Consider this scenario. You are a talented person who possesses the necessary academic qualifications to pursue higher education at a top-flight university. But there is one problem. Your family is on the breadline; you are unable to secure the funds to finance such an expensive education. What are you to do under such a circumstance? You are likely to opt for a college education of lower quality or will skip college altogether.
Consider another scenario. Your family is part of the middle class. Based on your parents’ income, it is possible that you can secure a loan to finance a top-notched education. The ongoing credit crunch, however, dictates that you probably only have a 50/50 chance of securing a loan. Furthermore, you also face the prospect of having to spend most of your post-college life paying off your college debt. What are you to do under this scenario? There is less than a 50% chance that you are able and would be willing to make such a risky investment.
In the final scenario, you are a person with average ability who comes from a wealthy family. You are able to secure admission to one of the top universities in the country, mostly through your parents’ connections. Since your family is rich, you don’t have to worry about how to pay for your higher education. You have access to the best educational tools, and can hire the best tutors to assist you with your schooling.
After reading the three scenarios, someone may ask this question. Is a college degree really the key to prosperity? The answer to this question depends on the reputation of the college you attend. A degree from a top university pretty much guarantees you a good and high-paid job. A degree from a lesser university, however, does not worth as much. In the employer’s perspective, a C graduate of a top university is always better than an A+ graduate of a lesser university.
What can we conclude from the three scenarios? In economics, there is a concept called the cycle of wealth or the cycle of poverty. If your parents are affluent, it is very likely (though not absolute) that you will also be rich (as a result of the quality education you attained); your children will be well-off as well. If your parents are poor, it is highly likely (unless some really fortunate events occur) that you will end up impoverished just like your parents; your children will end up impoverished as well.
The three scenarios from earlier perfectly demonstrate the phenomena I have just mentioned. As the cost of even mediocre higher education continues to rise at a blistering pace, many American families are becoming trapped in the vicious cycle of poverty through no fault of their own. Unless swift actions are taken, the American dream is very much just a dream.
Simon Nguyen, MA Economics