Early in my career, a local politician invited my wife and me to dinner. Naturally, I was a bit hesitant, but I did accept. As you might expect, he suggested a restaurant well beyond my financial comfort zone.
I can’t recall what my wife and I ordered, but it was probably the least expensive items on the menu. He and his wife had multiple drinks with dinner and of course, desert. When the bill arrived, my fear became reality. He suddenly developed alligator arms, but I countered with unusual restraint by not immediately picking up the bill.
Finally, he broke the silence and suggested we simply split it. Even though his portion was significantly more, I could see that splitting was probably the best I could hope for. Needless to say, that was the last dinner I ever had with a politician.
But the lesson I learned that evening has stayed with me throughout my career. And it’s a lesson that’s especially applicable today. Because somebody eventually has to pay the bill. And politicians want that somebody to be you, the taxpayers.
What immediately comes to mind is the student loan crisis that’s adversely impacting so many of our young people. Fine dining is wonderful if you can afford it, but if you can’t, you need to seek alternatives.
Even as the cost of tuition keeps escalating, students seem to prefer attending the best – and usually more expensive – schools. One reason is the relative ease of borrowing, often promoted by the universities since the liability isn’t theirs.
It may have been an eternity ago, but when I needed a student loan it was a process, and an uncomfortable at that. I met with a loan officer at a bank, filled out a bunch forms then had to wait for an answer. To me, it was a big deal.
As young students and their parents continue to apply, universities have minimal incentive to control their costs because we’re ingrained to equate a college degree with success.
Fine restaurants are only concerned that your credit card transaction works that day. They don’t care what other obligations are on your credit card. Universities don’t worry where the money comes from either. They just want the tuition to be paid.
Study after study shows that people with a college education fare better financially. But a recent study by Deloitte showed that the average net worth of those aged 18-35 has dropped 34 percent since 1996. I suspect that the increased burden of student loan debt is a large part of that decline.
I think we’ve reached a point where young students need to make business decisions about their educational path. If you want to study a subject that has minimal financial upside, don’t go into debt up to your eyeballs. Consider a less expensive path or select a field where the pay is likely to escalate over time.
I’m a huge believer in higher education, but I think it’s time for universities to step up and temper their fees. Families and students must accurately project the costs and benefits and act accordingly, as well.
And politicians? Well, they need to remember that taxpayers have aspirations and shouldn’t be expected to pay for every problem or issue that they, the politicians, fail to address.