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50th Anniversary State of Education Series
As tuition rises, student debt crisis escalates
In the last issue of The Scholar, we explored several reasons why college tuition feels so expensive and unmanageable, including rising tuition costs due to a decline in state education budgets, the high costs of running a university, and the fact that college is worth more in today’s world, which also means it costs more to get earn a degree. Naturally, this has led to an increase in both federal and private-sector student borrowing. Financial experts predict that student loan debt could reach a whopping $1 trillion by the end of 2011—and that this may be the next financial bubble to burst.
Tonja Lesmeister and her husband, Troy, met in college in the early 1990s. Both were first-generation college students and came from families that could not afford to set money aside for college tuition. Though their parents were supportive of their dreams of going to college, Tonja and Troy were left to navigate the complicated world of college finances on their own.
Coming from a low-income family, Troy received the maximum amount of federal grants available at the time. Because Troy was in school to become a pilot, there were extra costs that he had to cover; he ended up borrowing the full amount of student loans available to him. Tonja received some grants, but also took out a large amount of loans. She worked three jobs in order to cover the gap, but when she was put on academic probation, Tonja cut back on her work hours to focus on her studies and took out even more loans.
When Tonja and Troy graduated and married less than five years later, they consolidated their loans at an 8 percent interest rate—considered “good” at the time—and began paying off their nearly $36,000 in loan debt on a graduated payment plan (allowing the couple to pay a smaller amount in the beginning when their income was lower, with their payment amounts gradually increasing).
For several years, the Lesmeisters were successfully making their payments—which were primarily just on interest—even as their family grew. Just before they could begin paying down the principal balance, Troy’s job went south following the terrorist attacks on 9/11. The airline industry tanked. Because Troy didn’t have steady employment, they were forced to defer their student loans for three years.
It’s been 15 years since Tonja and Troy graduated from college. They are now 40 years old, have four children—two of whom they just adopted from Jamaica—and still owe $36,000 in student loans. Though they pay well over the minimum amount due every month, they’ve made zero headway on their balance. As three of their children approach college age, the Lesmeisters are growing increasingly concerned about paying for their education. Though they don’t want their children to be faced with the same unmanageable student debt, they also know that what little money they can provide for tuition won’t be enough.
Though the Lesmeisters’ situation may seem unusual, it has become increasingly common in today’s high-tuition and high-student-debt reality. In 2009, a PBS segment on student debt reported that seventy million people—one quarter of the nation’s population—owe a collective $700 billion in student loan debt, more than America’s total credit card debt. Whereas Tonja and Troy had roughly $18,000 in loans apiece, the Project on Student Debt says that today’s graduate carries an average of $24,000 in student debt, leaving graduates with unmanageable monthly payments in an uncertain job economy.
Unlike mortgages, credit cards, and nearly every other kind of debt, student loan debt cannot be wiped clean through bankruptcy. Default rates are on the rise, and the government is threatening to sue people
who have defaulted on their student loans.
Understandably, many people are quick to ask the question, “Is a college education worth it?” For the majority of Americans—and for America as a whole—earning a college degree even with student debt almost always pays off.
In 2009, the average annual unemployment rate rose sharply for all levels of educational attainment. But the unemployment rate for those with only a high school diploma was 5.1 percentage points higher than the unemployment rate for those with at least a four-year college degree, as reported by College Board in 2010.
Georgetown University Center on Education and the Workforce stated in a 2010 report that as the economy continues to recover over the next few years, 60 million Americans are at risk of being excluded from the middle class and will remain trapped in low-wage jobs that require a high school diploma or less. Between 1973 and 2008, the share of U.S. jobs that require a college degree increased from 30 percent to 60 percent. Yet today, less than 40 percent of Americans hold at least a two-year degree. By 2018, America will be short 3 million college degrees.
Americans should not be forced to choose between a life in low-wage jobs, or twenty years of high payments on student loans. Because the likelihood of tuition decreasing over the years is slim, and the amount of government aid is likely to decline, the role of scholarships in the majority of students’ education is exceedingly important. Instead of student loans, scholarships can be used to bridge the gap for students, making Scholarship America’s work all the more relevant in the coming decades.
Scholarship America is excited to announce that it was chosen by former CBS Evening News anchor Katie Couric as the beneficiary of a portion of proceeds from her new book, The Best Advice I Ever Got: Lessons From Extraordinary Lives.
