Tag Archives: Debt

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Higher Ed and Presidential Campaigns: Incompatible Bedfellows? (Part 2)

Before we choose a solution, let’s identify the problem

In my last post, I considered at some length the pros and cons of tuition-free public higher education, as advocated by some candidates now campaigning to be the next president of our country. After all, the reasoning goes, free tuition has been a long-standing policy in the K-12 sector; why not higher education? Different candidates vary with respect to how generous they are prepared to be, with one advocating a means test and at least a token investment by the students and their families, whereas another wants simply to do away with tuition at public colleges for everyone.

Unfortunately, the candidates are not discussing what particular problem their policy is intended to solve. Surely, in order to be effective, solutions have to derive from a collective agreement on, and understanding of, what problem the solution is intended to remedy – and our presidential candidates appear to have skipped this step.

The presidential election is almost a year away, so we still have time to think more about the problem we want to address before we fall in love with a particular solution.

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The Ultimate Question: “Is College Worth It?” (Part 6)

Our six-week exploration unearths a clear answer to that question

We’ve spent five weeks looking at the question that continues to be the focus of reports and articles in the media – “Is college worth it?” – from the standpoint of four distinct concerns: its perceived lack of affordability; the burden of debt that faces so many graduates; the relative scarcity of well-paying jobs for recent college graduates; and the risk that a student will borrow money, not complete his or her course of study, and be economically worse off than if he or she had never started. (As an aside, I should note that the question of the worth of a college education has been so frequently asked that it is now being satirized. The Onion recently posted the following headline on its website: “Study Finds College Still More Worthwhile Than Spending 4 Years Chained to Radiator.”)

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The Ultimate Question: “Is College Worth It?” (Part 5)

Lots of debt, no degree – the consequences of starting college, but not graduating

In previous blog posts on this topic, we have explored concerns relating to how expensive a college education has become; how many students are graduating with considerable debt; and how difficult it is for some graduates to find good jobs – all preparatory to a final discussion on the underlying question: Is college worth it? Before we take that question on, however, we must review a fourth concern:

Not enough college students are graduating, leaving them in debt and without a degree.

This is the most serious and significant of the four topics we have been discussing.

To begin, there are many studies regarding the economic impact on individuals with college degrees in comparison to those with just a high school education.

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The Primary Problem with Higher Education, in Four Words: It Costs Too Much

And so the primary task American colleges face today is controlling costs

On Monday, April 14, 2014, the Lumina Foundation convened a group of opinion leaders in Washington, D.C., to discuss college affordability, federal student loan policies and the role of states in supporting public colleges and universities (The Chronicle of Higher Education, “Paying for College: Experts Gather in Search of New Models,” April 15, 2014).

Unfortunately, the experts came up empty.

One commentator noted that “affordable” does not necessarily mean “cheap.” Another touted the merits of a net-price calculator designed to show the number of years after graduation at which “the benefits of college outweigh the cumulative costs.” A third suggested that greater numbers of women and minorities should choose more lucrative majors.

I hope the Lumina Foundation did not overly deplete its endowment to pay for these platitudes and in-the-box thinking.

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Colleges Must Fix All of Society’s Ills – Or Else! (Part 4)

Too much debt and too little learning? A federal ratings system is on the horizon…

Three weeks ago I presented a list of expectations, complaints or remedies for all that ails higher education that have received media attention in recent months. In two subsequent blog posts, I discussed subsets of this list at some length. In this post I will review the remaining items. They are:

  • Too much student debt – and it’s rising;
  • Too many students learn too little in college;
  • We need more technical education; and
  • Higher education needs a scorecard on affordability, access and outcomes (including salary of graduates).

These four items represent three criticisms and a proposed remedy. Allow me to examine each of them independently.

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Is the Student Loan Crisis Really a Crisis?

Or have hyperbole and hysteria created a misperception?

