Surveys show that what Americans want most is a good job, no surprise there. Over the last few decades, the best jobs have been in the public sector and those requiring a college degree. But the productivity of a growing public sector already suffers from rising costs and diminishing returns that impede economic growth, as in Greece where public sector employment doubled in the last decade or in Spain, where youth unemployment is 50%.Even many college degrees have already passed the point of diminishing returns, as presidential candidate Rick Santorum recently inarticulately expressed. About 30% of high school grads attained a college degree during the past decade and enrollments continue to rise. But according to the Labor Department BLS forecast fewer than a quarter of all new jobs created this decade will require one. The flip side of the surplus of college educated job-seekers is the shortage of skilled workers requiring only a high school diploma, as one third of the students in public high schools don't graduate.
The Obama Administration's student loan policy to promote a college education shares many attributes with the 1995 Clinton-initiated Bush-promoted policy to promote homeownership that subsequently led to the subprime lending debacle. First, declare that the opportunity to own a home — go to college — is a basic right. Then set a public goal for homeownership — college attendance — well above private individual demand. When budgets become tight, have government lenders replace private lenders, mitigating the need to save in advance or demonstrate the ability to repay.