage of the student’s future earnings. And he got what he wished for. How’s that working out in the free market utopia?

What is to be done?** Well, I guess we could blame the victims. Should have weighed the risk that you might not finish that degree, or that you might not find a job that allows you to pay off the principal as well as the interest. Of course, if you understand how the economy actually works, you’d know that forgiving those loans would actually boost the economy by increasing the velocity of money (Econ 101, peeps).

*technically, there was no tuition. These were “fees.”

**to quote Lenin