About half of student loan borrowers underestimate the amount of education debt they have.
It seems some college students need to work on their reading comprehension. Or their vocabulary. Whatever the problem is, some students aren’t grasping the concept of loans: 17% of first-year students who have federal student loans responded to a survey saying they had no student debt, according to a Brookings Institution report.
There are scores of stories and reports about the difficulty borrowers have repaying education debt, and that’s a serious issue, but the statistics about borrowers’ understanding of their loans and the cost of college are much more troubling.
The report from Brookings “Are College Students Borrowing Blindly?” cites some shocking figures, based on two data sets. The first, a survey conducted in spring 2014, included responses from first-time, full-time freshmen who applied for financial aid at their college, a “selective four-year public university in the northeastern U.S.” The second is the most recent result of the National Postsecondary Student Aid Study, a nationally representative analysis of first-year, full-time undergraduates with federal loan information available in the National Student Loan Data System.
The data reveals that students are generally clueless about the costs of higher education and how they’re paying for it. Nearly half of students underestimated their debt loads by at least $1,000, with 25% of students underestimating their debt by $5,000 or more.
I’m in Debt? Really?
There are a lot of reasons students may not fully understand their student loan debt: Students may be confused about the different kinds of loans (like federal or private), their parents may have taken charge of figuring out their education expenses, they’re simply not keeping track of their finances, or they really don’t understand the fact that borrowed money must be repaid. There’s not really a good excuse, considering the students had to sign paperwork saying they’ll repay the loan as agreed.
The gap between perceived and actual student debt is potentially more troubling than the growing student debt load itself. Failing to understand the costs of college and how you’re paying for it sets students up for an unpleasant reality check and regret if they can’t afford the debt they incurred along their chosen career path.
Student loans are rarely discharged in bankruptcy, and failing to repay them has serious consequences on the rest of your financial life. Missing loan payments is one of the worst things you can do to your credit, and if you default on student loans, you may face wage garnishment and calls from debt collectors.
Consequently, a low credit score can leave you unable to secure other forms of credit at affordable interest rates, not to mention rent an apartment or get a job. To see how student loans and your other financial behaviors affect your credit score, you can review two of your credit scores for free every 30 days on Credit.com.
Ideally, you’re well prepared to handle your student loans when you enter repayment, but if you think your loan payments will be unaffordable, you have a few options. If you have federal student loans, you may qualify for a variety of student loan repayment and forgiveness options. If you have private loans, you may be able to refinance. At the very least, you should reach out to your student loan servicer to see if there’s any way to avoid defaulting on your education debt.
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Data algorithms cover millions of grades from thousands of students
For years, Stephanie Dupaul would jokingly consult her collection of Magic 8 Balls when students asked her questions such as, “Will I get an A in that class?” Now, she can give them an answer far more accurate than anything predicted by a toy fortune-teller.
Dupaul, the associate provost for enrollment management at Southern Methodist University, is one of a growing number of university administrators consulting the performance data of former students to predict the outcomes of current ones. The little-known effort is being quietly employed by about 125 schools around the U.S., and often includes combing years of data covering millions of grades earned by thousands of former students.
It’s the same kind of process tech behemoths like Amazon and Google employ to predict the buying behavior of consumers. And many of the universities and colleges that are applying it have seen impressive declines in the number of students who drop out, and increases in the proportion who graduate. The early returns are promising enough that it has caught the attention of the Obama Administration, which pushed for schools to make heavier use of data to improve graduation rates at a White House higher education summit last week.
The payoff for schools goes beyond graduation rates: tracking data in this way keeps tuition coming in from students who stay, and avoids the cost of recruiting new ones, which the enrollment consulting firm Noel-Levitz estimates is $2,433 per undergraduate at private and $457 at four-year public universities.
“It’s a resource issue, it’s a reputational issue, it does impact — I’ll say it — the rankings” by improving graduation rates, Dupaul says.
At SMU, for instance, data analysis showed that students who applied early in the admissions process were more likely to ultimately earn degrees. So were those who visited the campus before enrolling, joined a fraternity or sorority, or registered for a higher-than-average number of classes.
