It is a real blow for the American middle-class when college costs soar and incomes barely increases to keep up with it. With out of pocket expenses of a good American college education increasing faster than incomes, middle and low income families are rethinking sending their kids to college.
Tuition fees at public universities have gone up by 130% in the last two decades, while middle class incomes have remained stagnant. In 1988, a public university charged $2,800 for tuition and fees for a four-year course, but by 2008, the figure had risen to $6,500 a year. Sadly, incomes didn’t keep pace with this increase or an American would have been earning an average of $77,000 a year by 2008. Instead, it was $33,000 on average. At that time, federal aid of $23,000 was available to students for a four-year degree. Now, students bear most of the financial burden of their education.
In the face of this, two trends can be seen: either families are taking on huge amounts of debt or are reducing their child’s education to two years instead of them studying for four. There is a good side to student debt, as the education a student receives is seen as a stepping stone to a better tomorrow. This is because there are more jobs available to college graduates—in fact, they can earn $1 million more throughout their lives. However, the flip side of this is that they start life with a huge loan hanging on their heads, sometimes averaging $23,186!
According to experts, half the number of graduates will take 20 years to repay their loans. This means they won’t be able to buy a house, save for retirement, or create a fund for their children’s education. To avoid such a scenario, families are entering their children into two-year degree courses. This leads to them getting fewer job skills at a time when employers are looking for more from them. Because they lack these necessary skills, unemployment rates are high and companies shift their jobs abroad where wages are much less.
This new trend of the middle class seeking two-year degrees is a deterrent to America competing in the global economy. In the domestic scenario too, this does not augur well. Now, the richest Americans continue to grow their money phenomenally while the poor are stuck where they were. In order to compete in the global knowledge economy, U.S. needs undertake some education reforms and make college education accessible to more people.
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