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 April 01, 2015 17:40 GMT

ADP

WASHINGTON (AP) -- U.S. businesses slowed their pace of hiring in March, a private survey found. The modest gains suggest that harsh winter weather has generated a broader slowdown that caused the survey to report gains of less than 200,000 jobs for the first time in 13 months.

Payroll processor ADP says companies added 189,000 jobs last month.

The figures come just before Friday's government report, which economists forecast will show an increase of 250,000 jobs.

The ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report, which includes government agencies.

A burst of hiring in the past year has lifted the number of Americans earning paychecks, yet average hourly wages have risen at a sluggish 2 percent pace.

AUTO SALES

DETROIT (AP) -- U.S. auto sales slowed down a bit in March, but the industry remains optimistic about the market.

General Motors' sales fell 2 percent and Ford and Nissan both saw 3 percent declines compared with last March. FCA -- the parent of Chrysler and Fiat -- says its U.S. sales rose 2 percent, though sales of its top seller, the Ram pickup, were down 2 percent.

The March gains pale in comparison with January's 14 percent increase in and even the 5 percent gain in February.

But analysts point to several contributing factors. Last March saw a surge in sales after an unusually cold February; while this year snow lingered into March and the month had one less weekend than last year.

Analysts say sales remain on track to reach 17 million this year, their best performance since 2005. Low interest rates, low gas prices, the improving economy and hot new SUVs like the Subaru Outback and the Jeep Cherokee are all drawing buyers to dealerships.

CONSTRUCTION SPENDING

WASHINGTON (AP) -- The Commerce Department says construction spending slipped 0.1 percent in February, following a revised 1.7 percent drop in January.

A drop in single-family home building dragged the overall figure down, as spending on apartments and nonresidential construction rose. Economists say the bitter winter weather likely constrained construction, and activity should pick up in the spring and summer.

Last month, the government said that the pace of housing starts plummeted 17 percent in February from January's rate. Home construction slid 56.5 percent in the Northeast and 37 percent in the Midwest, the two regions that endured the brunt of the winter storms.

In today's report, private spending on construction of single-family homes declined 1.4 percent, while spending on apartments was up 4.1 percent. Nonresidential construction spending rose 0.5 percent, led by a 5.5 percent jump in hotel construction and a 6.8 percent surge in factory construction.

ECONOMY-MANUFACTURING

WASHINGTON (AP) -- U.S. factories expanded last month at a weaker pace, with orders growing more slowly and hiring essentially flat.

The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index slipped to 51.5 in March from 52.9 in February.

It was the fifth straight drop. Still, any reading above 50 signals expansion.

U.S. manufacturers have faced a drag in recent months from falling oil prices and a rising dollar.

Some drilling rigs have stopped as oil prices have fallen more than 50 percent since June to below $50 a barrel, curbing demand for pipelines and machinery from factories. Simultaneously, the dollar has risen in value against the euro and other currencies, making American-made goods more expensive abroad and cutting into exports.

EUROPE-MANUFACTURING

LONDON (AP) -- A closely watched survey is showing that manufacturers across the 19-country eurozone are getting more optimistic about the future and are boosting hiring.

Financial information company Markit says its purchasing managers' index -- a broad gauge of business activity -- for the eurozone's manufacturing sector rose to 52.2 in March from 51.0 the previous month.

The so-called PMI now stands at a 10-month high, the latest in a string of indicators to point to a step-change in the eurozone's economic recovery.

Markit says Wednesday that growth accelerated across the eurozone, including Spain and Italy, two countries at the forefront of the region's debt crisis over the past few years.

Greece was a laggard as its manufacturers struggle to compete amid the uncertainty surrounding the country's bailout.

RELIGIOUS OBJECTIONS

LITTLE ROCK, Ark. (AP) -- It was just a day ago that Arkansas Gov. Asa Hutchinson's office said he would sign a bill passed by the Legislature to keep state and local governments from infringing upon someone's religious beliefs without a compelling interest.

