There's a great article on student loan debt in this weekend's New York Times. (May I just say that it is shameful that these stories never recieved attention from the higher education newspapers until now?)
For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports. Average debt for bachelor degree graduates who took out loans ranges from under $10,000 at elite schools like Princeton and Williams College, which have plenty of wealthy students and enormous endowments, to nearly $50,000 at some private colleges with less affluent students and less financial aid.
Please play with this great tool from the NYT about debt over time, by university, and by geography.
I'm sorry, but I won't be here much today. The hard drive on my Mac is shot after six months. I need to back everything up and get a new hard drive today. Ugh!
Apt. 11d 
As the article quotes Gordon Gee, I think this is the place to mention that I saw Gordon Gee walking across campus carrying a life-sized photo of his own bust and head while followed by another guy who carried a life-sized full-body cutout photo of Gee.
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The graph’s really interesting.
College tuition does not have a simple relationship to average debt at graduation. Some state schools have more indebted graduates than some private schools which list a higher “sticker price.” Grinnell College, at $18,578 average student indebtedness, or Framingham State College, at $19,300 average student indebtedness? Tuition and fees for each: Framingham State, $6,540, Grinnell, $36,476 The two schools seemed to have about 50% of the student body carrying debt.
The schools which can charge higher tuition seem to be able to limit the effects of student debt for those students who take out loans. If 50% of the student population can pay a full tuition of $40,000, the college can discount tuition more heavily for the students who can’t pay full tuition. If 50% of the student population can pay a full tuition of $6,500, the college doesn’t have the capacity to support the students who can’t pay full tuition (from tuition earnings, at least.)
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Kelsey Griffith, the first debtor mentioned, borrowed $120,000 to go to Ohio Northern University. Despite the name, it’s private and costs $50k a year. Show of hands, who has ever heard of Ohio Northern University?
The Griffith family did one smart thing–Mrs. Griffith (who is unfortunately on the loan) took out life insurance on her daughter in order to be able to pay back the loan in the case of her daughter’s premature death.
Co-signing by parents is a dimension of the student loan mess that we haven’t discussed much here. It means that if Kelsey Griffith doesn’t pay the loan (and lots of luck with $900 a month in student loan payments with two restaurant jobs), her mom is going to either have to pay or face the consequences of damaged credit and reputation. The interpersonal repercussions alone of this situation are dreadful.
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That is very interesting. The Robin Hood model that I experienced as a private school undergraduate is alive and well.
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Show of hands, who has ever heard of Ohio Northern University?
I hadn’t, despite having lived in that state for many years. She should have gone to Bowling Green. It’s pretty much in the same place and cheaper.
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$48,886 (about 90%+ students taking on debt) vs. $31,515 (about 80% students taking on debt. $31,000 tuition & fees for Ohio Northern University, vs. $9,060 for Bowling Green. You know, you’d expect the debt load to be radically different between the two schools, but it isn’t THAT different. Students (on average) owe about 1.5x tuition for Ohio Northern, but 3.5x tuition for Bowling Green.
Even if Bowling Green’s much cheaper, the student debt on average is still significant–and more than you’d expect.
I wonder if the difference in indebtedness by college campus also reflects the student loan providers the college chose?
Ohio Northern’s average test scores are much higher. It boasts a 24 – 29 ACT range, vs. a 19 – 24 ACT range for Bowling Green.
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I think the main difference may be the wealth of the parents. Ohio Northern students are probably coming from wealthier families while more Bowling Green kids borrow to pay living expenses.
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“I think the main difference may be the wealth of the parents. Ohio Northern students are probably coming from wealthier families while more Bowling Green kids borrow to pay living expenses.”
Very likely.
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Maybe. Yet, the Ohio Northern students are taking out more “other student loans,” which would mean private loans? compare: http://nces.ed.gov/collegenavigator/?q=ohio+northern&s=all&id=204635#netprc
to http://nces.ed.gov/collegenavigator/?q=bowling+green&s=all&id=201441#netprc
“financial aid” tab for both. Similar percentages of the entering students receive Pell grants (33% (BG) vs. 27% (ONU)).
Ohio Northern University gives out more “institutional grants.” The ONU tuition is also higher. They may give out merit aid to middle-class families, which would raise test scores and bring in more families who don’t need large amounts of aid.
