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.

Comments

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,…

Commuting Meets Technology

I'm finally out of the dark ages. I got an Android smartphone over the weekend and have since been in the process of exploring the Android apps market.  One thing I've immediately noticed is the really wide range of usefulness in the apps. For example, the WeatherBug app is fantastic. It automatically determines your location and gives you exact conditions for that location. On the other end of the spectrum, Google's Goggles app is supposed to be a type of 'visual search' where you snap of photo of something and Google searches for it. In each of my attempts to use it, the app hasn't returned any search results. I even took a photo of a bottle of Pepsi (figuring it as a common houseful item) and got nothing.

Somewhere in the middle is this app called Waze. Have a look at their 'guided tour':



Some people might look at it and comment on the amazing evolution of technology or on the incredible value of social networks. To me, Waze says something important ab…