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Education costs rising out of range

Updated: Friday, May 30, 2014
Education costs rising out of range story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - It's the time of year for pomp and circumstance and graduation parties, as young American men and women make the transition from high school to the rest of their lives.

Never before has the cultivation of young minds been more important for the future of our country.

Tonight, in Tom's Corner, Tom Van Howe says if we expect to compete well in the growing arena of global competition, we should be making it easier for young people to continue their education, not harder.

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We've all heard the numbers. And they're sobering.

In math, our kids rank 36th. In science, 28th. And in reading, 24th.

And its not so much that our scores are getting worse--theirs are getting better.

We're stagnating.

A generation ago the United States had the highest number of college graduates in the world.

Today we rank ninth--behind such countries as South Korea, Japan, China, Canada, and India.

This, at a time when how we compete in a global economy is going to be dictating our future. Whether we wish to burden our young people with this or not, the fact is, they are our warriors in an increasingly competitive battle for survival.  It's a war that will never end.

No longer is it whether the son or daughter is being groomed to take over the family grocery store. The day of the mom and pop enterprise is largely over. The game is now being played on a world stage.

And how are we helping?

We urge them to borrow large sums of money from the government--with interest rates of roughly 4 to 7 percent--to be paid back after they graduate from college.

With a smile, a signature, a handshake and a few words of encouragement, we award them a diploma and place them in a ten to twenty year financial bind.

Instead of saddling these young men and women with interest-laden debt, why not make it as appealing as buying a new car: "no money down and zero-percent financing." If auto companies can afford to do it to increase sales, we ought to be able to do it to increase our competitive edge.

Not to suggest free education. Just to suggest we drop the burden of interest. Why in the world should a student graduate with a debt of $50,000 and have to pay $80 or $90-thousand over the next 20 years to get out from under it? How about "pay back what you borrow."

To be sure, the government likes things the way they are. Our federal government takes in as much as $65 billion a year on interest from loans made to college students. Isn't that special?

Here's a snapshot of where we stand: more and more young adults want to further their educations. Applications are up at colleges and universities all across the state.

The trouble is, tuition rates over the past thirty years have risen three times faster than median family incomes.

A new ACT study says the average family income for high school seniors has actually declined 12 percent over the past eight years.

People have less and less to pay more and more.

Massachusetts Senator Elizabeth Warren says graduates are so strangled by student debt that for many it's nearly impossible to buy houses or cars or take part in our economy in any substantial way.

And the exact opposite is what we need.

Just as in the world of healthcare, we have to find a way to get control of the cost. There is no sane reason that healthcare and education should continuously outpace inflation.

And there is no sane reason we shouldn't be affordably equipping our young people with everything they need to compete head-to-head in an increasingly competitive world.

It's a cost we'd benefit from greatly.

And our future depends on it.

In this corner...I'm Tom Van Howe.

Business News

Last Update on January 30, 2015 18:13 GMT

ECONOMY-GDP

WASHINGTON (AP) -- The U.S. economy slowed in the final three months of 2014 as a big burst in consumer spending was offset by weakness in other areas.

The Commerce Department says the overall economy grew at a 2.6 percent rate in the October-December period, down from sizzling gains of 4.6 percent in the second quarter and 5 percent in the third quarter.

Consumers did their part in the fourth quarter, pushing up spending by fastest rate in nearly nine years. But businesses investment, trade and government spending weakened.

For the year, the economy grew at a moderate rate of 2.4 percent. But economists believe 2015 could be a breakout year for growth, with consumer spending boosted by strong employment gains and falling gas prices. Many expect growth above 3 percent this year.

EMPLOYMENT COST

WASHINGTON (AP) -- Wages and benefits rose at the fastest pace in six years last year, a sign strong job gains could be forcing companies to pay a bit more for workers.

The Labor Department says the employment cost index, which measures pay and benefits, rose 2.2 percent in 2014, up from 2 percent the previous year. That's the biggest gain since 2008. It's also ahead of inflation, which rose 1.3 percent.

Yet the increase is still sluggish by historical standards. In a healthy economy, the index usually rises at about a 3.5 percent pace.

The Federal Reserve is closing watching wages as it considers when to raise the short-term interest rate it controls. Fed Chair Janet Yellen considers rising wages a key sign that the job market is nearing full health.

US-CONSUMER-SENTIMENT

WASHINGTON (AP) -- U.S. consumers are more confident than they've been since January 2004.