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Cranberry, I can’t imagine a school where 50 percent of the population can afford to pay 40,000 a year. That’s 160,000 for college and most families have more than one child. I don’t know any family in America that has 320,000 dollars saved for college — even really wealthy ones. Can you give an example of a school where 50 percent of the population is paying 40,000 a year without financing it?
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I’m having a problem with interpreting the numbers. Looking at New Jersey public schools, debt at Rutgers New Brunswick is $16,766. Debt at College of New Jersey (FKA Trenton State) is $27,057, but a smaller percentage of graduates with any debt at all (so, assumedly, a higher percentage with lots of debt).
Rutgers and CoNJ cost the same amount. Rutgers is a top public university, CoNJ is a top public regional college. I assume financial aid is comparable.
What am I supposed to be learning? Is Trenton State doing something “wrong”? Are they accepting too many poor people? Should they raise their prices over Rutgers and then offer more financial aid with the money? Would I be better off at a private college?
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“Are they accepting too many poor people?”
probably (though “too many” only in the economic sense).
“Should they raise their prices over Rutgers and then offer more financial aid with the money?”
Could they? Would people who can pay come to Trenton State? and pay more?
“Would I be better off at a private college?”
Your kids? Maybe. It depends on really complicated economics, which I suspect might even seem random from the outside.
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It occurs to me that this difficulty in interpretation is a big part of the problem. In the olden days, when I was thinking about schools, my plan was 1) “meet” need schools, that met the financial need, with some debt and, expected contribution of my family, by the numbers was indeed something we could meet, and if wasn’t, 2) go to a state school, where we could pay the tuition.
Now, state schools cost a lot more, and what people think of as how much they can afford, v what the EFC is is very different (i.e. a family making 200K, which couldn’t really afford to spend 50K on school, without major lifestyle changes, is expected to).
So, the family making 200K would have to pay full price at the schools that “meet need” but might get some form of merit aid at another school (but, which one?). It might depend on an accident of the schools endowment (i.e. a school happened to graduate a few people who have made money available for scholarships).
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I’d like to see the numbers for Louisa’s question for different schools (i.e. the proportion paying full price for the school). A quick internet search says that 30% of Harvard students don’t receive any aid.
Does that mean they pay full price? Or are they taking loans? and if so which kind? They can’t be subsidized, right, ’cause then that would be “aid.”
And, is it debt financing if a family that’s paying 160K for their kids’ college still carries a mortgage on their home? (then they’re not taking a loan for school, but they’re taking a loan for something else so that they can pay cash for school).
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@Louisa: Well, the NYT graph depends upon self-reported student loan debt. I presume mortgages on the family home wouldn’t show up. However, if a college admits students from private and independent schools, they are likely to draw families who are already paying significant tuition bills. (See the New York Times for more stories about $40,000 elementary school tuition.)
@Ragtime. If I’ve found the right “College of New Jersey” on College Navigator, “Rutgers and CoNJ cost the same amount. Rutgers is a top public university, CoNJ is a top public regional college. I assume financial aid is comparable.” —isn’t quite true. It depends upon who you are.
If you make less than $30,000 a year, the net cost is $5,573 at CONJ, but $16,110 at Rutgers. If you make more than $110,000 a year, the net cost is $23,851 at CONJ, but $20,879 at Rutgers. I assume the CONJ enrolls more low income students than Rutgers. (They might not. It just seems logical that $5 thousand is less than $16 thousand.)
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bj,
At Harvard, I imagine those 30% are not struggling to pay for school. My elite East Coast school was not known for attracting nearly as fancy a demographic as Harvard, but there were plenty of kids whose parents were earning 7 figures a year. A family income of 200K is considered poorish at places like Harvard. My college boyfriend considered himself to be a middle-class average Joe, and his family made more than half a million a year. At my school, he probably was ‘middle’ income, honestly. I also heard (maybe they’ve changed since the crash), but at least around 2007ish any family with an income of 100k or less would get free tuition to Harvard. Currently at UChicago, a much ‘poorer’ school, any family making less than 70k gets a free ride. Places like Harvard know they’re a luxury item you can’t afford on a regular UMC salary, so if they want you to go there, they’ll subsidize you to the point your parents will have to sacrifice very little.
