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Destler Dodge

I’m going to express a hotly contested opinion on student debt. My opinion is that I don’t think we should have massive student debt and have to pay outrageous amounts of money to go to school debt blah blah blah I’m an entitled millennial, yeah, I get it. I’m not the first to argue this point; you and I know I am not going to be the last. Before I get into that topic however, I’d like to talk about investing.

Investing revolves around the idea that if you take up a risk, you’re going to reap a return somewhat proportional to the risk you assumed by taking on the investment. As college students, we do this every time we go to class, pay our tuition bill and study so that we can get a degree, find a well-paying job and do something we love. In order to get there, though, we have to put a lot of money upfront. This would all be well and good if it wasn’t so incredibly expensive.

We need to understand that college is an investment and that it contributes to society in meaningful ways.

Under the current model, a student will go to school, graduate and inject whatever they make back into the economy. Brookings, a non-profit organization based out of the DC area, found that the “average bachelor’s degree holder contributes $278,000 more to local economies than the average high school graduate through direct spending. Although this number fluctuates based on the size and quality of the college they went to, college graduates have the purchasing power to contribute to the economy in more meaningful ways than those who did not pursue college.

Before they’re even able to make meaningful change, however, they have to contend with the massive amounts of student debt they may have. A fund of some kind, contributed to by college students once they’ve graduated and are employed that will pay for future generations could help alleviate this matter and ensure that students aren’t stuck paying monumental costs for tuition.

This works kind of like social security, where graduates who are employed and earn income make regular contributions to a fund, which is then invested in safer assets, which will then pay for future generations. The nice part being that if you don’t pursue a college education, you’re not forced into paying it for other people.

Intrinsically, this model isn’t much different from the current model where students take out debt in order to pay for their education. The proposal above differs from the current model in that the money contributed to the fund by graduates is then invested in relatively safe investment assets to grow overtime and earn compound interest. Ideally, whoever manages the fund — whether that’s the government or some kind of non-profit — would be able to estimate what college will cost in the future and adjust how the fund is invested accordingly.

This idea isn’t without risk. The fund could fail and lose money, leaving us back at square one, but something needs to change. We need to understand that college is an investment and that it contributes to society in meaningful ways. This reflexive view of college will help us find a better way to invest in the future.