Thursday, January 02, 2014

Student Debt Continues To Grow

Back in 1993, only 47% of college students graduated with a debt incurred from paying for their education, and that average debt was only about $9,400. Since then, both the percentage of students graduating with debt and the amount of that debt have grown substantially -- to about 68% and an average debt of $27,850.

There are two main reasons for this. College costs have gone up astronomically, in both private and state-supported colleges. And worker wages have been stagnant (actually dropping in purchasing power due to inflation). The median income is dropping due to the growing number of low wage jobs be created (to replace the higher wage jobs lost due to the recession and outsourcing to other countries). Because of this, parents are less able to pay for, or help pay for, their children's ever-rising college costs -- forcing students to borrow if they want an education.

This is leaving many graduates with a heavy debt as they start their working lives. In a healthy economy with lots of good-paying jobs this might not be so bad, but we do not have a healthy economy. We have a floundering economy with millions of people out of work. This leaves many of those students with a huge debt and a low-paying job (if they can find a job at all) -- forcing them to delay things like starting a family or buying a house (and that delay hurts the economy in general).

This is an insane policy. In this modern world, a country needs a well-educated workforce to keep pace. Other countries know this, and give students who have earned it a free education (or an education mostly paid for by government). This has a couple of advantages for these countries -- giving them a more educated workforce, and a workforce that makes more money (which means they pay more taxes -- making up for the education help they received). It's a cost-effective arrangement that benefits both the country and the student.

We do things differently in the United States. We give students very little free financial help, forcing them to take out loans from the government -- loans which must be paid back with interest. In fact, the federal government is set to make about $185 billion in interest off those loans in the next 10 years.

This makes no sense at all. The government should be providing free (or nearly free) educations for those who qualify. But if they won't do that, the very least they should do is make those student loans interest-free. We should be helping more students to get a college education -- not putting up barriers to prevent them from doing so (or punish them when they have to borrow).

And like it or not, this is also a class problem. Poor students, if they are to get an education, must borrow much more than the averages shown above -- which puts them in deeper debt upon graduation, which acts as another barrier to their efforts to better themselves and climb the economic ladder.

Our education policy is screwed up in this country. It is time to rethink it.

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