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This is from Harvard’s financial aid FAQ page:
Beginning in the fall of 2012, Harvard will increase its investment in financial aid for students from low income families by raising the income level under which parents pay nothing towards the cost of attendance from the current $60,000 to $65,000.
Parents of current students with typical assets and total incomes between $60,000 and $180,000 are asked to pay an average of 10%.
Beginning with the Class of 2016, families with incomes between $65,000 and $150,000 will contribute from zero to ten percent of income, and those with incomes above $150,000 will on average be asked to pay proportionately more than 10%, based on their individual circumstances, with aid awards remaining among the most generous in the country. Families at all income levels who have significant assets will continue to pay more than those in less fortunate circumstances.
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Great! I’ll send the kids to Harvard! Oh, wait…
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If you follow up on Harvard’s net price calculator, a family with 400K of real estate equity, but no income, would be expected to pay 15K/year.
As, BI says, my suspicion is that indeed a fair number of Harvard students pay full tuition without direct financing of the tuition. As Cranberry points out, there are families that are already managing to pay hefty tuition for private secondary schools. I wouldn’t be shocked to hear that 30% of Harvard families are paying the full sticker price, from savings or from current income, though it might be somewhat less than that.
Harvard is an extreme example, but it sets a bar, I think. Other schools, poorer ones, in both endowment & in student family assets are the ones that get crunched (NYU, for example, which has the better student finance info among the sites I was looking at).
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“A quick internet search says that 30% of Harvard students don’t receive any aid.”
Don’t forget foreign students–that may be a substantial chunk of that 30%.
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Nope: Harvard is strongly committed to making educational opportunity accessible to all. All financial aid is awarded on the basis of financial need, and Harvard meets each family’s demonstrated need. About 70 percent of Harvard undergraduates receive some form of financial aid.
The financial aid policies for foreign citizens are exactly the same as those for U.S. citizens. All aid is need-based, and admissions decisions are made without regard to whether an applicant has applied for financial assistance
http://www.admissions.college.harvard.edu/apply/international/international_aid.html
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“The financial aid policies for foreign citizens are exactly the same as those for U.S. citizens.”
That’s rather surprising, although I’d always heard that a lot of Ivy League schools fudge their diversity numbers by bringing in bright foreign students. (Even in these parts, at a much less exalted academic level, you can barely swing a cat without hitting a Nigerian.)
On the other hand, Saudi princes and such will be paying full boat.
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Harvard says it offers aid to foreign applicants as it does to Americans. So maybe foreigners (true for state colleges) but maybe not.
I think there are a lot of people who can afford Harvard, in number far more than 30% of H’s class and that they are disproportionately represented there. I think the assumption that everyone is taking loans is part of what feeds the bubbles and that there’s an awful lot of confusion and obfuscation out there.
It’s interesting to read the fin aid pages. Each one says something different and it takes sophisticated reading to understand what they mean.
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At Princeton around 40% pay the full freight. Only about a quarter of the students take out loans, which average about $5,000 in total–not enough to make much of a dent in tuition, to say nothing of total cost. Even those receiving scholarships, in a fair number of cases, come from families that earn low six-figure incomes, especially if they have more than one child in college. Harvard has a substantially smaller percentage paying the full freight, and average indebtedness is higher (34% borrow an average of $10,000)–but at both places, and others like them, plenty of families can afford the full cost.
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Apparently there’s some doubt as to whether the NY Times figures are right:
http://www.insidehighered.com/quicktakes/2012/05/15/critique-key-figure-series-student-loans
The figures in the article in IHE _seem_ more plausible, though I don’t really know.
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I don’t buy the “No one told me that” regarding the $900/month. In order to receive loans, you must go through loan entrance counseling. This has to be done every year that you take a new loan. It provides estimates of monthly payments and total paid over the life of the loan. She ignored it.
That said, I do understand that a young woman, with financial aid and entrance officials telling her not worry about it, would just not think about it. Then when those payments turn into reality, react with shock.
But, “no one told me” is just BS
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Tony, those numbers — 40%, full freight — kinda horrifies me. A school of the one percenters.
