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I started crying, my mom says why are you crying what happened and i tell her the big news, and she just jumps and down. The daughter of two immigrants she says not going to college was never really an option. I know i want to get my education higher than my father did, so i wont have to struggle. But early in the application process, it became clear she didnt just need good grades to go on, but money too. And a lot of it. As soon as i started applying to different colleges and i saw tuition, it just made me feel kind of disappointed. Knowing that other students have the ability to just be like i quantity with that one. O no, i dont like that one, i want that one. And me i just felt weird, because i had to limit my choices. Gonzales has dreams of studying at old dominion, instead it has become an all out family afford to pay for her third choice. My dad has two full time jobs one at walmart deli and the other one at rudys for the airport. So i think he just every time he get as paycheck, he will just divide it between the bills and i also plan on doing work study at radford, so i will working while im at school. Most College Students share her story, the average Student Loan Debt at graduation topped 29,000. Thats nearly double what seniors owed in 1989, according to the college board, this average cost for tuition and fees were 30,094, at private colleges, 8,893, and 22,203 for out of stage residents at public colleges. And being in the red is not just an individual problem, but an evolving national one. Collectively Student Loan Debt is more than 1 trillions. A recent report by the policy Organization Says rising tuition fees are linked to state funding wases in public colleges. A consequence of the great recession. It is cuts in state funding that has been the major cause. Students are correctly paying the costs and they are doing so at the worst times in their lived. 49 states have seen an arrange cut of 27 per student. To cover operational overhead, meaning while students pay more, it doesnt necessarily translate into better quality chiefing. The results millions of 20 somethings enter the economy immediately cash strapped unable to spend money on much else other than their student loans. Hilton smith called it a new debt for diploma system. The student whose are paying 300, or 500 a month, towards relewissing their debt, thats 300dollar as month they could be spending on a down payment on a house, or a new car, or these other ink thises that would go and recirculate bam into the economy. The rules make it very difficult to forgive debt through bankruptcy, so when they default, it sets off a visual penalty. That make a bad situation worse. I have no retirement fund. No savings. She saw going into default first hand. After earning a bachelors degree in your honor limit, a master in International Relations she graduated college 80,000 in the red. I just ignored it. And it was a big mistake to ignore it. When she decided to face reality, she was smacked with an ugly truth. I signed into my account, and i took a look, and it was 92,000. She moved back in with her parents got a bar job and starting paying back her debts. How do i get that seven to a six, it became a game to me. Today she is carrying less than 20,000 debt, but at the experience of not spending money on anything else. Stories like hers weigh heavily on High School Seniors like karen gonzales. I really am scared for my father, i hardly see him now, and the factually be going away, i wont see him as much, it just feel like he isnt telling me oh i cant do it. By maybe the third or fourth year, i think he would just give up. It is so much money. So i guess right now, we are just trying to save as much as we can. Demos estimated young households will see a cumulative wealth loss of more than 200,000 in their lifetime. Compared to those without any education debt. Hinders long term after making an early investment in their adulthoods. As College Costs have continued to climb, even higher income families have begun wondering out loud if Cheaper College might be a better choice than zenith university, in large measure because it is cheaper and wont burden the young adult with debt, the modern market in higher ed, this time on inside story. Joining us for that conversation, the former chancellor. The director of College Counseling at the Green Hills School in dallas texas. And from new york, a correspondent for Al Jazeera America real money with ali velshi. Let me start with you. Since is you have seen fit the inside. Tell the people who are watch withing why it is that tuitions have risen so fast. What is driving those costs. Well, as in your set up piece, the biggest single factor increasing student tuition rates at Public University is the decline in state support for those universities. In fact. A major way the university has to make up for that, is to increase the tuition, now, at the same time they are most universities are getting more and more sensitive to the impact this has on students and so they will often have a skull min nation of an increase in tuition, and a some form of cuts within the university to try to decrease overall expenses. Were there no other choices as add inning stray tors like jouster look t a what can be done to economize what can go first. Was tuition really the only fall back position for closing what could be a budget deficit . Is. There are it depends on the magnitude of the deficit there are