For the past 18 months, the media (and, subsequently, the politicians) have been focused on the rising tide of student debt. Two issues have attracted particular attention: first, the fact that total student debt has (a) exceeded $1 trillion, or, expressed alternatively, (b) exceeded the total of credit card debt; and second, the fact that some individuals have accumulated more than $100,000 in student debt.

News stories have become increasingly frantic. For example:

  • In a March 9 editorial, The New York Times cited a federal analysis from 2009 that “found that 10 percent of borrowers with private loans were spending more than 25 percent of their incomes in monthly payments.” But of the 60 percent of students who borrow, only about one-third (20 percent) have private loans – so the 10 percent of private borrowers who are spending more than 25 percent of their incomes in loan payments represent just 2 percent of all graduates. Those large payments are a huge problem – but only for a very small number of individuals.
     
  • A Bloomberg.com post on May 7 was headlined “Bankers Warn Fed of Farm, Student Loan Bubbles Echoing Subprime.” That’s a pretty scary headline – but the article conflates a meeting of the Federal Advisory Council on February 8, 2013, relating to farmland prices, where the term “bubble” was in fact used, with a meeting of the same group a year earlier (February 3, 2012) relating to student loan debt, where “bubble” was not used.
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The Dreaded Out-of-State Fee

At flagship universities, balancing the budget on the backs of out-of-state students

I read an off-hand reference to a fact that all but knocked me out of my seat: tuition and fees at UCLA for out-of-state students total $35,570 for the current academic year. (Room and board is extra: another $14,232.)

I wondered how many students were paying such a huge sum. In addition to the 7 percent who are international students, only 5 percent of UCLA’s undergraduates are from out-of-state. Still, that’s more than 1,300 students – not an insignificant number. Moreover, at UC Berkeley, with a comparable out-of-state fee, 10 percent of students (about 2,500) are from out-of-state, in addition to the 9 percent who are international students.

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How to Choose the ‘Right’ College

As May 1 approaches, some advice for those students about to become the Class of 2017

We are in the closing weeks of college choice decision time: most institutions have a May 1 date for students to “accept the acceptance.” After that date, some colleges and universities will have a full class for the fall of 2013 and will return deposits postmarked May 2 or later; at many others, the choice (or even the availability) of residence halls, as well as classes, may be severely restricted. So prospective students should be prepared to make their choice of campuses by May 1.

But for many students, cost is a factor that limits choice. In short, can the student (and his or her family) afford the campus that is the student’s first choice?

It is at this point that the expectations of the campus and the student are often at odds. Based on extensive survey data, most students and their families expect to pay substantially less than the institution’s sticker price – and that is often the expectation of the institution as well. But there are enormous differences between and among institutions as to their willingness (or ability) to offer financial support.

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Where Should the Talented Poor Attend College?

Arguments for and against elite schools for high-achieving, low-income students

In his March 17 column (“Better Colleges Failing to Lure Talented Poor”), David Leonhardt of The New York Times wrote about a study that found that only 34 percent of high-achieving students in the bottom quartile of family income enrolled in one of the nation’s 238 most selective colleges, as compared to 78 percent of high-achieving students in the top quartile of family income.

One conclusion is that elite schools, for all their rhetoric, are failing to recruit an economically diverse entering class of students.

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The Debt Problem – Part I

Student debt is no small problem, but colleges can take the first step toward addressing it.

In his column in The New York Times on March 9, Charles M. Blow states: “We are reaching a crisis point in this country’s higher education system” because of “staggering levels of debt.” He notes that student loan debt has more than doubled in the last eight years, to almost $1 trillion, and that, not unexpectedly, student loan debt is hardest on families in the bottom quintile of family income. Mr. Blow ends his column with, “We are on an unsustainable track. This will not end well.”

How is it that this problem has become so large so quickly? How do we fix it? Is this as big a problem as people claim?

I’m glad you asked. This is a problem that resulted from many intersecting forces: