A college degree is and will continue to be a major key to economic security, social mobility and prosperity for millions of Americans. But as college costs continue to rise and family income remains stagnant at best, attaining that goal requires an increasingly significant investment of financial resources. College loans have provided a vital lifeline for most students and families, but affordability remains a top concern. It's time for a shared commitment to rebalance this equation.
Student loans are now second only to home mortgages as the biggest debt Americans are holding. This, coupled with growing frustration over the economy, lack of employment opportunities and underemployment among recent college graduates undergird the expanding Occupy Wall Street movement. Many college graduates are overwhelmed by the enormity of their student loan obligations and worry about what their future holds. And while at least one presidential candidate has gone so far as to propose the drastic measure of eliminating student loans altogether, it's time to step back and reiterate the importance of access to the financial means to attend college.
Anyone who has lost a job recently knows that virtually any high-paying job opening requires a degree just to get past the initial screening processes. College graduates also experience much higher earnings potential than those without a degree. According to the U.S. Census Bureau, adults with bachelor's degrees earned an average annual salary of $47,422 (2010 dollars) compared to just $26,349 for high school graduates; nearly 80 percent more. And businesses remind us daily that our economic future depends upon knowledge workers -- people who can think critically and can anticipate and solve problems.
I have spent over 25 years of my career in higher education advocating for college affordability. I know first-hand that access to student loans, particularly low-interest federal student loans, has unlocked the door to this wealth of opportunity and empowerment for students who otherwise would not be able to afford college. In 2008, almost 60 percent of college students nationwide had student loans, with the amount of debt owed continuing to rise. Let's not forget that the overwhelming majority of students and their families handle their student loan obligations responsibly. We must ensure that this remains the case by helping students manage their finances and their loan obligations more effectively before, during and after school.
As I speak with college and university administrators across the country in my current role as financial literacy advocate, I am struck by resounding concerns and observations which cry out the need for more personal finance education. Undergraduates may understand that student loans represent a lot of money, for example, but they don't quite grasp the impact this debt may have on their lives after college. Many have never had to make a monthly payment, and may not understand basic financial concepts such as the difference between principal and interest. They may not know or haven't been told the total debt they will incur to complete their degree. Others struggle with managing their financial aid and take out more student loans than they really need to cover their educational costs, or do not use it as wisely as they should, spending too much on food and entertainment, for example.
Every stakeholder -- students, families, colleges and universities, government and business -- has a role to play in protecting and developing our most valuable assessment, our human capital. Positive steps have been taken to provide more transparent tools, such as required net price calculators, the model financial aid disclosure form designed to help estimate how much financial aid students may be eligible for, and the Consumer Financial Protection Bureau's Student Debt Repayment Assistant that's under development. But more is required:
Let's work together to ignite new hope and confidence among our nation's young adults. Help them navigate and overcome the financial obstacles to educational attainment, and support them in their quest to achieve their best.
Currently, Mary is the financial literacy expert for Higher One, a leading company that works closely with colleges and universities to ensure students receive financial aid refunds quickly, can pay tuition and bills online, make on-campus and community purchases, and learn the basics of financial management. Higher One is not a student loan company, nor does it offer students any instruments of credit. More on Mary on Twitter
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+False selling point number one. A JOB is the major key to economic security. A degree does not equal a job.
*"ProspectÂive students and their families must do their own due diligence in understandÂing how much they can afford and how much loan debt they can comfortablÂy incur before enrolling. "
+The answer is ZERO. Nobody should borrow money to attend college.
*"credit and other financial products must be more transparenÂt so that students understand their costs and obligationÂs before signing on."
+Financial institutioÂns should have NO access to college students.
This entire article is the same Sales Pitch that Colleges have been giving for Decades.
It then proceeds to claim to want to help them to "borrow wisely" to achieve "success".
Universities should be required to make the loans out of their own funds and to write them off when
a student fails to find a job in the career they've trained for.
We need to get off the more education is better treadmill.
Credential Inflation is no substitute for real jobs.
*"College loans have provided a vital lifeline for most students and families,"
+In fact they have created an anchor that is dragging down families and students.
*"Anyone who has lost a job recently knows that virtually any high-paying job opening requires a degree just to get past the initial screening processes"
+The truth is that many high paying jobs require no degree. Jobs like machinist, entrepraneur, plumber, real estate agent, developer, sheet metal, derrick operator, building contractor, auto body, diesel mechanic, equipment operator, police, loan officer, sales manager, etc..... Most people end up working in a field unrelated to their degree.
*" businesses remind us daily that our economic future depends upon knowledge workers -- people who can think critically and can anticipate and solve problems."
+There is no evidence that college teaches these skills. In fact, traditional education diminishes creativity.
The primary lesson everyone in America should be taught starting from about 6th grade up I'd say, is that all currency in use today is fiat currency, and that all of it is loaned into existence and bears exponentially compounding interest. That is the essential fact that almost none realize, and that is also the noose that will strangle the financial system going forward as the growth of the real economy inevitably goes negative. Today, anyone who takes out a loan that can't wiped in bankruptcy is making a serious mistake, no matter the reason. Period. The only option the most of these debt laden graduates will have going forward is to simply leave the US.
I would be interested to have the author address how ever-increasing financial aid has fuelled an 'educational arms race' among institutes of higher learning and has in fact done nothing in the last 40 years to make higher education either more afforable or more accessible. As addressed with clarity by Gordon Winston of Williams College:
http://net.educause.edu/ir/library/pdf/ffp0103s.pdf