In the uproar about student debt we often hear people say things like “Well, they shouldn’t have taken out 50k+ in debt for a degree that isn’t marketable!” But lost in this argument are a few factors that seem to play a very important role.

First, we must consider the cultural narrative at the time. For generations people used education and home buying as THE go-to methods of upward mobility. Many GenX and early Millennials were raised on the idea that that’s what you do- you go to college because it puts you in a better demographic, the degree makes you more marketable. Many of these same kids were told their entire lives to pursue what you’re passionate about so that you never have to work a day in your life. Their parents and/or grandparents had been grinding for decades and they wanted better for their kids.

Not to get too far off topic, but you can see the power of this cultural narrative in how popular those Adjustable Rate Mortgages (ARM) were that contributed to the housing crisis. So many people were making money on their houses. They were taking out their equity and using the money to increase their quality of life, people were flipping houses and making a profit, getting their real estate license and making money-finding any job in the real estate market was like learning how to print money. “Home values always go up!” people said. “Even though you many not be able to scrape together enough money to put 20% down, or afford the full payment now, if just get yourself into the home with an interest only loan, the value of the home will pay you back later. You can always refinance when the home value goes up, and it always does.” But when the bill came due before the value went up, people weren’t ready. The music stopped and there just wasn’t enough chairs. In hindsight this is all obvious, don’t buy a house that you can’t afford! But at the time, the cultural narrative was strong, and nobody likes to see so many of their peers making money in a market and feel like they are the ones getting left behind, being foolish for being so conservative and cautious, letting everyone else reap the rewards for an obvious way to advance your financial situation.

So people see ways to accumulate wealth all around them, especially in an internet and social media era when it’s so easy to see every single way that people find to make money. Go to school, get a good job, buy a house. Here’s where tuition comes in. For families who could afford it, the parents or grandparents pay for school, and the kid graduates with a degree (and the accompanying connections) and it’s off to the races. For some students they maybe even got need-based scholarships. But there is a large group of kids who were taught that college was the way to move advance their social status. Their parents couldn’t afford to put them through school, maybe the parents didn’t go to college themselves, but things would be better if you just make it happen- whatever it takes. Take the loans, it’s good debt, it’s tax deductible, you are investing in yourself because when you graduate instead of starting your career at 25k/year you can apply for jobs that start at 40k that require a degree.

Then the market changed. The internet bubble burst in 2001 and the housing recession in 2008. And automation. The rug got pulled out.

For many of these kids they have followed the rules their entire lives: they did well in school, they did what their parents and teachers have told them to do for their entire lives, and now we want to blame them for having the gall to go to college and not becoming an engineer or an accountant. To make this large scale judgement is to ignore the large scale narrative that college was the answer, by any means necessary.

I had been thinking about this topic for a while but credit to this WSJ article for inspiring me to finally put my thoughts down.

https://www.wsj.com/articles/your-parents-financial-advice-is-kind-of-wrong-11568367000