Friday, October 12, 2007

College Loans

I don't get it. Here I am, teaching business and economics thinking one of the biggest points of getting a college education (note: I don't use "degree") is to signal value to the labor market and win a job that pays a higher salary. Now, there's a proposal on the table to "forgive" federal college loans if students go into fields (jobs) that "serve the public good" in some sense for ten years. I really hope kids don't fall into this trap unless they get some personal satisfaction from the service they choose. Otherwise it just doesn't make sense to take a job in the public sector that puts your earnings potential 10-20,000 lower than what you might make in the private sector. The economical choice is to pay off the extra 10-15,000 that you have to take out in college loans over the normal maturity. Trading 10-15,000 over the 4 years prior to your working career for the 10-20,000 extra you can rake in working for private industry for those 10 years is seemingly a no-brainer, or is my calculator just broken?