How To Deal With The $1 Trillion Student Loan Crisis

Jan 20 2014, 8:46am CST | by

How To Deal With The $1 Trillion Student Loan Crisis

Want to go to college? Prove it: Make a business plan.

In the real world, if you want precious resources to start a company, expand a division or even hire a few interns, you have to fight for them. Hard. That means making your case to those who hold the purse strings. No sound plan? No soup for you.

Why shouldn’t the same logic apply to six-figure investments in college degrees?

This is no ivory-tower debate. Like it or not, the student-loan crisis is everyone’s crisis now. With $1 trillion of student debt outstanding, or triple the amount just a decade ago (see chart below), spending on big-ticket items like homes and cars is likely to suffer, putting a drag on the tenuous economic recovery. Every student, educator, parent and taxpayer has a stake in this issue.

A modest proposal: All college applicants—even those not seeking financial aid—should be required to present a personal, 10-page business plan that illustrates how they’ll put the value of their education to work. That includes studying an industry (or maybe a few) and calculating the potential return on the investment required to succeed within it.

Like all useful business plans, these personal versions would communicate three things: vision, strategy and feasibility. Translation: “What do I want?”, “How do I get there?”, and “What are my chances (and what’s Plan B if I don’t succeed)?” The analysis would be replete with an executive summary, market research and financial projections—nothing too fancy, but enough to clearly address the main risks and rewards.

That’s not all. Business plans are living documents. As conditions change, so must the plan. That’s why students should also be required to amend—and defend—their plans at the end of each year before being allowed to move on to the next year of their college curriculum.

I’m not suggesting that college admission or advancement hinge wholly on these presentations. I’m saying that every student should be made to go through the process—in considerable depth, preferably with the help of a skilled advisor—and have ample opportunity to contemplate the ramifications of making sizable, long-term investments. While they’re at it, students should also create their own theoretical retirement savings plans.

What if the analysis ultimately discourages students from pursuing traditional four-year college degrees, at least until they get things sorted out a bit more? For some, that might be the best long-term financial move they ever make.

In 1998 I wrote an article for Forbes—called “Gearheads Wanted”—about the dearth of skilled machinists in the U.S. despite the profession’s many rewards, including (in those dollars) potential six-figure salaries. Sixteen years later, many skills gaps still exist—even as universities churn out more diplomas. In 2012, one third of Americans ages 25 to 29 had attained a bachelor’s degree or better, compared with just a quarter in 1995, according to the National Center for Education Statistics. Hopefully more employers will wise up and offer apprenticeship programs, in various disciplines, for industrious youngsters who can’t justify four-year-college ticket prices.

What about all the art-history majors with dubious plans? At least they’ll know the true price of their art.

Have thoughts on preparing future generations to thrive in the global economy? Please share your comments.

Source: Forbes Auto

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

IPad Air Giveaway 2014 is Online
IPad Air Giveaway 2014 is Online
Our sister site I4U News is giving away a brand new iPad Air or if you can wait an iPad Air 2. This is an $499 value.
 
 
Your Parent Or Kid Moved In: Are You Covered?
A record 57 million Americans now live in multigenerational family households — double the number in 1980, according to a new Pew Research Center study. And I bet many of them have the wrong homeowner’s or renters...
 
 
Pandora Looks to Challenge Terrestrial Radio's Dominance in Cars
Pandora Media is one of the largest Internet radio providers in the U.S. with more than 75 million active users. While the company’s active user count has increased at a robust pace historically, it is likely to slow...
 
 
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over...
 
 
 

Latest from the Network

US doctor tests positive for Ebola in Liberia
Washington, Sep 3 (IANS) An American missionary doctor working in Liberia has tested positive for the Ebola virus, his organisation SIM USA announced Tuesday. The doctor was treating obstetrics patients at ELWA...
Read more on Business Balla
 
Anastacia slams Kim, Kanye
Los Angeles, Sep 3 (IANS) Singer Anastacia slams reality TV star Kim Kardashian and her husband Kanye West saying their need for attention is just so ill placed. The 45-year-old hit out at the star couple for having...
Read more on Celebrity Balla
 
EU to decide on new sanctions on Russia
Brussels, Sep 3 (IANS) The incoming European Union (EU) foreign policy chief Federica Mogherini Tuesday said the EU leaders will decide on new sanctions on Russia by Friday. "The package (of further sanctions) will be...
Read more on Politics Balla
 
Israel 'stands by' new land appropriation in West Bank
Jerusalem, Sep 3 (IANS) Israeli Foreign Minister Avigdor Lieberman Tuesday said his country "stands by its decision" to appropriate 1,000 acre land in the West Bank. "Gush Etzion settlement bloc reflects a wide...
Read more on Politics Balla
 
Jolie's wedding dress featured her kids' drawings
Los Angeles, Sep 3 (IANS) Actress Angelina Jolie walked down the aisle in a wedding gown with various coloured illustrations drawn by her children. She married actor Brad Pitt Aug 23 in France and on her wedding day,...
Read more on Celebrity Balla
 
UN chief welcomes lifting of Iraqi town siege
United Nations, Sep 3 (IANS) UN Secretary-General Ban Ki-moon Tuesday welcomed the end of militant siege on the northern Iraqi town of Amerli, saying it averted "a major humanitarian disaster". Ban welcomed the...
Read more on Politics Balla
 
Second beheading plunges Obama into top crisis
Washington, Sep 3 (IANS) Just two weeks after beheading American photojournalist James Foley, the Islamic State (IS) Sunni extremist organisation sent what it called "A second message to America", with a video showing...
Read more on Politics Balla
 
11 killed in Pakistan building collapse
Islamabad, Sep 2 (IANS) At least 11 people, including women and children, were killed Tuesday when a roof of an old building collapsed in Pakistan, a media report said. As many as 18 people were wounded when a two-...
Read more on Politics Balla
 
Imran refuses to budge as parliament supports Pakistan PM (Roundup)
Islamabad, Sep 2 (IANS) Pakistan Tehreek-e-Insaf (PTI) chairman Imran Khan refused to budge on his demand for Prime Minister Nawaz Sharif's resignation Tuesday as a joint session of parliament came out overwhelmingly...
Read more on Politics Balla
 
IS video shows beheading of second US journalist
Washington, Sep 2 (IANS) Days after the beheading of American photojournalist James Foley, Sunni militant group Islamic State (IS) has posted a video showing the beheading of another kidnapped American journalist...
Read more on Ad Balla