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 01, 2014 17:47 GMT

CONSTRUCTION SPENDING

WASHINGTON (AP) -- U.S. construction spending fell in August, the second decline in the past three months, with housing, non-residential and government projects all showing weakness.

The Commerce Department says construction spending dropped a seasonally adjusted 0.8 percent after a 1.2 percent increase in July. The July increase followed a 1.6 percent June decline.

The weakness was apparent in all sectors. Housing construction declined 0.1 percent, reflecting a big drop in spending on remodeling. Non-residential construction fell 1.4 percent while spending on government projects dropped 0.9 percent.

In addition to the August decline, the government revised lower its estimates for activity in the previous two months. This could call into question expectations that building activity will support economic growth in the second half of the year.

ADP

WASHINGTON (AP) -- U.S. businesses continued hiring at a solid pace in September, according to a private survey. The result marks the the sixth straight month of solid gains.

Payroll processer ADP says private employers added 213,000 jobs last month, up slightly from 202,000 in August. Job gains above 200,000 are usually enough to lower the unemployment rate.

The figures suggest the government's jobs report on Friday could show a rebound in hiring. The government said employers added only 142,000 jobs in August. But the ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report. ADP's August figure was much higher than the government's.

Economists surveyed by FactSet forecast that the government's report will show 215,000 jobs were added in September, while the unemployment rate remained 6.1 percent.

ECONOMY-MANUFACTURING

WASHINGTON (AP) -- The pace of U.S. manufacturing growth slowed in September, as expectations for hiring and new orders slipped from their August levels.

The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index fell to 56.6 from 59 in August. Anything above 50 signals that manufacturing is growing.

The index's measure of new orders fell to 60 from a reading of 66.7, while the employment component fell to 54.6 from 58.1. The one upside is that customer inventories continue to remain low, suggesting that there will be continued demand from factories.

Manufacturers have reported growth for the past 16 months, as the sector has helped drive the recovery from the Great Recession.

AUTO SALES

DETROIT (AP) -- Demand for pickup trucks and SUVs helped keep U.S. auto sales strong in September following a blistering August.

General Motors Co. and Chrysler Group led the industry with 19 percent sales increases over last September.

While August's sales were fueled by incentives on midsize cars, September saw good deals on trucks.

GM says sales of its Chevrolet Silverado pickup jumped 54 percent and the GMC Sierra pickup rose 25 percent.

Chrysler had best September since 2005, with sales of Ram pickups rising 30 percent and Jeep brands up 47 percent.

But Ford's U.S. sales dipped 3 percent as the company cut back on truck discounts in anticipation of a new F-150 later this year.

Toyota sales were up 2 percent, with its RAV4 SUV seeing double-digit gains. Honda sales increased 12 percent on the strength of the CR-V SUV and the Honda Fit subcompact.

Nissan sales rose 18.5 percent, with its newly revamped Rogue crossover up 52 percent.

Volkswagen fell 18.6 percent overall, but sales of its new Golf were up 93 percent.

GM-ROAD AHEAD

MILFORD, Mich. (AP) -- General Motors CEO Mary Barra told investors Wednesday that GM will rely on new models and a big push to sell more cars in China to boost profits in coming years, as the company tries to shift the spotlight from a mishandled recall of older small cars.

Barra needed to reassure investors that GM has a strong plan going forward. The stock has dropped about 18 percent this year. It rose 2.6 percent in afternoon trading.

GM recalled 2.6 million small cars worldwide earlier this year to fix faulty ignition switches that are now blamed for at least 23 deaths nationwide. Barra said suppliers have made enough parts to fix all of the switches, but only 1.1 million small cars have had the repairs so far.

GM has admitted knowing about the problem for a decade, yet it didn't recall the cars until this February. The switches can cause the engine to stall, deactivating the cars' air bags.

Barra said GM is staying with an estimate of $400 million to $600 million to compensate ignition switch crash victims. The company has hired compensation expert Kenneth Feinberg to pay victims. He made his first payments last week.

CANADA-FORD AUTO JOBS

OAKVILLE, Ontario (AP) -- Ford Motor Co. of Canada says it is adding 1,000 jobs at its plant in Oakville, Ontario, by the end of this year to build the 2015 Ford Edge crossover SUV for the global market.

