Monday, August 22, 2011

Are student loans the next bubble?


Many would argue that higher education in this country is the best in the world. France has some of the best culinary schools, and Oxford and Cambridge have rivaling histories of literary renown, but only in the United States will you find comparable culinary and literary prowess as well as thousands of virtually every other topic one could imagine -- only to the United States do more than half a million students come every year to study.

Here's a question or two for you:  If our public K-12 educational system is such a mess, then how do we have world class leading higher education?  Is higher education only the best because the universities and colleges claim it to be?  Do our top colleges and universities actually suck?

Then add in the ever increasing crushing debt burden upon our students: Student Loans.  Is it time to rethink not only what college, but how students go about getting a college degree?  I would say yes.

According to a recent study by the college board, I am in plenty of good (or was in unlucky) company as almost one-out-of-five graduates with bachelor degrees will not be able to make payments on the average undergraduate loan debt, which now stands at a whopping $30,500 before interest. If that’s not disheartening enough, consider that for the first time ever, student loan debt now outranks credit card debt.

Can you believe that Americans now have accrued more debt by pursuing higher education that by using credit cards.  To be exact – $805.9 billion in federal student loans outstanding and $237.3 billion in outstanding private student loans. The news is even more troubling for both the African American and Latino communities, who borrow disproportionately to pay for private nonprofit or for-profit college than a public four-year college.

Do parents need to save and pay more or is it time to completely rethink higher education?  Do I even bring up how much of our tax dollars are used to fund higher education, thus we are paying twice and condemning our children to monster student loans. 






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