Washington Post: Starbucks is bankrupting out college students!

Via NYgirl, OxBlog does a great job of fisking a Washington Post article about how our college kids running up massive student loan debts to pay for their Starbucks habits.  Seriously.

According to the article...

No, I'm not kidding.  The WaPo really published the article.

Anyway, according to...

STOP INTERRUPTING!  I told you, the WaPo really did publish the article.  And, yes, it DID appear on page 1.  No, I don't know if it was above the fold.  Gimme a break, OK?

ANYWAY...

According to the article, college students are spending a substantial chunk of their money on lattes, espressos, and other such drinks from Starbucks and similar coffee shops.  Given that most college students live to some extent on student loans, this means that they are going into debt for their caffeine habits.  According to the article:

... a five-day-a-week $3 latte habit on borrowed money can cost $4,154, when repaid over 10 years.

Wait, it gets worse:

At Seattle University School of Law, [director of career services at the law school Erika] Lim concedes the futility of persuading students to stop spending borrowed money on high-priced coffee. Still, she refuses to give up. The consequences of latte-larded law school debts are worrisome for the legal profession, she said, insidiously tilting career paths toward jobs that pay more but satisfy less.

"The amount of money you owe directly affects the professional choices you have," she said.

Debt-panicked law school graduates, she said, tend to run away from low-paying jobs such as public defender (about $45,000 a year) and into the more remunerative arms of corporate law.

So, not only is Starbucks bankrupting our college kids and sinking them into a pit of debt from which they'll never be able to climb out, it's also robbing the United States of public defenders.  Somebody call John McCain: Congress needs to investigate this!

Sigh...

I can't believe that the WaPo published this article, much less put it on page 1.  What's next?  Perhaps they can do a hard-hitting expose on how much money college kids spend on pizza.  Or on carbonated drinks.  Or on dating.

Aside from the sheer stupidity of the article, what bothers me about it is the implicit assumption that people are not responsible for their actions.  While I would agree that very few (if any) college kids are going to go through the pains of amortizing their daily cup of joe ('Wow!  With interest, this thing is going to cost me $4.78 by the time I've paid off the loan!'), they nevertheless have the same gut feel for what they can and can't afford that the rest of us do.  'Hmmmm.... I have $5 in my pocket.  I'd love to have my daily latte, but I'm rather hungry.  I think I'll go get a bite to eat, instead.'

The article seems to make it clear that college kids aren't capable of this kind of reasoning:

"The question that needs to be posed is 'Do they really need to have a Starbucks every day?' " said Jeffrey Hanson, director of borrower education service at Access Group, a Delaware-based organization that is the nation's third-largest provider of graduate school loans. "Since they are living, in part, on borrowed money, they need to be aware of the opportunity cost of that $3 latte. Once they spend it, it is not available for a loaf of bread."

If the kids can't understand this basic level of economics, then we've got a much bigger problem on our hands than mere latte addiction!

The article also makes the assumption that students have access to unlimited credit.  To a certain extent, this is true; many people can tell the same story about how much credit card debt they accrued in college before they started to understand what 'compound interest' and 'minimum payments' are all about.  However, student loan amounts are essentially fixed at the beginning of the semester; aside from emergency cases, kids can't keep going to the financial aid office every month or two for another loan to support their latte habit.  If kids are spending their loan money on lattes, then perhaps the government and lending institutions ought to reduce the loan amounts.

And if you believe they will, I've got a lovely bridge in NYC to sell you!

Banks are in the business of making money by lending money at interest (duh!).  So long as people don't default on their loans, the bank's interest lies in getting them to borrow MORE money, not less.  Keep drinking those lattes, kids: every sip puts more money into the coffers of First Mutual Fidelity Savings Bank of Podunk!

The government also has no interest in reducing student loans.  To listen to some in Congress and their allied advocacy groups, the government isn't giving ENOUGH money to kids for college.  We can't be concerned about picky little details such as whether the kids are using the money to pay for books or to pay for coffee!

It was either a VERY slow news day at the WaPo, or somebody there has a serious axe to grind with Starbucks.

Cappuccino, anyone?

Comments

[Aaron]

These kids who have to have their daily 4 dollar latte are the very same ones who complain about not having health coverage. I believe the daily price for a reasonable health plan comes out to about the same amount.

[NYgirl]

Good point Aaron. Too bad Starbucks doesn't sell personal responsibilty.

Thanks for the link Jim.

[docjim505]

Aaron,

I think that it's not the kids who whine about the cost of a latte or the cost of health care: it's their elders at places like the WaPo.

[fleneUnding]

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