The US Census Bureau estimates that college graduates will make close to a $1 million — or more depending on the degree — than a high school graduate over the course of a lifetime.
Millions of young people have certainly taken that advice and enrolled in college. Those young Americans are now faced with the new reality of high unemployment for recent graduates. The rough job market is made worse by the fact that the average senior will graduate with $25,250 in loan debt.
What has caused the current situation and what must be done to fix it?
There are more and more young Americans attending college; 70 percent of seniors in high school moved on to higher education in 2010. However, that does not mean that they will graduate on time or remain in the same school.
Why is there an increase? Is it because students are smarter or is it because there is a growing industry in this country that loosens admission standards?
I don’t mean to say that Harvard or USC is becoming less selective, but that college has now become an industry.
The federal government is able to guarantee loans for hundreds of thousands of young people. This money then gets deposited directly into the coffers of colleges across the country. Schools range from Yale to ITT Tech, the latter school being a ‘for-profit’ institution. These schools are in the business of making money and will accept any student in to their ranks. Some of their admission officers are paid based on how many new students sign up.
These institutions have flourished because the federal government hands out loan money so generously. The guaranteed supply of funds allows institutions, both for-profit and not, to continuously raise the cost of tuition. In my opinion, this is not a free-market system.
In an ideal world, financial aid should be more restrictive than it is now. If college students had no money to pay for their school, colleges would have to lower their tuition rates so students could pay. While the previous example is oversimplified, the same principle can apply to the current situation.
So what is the solution? Well, it’s rather simple: forgive student loan debt. Student loan debt has now surpassed credit card debt and is over $1 trillion. Americans have seen the bailouts and stimulus packages pass through congress: President Bush’s Emergency Economic Stabilization Act of 2008 and President Obama’s American Recovery and Reinvestment Act of 2009.
Hundreds of billions of dollars went to Wall Street and taxes were cut for many Americans.
If student loan debt was forgiven, it would emancipate millions of Americans from crippling loan payments and allow them to contribute that money back into the economy how they see fit.
Powered by Facebook Comments