From this and other knowledge, the university has built a predictive algorithm that can gauge the probability that a student will finish school, and prop up those who might not by sending academic advisors or deans to intervene.
Other universities also use detailed data to make sure students stay on track once they’ve arrived. Georgia State, for instance, has analyzed 2.5 million grades of former students to learn what may trip up current ones. That early-warning system, begun in 2012 to address a lower-than-the-national-average graduation rate, triggered 34,000 alerts last year about students who may have been in trouble, but didn’t know it yet.
It works by identifying risk patterns that can help catch students before they fall. For example, Georgia State’s data shows that students’ grades in the first course in their majors can predict whether or not they will graduate. Eighty-five percent of political science majors who get an A or B will earn degrees, but only 25% of those who score a C or lower will.
“What we used to do, and what other universities do, is let the C student go along until it was too late to help them,” says Timothy Renick, Georgia State’s vice president for enrollment management and student success. “Now we have a flag that goes off as soon as we spot a C in the first course.”
That student is invited to meet with an advisor and given the option of switching majors before spending more time and money on a losing proposition.
The university also uses its predictive algorithm to channel incoming freshmen with higher risk factors — like those who come from high schools where earlier graduates have been poorly prepared — into a seven-week summer session. Nine out of 10 of these students make it to the end of the first year, more than their classmates who entered without red flags.
And the analysis isn’t limited to first year students. Last year, some 2,000 Georgia State upperclassmen were hauled in for one-on-one sessions with an advisor when they signed up for courses that didn’t satisfy requirements for their majors — which the data showed would probably derail them — and moved to classes that did.
“Most students, when they take classes that don’t apply to their program, it’s not because they’ve always wanted to take a course in Greek philosophy,” says Renick. “It’s because they don’t understand the maze of rules that big institutions like Georgia State have created. And when they go off course, it’s a difference between graduating and not graduating.”
The university also uses 12 years of data from former students to nudge current ones toward majors that track more closely with their academic strengths, thereby increasing their chances of graduating.
“It’s a really simple process,” Renick says, “but it’s the kind of thing that higher education hasn’t been doing.”
Despite the promising early returns, most institutions have not embraced predictive data. Only about 125 of the more than 4,000 degree-granting postsecondary institutions are using data in this way, according to the Education Advisory Board, a firm that helps Georgia State and other schools run such programs.
More will sign on, experts say, because it can do as much for the bottom line as it does for students. For every 1 percentage point improvement in the proportion of students data tracking keeps from dropping out, Renick says, Georgia State keeps $3 million in tuition and fees that would have otherwise been lost. So far, that rate has increased by five percentage points since the university started tapping this data two years ago, meaning it has more than recouped the $100,000-a-year cost of running the system and the $1.7 million per year it takes to pay an extra 42 advisors hired to help the students it predicts might fall between the cracks.
“It’s no longer just a moral imperative. It’s a financial imperative,” says Ed Venit, a senior director at the Education Advisory Board. “The students who are on their campuses now, they have to keep them around, hopefully ’till graduation.”
Yet graduation rates overall are down, not up, since 2008, according to the National Student Clearinghouse. Only 55% of students earn their two- or four-year degrees within even six years, as they switch majors, flounder through required courses, and take classes they don’t need.
To Venit, analyzing that information — which schools already collect — can help avert such stumbles. “The data is so accurate that we can see the problems coming a mile away,” he says. “Higher education is lagging behind other industries in the use of this.”
That’s begun to change as students, parents, and policymakers press universities to provide a better return on their investments, and as universities themselves — especially public schools, whose revenues are under strain — are forced to become more efficient.
At Georgia State — where 80% of students are racial minorities, low-income, the first in their families to go to college, or from other groups that often struggle to graduate— the six-year graduation rate had fallen to a dismal 32% before the university began to look at data. It’s since increased to 53 percent.
“Think of going through college as driving a car and the destination of the car is graduation,” says Mark Becker, Georgia State’s president, a first-generation college student who went on to earn a PhD in statistics. “If you start drifting off the road, we want to straighten you out and keep you driving forward.”
Such aid is becoming increasingly important as the students arriving on campuses look more like the ones at Georgia State: less affluent, nonwhite, and often the first in their families to attend college.
