"Let's Make A Deal" #All Lives Matter: Financial Literacy

"Let's Make A Deal" #All Lives Matter: Financial Literacy

The American economy is still reeling from the tsunami Mortgage Bubble and Economic crisis of the 1st decade of the 21st Century. This Tsunami “swallowed-up” the American Economy; taking much of America’s financial stability “down-the-drain.”  The Automotive industry was on the verge of collapse, but saved from extinction through Governmental tarp loans. The average American was left gasping as the Tsunami barreled through Wall Street; collapsing Investment houses and bringing “sticker shock” to the American Taxpayer, due to a hefty tax bailout for banking and industry.   The financial calamity has created ripple effects; complicating the delicate balance of finances; impacting education, making financial literacy an essential skill set for education at all levels.


According to the College Board, the average published tuition and fee price was 40% higher in 2015-16 at public four-year institutions than it was in 2005-06, 29% higher in the public two-year sector, and 26% higher in the private nonprofit four-year sector. College Trends.  College fees are steadily increasing despite the gap in available student aid grants, and the unmet college expenses students confront.   While colleges actively recruit low-income and minority students, states are decreasing the amount of aid provided to public institutions.  This creates a tremendous weight for the most vulnerable population. The “Let’s Make a Deal” scenario forces too many hopeful college students to choose Door #1 - College education; signing away the stability of  their financial futures in student loan debt, in exchange for career benefits realized through advanced education. Or select  Door #2 - Forgo student debt, linked to college education, exchanging the opportunity to expand their career horizons; changing the trajectory for self and family.    


The steady decline of state aid, coupled with increasing employee costs (salary, benefits, etc) has forced colleges and universities alike to pass the skyrocketing costs to families of enrolled and potential students. The problem of unmet college costs, is only exacerbated by the stagnate Federal PELL Grant, which has been held at a $5,920 annual maximum award, Financial aid. The Center of Budget and Policy Priorities, asserts, that “A decade since the Great Recession hit, state spending on public colleges and universities remains well below historic levels, despite recent increases. Overall state funding for public two- and four-year colleges in the 2017 school year (that is, the school year ending in 2017) was nearly $9 billion below its 2008 level Lost Decade in Higher Ed Funding.


Judith Scott-Clayton, faculty member at the Teachers College, and Jing Li, research associate in the Department of Education Policy and Social Analysis, both of Columbia University, offer a compelling look at the disparities in student debt along racial divides.  They highlight the glaring differences of student debt at the time of commencement, four-years after graduation, and newly acquired debt for graduate school; and the impact of such debt across a given life-span. Students of color are disproportionately saddled with student debt. Specifically, African American graduates carry the greatest debt at almost $53,000 in student loans four years after graduation, followed by Latino graduates at almost $30,000; creating a debt difference of $20,000+ between the two.   During the same period, the debt of African American students nearly doubles in comparison to their white counterparts. Just a few years earlier, when students collect their diplomas, the gap is just $7,400. Student Debt disparity.   



Simply stated, students of color borrow more debt, than their white counterparts.  As the debt accrued interests, income sensitive repayment plans, and default scenarios, such students begin their professional journey shackled to debt  wreaking havoc on their future financial stability. Such havoc disrupts, eating aways at the American dream. Know as the original “gangstas” student loan debt unlike other forms of debt, cannot be eliminated in bankruptcy court.  

In 2015, 3.9 million federal Direct Loan borrowers were in repayment plans that limit their payments to a specified percentage of their incomes. These borrowers constituted 20% of those in repayment plans; they held 37% of the total outstanding debt in repayment plans. College Trends Higher Costs.  At first glance, it appears the student loan drama is culturally isolated. However, as the Nation tans, and the minority populations gain the collective majority, said trends of debt delinquency and default promise to stream ripple effects impossible to avoid.  An insurmountable problem which can become the weight of all citizens, as the debt is redistributed. Advocates for Student Loan Reform call on lawmakers to give 44 million Americans an opportunity to make a “Better Deal” Student Loan Reform.  


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