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Defaulting Into Education | | | | |
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< | America is captured by a creed that education is your ticket up. Investment in education, no matter the school or area of study, is worth the cost. This creed, combined with easy access to money through education loans, leads many people into graduate degree programs by default. A graduate education can be an excellent decision for many; however, its value is not universally applicable. This fact, often realized too late into one’s career planning, is illustrated by massive student loan debts, a vast number of underemployed Americans, compromised career ambitions, and a growing number of people who cannot repay their loans. Students would be better served by evaluating graduate school enrollment as a significant financial investment to be weighed against long term opportunity costs. Using principles of libertarian paternalism, or nudges, there may be ways to guide students towards more informed decision-making. Ultimately, students would benefit from an honest evaluation of the benefits of graduate education. | >
> | America is captured by a creed that education is your ticket up. Investment in education, no matter the school or area of study, is worth the cost. This creed, combined with easy access to money through education loans, leads many people into graduate degree programs by default. A graduate education can be an excellent decision for many; however, its value is not universally applicable. This fact, often realized too late into one’s career planning, is illustrated by massive student loan debts, a vast number of underemployed Americans, compromised career ambitions, and a growing number of people who cannot repay their loans. Students would be better served by evaluating graduate school enrollment as a significant financial investment to be weighed against long term opportunity costs. Using principles of libertarian paternalism, or nudges, there may be ways to guide students towards more informed decision-making. Ultimately, students would benefit from a more honest evaluation of graduate education's benefits and its direct applicability to their unique situations. | | | The Creed – Education is Always a Good Investment | |
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< | The unquestioned value of education is based in reality, and it is not altogether wrong. On average, higher levels of education are correlated with higher levels of income. Additionally, gaining a specific skill or education may be the best way to break through an income or career ceiling. A medical doctor interested in dermatology, a young woman looking to make partner at Cravath, and a studious literature academic are all well served by their requisite graduate programs. People look to these idyllic examples to justify their own investments. The financial surety of these examples does not apply to each student’s particular situation. | >
> | The unquestioned value of education is based in reality, and it is not altogether wrong. On average, higher levels of education are correlated with higher levels of income. Additionally, gaining a specific skill or education may be the best way to break through an income or career ceiling. A medical doctor interested in dermatology, a young woman looking to make partner at Cravath, and a studious literature academic are all well served by their requisite graduate programs. People look to these idyllic examples to justify their own investments. However, the financial surety of these examples does not apply to each student’s particular situation. | | | The Creed Does Not Apply To All | | | Nudging and Setting Defaults | |
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< | Cass Sunstein and Richard Thaler introduced the concept of libertarian paternalism to a wide American audience with their book Nudge. Taking lessons from this concept, there are several way schools and the government may help default students self-identify as an at-risk group. First, an education in basic financial literacy may go a long way alone. Some states already require such a course in high school, and these requirements should be expanded. Second, some graduate schools should place a larger emphasis on post-undergraduate employment in their admissions practices. For example, nearly 80% of Northwestern Law School’s entering class has two or more years of work experience. Among other benefits, this requirement would encourage the default student to explore other opportunities and consider the value of graduate education in context of her life. Additionally, defaulting into employment instead of school would reduce applications motivated by intimidation of the working world. It would encourage more careful consideration of the degree’s value by requiring students to make an active instead of default decision. Third, most school borrowers are funded at least partially through the national government’s Stafford loan program. Today, borrowers are required to sign a promissory note and take an accompanying quiz prior to loan disbursement. I suggest the government add a portion to that requirement that roughly illustrates the expected financial impact of the individual’s graduate education. With the applicant’s previous level of education, major or specialty, prospective graduate program, and prospective career, the quiz could show the expected value of the degree. Although this information may come too late in the decision process, requiring this level of introspection alone would be beneficial. Some combination of nudges like these may help overcome the power of the education creed. | >
> | Cass Sunstein and Richard Thaler introduced the concept of libertarian paternalism to a wide American audience with their book Nudge. Taking lessons from this concept, there are several way schools and the government may help default students self-identify as an at-risk group. First, an education in basic financial literacy may go a long way alone. Some states already require such a course in high school, and these requirements should be expanded. Second, some graduate schools should place a larger emphasis on post-undergraduate employment in their admissions practices. For example, nearly 80% of Northwestern Law School’s entering class has two or more years of work experience. Among other benefits, this requirement would encourage the default student to explore other opportunities and consider the value of graduate education in context of her life. Additionally, defaulting into employment instead of school would reduce applications motivated by intimidation of the working world. It would encourage more careful consideration of the degree’s value by requiring students to make an active instead of default decision. Third, most school borrowers are funded at least partially through the national government’s Stafford loan program. Today, borrowers are required to sign a promissory note and take an accompanying quiz prior to loan disbursement. I suggest the government add a portion to that requirement that roughly illustrates the expected financial impact of the individual’s graduate education. With the applicant’s previous level of education, major or specialty, prospective graduate program, and prospective career, the quiz could show the expected financial value of the degree. Although this information may come too late in the decision process, requiring this level of introspection alone would be beneficial. Some combination of nudges like these may help overcome the power of the education creed. | | | Conclusion |
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