But now, Hutchinson says he wants the Legislature to recall the bill -- or pass a follow-up measure.

He told reporters that Arkansas is "not going to be a state that fails to recognize the diversity of our workplace, our economy and our future."

Indiana Gov. Mike Pence signed a similar measure into law last week. Pence now says he wants follow-up legislation to address concerns that the law lets businesses discriminate based on sexual orientation.

Hutchinson didn't specifically call for changes that would prohibit the Arkansas law from being used to deny services to someone, but he said he doesn't think that's what it was intended to do.

Hutchinson is facing pressure from the state's top employers, including retailer Wal-Mart, which said the measure is discriminatory and would stifle economic development. Indiana has faced protests and boycotts over its version of the law.

Hutchinson said the issue has become so divisive -- even his son Seth was among those signing a petition asking him to veto the bill.

MCDONALD'S-CHICKEN

NEW YORK (AP) -- McDonald's says it's simplifying its grilled chicken recipe to remove ingredients people might not recognize, the latest sign the company is rethinking its menu to keep up with changing tastes.

The company says it expects the new "Artisan Grilled Chicken" to be in its more than 14,300 U.S. stores by the end of next week, in products including sandwiches, wraps and salads.

McDonald's is fighting to hold onto customers amid the growing popularity of places like Chipotle that position themselves as more wholesome alternatives.

As ingredients become a marketing advantage, McDonald's has been trying to shake perceptions that it serves junk food packed with artificial ingredients.

McDonald's representative Terri Hickey said the new chicken will have 12 ingredients, down from 18. It will no longer use sodium phosphates or maltodextrin.

WAL-MART-INVESTORS

NEW YORK (AP) -- Wal-Mart is asking suppliers to cut back on advertising spending in its stores as it seeks better prices on goods that it sells to its own customers.

The request comes as the world's largest retailer looks to reclaim its position as the low-price leader and perk up sluggish sales in the U.S.

Historically, makers of consumer products like laundry detergent devote a portion of their budget to market their products at Wal-Mart whether it's online advertising on social media or store displays. Wal-Mart executives told suppliers in February they would rather have them reinvest some of that money.

Wal-Mart's actions were first reported by The Wall Street Journal.

Deisha Barnett, a Wal-Mart spokeswoman, confirmed the strategy and described it as more of a "reinvigorated focus."

GODADDY-IPO

NEW YORK (AP) -- GoDaddy shares are jumping in their market debut after the Web hosting company known for racy TV commercials priced its initial public offering of stock above expectations.

The stock rose $6.15, or 31 percent, to $26.06, well above the IPO price of $20 per share. That marked an increase from the prior high estimate of $19 per share.

Overall, the Scottsdale, Arizona, company is offering 23 million shares and hopes to raise up to $460 million in the offering.

Underwriters have a 30-day option to buy up to an additional 3 million shares.

The lead underwriters are Morgan Stanley & Co., J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

FRANCE-PLANE CRASH: LUFTHANSA

SEYNE-LES-ALPES, France (AP) -- The chief executive of Lufthansa says it will take a "long, long time" to understand what led to last week's deadly crash in the French Alps.

But Carsten Spohr is refusing to say what the airline knew about the mental health of the co-pilot who's suspected of deliberately destroying the plane.

Spohr and the head of Lufthansa's low-cost airline Germanwings visited the crash area today. They laid flowers and then stood silently facing a stone monument to the 150 people who died. The monument looks toward the mountains where the plane crashed. It bears a memorial message in German, Spanish, French and English.

Spohr says the airline is "learning more every day" about what might have led to the crash.

The airline acknowledged yesterday that it knew six years ago that Andreas Lubitz had suffered from an episode of "severe depression" before he finished his flight training. But it said he had passed all of his medical checks since then.

The airline didn't mention the depression episode when questions were raised last week about Lubitz's medical history.

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