One Culprit of College Cost Revealed by New Hampshire Study

The rising price of college is leaving students and families in ridiculous amounts of debt. As a college applicant myself, a huge concern of mine is the cost of college. I want to be able to attend a four year college, and hopefully graduate school as well, but don't want to be overwhelmed by debt after I graduate. While many politicians and government officials want to discuss the problem of debt, the root problem that needs to be taken care of first is the cost of college. This article focused particularly on the state of New Hampshire and highlights a major cause of rising college prices.

While there are many reasons behind why college is so expensive now, a think tank called Demos brought a specific reason to notice in a study they did in New Hampshire this year. According to their findings, the state of New Hampshire decreased its investment in higher education by 43% from 2008 to 2012. With less support from state governments, colleges resort to increasing the price of tuition and housing in order stay afloat and have enough money for improving the school. Demos also found that higher education was the first area of the state budget to get funding cuts whenever a recession took place. 

These higher education budget cuts have not been replaced largely in part because politicians are not eager to raise taxes. I mean, nobody is really eager to have higher taxes. If what is happening in New Hampshire is also taking place in other states, something needs to be done by the government to help higher education become more affordable. It is unfair for states to keep taking away money from higher education. While I understand that things like health care and infrastructure may seem more important than a college degree, a generation of kids in debt is not ideal either. 

Even though the price of college is going through the roof, people continue to pay for it due to the importance of a higher education degree in the workforce. Families who can't afford today's college prices are going in to a lot of debt. It makes me wonder if a college degree is really worth taking on thousands of dollars in debt? According to the article "more than half of millennials are delaying major life events such as buying their first homes because of their student debt." I know that when I graduate college, I want to be able to afford things like a house and a car and be able to sustain myself. However, with no foreseeable drop in the price of college, I'm not sure if that is a realistic desire at this point. Education is important, and everybody should have access to it. Data and studies like this should be a red flag signaling our government to take serious action about this problem. 

Currency Devaluing in China Could Spell Trouble for America

Earlier this month, Chinese authorities made a decision to drop the value of the Chinese currency, or renminbi (same as the yuan), to 6.36 to the U.S. dollar at the end of the business day on Tuesday, August 11th. According to this article from the New York Times, this is the largest devaluation of Chinese currency since the new modern exchange rate system was adopted by the country in 1994.

Unlike the American dollar, Chinese currency is decidedly valued every day by the Chinese government. Consumer spending in China has been declining over the past few years, but has been especially low this summer. Also, Chinese stock markets saw a big drop this summer, which further added to the decrease in consumer spending. In effort to boost spending, the Chinese government has been lowering the value of the renminbi. With a less valuable currency, Chinese goods become cheaper to buy. This is where the problem lies for U.S. manufacturers. As the value of the renminbi decreases, Chinese exports become cheaper for other countries to buy. Therefore, American manufacturers suffer because they cannot compete with the competitive Chinese prices. This ends up in a lot of job loss for those working in the manufacturing business. The benefit of having a less valuable renminbi is that Chinese imports to the U.S.  become less expensive, but that does not fix the problem for our manufacturing companies.

Our country's relationship with China is a very crucial one. We depend on China for a lot of trade and business. That is why it is hard for the United States government to intervene with the People's Bank of China and admonish them for their deliberate devaluing of the renminbi in order to help their manufacturing sector, despite the problems it ends up creating for the U.S. economy. Also, Chinese currency is not traded freely. The Chinese exchange rate policy works in which Chinese exporters receive U.S. dollars for their goods and those U.S. dollars come in to China and are converted into renminbi. So with China in complete control of its currency and trading, it makes U.S. intervention a very risky task.

For now, the Obama administration will most likely continue to use what the Treasury calls "quiet diplomacy" when dealing with China and its trading policies, in order to avoid major trade issues for the U.S. This goes to show how interconnected our global economy is and how much the economic prosperity of the U.S. depends on other countries.

Not So Sizzling Summer for Home Buyers

Home prices in metro areas have been steadily rising throughout the summer and are continuing to do so. Specifically, the real estate markets in east coast of Florida and everywhere in Southern California have seen very dramatic price increases for residential space. There are a couple of reasons behind the price increase, and several issues that are coming up because of it.

According to real-estate agents, this spring was a very big time to buy homes, and the buying trend continued into early summer. However, with so many people buying houses, the availability of homes began to go down. Even during this buying spree, the markets were still not great in comparison to the beginning of 2015. People were buying these houses for much more than they are worth, and took out massive loans to be able to afford to live in metropolitan areas. In high-demand areas such as California, there is a lot less available land to build on than there was several years ago, so prices are sky rocketing with the lack of availability. With more and more Americans seeking to move away from rural areas and in to more populated areas, it is no wonder that suburban and urban housing is becoming more expensive.

This article had a couple of terms I was unfamiliar with, so I took the liberty of looking up some real estate terms. The article discussed the fact that the "median price" is increasing for houses in metropolitan areas. The median price is just another word for average price on a house. I was shocked to learn that in cities in southern California, the median price has risen to almost one million dollars. Another term that was used a lot in the article was first and second "quarter." Quarters are just time frames of three months based on the calendar year that real estate reports are made at the end of. For example, the in the second quarter (April-June) over 30 metro areas saw double digit median price gains.

The issue with the rise in residential real estate is that as people spend more and more money on houses, they have less to spend in other areas. So consumers are having to be a lot more thrifty with their purchases, which may hurt other commercial areas of the economy. Personal consumption will most likely decline if the real estate prices continue to rise like they have been this year. Less consumer spending could even lead to more unemployment in some businesses, because their won't be enough people that can afford to do things like go to the movies, go on a shopping spree at the mall, or take vacation. Hopefully the real estate market will get better soon and home prices will go back down, but for the foreseeable future it looks like prices are only on the rise.