|COMMENTARY: COLLEGE GRADS OVERWHELMED WITH DEBT by TOM PAUKEN|
|by Tom Pauken||Mon, Nov 7, 2005, 01:34 PM|
A story in the November 14, 2005 issue of Business Week highlights a problem that has been building for some years – college grads are being saddled with high levels of student loan and credit card debt that may take them decades to pay off. The article profiles a number of graduates who are stuck with financial obligations from their college years.
William Love has a current debt of $111,000 as he tries to finish his MBA while working in a "temporary, full-time job as a financial analyst at Constellation Brands." Texan Cristina Garcia Gamboa and her husband Manuel Gamboa have student loan debts amounting to $116,000. Manuel is now getting an MBA at the University of Texas at Austin. When he finishes, "they will have accumulated an additional $100,000 in debt."
In the Pauken family, five of our children got through college through a combination of financial assistance from us, part time work, partial scholarships, and student loans. However, none of them started out after college with anything near the levels of debt obligation cited in the Business Week article.
One major factor contributing to this growing problem is the huge increase in the cost of higher education. When I went to Georgetown University in the 1960s, tuition, room and board were $2,000 per year. Now, the cost of a Georgetown education is around $40,000 per year. What this does is make it difficult for children of middle class families to afford a university like Georgetown without the parents and/or children incurring a substantial financial obligation. The Business Week article points out that the cost of higher education has gone "up by 63% at public schools and 47% at private" schools over the past decade and a half. Here in Texas, tuition at our public colleges has gone up dramatically since the Legislature allowed the university system to set their own tuition levels a few years ago. Do we run the risk of freezing the middle class kids out of the higher education system by what we are doing at our public institutions in Texas? Or, loading them up with debt that will take years to repay? And, are degrees from expensive private colleges worth having to take out loans in excess of $100,000? Somehow, the cost of higher education has gotten out of whack in America. Higher costs do not necessarily correlate with a better education.
On our site, we began a series Sunday called "Choosing the Right College" from the 2006 Edition of that college guide. This series will focus on some of the best colleges in Texas. The Business Week article entitled "Thirty & Broke" is an important addition to read alongside the latest College Guide. The link to the Business Week article is here: www.businessweek.com/magazine/content/05_46/b3959107.htm
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