The automaker said Wednesday it also expects to increase spending on Canadian-made auto parts by $200 million a year.

The 1,000 new jobs and 300 added last year will bring total employment at the plant to more than 4,000 by the end of 2014. Ford also operates an engine plant in Windsor, Ontario and employs a total of about 6,000 in Canada.

A recent Scotiabank report on the global auto industry says that increased vehicle sales in the U.S. as well as a depreciation of the Canadian dollar had benefited the Canadian auto parts sector.

GENERAL MILLS-JOB CUTS

NEW YORK (AP) -- General Mills plans to cut 700 to 800 jobs, the second time it's trimmed its work force in a month, as the food company wrestles with a shift by U.S. consumers away from boxed or frozen meals.

The Minneapolis company expects about $135 million to $160 million in restructuring charges. It foresees annual cost savings of approximately $125 million to $150 million, starting in fiscal 2016.

General Mills Inc. anticipates the current restructuring to be completed by fiscal 2015's end.

The company has said it's begun a formal review of its North American manufacturing and distribution network, along with a pair of announcements in recent months about cost-cutting initiatives.

AMAZON-KANSAS

WICHITA, Kan. (AP) -- Amazon.com plans to close a distribution center in southeast Kansas in February, but it isn't clear how many employees the move will affect.

Coffeyville Chamber of Commerce executive director Stacia Meek said Wednesday that Amazon informed her of the closure in an email Tuesday evening.

The Seattle-based online retailer did not immediately return email and phone messages seeking comment.

Meek says Amazon told her the closure is part of a move to have its distribution centers closer to the bulk of its customers.

Coffeyville is a rural town about 70 miles north of Tulsa, Oklahoma. Amazon is one of the area's largest employers, though its workforce fluctuates widely.

The Parsons Sun first reported the closure plans and noted the company recently celebrated its 15th year anniversary in Coffeyville.

COCA-COLA-PAY PLAN

NEW YORK (AP) -- Coca-Cola is revising its pay plan for executives after shareholders including Warren Buffett expressed disapproval and called it excessive.

The world's largest beverage maker says its long-term incentive program will now distribute the company's shares to a smaller group of executives, while the rest will be rewarded with cash instead. That will mean the total shares authorized to be awarded under the plan will last longer.

The Atlanta-based company also said it would increase transparency about its equity awards and formalize its practice of share repurchases to keep stockholders' stakes from being diluted.

Coca-Cola's pay plan had come under scrutiny after Wintergreen Advisers took issue with it earlier this year, calling it a "raw deal" for shareholders. Buffett also said he discussed his concerns with Coca-Cola CEO Muhtar Kent.

UNITED STATES-BRAZIL TRADE

WASHINGTON (AP) -- The United States and Brazil have resolved a decade-long trade battle over subsidies Washington provided to U.S. cotton growers.

The agreement resolves a bitter trade fight that had strained relations between the two countries since 2002, when Brazil brought a case against the United States charging that U.S. cotton subsidies were a violation of global trade rules. The World Trade Organization ruled in Brazil's favor and the United States had been forced to make annual $147 million payments to Brazil.

U.S. Trade Representative Michael Froman, Agriculture Secretary Tom Vilsack and their Brazilian counterparts signed the agreement Wednesday in Washington. Under the agreement, the United States will make a final one-time payment of $300 million and Brazil will drop the cotton case.

ZOHYDRO-NEW VERSION

WASHINGTON (AP) -- The maker of the much-debated painkiller Zohydro is seeking approval of a harder-to-abuse version of its drug which, if approved, could replace the currently marketed version of the pill by next spring.

San Diego-based Zogenix said Wednesday it submitted a Food and Drug Administration application for the new Zohydro formulation that is designed to be more difficult to snort or inject -- two common methods for abusing painkillers. Zogenix expects approval in the first quarter of 2015, which would allow the drugmaker to replace the older version of Zohydro in the second quarter.

Zohydro has been criticized by health advocates, politicians and law enforcement officials since it became the first single-ingredient hydrocodone drug ever approved for U.S. patients last fall.

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