Attacking the Debt Problem: Technology and Education

Education: An opportunity to improve results while reducing governmental and student debt.

Several recent Geofftalk postings have expressed the problems with inefficiencies in higher education and the associated student loan debts that have been racked up to dangerous levels. Last week Ellen Brown wrote about social security garnishments to pay off student loan debt. An additional writing at ritholtz.com graphically illustrates that the massive increase in consumer credit and student loan debt are one in the same and that tuition has far exceeded the rate of growth in Core CPI. This could have disastrous consequences and Bloomberg notes that student loan debt can ultimately effect the housing market as individuals find it harder to obtain mortgage financing with unpaid balances on student loan debt.

A prior geofftalk post, A Market Force Change in Higher Education (http://geofftalk.com/?p=2934), had an actual fix for this problem, which is technology. Others have advanced this idea as well. Writing in Forbes, Publisher Rich Karlgaard writes “Let Technology transform education and healthcare.” He notes the success of Stanford’s Sebastian Thrun, who makes his course available online. Over 150,000 students have signed up and some of the highest performing students are online students.

Traditional brick and mortar schools will continue to have a place where hands on skills are required and a high level of interaction between students and faculty is required. However, for strictly intellectual pursuits such as social sciences, mathematics and business, online will be the way to go simply because traditional schools will be too overpriced to compete. Technology will be the solution to a lot of education problems. Further, much of higher education is overated and the costs are not reflected in actual productivity in the workforce. These degrees should be considered a luxury good and as such should only be paid with cash, rather than debt.

Source: Ritholtz.com

John

References.

1) Karlgaard on Technology transforming education.

http://www.forbes.com/forbes/2012/0507/innovation-rules-government-tax-code-debt-america-needs-growth-rich-karlgaard_2.html

2) Student Loan Debt outpaces wages and could cause problems in the housing sector.

http://www.bloomberg.com/news/2012-04-17/-explosion-in-student-debt-drags-down-housing-chart-of-the-day.html

3) I hate parabolas unless it is my bank account balance. Ritholtz shows why consumer credit is worse than you think.

http://www.ritholtz.com/blog/2012/05/consumer-credit-worse-than-you-think/

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