Photo: Nathan Csonka on Flickr
The “MetLife Survey of the American Teacher” recently discovered that more high school students worry about financing their education than about actually getting into college or even being successful at college. Not long ago, administrators at California State University Fullerton stated that they lose more students to credit card debt than to academic failure.Why are so many students battling debt? And how can they focus on doing well in school when they can’t afford being there? Are college students today unable to complete their education because of debt and what is Obama doing to address this?
Broke and uneducated: Is this the future of our children?
Graduation caps have been flying through the sky like paper planes all week. Parents have exchanged smiles and silent tears, and students have exchanged meaningful hugs and promises of everlasting friendship.
But a few days after a high school graduation, the mixture of success, gratitude, and pride all start to fade as a new reality sets in for many young adults: College. And, if you’re like an overwhelming majority of incoming college freshman, you may be dwelling on aspects of your university career that have nothing to do with education.
It used to be easier: Go to high school – do well; go to college – do well; get a job – be successful. But now the yellow-brick-road of education is entirely different. While students used to worry about speed bumps like acing that chemistry final or finishing that 12 page book analysis, concerns are now entirely different. Questions like “How will I pay for my loans?” and “Should I just drop out because I can’t afford tuition?” are replacing the innocent academia questions of the past.
The culprit may be a rectangular piece of plastic: The Credit Card. According to U.S. Federal Reserve data, 43% of students own credit cards in high school and 73% of those who don’t will own one will by the time they are in their fourth or fifth year of college. Also, 25 % of students use their credit cards to pay for tuition when paying for college. Within several months, 41% of these students will carry a debt balance.
Anthony S. Colucci, a National Board-certified teacher and member of the Teacher Leaders Network, blames school curriculums for this problem in understanding personal finance with students.
In his article in Education Week: Teacher, he writes, “Our schools ask students to multiply fractions, calculate the area of squares, and pinpoint the main idea of passages of literature. These are all useful skills, but there’s an enormous elephant in the room: the need to address our country’s economic woes by improving citizens’ financial literacy.”
He’s right. Yes, it’s often difficult to speak to middle school and even high school students about woes of credit card debt. But as most educators shy away from these important conversations, many students assume their plastic cards are just that: plastic money cards to be used at their leisure.
Colucci even cites a survey of 12-year-olds done by Consumer Reports that found 28% didn’t understand that credit cards are a form of borrowing and 40% didn’t know that banks charge interest on loans.
But if college students today are unable to complete their education because of debt, what is the government doing to address this?
Time magazine writes that the Department of Education finalised the “gainful employment” rule this past June. This rule will basically prevent federal financial aid dollars from trapping students with more debt than they can realistically repay. It goes into effect July 2012, as will a set of new regulations to reform the for-profit career-college industry.
These new regulations include preventing career-college recruiters from being paid based on the number of students they enroll and placing stricter requirements on states to monitor schools. The Obama administration says that this rule will help protect students and their families from “exploitive programs,” according to Time.
Time also said that under the rule, to qualify for federal financial aid, a program must meet one of three requirements: at least 35% of former students are repaying their loans; the annual loan payment does not exceed 30% of his or her income; or the estimated annual loan payment does not exceed 12% of his or her total earnings.
According to a press release from the U.S. Department of Education, Secretary of Education Arne Duncan said that the new regulations will help ensure that students at these schools are getting what they pay for: solid preparation for a good job.
“We’re giving career colleges every opportunity to reform themselves but we’re not letting them off the hook, because too many vulnerable students are being hurt,” he said.
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