The University of Michigan says that its index of consumer sentiment rose to 98.1 in January from 93.6 last month.

Consumers say the prospects for the U.S. economy are the strongest in a decade, and half of consumers expect the expansion to keep going another five years.

The Michigan survey was the latest evidence that strong job growth and tumbling oil prices have lifted consumers' spirits. The Conference Board on Tuesday reported that its consumer confidence index climbed to the highest level since August 2007. And the Commerce Department reported Friday that consumer spending rose from October through December at the fastest pace in nearly nine years.

AMERICAN AIRLINES-PILOTS

DALLAS (AP) -- Pilots at American Airlines and US Airways have approved a single labor contract. That's a step toward combining workforces at the two carriers, which merged in December 2013.

The multiyear deal gives pilots a 23 percent pay raise retroactive to Dec. 2.

The pilots' union said Friday that the contract was approved 66 percent to 34 percent, with 95 percent of eligible pilots casting a vote.

TOYOTA-FATAL CRASH

MINNEAPOLIS (AP) -- A jury of six men and six women is continuing deliberations in a case alleging a 1996 Toyota Camry had a design defect that caused a fatal crash.

Jurors received the case late Wednesday afternoon and deliberated all day Thursday without reaching a verdict. They returned to a federal courthouse in Minneapolis on Friday to keep working.

The jurors must decide whether Toyota's design of the 1996 Camry had a defect that was unreasonably dangerous. If they find there was a defect, they must decide if it directly caused injuries to those hurt or killed when Koua Fong Lee crashed into another car in 2006.

Lee spent 2 1/2 years in prison before being released after reports suggested some Toyota cars had sudden acceleration problems.

GERMANY-BMW-SECURITY FLAW

BERLIN (AP) -- German automaker BMW says it has fixed a security flaw that made 2.2 million of its vehicles vulnerable to break-ins.

The company says the problem affected BMW, Mini and Rolls Royce models equipped with its ConnectedDrive technology, which allows drivers to access certain car functions with a smartphone.

German automobile club ADAC, which discovered the flaw last summer, says hackers could have used a fake cellphone base station to intercept network traffic from the car and lower the windows or open the doors. There are no reports such a break-in ever took place.

BMW spokeswoman Silke Brigl said Friday that hackers wouldn't have been able to start or stop the engine.

Brigl said the problem has been fixed with an automatic update and customers don't need to take any action.

POM JUICE-RULING

WASHINGTON (AP) -- A federal appeals court says many advertising claims for POM Wonderful juice were deceptive in asserting that it curbs the risk of heart disease, prostate cancer and erectile dysfunction and is clinically proven to work.

In a 3-0 decision, the U.S. Court of Appeals for the District of Columbia Circuit upholds the conclusion that many of POM's ads made misleading or false claims. The conclusion was reached by the Federal Trade Commission.

The ads appeared in national publications, on Internet sites, bus stops, billboards, newsletters and on tags attached to the products.

POM Wonderful LLC produces a number of pomegranate-based products.

RUSSIA-FINANCES

MOSCOW (AP) -- Russia deputy sports minister Yuri Nagornykh says his country's economic crisis is forcing athletes to scale back their training plans for next year's Olympics in Brazil.

Training camps abroad can be crucial in acclimatizing athletes for Rio de Janeiro's tropical conditions, but they are rapidly becoming unaffordable after the ruble lost almost half of its value against the U.S. dollar in the last 12 months.

Nagornykh tells Russian agency R-Sport that, with the ruble's value low and the Sports Ministry's budget facing cuts, athletes should stay in Russia rather than train abroad "in order to spend less of the currency reserves."

Officials will select priority sports and athletes for scarce funding, Nagornykh said.

The measures affect athletes for the Rio Olympics, and the 2018 Winter Olympics, he added.

OHIO STATE-ROYALTIES

COLUMBUS, Ohio (AP) -- The Ohio State University is cashing in after the Buckeyes' national championship victory.

The Columbus Dispatch reports the university expects a $3 million increase this year in royalties from licensed merchandise sales as fans continue to buy national championship gear and keepsakes.

Retailers say the team's special story has helped boost sales. The Buckeyes, who defied naysayers in their 42-20 victory over the University of Oregon, earned the final playoff spot after losing two starting quarterbacks to injuries.

Licensing officials also attribute increased sales to the fact Ohio State hadn't won a championship since 2002.

More than half of each dollar that comes into the school's licensing office goes to academic affairs. The athletics department, alumni association and student life program also receive portions of the revenue.

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