WATCH THE VIDEO VERSION! http://www.youtube.com/watch?v=wQE0HwF3KR0&feature=plcp dailyreckoning.com As the student loan debt hits $1 trillion, check out some of the facts surrounding this crisis and the future of college tuition. Follow Us On Facebook: http://www.facebook.com/TheDailyReckoning Follow Us On Twitter: https://twitter.com/DailyReckoning

2. This is what Americans owe in student loans.

3. It’s greater than America’s auto debt or credit-card debt
and second only to the mortgage debt in the United States.

4. Approximately 2/3 of all college students graduate with
loans. In 2010, the average one of those students had
accumulated $25,000 in debt by graduation day.

5. In 2010, the unemployment rate for college
graduates under 25 years old was over 9%.

6. 1/3 of all graduates end up taking lower paying jobs that
don’t require college degrees. Today, more than 100,000
janitors… 317,000 waiters/waitresses… 18,000 parking lot
attendants and 365,000 cashiers - all have college degrees.

7. Over the past 25 years, college tuition cost has increased at an
average rate that is higher than the general rate of inflation.

8. College tui$on
that
was
$10,000
in
1986
would
cost
that
same
student
over
$59,000
today
-­‐-­‐
more
than
2
½
$mes
the
general
infla$on
rate.

10. There are a number of factors.

11. Faculty wants good salaries.

12. And a lower teaching load.

13. Alumni want new stadiums. Students want nice
dorms and facilities – all things that cost money.

14. I want
a raise.
College rankings drive up costs. Colleges can move
up in the rankings by paying professors more, having
more alumni who donate to the school, and attracting
better students and athletes. Colleges compete to be
the best. And to be the best, you have to spend.

15. Budget cuts for state legislators means less money going to public
colleges. Public colleges then raise tuition. Compared with the
three other major state expenditures (shown left), college students
look more like paying customers than hungry learners and the
easiest solution for state officials is ask them to pay more.

17. This is very similar to what happened in the
housing market. Through Fannie Mae and
Freddie Mac, the government provided cheap
and easy loans for everyone to buy a house.

18. And with funding so easily available…

19. Prices went up… and up… and up.
We now know how the mortgage bubble ended. And now
college education is heading down a very similar path.

20. The government will provide almost anyone a loan to
pay for college. This attracts more and more young
people to go to college, most of whom can't afford
education without the government's help.

21. With the government backing just about every loan,
universities can raise tuition prices. First because of high
demand. And second, because they know students won’t
be denied financing from the government.

22. The more government aid goes up, the more tuition will rise.

23. Lim
Avai ited
lable
!
Putting a limit on loans would cap spiraling tuition
prices. By taking away easily available loans, young
adults would assess the true value of a college degree
and opt for alternatives to career and business training.
It would reduce the demand for college, thus reducing
the ability of colleges to raise tuition fees. The price
of college would flatten or even come down.

24. TO RECEIVE MORE GREAT ARTICLES LIKE THIS,
SUBSCRIBE TO OUR FREE E-LETTER AT