student loans

Maybe we should forgive student debt after all.

pnrj critique of neoclassical economics, current events, ethics, inequality, personal, politics, public policy , , , , , , , , ,

May 8 JDN 2459708

President Biden has been promising some form of student debt relief since the start of his campaign, though so far all he has actually implemented is a series of no-interest deferments and some improvements to the existing forgiveness programs. (This is still significant—it has definitely helped a lot of people with cashflow during the pandemic.) Actual forgiveness for a large segment of the population remains elusive, and if it does happen, it’s unclear how extensive it will be in either intensity (amount forgiven) or scope (who is eligible).

I personally had been fine with this; while I have a substantial loan balance myself, I also have a PhD in economics, which—theoretically—should at some point entitle me to sufficient income to repay those loans.

Moreover, until recently I had been one of the few left-wing people I know to not be terribly enthusiastic about loan forgiveness. It struck me as a poor use of those government funds, because $1.75 trillion is an awful lot of money, and college graduates are a relatively privileged population. (And yes, it is valid to consider this a question of “spending”, because the US government is the least liquidity-constrained entity on Earth. In lieu of forgiving $1.75 trillion in debt, they could borrow $1.75 trillion in debt and use it to pay for whatever they want, and their ultimate budget balance would be basically the same in each case.)

But I say all this in the past tense because Krugman’s recent column has caused me to reconsider. He gives two strong reasons why debt forgiveness may actually be a good idea.

The first is that Congress is useless. Thanks to gerrymandering and the 40% or so of our population who keeps electing Republicans no matter how crazy they get, it’s all but impossible to pass useful legislation. The pandemic relief programs were the exception that proves the rule: Somehow those managed to get through, even though in any other context it’s clear that Congress would never have approved any kind of (non-military) program that spent that much money or helped that many poor people.

Student loans are the purview of the Department of Education, which is entirely under control of the Executive Branch, and therefore, ultimately, the President of the United States. So Biden could forgive student loans by executive order and there’s very little Congress could do to stop him. Even if that $1.75 trillion could be better spent, if it wasn’t going to be anyway, we may as well use it for this.

The second is that “college graduates” is too broad a category. Usually I’m on guard for this sort of thing, but in this case I faltered, and did not notice the fallacy of composition so many labor economists were making by lumping all college grads into the same economic category. Yes, some of us are doing well, but many are not. Within-group inequality matters.

A key insight here comes from carefully analyzing the college wage premium, which is the median income of college graduates, divided by the median income of high school graduates. This is an estimate of the overall value of a college education. It’s pretty large, as a matter of fact: It amounts to something like a doubling of your income, or about $1 million over one’s whole lifespan.

From about 1980-2000, wage inequality grew about as fast as today, and the college wage premium grew even faster. So it was plausible—if not necessarily correct—to believe that the wage inequality reflected the higher income and higher productivity of college grads. But since 2000, wage inequality has continued to grow, while the college wage premium has been utterly stagnant. Thus, higher inequality can no longer (if it ever could) be explained by the effects of college education.

Now some college graduates are definitely making a lot more money—such as those who went into finance. But it turns out that most are not. As Krugman points out, the 95th percentile of male college grads has seen a 25% increase in real (inflation-adjusted) income in the last 20 years, while the median male college grad has actually seen a slight decrease. (I’m not sure why Krugman restricted to males, so I’m curious how it looks if you include women. But probably not radically different?)

I still don’t think student loan forgiveness would be the best use of that (enormous sum of) money. But if it’s what’s politically feasible, it definitely could help a lot of people. And it would be easy enough to make it more progressive, by phasing out forgiveness for graduates with higher incomes.

And hey, it would certainly help me, so maybe I shouldn’t argue too strongly against it?

Green New Deal Part 3: Guaranteeing education and healthcare is easy—why aren’t we doing it?

pnrj current events, ethics, inequality, personal, public policy , , , , , , , , , , , ,

Apr 21 JDN 2458595

Last week was one of the “hard parts” of the Green New Deal. Today it’s back to one of the “easy parts”: Guaranteed education and healthcare.

“Providing all people of the United States with – (i) high-quality health care; […]

“Providing resources, training, and high-quality education, including higher education, to all people of the United States.”

