Student Loan Rates to Raise While Wages Stagnate
How Can College Be Justified?
July 1st is a big day for those college-bound in late August 2013. It's the day when the government plans to double subsidized student loans to 6.8%. Students are advised to expect the worst in this situation. Lawmakers are trying to create a law which will extend the 4% rates for one more year, while others in positions of power are proposing to let the rates raise as the market fluctuates. No one has made any solid decisions as the July 1st deadline looms. We are all hoping for a miracle. While Congress is working to overturn this decision and will create retroactive laws to cover the raise, this move makes us wonder, is college worth it?
Well, yes. College is worth it for job seekers. Employers look for those with degrees to prove that the candidate is willing to commit to something. Many college students either don't work through college or hold part time jobs, so the higher commitment to college proves a student's willingness to work hard at obtaining a goal. College looks great on a resume and many companies will pass up a non-student in favor of the student despite experience or qualifications.
We must ask, however, if college is worth the money. There is still more money to be made as a college graduate, but with the median household income at 50,000 a year for the 2013 household, can we really afford to pay back those loans? Probably not, if we want a house with a yard. Forget about a family. There won't be much left over after paying that hefty monthly student loan fee with the average wages.
With college prices skyrocketing and incomes plummeting (down by 7 percent between 2008 and 2013), the argument for going to college is quite heated. Should students attend college if they can't afford to pay for it without government subsidized loans? Some students attend school fully on loans, and these students will suffer financially when they finally graduate.
The price of college alone is scaring away potential students. Skyrocketing loan rates don't make the choice to go to college any easier. When young people don't attend college, they don't gain the edge over the competition, no matter where their life experiences take them.
Young people need to face a tough decision. They need to decide if college is worth the struggle. A lack of a college degree will truly hurt throughout life, from the first job to the future possible promotion. However, the price of college is raising and the loans are becoming harder to pay back. Is college worth it if it comes with a lifetime of debt and struggle?
Many young people are deciding that the answer is no, college is not worth the future financial struggles. This decision weighs heavily on the potential students and causes the available pool of graduates to suffer. Businesses need to take a hard look at hiring practices and decide if qualifications could override a college degree.
Perhaps Businesses Need to Follow This British Recruitment Model
The shrinking pool of college graduates will reduce the number of people qualified for specific jobs. Certain industries, such as engineers and doctors, will always need educated people, but some industries, such as writers or administrators, may need to reconsider how - and who - they hire.
The model of work in the recent past was one of working up from the bottom. The store stock person who works hard could someday be manager with minimal extra education. Industries may need to return to this model if the rates for college continue to rise while the median income continues to decrease.
Too many businesses are picking candidates based on college degrees for everything from the typist to the management. Since young people are reconsidering a college degree, we may be faced with a generation full of non-graduates.
The rates of people living with their parents well into their 30's is rising. People can't afford homes and jobs are low. Salaries are becoming stagnant as businesses need to offer less money for the same amount of work.
This spiral is leading to a future where businesses go back to basics. Less college graduates and reduced incomes will force businesses to have to pull in those who have not attended college. There may be a small pool of graduates who will do the necessary work, but promotions from within might become the norm once again - despite who holds a degree.
A college degree is nothing to be dismissed and young people should strive for the advantages which come with a degree. However, businesses will soon need to reassess hiring practices and look within the abilities of candidates rather than what degrees are held. If the rates of college continue to rise while incomes continually stagnate or reduce, businesses will have no choice but to return to the previously used models. Here's to hoping that Congress can come to an agreement and try to keep the price of college loans at a reasonable rate.
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