High College Costs…Is it Really Worth It?

According to CNNMoney, the middle class may be eventually priced out of a college education. CNNMoney reports that while middle class incomes have been relatively stagnate in the past 20 years, tuition and fees at public universities have skyrocketed, rising almost 130%. What does this mean for you if your family is middle class?

“As the out-of-pocket costs of a college education go up faster than incomes, it’s pricing low and medium income families out of a college education,” said Mark Kantrowitz, publisher of financial aid sites FinAid.org and FastWeb.com.

This report confirms what many middle class families already figured out. It may not be worth it to accumulate this much debt, especially with the current unemployment rates and the high chance that it could take years to repay college education loans.

The numbers are surprising, in 1988, students could attend a semester at a four-year public university for approximately $2,800. This included fees and tuition. In 2008, this same student would have had to pay an estimated $6,500. This is an increase of 130%. The actual cost of college, which would include the cost of living and books, would actually be much higher.

Middle class Americans have a median income close to $40,000, but this is much less than the estimated $77,000 they need to be earning each year to keep up with the rate of rising college costs.

Not only are wages failing to increase fast enough to pay for college, financial aid which is provided to students has also not adjusted for the increased cost. Even government-subsidized student loans have remained fairly stagnant.

So what are families doing as the disparity between higher education and income widens? Some families have sacrificed the dream of a four year degree, opting rather for a two year degree or technical training. Other families have begun to borrowing unprecedented levels of debt to subsidize the educational costs, but is this a good idea?

Many claim that student debt may be justified because it may lead to the hope and promise of a better job and a better financial future. Historically, this may have been true, especially when the unemployment rates were low. Is this still true? With unemployment hovering around 9% it may be more difficult for students to pay their loans when they graduate, loans which are averaging $23,186, according to FinAid.org.

Graduating with over $20,000 in debt may be devastating to many college graduates who may have to delay purchasing a home, saving for retirement or buying a car. Many college graduates find they are paying for their loans many years after they graduate, some when their own kids are in college.

What will the future hold? Many employers may realize college degrees are unnecessary for many jobs. Jobs in many industries can be learned with a good apprenticeship program and on-the-job training. Many workers may turn to technical training to become mechanics, plumbers, electricians and skilled construction workers. An affordable college education is a good idea, but accumulating unprecedented levels of debt is destructive to American families.

Filing for Bankruptcy

So what if you are facing a severe financial crisis and owe thousands of dollars in student loans? Can they be discharged in bankruptcy? No, they generally cannot, but there may be some exceptions if you can prove extreme hardship. The types of debts NOT discharged by filing Chapter 13 or Chapter 7 Bankruptcy generally include:

• Tax claims
• Debts not outlined in the debtors lists and schedules
• Debts for child support or spousal support
• Debts from the willful and malicious injuries to person or property
• Debts to governmental units for fines and penalties
• Debts for most government funded or guaranteed educational loans or benefit overpayments
• Debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated
• Debts owed to certain tax-advantaged retirement plans
• Debts for certain condominium or cooperative housing fees.

Talk to a bankruptcy lawyer if you are considering filing for bankruptcy and make sure it is the right financial decision for you. Bankruptcy lawyers need to review your case to determine if discharge may be possible.

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Beth L. is a content writer for Better Bankruptcy. Good content and information is one of many methods we utilize to bring you the answers you need.