Cost Keeps 600,000/Year From 4-Year College

The Campaign for America's Future, a Washington-based policy group, estimates that some 200,000 Americans are being priced out of college education annually. Tuition at four-year colleges alone has climbed 40 percent since 2001.

``One in five students say student debt impacts their job choice,'' says Tamara Draut, author of ``Strapped: Why America's 20- and 30-Somethings Can't Get Ahead.'' ``It's an economic competitiveness argument. We need to continue to make progress on higher education.''

Instead of making a direct investment in human capital, Congress chose to cut student aid in the most recent federal budget by $12 billion while interest charged on student loans climbed 2 percentage points July 1 -- the largest increase in history.

According to the Bureau of Labor Statistics and Federal Reserve, non-supervisory wages have been stagnant after inflation since 2001.  According to the Census Bureau, median national income is lower in 2005 than 2001.  Over the same time, college costs have increased 40%.  The result?:

Every year, 400,000 college qualified students enroll in community college instead of going to a 4-year school and 200,000 students do not enroll in college at all because of financial barriers.

This is an issue of economic competitiveness.  The US needs well-qualified employees for the jobs of the 21st century.  However, the Republican Congress has decided to push for such pressing issues as gay marriage and flag burning.   As Representative George Miller noted in a recent editorial:

As Congress reconvenes, one of its first orders of business will be to vote on a budget plan that will make it even harder for families to pay for college. The plan takes $12.7 billion out of federal student financial aid, the largest cuts in history. As a result, students and parents who borrow money to pay for college will be forced to pay unwarranted and, in some cases, higher interest rates on their student loans. That's bad news for the typical student borrower, who is already saddled with an average $17,500 in debt, and for parents who are coping with rising tuition costs.

Republican leaders say these cuts are necessary to reduce the nation's budget deficit. But they also plan to push soon for a bill that gives tax breaks to the wealthiest Americans, many with annual incomes exceeding $1 million. That bill wipes out any "deficit reduction" from the budget-cutting bill, laying bare the Republican leadership's true agenda: to reward their friends and campaign contributors at the expense of everyone else.

The cut backs in federal aid have led to an increase in the use of debt to pay for college.  Some debt is good as an incentive.  However, the use of debt is starting to increase substantially:

``About two-thirds of baccalaureate recipients now graduate with education debt,'' according to a petition to the U.S. Education secretary by the Project on Student Debt, a public- interest group based in Berkeley, California. ``And their average debt has increased by more than 50 percent over the past decade after accounting for inflation.''

Students are now taking on enough debt to seriously impact their lives after college:

The typical student borrower takes on $17,500 in loan debt.

Nearly 25% of undergraduates use credit cards to help pay tuition and fees.

Student loan debt cause 14% of young graduates to delay marriage; 30% to hold off buying a car; 21% to postpone having children and 38% to delay buying a home in 2002.

Wow --- high debt levels really interfere with family values like marriage and children.  Think of all those babies those married people could be having if they weren't in debt.

Can we call this a crisis yet?  Or is that too alarmist?

Tags: Economy, Education (all tags)


1 Comment

Re: Cost Keeps 600,000/Year From 4-Year College

It's not a crisis in the eyes of the elite interests until american consumers wise up and stop spending themselves into the ground. Of course, by then it is already too late as any serious drop in consumer spending (the cornerstone of the US economy) would likely cause a major economic slide.

The sad part is when you realize that the richest among us don't really lose during an ecomomic depression as they have the financial fluidity to respond to and even profit from such changing economic conditions. The only people who really hurt are the people who always hurt, the poor and the folks once known as the middle class.

by TimThe Terrible 2006-07-18 05:44AM | 0 recs


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