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 July 27, 2015 17:07 GMT

DURABLE GOODS

WASHINGTON (AP) -- Orders to U.S. factories for big-ticket manufactured goods posted a sizable gain in June, reflecting a surge in demand for commercial aircraft. Meanwhile, a key category that reflects business investment rebounded after two months of declines.

The Commerce Department says orders for durable goods jumped 3.4 percent in June from May, when orders had fallen 2.1 percent. The gain was the best result since March.

A category viewed as a proxy for business investment plans increased 0.9 percent, then best showing since a 1.6 percent rise in March. This category had declined in April and May and has been weak for a number of months.

U.S. manufacturers have struggled this year from the effects of a strong dollar and a big plunge in energy prices.

FAST-FOOD WAGES

NEW YORK (AP) -- New York's Wage Board has finalized its recommendation to endorse a $15 minimum wage for fast-food workers in chain restaurants.

The formal step by the three-member board is necessary before Gov. Andrew Cuomo's labor commissioner can approve the increase. The commissioner, who also could make modifications, will have 45 days to act on the recommendation once he receives it.

Cuomo, a Democrat, supports the proposal, so it's unlikely that Acting State Labor Commissioner Mario J. Musolino will make many big changes.

The wage increase would apply to fast-food workers in restaurants with 30 or more locations. It would be phased in over three years in New York City and six years elsewhere. The first phase of the increase would take effect on Dec. 31, when the minimum wage for affected workers would go from $8.75 to $10.50 in New York City and to $9.75 in other areas.

Franchise owners say the increase unfairly singles out their industry and will force them to raise menu prices, cut employee hours or even replace workers with automation.

MCGRAW HILL FINANCIAL-ACQUISITION

NEW YORK (AP) -- McGraw Hill Financial, owner of ratings agency Standard & Poor's, is buying SNL Financial for about $2.23 billion.

Privately held SNL Financial, based in Charlottesville, Virginia, is a provider of financial news, data and analysis.

McGraw Hill Financial President and CEO Douglas Peterson says in a written statement that the transaction will enhance existing offerings, help in developing new services and allow the company to expand into adjacent markets.

McGraw Hill Financial Inc., based in New York, says it expects approximately $70 million in savings to be realized by 2019.

The deal is targeted to close in the third quarter.

RESTAURANT BRANDS-EARNINGS

NEW YORK (AP) -- Burger King has gotten a boost from the return of its "Chicken Fries."

Parent company Restaurant Brands International Inc. says sales rose 7.9 percent at Burger King locations in the U.S. and Canada during the second quarter. After taking Chicken Fries off the menu in 2012, Burger King had said last year it was bringing back the long, deep-fried piece of chicken as a limited-time offer in response to customer demands.

The campaign was so successful the company brought them back this year.

Restaurant Brands CEO Daniel Schwartz says Chicken Fries are also profitable because they have a high gross margin and restaurants sell a lot of them. They are positioned as a snack or meal and cost around $3.

OFFSHORE WIND

PROVIDENCE, R.I. (AP) -- Construction has begun off Rhode Island's coast on the nation's first offshore wind farm.

Deepwater Wind is building a five-turbine wind farm off Block Island. It hopes to power 17,000 homes as early as next year.

It began attaching the first of the steel foundations to the ocean floor Sunday. The first one touching the seabed is known in the industry as the "first steel in the water."

The foundations will rise about 70 feet above the waterline, about three miles off southeastern Block Island.

REPUBLIC AIRWAYS-DISRUPTIONS

UNDATED (AP) -- Republic Airways is warning the biggest U.S. airlines that the regional service it provides for them may be disrupted because of a pilot shortage and labor dispute.

The company says it's talking with the airlines about reducing their reliance on Republic planes through the first half of next year.

Shares of Republic Airways lost half of their value today.

The Indianapolis company disclosed late Friday that it faces possible disruptions in the service it provides for American, United, Delta and US Airways. The company says it's facing a pilot shortage because of rules that raised training requirements for new pilots and a standoff in contract talks with the Teamsters, which represents Republic pilots.

Shares of Republic Airways Holdings Inc. are $4.40, or 51.8 percent, to $4.10 in midday trading.

NORFOLK SOUTHERN RESULTS

OMAHA, Neb. (AP) -- Norfolk Southern's 23 percent drop in second-quarter profit follows the same story line as other railroads seeing a sharp decline in coal shipments.

Norfolk Southern posted $433 million net income, which is down from $562 million a year ago.

Its revenue decreased 11 percent to $2.71 billion because coal volume fell 21 percent and total volume declined 2 percent. That revenue figure was also more meager than expected.

Union Pacific and CSX railroads both cited similar challenges when they released results earlier this month.

But Edward Jones analyst Logan Purk says, "Norfolk clearly stands out as the worst of the bunch."

Purk says Norfolk Southern fared worse than its peers because it has more exposure to export coal and its fuel surcharge program has a bigger lag than other railroads.

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