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It’s not bs, Tulip. I never once talked a loan counselor in the 8 years that I was in grad school. The first time that i was confronted with the totality of my debt was the week before I graduated.
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These hyper-borrowers exist, but they are outliers. There are few enough of them that we can probably get all of them part-time gigs visiting high schools to give talks on student loans and their perils.
Here’s some inspiration for anybody who takes that route: “I was such a moron. I thought my college loans were free money. I went to an expensive school that nobody but the employees and the alumni have ever heard of. I put pizza and $4 coffee and cute shoes on a 20-year payment plan. For $900 a month in student loan payments, I could be buying a house of my very own today, but instead, I’m living with my parents and still paying for that spring break trip in 2003 that I can’t even remember. My college major was stupid, but I owe so much money that I can’t go back to school.”
Season to taste.
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“These hyper-borrowers exist, but they are outliers.”
Do you have any proof for that statement? I’m not trying to be confrontational, but I don’t assume students with large debts are rare. To assert that the students with large student debts are exceptionally naive (or stupid) is to lay the blame on the particular students, rather than the system.
I think it would be fascinating to see the chart in three dimensions, with the parents’ level of indebtedness as one of the criteria. I notice that sensible families are making sensible choices, when it comes to choosing between colleges. When given a choice between colleges of comparable value, they pay attention to finances.
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Laura, you were in grad school a while ago. I think things have changed. I finished grad school in 2006 and I had to sign off on each loan. Stuff like “i acknowledge this is a loan and must be repaid.” I received statements showing new loan and total loans with each disbursement. Also, estimated monthly payment. (I just pulled my file and checked.) My loans were through the government – direct student loans, and the statements are from DSL, not the university. This was not just something my university did. None of this happened with my undergrad loans from years ago.
So, yes it is BS.
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Laura–yes, there are a lot of wealthy kids at Princeton (and at the rest of the Ivy Plus group), and there are corresponding aspects of student social life that make me a little uncomfortable. But there are also many kids from families that aren’t wealthy at all–and many more than there used to be since we stopped requiring scholarship kids to take loans. What matters to me, in the end, is to have students who actually love learning, and I’ve had plenty of them, from every kind of family.
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I graduated in 2000 and Steve graduated in 2001. Did things change that much in five years?
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“Do you have any proof for that statement?”
Wasn’t it something like 3%? (I saw that somewhere yesterday–maybe even on one of Laura’s links.) I’m not looking this up right now, but wasn’t the median something in the $20k range and the average around $12k? The six figure undergraduate borrower (or even mid-high five-figure borrower) is rare.
Sorry for the lack of cites–I can’t just remember where I saw this.
“I think it would be fascinating to see the chart in three dimensions, with the parents’ level of indebtedness as one of the criteria.”
That’s right. And total student indebtedness as well, not just student loan.
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Laura, I don’t know when it changed. When I went back to finish undergrad (2000) I didn’t have any loans – my undergrad loans were earlier and paid off before I returned. But getting the new ones was a hassle compared to the long ago undergrad loans (which just needed a signature) – entrance loan counseling EVERY year, not just once. Statements with EVERY disbursement. It takes willful ignornance to not know your total loans, estimated monthly payment and estimated total repayments (just like a car dealer).
All this information is a good thing. It regularly made me hyperventilate when reading those statements. It also makes me really, really unsympathetic to “No one told me.”
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I finished undergrad in 2000 – after a return.
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“Do you have any proof for that statement? I’m not trying to be confrontational, but I don’t assume students with large debts are rare.”
Cranberry — I referenced this publication from the College Board a week or two ago:
Click to access Trends-Who-Borrows-Most-Brief.pdf
In Chart 1 on Page 2, the median bachelor’s degree graduate has $11,000 in debt, the 75th percentile graduate with $24,600 in debt and the 90th percentile with $39,300. The study identifies “high debt” as over $30,500 and notes that 12% of public college, 24% of private non-profit, and 53% of for-profit graduates are “high debt.”
As we pointed out, these numbers exclude stuff like loans your parents take or amounts you run up on your credit card. But if you imagine the bell curve with $11K in the middle and $39K at 90%, the six-figure horror stories do seem to be outliers.
