Debt Only Has a Downside

Debt is like a shackle around a wrist, like a ball and chain.  And today, higher education means that many a student has a significant amount of debt and nothing but an informed mind to show for it. 

Even though the market is actually relatively stable, considering, for young workers and college graduates, it is still a scary place to be considering a move or starting a career. 

And, the situation is getting more and more complicated because of student debt. College costs have increased by 300% in the past thirty years.  Incomes have only increased by about half that.  Endowments are plummeting during this time period.  Scholarships are suffering as a result. And the federal government isn't giving more money to students as a response to the increase in costs.

The increase in debt means fewer choices for students when they graduate.  This could discourage individuals with gifts for areas that doesn't pay as well, such as academia or non-profits.  Graduating with debt will make students more risk adverse in their career choices. You will see fewer start-ups from individuals outside of the monied America, the individuals in a position to challenge the status quo.  Entrepreneur-ship is important, because it keeps industry moving forward. Once an idea becomes established, and the individuals running this idea maintain little incentive for progress, young entrepreneurs are the ones who push the envelope. But the new crop of graduates, saddled with house-sized debt, will be much more reluctant to push anything, except paper for a paycheck. 

And finally, greater debt will cause a much more conservative graduate, especially after witnessing the fast and hard fall of the generation before it. This economic downturn will probably squeeze whatever little entreprenual spirit is left out of the recent and soon to be graduates. They will find a job, and work, keeping their heads down and below the radar.  Perhaps it is how the media tells the tell, but specials on failing small businesses and giant news stories on ailing business giants make it seem that this climate isn't a good one for a new idea, or even some old ones. Perhaps a few current students will take heart, and go start the next Microsoft. But a young Gates successor seems unlikely in the generation that may be known for having significant debt before buying anything. 

I also wonder if the mountain of debt recent and future college graduates have will further forestall important life events like marriage and home ownership. But only time will tell.