There was a time not too long ago when it was possible to work your way through college with only minimal loans at the completion of your degree. I know this to be true because I was able to do this as were many of my contemporaries.
There were also many more state and federal financial supports than there are now in the way of grants. In addition to rising college costs, American median household income has declined to compound the difficulty in financing a college education. The convergence of these developments has contributed to a gathering financial storm that may soon begin to dampen the economic fires that have been lifting the national economy.
There seems to be little hope that there will be a reinvestment by states in higher education any time soon, instead, students and families will be expected to shoulder even more expense going forward.
This ‘new normal’ could also further imperil the economy as college graduates delay making major purchases such as new cars, homes or other major purchases as they begin to pay off college loans that in some instances are over $100,000 and climbing as interest piles up. In 2001, state and local per full time student support reached their zenith at $8,670.00.
Currently student support per full time student is $5,896.00. Colleges seem to be ignorant of these nationwide developments as tuition continues to increase at unsustainable rates. Over the last ten years community college expense has risen by 40 percent while tuition at a four year public college has increased by 68 percent. In that same decade, median household income fell by almost 10 percent as more Americans suffered under the recession or economic malaise.
Now, there are more Americans living in poverty than at any other time since accurate records have been maintained. According to some sources, the aggregate of all student loans is approaching one trillion dollars. The households with the lowest incomes are shouldering the most debt as families in the lowest income quintile at 24 percent are over twice that of any other income quintile. To compound the difficulty, many college graduates are unemployed or underemployed.
In 2013, the Center for College Affordability and Productivity found that 48 percent of college graduates are employed in jobs where a college degree is not required and 38 percent are employed where a high school diploma is not required. For example, in 1970, 1 percent of taxi drivers had college degrees now 15 percent do.
One need not be an accountant to surmise what is and will continue to happen; students are defaulting on their college loans. In 2004, the rate of college debt default was 9 percent, today that rate has risen to 17 percent and many indicators suggest that the default rate could rise to over 50 percent.
On July 1, the interest rate on student loans is scheduled to return to 6.8 percent if congress does not act to keep interest rates lower. Senator Elizabeth Warren has suggested that college students should be allowed to borrow money at the rate that big banks borrow it at from the Federal Reserve, 0.75 percent.
Warren suggested that investing in those large banks is no more important than investing in the minds that will lead the nation one day. If there is no relief for college students fewer students will attend a university just as it was many years ago.
There was a time in America where only the affluent could attend college because they were the only ones that could afford it. If this is the course that develops I am afraid that our country will pay a heavy price for this decision. In the early seventies, if I am recalling it correctly, there were a variety of television commercials in support of funding African American college students; I believe the tag line was, “a mind is a terrible thing to waste.” Perhaps those commercials will resurface again, not in support of a particular disadvantaged group but rather all Americans who cannot pay for college out of pocket.
I hope that I am wrong and that the government will provide relief to students and their families just as it did for the major corporations that received a bailout. It is difficult to imagine that our political leadership will allow our country to take what would be a giant step backward.
Remember, all kids count.
Reach the writer at Hurlburt@wildblue.net