by Megan McArdle
Mythomania about college has turned getting a degree into an American neurosis. It’s sending parents to the poorhouse and saddling students with a backpack full of debt that doesn’t even guarantee a good job in the end. With college debt making national headlines, Megan McArdle asks, is college a bum deal?
Why are we spending so much money on college? Read More
The New York Times recently updated their breakdown of college costs and debts, revealing that for-profit schools are not the only bad guys in this troubled economy. Read More
It’s hard to miss talk about rising college costs these days. It’s plastered all over newspapers and websites, and has been at the center of much political debate over the past month, especially in response to President Obama announcing a new plan to help grads better cope with student debt. And it’s not a discussion that’s likely to go away soon. Over the past few decades, college tuition has been rising at a breakneck pace, almost three times as fast as inflation. Incomes haven’t kept up with college costs, and that’s made it a challenge for many students to pay their way through school, often accruing tens of thousands of dollars of debt in the process.
The effect these rising costs have had on young adults hasn’t always been predictable, however. Here, we explain some of the more surprising ways higher tuition is affecting the way current students and recent grads work, play, and live.
Posted by Tasha Adaams
PHOTO COURTESY MCT CAMPUS
Unless you have the no-limit diamond-studded Dubai First Royale MasterCard (which by the way, is only available in Dubai), then chances are you have a spending limit of some sort.
So does the government and this summer, it was close to hitting it.
Talks between President Obama and congressional leaders began to find a solution.
According to the New York Times, an agreement was made “that would raise the debt ceiling by up to $2.4 trillion in two stages, enough to keep borrowing into 2013. The pact called for at least $2.4 trillion in spending cuts over 10 years, with $900 billion in across the board cuts to be enacted immediately.”
There is one spending cut students may notice.
In an effort to trim deficits, the text of the bill calls for the elimination of subsidized loans for graduate students.
Effective July 1 2012, graduate students will now pay interest on loans while still in school. Read More
By Lesley Ryder Recent Hamilton graduate for Huffington Post
With the rising costs of education, student debt seems to be as much a graduation requirement as course credits and thesis projects. Three months ago, I graduated with a degree in Biology, and $41,500 of debt (not including accrued interest). How am I coping? It’s simple: pennies pinched, fingers crossed. Sure, it’s a scary amount of money to owe, but it could be worse. My sister is about to matriculate law school at the University of Colorado. She’ll “only” owe six figures after graduation because she can claim state residency after a year. Still, I have no regrets. I loved my college experience and wouldn’t change a thing about it.
For now, debt is a necessary evil for the overwhelming majority of students that don’t win full scholarships. The rising student debt goes hand in hand with rising tuition costs. At my alma mater, my senior year cost nearly $6,000 more than my freshman year.
That’s one expensive graduation robe.
The price change did not reflect an increase in the quality of my education (it was already high) but I learned the increase was needed to make it sustainable. Last February, Hamilton College‘s VP of Administration and Finance, Karen Leach, explained the fate of every dollar in the budget. Student tuition only covers expenses for 65 percent of the academic year. The rest of the year is funded by generous alumni donations. Interestingly, the largest expense is not from construction or maintenance, but rather, labor. Faculty, administrators and staff members need benefits like health insurance (conveniently, another service with rapidly rising costs). You can’t cut labor costs without sacrificing the quality of the Hamilton experience, which boasts a 12:1 student-faculty ratio (including some of the best professors in the country).
It made me feel a little bit better about the small mountain of debt on my horizon, because all that money was used to invest in my future. It took a few loans that I’ll have to start paying off in 3 months, but think about it. When you buy a house, you take out a mortgage. You may even take out a loan on a new car. Why not take out a loan on your future? Read More
Americans have cut back on credit of all kinds, with one notable exception.
According to the Federal Reserve Bank of New York’s quarterly report on debt and credit, U.S. households had $11.42 trillion in debt outstanding in the second quarter. That was down from a peak of $12.5 trillion in the third quarter of 2008, when the financial crisis took hold, and the lowest since the first quarter of 2007. Mortgage debt, home equity loans, credit card debt and auto loans are all down sharply — partly because people are being more careful, but also because many have defaulted. Read More
Many students across the UT Campus planked to protest higher education costs.
American’s for Prosperity claims that student loan debt in America has reached $1 trillion and they want the university to find ways to make cuts to the system to lower tuition. According to the group the tuition rates have steadily increased since 2005 by almost 35 percent, leaving students in a mound of debt after they graduate.
The student loan debt has surpassed $1 trillion.
In this economy, back pay can be rough especially with many graduated making less for their first jobs than ever before and there are fewer jobs for the taking.
Interesting perspective, but we don’t believe it for a moment.
Debt has become a way of life for American college students. The average student loan debt among graduating college seniors was more than $23,000 in 2008, according to FinAid.org. In addition, the student lender Sallie Mae says the average graduating senior with at least one credit card had $4,138 in debt on the card.
Yet, instead of feeling stressed about owing all that money, many students actually feel “empowered,” says a new study from Ohio State University, based on data collected for the federal Bureau of Labor Statistics. The study, published in the journal Social Science Research, surveyed 3,079 students, the majority of whom were in their early- to mid-20s.
That’s right. The more college loans and credit-card debt that young adults 18 to 27 have, the higher their self-esteem — and the more control they feel they have over their lives. They tend to view debt positively, rather than as a burden.
Come again?
Rachel Dwyer, an assistant professor of sociology at Ohio State and the study’s lead author, says it’s not entirely clear why debt seems to have that effect. But the finding is consistent with earlier research suggesting that student loans, in particular, represent the cost of opportunity for some students, and so can be seen in a positive light. “Educational debt can represent an investment in the future,” she said.
That seems to hold true for credit-card debt, too. It may be because students use credit cards for educational purposes, she said. Some students, for instance, may use cards to buy books or even “that nice interview suit.” Read More
Higher education is an investment – and like many good investments – individuals must often think long-term to reap the benefits. College graduates often have better employment opportunities, financial stability, and retirement quality of like than individuals without a degree. However, today’s students face rising tuition and other college costs. The New York Times recently reported that the burden of mounting student debt continues to burden college graduates, resulting in a threat to college access and success in Texas and across the country. In fact, outstanding student loan balances in the United States have surpassed credit card debt, soon to top $1 trillion. Rising debts and an unstable economy have placed students in a challenging position to determine the best investment of their time and money. Read More
With the debt ceiling battle looming large on the horizon, many are discussing the budget situation. Despite the variety of proposals being floated by those on both sides of the isle, Harvard professor Jeff Miron, PhD makes one thing perfectly clear: entitlement spending must be reformed and cut. In this video, he illustrates the problem that entilement spending has created and how programs like Social Security, Medicare, and Medicaid will continue to drive Federal spending out of control. Failure to reform and cut entitlements will make debt ceilings irrelevant as we see debt levels reaching close to 200% of the GDP.
See story @ http://www.freedomworks.org/blog/phedger/entitlement-spending-must-be-cut-warns-harvard-pro
