by Burden of exorbitant college costs hampers young people’s ability to purchase a home and furniture — here are some thoughts on how we can address the problem head-on
HIGH POINT — As the nation continues to grapple with an estimated $1.7 trillion in student debt, common sense at some point must prevail.
After all, the money that’s going toward repaying those loans is undoubtedly having an impact on young consumers’ personal lives getting started. This not only has an impact on their ability to purchase a home, but also on their ability to purchase furniture, something that impacts most people reading this column.
Readers well know that the issue has gone to the Supreme Court, which recently rejected loan forgiveness for some 43 million borrowers. The main argument was that the president didn’t have the authority to cancel so much debt, particularly relating to the Heroes Act of 2003 that permitted the canceling of such debt during national emergencies such as Covid. The court disagreed, but its reasoning also had to do with the idea that companies servicing such loans would lose significant revenues in servicing federal student loans.
Regardless of which side of the issue you are on — to pay or not pay student loans — the issue will remain in the public eye, perhaps with greater scrutiny on the costs of higher education, not to mention our staggering $32.5 trillion national debt. Last year alone, the deficit rose by $878 billion to $1.39 trillion for the recently ended fiscal year. NPR reported that forgiving up to $20,000 in student debt per borrower would cost about $400 billion (not including the $20 billion it already cost the government to pause the student loan payments), according to an assessment by the Congressional Budget Office last fall.
So is the student debt model sustainable? That depends on whom you ask. While wiping that off their balance sheets would certainly pave the way for more young people to buy a home and furniture for those homes, many are concerned this will set a precedent.
It’s also patently unfair to students that have already paid off their loans in the past and to those who will incur student debt not covered by loan forgiveness in the future. Perhaps the most important question is will the federal budget continue to support free college education? And in doing so, will it continue to encourage college costs to keep escalating?
Granted these thoughts come from a student of an industry that’s kept the price of a sofa or bedroom as low as it was 15 or 20 years ago, perhaps longer. That’s obviously not the case with higher education. Citing the National Center for Education Statistics, Forbes reported in May that the total price of tuition, fees and room and board adjusted for inflation was nearly $29,000 per year, up 180% from the $10,230 it cost back in 1980.
Yet with all the consumer angst about inflation, you might think there would also be some angst about the cost of a college education. Obviously not, as student debt has continued to rise — from $187 billion in 1995 to $1.4 trillion in 2017, according to the Peter G. Peterson Foundation. Several key factors it cites include an increasing number of borrowers, a higher amount borrowed, changes in the types of colleges attended and a low rate of repayment.
But there are ways to address the issue before we keep asking the federal government to step in. Here are some thoughts on the issue, which could get worse before it gets better.
+ Invest in your child’s future. Parents who aren’t doing so need to start paying for their children’s education. Forget the fancy new car every few years, forego the cruise or trip to some lush resort each year and forego spending tens of thousands of dollars on expensive new clothes and dining out. This may be a harsh reality from your carefree days of being single and without children. But in case no one told you, it costs money to have kids. Remember to save for their education.
+ And if the money you’ve saved isn’t enough — then reassess where they are going to school. And we’re not just talking about places like Harvard, which CNN recently reported costs more than $95,000 a year to attend. There are plenty of other schools whose costs have skyrocketed. Last summer, CBS ranked the 50 most expensive colleges in the country, with Landmark College in Vermont costing $73,700 for the 2020-21 academic year. It was the cheapest in the Top 50. The most expensive — a school most all of us have dreamed of sending our kids to — Harvey Mudd College in California at a cost of $77,339 per year, CBS noted. Editor’s note: According to CBS, Landmark largely serves students with learning disabilities and some 70% of Harvey Mudd students obtain some form of financial assistance such as grants and scholarships and you guessed it — loans.
+ Pay for what you can afford: This gets back to sending your kids to one the aforementioned 50 most expensive schools in the country. Or any school that’s too expensive for your budget that is. Again, any type of discussion about sending one’s child off to school should be based on the actual cost. That includes room and board. If there’s a reputable school in your area, have them live at home the first year or two. Better yet, send them to community college where they will be forced to commute. It will knock off tens of thousands of dollars from the overall cost of their education. They may not like it at first but will thank you later on when they aren’t having to cover the cost of a student loan like so many of their friends and colleagues.
+ Again pay for what you can afford. According to Businessinsider.com, the cost of room and board “at public universities is increasing faster than the rate of tuition, causing students to rack up deliriously high student loans and in some cases, leading them to drop out altogether.” Citing data from 10 public colleges, it said the estimated cost of room and board rose by 25% between the 2012-13 and 2022-23 school years, compared to the 22% increase in tuition during the same period. This obviously should give any student or parent pause. If they have to attend that fancy ski resort college in Colorado or Vermont, maybe they need to consider putting off their extended four-or five-year vacation until after they graduate.
+ Divert the cost of education to other sources: Of course there is always the traditional route of publicly and privately funded educational grants or even having your child enter the military which will pay for their education in return for their service over a decade or so. But perhaps more companies also can lend a hand by hiring young people before they graduate and give them the option of completing their education locally while they work. This obviously will drag out their schooling another few years, perhaps longer. Some companies may even balk at the idea of hiring someone before their education is completed. But many companies are already paying a portion of their workers’ continuing education as a benefit. And if having that four-year degree — along with real-world, on-the-job experience — is so important, then companies may want to consider making such an investment in their younger workers.
+ Not everyone has to go to college to be successful or even a millionaire. A simple web search will show you some examples of people who pursued fields they love and made a career and legacy of it.
Here’s another point to consider. Citing a report from Georgetown University, the CNN report noted that the average price of room and board for an undergraduate degree has risen by 169% between 1980 and 2020. This compares to 19% increase in earnings for workers ages 22-27, the study noted. What gives?
None of this is meant to diminish the importance of any type of education. But the level of student debt has gotten to a point where it’s likely affecting other areas of the economy as well, not just the furniture industry. This column, however, is written based on the belief that the furniture industry is among — if not the most important — sector of the economy.
And not only that, having a beautifully furnished home — whether it’s a single-family house, condo, townhouse or apartment — should be everyone’s right. That includes for the young people who our industry has so diligently courted in recent years.
Paying the exorbitant and increasingly unaffordable costs of education — costs they may never fully pay off — is likely depriving a lot of young people from that experience.