Many Americans seem to think that providing universal healthcare would be prohibitively expensive. In fact, it would have literally negative net cost.
The US currently has the most bloated, expensive, inefficient healthcare system in the entire world. We spend almost $10,000 per person per year on healthcare, and get outcomes no better than France or the UK where they spend less than $5,000.
In fact, our public healthcare expenditures are currently higher than almost every other country. Our private expenditures are therefore pure waste; all they are doing is providing returns for the shareholders of corporations. If we were to simply copy the UK National Health Service and spend money in exactly the same way as they do, we would spend the same amount in public funds and almost nothing in private funds—and the UK has a higher mean lifespan than the US.
This is absolutely a no-brainer. Burn the whole system of private insurance down. Copy a healthcare system that actually works, like they use in every other First World country.
It wouldn’t even be that complicated to implement: We already have a single-payer healthcare system in the US; it’s called Medicare. Currently only old people get it; but old people use the most healthcare anyway. Hence, Medicare for All: Just lower the eligibility age for Medicare to 18 (if not zero). In the short run there would be additional costs for the transition, but in the long run we would save mind-boggling amounts of money, all while improving healthcare outcomes and extending our lifespans. Current estimates say that the net savings of Medicare for All would be about $5 trillion over the next 10 years. We can afford this. Indeed, the question is, as it was for infrastructure: How can we afford not to do this?
Isn’t this socialism? Yeah, I suppose it is. But healthcare is one of the few things that socialist countries consistently do extremely well. Cuba is a socialist country—a real socialist country, not a social democratic welfare state like Norway but a genuinely authoritarian centrally-planned economy. Cuba’s per-capita GDP PPP is a third of ours. Yet their life expectancy is actually higher than ours, because their healthcare system is just that good. Their per-capita healthcare spending is one-fourth of ours, and their health outcomes are better. So yeah, let’s be socialist in our healthcare. Socialists seem really good at healthcare.
And this makes sense, if you think about it. Doctors can do their jobs a lot better when they’re focused on just treating everyone who needs help, rather than arguing with insurance companies over what should and shouldn’t be covered. Preventative medicine is extremely cost-effective, yet it’s usually the first thing that people skimp on when trying to save money on health insurance. A variety of public health measures (such as vaccination and air quality regulation) are extremely cost-effective, but they are public goods that the private sector would not pay for by itself.
It’s not as if healthcare was ever really a competitive market anyway: When you get sick or injured, do you shop around for the best or cheapest hospital? How would you even go about that, when they don’t even post most of their prices and what prices they post are often wildly different than what you’ll actually pay?
The only serious argument I’ve heard against single-payer healthcare is a moral one: “Why should I have to pay for other people’s healthcare?” Well, I guess, because… you’re a human being? You should care about other human beings, and not want them to suffer and die from easily treatable diseases?
I don’t know how to explain to you that you should care about other people.

