Stagnant wages and soaring college fees affecting US economy
24 Apr 2015
Mounting college tuition fees in the US are having an adverse effect on the nation’s economy and social wellbeing, as graduates with debts struggle to live within their means on stagnant salaries
While salaries have been sluggish, college fees have soared in the past 10 years, with today’s graduates often racking up debts of US$70,000-$100,000 or more after studying for an undergraduate degree, according to TedxLBS speaker Adam Carroll. The combined effect is forcing people to put plans of buying a home or starting a family on hold. Moreover, government grants to subsidise education have been slashed from 80–90 per cent to 8–17 per cent.
“People aren’t making more money even though they’re spending tens times more on education now than a decade ago,” said Carroll, who spoke at TedxLBS about his documentary, Broke, Busted and Disgusted, which looks at spiralling student debts in America.
Carroll said that today’s students are living a prolonged adolescence, where they spend more time in education, or work for a year or two before going to college. Most start their careers aged 22–24, by which time they have amassed huge debts that prevent them from living independently.
“After finishing college, they’ll go back to live with their parents and put off buying a home or cars, or starting a family. Those people could be buying property, which would pump more money into the economy.”
Demand for college places remains high, despite soaring tuition fees, with Carroll estimating that there are 19 million undergraduate students in the US.
The US Government hopes to tackle the issue by providing each state with $10–$15m for apprenticeship schemes that encourage people to learn a trade rather than accrue huge debts at college.
In a country with 5–7 per cent unemployment, there are several industries that desperately need skilled workers such as welders, sheet metal specialists and factory line technicians.
“These schemes are for people who don’t want to sit at a desk studying for four years, they want to use their hands,” Carroll said. “Apprentices will make $14–$16 an hour for starters and, within four years, they’ll get the equivalent of a two-year degree. They will have made $30,000-$40,000 a year and be on $80,000 in their fourth year but have no debt. In contrast, you could have someone who goes through school for four years, comes out with a $60,000 debt and then gets a job paying $30,000–$40,000 a year. Their monthly repayments will be pretty high.”
Click here to view Adam's talk at TedxLBS.