“A lot of these are students who are just barely able to afford college,” Renick says. “Taking the wrong course, getting a couple of Fs, losing a scholarship, wasting credit hours all can stop them from getting a degree.”
Now the university is poring over its data to determine how to predict when financial problems might force students to drop out, and offering “micro grants,” with stringent conditions, to keep them enrolled. Nine out of 10 freshmen who were offered the grants last year stayed in school.
At Purdue University Calumet, where only 31% of students graduate in six years, 74% of students returned this fall — a 5% improvement over the year before. The gain preserved nearly $500,000 in tuition, and saved the school the expense of recruiting new students to fill those empty seats — an amount worth almost five times what the university says it paid to analyze and act on the data.
Southern Illinois University increased its return rate by an even larger 8.3 percentage points, to 68%, and its revenue by more than $2 million, according to John Nicklow, who was provost when the process was begun last year. Those gains came after the university used data to identify a much larger proportion of students who needed help than was previously thought. The cost was about $100,000, part of it paid for by a grant from the Bill & Melinda Gates Foundation.
“I can’t believe it’s taken us this long to dig into this data,” says Nicklow, an engineer by training. “More of us need to do it.”
Sitting amid her collection of 30 Magic 8 Balls at SMU, Stephanie Dupaul calls predictive data “one of those waves that’s coming. A lot of schools just haven’t caught the wave yet” But she cautions that even the best algorithms can sometimes be about as precise as the toys that line her desk.
“We still have to remember that data alone is not always a predictor of individual destiny,” she says, “even when ‘Signs Point to Yes.’”
This story was produced by The Hechinger Report, a nonprofit, independent news website focused on inequality and innovation in education.
Even colleges that signed a White House pledge to help low-income students are making it more expensive
Decked out in black tie and formal dresses, guests at Mr. Jefferson’s Capital Ball finished their salmon with horseradish sauce just in time to dance to classics like “Shout” and “My Girl” in the Grand Ballroom of Washington, D.C.’s historic Mayflower Hotel. Some of the people who paid up to $400 a couple to attend the event even joined in the Electric Slide.
The mood was understandably festive: The gala had the commendable purpose of raising money for scholarships to the University of Virginia.
But not the kind of scholarships that go to low-income students based solely on their financial need. The proceeds from Mr. Jefferson’s Capital Ball were for merit aid for applicants who have the high grade-point averages and top scores on entrance tests that help institutions do well on college rankings. Merit aid can also attract middle- and upper-income students whose families can afford to pay the rest of the tuition bill — an attractive proposition for schools that are increasingly reliant on revenue from students.
As institutions compete to lure top-performing applicants in this way, regardless of their need, they’re raising their net prices much faster for the lowest-income students than for higher-income ones, according to an analysis of newly released data the universities and colleges are required to report to the U.S. Department of Education.
This trend includes the 100 higher-education institutions whose leaders attended a widely publicized White House summit in January and signed a pledge to expand the opportunities for low-income students to go to college. In fact, the private universities in that group collectively raised what the poorest families pay by 10%, compared to 5% for wealthier students, according to the analysis by The Dallas Morning News and The Hechinger Report based on information the U.S. Department of Education released this month covering 2008-09 to 2012-13, the most recent period available.
Not only did the schools at the White House summit raise their net prices faster for the poorest families on a percentage basis, the new figures show; nearly a third increased the actual dollar amount more quickly for their lowest-income students.
The effect, critics say, is that college is becoming less accessible to lower-income students.
“All too many elite, extremely wealthy colleges and universities that should be operating as engines of socioeconomic mobility are instead calcifying inequality,” says Michael Dannenberg, director of higher education at the nonpartisan think tank The Education Trust.
Some colleges that have raised their net prices dispute the federal data, and note that even families in what appear to be higher-income brackets need help paying for college.
The White House has scheduled a follow-up summit for Thursday on the issue of keeping college affordable for the lowest-income students. “Institutions need to remain vigilant in making sure that the students with the highest need have the highest access to aid,” saysTed Mitchell, U.S. Under Secretary of Education.
