student loan debt

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Author: agora-financial

Post on 12-Nov-2014

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WATCH THE VIDEO VERSION! http://www.youtube.com/watch?v=wQE0HwF3KR0&feature=plcp dailyreckoning.com As the student loan debt hits $1 trillion, check out some of the facts surrounding this crisis and the future of college tuition. Follow Us On Facebook: http://www.facebook.com/TheDailyReckoning Follow Us On Twitter: https://twitter.com/DailyReckoning

TRANSCRIPT

  • 1. This is what Americans owe in student loans.
  • 2. Its greater than Americas auto debt or credit-card debtand second only to the mortgage debt in the United States.
  • 3. Approximately 2/3 of all college students graduate with loans. In 2010, the average one of those students had accumulated $25,000 in debt by graduation day.
  • 4. In 2010, the unemployment rate for collegegraduates under 25 years old was over 9%.
  • 5. 1/3 of all graduates end up taking lower paying jobs that dont require college degrees. Today, more than 100,000janitors 317,000 waiters/waitresses 18,000 parking lotattendants and 365,000 cashiers - all have college degrees.
  • 6. Over the past 25 years, college tuition cost has increased at an average rate that is higher than the general rate of ination.
  • 7. College tui$on that was $10,000 in 1986 would cost that same student over $59,000 today -- more than 2 $mes the general ina$on rate.
  • 8. There are a number of factors.
  • 9. Faculty wants good salaries.
  • 10. And a lower teaching load.
  • 11. Alumni want new stadiums. Students want nicedorms and facilities all things that cost money.
  • 12. I want a raise.College rankings drive up costs. Colleges can moveup in the rankings by paying professors more, havingmore alumni who donate to the school, and attractingbetter students and athletes. Colleges compete to be the best. And to be the best, you have to spend.
  • 13. Budget cuts for state legislators means less money going to public colleges. Public colleges then raise tuition. Compared with thethree other major state expenditures (shown left), college students look more like paying customers than hungry learners and the easiest solution for state ofcials is ask them to pay more.
  • 14. This is very similar to what happened in the housing market. Through Fannie Mae andFreddie Mac, the government provided cheap and easy loans for everyone to buy a house.
  • 15. And with funding so easily available
  • 16. Prices went up and up and up.We now know how the mortgage bubble ended. And now college education is heading down a very similar path.
  • 17. The government will provide almost anyone a loan to pay for college. This attracts more and more young people to go to college, most of whom cant afford education without the governments help.
  • 18. With the government backing just about every loan,universities can raise tuition prices. First because ofhighdemand. Andsecond, because they know students wont be denied nancing from the government.
  • 19. The more government aid goes up, the more tuition will rise.
  • 20. Lim Avai ited lable ! Putting a limit on loans would cap spiraling tuition prices. By taking away easily available loans, young adults would assess the true value of a college degreeand opt for alternatives to career and business training.It would reduce the demand for college, thus reducing the ability of colleges to raise tuition fees. The price of college would atten or even come down.
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