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Tulip, here’s a guy in the NYT who says that student loan information is too complicated for students to figure out.
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There are lots of 1%’s (1 % of america is a lot) and they dominate the elite marketplaces. One of the problems I see in society is a growing expectation that everyone should have access to the same things that the 1% has, while doing nothing to change the growing gulf between the 1% and everyone else. In that paradigm, the rest of the 99%(well, not really, ’cause not the poor, but some part of it) is borrowing to fund a 1% lifestyle (in education, which seems important, but also in marble counter tops, big houses, big ticket weddings, expensive shoes, . . . .).
The rest have to stop borrowing to buy those things (while also demanding that the gulf between the 1% and the rest be decreased and that real needs and necessities, like decent education and health care, not be priced for the 1%).
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Tulip- my walk through the financial aid sites suggests to me that the quality of the counseling on aid might be quite different at different schools. At Ohio Northern, the credit counselors are quoted in that article as off-handedly saying that they can’t be on top of everything ’cause there aren’t enough of them.
Looking through NYU’s site, on the other hand, I see a quite aggressive attempt to make clear that NYU expects students to pay, and that if they take on debt, they should be understanding the consequences.
My guess is that the “buyer beware” aspect of credit counseling is different in those schools where too much info might significantly affect their bottom line in attracting students (legal boilerplate + winks) v schools that think they’re selling a good that people will be willing to go into debt for (NYU, Julliard, . . . ).
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That link is more about comparing offers from schools and understanding the repayment options available. it has nothing to do with not realizing how much you have borrowed or what the monthly repayment will be Question 2 of the (useless) Student Debt Repayment Assistant is about the monthly payment. (Srsly?? That’s their help? It has less information than the statements.) And if you don’t know the monthly payment, it tells you where to find it. So, even these guys think students should know or be able to easily find their estimated monthly payment
What the hell kind of crappy education did she get if she can’t read a simple statement? If she couldn’t read those statements, she ought to get a refund.
My nephew is currently picking a school. The packages he’s getting list the scholarships, the name of the loan (Stafford etc.) being offered. They even separate subsidized from unsubsidized. Doing the comparison as to which school is a better deal IS tricky, but knowing how much you are borrowing and what it will take to repay it – not so much.
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I have three high schoolers and I’ve been reading lots of things about college funding lately. THe thing is between the two of us, my husband and I have three master’s degrees and a PhD and we’re still thinking seriously about paying the guy who does our taxes to fill out the FAFSA forms. I can’t even imagine how my husband’s parents who immigrated to the US when their kids were small and neither of whom went beyond the eighth grade (and I suspect my MIL is largely illiterate, given that someone else always reads her the menu when we go to dinner) were able to figure out how to fill out those forms. To me, the FAFSA forms actually look to be more confusing that the taxes you fill out every year.
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It seems to me that there are a couple of issues here that haven’t really been addressed at all. While the conversation goes round and round about how clear student loan statements are (or aren’t)…have we considered that relatively few 18 year olds have all that much experience reading and understanding financial statements?
And added on to that – do they have a reasonable body of knowledge to understand the numbers on the statement? If you have never held a full time job, never received a paycheck from a part time job (because you know, school was your job) would you really understand how much money you will be earning, how much money will be taken out in taxes, etc. etc.
Do you understand the actual costs of goods and services that you will need to purchase as an “adult”? Rent, food, utilities, etc, etc. Again, I know plenty of adults well out of school age who if asked to create a budget would routinely forget to add some recurring expenses because those expenses slip their mind. And yet, we are expecting 18 year olds to not only be able to read student loan financial statements, understand the level of indebtedness they are taking on, and understand the full financial ramifications of those choices…at the same time that we as a country have infantilized our adolescents and young adults to an enormous degree.
Saying that these graduates are stupid…foolish…short sighted, it just seems to blame the person who is the product of the broken system we have in place, rather than confront said system.
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My guess (though it’s really a guess)is that part of the confusion on amounts of loans is which loans one is taking about. There are the stafford subsidized & unsubsidized loans, parent plus loans, and private loans. Some have limits, but others don’t. Some are probably reported to federal sources while others aren’t.
I was pretty confused looking at the loan information. In particular, it seemed like some form of student loan is available without regard to need, so that parents, particularly, can take on loans to pay for, say, NYU.