Understanding Net Price
Colleges are required to annually report their average net prices—the total cost of tuition, fees, room, board, books, and other expenses, minus federal, state, and institutional scholarships and grants—to the Education Department. They must also break down those prices based on students’ family income, from the lowest—$30,000 or less—to the highest—$110,000 or more.
There are limitations to the data. They include only full-time freshmen who get federal grants, loans, or work-study jobs. The most recent figures cover the period ending more than a year before that initial January White House summit. And some schools dispute how net price should be determined and use their own calculations that are different from the federal formula.
But the federal figures give the only standardized picture of what students from different income brackets pay to study at the same university or college. The data also make clear that, while lower-income students at many of the institutions that signed on to the White House pledge still pay less than higher-income ones, their net prices are rising faster on an inflation-adjusted percentage basis than the net prices charged to students more able to pay. In some cases, costs for the wealthier families are actually falling.
Even at the 36 taxpayer-supported public universities that signed the promise to help low-income families, the average net price for poor students rose 25% in the last four years, from about $8,000 in 2008-09 to almost $10,000 in 2012-13. During the same period, wealthier students at those schools saw their average net price go from about $18,000 to $21,000, a 16% increase. The figures have been adjusted for inflation.
At the University of Virginia, for instance, the poorest students saw their net price climb $4,313 over that period, compared to $2,687 for students in the top earning bracket. Despite UVA President Teresa Sullivan’s White House pledge to help poor families afford the price of college, from the start of the economic downturn through last year, the university raised the net price for its very poorest students by 69%, more than three times faster than for wealthier students, the federal figures show. Even after the January summit, beginning with the class that entered this fall, the public university dropped a policy of meeting full need for the lowest-income students without requiring them to take out loans, and now asks in-state families to borrow up to $14,000 over four years and out-of-state families up to $28,000.
Cuts in state allocations for higher education have also reduced the money available for financial aid for low-income students. G. David Gearhart, chancellor of the University of Arkansas, said at the White House summit that providing educational opportunities to disadvantaged students “is part of our heritage.” Yet the public university raised its net price for the poorest families by 9% while lowering it 6% for wealthier ones between 2008-09 and 2012-13. The lopsided changes in cost there came even before the Arkansas State Lottery Scholarship was cut last year by more than 50%, says university spokeswoman Laura Jacobs, threatening to reduce even more funding for low-income students.
Universities “are giving lots of merit aid to kids who don’t need it,” and less financial aid to those who do, says Richard Kahlenberg, a senior fellow at the nonpartisan think tank The Century Foundation. “There are powerful incentives for universities to avoid admitting and enrolling low-income students. The way that universities compete is on prestige and on the U.S.News & World Report rankings, and you get no credit for having a generous financial aid program that brings in more low-income students.”
No Magic Number
A UVA spokesman says Mr. Jefferson’s Capital Ball is run by an independent foundation of alumni and other supporters, not by the university itself. He also says the elimination of the no-loan policy for low-income students was unavoidable because the cost of assisting them exclusively with grants had nearly doubled since 2008. “UVA has committed to providing the necessary need but also needs to ensure that the program is sustainable,” the spokesman, McGregor McCance, says. Requiring all students to borrow is projected to save the university more than $10 million through 2018.
Heated protests over the changes, however, brought attention to the fact that, even as it was cutting the cost of providing financial aid to its poorest students, UVA was spending $12 million on a new squash facility and increasing its marketing budget by $18 million annually. Since then, a member of the Board of Visitors, Blue Ridge Capital president John Griffin, has pledged $4 million for scholarships for high-achieving low-income students and to seed an endowment to provide financial aid for top low-income undergraduates.
Other universities and colleges that were represented at the White House summit say their net prices for low-income students appeared to be increasing more quickly than they really have because they use different formulas than the federal government does to calculate whether or not a student has financial need. For example, while the government takes into account only the income of the custodial parent in the case of a divorce, these colleges also factor in the income of the parent who does not live at home, and often the value of real estate and other holdings. This means they do not necessarily regard as low income the same students the federal government does, and may not provide them with much financial aid.
