A new study from TD Ameritrade should serve as a stunning wake-up call to policymakers, but if their previous action is any indication, this report may be ignored. The question becomes: Is the nation okay with forcing millennials to delay true adulthood — financially, economically, and in regards to starting their families — until after they’re 30+ years old?
For the next generation of Americans, the American Dream is being delayed and degraded. The causes of this decline are numerous, but the TD study reveals what could be the single biggest driver: high student loan debt.
In their report, 39 percent of young millennials (ages 20-to-26) said they delayed buying a home because of student loan debt, 27 percent delayed moving our of their parents home, and 25 percent delayed having kids. 48 percent of recent grads moved back in with their parents after graduation. These numbers align with other recent polls, showing homeownership rates falling to historic lows and life decisions being deferred.
At the same time as college costs are causing these delays, grads are finding less value in college. Just 57 percent think college was worth the cost, and 23 percent say it will never be worth it.
Our higher education system isn’t working for the 4-in-10 young Americans who say college isn’t worth it, and it’s too expensive for most everyone else, even if it is “worth it.” The high costs are leading young people to delay major life choices and investments in the economy. When young people don’t buy homes, cars, and other goods, it hurts all of us by not generating economic activity.
Beyond the positive effects of millennial economic investment, there’s also an incentive for all taxpayers to want to reform higher education. Americans get taxed nationally and at the state level to subsidize higher education. The feds run the nationalized student loan program, issue Pell Grants, and fund a myriad of other higher ed initiatives through the Department of Education. Every state in the union subsidizes their state universities and colleges.
Are taxpayers getting a good return on our investment? Is it worth it for us?
The nation needs affordable tuition and more programs that prepare students for modern jobs. The current model isn’t working. Unlimited cash via government aid and student loans has allowed colleges and universities to expand salaries and capital programs to ridiculous levels, while at the same time not significantly improving the overall quality of higher education.
Policymakers must consider: how to lower tuition, by cutting costs not adding more subsidies; how to add programs that will enable us to compete with other developed and developing economies; and, how to lower the student debt burden of those who already graduated and are now being a drag on the economy.
Liberals will say forgive the debt and make college “free.” Conservatives will say privatize student loans and force more market competition between schools. Others have creative solutions that bypass partisan stances. Some solutions lay outside of government, like encouraging students to consider trade schools instead of universities. I have my favorite solutions too, but they aren’t worth discussing again until we can get our leaders to acknowledge and debate this problem.
President Trump has a chance to lead on this issue and had some surprisingly good ideas during the campaign. Let’s hope Trump and Congress start taking this crisis more seriously.