Ending Washington's Student Loan Addiction
Forget Student Loans, Focus on Jobs!
Democrats are all riled up today now that the interest rate on Stafford student loans has officially doubled to 6.8%.
Some in Washington are hoping to have the interest rate changed retroactively after our well-fed lawmakers return from yet another vacation, while others want to offer even bigger subsidies for students. Senator Elizabeth Warren wants the Fed to subsidize student loans at the same rates as loans to big banks.
To be honest, the banks are about as responsible as college students when it comes to fiscal responsibility, so I get the connection. But perhaps we need to dive into another kettle of fish here and realize that perhaps the problem here goes well beyond the availability of cheap loans for students.
The truth is, if I were getting ready to graduate from high school today, I'd bypass college altogether and learn a trade. Something where I could learn a valuable, tangible skill.
You know, web designers, lawyers and cocky MBAs are a dime a dozen. But do you realize how hard it is to find a good electrician, plumber, welder or HVAC technician? And let me tell you something – you can earn some serious cash in some of these fields, too.
While there are plenty of college graduates moving back in with their parents, I know a 25-year-old electrician who, just three years after his apprenticeship, is now pulling in about $65,000 a year, not including overtime. He tells me he can make an extra $15,000 to $20,000 a year with added overtime.
An acquaintance of mine who I see at the gym every so often installs air conditioning systems in commercial buildings and warehouses. He's been doing this for twelve years now. It's hard work, but even after the real estate market took a nosedive, at the lowest point, he was still pulling in more than $60,000 a year. Last year, he clocked in $83,000, thanks mostly to an increase in new construction work here in Baltimore.
Point is, instead of trying to help students get cheaper interest rates for college loans, perhaps we should incentivize students (not subsidize them) to seek a vocational career – where work is virtually guaranteed, and the cost of training is minimal compared to what most colleges charge today for a piece of paper.
I'm not saying it's the perfect match for all students, but quite frankly there are just too many kids running off to school, having no idea what they want to do, racking up huge amounts of debt and being released into the workforce with few valuable skills and little hope of finding a well-paying job. It just doesn't seem to make sense that the government should be supporting and helping to facilitate this trend.
You'll Never Be On the Inside!
After getting your report, you’ll begin receiving the Outsider Club e-Letter, delivered to your inbox daily.