of ash since the beginning of the week. an alert has been ished, calling for voluntary evacuation. people in hawaii are bracing for two hurricanes heading towards it. it's the first in 22 years to hit the island. even in the teeth of the worst depression since the great depression college tuition and fees, public and private, rose faster than the cost of everything else. as undergraduates don cap and gown, high schoolers have been picking colleges. education changes lives, so does college debt. it's the "inside story".

hello, i'm ray suarez, over the past 40 years, college and university tuition soared faster than consumer prices and faster than the cost of houses, faster than the wages of american families. the old reassuring optimistic idea, going into debt for a good college education would pay back the borrower maybe times over. that is getting a second look. it's unquestionable that during economic crisis and years of slow growth college graduates did better than people with some college or a high school diploma. students and their families now have to take a tougher look at costs. dream school versus affordable school, public versus private. two years of community college to begin, versus four years at a residential programme when the

diploma, the credential looks the same to the world. value versus perception. it's real. it's forcing tough choices on families that would otherwise be happy to reward their hard-working high schooler. >> high school senior karen gonzalez of centerville virginia will head to radford university, the first in her family to go to college. >> i got the red folder. it was crazy, i cried. i told mum the big news. she jumps up and down. >> the daughter of two peruvian immigrants, karen said not going to college was not an option. >> i want to get my education. >> early in the progress, it was clear she didn't just need good grades, but money too. and lots of it. >> as soon as i applied to different colleges, and i saw

tuition, it made me feel disappointed, thoughing that other students have the ability to say "i want that one", or "no, i don't like that, i want that." me i felt weird because i had to limit my choices. >> she had dreams of studying at old dominion or virginian commonwealth. it's become a family affair to pay for her third choice, a less expensive school. >> my dad has two full-time job, one at wal-mart delis and one at rudies for the airport. every time he gets a pay check he'll divide it. i plan on doing work study at radford. i'll work while i'm at school. >> most american college students share the story. the average student loan debt tops $29,000, which is nearly double what seniors owed in 1989. according to the college board the school year adds average

cost for tuition and fees were 30,094 at private. 8,093 for state residents at public colleges and 23,203 for out of state residents at hub bike colleges. being in the red is not just an individual problem, but an evolving national one. collectively student loan debt is more than a trillion dollars. >> a report from dimos says rising fees are linked to funding cuts at college. a funding cut of the great recession. this is an author. >> it is cuts to state funding that is it the rising cause students are paying the cost for the holes in the state budget, at the worst times in their lives. >> 49 states have seep an average -- seen an average cut in funding of 27% per student. most are raising fees and

cutting resources to cover operational overhead, meaning while students pay more, it doesn't translate into better quality teaching. the result millions of 20 somethings, and during the economy immediately cash strapped after graduation, unable to spend money on much else, other are than student loans. hilton smith calls it a debt for diploma system. >> the students who are paying $300 or $500 towards reducing debt is $300 to $500 that they could spend on a down-payment of a house or a new car or other things that would recirculate in the economy. >> the rules made it difficult to forgive student debt. when it defaults, it set off a vicious cycle. >> i have no retirement or savings. >> this person saw going into

default first hand. after earning a bachelors in journalism and a masters in international relations, she graduated college 80,000 in the red. >> i ignored it. it was a big mistake. >> when she decided to face reality she was faced with an ugly truth. >> i signed into my account and it was 92,000. >> it caused upheaval. she got a job. how do i get the 7 to a 6. it was a game. >> she is carrying a 20,000 debt, but at the expense of not doing anything else. storeys likes this weigh heavily on the high school seniors. >> i'm scared for my father. i hardly see him now.

the modern market in higher ed, this time on inside story, joining us philip yeaingel, the former interim chancellor. marie big im, a director of

college counselling at a greenhill school in dallas texas, and from new york, a correspondent for al jazeera america's "real money" with ali velshi. >> let me start with you philip. you have seen it from the inside. tell the people who are watching why it is that tuitions have risen so fast. what is driving the costs? >> as in your set up piece, the biggest single factor increasing student tuition rates at public universities is the decline in state support for the universities. in fact, it really seems as if the american dream is in danger of turning into a nightmare. the students can see the land of tonny, but can't get to it. as you decrease the state support, the expenses of the university continue, and the only way - or the major way that

a university has to make up for that is, in fact, to increase tuition. at the same time most universities are getting more and more sensitive to the impact this has on students, and so they will often have a combination of an increase in tuition and some form of cuts within the university to try to decrease over all expenses. >> were there no other choices as administrators like yourself looked at what could be done to econ omize, what could go first. is tuition the only fall-back position for closing what could be a budget deficit? >> depend on the magnitude of the deficit. there are opportunities within universities, and you can encompass them in the concept of focussing 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 universities, the state support paid for most of the educational costs. today it's the student's tuition that paid for the majority of the educational costs. in that framework it's important for universities to focus on expenditures that enhance and improve and sustain the student experience as students. that means that sometimes some of the other programs and missions at universities, that they have taken on, may have to be diminished or fall by the wayside as one focuses on the student. >> as the trend conditions, have you seen the kids you advise not only make decisions on where their grades will take them, but where their budgets will?