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I think it would be interesting to see some of the letters w/ financial aid that students are getting (w/ identifying information blanked out?).
I personally find the information about student loans (and yes, the FAFSA form — my dad hated, really hated those through the years that his kids were in school) very confusing. I also find the details about how aid/loan is calcualted very confusing. I find the policies of different schools (Harvard, offers same aid to International students — but, not really, ’cause Pell grants aren’t available for International students, so they must have a “Harvard” Pell grant, which, isn’t, really, a Pell Grant. Swarthmore, which says it meets need, other schools which say they meet need without loans, other schools which say “paying for school is a family’s responsibility”, NYU). None of this info matters to us — we will be full pay and our plan is to save money so that our kids can pay for Princeton (because they would have to) without taking on loans.
(But, even we haven’t thought about the cost of professional school, which is where the really heavy debt builds up).
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“…have we considered that relatively few 18 year olds have all that much experience reading and understanding financial statements?”
Right.
“Saying that these graduates are stupid…foolish…short sighted, it just seems to blame the person who is the product of the broken system we have in place, rather than confront said system”
Well, we’ve previously discussed the merits of restoring bankruptcy protection for student loans, as well as the possibility of getting colleges to carry some percentage of student loans (for instance, as a condition of federal guarantee of the other 80%). I suspect Ohio Northern University would change their tune if they realized that 1) young Griffith can declare bankruptcy and 2) the jobs Griffith has been able to obtain with her ONU education do not allow her to effortlessly pay $900 a month.
It’s like the housing bust, though–a real Orient Express situation. Everybody involved (colleges, lenders and borrowers) is guilty, just as with the housing bust.
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So, I graduated with $20,000 in student loans, but it was because I qualified for that amount in subsidized Stafford & Perkins loans, and so it meant I could keep my $20,000+ in the bank/CDs accruing interest while borrowing interest free loans. I would appear to be a high loan statistic, even though I paid my loan off in full before the 6th month grace period was up. It would be interesting not to just look at loan right at graduation, but to look at loan amounts a year out. I imagine I was am a rare case though.
Schools also really differ in how they calculate need, so its hard to know exactly what sorts of offer you’ll get. My school considered property and retirement off limits in possible assets, and calculated need only based on salary and certain liquid assets. It’s changed, but when my friend went to UChicago, they looked at property, which really screwed her since her father owned a small business whose main value was tied up in the building they owned. On paper it made her family appear to have a lot of money in assets, but in reality it was illiquid and basically her parents’ sole livelihood & retirement money. In reality, they were cash strapped, but despite having less money on hand than my family, she got a much worse financial aid offer and is still dealing with student loans. Likewise, having siblings in college is taken into account (like where I went), but not so much at other places (like where my sister went).
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Saying that 18 yr olds lack experience reading these statements and therefore can’t understand is really insulting to them in my opinion. The statements literally show – in boxes with bold lines around them – 1) your loan amount, 2) your estimated monthly payment, 3) number of payments, and 4) total you will repay. Number 4 is the scary one. Above, I said it is just like car dealership and it is. FAFSA is different and a nightmare, but it is not the loan statement, which is the point of the quote.
I think the reason the reporter put that quote in the story and Laura highlighted it, is to create an emotional tug. Isn’t it terrible, no one told her. It just isn’t true. I have no doubt she was told (through statements) over and over. She had other people telling her that it was ok, she was pursuing a dream, getting a wonderful college experience and the degree she would get meant it would all work out. THAT actually gets my sympathy but doesn’t play emotionally in a newspaper.
I am focused on this issue because how the issue is framed will matter to the solutions that are pursued. Pretending that no one is ever told, or they can’t understand the statements is really pretending that if we just make sure they know how much they are borrowing or make the statements clearer (how??) the problem will be fixed.
The real scandal to me is that schools like ONU are no better than U of Phoenix when it comes to exploiting students. People at ONU convinced her it will all be worth it, don’t worry about the price, you can get loans. Until we talk about that part, the problem won’t be fixed, it will be perpetuated.
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Ragtime, thanks for the link. The document dates from 2007-8, which means its preparation predates the financial meltdown.