Single-payer healthcare is not only affordable: It would be cheaper and better than what we are currently doing. (In fact, almost anything would be cheaper and better than what we are currently doing—Obamacare was an improvement over the previous mess, but it’s still a mess.)
What about public education? Well, we already have that up to the high school level, and it works quite well.
Contrary to popular belief, the average public high school has better outcomes in terms of test scores and college placements than the average private high school. There are some elite private schools that do better, but they are extraordinarily expensive and they self-select only the best students. Public schools have to take all students, and they have a limited budget; but they have high quality standards and they require their teachers to be certified.
The flaws in our public school system are largely from it being not public enough, which is to say that schools are funded by their local property taxes instead of having their costs equally shared across whole states. This gives them the same basic problem as private schools: Rich kids get better schools.
If we removed that inequality, our educational outcomes would probably be among the best in the world—indeed, in our most well-funded school districts, they are. The state of Massachusetts which actually funds their public schools equally and well, gets international test scores just as good as the supposedly “superior” educational systems of Asian countries. In fact, this is probably even unfair to Massachusetts, as we know that China specifically selects the regions that have the best students to be the ones to take these international tests. Massachusetts is the best the US has to offer, but Shanghai is also the best China has to offer, so it’s only fair we compare apples to apples.
Public education has benefits for our whole society. We want to have a population of citizens, workers, and consumers who are well-educated. There are enormous benefits of primary and secondary education in terms of reducing poverty, improving public health, and increased economic growth.
So there’s my impassioned argument for why we should continue to support free, universal public education up to high school.
When it comes to college, I can’t be quite so enthusiastic. While there are societal benefits of college education, most of the benefits of college accrue to the individuals who go to college themselves.
The median weekly income of someone with a high school diploma is about $730; with a bachelor’s degree this rises to $1200; and with a doctoral or professional degree it gets over $1800. Higher education also greatly reduces your risk of being unemployed; while about 4% of the general population is unemployed, only 1.5% of people with doctorates or professional degrees are. Add that up over all the weeks of your life, and it’s a lot of money.
The net present value of a college education has been estimated at approximately $1 million. This result is quite sensitive to the choice of discount rate; at a higher discount rate you can get the net present value as “low” as $250,000.
With this in mind, the fact that the median student loan debt for a college graduate is about $30,000 doesn’t sound so terrible, does it? You’re taking out a loan for $30,000 to get something that will earn you between $250,000 and $1 million over the course of your life.
There is some evidence that having student loans delays homeownership; but this is a problem with our mortgage system, not our education system. It’s mainly the inability to finance a down payment that prevents people from buying homes. We should implement a system of block grants for first-time homeowners that gives them a chunk of money to make a down payment, perhaps $50,000. This would cost about as much as the mortgage interest tax deduction which mainly benefits the upper-middle class.
Higher education does have societal benefits as well. Perhaps the starkest I’ve noticed is how categorically higher education decided people’s votes on Donald Trump: Counties with high rates of college education almost all voted for Clinton, and counties with low rates of college education almost all voted for Trump. This was true even controlling for income and a lot of other demographic factors. Only authoritarianism, sexism and racism were better predictors of voting for Trump—and those could very well be mediating variables, if education reduces such attitudes.
If indeed it’s true that higher education makes people less sexist, less racist, less authoritarian, and overall better citizens, then it would be worth every penny to provide universal free college.
But it’s worth noting that even countries like Germany and Sweden which ostensibly do that don’t really do that: While college tuition is free for Swedish citizens and Germany provides free college for all students of any nationality, nevertheless the proportion of people in Sweden and Germany with bachelor’s degrees is actually lower than that of the United States. In Sweden the gap largely disappears if you restrict to younger cohorts—but in Germany it’s still there.
Indeed, from where I’m sitting, “universal free college” looks an awful lot like “the lower-middle class pays for the upper-middle class to go to college”. Social class is still a strong predictor of education level in Sweden. Among OECD countries, education seems to be the best at promoting upward mobility in Australia, and average college tuition in Australia is actually higher than average college tuition in the US (yes, even adjusting for currency exchange: Australian dollars are worth only slightly less than US dollars).
What does Australia do? They have a really good student loan system. You have to reach an annual income of about $40,000 per year before you need to make payments at all, and the loans are subsidized to be interest-free. Once you do owe payments, the debt is repaid at a rate proportional to your income—so effectively it’s not a debt at all but an equity stake.
In the US, students have been taking the desperate (and very cyberpunk) route of selling literal equity stakes in their education to Wall Street banks; this is a terrible idea for a hundred reasons. But having the government have something like an equity stake in students makes a lot of sense.
Because of the subsidies and generous repayment plans, the Australian government loses money on their student loan system, but so what? In order to implement universal free college, they would have spent an awful lot more than they are losing now. This way, the losses are specifically on students who got a lot of education but never managed to raise their income high enough—which means the government is actually incentivized to improve the quality of education or job-matching.
The cost of universal free college is considerable: That $1.3 trillion currently owed as student loans would be additional government debt or tax liability instead. Is this utterly unaffordable? No. But it’s not trivial either. We’re talking about roughly $60 billion per year in additional government spending, a bit less than what we currently spend on food stamps. An expenditure like that should have a large public benefit (as food stamps absolutely, definitely do!); I’m not convinced that free college would have such a benefit.
It would benefit me personally enormously: I currently owe over $100,000 in debt (about half from my undergrad and half from my first master’s). But I’m fairly privileged. Once I finally make it through this PhD, I can expect to make something like $100,000 per year until I retire. I’m not sure that benefiting people like me should be a major goal of public policy.
That said, I don’t think universal free college is a terrible policy. Done well, it could be a good thing. But it isn’t the no-brainer that single-payer healthcare is. We can still make sure that students are not overburdened by debt without making college tuition actually free.

Green New Deal Part 1: Why aren’t we building more infrastructure?

pnrj education, public policy , , , , , , , , ,

Apr 7 JDN 2458581

For the next few weeks, I’ll be doing a linked series of posts on the Green New Deal. Some parts of it are obvious and we should have been doing them for decades already; let’s call these “easy parts”. Some parts of it will be difficult, but are definitely worth doing; let’s call these “hard parts”. And some parts of it are quite radical and may ultimately not be feasible—but may still be worth trying; let’s call these “very hard parts”.

