Tag: college debt
What Can We Do About America’s Skilled Labor Shortage?

What Can We Do About America’s Skilled Labor Shortage?

As the new decade begins, America is facing a difficult situation when it comes to employment and jobs. While more people than ever are graduating from higher education, they’re facing difficulty when seeking employment. Meanwhile, the nation faces an increasing lack of skilled labor, with trade professions having difficulty in staffing. With more people seeking employment after college, there’s increasingly a lack of people taking jobs in skilled trades, creating an employment gap based on education and training.

The Call Of Higher Education

With college education being more expensive than ever, why are more students attending when there are plenty of available jobs that don’t require a college degree? As a college education becomes more common, there’s increasing pressure from previous generations to pursue higher education. Often, attending college is now seen as the inevitable next step after high school. Public school systems tend to perpetuate this assumption. Half of the public school workforce consists of teachers. The other 50% are guidance counselors, nurses, speech therapists, etc. Regardless of staff status, many public school workers and teachers push their students to seek a college education, even when doing so is financially unwise.

Stigma Against Skilled Labor

In addition to the pressure to attend higher education, many Americans pursue college due to the seemingly prevalent stigma against careers in skilled labor. Trade professions, such as carpentry, plumbing, and repairs, often are seen as being “below” office work. This pushes many recent college graduates into part-time temporary or contract positions in an office environment. More than three million temporary and contract employees work for America’s staffing companies during an average week.

However, these skilled trade professions can actually pay more than the standard office job by a wide margin. Many skilled labor careers offer a high income, better hours, and better long-term prospects than college graduates will be able to find in other fields. Many capable individuals are, unfortunately, missing out on excellent careers due to widespread stigma against skilled labor.

Economic Impacts

The skilled labor shortage isn’t only impacting individuals’ career prospects; it also comes with a significant disadvantage for the nation’s economy. Current estimates suggest that the skilled labor shortage could cost as much as $2.5 trillion, with up to 2.4 million positions unfilled between 2018 and 2028. Additionally, the stigma against trade skills and the pressure to pursue higher education may worsen America’s existing student debt problems. Many students are forced to take out expensive loans to afford college tuition, pushing them into severe lifelong debt. This debt impacts all aspects of individual and national economics, with ripple effects as far-reaching as the settlement of life insurance payments. Approximately 86 percent of life insurance policies lapse without any benefit ever paid. With student debts climbing and more unfilled positions in certain industries, it’s clear that the nation will need to find solutions.

Fixing The Problems

Encouraging more people to pursue careers in skilled labor won’t happen overnight. Major cultural and structural shifts will need to occur for changes to take place long-term. During schooling, more students need to be made aware that there are acceptable career choices within skilled labor that pay well and don’t require a college degree. Not all of these careers require so-called “hard labor” either; according to the U.S. Bureau of Labor Statistics, there are an estimated 7,880 tailors, dressmakers, and custom sewers across the nation. Informing current students about their options ensures that a larger percentage of them will move into these positions in the future.

But what can be done for positions that are currently vacant? Is waiting for students to graduate from high school first necessary? There are several more immediate intervention options available, and almost all of them rely on educating and retraining unemployed or underemployed individuals. It’s technically possible for people to educate themselves for entry into these careers. There are over 119,000 libraries in the United States. Most have resources or learning materials available to help with retraining.

However, many of these careers require some degree of training through trade schools. Directing funds towards training and retraining could help, and in many cases, it already has. Several veteran programs allow veterans to gain an education that can help them enter into well-paying skilled trade jobs. Veterans of the Armed Services can apply for G.I. Bill benefits online, making it easier than ever to receive the necessary financial support for education.

As 2020 begins, the skilled labor shortage continues to pose problems for the nation’s employment and economy. However, with increased resources and promotion of skilled labor careers at earlier ages, it may be possible to combat the shortage and avoid continued employment gaps over time.

Older Parents Face College-Debt Crunch

Older Parents Face College-Debt Crunch

By George Erb, The Seattle Times (TNS)

SEATTLE — Higher education is a priority for this tight-knit Maple Valley family.

Walter Lowe and his wife, Annerose Lowe, are determined to help their five children earn college degrees and start their careers without taking on mounds of student debt.

But the Lowes are also older parents in their 50s and 60s. They have a six-figure mortgage, limited savings and a break-even cash flow that makes additional savings difficult.

How could they help their children pay for college without wrecking their retirements?

After examining the family’s values and finances, a volunteer financial planner steered the Lowes toward alternatives for paying for college and urged them to leave their retirement savings alone.

“We have to protect our retirement funds,” Walter Lowe said.

Middle-class families grappling with the rising cost of college often find solutions in borrowing. The result has been an explosion in student debt. In Washington state, 58 percent of students who graduated from four-year schools in 2013 carried an average debt of $24,418, according to The Institute for College Access & Success.

That’s not an outcome the Lowes want for their children.

Walter Lowe, 67, is the family breadwinner, earning about $60,000 a year as a full-time faculty member for the English department at Green River College. He supplements his income by working as an adjunct instructor at Green River. By teaching an average of six additional courses a year — three during the summer — he is able to increase his income by $15,000 to $20,000 a year.

