Thomas Piketty, one of the most important economists of our time, guru of economic inequality, offers some brief and pithy observations on student debt in American higher education. Let’s break it down.
First, the general observation:
[T]he amount of household debt and even more recently of student debt in the U.S. is something that is really troublesome and it reflects the very large rise in tuition in the U.S. a very large inequality in access to education…
Piketty links student debt to mortgages, which is an underappreciated combination. (Yes, I am still paying both at 48 years of age)
Second, student debt has reached crisis proportions. Not just for the students, but also for the economy and nation as a whole:
[I]t’s not possible to have such a large group of the population entering the labor force with such a big debt behind them…
this is a situation that is very troublesome and should rank very highly in the policy agenda in the future in the U.S.
“It’s not possible.” Are we approaching an economic and/or political limit?
Third, it’s a practical crisis and an ideological one:
[Y]ou have the official discourse about meritocracy, equal opportunity and mobility, and then you have the reality. And the gap between the two can be quite troublesome. So this is like you have a problem like this and there’s a lot of hypocrisy about meritocracy in every country, not only in the U.S., but there is evidence suggesting that this has become particularly extreme in the United States…
That tension between promise and reality is part of what’s driving the higher education crisis and reform moment today.
Fourth, note the case of Harvard, which ironically makes use of that university’s typical role as stand-in for all of American higher education:
There’s one statistic, which I give in my book, which is a bit frightening, which is that if you look at the average income of the parents of Harvard University graduate students right now, what you get is the equivalent of the average income of the top 2 percent of the U.S. distribution of family income. So this doesn’t mean that there’s nobody from below the top 2 percent that gets into Harvard, but this means something very precise, which is that people from below the top two that make it to Harvard are sufficiently few. And the people who come from the top two come from sufficiently high within the top two, that the overall average is as if all students had been picked from within the top 2 percent of the distribution of U.S. family income.
Ouch. It should apply to the top Ivies and their peers. Does Excellent Sheep address this?
For more on Piketty, I’ve written some earlier posts and a review.