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 October 21, 2014 17:19 GMT

HOME SALES

WASHINGTON (AP) -- U.S. homes sold in September at their fastest clip this year, yet the housing market has yet to fully shake off a slowdown that began in the middle of 2013.

The National Association of Realtors says sales of existing homes rose 2.4 percent to a seasonally adjusted annual rate of 5.17 million. Still, the sales rate has dropped 1.7 percent over the past 12 months.

Investors have retreated from the market over the past year. Their departures are being offset by existing homeowners who are upgrading to more expensive properties or downsizing after having raised their children.

Rising prices through much of 2013, weak income growth and tighter credit standards have priced out many would-be buyers. Median home prices rose 5.6 percent over the past 12 months to $209,700.

STAPLES-POSSIBLE BREACH

NEW YORK (AP) -- Staples is looking into a potential credit card data breach and has been in touch with law enforcement officials about the issue.

The office supplies retailer said Tuesday that if it turns up any data discrepancies during its investigation, customers won't be responsible for fraudulent activity on their credit cards as long as it is reported in a timely manner.

"We take the protection of customer information very seriously, and are working to resolve the situation," spokesman Mark Cautela said in a statement.

Earlier this month Sears Holdings Corp. reported a breach at its Kmart stores that started last month, saying some customers' credit and debit cards may have been compromised. Other breaches have occurred at retailers including Target Corp., Supervalu Inc. and Home Depot Inc..

Shares of Staples Inc., based in Framingham, Massachusetts, slipped 3 cents to $12.27 in midday trading. Its shares have fallen 23 percent over the past year.

EARNINGS

UNDATED (AP) -- Coca-Cola and McDonald's are reporting declining profits.

Coke says its third-quarter net income was $2.11 billion, down 14 percent as beverage volume rose 1 percent, thanks to an increase in non-carbonated drinks. The world's biggest beverage maker also announced a new plan that it said will reduce costs by $3 billion a year by 2019. For this year, the company said it expects earnings per share to miss its long-term target.

McDonald's saw customer traffic fall around the world. Sales took a big hit in Asia, where a major supplier was shown on TV repackaging expired beef. In the U.S., McDonald's is fighting to hold onto customers amid shifting tastes toward food people consider more wholesome.

For the quarter, revenue declined to just under $7 billion, falling short of Wall Street expectations.

Also reporting results this morning, Verizon Communications reported lower net income but higher revenue in its third quarter, helped by strong wireless subscriber growth and demand for its FiOS Internet services.

Higher cigarette prices helped cigarette maker Reynolds American's net income rise 2.2 percent in its third quarter.

MORTGAGE RISK RULES

WASHINGTON (AP) -- New U.S. rules aimed at getting banks to take on more of the risk when they package and sell mortgage securities are being relaxed with an eye to spurring broader home lending.

Federal regulators have dropped a key requirement: a 20 percent down payment from the borrower if a bank didn't hold at least 5 percent of the mortgage securities tied to those loans on its books.

The long-delayed final rules unveiled Tuesday by six federal agencies include the less stringent condition that borrowers not carry excessive debt relative to their income.

The board of the Federal Deposit Insurance Corp. voted 4-1 Tuesday to adopt the rules.

The rules, proposed in stricter form in 2011, were mandated by the overhaul law enacted in the wake of the 2008 financial crisis.

STATE UNEMPLOYMENT

WASHINGTON (AP) -- Unemployment rates fell in 31 U.S. states in September, including many currently embroiled in tough political campaigns. The report is the final data on state unemployment before the midterm elections Nov. 4.

The Labor Department says that unemployment rates rose in 8 states and were unchanged in 11 states. That is the smallest number of states to see an increase since April.

Employers added jobs in 39 states and cut jobs in 10. South Dakota's job count changed little.

Colorado and Kentucky, two states with hard-fought Senate campaigns, experienced the biggest declines in unemployment. Colorado's fell to 4.7 percent from 5.1 percent, and Kentucky's rate dropped to 6.7 percent from 7.1 percent.

Nationwide, the unemployment rate declined to 5.9 percent in September, from 6.1 percent the previous month.

NAPROXEN RECALL

GREENSBORO, N.C. (AP) -- A North Carolina company is recalling nearly 12,000 boxes of pain relief tablets sold at Dollar Tree stores because some cartons contain a different medication that could cause allergic reactions.

Greensboro-based Contract Packaging Resources Inc. says it mistakenly placed bottles of ibuprofen inside boxes sold at Dollar Tree stores nationwide as Assured brand naproxen sodium tablets.

Some consumers buy naproxen sodium pain relievers because of allergies to ibuprofen. The packaging company says reactions that can include hives or life-threatening respiratory problems, but it hasn't received any reports of adverse reactions.

Consumers who bought 15-count boxes of 220mg Assured brand naproxen sodium tablets may return them to the store of purchase or call 336-252-3422.

CVS HEALTH-TOBACCO

CVS develops tobacco-free prescription network

First, CVS Health pulled tobacco from its store shelves. Now, it plans to make some customers think twice about filling prescriptions at other stores that still sell smokes.

The nation's second-largest drugstore chain is developing a new tobacco-free pharmacy network for clients of its Caremark pharmacy benefits management business.

The network would slap an extra co-payment on patients who fill their prescriptions at stores that still sell tobacco. That payment won't apply to prescriptions filled in the tobacco-free network, which would include CVS and Target locations nationally, as well as other pharmacies that abstain. Target Corp. gave up tobacco sales in 1996.

CVS national rivals Walgreen Co. and Rite Aid Corp. still sell tobacco.

The tobacco-free network will only be used by the pharmacy-benefit management customers that choose it.

KIMBERLY-CLARK-JOB CUTS

DALLAS (AP) -- Kimberly-Clark plans to eliminate up to 1,300 jobs as part of restructuring efforts aimed at reducing costs and making its business more efficient.

The consumer products company has 58,000 workers worldwide, according to its website.

Kimberly-Clark Corp. said Tuesday that it anticipates restructuring costs between $130 million and $160 million, after taxes. The company -- whose brands include Kleenex and Huggies -- foresees between $120 million and $140 million in savings by the end of 2017.

The restructuring is expected to be completed by 2016's end.

Kimberly-Clark also cut its 2014 adjusted profit forecast to account for the spinoff of its health care business. The Dallas company now expects an adjusted profit between $5.93 and $6.03 per share, down from its prior range of $6 to $6.15 per share. Analysts polled by FactSet expect $6.06 per share.

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