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

Jada still besotted with Will Smith
Los Angeles, Aug 2 (IANS) Even after 17 years of marriage, actress Jada Pinkett Smith is still very smitten by actor husband Will Smith. The 42-year-old actress is "ecstatic" about the way their union has evolved,...
Read more on Celebrity Balla
 
Indian paddlers Sharath-Amalraj get silver
Glasgow, Aug 2 (IANS) Indian paddlers Achanta Sharath Kamal and Anthony Amalraj had to settle for the silver medal in the men's doubles after they lost 1-3 to Singapore's Hu Li and Ning Gao in the title clash of the...
Read more on Sport Balla
 
Jennifer Lawrence splits from Nicholas Hoult
Jennifer Lawrence and Nicholas Hoult have reportedly split up again. The on-again, off-again couple agreed to part ways recently because of their busy schedules. A source told E! News that their break-up ''was very...
Read more on Celebrity Balla
 
Cameron Diaz is Benji's Madden's muse
Benji Madden admits Cameron Diaz is his muse. The 35-year-old rocker, who started dating 'The Other Woman' actress earlier this year, says she inspires him to be the best person he can be and makes him ''really happy...
Read more on Celebrity Balla
 
Julia Roberts is 'really proud' of herself
Julia Roberts is ''really proud'' of herself for being a working mother. The 'Normal Heart' star, who has nine-year-old twins, Hazel and Phinneaus, and seven-year-old son Henry with husband Danny Moder, tries to spend...
Read more on Celebrity Balla
 
Rob Kardashian feels abandoned by Lamar Odom
Rob Kardashian reportedly feels abandoned by Lamar Odom. The 'Keeping Up with the Kardashians' star, who is rumored to be battling a number of issues, including depression, after gaining 50 pounds, allegedly started...
Read more on Celebrity Balla
 
Simon Cowell tips Cheryl Cole for motherhood
Simon Cowell has tipped Cheryl Cole for motherhood. The 'X Factor' star foresees his fellow reality show judge - who secretly wed French restaurateur Jean-Bernard Fernandez-Versini last month - becoming a parent in the...
Read more on Celebrity Balla
 
Indian squash pairs lose in mixed quarters
Glasgow, Aug 1 (IANS) Indian squash pairs Saurav Ghosal-Dipika Pallikal and Harinder Pal Sandhu-Joshana Chinappa bowed out from the Commonwealth Games after losing their respective mixed doubles quarter-finals at the...
Read more on Sport Balla
 
Paddler Sharath in men's doubles final, singles semis
Glasgow, Aug 1 (IANS) Veteran Achanta Sharath Kamal still remains India's brightest table tennis star among all others as he led from the front to come out on top in both singles and doubles categories at the...
Read more on Sport Balla