The book, which was released on April 12 by Random House and quickly made the New York Times bestseller list, is a collection of essays, poems and advice from A-listers in business, entertainment and politics geared toward encouraging college graduates to think about their futures. In addition, two of Scholarship America’s New York-based scholarship recipients are featured in the book’s introduction.
“Scholarship America changes lives every day by helping students afford a college education,” Couric said. “Because my book offers inspirational advice from some amazing people on how to succeed in life, Scholarship America is the perfect partner organization for this project.”
Katie Couric recently left her post as anchor and managing editor of the CBS Evening News; she is a 60 Minutes correspondent and anchor of CBS News primetime specials. Couric also writes a monthly column for Glamour magazine which features an interview with a new female role model every month.
With the cost of college tuition on the rise and the number of college graduates on the decline, private scholarships are essential in bridging the gap. Scholarship America supports the continuum of student needs.
“We are honored that Katie selected Scholarship America,” said Lauren Segal, president and CEO of Scholarship America. “Her donation will support our National Scholarship Fund, which will help even more students across the country complete their college education, and the book itself will serve as a great inspiration for students as they plan their futures after graduation.”
As Scholarship America celebrates 50 years of providing more than $2.5 billion in scholarships and sending 1.7 million students to college, we are launching A Dollar A Day, a program designed to encourage communities nationwide to donate as little as one dollar each day for a week—$7, roughly the equivalent of $1 in 1961—to help even more students go to college.
“With the cost of college tuition on the rise, the number of college graduates on the decline, and more than $700 billion in student loan debt nationally, scholarships are essential to bridging the gap—making this one of the biggest economic issues facing our country today,” said Lauren Segal, president and CEO of Scholarship America. “Our goal is not just to help students get into college, but to help them complete college by awarding renewable multi-year scholarships, which will ultimately help minimize the debt they will incur upon graduation.”
“By encouraging every American to give a dollar a day, whether it be for one week, one month, or one year, we continue making our dream of helping every deserving student achieve their dreams a reality, while advancing the economic vitality of our country’s future,” Segal said.
Scholarship America’s 4G philosophy—Get Ready, Get In, Get Through and Give Back—supports the continuum of student needs from college preparation and access through degree completion and giving back to the community. In addition to entry-level scholarships, Scholarship America awards renewable multi-year scholarships, as well as emergency financial grants—both of which provide students with the financial assistance they need to complete their college educations.
View our A Dollar a Day video at www.scholarshipamerica.org/dollaraday; then forward the link to help us raise awareness about the importance of scholarships.
- Teaming up with Microsoft
The Microsoft Store’s Giving Kids Tools for Tomorrow Program runs through July 3; all customers, supporters and Facebook fans can cast votes to help Scholarship America, one of three student-centered
organizations featured. Each vote means the Microsoft Store will donate $5 worth of software (with a minimum value of $25,000 for a maximum donation of $100,000 worth of software). Please visit the
Microsoft Store on Facebook (www.facebook.com/microsoftstore) and vote for Scholarship America today!
- Home of Bridgeport Dollars for Scholars was finalist for Presidential Commencement Challenge
Bridgeport High School in Washington, home of Bridgeport Dollars for Scholars, was named one of the top three finalists from the thousands that applied for the President’s Race to the Top Commencement Challenge; the winning school features a commencement address from President Obama. Though Bridgeport was not selected, the staff and students of Bridgeport High School have succeeded in being recognized as one of the top schools in the country, and will hear from U.S. Labor Secretary Hilda Solis and Washington Governor Christine Gregoire at their commencement.
- eyebobs frame benefits Scholarship America
eyebobs, which designs stylish reading glasses for women and men, is introducing an exclusive, limited-edition frame called “Katie’s Close Up,” a design collaboration between eyebobs and Katie Couric. The
company is making a donation from the sales of “Katie’s Close Up” to Scholarship America. Suitable for men or women, “Katie’s Close Up,” is available for pre-order at eyebobs.com.
Developed in partnership with interactive agency BGT Partners, who provided services pro bono, our new user-friendly site engages and educates visitors and stakeholders via easy access to information
and resources. Highlights include:
- Simplified homepage navigation
- Enhanced search functionality
- Increased social media integration
- Student & parent resource center
- Rotation billboard to share current promotions
A big thank you goes out to everyone involved in making this site a reality!
© Copyright Scholarship America, Inc. 2014, All rights reserved.