>> absolutely. and i work at independent schools, so i have students whose families can afford to pay the full freight, students whose families struggle, and students whose families have no means to pay for the college education. when i started in this profession 20 years ago, aspirations were important and families would say we'll go out of our way to make it possible. now i see families all along the income spectrum asking questions about cost, about what you get from the cost, ways to pay for college, and what that might mean for the future. >> does that mean hard-nosed decisions. are parents saying about dream school a, the one the kid was shooting for "sorry, you are not going there." absolutely. more and more families are having a real and honest conversation. i can recall a moment this year in our office when i overheard a

group of seniors mulling over choices and a girl said to a boy "i'm proud of you getting into college x, are you excited to attend." and the bay said "no, i'm going to college? a. yes." >> he said "that's your dream.". he said "college y gave me the best money, that's now my dream school.". >> patricia, when we look at the way markets work, there was an idea. i heard it a lot, that this would hit the wall, that families would say sorry, we are not spending that kipd of money. it didn't happen, is college more like buying a luxury car than it is between choosing between two different detergents. >> college is a ticket to the middle class. all the studies show if you go to college and earn a degree, you make more than a high school graduate. that's why people pay to play, if you will.

huge student loan debt burdens are having a knock-on effect on to the economy, and one of the ways i like to describe it is you have to think of the economy as an eco system, and young people are in that system. when we crush them with debt, we deny them the choice of participating in the economy in a meaningful way, and by that i mean consumer sentiment. for example, homes. for every home construction job, that creates three to four jobs for people sharing goods in that home. so you can see how all along the food chain that student debt is having an impact not just on student debtors, but all of us. >> we'll take a short break. when we come back, we'll talk about college education and the

marketplace. what decisions are families making, what is driving them. this is "inside story".

>> this trial was a sham... >> they are truth seekers... >> all they really wanna do is find out what's happening, so they can tell people... >> governments around the world all united to condemn this... >> as you can see, it's still a very much volatile situation... >> the government

is prepared to carry out mass array... >> if you want free press in the new democracy, let the journalists live. welcome back to "inside story". i'm ray suarez. today on the programme not going to college versus not going - the value of higher education to young americans is pretty well demonstrated. how much should price guide a family's decision - when and whether a family should give in to the long-cherished dream of a particular school and when option, and there are almost always other options, should get a second look. marie, does anyone talk to teenagers about the consequences of taking a loan to go to college, how the interest accrues, how payments grow over time, how much time is might take them to pay off debt

incurred between the ages of 18 and 23? >> yes, if you look at studies, most of the student who take out loans tell you that nobody told them about any - any way of how the numbers add up, how from accrues, what repayments may cost in relation to the first job salary. as an educator, i should tell you that there are a lot of efforts made. what we hear from students in college and post college, that no one informed them of what the loans could do to them in the future. >> are there tools out there, patricia, in the face of rising costs for decision making around picking a college? >> financial literacy is one component of the answer to that question. the fact of the matter is that a lot of kids don't know what they are facing and a lot face sticker shot. but they are looking at it so

late in their lool careers, maybe -- high school careers, maybe it's time at junior high school to talk about college costs. an 8th grade teacher is preparing her kids for the bill down the line. it's a fine balancing act. you don't want to scare kids from going to college. you want to encourage them to get a higher education because they'll be better off with that diploma. it's that balancing act of preparing them for the bill that is coming down the line. >> the incentives and the tools at hand work at cross-purposes. we say maybe you ought to work. it's my impression, and i have seen varying stats that kids that work more take longer to finish. >> it's correct and one of the things i get angry will is when people say "i worked my way through college why can't students do the same." when some private institutions

top out of $65,000 a year, how do you spent a student to work their way through. if a stun spends time working to pat for their -- student sometimes time working to pay for their education, it will take them longer to graduate. >> you were telling us how reductions in state support has driven up costs at public institutions. hasn't this gap between the cost of private and public education strengthened public education's hands, don't you have more customers because you are better priced product. >> yes, you do. not all, of course, but many public universities, particularly those perceived that are high value, you see a substantial increase in the last several years as a matter of fact, in the interests of the institutions, and that is in the form of increased applications,

and there has been a response on the part of many of these institutions to increased enrolment to meet the needs. there is 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. therefore, additional enrolment means additional costs for the university ni that it has to find other sources to pay for in the time of declining state support for these public institutions. that means that there's a real scramble that increasingen roll. doesn't increase your overall budget in terms of being able to support the university activities, and, in fact, creates an additional burden. increasing enrolment in response to the increase in the public institutions for the reasons you describe is a real challenge for the institutions to meet.