Look at a few of the colleges on the NYT’s interactive map. Many colleges show a leap in the debt level and the % of students in debt right around 2009. There’s a reason for that. The mortgage market became difficult. Families’ houses were underwater. It’s probably much harder to get a HELOC these days.
The college board leaflet also mentions PLUS loans, which wouldn’t show up as “student debt.” So, we could add $30,000 to the “average” student loan, and end up with a different picture of the problem.
Amy P, if universities were required to take some part of student loans, they’d just flip them. They’d sell them off to investment houses. Trying to turn universities into banks will not lead to better universities. You can end up with bad universities which are also bad banks, though.
I have read the argument that colleges should have some “skin in the game” re: student graduation rates and employment. The easiest way to increase graduation rates and employment without lowering expectations would be not to admit students who clearly can’t do the work. That would fly in the face of political pressures to increase the number of college graduates.
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The college board leaflet also mentions PLUS loans, which wouldn’t show up as “student debt.” So, we could add $30,000 to the “average” student loan, and end up with a different picture of the problem.
You can’t just add the $30k mentioned to the link for PLUS loans to the student loan figures an average (if that’s what you doing). The average PLUS borrower owes the feds $30,900 but the per student average is only $12,900. Comparing the family figures to those of individual students really distorts the picture. Also, I gather that PLUS loans are highly correlated with student loans. At least, it says “All of these students borrowed at least $30,500 in addition to their parents’ loans.” This suggests that the picture isn’t so different.
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“Amy P, if universities were required to take some part of student loans, they’d just flip them. They’d sell them off to investment houses. Trying to turn universities into banks will not lead to better universities. You can end up with bad universities which are also bad banks, though.”
I’m a housing bubble blog junkie, and one thing the bubblistas like is the idea of making banks hold onto some percentage of the mortgages that they make. (I think that may have been standard practice in the past.) I’m suggesting something similar for colleges. For a big endowment university, I think it would be more or less feasible, although I haven’t done the numbers. You could treat the college’s loan like a 2nd mortgage, so that the primary lender would get the first bite at the graduate’s assets, while the college would be further back in line and would probably not get anything. That would focus the minds of the college accountants, especially if bankruptcy became an option again.
(Of course, this would probably sour a lot of alumni on the old alma mater, but I suspect that large student loans do the same thing.)
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Amy P: So, how many Philosophy Departments would be left in the Continental US under that plan?
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Cranberry – 3 – and you have to decide whether that’s a bug or a feature…
Actually, more. Philosophy from a career point of view is known as a very good degree to take before going to law school. If you are a smart careerist, a tough philosophy degree is a whole lot better than an undergraduate business degree. Or Victim Studies/basketweaving.
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“Amy P: So, how many Philosophy Departments would be left in the Continental US under that plan?”
People shouldn’t borrow mid or high five figures (let alone six figures) to study philosophy or anything else, really. (I grant waivers to people borrowing to become MDs or maybe CPAs. The JD waiver program is currently suspended.)
The saving grace of philosophy from the crassly vocational point of view is that philosophy attracts really smart people. An undergraduate philosophy major who has survived logic is a pretty smart critter. Now, it’s open to debate whether the undergraduate philosophy program provides value-added to the student, but purely as a sorting mechanism for finding brainy people in the liberal arts, it has definite merits. (I’d argue that English has a lot of merit as a sorting machine, too. For one thing, you can be sure that they’re not afraid to read, which is not to be sneezed at.)
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“Actually, more. Philosophy from a career point of view is known as a very good degree to take before going to law school.”
That is traditionally true (I know a woman who transferred from a philosophy grad program to Yale Law). The JD is looking kind of iffy at the moment, though.
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This is interesting:
“Nearly 40 percent of Iowa State University students underestimated the amount of student loans they owe, while one in eight didn’t realize they had debt, according to research by ISU faculty and staff released Wednesday.
“The financial literacy study, which surveyed 801 undergraduate Iowans in fall 2010, also found 10 percent of students underestimated their debt by more than $10,000. Only 22 percent had not taken out loans.”
http://www.desmoinesregister.com/article/20120516/NEWS/120516028/New-study-1-in-8-ISU-students-unaware-of-college-debt?odyssey=tab|topnews|text|Frontpage
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