Student Debt Bubble Side Effect

August 9, 2012

by Chidem Kurdas

Gore Vidal died a few days ago. He was a remarkably erudite author, as any reader of his marvelous historical novels – Burr and Lincoln are just a sample – notices.  He never went to college.  Born in 1925, he joined the army at age 17 and published his first novel before age 21. Having mostly detested the high schools he was sent to, he had no desire for further schooling. But he taught himself intensively through much of his life.

Federal policy is to encourage people to go to college. For this purpose, the government backstops student loans—with the result that total student debt outstanding surpassed $1 trillion in late 2011. Even upper-middle class families, squeezed between tuition inflation and not being able to get much financial aid because of higher income and assets, are borrowing more.

The similarity of student debt to mortgage debt and the role of the government in both has been widely commented on. The government pushes college attendance, like home buying; both activities are subsidized. Sallie Mae dominates education finance, as Fannie Mae and Freddie Mac do mortgage finance. We lived through the boom and bust in mortgage-financed housing. College debt also looks like a bubble. How it might collapse is unclear but in the meantime left-liberals already blame market forces for the unpleasant results of massive government intervention.

In any case, I have in mind another effect. Vidal belongs to the American tradition of accomplished individuals with no university degree, a line that includes Thomas Edison and Steve Jobs but is not limited to such notables. It was possible for individuals to do well and lead fulfilled lives without spending years in costly educational programs that often provide few useful skills.

Now you are supposed to have a university degree to do almost anything. It is not impossible for self-taught men and women to get on, but it is more difficult because the convention has changed—you are supposed to have a college degree and there are huge numbers of people who do, competing with you.

Thus citizens have become dependent on the government – in fact, on taxpayers, who are liable for unpaid loans – to find their way into a career. The conditions created by policy push most into this dependency.

A Gore Vidal today would have a harder time. By striking out on his own and attempting to make his way independently, he would face greater risk of failure. He would be under pressure to get a college degree, not something he was likely to benefit from intellectually. While Vidal was on the left of the political spectrum, he thought Americans have become more ignorant even as they accumulated academic degrees.

7 Responses to “Student Debt Bubble Side Effect”

  1. Richard Schulman Says:

    Gore Vidal strikes me as an egregiously bad choice for autodidactic poster boy. While it’s hardly a sure thing that a college major in history or political science would have saved him from the idiocy of espousing that, though forewarned, FDR deliberately allowed the Japanese attack on Pearl Harbor to proceed undefended, and that Bush and Cheney orchestrated 9-11, undergraduate training in the rudiments of careful scholarship certainly wouldn’t have hurt.


  2. Excellent post. Higher education is a bubble. Something like 40% of college grads are working in jobs not requiring a college degree. A few years ago, when the boom was still in progress, I met a baretender who had an MA in Sociology.

    Meanwhile, firms cannot hire skilled (not educated) workers to perform the mundane tasks requuired for running an economy.

    If you subsidize something long enough, you will always get too much of it.


  3. “undergraduate training in the rudiments of careful scholarship certainly wouldn’t have hurt.”

    As if any American kids with only an undergrad degree know anything about careful scholarship! It is a stroke of luck if they can write a grammatical sentence.

  4. P3VS Says:

    I don’t think encouragement of higher education is necessarily a bad thing, but I definitely agree that there is a huge problem with the overall cost to students. With ever-increasing tuition fees, it’s no surprise that many hopeful undergraduates quickly fall into struggles with student debt. Perhaps a solution to the college graduate vs. self-taught competition would be to conduct more rigorous examinations to evaluate prospective employees on their actual abilities rather than immediately turning down the ones without a degree. This would reduce the pressure to those who believe they are capable of independent success and still allow the rest to pursue their college education.

  5. chidemkurdas Says:

    Jerry O’Driscoll–
    You have the central issue in a nutshell:
    “If you subsidize something long enough, you will always get too much of it.”

  6. chidemkurdas Says:

    Richard Schulman–
    I realize that Gore Vidal advocated some questionable positions in his essays. Nevertheless, his writings — historical novels in particular — show an immense amount of learning and thought. This self-taught author accomplished things that no advanced degree holder has done.

    So I disagree with you. He is an excellent “choice for autodidactic poster boy.” Not that there aren’t others in this very interesting American tradition.

  7. chidemkurdas Says:

    I should add that one of his plays, The Best Man, about a Presidential campaign, is currently on Broadway.


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