Today I’m going to talk about some of the easy parts.

“Repairing and upgrading the infrastructure in the United States, including [. . .] by eliminating pollution and greenhouse gas emissions as much as technologically feasible.”

“Building or upgrading to energy-efficient, distributed, and ‘smart’ power grids, and working to ensure affordable access to electricity.”

“Upgrading all existing buildings in the United States and building new buildings to achieve maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through electrification.”

Every one of these proposals is basically a no-brainer. We should have been spending something like $100 billion dollars a year for the last 30 years doing this, and if we had, we’d have infrastructure that would be the envy of the world.
Instead, the ASCE gives our infrastructure a D+: passing, but just barely. We are still in the top 10 in the World Bank’s infrastructure ratings, but we have been slowly slipping downward in the rankings.

 

Where did I get my $100 billion a year figure from? Well, we have about a $15 billion annual shortfall in highway maintenance, $13 billion in waterway maintenance, and $25 billion in dam repairs. That’s $53 billion. But that’s just to keep what we already have. In order to build more infrastructure, or upgrade it to be better, we’re going to need to spend considerably more. Double it and make it a nice round number, and you get $100 billion.

 

Of course, $100 billion a year is not a small amount of money.
How would we pay for such a thing?

 

That’s the thing: We wouldn’t need to.

 

Infrastructure investment doesn’t have to be “paid for” in the usual sense. We don’t need to raise taxes. We don’t need to cut spending. We can just add infrastructure spending onto other spending, raising the deficit directly. We can borrow money to fund the projects, and then by the time those bonds mature we will have made enough additional tax revenue from the increased productivity (and the Keynes multiplier) that we will have no problem paying back the debt.

 

Funding investment is what debt is supposed to be for. Particularly when interest rates are this low (currently about 3% nominal, which means about 1% adjusted for inflation), there is very little downside to taking out more debt if you’re going to plow that money into productive investments.

 

Of course debt can be used for anything money can, and using debt for all your spending is often not a good idea (but it can be, if your income is inconsistent or you have good reasons to think it will increase in the future). But I’m not suggesting the government should use debt to fund Medicare and Social Security payments; I’m merely suggesting that they should use debt to fund infrastructure investment. Medicare and Social Security are, at their core, social insurance programs; they spread wealth around, which has a lot of important benefits; but they don’t meaningfully create new wealth, so you need to be careful about how you pay for them. Infrastructure investment creates new wealth. The extra value is basically pulled from thin air; you’d be a fool not to take it.

 

This is also why I just can’t get all that upset about student loans (even though I personally would personally stand to gain a small house if student debt were to suddenly evaporate). Education is the most productive investment we have, and most of the benefits of education do actually accrue to the individual who is being educated. It therefore stands to reason that students should pay for their own education, and since most of us couldn’t afford to pay in cash, it stands to reason that we should be offered loans.

 

There are some minor changes I would make to the student loan system, such as lower interest rates, higher limits to subsidized loans, stricter regulations on private student loans, and a simpler forgiveness process that doesn’t result in ridiculous tax liability. But I really don’t see the need to go to a fully taxpayer-funded higher education system. On the other hand, it wouldn’t necessarily be bad to go to a fully taxpayer-funded system; it seems to work quite well in Germany, France, and most of Scandinavia. I just don’t see this as a top priority.

 

It feels awful having $100,000 in debt, but it’s really not that bad when you realize that a college education will increase your lifetime earnings by an average of $1 million (and more like $2 million in my case because I’m going for a PhD, PhDs are more valuable than bachelor’s degrees, and even among PhDs, economists are particularly well-paid). You are being offered the chance to apy $100,000 now to get $1 million later. You should definitely take that deal.

 

And yet, we still aren’t increasing our infrastructure investment. Trump said he would, and it seemed like one of his few actual good ideas (remember the Stopped Clock Principle: reversed stupidity is not intelligence); but so far, no serious infrastructure plan has materialized.

 

Despite extremely strong bipartisan support for increased infrastructure investment, we don’t seem to be able to actually get the job done.
I think I know why.

 

The first reason is that “infrastructure” is a vague concept, almost a feel-good Applause Light like “freedom” or “justice”. Nobody is ever going to say they are against freedom or justice. Instead they’ll disagree about what constitutes freedom or justice.

