Credible source summary

       In this post I am going to share another credible source, as well as a summary of the article. The article, written by Steven Horwitz, is titled, Bubbles, Malinvestment, and Higher Education. It's home site is www.thefreemanonline.org. The specific address is http://www.thefreemanonline.org/headline/bubbles-malinvestment-and-higher-education/.
      Once again, there are several reasons that this is a credible source. One is the author. Steven Horwitz is a professor of Economics at St. Lawrence University. He has degrees in economics from George Mason and the University of Michigan, and has also authored two books on economics. Another sign of credibility is that this article appears on a scholarly journal's website. The Freeman, a publication of the Foundation for Economic Education, has been in print for over 50 years. One final sign of credibility is that the author provides a way to contact him on the site.
        This site is useful to me for a couple of reasons. One is it's currency. This article was posted on May 17'th, 2012. Another reason that it is useful is that he directly addresses some of the questions I have, such as, What is driving this process and what consequences does it have for students? This process, refers to the college costs outpacing the inflation rate.
       Steven Horwitz begins his article by addressing the topic. Many people are wondering if the next bubble to burst will be the debt that many former college students have acquired. College costs have outpaced inflation. Why is that, and what are the consequences are for students? One factor in the rising cost is the government provision of student loans at very low interest rates. This encourages too much borrowing, resulting in many people spending much too long in college. Essentially, people are investing in general human capital, rather than specific human capital. They are opting for the general knowledge and skills that come with a  college education, rather than, the specific experience and worksite training that come from entering the workforce immediately. Even if everybody has that knowledge and skill, which is what would happen if everybody went to college, we would still have basic workforce labor that needed to be done. This would result in an unsustainable structure of human capital that would not meet the demands of the market. When that happens, graduates do not get jobs. When graduates do not get jobs, they cannot pay off their debts. That is when, as Steven Horwitz says, boom will go bust. Another factor is that, with cheap loans, comes more money for the students to spend at college. This leads to an increased demand, which in turn, leads to higher tuition. Schools also have started to offer more, and better than necessary, amenities, to attract students. This also leads to a hike in tuition. While forgiving student loans seems like a tempting option to solve the boom, it really is not. The problem is, if the government forgives these debts, it sets a precedent that will result in more and more poor decisions. To get out of this boom there are two things that need to happen. First, replace low interest government loans with market-driven loans and interest rates. This will draw out those that really value higher education. Second, provide real competition. This will drive down costs, and hopefully, stop the boom before the bust gets worse.