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Tue May 8, 2012
Latest numbers reveal Washington college students not spared from grim outlook
The dark clouds looming over higher education in the nation and Washington may have a silver lining, but so far it’s been hard to find and the recent spate of news has been pretty bad for college students.
We'd love to hear your thoughts on building in a silver lining, but first the details.
Here's the rundown of recent education news:
- Interest rates on federal student loans are caught up in a political dog fight in D.C. – raising the potential for the rate for new loans to double from 3.4 percent in July. And, the amount of outstanding student loans has hit $1 trillion.
- Washington colleges recently announced tuition increases in the double digits, after years of consecutive increases.
- The majority of graduates (especially those in the liberal arts) are underemployed, if at all.
- And, the state’s ability to fund needy students has been steadily declining.
The national loan numbers
The new federal watchdog agency — the Consumer Financial Protection Bureau – reports that the total student debt topped $1 trillion several months ago. That’s compared to the country's total credit card balance of $693 billion and the total auto loan balance of $730 billion.
That prompted many to wonder if the student loan system was heading for a crisis.
- Yes it is
Here’s a warning from Salon.com: When there are Americans whose Social Security checks are being garnished to pay off their outstanding student loan debt, then it is clear that the United States has a problem. And the rising number of seniors who haven’t paid off loans taken out decades earlier is only one of several reasons to be alarmed by a report on student loan debt released by the Federal Reserve Bank of New York in March.
- No it’s not
"I don't think it's a bubble," Mark Kantrowitz, publisher of Finaid.org, a financial aid website, told CNN Money. "Most students who graduate college are able to repay their loans."
Silver lining? Well, not exactly:
CNN goes on to write: This is not to say that there aren't problems with student loans, which now exceed the amount of credit card debt and auto loans. Students are taking on more debt, on average, and more than a quarter of borrowers are behind on their payments. And a hefty debt load could delay recent graduates' purchase of a home or starting a business.
The latest study conducted by the Washington Higher Education Coordinating Board (HEC Board) concluded that billions of financial aid dollars were provided to Washington students during the 2010-11 academic year, of that total 50 percent was given in the form of loans totaling $1.2 billion.
The Project on Student Debt has concluded that statewide, students graduate with just over $22,000 of debt on average (compared to roughly $25,000 national average).
“In general I would say that college remains a good investment but students should do what they can to minimize the amount of debt they take on,” says Randy Spaulding HEC Board’s Director of Academic Affairs and Policy.
Needy students left behind
Bob Burdick, a spokesman for HEC Board, explained that prior to the economic recession Washington appropriated enough money to provide state need grants to all but a small percentage of the students who qualified — 1,500 qualifying students did not receive financial aid in 2006.
Currently 26,000 qualifying students are without a needs grant because of an increase of students attending colleges.
According to Burdick, since the economic recession many high school graduates intending to directly enter the workforce are unable to find jobs – more than twice the unemployment rate of those with bachelor’s degrees – and are now attending college.
However, students qualifying for a needs grant are forced to turn to other loan options since the total amount of state need grants are unable to increase at a fast enough rate, creating a spike in student debt that continues to grow.
“We are seeing the annual average amount borrowed increase, likely due to tuition increases combined with limited financial aid grant dollars,” said Rachelle Sharpe, the board's Director of Student Financial Assistance.
"You can make more money on average if you go to college, but it's not true for everybody," Harvard economist Richard Freeman told USA Today. He noted the growing risk of a debt bubble with total U.S. student loan debt surpassing $1 trillion. "If you're not sure what you're going to be doing, it probably bodes well to take some job, if you can get one, and get a sense first of what you want from college."
Andrew Sum, director of the Center for Labor Market Studies at Northeastern University who analyzed the numbers, added that many people with a bachelor's degree face a double whammy of rising tuition and poor job outcomes.
"Simply put, we're failing kids coming out of college," he told USA Today, emphasizing that when it comes to jobs, a college major can make all the difference.
Choosing the right major for you
According to an analysis of government data conducted for the Associated Press, roughly 1.5 million or 53.6 percent of bachelor’s degree holders under the age of 25 were unemployed or underemployed last year.
The AP reported that college graduates majoring in anthropology, philosophy and humanities were among the least likely to find jobs correlating to their degree, while those pursuing nursing, accounting and computer science are among the most likely.
The AP broke down employment of graduates unable to find jobs matching their level of education:
In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined. There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs. More also were employed as cashiers, retail clerks and customer representatives than engineers.
“In today’s knowledge-based, high-tech economy, those who do not earn some form of postsecondary degree or certificate or participate in an apprenticeship program will simply not be competitive for living-wage jobs,” said HEC Board's Burdick . “And it will become more and more like this in the future.”
Washington’s tuition plan
The Associated Press reported last week that in order to counteract the decrease in state dollars allocated to public universities, colleges are implementing a double-digit in-state college-tuition increases.
For the second year in a row Washington State University's board of regents voted to raise tuition 16 percent or $1,500. The University of Washington will likely vote to increase tuition by 16 percent in June, following last year’s 20 percent increase.
WSU's student-body president Riley Myklebust told The Associated Press, "I don't believe that our state leaders realize the effects of raising tuition," adding his worries about the future impact of student loans on the nation and economy.
Many other colleges will likely increase their in-state tuition this next academic year:
- The Evergreen State College by 14 percent.
- Central Washington University by 14 percent.
- Eastern Washington University by 11 percent.
- Western Washington University by 16 percent.
- Washington's 35 community and technical colleges by 13 percent for full-time students and 11 percent for part-time students.
For a future story, we'd love to hear your thoughts on how the state – heck, the country – can turn this situation around.
On the Web:
- The Chronicle of Higher Education: The Ph.D. Now Comes With Food Stamps