Federal Loan Debt Relief: The Web Link and Discussion on Value of Higher Ed.

Business benefits
from a skilled labor force
and new ideas.
The Brown Hotel

The Federal Student Loan Forgiveness is now open and you can apply to have part of your student loans forgiven (Apply HERE). There has been some controversy over this loan forgiveness program based on total cost, funding approaches and whether or not it is the best use of public resources. Different people from different sides of the political perspective will give you different answers. Some love the idea and some pull their hair out. 

These are my thoughts for my own personal understanding.....

What I can say is we do need as much skilled and creative labor as we can generate in this country if we hope to pull ahead in our slowly shrinking economic lead (Another point supporting economic clusters and rapid innovation systems that put the right resources, skills/people, and investments in a networked place where they can quickly adapt.). Improving human capital means higher education must be at the top of its game while governments and industry will need to find ways to maximize that academic and creative capital. 

In other words, we will want to put to good use our college graduates if we want to maximize the cost of higher education as a method of societal return (That doesn't take away from the arguments of other improvements we can make in higher education. There are always ways to improve every system but it may only be one problem in a situation that requires multiple solutions.). Likewise, since we are working older and longer, and as the digital economy develops, we will rely less on manual labor as a primary source of revenue (Think of wearable robotics where skill is more important than pure muscle as an economic input. Another example, if I near retirement age and am working remotely, or for contract, I may decide to work part time but stay involved in my field.) 

That is not a discussion on the specific costs of higher education, form, curriculum, design, etc. but more on education being an important input into the development of an innovative nation (There are probably some numbers out there that can shed light on the value of higher education and its return rate. Those numbers are likely to be somewhat limited because there are wider benefits and costs that don't lend themselves easily to current benchmarks. i.e. like does person with a higher education commit less crimes, more happy, help/hurt the environment, less/more medical costs, lives longer, has a higher/lower carbon footprint, knowledge semination, invent more things, produces more value, etc.).

Anyway, you get my point that metrics are only slices of the whole phenomenon and sometimes miss a significant portion of soft economic value. We should adjust our metrics from time to time to keep us from being blinded to the full picture (Most are users of metrics and some are creators of them. Metrics should continuously be improving their reflectiveness of actual events.).....

Depending on which economic philosophy one adheres there are going to be a couple of ways to tackle the higher education funding problem. Some will say government should pay for education (free, subsidized, loan forgiveness, etc.) and some will say the free market should handle it (corporate individuals, families, non profits, etc.).

I'm an advocate of free market solutions as long as those free market solutions are providing opportunities for everyone. In other words, they are free from manipulation (i.e. the dying off of small business and slowing of American development could be an indication its not completely free from manipulation and somewhere in our policies/politics we will need to make an adjustment. Higher innovation happens when small businesses are continuously developing to either innovate existing larger MNCs through acquisition or grow into companies themselves through investment in bringing new products and services to market. We must not forget what small business does for improving wealth opportunities on a grass roots level. Something we might need more than ever as a nation that will now show it can run to keep up its top spot! 🤷) We want to maintain the value of opportunity to encourage people to be the best they can be and rise from the bottom to the top to create circulation in government, business, and social positions so as to widen the adaptive lens.

The point is that free markets offer solutions because when the market functions in balance in naturally seeks to solve problems through developing new products services based on competitive need (fair competition). With the right policies we often don't need to make corrections in hindsight like student loan forgiveness. It costs the government little to nothing if it creates the right business environment that fosters start ups and small business to generate new wealth. Where or how we fund the education is a matter of politics and needs. What I can say is that when its truly a free market, the need for knowledge/skill will rise and the value of higher education will become more important. (In other words, it will be a self-correcting system that creates balance.) 

A balanced economic system is preferred to an unbalanced one where the various sectors of an economy are not growing together. To me its always better to go back and fix the roots of a problem (i.e. free market ) so as to not need to make economic "corrections" in an effort to try and rebalance the opportunity pendulum (Profit and opportunity will consistently be behind unless you fix the free market system to get ahead of the problem so that different opportunities are being created at different economic stratums of society. Perhaps there are some legal or policy changes that can adjust the entire chain that creates a market environment that provides more natural incentives for people to start businesses and regenerate their neighborhoods. It is a little more of a free market, capitalist type approach based in natural human needs that gives value to organic local development.)

No matter if we fund or don't fund higher education through "correction programs" we will still need to ensure education raises the value of our human capital in a way that has tangible benefits for the broadest beneficiaries of society. Those beneficiaries range from business development to individuals seeking to take advantage of the Digital Era (Society is at it its most stable point when opportunities are abundant and able to be taken up by those who have the desire to improve their lot in life. It is the best path all around. Unstable societies are marked by disparity in life, subjective laws, lack of opportunity, impermeable social hierarchies, mismanagement/corruption, and unnecessary culture degradation/segregation. ) 

You may be interested in a study on the value of higher education to spurring economic growth. Using UNESCO data of 15,000 universities from 1,500 regions across 78 countries between 1950 to 2010 and found that a 10% increase in universities per capita leads to a .4% increase in future GDP from that region (Valero & Reenen, 2019). In theory, I suppose if one were do do this with student debt, degrees per capita, universities per capita, it might be possible to find a fuller picture of impact of education on the economy (I can only say I don't know because I never went through and looked at the many different sources to compare them to come up with an answer based upon the best information we have available today to find the ranges.)

In summary, higher education provides greater growth and opportunity for business, the economy, and people. The dollar figure of that growth and opportunity is a deep economic question with experts likely to provide numbers all over the map (There will be significant variability among economists assuming they are not copying from each other by using the same exact metrics and methods. Changing around metrics changes around the economic picture.) In other words, its not an argument on the value of higher education itself but the economical ideology of funding that value. 

Valero, A. & Reenen, J. (2019). The economic impact of universities: Evidence from across the globe.
Economics of Education Review, 68, 53-67 Retrieved 10-18-22 from https://www.sciencedirect.com/science/article/pii/S0272775718300414