Is College Worth It?

I have written before about how challenging I find suggestions that college has no value. When research suggests that learning or critical thinking is not occurring on the college campus, I know that I see otherwise at my university, with my students. Does the academe have work to do? You bet. But creating a society of education privilege where only certain individuals are encouraged to pursue a degree is not an answer.

This Chronicle editorial suggests we are already creating that privilege by pricing a large portion of the population out of the higher education pool.

…going to college is worth it, but going to any college at any price may no longer be worth it. ~Jeff Selingo

But for another viewpoint here is an interesting debate of whether too many students are attending college. It highlights the argument that increased access to higher education has little influence on economic growth. And although I find this argument insulting to education and our students, it is worthy for discussion. Who decides who attends college?

To ask whether too many people are going to college begs another question: If too many people are going to college, then who are these people?  How should we as a society ration a more restricted level of educational opportunity?  ~Peter Sacks

Consider the students in your office today. Which ones could you single out as not being eligible for higher education?

Debt Zapper

Student loan debt has surpassed total credit card debt in the United States, reaching more than $1 trillion this year. That’s trillion with twelve zeroes. Student debt is a recurring topic here, so these 10 Tips for Zapping Student Loan Debt may be worth a look.

More on the student debt challenge:

Presidential Agenda

Student Debt: No new car, caviar, four star daydream

Student Debt continued: Still no caviar

Student loans of interest

It’s not only a national debt crisis

Money, money, money… Must be funny…

Presidential Agenda

My university named a new president last week and I was excited to learn that he has goals similar to mine in the area of decreasing student debt. This is a topic that is of great interest for me as I counsel first-generation college students, many of whom borrow large amounts of money through federal, institutional and private sources to meet expenses. As we reside in a state where 85 percent of the state’s need-based grants support students enrolled in private, not-for-profit colleges with only 6 percent supporting students enrolled in public colleges and universities, change will not be easy

It’s increasingly difficult for the middle class to afford a high-quality public education. That’s a huge concern of mine. Our long-term goal would be that any qualified Iowan could graduate debt free. That’s the direction we want to be going.  ~Steven Leath, president-elect

More on the student debt challenge:

Student Debt: No new car, caviar, four star daydream

Student Debt continued: Still no caviar

Student loans of interest

It’s not only a national debt crisis

Money, money, money… Must be funny…

Money, money, money… Must be funny…

In the 2009 fiscal year, the default rate on student loans climbed from 7 percent to 8.8 percent, over the previous fiscal year, according to a U.S. Department of Education report released today.

Of the 3.6 million student-loan borrowers whose first repayment period was between October 1, 2008, and September 30, 2009, about 320,000 people defaulted before September 30, 2010.

You can review information on the national student loan default rate and rates for individual schools, states, and types of institutions at the Federal Student Aid Data Center.

It’s not only a national debt crisis

Helping students understand how to effectively manage student loan debt is a bit of a project for me. I spend much of my professional work counseling first-generation college students, most of whom have high financial need. I have shared my views on the student debt crisis here, here, and here.

Andrew Hacker and Claudia Dreifus present some excellent alternative plans for lowering student costs in higher education by encouraging students to choose community colleges and state institutions.  And although I disagree with their portrayal of unscrupulous financial aid officers when describing the individuals at my own institution, I do not doubt that they are out there.

The next subprime crisis will come from defaults on student debts, starting with for-profit colleges and rising to the Ivy League. The parallels with housing are striking. In both, the written warnings aren’t understood, especially on penalties and interest rates. And in both, it’s assumed that what’s being bought will rise in value, in one case the real estate, in the other the salaries which will accrue with a degree. One bubble has burst; the second is already losing air.

Treating students like an ATM machine

Inside Higher Ed posted another feature on the prospect of eliminating subsidized student loans and their relation to the federal deficit. Is there sense in using students seeking higher education as a revenue generating source for the federal government? Shouldn’t we all strongly object to shifting funds from student aid toward deficit reduction?

The federal government is making a lot of money on students and on parents. There’s a risk of almost treating students like an ATM machine.  ~Becky Timmons, assistant vice president for government relations, American Council on Education

Student loans of interest

Helping students be aware of the impact of student loan borrowing to finance college is a bit of a pet project of mine and I have written about it here and here.  Don’t get me wrong, I think a moderate investment in student loan to obtain higher education is a very wise investment. Moderate being the key word in that statement.

