Tuition vs Wages: Bittersweet Reality
College costs are rising and, with that, so is the cost of college loans. Currently, loan interest rates are 3.4% and may rise to 6.8%, if Congress does not act by July 1st, 2012. College tuition is rising by 8.3% on a YoY basis. Should the interest rates rise,
- 7.4 million students will see their college costs go up— about one out of every three college students in the country.
- The increase will cost the average college student about $1,000 more per year of school.
- As a result, the cost of college for the average borrower taking out full Subsidized Stafford Loans will increase by 20 percent next year.
Both sides agree that better financial aid mechanisms and loan provisions will make the economy stronger. Median weekly earnings for 25-34 year olds has fallen by 5% on a YoY basis since 2001. Based on the numbers, if the current situation continues, people will start questioning the value of higher education. We need a solution fast, not only for the 7.4 million students currently affected, but also for the 20 million overall student population.