opportunities quarterback universities and i think you can encompass them in the concept of focusing on student first. That is that as you make decisions on expenditures you ensure that your First Priority is for the students because after all these days the whole equation is flipped. It used to be in Public University is support pays for most of it, today its the students tuition thats paying for the majority, so in that frame work. It is important for the universities to fee cous on expenditures that enhance and improve, and sustain the Student Experience as students. That means that sometimes some of the other programs and in additions at universities have taken on, may have to either be diminished or fall by the wayside as one foe discusses on the student. Whys to fay for college, and what that might mean. Does that mean hardnosessed decisions . Are the parents saying about school a, dream school a, the one the kid happen president shooting for, no, i am sorry you are not going there. Absolutely. And i think more and more families are having that very real conversation. I can recall a moment this year, when i heard a group of seniors and one girl said to a boy i am so proud of you for getting into college x, are you so excited, he said no i am going to college y, the girl was surprised oh thats your dream, college y gave me the best money, and now thats my dream school. More and more students. When we look at the way markets work, there was an idea that specifically this was going to hit the wall. That families were with going to say oh no, i am sorry, we just arent going to intend that money, but it didnt happen. The college more like buying a luxury car than it is like choosing between two kinds of detergent . College is the ticket to the middle class. And the fact is, all the studies show if you go to college, and earn a degree, you will make more than a high school graduate, and thats why people keep paying to play if you will. But these huge student loan get burdens are having a severe knock on effect on to our economy. And one of the ways i like to dry it is you have to think of our commit as ecosystem. And young people are the plank ten. And when we crush them with with debt, we with deny them the choice to participate in our economy in a meaningful way. And by that i mean consumer spending. And the knock on effect that can have. For example, Single Family homes now ewith arent sees as many of them built. And there are studying that show that 30yearold that carry debt are buying homes. That creates three to four more jobs for people who sell goods to go in that home. You can see that student debt is not just having an impact on student debtors but all of us. We will take a short break, and when we with come back, we will talk more about College Education, and the marketplace, what decisions are families making, whats driving them. This is inside story. Im ali velshi, the news has become this thing where you talk to experts about people, and al jazeera has really tried to talk to people, about their stories. We are not meant to be your first choice for entertainment. We are ment to be your first choice for the news. Angry is when i hear people say, i worked reply way through college. Why cant students now do the same . When some private institutions are topping out at 60,000 a year, how do you expect an 18yearold to work their way through college . And yes many every study about Student Engagement shows that if a student is spending time work to pay for their education thats time away from their academics, theyre taking longer to educate and less likely to jaw well. Philipp, you say reductions of state support have driven up costs at Public Institutions. But hasnt this gap between private and public education, also strengthen public educations hand . Dont you have better customers because you oar betterpriced product . Yes, of course do you. Not at all, but many public universities particularly those perceived as being high value, you see a substantial increase in the last several years as a matter of fact. In the interest in those institutions and that comes in the form of increased applications. And theres been a response on the part of many of these institutions to an increased enrollment, to try to meet those needs. There is however a hidden problem in all of that, and that is that the cost of educating a student, while mostly borne by the student is not entirely borne by the student. And therefore additional enrollment actually means additional cost for university that it has to find other sources to pay for. In the time of declining state support for these Public Institutions, that means that theres a real scramble that increasing enrollment doesnt increase your overall budget in terms of being able to support the University Activities and, in fact, creates an additional burden so increasing enrollment in response to that very increase in the Public Institutions for the reasons youve described is a real challenge for institutions to meet. Were going otake a short break right now. And when we come back well talk about the future of this problem. Are there things being put in place . Either Market Forces or loan programs or ways of cutting the eventually cost that may bring relief to the American Families . This is inside story. Real reporting that brings you the world. Giving you a real global perspective like no other can. Real reporting from around the world. This is what we do. Al jazeera america. Welcome back to inside story. Im ray suarez. You hear all the time that in todays economy a College Education is essential to landing a good job. But tuition and room and board rise in price every year. And todays graduates are the most indebted in history. 