By Michelle Armstead
Williamston Post staff writer
Generation X and Generation Y are facing a grim future due to the current economic crisis and its effect on their lives after college.
Last year student loan debt topped $1 trillion. On top of that, according to the Urban Institute, both the generation born after the baby boom (Gen X) and the generation born near the new millennium (Gen Y) are not accumulating as much wealth as the generations before them.
In its March 2013 report, the institute cited stagnant wages, diminishing job opportunities and lost home values as the culprit of the two generations grim future.
In school Tori Davis, a 14-year-old freshman in Williamston High School, was not taught about the diminishing job opportunities facing her generation nor about many of the prospects that makes up the economic crisis.
“It’s gonna cost a lot more for me to go to college, and hearing what it costs now it’s probably gonna triple, double and quadruple by the time I go,” said Tori.
Rising Cost In Tuition
Gen X has been plagued with rising education costs, evident in the continuous rise in cost per credit hour in institutions like Michigan State University.
Over the past 5 years, the cost of a credit hour at MSU has risen $134, a 46 percent increase.
Full-time students must take 12 or more credits per semester, which means that in 2012 full-time students paid $5,049 or more in tuition while students in 2008 paid $3,441 or more.
The cost of a credit hour has steadily risen since 1984, when the cost was only $41.
With the rising cost in tuition, students are forced to take out student loans because they can’t afford college– even with the help of parents.
Cuts to the Pell Grant, a major federal financial aid program, causes students to trade a degree at a four-year university for a degree from a community college because it is cheaper.
Tori’s father, Bob Davis, the 45-year-old father of three, said that instead of cutting costs to things like the Pell Grant, schools should make cuts to unnecessary spending, such as the $10 million scoreboard in the Spartan Stadium and the $45 million Eli Broad Museum, which the Broad family provided $28 million for.
“I think it’s kind of a slap in the face to be raising tuition to the max every year they can and then turn around and build a building that costs that much,” Davis said.
It’s having bills increase and not having a pay increase to match, added Davis.
Tori hopes to find someone who will hire her at her age so that she can start saving for college.
Students May Not Be Able To Make Up Lost Ground
Many students will struggle to pay off their student loans and support themselves.
“Despite their relative youth, they may not be able to make up the lost ground,” the report said. “If these generations cannot accumulate wealth, they will be less able to support themselves when they eventually retire.”
Gen X and Gen Y will most likely have to rely, more than other generations, on government-backed social programs, such as Medicaid, to act as a safety net when they can not fully afford retirement.
The two generations will find it harder to purchase homes, get married, or even buy a car.
Political discussions regarding tax cuts, especially during the election period, discussed preserving the public wealth and benefits of only older Americans and baby boomers, according to the Urban Institute.
This comes at the expense of the younger generation, the report added.
During the home market crash, government efforts to mitigate the issue caused the home values of new owners to decrease.
Younger homeowners lacked the equity that would allow them access to lower-cost loans because of some instant approval matching services.
Accumulating Debt While In School
Montinique Lynch, a sophomore Criminal Justice major at MSU, already has $11,000 in student loan debt. Even though Lynch pays in-state tuition, she says the rising cost in tuition is hard for her.
“Without scholarships, or my mom being rich, it’s hard enough making payments for tuition as it is,” she said.
Interested in going into the juvenile corrections field, Lynch said that she will most likely not make enough to pay accumulating debt in an entry-level position– with a starting salary of only $37,000.
Instead of cutting funds to the Pell Grant, she suggested that MSU and other institutions cut unnecessary expenses and give scholarships to college students rather than mostly high school students.
The Choice of an International Education
Janelle Lightbourn is a 27-year-old graduating senior who has been at MSU for three years.
As an international student from Nassau, Bahamas, Lightbourn can’t receive financial aid; however, she did receive an emergency scholarship from the Office for International Students and Scholars for $5,700.
“I’m not American, so this whole government system is foreign to me,” said Lightbourn.
Lightbourn’s mother pays for her schooling alone because her father does not work, and she no longer has a job working on campus, by choice, because she is graduating.
“The rising cost of tuition sucks. It just makes everything harder and I already have to pay out-of-state,” Lightbourn added.
In her three years at Michigan State, tuition has risen 22 percent.
Decreasing Wage and Student Debt
Average student debt was $26,000 in 2011. Diminishing real wages for the younger generation will make paying off student loans harder.
The International Institute of Finance released a report that said nearly 20 percent of U.S. households have outstanding student debt, compared to 16 percent in 2007. However, average wage for workers 25-34 decreased by 10 percent.