Skip to main content

Assets and Debts

The big headline this week is that aggregate student debt in the U.S. surpassed a trillion dollars and to no surprise, it's hitting grads hard. It's now greater than credit card and auto debt. It's also something that, as a researcher of urban issues, I wish we had a better handle on.

(from HeatherMG on Flickr)

People say that student debt is "good debt", because you used it to buy something of value. People with college degrees make more money than people without them - that's not really up for debate here. Mortgage debt could also be considered "good debt" in this regard. Every month you're paying a chunk of money to eventually own a really big asset - a house.

There's one huge difference between owning a house and having a college degree though. A house is an "asset" from an accountant's perspective. It's a physical thing that sits on top of a piece of land. Both the sticks and bricks and the land are worth something (except in the worst case scenarios). If you buy a house and then 10 years down the road decide that you don't want it anymore, you sell it. As long as it hasn't depreciated, you wipe out your debt and probably have some money in the bank too.

A student loan is an asset in another perspective, because holding one opens certain doors that otherwise you wouldn't be able to open. But you can't ever sell your degree to somebody else if you don't want it anymore, and that's a problem for college grads working at Starbucks who might actually prefer a debt free life if they feel discouraged and stuck in low wage work. Unfortunately for them, you can't sell your degree, and the debt you used to buy it is nearly impossible to expunge.

The Occupy people have opened a dialogue about wealth in America, but I feel like the discussed is heavily tilted toward  the question of income. Income is the money that comes in the door. Wealth is that money minus the money that goes out the door. Who's in better financial shape? A recent grad working at a job with a $40,000 salary and no student debt? Or a recent grad working the same job for the same income but whose paying $6,000 a year in loan payments? There's a pretty big difference between $34,000 and $40,000, especially in a high-cost city.

I can really easily look up data about income. The U.S. Census Bureau collects it as part of their American Community Survey. I could tell you which cities, and which neighborhoods in cities, have people that earn a lot and which have people who don't. What I can't tell you is how much student debt people in those places have - Census simply doesn't collect it.

That's really unfortunate, because without knowing how much student debt college grads have, it's nearly impossible to know whether the income numbers are truly accurate when assessing how wealthy a city or a neighborhood is. I have some ideas how how this could possibly be modeled, but it would be an estimate at best. In the meantime, I'll keep thinking.


Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Mixing Sports and Business

In the last two days I've devoured every article in the Washington Post about the Nationals painful and epic defeat on Friday night in the NLDS. It was a tough way to see the season end, there's no doubt about that.

(from wallyg on Flickr)
These articles make it clear that there are a lot of people emotionally invested in professional sports. I think they sometimes they forget that, ultimately, Major League Baseball is big business. Each team is a major corporation and the league itself is an organization governed by a bunch of executives. The television networks that show the games are under contract with the team owners and the games aren't usually available to those without cable.

This is why it can be so hard to be a fan in this game. It's the multi-millionaire and billionaire owners that call most of the shots. They get to decide how much they're willing to spend on players. They get to decide who to hire as the CEO of the company. They get to decide how much t…