70 have outstanding loans. The average debt load, 29,000. What does it mean to start your adult life in that much debt . The is it still worth it . Still with us, philipp yagel, maria bigham, and from new york, my colleague, patricia sabga, a correspondent for real money with ali velshi. Patricia, does College Tuition and cost end up operating in a different way than what we buy . Colleges who increased their application costs have seen the largest increase in applications. Price isnt scaring people off. Price isnt scaring people off. But the fact of the matter is, we are seeing a knockon to our economy of this massive Student Loan Debt better. And one thing burden. And one thing people are starting to take a look at is what would be a reasonable percentage of Median Household Income for four Year Public Institution tuition. So in half the country right now tuition is 15 of Median Household Income. That is before taxes. That is a really big bite. And the middle class is really, really suffering in the face of rising tuition. In fact, studies show kids from lower income families, between 40 and 50,000 a area they are actually graduating 11,000 more in debt than students from poorer families or affluent families primarily because the grants arent available to them. So the middle class is really getting half erd with these higher hammered with these higher tuitions. Ray, tuitions have is incomes are stagnant for the past 15 years. And these tuitions are hitting them with massive amount of loan debt. Maria bingham, that situation that patricia described, are there kids who are leaving your school for instance, who might have in another day and age gone to a private school and been pretty well sought to those schools who are now going to a Public University instead and raising the profile of those places . Oh certainly. You know, i think students will look at our education as an independent secondary school and see value. But the question is, what is that in comparison to the cost of paying for college . I think that more and more of our families are looking at Public Institutions instate and out of state options and i think sadly too more of my students are questioning their major choices and their potential career choices. Students who used to be interested in are education and Public Service say those are too low paying to justify their loan debt. I think there are a lot of long term implications about how this debt load is crushing the children. Phillip, in the next couple of years well pass the cresting High Water Mark of the number of are graduating High School Graduates. If the next class is smaller and after that, smaller still, that means colleges will be competing for a smaller pool of potential freshmen. What is that going to do in the potential marketplace . Thats already happening. The crest of High School Graduates is probably a year now in the past. And so the response of institutions like mine has been to expand the Educational Opportunities for the nontraditional sector. That would be more the adult populations, but also worked on the side of trying to assist students in managing the total cost of making transfer from Community Colleges to fouryear institution much easier. And that way, the students can take advantage of, one, the lower cost of tuition. Two, the fact that they can do Community College close to home and dont have to have a residential component which costs anywhere from ten to 12,000 a year byself and therefore have a much more academically viable situation in four years, and then transfer for more opportunities in their major et cetera that they can then take advantage of to hone their skills and become a wellrounded graduate. Patricia sa sabga, with the possibilities we have been speaking of, will milt class go on strike, and say im sorry, 5 last year, 5 this year, we simply cant do it. The question is, when are people not suffering from student debt waking up to the fact that this does impact all of us and we are all in this together. I could give you countless examples of how this resonates throughout the country. Another example would be entrepreneurship. Student debtors are less likely to start their own businesses. And Small Business creates about 60 of jobs in this country. At what point do families give up and close their pocket books . They need that diploma. Its the ticket to the middle class and frankly the nation needs it. Because if the United States is going to be competitive in the Global Economy we need a well educated workforce. So maybe its when do families get tire of it, but when do we believe it is something that are affects all of pus. Thank you you, its been a pleasure. That brings us to the end of inside story. Thanks for being with us, in washington, im ray suarez. Are you guys ready . In the event of any emergency, let us know through coms. High above the artic circle, stand by. In some of the worlds coldest waters, Canadian Military divers are preparing for a search and rescue training mission. The bottom is about 40 meters, 120 feet down, the water is about 2 degrees below zero celsius. They can stay down there 40 minutes to an hour without really getting too cold. Yellow diver well, yellow

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