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Revenge of the Nerds: College Debt is About More Than Money

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The revenge of the nerds? A couple of weeks before the U.S. elections, The Economist began promoting an article about the predictions made 10 years ago by Peter Turchin of the University of Connecticut. He said that “the next decade is likely to be a period of growing instability in the United States and Western Europe” due in part to “overproduction of young graduates with advanced degrees”. And he was right.

The Economist‘s analysis explores the link between “overproduction” of elites and political unrest that eventually led to disruptions such as the Civil War, the European revolutions of 1848, and perhaps also the recent wave of protests under the mantle of Black Lives Matter. It sounds sensible, because (notwithstanding the merits or lack thereof of the theory of Cliodynamics, promoted by Turchin) it seems indisputable that we have too many graduates. Millions were expecting to walk straight from the classroom into decision-making roles, and now they feel betrayed by the system that placed them instead in a “normal” job.

You have to go to college

Let’s see why. For most of human history, high academic degrees were accessible only to the smallest of minorities. In the 16th century, for example, if someone was awarded the equivalent of a high school degree, it was a cause for celebration for the entire village. Outside of the handful of university towns in European countries, finding a “doctor” was virtually impossible.

Even well into the 20th century, only the wealthiest or the most talented could afford to go to college. Once they graduated, the labor market received them with open arms and key positions, those with the corner office, the large desk, the company car, and the driver at the door. Thus a paradigm was born about how going to university guaranteed a high quality of life.

This vision became deeply imprinted in the minds of the baby boomers. When they had children of their own, they did their best to provide that sign of status, which, combined with more loans or scholarship opportunities and increased college coverage, resulted in a dramatic increase in the number of college graduates. Too good to be true? Yeah, it is.

You can’t eat your college degree

Both families and authorities looked at the statistics and neighbors. They saw that those with a college degree were getting better jobs and came to the erroneous conclusion that a college degree was a visa for wealth. The real explanation had much less to do with the academic degree itself, and more to do with the kinds of people who actually went to college: either the most talented or those with rich families, with their corresponding high-level social connections. However, as the university offerings expanded, the scenario changed:

  • Millions of people who lacked the talent, wealth, or social connections of previous generations obtained a degree.
  • Being a college graduate ceased to be a symbol to automatically access better job offers. After all, a college degree is not as impressive when the whole neighborhood has one. As Buddy Pine said, “when everyone is super…no one will be.”

In his book, The Case Against Education, Bryan Kaplan brilliantly explains how a college degree works as a signal to employers that the person who has it is someone with “socially desirable strengths,” including intelligence, conformity, and conscientiousness.

The problem? When the bachelor’s degree erodes as a sign of differentiation in the workplace, it also decays as a route to status and wealth. This, in turn, has prompted more people to opt for “graduate studies” degrees in an attempt to maintain the ol’ degree dream. Consequently, they enter the labor market much later in their lives, and arrive with absolutely ludicrous expectations about it, which quickly and painfully collide with the real world.

Worse yet, as Kaplan points out, universities are filled with subjects, and even entire careers, whose only real field of work is, well, as college professors in those same careers. Yes, it sounds like a Ponzi scheme.

Revenge of the nerds means making other people pay for it

In the United States, both harmful government policy and social incentives have led to a dramatic increase in tuition fees (at a rate up to 8 times faster than the increase in wages) and a surge in academic offerings not linked to the labor market. The result is a horde of graduates who get their first real job when they’re 25, 28 or 30 years old. By then, they carry a debt of up to hundreds of thousands of dollars in exchange for a university degree that sometimes is barely worth the ink it is printed on because it gives them neither distinction nor job offers.

According to Forbes, by 2020, college credit debt exceeds $1.5 trillion and includes more than 44.7 million people whose debt is $32,731 on average. Almost 11% of them are at least 3 months late in their payments (a percentage four times greater than that of credit card payments). The government has activated programs to “forgive” loans in exchange for public service, and students want to take advantage of them, but they can’t. As of September 2019, only 1,561 of the 136,473 applications had been authorized.

Meanwhile, the resulting outrage is becoming a political banner. Thanks to his proposal about canceling student debt, Bernie Sanders went from near anonymity to star status within the Democratic Party. Many Bernie fans will try to justify their support six ways to Sunday. Still, deep down, they back him because he promises to get rid of their loans and provides them a narrative in which they are not failures but the vanguard in the revolutionary struggle against the capitalist and patriarchal order that oppresses them. It is not that they want to be Communists, it is that they wanted to be bourgeois, and the system didn’t work for them.

From the moment he gets into the White House, Biden will face a difficult decision. On the one hand, these graduates are part of the alliance that got him to the presidency. On the other hand, canceling more than $1.5 trillion in student debt would increase the deficit and turn him into the cliché of the Democratic president who gives money to the irresponsible, while he overtaxes hard-working families. Moreover, it would simply encourage the emergence of a new (and even larger) pool of debt.

A real solution would be far more complex, but (for starters) it involves demystifying the university as a route to wealth, debunking the fraud about careers that are not in demand in the labor market, and promoting other mechanisms to signal the intelligence, conformity, and conscientiousness of potential employees.

Meanwhile, for the rest of this generation, we’ll live in the shadow of an eventual “revenge of the nerds.” College graduates (who read a lot, got good grades, and earned fancy degrees, only to end up in run-of-the-mill jobs) will continue to be fertile ground for political radicalization, especially from the left. They’ll keep looking for an enemy and an explanation that allows them to rationalize their failure as oppression by The Man, when -in fact- it was more likely the result of a mixture of naiveté and human nature, from which we cannot escape, not even with a Ph.D.

Gerardo Garibay Camarena, is a doctor of law, writer and political analyst with experience in the public and private sectors. His new book is "How to Play Chess Without Craps: A Guide to Reading Politics and Understanding Politicians" // Gerardo Garibay Camarena es doctor en derecho, escritor y analista político con experiencia en el sector público y privado. Su nuevo libro es “Cómo jugar al ajedrez Sin dados: Una guía para leer la política y entender a los políticos”

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