College Tuition is the Innovation-Killer
According to Scott Galloway, the cost of education has increased at twice the rate of inflation, and student loan debt has become "an Albatross" around students necks that is choking innovation.
What's the Big Idea?
In a previous post, NYU Stern School of Business Professor Scott Galloway described how an email exchange he had with a student went viral. Among other things, the emails touched on a timely and controversial subject: "We have two very credible, emotional arguments that came kind of full force together in a forum of an authentic email," Galloway told Big Think.
The subject in question was, according to Galloway, "how expectant GEN Y has become, and how incredibly expensive education has become, and the fact that a lot of people think that we in education are sitting in ivory towers and not delivering the value we should."
It is not surprising, then, when we asked Galloway what he thinks the biggest threat to innovation in the United States is, he answered this way:
"A threat I see firsthand every day," said Galloway, is "the escalating costs of education in our country." Galloway points out the cost of education has increased at twice the rate of inflation, which is a faster increase than healthcare and energy costs. In fact, the average annual cost of a private four-year college is nearly $37,000.
As a result, there is now more student loan debt in America than credit card debt (it is estimated to be $903.6 billion). According to Galloway, "it’s getting to a point where no graduate of a four-year college or graduate degree program can go out on their own and start their business because they have this incredible weight, this Albatross around their neck called student loan debt."
What's the Significance?
According to Galloway, "the key to innovation in the most powerful economy in the world" is letting young people "have the freedom to start their own businesses."
In other words, when young people assume an enormous amount of debt, it greatly reduces their ability to assume the risks associated with starting a new business. According to Galloway, this means an entire generation of entrepreneurs are essentially being silenced: "Until we figure out a way to give them access to education at the rates I paid when I was in school," Galloway says, "we are putting at risk the core competence of the greatest economic engine in the world."
Of course, the $37,000 per year model is being challenged by a number of institutions and individuals. There is Sal Khan's Khan Academy, which serves 2,400 online video lessons; Western Governor's University, which offers cheap online degrees and has found advocates in both Bill Gates and Texas Governor Rick Perry; and last but not least, there is Floating University, a virtual classroom we created here at Big Think. Our first course, called Great Big Ideas, is being offered to students at Harvard, Yale and Bard for the Fall, 2011 semester as well as to students anywhere.
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