p>On the heels of news that the United States ranks fourth in the world in the percentage of college graduates come new statistics revealing that for the first time ever, Americans’ has surpassed the nation’s credit card debt, with student loan defaults leading the way in debt collection. Although US spending on tertiary education also ranks among the highest in the world, the student loan crisis points up concerns about the role of higher education in the current economic downturn.

According to a recent CNN article, just 55 % of Americas between the ages of 16 and 29 are employed. And of those who are employed, many are working jobs unrelated to their college majors, while struggling with crushing debt from college costs. And, under current bankruptcy laws, student loan debt is exempt from discharge, leaving graduates from all kinds of institutions carrying their student loans for most if not all of their professional lives.

Educators and financial experts point to several causes for the student loan crisis and its implications for the economy as a whole. The most obvious is the rising cost of a college education. At institutions small and large all over the country, tuition rates have increased –nearly doubling at some Ivy League and private colleges. At the same time, scholarship opportunities and grants have decreased, creating situations in which nearly every student must rely on loans to complete their degrees.

The rise of for-profit colleges such as the University of Phoenix and Kaplan University contributes to the problems. These schools, many of them offering vocational or specialized training in a specific field, often target spe

cific populations such as veterans or single mothers with promises of a path to a new career and financial aid from federally guaranteed loan money to complete the program. But the dropout rate is high, and students who fail to complete the programs are still obliged to pay their debts.

The same kind of situation applies even in the traditional college world, where some schools, particularly law colleges, are the target of consumer complaints for misrepresenting the post-graduation employment picture in order to keep enrollments up. Although few jobs are now available in some fields, schools continue to accept large numbers of students, who must take on a substantial student loan debt when the likelihood of finding a stable job using their degree is slim.

This situation creates a disturbing conundrum. As the rapidly evolving global economy creates even greater demand for

highly skilled, technologically savvy workers, the post-secondary system places severe burdens on students attempting to find a place in that economy. The student loan crisis is a symptom of broader concerns about employment and the country’s future as a competitive force.

The solution? Tougher oversight of higher education’s use of federal student loan funds, and changes in bankruptcy laws to allow the discharge of student loan debts may be a start. But private contributions account for a significant percentage of support for many colleges, so donors investing in education can also press for change. As Jason Hartman points out, financial independence benefits everyone – and helping America’s graduates helps the country as a whole. (Top image: Flickr /ParkerMichaelKnight.

The American Monetary Association Team