That’s one reason Claremont McKenna College says it appears to have more than doubled its net price for its poorest students—10 times as fast as for their richer classmates—in spite of also signing the White House pledge, spokesman Max Benavidez says. “Moving from one formula in reporting aid to another completely different methodological formula may account for the misimpression of a large increase,” Benavidez says, though he would not provide the formula the college uses.
Oberlin, another White House-pledge college that uses its own formula to calculate need, did provide specifics. While federal figures show it doubled the net price for its poorest students at a rate 10 times as fast as for the highest group, Oberlin’s own calculations—which include the earnings of both parents in cases of divorce, making fewer students qualify as low income than the federal method—show that the net price for the poorest students hardly budged in the last three years and fell in 2012-13, says Debra Chermonte, dean of admissions and financial aid.
Nor are seemingly wealthier families always necessarily able to afford tuition without help. Some may live in places with high costs of living, leaving them with less disposable income, or have children close in age who go to college at the same time.“You might be making $200,000 a year, but you just got divorced and that’s a factor and this is a factor and there are other factors,” says Michael Crow, president of Arizona State University.Families that are not low-income but still need help paying for the growing cost of college can get forgotten in the discussion, says Patrick Leahy, president of Wilkes University. “There’s plenty of aid going to the $80,000 [earners] and below, but once you get to $80,000 it’s not like it’s some magic number and you can suddenly afford tuition,” he says.
Yet other universities and colleges at which the net price for low-income students has shot up faster than for higher-income ones conceded that financial aid based on merit, as opposed to need, is increasingly important to their bottom lines. “Tuition-driven schools like UVM must think holistically about the entire undergraduate population and use more merit aid than in the past,” says Enrique Corredera, spokesman for the public University of Vermont, another school that signed the White House pledge but has more than doubled the annual net price for its poorest students, from $4,500 in 2008-09 to $11,000 in 2012-13. Meanwhile, the net price for students in top income group stayed flat at $21,000 a year. “We do this to attract academically talented students, who play a significant role in determining our ability to attract other students.”
Corredera says wealthier students, whose families can afford to pay at least some of the tuition, also subsidize financial aid for their poorer classmates. That subsidy is under attack in some states. The board of governors of North Carolina’s public universities, for example, is considering capping the proportion of tuition revenue that could be applied toward financial aid for low-income students, arguing that more affluent students shouldn’t be forced to cover the costs of their less affluent classmates. Iowa has already stopped its universities from using any of their in-state residents’ tuition toward financial aid.
“It’s politically popular to invest a lot of state money in merit-based aid. It’s very appealing to the middle class,” says Michael McLendon, a professor of higher-education policy at Southern Methodist University. “It’s not helpful for boosting higher-education access or completion for the poorest kids.”
There’s at least one glimmer of promise for critics of current aid practices. As the heat on this matter is being turned up, states, on average, slightly increased the share of financial aid they allocated for low-income students, as opposed to other students, in 2012-13, the latest year for which that figure is available, according to the National Association of State Student Grant and Aid Programs. On the other hand, the inflation-adjusted amount of total aid actually declined.
This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University, in collaboration with the Dallas Morning News and the Education Writers Association.
Students are being asked to pay more as the state reduces its funding
Tuition at University of California schools could rise by as much as 28% by 2019 under a plan approved Thursday.
The 14-7 vote by the system’s regent board pitted top state officials, including Gov. Jerry Brown, against those who run the UC’s 10-campus system, including its president, Janet Napolitano.
Students at UC campuses protested the proposed tuition hike ahead of the decision. Students at the University of California, Berkeley staged an all-night sit-in and students on hand for the vote itself, which took place in San Francisco, shouted their protests inside the meeting room and clashed with police outside.
Tuition at UC campuses has more than tripled since 2001, even without the increase just approved. Students and their families have shouldered more of the financial burden of attending UC schools in recent years, as the state has cut back the share of overall expenses it covers. The economic downturn accelerated this trend in California and at public universities and colleges across the country. Napolitano, who conceived and proposed the tuition hike plan, said increases could be scaled back before they go into effect if the state provides more direct funding for the UC system. Negotiations between Napolitano and state officials over how to fund UC will now begin in earnest.
