Marc Yacht: College loans creating a debt crisis

According to the Institute for College Access & Success student loan debt is on the rise. Sixty percent of graduates from public institutions, 75 percent of graduates from private non-profit schools and 88 percent from for-profit schools, incurred significant debt. Families earning under $40,000 annually can receive Pell Grants. Surprisingly, Pell recipients tend to borrow more and leave school with higher debt than those without such grants.

Increasing tuition costs and private for-profit college student recruitment leave 40 million Americans with outstanding higher education loans. The average loan approaches $35,000 but many student face $100,000-plus with advanced degrees. Total student loan debt now tops $1.2 trillion, creating impossible financial obstacles when graduates are beginning their careers and families.

Many who find jobs sink further into debt when unable to repay lenders as interest accumulates. All colleges and universities recklessly encourage such student borrowing. Are these loans worth the sheepskin? Jobs are scarce and many graduates are underemployed, unable to pursue career goals or satisfy loans.

Although student loan defaults are falling the rate still stands at 14.7 percent. For-profit universities have the highest default rates, approaching 22 percent. The schools received their money but the student must repay the debt.

European students enjoy much lower tuition rates and more government subsidies allowing more affordable education. Also, the European university maintains high standards. European secondary education provides an equivalent two year college degree and identifies students who show different skill sets. Many are tracked to vocational or technical training.

Many countries such as Norway, Iceland and Argentina are tuition-free, yet some minor debt may be incurred by their students. British and Japanese students may incur debt; however, none compare to American student obligations. U.S. loan debt results from aggressive college recruiting, escalating tuition, residential needs and exorbitant student fees; Americans quickly acquire significant liability.

Sadly, college is a costly mistake for some, and more U.S. high school graduates are opting for blue collar work. Yet, high school advisers find it difficult to suggest technical training for students wanting a college education. Admissions are easy to come by. Students are duped into accumulating significant loans and become victims of a degree mill offering poor job options. The result is a high level of loan default and negative credit for the graduate.

Welders, electricians, and other skilled worker jobs provide excellent job opportunities with good income and rarely create debt for those in training. School work programs and apprenticeships may allow students to earn money while training. High schools must clarify to parents and students alternatives to college education.

High-schoolers with marginal academic achievement should look to personal areas of strength when continuing their education. Those with strong academic records must make smart curriculum choices when attending university so the earned degree will provide adequate employment opportunities.

The current debt crisis came about due to unscrupulous college recruiters looking to cash in on liberal loans, lack of proper guidance, and often unrealistic undergraduate expectations. Students must consider their strengths carefully when leaving high school to further their education and skills.

The Latin phrase Caveat Emptor or “let the buyer beware” sadly relates to American higher education where many for-profit colleges take cruel advantage of high-schoolers. A low paying job or no employment leaves many youth with insurmountable debt while beginning their lives as adults and parents.

Dr. Marc Yacht, MD is semi-retired living in Hudson, Florida. Column courtesy of Context Florida.

Marc Yacht



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