." 2). Obtaining a college degree gives an advantage to graduates seeking a job. Although adults with a college degree have a higher salary than those who do not, student debt is hurting college graduates. ProCon says, "between 2003 and 2012 the number of 25-year-olds with student debt increased from 25% to 43%, and their average loan balance was $20,326 in 2012-a 91% increase since 2003" ("Is a College.
Reports show that college tuition has rose 439 percent between 1982 and 2007 (Student Loans). However, with the rise in tuition, comes the rise in student loans. Government loans are offered to students who otherwise would not be able to go to college, with the agreement that students will pay back the loans with interest. Therefore, the government spends $34- $45 billion on student loans (Belkin). However, due to the 18.5% unemployment rate in 2009, the US Department of Education concluded that 46.3% of loans go into default (Student Loans).
So you have to ask, yourself do the pros out way the cons? One of the major cons in going to college is the student loan debt that you have to deal with after you graduate. Between 2003 and 2012 there was a 18 percent increase in student loan debt for the average graduate over 25 years old (college, 2014). This is mostly due to the extreme increase in tuition. In the last 24 years the tuition rate has raised about 30 percent.
("Comparison of FY 2011 2-Year Official Cohort Default Rates to Prior Two Official Calculations"). The New York Federal Reserve reported that as of March 31, 2013 outstanding student debt surpassed credit card debt and was approaching the $1 trillion mark (Quarterly Report on Household Debt and Credit). If student loan default rates stay unchanged, the federal government will lose $200,000,000,000 of taxpayers’ money over the next few decades because of student loan defaults. Below is the chart representing the outstanding credit card and student loan debt over the last ten years (Quarterly Report on Household Debt and Credit). Recent studies show that the number of individuals who default on their student loans has been steadily increasing as well.
the toll of the quality of life and the prosperity and competitiveness of the communities where they live and collectively across the nation is significant” (p.4). If the nation fails to educate the future leaders, the entire nation’s well being is at risk (Kennelly, 2007). According to Esch (2003), high school graduates earn on average about 70 percent more than dropouts. To put it in perspective, with around four million ninth graders in the 2003-04 academic year, a little over one million dropped out of the graduating the class of 2007. This represents over 325 billion dollars in total lifetime additional income if these students were to graduate (AEE, 2007).
Today in the United States two thirds of graduating students leave colleges and universities with student debt. The Institute for College Access and Success began an initiative called “the Project on Student Debt” to estimate just how much student debt has been accumulating over the years. What they found was that the average student will graduate with $26,000 in debt and in more extreme cases, over $100,000 dollars in unpaid loans. These numbers have serious underlying implications, not only for student borrowers and their lenders but rather the entire national economy. With more than a quarter million graduating students every year, the national student debt has amassed to over $1.2 trillion dollars – or about 6 percent of the country’s total debt, and twice the size from 2007.
However, despite everything, spending on a college education remain an investment that some hope will result in better and higher paying jobs. FIGURE 1 . Increase in Tuition From 2000 to 2015 TYPES OF STUDENT LOANS While Pell Grants are being cut and leaving about 8 million students from low and modest income unable to afford college, students loans are becoming a necessity in a time when the cost of higher education is rising quickly. In 1980, Pell Grants covered 77 percent of the cost of a four-year college education. However, those grants have been decreasing and now cover less than one-third of students’ education (Flannery).
Cohen explains “Tuition has risen almost 1,200 percent in the last 35 years, and the sticker price for many four-year private colleges and out-of-state public universities exceeds $250,000.” Moreover, he goes on to say that even at public universities, it is about $80,000 for four years for tuition and other college related expenses. Later in his article, Cohen explains how this leaves middle-class families in a very uncomfortable situation. The parents or other money-making entities in the household want their student to go to college and earn a degree, but now there can be an element of stress in figuring out how the fees will be paid for. Furth... ... middle of paper ... ...es have skyrocketed in recent years, putting the pressure on the student to either take out loans and risk going into debt or to not attend college altogether. If the EFC formula was revised or drastically cut, then maybe the average middle class family could cope better with the tuition bills.
The cost of a typical four year degree has increased tremendously in the past forty years. In 1976 the average four year degree with room and board cost $2647 in current dollars. In 2006 the average cost of the same program was $19,232 –National Center for Education Statistics table 320 The cost of a college education has skyrocketed in recent years. This needless raising of cost makes a college degree almost impossible to pay for without going into debt. “At public four-year institutions, students now pay between 50 percent and 60 percent of the cost of their education—an 18–22 percentage point increase over the decade.” –Delta Cost Project Trends in College Spending 2001-2011 This increase in the cost of education for the student is due to the funding of non education related divisions and projects in the university.
With the current investments in mind it would take a high school graduate almost 43 years to save up ten times their salary. Where with my college degree I would only have to work for about 37 years. I also figured in my age and realized that I don’t want to work until I am 88 years old. So I did some calculating and figured out that if I were to invest 15% for 28 years I would be able to retire at 62 years old with just over one million dollars in my 401K. Another thing to consider is if I was to factor in my raises I would have about $2,864,000 in my 401K.