 

And likewise, while almost everyone will agree that infrastructure as a concept is a good thing, there can be large substantive disagreements over just what kind of infrastructure to build. We want better transportation: Does that mean more roads, or train lines instead? We want cheaper electricity: When we build new power plants, should they use natural gas, solar, or nuclear power? We want to revitalize inner cities: Does that mean public housing, community projects, or subsidies for developers? Nobody wants an inefficient electricity grid, but just how much are we willing to invest in making it more efficient, and how? Once the infrastructure is built, should it be publicly owned and tax-funded, or privatized and run for profit?
This reason is not going to go away. We simply have to face up to it, and find a way to argue substantively for the specific kinds of infrastructure we want. It should be trains, not roads. It should be solar, wind, and nuclear, not natural gas, and certainly not coal or oil. It should be public housing and community projects, not subsidies for developers. Most of the infrastructure should be publicly owned, and what isn’t should be strictly regulated.

 

Yet there is another reason, which I think we might be able to eliminate. Most people seem to think that we need to pay for infrastructure the way we would need to pay for expanded social programs or military spending. They keep asking “How will this be paid for?” (And despite a lot of conservatives frothing about it—I will not give them ad revenue by linking—Alexandria Ocasio-Cortez was not wrong when she said “The same way we pay for everything else.” We tax and spend; that’s what governments do. It’s always a question of what taxes and what spending.)

 

But we really don’t need to pay for infrastructure at all. Infrastructure will pay for itself; we simply need to finance it up front. And when we’re paying real interest rates of 1%, that’s not a difficult thing to do. If interest rates start to rise, we may want to pull back on that; but that’s not something that will happen overnight. We would see it coming, and have a variety of fiscal and monetary tools available to deal with it. The fear of possibly paying a bit more interest 30 years from now is a really stupid reason not to fix bridges that are crumbling today.

 

So when we talk about the Green New Deal (or at least the “easy parts”), let’s throw away this nonsense about “paying for it”. Almost all of these programs are long-term investments; they will pay for themselves. There are still substantive choices to be made about what exactly to build and where and how; but the US is an extraordinarily rich country with virtually unlimited borrowing power.

 

We can afford to do this.

 

Indeed, I think the question we should really be asking is:
How can we afford not to do this?

Student debt crisis? What student debt crisis?

pnrj development economics, public policy , , , , , , , , , ,

Dec 18, JDN 2457741
As of this writing, I have over $99,000 in student loans. This is a good thing. It means that I was able to pay for my four years of college, and two years of a master’s program, in order to be able to start this coming five years of a PhD. When I have concluded these eleven years of postgraduate education and incurred six times the world per-capita income in debt, what then will become of me? Will I be left to live on the streets, destitute and overwhelmed by debt?

No. I’ll have a PhD. The average lifetime income of individuals with PhDs in the United States is $3.4 million. Indeed, the median annual income for economists in the US is almost exactly what I currently owe in debt—so if I save well, I could very well pay it off in just a few years. With an advanced degree in economics like mine, or similarly high-paying fields such as physics, medicine, and law one can expect the higher end of that scale, $4 million or more; with a degree in a less-lucrative field such as art, literature, history, or philosophy, one would have to settle for “only” say $3 million. The average lifetime income in the US for someone without any college education is only $1.2 million. So even in literature or history, a PhD is worth about $2 million in future income.

On average, an additional year of college results in a gain in lifetime future earnings of about 15% to 20%. Even when you adjust for interest rates and temporal discounting, this is a rate of return that would make any stock trader envious.

Fitting the law of diminishing returns, the rates of return on education in poor countries are even larger, often mind-bogglingly huge; the increase in lifetime income from a year of college education in Botswana was estimated at 38%. This implies that someone who graduates from college in Botswana earns four times as much money as someone who only finished high school.

We who pay $100,000 to receive an additional $2 to $3 million can hardly be called unfortunate.

Indeed, we are mind-bogglingly fortunate; we have been given an opportunity to better ourselves and the society we live in that is all but unprecedented in human history granted only to a privileged few even today. Right now, only about half of adults in the most educated countries in the world (Canada, Russia, Israel, Japan, Luxembourg, South Korea, and the United States) ever go to college. Only 30% of Americans ever earn a bachelor’s degree, and as recently as 1975 that figure was only 20%. Worldwide, the majority of people never graduate from high school. The average length of schooling in developing countries today is six years—that is, sixth grade—and this is an enormous improvement from the two years of average schooling found in developing countries in 1950.

If we look a bit further back in history, the improvements in education are even more staggering. In the United States in 1910, only 13.5% of people graduated high school, and only 2.7% completed a bachelor’s degree. There was no student debt crisis then, to be sure—because there were no college students.

