Termite Called Student Debt

Dothan, Alabama, September 1, 2015 (Newswire.com) - $1.2 trillion dollars is owed by U.S. college students, an amount that is greater than all U.S. credit card debt combined. College student debt is a staggering number to grasp, but since we've always been taught that education is better than no education, is this really a problem?

To understand the answer to this question, we have to define who is owed that money, what criteria were used to loan that money and then how likely will it be that the money will be repaid.

MyAcademicProgram solves the cost to benefit of obtaining a degree by calculating student success outcomes with our patent-pending MAPScore.

John Parkman, CEO

95% +/- of student loan debt was lent to students by the federal government, all backed by tax dollars. Currently, student loans are made with no underwriting standards. The criteria for lending the money - as far as we can tell, there aren't any criteria. For example, in banking, the process of setting criteria to loan money so as to limit the risk of it not being paid back is called underwriting. This explains why student loan default rates are an order of magnitude higher than standard bank loans for things like mortgages and car loans.

So, how likely are taxpayers to get paid back? The answer is unclear at best. Until now, data on the earning potential for a degree has not been adequately measured and it is not analyzed with the amount owed for pursuing the degree. With no cost-to-benefit ratio for colleges or majors, we have no method to assess if students will have the means to payback their loans.

So, is $1.2 trillion dollars in student loan debt a problem? The answer is at the very least a strong maybe.

While no one will argue that a degree will increase your opportunities in the job market, most people don’t go to college so that they can move back in with their parents and work night shifts at the local bar.  

With a current unemployment rate for college graduates at 5.8%, compared to high school diploma holders at 9.8%, the odds of getting a job are much higher than non-graduates.

However, while unemployment among high school graduates remains higher than college degree holders, there’s an equally concerning metric which is underemployment, meaning a college grad has to take a job that does not require a college degree. As a result, the lowest-earning 25% of college graduates are paid less than 50% of high school graduate workers.

The average college graduate with a bachelor’s degree and a full-time job earns about $36,000 annually. After factoring in the cost of living, recent graduates often face a tough time repaying their student loans and meeting basic living standards.

Often times, both graduates and diploma non-graduates find themselves in the same boat, loaded with debt and limited job opportunities. However, it’s the student that never graduates that ends up with the worst of it: debt and no degree to improve their job outlook.  

Based on the national average, if a high school graduate is able to earn $22,000 per year, and a college student takes five years to graduate, then the high school graduate is $110,000 ahead in lifetime earnings while the college grad is in debt $25,000 - $250,000.

By combining the average wage a student would have generated plus the amount of debt they take on gives us the lost opportunity costs associated with pursuing the degree. If we take this into perspective when calculating the cost to benefit of obtaining a degree over going straight into the workforce, we can start to realize that both the college and degree program have values of relativity that can either help or hurt your chances for success.

In pursuit of higher education as a means to gainful employment, both students and their parents have a limited voice and few advocates to help them navigate the complex pathways to admission, financing, graduation and employment.

With over 7,000 U.S. universities and colleges, choosing the right college for your individual needs is a daunting task. College fees differ, curricula differ, graduation rates differ and, most importantly, your individual goals differ. How, then, do you sort out all these factors that are important and different? How do you find the college that is the best value?

Until recently, answering the questions posed above was very difficult. There are numerous college search sites, but still a scarcity of real data for students to use to compare one college to another. There exists even less data on the topic of financial benefits gained from attaining a college degree from any of the U.S. colleges.

The idea that education is priceless is not exactly true, it comes with a real financial price tag that could impact the rest of your life. MyAcademicProgram was born from the idea that one should value an education just like any other asset class one would consider investing in.

MyAcademicProgram is the first to produce student success outcomes on U.S. colleges. By taking into account graduation rates, financial loan default rates, employment opportunities and salary rates, plus several other student outcome variables, we patented the MAPScore - a cost-to-benefit analysis on each college and degree program.