Inside Higher Ed profiled a proposal made during recent Congressional discussion on the federal deficit that would require students to pay the interest on student loans while they’re enrolled in college, a change that would save the government $40 billion over 10 years.

Students who borrow the maximum amount of subsidized loans, $23,000, and take six years to graduate would owe $5,000 more by graduation and $9,000 after a 20-year repayment period.  ~Pauline Abernathy, Institute for College Access and Success.

National Association of Student Financial Aid Administrators president Justin Draeger said he strongly objected to the idea of shifting funds from student aid toward deficit reduction but finds it a better alternative than cutting the Pell Grant which would have more impact on student access to college.

When debt attributed to private and federal student loans is set to surpass $1 trillion dollars in the United States and already contributes to the ballooning national debt, isn’t adding $5,000 more debt to the average student loan borrower government-speak for robbing Peter to pay Paul?

Shouldn’t we all strongly object to shifting funds from student aid toward deficit reduction?

Future Earnings

As a student affairs professional and higher education advocate, I am exhausted by recent events discounting the value of a college degree. Yes, I am looking at you, Mr. Stanford Educated Peter Thiel. Thankfully, there are enough critical thinkers in the media who are willing to defend the value of education from stories such as:  Debt-Laden Graduates Wonder Why They Bothered With College.

Why the Media is Always Wrong About the Value of a College Degree

The Long, Sad History Of ‘College Not Worth It Anymore’ Articles

Does College Still Pay?

And my logical thinking favorite:

Where is the Best Place to Invest $102,000–In Stocks, Bonds, or a College Degree?

…the recession has not fundamentally changed the math: although a college degree has upfront costs, it is important to remember that it is an investment that pays off over time.

Student Debt continued: Still no caviar

I have frequently referenced a paper for a higher ed finance class this semester that was featured today in a Los Angeles Times article on the big picture of student debt.

The Institute for Higher Education Policy study of federal student loans, Delinquency: The Untold Story of Student Loan Borrowing, suggests that a majority of students struggle to repay their loans.  As the cost of a higher education has increased exponentially over the last couple of decades, policymakers have relied solely on default rates as a measurement tool.  An institution’s default rates can impact their ability to provide loan borrowing to students.  This study suggests that default rates alone provide an incomplete analysis, as they exclude borrowers who have difficulty repaying their loans but who avoid default.

This study consists of a review of federal student loans only, not private lending.  It focuses on the nearly 1.8 million borrowers who entered into repayment on loans obtained through the Federal Family Education Loan Program in 2005 during their first five years of repayment.  It details the rates at which borrowers entered into default; into deferment, a temporary suspension of loan payments for re-enrollment in school, unemployment, or economic hardship; forbearance, temporary suspensions of a borrower’s payments because of financial difficulty; and delinquency, or late payment on a loan.

Overall, only 37 percent of the borrowers in the study managed to repay their student loans throughout the study period without postponing payments or becoming delinquent. Another seven percent entered into deferment because they re-enrolled in school.  A majority, 56 percent of borrowers, had difficulty making timely payments on their loans.

Of the 56 percent with repayment difficulty, 15 percent of borrowers used deferment and forbearance to postpone their payments and avoid delinquency.  Overall, 41 percent of the student loan borrowers became delinquent or defaulted.  Twenty-six percent of borrowers became delinquent, but did not default.  Approximately 15 percent of borrowers became delinquent and defaulted.

Delinquency and default have serious consequences for student loan borrowers and can affect credit scores and the ability to obtain mortgages and auto loans, and the terms upon which those loans are offered.  Borrowers who default face even more severe consequences, including wage garnishment, withholding of income tax refunds or Social Security benefits, the turning over of the defaulted loans to collection agencies, and liability for collection and court costs.

There were important distinctions made between borrowers.  Undergraduate and graduate borrowers who left school without graduating were far more likely to become delinquent or default than those who graduated.  Graduate students were far more likely to make timely payments without using deferment or forbearance and less likely to become delinquent or to default than undergraduates.  Students at public four-year and private, nonprofit four-year institutions were more likely to repay their loans on time without resorting to deferment or forbearance and less likely to default on loans.  Students at public and for-profit two-year institutions and for-profit four-year institutions were the most likely to experience repayment difficulty.