Indeed, I have been underestimating the benefits of education thus far, because education is both a public and private good. The figures I’ve just given have been only the private financial return on education—the additional income received by an individual because they went to college. But there is also a non-financial return, such as the benefits of working in a more appealing or exciting career and the benefits of learning for its own sake. The reason so many people do go into history and literature instead of economics and physics very likely has to do with valuing these other aspects of education as highly as or even more highly than financial income, and it is entirely rational for people to do so. (An interesting survey question I’ve alas never seen asked: “How much money would we have to give you right now to convince you to quit working in philosophy for the rest of your life?”)

Yet even more important is the public return on education, the increased productivity and prosperity of our society as a result of greater education—and these returns are enormous. For every $1 spent on education in the US, the economy grows by an estimated $1.50. Public returns on college education worldwide are on the order of 10%-20% per year of education. This is over and above the 15-20% return already being made by the individuals going to school. This means that raising the average level of education in a country by just one year raises that country’s income by between 25% and 40%.

Indeed, perhaps the simplest way to understand the enormous social benefits of education is to note the strong correlation between education level and income level. This graph comes from the UN Human Development Report Data Explorer; it plots the HDI education index (which ranges from 0, least educated, to 1, most educated) and the per-capita GDP at purchasing power parity (on a log scale, so that each increment corresponds to a proportional increase in GDP); as you can see, educated countries tend to be rich countries, and vice-versa.

hdi_education_income_labeled

Of course, income drives education just as education drives income. But more detailed econometric studies generally (though not without some controversy) show the same basic result: The more educated a country’s people become, the richer that country becomes.

And indeed, the United States is a spectacularly rich country. The figure of “$1 trillion in college debt” sounds alarming (and has been used to such effect in many a news article, ranging from the New York Daily News, Slate, and POLITICO to USA Today and CNN all the way to Bloomberg, MarketWatch, and Business Insider, and even getting support from the Consumer Financial Protection Bureau and The Federal Reserve Bank of New York).

But the United States has a total GDP of over $18.6 trillion, and total net wealth somewhere around $84 trillion. Is it really so alarming that our nation’s most important investment would result in debt of less than two percent of our total nation’s wealth? Democracy Now asks who is getting rich off of $1.3 trillion in student debt? All of us—the students especially.

In fact, the probability of defaulting on student loans is inversely proportional to the amount of loans a student has. Students with over $100,000 in student debt default only 18% of the time, while students with less than $5,000 in student debt default 34% of the time. This should be shocking to those who think that we have a crisis of too much student debt; if student debt were an excess burden that is imposed upon us for little gain, default rates should rise as borrowing amounts increase, as we observe, for example, with credit cards: there is a positive correlation between carrying higher balances and being more likely to default. (This also raises doubts about the argument that higher debt loads should carry higher interest rates—why, if the default rate doesn’t go up?) But it makes perfect sense if you realize that college is an investment—indeed, almost certainly both the most profitable and the most socially responsible investment most people will ever have the opportunity to make. More debt means you had access to more credit to make a larger investment—and therefore your payoff was greater and you were more likely to be able to repay the debt.

Yes, job prospects were bad for college graduates right after the Great Recession—because it was right after the Great Recession, and job prospects were bad for everyone. Indeed, the unemployment rate for people with college degrees was substantially lower than for those without college degrees, all the way through the Second Depression. The New York Times has a nice little gadget where you can estimate the unemployment rate for college graduates; my hint for you is that I just said it’s lower, and I still guessed too high. There was variation across fields, of course; unsurprisingly computer science majors did extremely well and humanities majors did rather poorly. Underemployment was a big problem, but again, clearly because of the recession, not because going to college was a mistake. In fact, unemployment for college graduates (about 9%) has always been so much lower than unemployment for high school dropouts that the maximum unemployment rate for young college graduates is less than the minimum unemployment rate for young high school graduates (10%) over the entire period since the year 2000. Young high school dropouts have fared even worse; their minimum unemployment rate since 2000 was 18%, while their maximum was a terrifying Great Depression-level of 32%. Education isn’t just a good investment—it’s an astonishingly good investment.

There are a lot of things worth panicking about, now that Trump has been elected President. But student debt isn’t one of them. This is a very smart investment, made with a reasonable portion of our nation’s wealth. If you have student debt like I do, make sure you have enough—or otherwise you might not be able to pay it back.