Wednesday, June 17, 2009
The Holding Tank
In discussions of the cost of higher education, 'opportunity cost' comes up a lot. Basically, it's the money you would have made during the time you spent taking classes, had you worked instead of taking classes. It's the cost of money you didn't make. The kid who goes straight to work at 18 is probably more flush at 21 than the kid who went straight to college, since he didn't suffer the opportunity cost. Over time, there will usually be a more-than-compensating difference in future earnings, but at the moment, it's no contest.
I've been hearing complaints of a terrible lack of summer jobs, at the exact same time that I've been noticing record enrollments in our summer classes. In a perverse way, the Great Recession has effected a huge discount in the opportunity cost of education. If the choice is between work and school, that's one thing. If the choice is between unemployment and school, that's something else.
While I'd like to believe that the major driver of new enrollments is a general cultural enlightenment, it seems likelier that the 'holding tank' function of college is what's really at work. What better time to get the sheepskin than when there aren't any real jobs to be had anyway? You aren't missing anything. And if you time it right, you might emerge with a credential just as the market picks up again, giving you a ticket to ride the updraft in a way you couldn't otherwise.
In the US, the way we count 'unemployment' doesn't always match real life. ('Discouraged' workers don't count, for example, even though their unemployment is the source of their discouragement.) But one way it sort of matches real life is with students. We don't consider students to be unemployed, even if they're looking for work, and there's some validity to that. Studenthood is a kind of economic limbo. It's neither employed nor unemployed; it's just sort of hovering outside the market. Even for people from relatively moneyed backgrounds, there's an acceptance of 'student poverty' as a life stage. It's a phase during which poverty isn't held against you culturally or psychologically. Being unemployed and poor at 30 may feel like a verdict; being a student and poor at 20 is just following the script.
(Graduate student poverty falls between the two. It's still 'student,' and still expected at some level. But it's also at a later stage of life, and what seems cute at 20 just feels sad at 27. By the latter part of my grad school trek, the economic gap between me and most of the rest of my age cohort started to get pretty depressing. TW and I met when I was in grad school. After we got married, she confided that when she first saw my Gradmobile, she started to wonder. I couldn't blame her.)
Trading unmoored poverty for student poverty makes a lot of sense, even if you're still basically broke. It's a different script, and it offers more hope for a happy ending. Besides, student loans are much better deals than credit card debt, and they come with deferments tailor-made for recessions. They even cover health insurance, unlike most entry-level jobs. As holding tanks go, this isn't bad.
I just hope the recession breaks soon enough for everyone to pay back those loans. If not, we'll be hearing about the student loan bubble in a couple of years.