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 May 26, 2015 17:47 GMT

CHARTER-TIME WARNER CABLE

NEW YORK (AP) -- Charter Communications will spend $55.33 billion to acquire Time Warner Cable in a cash-and-stock deal that would instantly create one of the largest pay-television and broadband operators in the U.S.

As part of the agreement, Charter will also buy Bright House Networks for more than $10 billion.

Charter will provide $100 in cash and shares of a new public parent company equal to 0.5409 shares of Charter for each outstanding Time Warner Cable Inc. share. The transaction values each Time Warner Cable share at about $195.71.

The companies on Tuesday valued Time Warner Cable at a total of $78.7 billion.

Shares of Charter Communications Inc. are up more than 3 percent in premarket trading.

DURABLE GOODS

WASHINGTON (AP) -- Orders to U.S. factories for long-lasting manufactured goods fell slightly in April. But orders in a category that indicates business investment posted a second increase, a hopeful sign that this key sector is starting to revive.

The Commerce Department says that total orders for durable goods slipped 0.5 percent from March, when total orders had surged 5.1 percent. The big swing was driven by changes in commercial aircraft, an extremely volatile category that had jumped in March but fell in April.

Orders in the business investment category rose 1 percent in April after a 1.5 percent increase in March. The results followed a sizable 5.1 percent fall in February. Business investment has been hurt by a stronger dollar cutting into exports and cutbacks in the energy industry.

CONSUMER CONFIDENCE

WASHINGTON (AP) -- The Conference Board says consumer confidence rebounded this month as the job market showed signs of improvement.

The business research group's consumer confidence index rose to 95.4 in May from 94.3 in April. The April reading had been sharp drop from March's 101.4.

Consumers' assessment of current economic conditions improved, but their outlook for the next six months slipped. Their expectations for the for the job market improved, however.

Employers added a healthy 223,000 jobs last month, up from a lackluster 85,000 in March. And the unemployment rate slid to 5.4 percent, lowest since May 2008, six months into the Great Recession.

NEW HOME SALES

WASHINGTON (AP) -- More Americans bought new homes in April -- fresh evidence that the improved job market is powering the real estate sector.

The Commerce Department says new-home sales climbed 6.8 percent last month to a seasonally adjusted annual rate of 517,000. Sales recovered from an annual pace of 484,000 in March.

Purchases of new homes are volatile on a monthly basis, although sales during the first four months of 2015 are 23.7 percent higher than in 2014. Employers have added 3.1 million jobs over the past year, with those new paychecks starting to trickle into housing.

Sales increased in the Midwest and South last month, while slumping in the Northeast and West where prices are generally higher.

The median sales price has risen 8.3 percent since April 2014 to $297,300.

HOME PRICES

WASHINGTON (AP) -- U.S. home prices rose at a steady pace in March, pushed higher by a limited supply of houses for sale.

The Standard & Poor's/Case-Shiller 20-city home price index rose 5 percent in March from 12 months earlier. Prices increased at the same pace in February.

Home values are rising at a faster rate than incomes, potentially pricing many would-be buyers out of the market. Yet current increases have moderated from the double-digit gains of late 2013 and early last year.

The biggest increases were in San Francisco and Denver, where prices rose 10.3 percent and 10 percent respectively.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

DEUTSCHE BANK-SEC SETTLEMENT

WASHINGTON (AP) -- Germany's Deutsche Bank AG has agreed to pay $55 million to settle civil charges of filing incorrect reports during the financial crisis that downplayed risks of huge losses.

The U.S. Securities and Exchange Commission announced the settlement Tuesday with the big German bank, which is a prominent institution on Wall Street. Deutsche Bank neither admitted nor denied the allegations but did agree to refrain from future violations of the securities laws.

The SEC said that in some quarterly reports in 2008, Deutsche Bank inflated the value of its transactions designed to hedge against losses on securities in the credit markets, which were turbulent at the time. That created a "gap risk" worth billions of dollars that wasn't properly taken into account in the bank's reports, the agency said.

CHINA-IMF

BEIJING (AP) -- An official of the International Monetary Fund says it believes China's currency is no longer undervalued -- a stance that might help Beijing in its wrangling with Washington over exchange rate controls.

The IMF's first deputy managing director, David Lipton, also said Tuesday that Beijing should work toward having a floating exchange rate in two to three years.

Lipton spoke after meeting Chinese officials to discuss economic and financial policy.

The United States and some other governments have complained for years that China suppresses the value of its currency, the yuan, giving its exporters an unfair price advantage and hurting their foreign competitors.

Referring to the yuan, Lipton said that after recent changes in global exchange rates, "We believe that it is no longer undervalued."

BRITAIN-LIBOR

LONDON (AP) -- A British prosecutor says a former Citibank and UBS trader motivated by greed served as the ringmaster in the alleged manipulation of a key interest rate, the London Interbank Lending Rate, or Libor.

The charges against trader Tom Hayes, who specialized in products pegged to yen-denominated Libor, relate to the period from August 2006 to September 2010. He is charged with conspiring with employees from other leading institutions.

Prosecutor Mukul Chawla says the 35-year-old Hayes' greed "led to his dishonesty on an enormous scale."

Libor is a key rate that banks use to borrow from each other. Indirectly, the rate affects what people pay when they take out loans, such as a car loan.

Hayes denies all eight charges in the case that opened Tuesday at Southwark Crown Court.

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