The burden of student loan debt on individuals, particularly young unemployed ones, is certainly starting to get a lot more attention in the media. College costs have experienced higher rates of inflation than for most consumer areas. The American Institute of CPAs for example reports that for the 2010-2011 academic year alone, 4-year state colleges for in-state students rose 7.9%, while for out-of-state students the rise was 6%. The inflation rate for 4-year private colleges was 4.5%. This compares to a general consumer rate of 3.9% for the past twelve months, according to the Bureau of Labor Statistic’s Consumer Price Index, a measure of U. S. inflation.
Among the economic complaints raised by recent protests of the Occupy Wall Street movement is that student loan payments are creating too high of a debt position for young people trying to enter the workforce. In fact, it could be said that this issue is one of the significant catalysts of the movement. Starting out adult life faced with ten or twenty years to pay off tens of thousands of dollars of debt in this economy with no job is enough to make anyone scream.
In my own personal life, I sense the anxiety. My daughter recently graduated with a 4-year degree and between my Parent PLUS loans and her Stafford loans we are looking at substantial debt. For my portion alone the Federal government is giving me up to thirty years to pay this off and from where I sit right now, I’ll need that much time. If it takes me thirty years to pay off this loan, I’ll be 88 years old! I have real doubts that I will live that long.
My situation is indicative of a situation facing the generations right now. I am a Baby Boomer who has always believed that education is an investment. I have bought into the notion that there is a direct correlation between the level and quality of one’s education and the number of career options and earning potential one has throughout life.
Even recent statistics have supported this view, such as the fact that of the 9.1% unemployed in September 2011, 78% have only a high school diploma. My daughter on the other hand is looking at her amount of student loan debt more as an expense right now and is truly questioning whether the B. A. was worth it. Time will tell. I still think the college education gives her a higher launching pad for her career and hope the debt will not diminish that advantage.
I was chatting with a businessman from Belgium a few years ago over lunch. We were in Boston being trained to administer and interpret the Myers Briggs Type Indicator. I asked him about the income tax level he lives with in his country, and he did say it was quite high, if I remember correctly close to 50%.
But he did not seem that upset after seeing my jaw drop. When I asked him why he was not outraged he cited two reasons. One, he does not pay any medical expenses and felt that he and his family received good medical care. The other reason was that one of his children, who was at the time enrolled in a university, could attend at no additional expense. He seemed content with the concept of receiving quality service for the high taxes he was paying.
I do not know which system is best, the European or the American. But I do know this. The system that promotes the greatest amount of education for the most people will be in a better position to compete in the 21st century global economy. If higher education is not pursued by more and more Americans because it is seen as too much of a crushing expense, then it will diminish our talent pool and our competitiveness. This is a situation to be avoided.
