This video is another example of the student debt crisis we face in this country.
One fundamental issue is that we’ve created an incentive structure to push students into borrowing money in order to get an education. The rational decision would be to pick an affordable school, but those options are limited. The college experience is so ingrained in our culture that many families want that for their children.
Also, we have young people making bad financial decisions, and too many parents aren’t helping. You shouldn’t take out a big student loan to go to a small, private college if you can pay much less at a state school. Also, if you’re going into a field with little earning power, this decision is even more important.
This video also discusses the Debt Collective, which was born out of the Occupy Wall Street movement and helps people dispute debts with a goal of cancelling their loans. It currently has over 700 people who are planning to never repay their loans.
One of the themes we keep emphasizing has to do with the crippling costs of a college education today in America. Sure, college campuses are much nicer with all the new buildings and new technologies, but they are failing in their basic mission if students leave there with massive student debt that will hang over them for the rest of their lives.
More publications are doing good work discussing these problems. In Newsweek, Megan McArdle asks whether college is a lousy investment.
Why are we spending so much money on college?
And why are we so unhappy about it? We all seem to agree that a college education is wonderful, and yet strangely we worry when we see families investing so much in this supposedly essential good. Maybe it’s time to ask a question that seems almost sacrilegious: is all this investment in college education really worth it?
The answer, I fear, is that it’s not. For an increasing number of kids, the extra time and money spent pursuing a college diploma will leave them worse off than they were before they set foot on campus.
Given the costs, it’s hard to argue with her on this point. She discusses how college was critical for many families in building a better life for the next generation. But sitting on an English degree with $150,000 of debt seems like a pretty bad deal.
That said, we can’t overreact to the current economic conditions. When the economy improves, more of these kids will get jobs with their degrees.
Yet something has to give, and it was very encouraging to hear President Obama challenge colleges to slow down tuition inflation.
Also, the future of free college courses looms on the horizon. Universities would be wise to start figuring out how to lower costs, or they might really have a problem in the future.
It was a pretty technical decision, but a court has struck down some of the regulations put in place by the Obama administration to regulation the for-profit-college industry. This is problematic as many of these colleges are loading up students with a ton of debt, while their degrees don’t get them a job. We’ve also seen some pretty shady practices in recruiting students to these schools. Unfortunately, there are far too many for-profit college scams out there.
This unfortunately tarnishes those colleges that provide good training for students. Hopefully the media attention will make students more selective, but the problem is that these schools are playing with our money, as the taxpayers help fund these student loans. We need more accountability and the court just made it more difficult.
We have some serious problems in the country surrounding college education. We have some of the best universities in the world, so the issue is not quality. The issue is price. The cost of college is soaring, and aggregate student debt will exceed $1 trillion!
President Obama is trying to address the student loan crisis with some sensible reforms, but the bigger long-term issue has to do with the cost of a college education.
Since loans now comprise 70% of financial aid packages, the growing tuition burden falls squarely on student-borrowers who may have saved for college but who still can’t meet the high cost of attendance. Two-thirds of American undergraduates are in debt. This year, student loan debt will grow to more than a trillion dollars, outpacing credit card debt for the first time. As hundreds of thousands of high school seniors prepare their college applications, and their parents compile documents required for financial aid, Congress needs to seriously consider legislation that will rein in future tuition increases.
There are many reasons for the dramatic rise in tuition, including demand for better student residences, cutting-edge laboratories, IT improvements, cuts in state subsidies and administrative growth. Regardless of which factors are most significant, the fact remains that there has simply not been enough external pressure to force universities to contain costs. Ironically, the accessibility of student loans, while admirable at first glance, has contributed to tuition growth. And while President Obama’s recent proposal to cap student loan repayments depending on income is a step in the right direction, it doesn’t address the bigger problem of runaway tuition in the first place.
This is where government needs to firmly step in. The federal government contributes billions of dollars to research and development on campus and allows universities to function as tax-exempt institutions. Self-policing of college costs has not worked; government needs to tie its support of higher education to college costs.
Read the entire article as it presents a sensible argument.
Millions of college students around the world graduated this year and they have more on their minds than finding a job. Most college students graduated with a mountain of debt and no means to pay it. Even if these graduates find a job right out of college, depending on the amount of debt, payments can range anywhere from $100 a month to more than $1,000 a month.
According to a recent news article, one student loan servicing center suggested that a recent graduate, working in an entry-level position for a Web company, pay $900 a month towards his $82,000 federal student loan balance. Of course, this is nearly impossible to manage on an entry-level salary – or even a mid-level salary for that matter, so what can borrowers do to delay or minimize payments? According to author and personal finance columnist Gail MarksJarvis, if you have federal loans, you can make use of new government rules that give people a break on student loan payments they cannot afford.
If you owe more on your loans than you earn annually, you are likely a candidate for some relief. Under the relatively new “income-based repayment plan,” you get relief if the regular payments you would have to make over 10 years will exceed about 15 percent of your discretionary income. That’s calculated based on a formula related to the U.S. poverty line. Besides income, the calculation involves the size of your family. Simply put, most borrowers will pay less than 10 percent of their adjusted gross income.
