The total outstanding debt for student loans now exceeds $1 Trillion.
Have you looked at the cost for higher education lately?
| University of South Carolina | ||
| Annual College Costs (Fall 2011) | ||
| In-state, living on-campus | ||
| Tuition and fees | $10,168 | |
| Room and board | $8,026 | |
| Books and supplies | $936 | |
| Personal expenses | $2,420 | |
| Transportation expense | $1,500 | |
| Total Annual Cost | $23,050 | |
| 4 yr Cost | $92,200 | |
| 5 yr Cost | $115,250 | |
| Out of state? Add $16,000 per year for tuition. | ||
This should help explain why folks are borrowing so much money. There are these additional factors:
· High school grads are increasingly unprepared for employment with many barely literate and many more simply not yet sufficiently mature to be on their own. The choices are college, the military or the streets.
· Entry level service jobs are just as unappealing to today’s young as were the grunt labor jobs of the past to previous generations.
· Government lending has expanded steadily and loans are made to students rather than parents.
o Of students who received bachelor's degrees from Minnesota colleges in 2010, 71 percent had student loans, and the average amount they borrowed was $29,100.
o Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier
· For-profit schools market aggressively to the military and to lower-income students.
o They charge more, have the highest default rates, offer less accreditation, have lower entry standards and offer extensive courses online. The nation's largest for profit school – The University of Phoenix – got 88% of its revenue from federal programs last year, most of it from student loans. This industry is one of the fastest growing in the nation.
· With Congress now fully in control of loans made directly from government to students, it is far easier for students to default and for Congress to cap and forgive the debts. This is low risk borrowing.
o Defaults rose from 6.7% to 8.8% in just two years and are now 10% and growing.
o The Obama Administration’s “Pay as You Can” plan caps loan payments at 10% of income, lowers the interest rate by half a percent and allows the debt to be forgiven after 20 years rather than the current 25 years.
o These things do not apply to loans taken by families. Federal loans are capped and many families borrow additional funds in traditional fashion to cover the rest of school costs.
· Our “land grant” colleges have long since squandered their money and states have been funding them for generations.
o In the down turn, state funding has decreased. Colleges have used this as an excuse to hike tuitions at a rate greater than spiraling healthcare costs but there is no evidence that they are cutting any overhead.
o The President announced in the State of the Union that government will force schools to lower tuitions. How’s that for big government central planning?
Once again, we have a federal government program that is founded on the very best of intentions. But as with all government programs, this one is going to become a massive giveaway until it becomes an unfunded entitlement. There will be incredible waste and fraud and worse, more general public expectation and ever less need for personal responsibility.
When we started granting and loaning money to students for higher education, it was to soldiers after WW2. We should seriously consider compulsory national service. There could be a variety of programs to ensure basic literacy, offer some useful on the job training, give kids an adventure and time to grow up and give everyone a chance to earn additional education.
College Board - What It Costs to Go to College
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