The education balloon
Source: http://www.washingtonpost.com/blogs/wonkblog/post/chart-of-the-day-college-tuition-is-out-of-control/2011/10/27/gIQABi4sMM_blog.html
In a nutshell, the tuition fees in the US universities have increased 4 times for the last quarter of a century, and the student loans have surpassed $1 trillion:
Much could be said about the curse of higher education: as soon as the student has graduated, he or she already has piled mountains of debt. The young educated Americans need more and more time to pay back to their creditors. And many of them never manage, and they sink down into a debt spiral.
The university tuition in the US has passed the 1 billion mark, which is more than all the debt on credit cards for all Americans. There are thousands, if not millions of personal stories of students who are paying hundreds of dollars every month, just to cover the interest on their loans. It is like paying a mortgage on an imaginary house that doesn't even exist in the material sense. Still, at least they have supposedly received something in return for their indebtedness - either education at Berkeley, or Harvard, or some of the other, more or less prestigious education institutions in the country. All financed through a private loan. Some of them even come back to teach in colleges or universities. And the wheel keeps turning.
Still, for each of those who manage to pay it all back, there are dozens who never find a proper job after graduation. And their number keeps growing. As well as the number of those who fail to serve their debts that they have piled during their studies. The share of 90+ day delinquency has increased from 9% to 11% for 2012.
The economists are warning of a danger for a new "balloon" coming up, one that could plunge the country in a new crisis. The education balloon could have much graver consequences than the real estate balloon, because, unlike the owners of real estate, students cannot just "return" their education. And whoever has interrupted their studies or has chosen a discipline that has yet to assert its place at the labour market, would virtually remain empty-handed.
More and more university graduates work as waiters and janitors. Some of them never even finish university - about 40% of them interrupt their studies. One-third of the debtors are over 40 years of age, and one in four households consisting of 35-45 year old high-education graduates are still paying back their student loans.
The average US student with a bachelor degree leaves the university with $ 27,000 of debt (if they manage to graduate at all). And those who study medicine, law, or who have chosen some elite private university, could end up with a 6-digit debt.
The problem is that the salary growth rates simply lag way behind the growth rate of student loans. The Economist reports that in 2007 the US university graduates earned salaries comparable to the 1979 levels, while in the meantime their education expenses have risen exponentially.
This is a disturbing trend, and sounds like financial enslavement of vast proportions. It is an enormous hindrance to the well-being of an entire society, because as we know, education and the youth potential is essential for the long-term growth of an economy, and hence the prosperity of a nation. And while many people are so focused and invested in other issues and seem to believe that the worst of the economic crisis is behind their backs, this mine field keeps getting wider and denser. And it is bound to explode at some point. And this time the consequences will be very profound.
I wish I had a solution to this problem. But, as I am obviously lacking the insights an American would have, I guess I am stuck at the "raising the issue" stage at this point.