Social Security also pays the Lowes $12,648 a year for their 16-year-old son. Walter Lowe signed up for a dependent, minor-children benefit by filing for Social Security at full retirement age, and then suspending his own benefit. The payments, however, will end when their son turns 18.

According to Zillow, the current market value of the family’s home is about $279,600. But the Lowes are about five years into a 30-year mortgage on the property, with an outstanding balance of $177,000.

Their youngest son is in high school and has college plans, while their youngest daughter is working part time at Starbucks and studying nursing at Green River. Their older son this summer landed a full-time job on a technology help desk. Another daughter is five months into a new job with a property-management company; she is currently using her income to pay down credit-card debt. Their oldest daughter is living out of state.

The family is also paying off an $8,500 car loan and $5,000 that the Lowes put on a credit card for their daughter Francine’s studies last year at a university in Florida.

The Lowes do not get a tuition break at Green River because of Walter Lowe’s job, but their children have lowered their expenses by studying at the college while living at home. Three of the Lowes’ children have Green River degrees.

For savings, Walter Lowe has accumulated about $573,000 in a work-related retirement account. But the Lowes have had to repeatedly tap their household savings account, mostly for home repairs. More than a year ago the account balance exceeded $20,000; today, the balance is about $7,000.

Money is tight. “There was no give or take anywhere,” said Diane Jochimsen of Arlington, a certified financial planner with Seattle-based KMS Financial Services.

She urged the Lowes to abandon any notion of either tapping or borrowing against Walter Lowe’s retirement account to pay for their children’s college educations.

“You can finance college,” Jochimsen said. “I don’t know any way to finance retirement. Would anybody give you a loan for retirement?”

A better path to a secure retirement is for Walter Lowe to keep putting money into his retirement savings plan, Jochimsen said. She also encouraged Annerose Lowe to find work when her children become independent, which would increase her Social Security benefit when she retires.

“I did not want them to be destitute when they’re older,” Jochimsen said.

Luckily, Walter Lowe loves his job and wants to keep working until he turns 74. Meanwhile, Annerose Lowe, 56, wants to become a certified home-care assistant after her children become independent.

Jochimsen next urged the family to pursue other ways of paying for college for their children. She suggested federal student aid as well as various scholarships, grants and loan programs.

Because of the Lowes’ close family ties, Jochimsen advised them to make college funding a group project, in which everyone participates in finding solutions.

“We are going to do that,” Annerose Lowe said. They are planning an initial family meeting that could become a monthly session.

The Lowes still need to look into alternatives for paying for college and keep building their retirement savings. But they also say that Jochimsen gave them a path to follow.

“We have a lot more confidence that we can navigate this,” Walter Lowe said.

(c)2015 The Seattle Times. Distributed by Tribune Content Agency, LLC.

Walter Lowe, 67, with wife Annerose, 56, and three of their five children: from left, Henry, 23; Elliott, 16; and Francine, 20; at their Maple Valley, Wash., home. (Sy Bean/Seattle Times/TNS)

Loan Refinancing, Grants Key To Clinton’s College Affordability Plan

Loan Refinancing, Grants Key To Clinton’s College Affordability Plan

WASHINGTON (Reuters) – Democratic presidential candidate Hillary Clinton will propose a college affordability plan in New Hampshire on Monday that would increase access to tuition grants, allow graduates to refinance existing loans at lower interest rates, streamline income-based repayment plans and police predatory lenders.

The proposal asks that students, families, universities, states and the federal government “do their part” to make it easier to attend college without taking on excessive debt, according to briefing documents.

There are more than 40 million students and graduates in the U.S. with education debt that amounts to a collective $1.2 trillion, exceeding debt from credit cards, auto loans or home equity lines of credit, the campaign said.

Making college more affordable – and helping graduates and their families repay education loans they already have – has been an early theme of Clinton’s campaign since she launched her White House bid in April.

Clinton has frequently visited community colleges and technical schools, and indicated she sees an expanded role for such programs in her effort to boost the middle class, and lamented the high interest rates at which some graduates are repaying loans.

During a recent appearance in South Carolina, a state that votes early on for the party’s nominee for president, along with Iowa, New Hampshire and Nevada, Clinton polled the crowd about the student loan interest rates they were paying, nearing double digits with a smattering of hands still raised in the room.

Clinton’s student debt proposal is highly anticipated by groups in the progressive wing of the Democratic Party, which see the issue as essential to jump starting the economy by freeing up graduates to buy homes and start businesses. It will also be closely watched by young voters, whom Clinton will need to energize to win the general election in November 2016.

Clinton’s plan would allow graduates to refinance existing loans at current rates and consolidate four existing programs that allow graduates to make income-based loan payments into one that caps repayment at 10 percent of income, with the balance forgiven after 20 years.

A new grant program would be available to states that commit to a no-tuition guarantee at community colleges and a no-loan guarantee at four-year public colleges and universities, the campaign said.

The total cost of Clinton’s proposals would be $350 billion over 10 years and would be paid for by capping itemized tax deductions for the wealthy.

(Reporting By Amanda Becker in Washington; Editing by Chris Reese)

Photo: U.S. Democratic presidential candidate Hillary Clinton speaks at a campaign event in West Columbia, South Carolina July 23, 2015. REUTERS/Chris Keane