>> we'll take a short break now, and when we come back, we'll talk about the future of this problem. are there things put in place either market forces or loan programs or ways of cutting the eventual cost that might bring relief to american families. this is "inside story".

welcome back to "inside story". i'm ray suarez. you hear all the time in today's economy a college education is essential to landing a good job. 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 thoz. what does it mean to start your adult life in that much debt. is it still worth it? still with us philip chancellor, marie

bigin, and from new york, my colleague patricia sabgar a correspondent for al jazeera's "real money" with ali velshi. patricia, does college and university cost end up operating in the economy differently from other things that we buy? you know, some of the colleges that increased their prices the most have seen the largest rise in applications. so apparently price is not scaring people off. >> price is not scaring people off. but the fact of the matter is that we are seeing a knock on to our economy of this massive student loan debt burden. one thing that economists are starting to take a look at is what would be a reasonable percentage of medium annual household income for 4-year public university tuition. in over half the country

tuitions are 15% of median household income. and that's before taxes. that's a big bite. the middle class is suffering in the face of rising tuitions. studies show that kids from lower middle income families earning between $40,000-$50,000 - they are graduating $11,000 more in debt than student from poorer families and students from affluent families. primarily because the grants are not available to them. the middle class is getting hammered with the higher tuitions and you have to bear in mind that winter games have been stagnating. while tuitions are eye-watering, incomes stagnant and it's all-conspiring and hitting students with loan debt. >> marie, are there unexpected results coming from just that situation that patricia

described. are students leaving your school that might have in another day and age gone to a private school and be well sought by the schools who are going to a public university instead and raising the profile of those places? >> certainly. i think students look at our education as an independent secondary school. but the question is what is that in apparent to the cost of paying for college. more and more of our families are looking at public institutions in state and out of state. sadly. more of my students are questioning their major choices and career choices. students who used to be friday in edu -- interested in education and public service say those are careers that are too low paying. yes, i think there are a lot of long term implications in the society about how this debt load is crushing the children. >> in the next couple of years, we'll pass the cresting high

water mark of the number of high school graduates if next year's class is smaller, and the year after that smaller still, that means colleges are going to be competing for a smaller pool of participation freshman. what will that do inside the marketplace? >> that's already happening. the crest in high school graduates, we think, is probably a year now in the past. and so the response of institutions like mine has been to expand the educational opportunities in - for the non-traditional sector. that would be more the adult populations. also work on the side of trying to assist students in managing the total cost of making transfer from community colleges

to - for your institution much easier. 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 don't have to have a res condition shall component, which costs $10,000 to $12,000 per year, and has a more economically viable first two years, and transfer to the 4-year institution with more opportunities in their major, et cetera, that they can take advantage of and hone their skills and become a well-rounded graduate. >> with the possibilityies we are talking about, is there a point at which middle class and upper middle class families go on strike, close their wallets, say "i'm sorry", 5% this year, 5% last year, we can't do it? >> well, the question is when are people who are not suffering

with student debt - when do they wake up to the fact that this does impact all of us, and we are all in this together? you know, i could give you countless examples of how this resonates through the economy. another example is entreprene entrepreneursh entrepreneurship. small businesses created 60% of jobs. at what point to families close the pocket books. >> that's hard to say. they need the diploma. the nation needs it. if the united states is going to be competitive in the global economy, we need a well-educated workforce. maybe it's not when do families get tired of it, but we as a society realise that this is a problem that impacts all of us. >> patricia, marie, philip - thank you all very much. terrific conversation. >> thank you. >> thank up. >> my pleasure.

>> that brings us to the end of this edition of "inside story". thanks for being with us. in washington, i'm ray suarez. next? with ebola on the move across new borders, what are countries, including the u.s., doing to stop it from spreading? at points of entry, and more porous borders, how can this deadly virus be contained? also tonight, paying the piper, and it's not enough. the privatization of probation aims to get more communities money that they are owed. but the cost to the poor can be devastating. >> really it's a system that's run amuck. >> correspondent sarah how with an in-depth look at the price of privatized probation