we want to thank you for joining us on aljazeera america. go to aljazeera.com where the news never stops and it continues 24 hours a day. 7 days a week. even in the teeth since the worst recession. college tuition and fees public and private kept raising faster than the cost of everything else. as undergraduating high schoolers have been picking colleges education change lives but so does college debt. it is the inside story.

hello. i am ray swarez. college and university tuitions have soared. much faster than consumer prices much fatter than the cost of houses, much faster than the wages of american families, so that old reassurancing optimistic idea, going into debt for a good college education would pay back the borrower many times over, that theory is getting a second look. it is unquestionable but even during economic crisis and years of slow growth, college graduates did better than people with some college or just a high school diploma, but student students and fr families now have to take a tougher look at costs. dream school verses affordable, public verses private. two years after community college, veries four years at a residential program, when the diploma will look the same to the

world, value verses perceptions of value, it's real, and it's forcing tough choices on families that would otherwise be happy to reward their hardworking high schooler. >> high school senior of epicenterville virginia will head to radford this fall, the first in her family to go to college. >> i got the reeled folder and it was crazy, 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 won't have to struggle. >> but early in the application process, it became clear she didn't 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 don't 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 wal-mart deli and the other one at rudy's 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 i'm at school. >> most college students share her story, the average student loan debt at graduation topped $29,000. that's 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 doesn't necessarily translate into better quality chiefing. the results millions of 20 something's 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, that's 300-dollar 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 won't see him as much, it just feel like he isn't telling me oh i can't 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 won't 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 it's the students tuition that's 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 that's your dream, college y gave me the best money, and now that's 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 aren't going to intend that money, but it didn't 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 that's 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 aren't sees as many of them built. and there are studying that show that 30-year-old 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, what's driving them. this is inside story.

welcome back to inside story. today on the program, not going to college verses not going, the value of higher education in young americans is pretty well demonstrated. but how much should price guide a family's decision, when and whether a family should give into the longshorished dream of a particular school and when other options and there are almost always other options should get a second look.

does anybody talk to teenagers about what the consequences are of taking a loan to go to college? how the interest accrued, how payments grow over time. between the ages of 18 and 23. >> if you look at students most of the loans will tell you that knob told them about any way of how the numbers add up. what repayments may cost, in relation to your fist job salary. i can tell you there's a lot of efforts being made, but what we hear is that no one informed them of what these loans could do to them in the future. are there better tools out there for decision making around picking a college? >> well, financial literacy is definitely one component of the

answer to that question. a lot of kids don't know what they are facing and a lot face sticker shock. maybe it's time to start educating kids about college costs in junior high school. it is a very fine balancing act. you don't want to scare kids you want to endoubling therm to get a higher education, because they will be better off in the end, but at the same time, it is that balancing act, of preparing them for the bill coming down the line. the incentives often work across. maybe you out to work, but it is my impression, and i have seen varying stats on this, that kids that work more, take long tore finish.

>> it is correct. when i hear people say i work my way through college, why can't students do the same. when some are topping out at 60,000 a year, how do you expect an 18-year-old to work their way through edge which. yes, every study shows if a student is spending time working to pay for their education, that's time away from their academics and it takes them longer to graduate, and less likery to graduate as welt. just a few moments ago, you were telling us how reductions in state support have driven up costs. haven't this gap am strengthened public education's hand? don't you have more customers because you are a better priced product? je, you do, not all of course, but many public universities particularly those that are perceived

as being high value, you can see substantial increase in the last several years. in the interest in those institutions. and that comes in the form of increased applications. and there's been a response to increase enrollment, to try to meet those needs. mrs., however, a hidden problem in all of that. that is so the cost of educating a student, while mostly bourn by the student, is not entirely bourn by the student. that it has to find other sources to pay for in the time of declining state support. that means there's a real scramble that increasing enrollment doesn't increase your overall budget in terms of being able to support the university activities.

so increasing enrollment in response to that very increase in the public institutions for the reasons you have described. rah there things being put in place, market forces or loan programs or waying of cutting the costs that may bring relief to american families. this is inside story.

story.come back to inside i'm ray swarez. you hair all the time in today's and i, a college education is essential to landing a good job. but tuition, and room and board, rise in price every year and today's 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? is it still worth it? still with us former interim chancellor of rutgers newark, marie bigham. at the green hilts school in dallas texas and from new york, my colleague pa tricia, a correspondent for al jazeera america's real money with ali velshi.

pa tricia, does college and university costs end up operating in the economy differently from other things that we buy? you know, some of the colleges that have inceased their prices the most, have seen the largest rise in applications. so apparently, price isn't scaring people off. >> price isn't scaring people off, but the fact of the matser that we are seeing a knock on two our economy of this massive student loan debt burden. and one thing that economists are now starting to take a look at is what would be a reasonable percentage of median annual household income for four year public university tuition? so for example, in over half the country right now, tuitions are 15% of median annual household income. and that's before taxes. that is a really big bite. and the middle class is really really suffering in the face of rising tuitions.

and in fact, studying show that kids from lower middle income families that's earning between 40 and $59,000 a year, they are actually graduating $11,000 more in debt than students from poorer families and students from affluent families primarily because the grants just aren't available to them. so the middle class is really getting hammers with these higher tuitions and also you have to bear in mind, that wages have been stagnating for 15 years. so while tuitions are eye watering incomes are stag pant, and it is all conspiring on these students and hitting them with massive amounts of student loan debt. >> marie, are there some unexpected results coming from just that situation? that patricia describes? are there kid whose are leaving your school, for instance, who might have in another day and age, gone to a private school and been pretty well with sought by those schools who are now going to a public university instead, and raising the

profile of those places? certainly, 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 the the cost of paying for college. i think more and more of our families are looking at public institutions in state and out of state as options and sadly too, more of my students are questioning their major choices and their potential career choices. student whose used to be interesting in education or public service are now saying nose are careers in are too low paying for them to be able to justify their loan debt. so i think there are a lot of long term implications about how this debt load is crushing. >> will cost the cresting high water mark of the number of high school graduates if next year's class is smaller, and the year after that is smaller still, that means colleges are going to be competing for a smaller

pool of potential freshman. what will that do inside this marketplace? that's already happening. the crest in the high school graduates we think is probably a year now have in the past. and so the response of institutions like mine has been to expand the educational opportunities before the nontraditional sector. that would be more the adult populations and also work on the side of trying to assist students in managing the total cost. of making the transfer from community colleges to four year institutions much easier. is they with students can take advantage of the total cost. the fact that they can do

community college close to home and don't have to have residential. and thus, have a much more economically viable first two years and then transfer to the four year institution, that has more opportunities in their major. in becoming a well rounded graduate. >> with the possibility of what we have been talking about, is there a point in which middle glass and uner middle class family goss on strike. the question is when are people who are not suffering when do they wake up to the fact that this really does impact all of us. and we are all in this together. i can give you countless

examples of how this resinated. another example. would be on entrepreneur ship. they create about 60% of jobs so at what point do families get fed up, and close their pocketbooks. they need that for their kids to be competitive. and frankly the nation needs it. we need a well educated work force. this is a brock that really impacts all of us. >> p tricia, marie bingeham, thank you all very much. terrific conversation. i'm ray swarez.

the international community must not abandon the people of syria. u.n. chief ban ki-moon called for an arms embargo. ♪ ♪ i am jane duffy, you are watching al jazerra. also on the program a suicide bomber targets a top security commander in lebanon. the number of people forced to flee their homes across the globe passes 50 million for the first time since world war ii. and at the world cup in brazil, police move in quickly to quash any sign of pros