For high wage jobs (doctors, engineers, etc.), you might have a point. For low wage jobs, I have to disagree.

While Harvard might have the best undergraduate Education Department in the US, a propective elementary school teacher would be substantially better off getting his her degree at a state school.

If my wife (an elementary school teacher) had $100K+ in student loan debt, a “high-end education” would be a curse.

While it may be that the benefit of having a degree still reflects well on the salary one can command after graduation (because of the race between education and technology) there is no guarantee that this will remain so in the future. But again we are looking at it on an individual level, which is not quite right. Loading young people up with lots of debt has side-effects that are undesireable for society. People put off buying homes, marrying and having kids. For more info about this:
http://www.profam.org/pub/fia/fia_1912.h tm#fn1
It would be better for society to subsidise education outright (at least up to a far higher level than is custom in the US). Education then becomes a ‘free’ choice for persons (i.e. delay starting to work in the hope for a higher cumulative pay over the entire carreer or start sooner but risk getting paid less over time). The expenditure of funding higher education would easily be recouped through higher tax income (because educated people command higher pay). This will enlarge the pool of people that will consider higher education, to the benefit of all. It would also remove doubts about people ‘buying’ degrees because a degree can then only be ‘bought’ through studying hard, rather than a high school fee (and or studying hard). Funnily enough people are willing to pay much for something scarce that isn’t really worth much, but they are not prepared to pay a low amount to something available to all that isn’t really worth much.

I’ll offer my own annecdata: after five years in a tenure-track job, starting around 50K, my salary has increased by about 5%/year. I spent twice the time in grad school it would have taken to get a law degree. And I have a better gig than the VAST majority of humanities PhDs….

An interesting aside, I’m reading a novel set in 1960-2, and some of the characters teach at a college and several times its pointed out how little they make. Here in this burg, all the highest price homes are those within walking distance of the local college. Tuition rose something like 4.2% this year and articles noted this was the smallest increase in 30 years.

Here’s the problem: both demand for and supply of quality university education are inelastic. Demand is such because it’s essentially non-optional for any white-collar job, and supply because universities are largely non-profit (the good ones, anyway). In that situation, increases in price increase the need for financing, which in turn increase the population’s willingness to pay (i.e. demand), and that in turn leads to an increase in price. Of course there’s more intricate economics at work than this, but that’s a good summary.

Suggestion to the government: get out of the business of cheaply financing student loans and spend that money founding new universities or increasing the capacity of existing ones.

Normally you’d be right that an increase in the supply of something (like graduates) would reduce its price. But during the 1980s and 1990s something amazing happened, in both the US and UK – the supply of graduates increased massively, and *at the same time* their wage premium went up.

That may sound like it breaks the laws of supply and demand, but it doesn’t (I’m an economist by trade!). What happened was that the supply of graduates increased hugely, but the demand for graduates increased even more. All things were definitely not held equal…

Something about the spread of computers (which make educated workers much more productive) meant that businesses literally couldn’t find enough graduate workers – despite so many more people going to university. This bid up graduate wages – a phenomenon economists call ‘skill-biased technological change’. It meant that we really could ramp up university attendance *and* have increasing graduate salaries.

The economists Claudia Goldin and Lawrence Katz call this ‘the race between education and technology’. During the first 80 years of the 20th Century, the supply of educated workers outstripped demand. But since 1980, technology has ‘overtaken’ education – meaning the growth in student numbers hasn’t been anything like fast enough to bid down graduate wages. (See their book here: http://www.amazon.com/Race-between-Educa tion-Technology/dp/0674028678, or just type ‘skills biased technological change’ into Google Scholar for tonnes of free papers on this.)

In fact, despite the explosion in higher education in recent years, the graduate wage premium has never gone back down to its pre-1980 level. It’s stopped racing upwards so fast, but it isn’t falling.

Of course, this really sucks for non-graduates, as their wages fall ever further behind those of college graduates. It’s one of the leading explanations for growing income inequality in the US and UK over the past few decades.

But that’s all the more reason to help as many young people as possible into university/college. A more productive economy isn’t a zero sum game…

Debt though, sticks. And it’s unforgiving. And it has real effects on peoples lives.

I think you addressed Felix’s point. Someone planning to be a social worker or teacher should *not* choose a school at which they would incur $150,000 in student loan debt.