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Distinct Groups of Students—And "Fun Capital"

Either way, it does seem that to afford tuition—whether at expensive private schools or not—students are incurring a substantial and increasing amount of debt. The average amount of debt held by a typical undergraduate rose from $16,000 in the early 1990s to $20,100 in 2007 (all reported in constant 2007 dollars). Just recently the Wall Street Journal reported that it has reached $23,000 in 2009.13 Although these numbers might seem relatively low to those earning many times that amount in one year of work, I know from my own years teaching at a university that some students are taking on much more than this average amount of debt to make it through with a degree—and the bulk of students do take out loans to finance their education. According to the Annual Survey of Colleges, approximately 60 percent of undergraduate students graduate with some student loan debt and this number might be as high as 70 percent for 201014.

But what of the 40 percent with no debt? Perhaps some students have (wealthy) parents and grandparents who saved for their children's education and have thus contributed the bulk of the cost. Yet other diligent students manage to find the time to work at one (or two or three) part-time jobs, the earnings from which enable them to avoid any debt or loans. I have tremendous respect and great sympathy for these kids—and they are kids—who have to endure a full semester-load of coursework in addition to an additional 20 to 30 hours of paid work per week. These students rarely have time for anything else, and I make a habit to remind them to keep track of all the debt they do not incur, compared to their peers with student loans. With no debt, their holistic net worth is greater, and their holistic balance sheet will likely look much better in five to ten years. In my view, this lack of debt should be valued and quantified.

I would even argue that indebted students, who have decided to finance their education by borrowing, should really keep track of all the time they spent having fun while in college, using a journal or keeping a running total. When these graduates come to me with concerns about all the debt they have incurred and now have to repay, I remind them of their colleagues who likely spent much less time at parties and bars, and hence avoided debt. These students should perhaps create another asset class on the left side of the holistic balance sheet called "fun capital" to record the sum total of all the hours they spent clubbing while investing in their human capital.

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