Brown, who was reelected by a wide margin earlier this month, criticized the tuition hike plan and had asked Napolitano and other UC regents to further study how costs could be cut within the system in lieu of raising tuition. Awarding degrees in three years instead of the standard four and more online courses were among the ideas Brown wanted to see considered.
In-state tuition and fees at the University of California is $12,192, compared to a national average of $8,893 for all public colleges, according to the College Board. The cost of attending four-year colleges in the second-tier California State University system is below the national average. Napolitano has said the UC system needs to increase funding to cover pension and faculty costs, increase enrollment and maintain its world-class reputation. More than half of all UC students pay no tuition because their costs are coverage by public and private grants distributed based on income.
As state funding dwindles, students at public universities are being asked to pick up more of the tab
When does a public university system become one in name only? That’s the question facing California as officials in charge of the state’s prestigious, but financially-struggling university system clash over how to keep it afloat.
On Nov. 20, the regents that control the University of California system will vote on a proposal to increase tuition at its 10 campuses by as much as 5% a year for the next five years. This year’s tuition and fees for in-state students is $12,192, which could rise to $15,564 by the 2019-20 school year under the proposal. The plan was conceived and put forward by Janet Napolitano, who took over the UC system in 2013.
The fight over the tuition increase pits Napolitano, the former governor of Arizona and federal homeland security chief, against Governor Jerry Brown, a popular figure in the state who was just re-elected with a sizable mandate. Brown has said he opposes increasing tuition, and would restore some state funding cut during the recession only if it stays flat. Brown is a regent and is among a handful of those on the board who have already indicated they will reject Napolitano’s proposal.
“There is a game of chicken,” says Hans Johnson, a higher education expert at the non-partisan Public Policy Institute of California. “It’s not clear to me at all how it’s going to turn out.”
Underlying the clash of big personalities is a philosophical debate about the changing funding models for public universities. In 1960, California created a lofty master plan that said higher education should be free or very low-cost for residents. “We’ve moved away from that pretty dramatically,” says Johnson. “It’s almost traumatic for California to think about it.” In recent decades, the state has decreased the share of overall public higher education costs it pays for and the system has become increasingly dependent on student contributions, among other sources, for the difference. In the 2001-02 academic year, in-state tuition and fees for UC campuses was $3,429, about one-third of the cost today. Similar trends have played out in state university systems elsewhere as well.
The recession accelerated public schools’ reliance on private money. At UC, the system receives some $460 million less per year in state funds than it did in the 2007-08 school year.
“As a political matter, state officials have made the judgment they don’t want to pay for higher education for our citizens,” says David Plank, an economist at Policy Analysis for California Education, a non-partisan research center. “What were once public universities are now private universities that receive some subsidy from the states.”
Napolitano says that if UC is to remain a world-class educational and research institution, it needs more money, no matter the source. And she says students and families will need to fill the gap left by the state. The proposed tuition increase would affect only around half of the student body. Thanks to income-based federal and state grants, about 55% of UC students pay no tuition.
Gavin Newsom, California’s lieutenant governor, has said he and Brown were blind-sided by the tuition increase proposal. The governor’s office has said Napolitano’s plan could void a plan Brown has endorsed to increase state funding 4 percent per year if tuition stays flat. Napolitano has said she never made a deal and if was one was struck before she took charge, she hasn’t found any record of it. “It was unilateral. It wasn’t anything we agreed to,” says Steve Montiel, a spokesman for Napolitano.
On the eve of today’s meeting of the regents planning board, the speaker of the California state assembly reportedly proposed directing $50 million in additional state general funds to UC to stave off increased costs for students. The proposal followed student protests at at least two UC campuses this week.
Don't get so caught up in SAT scores and grades+ READ ARTICLE
In an era of rising tuition and worries about “paper classes,” it’s easy for students (and parents) to get overwhelmed about making the right decisions during the college admissions process.
Admissions expert Pamela Donnelly, author of the recently published 4 Keys to College Admissions Success, offers several tips for families looking for a way to stay sane.
The process “is a blip on the chart of a much larger movie called life,” Donnelly says, encouraging students to not get so caught up on SAT scores and grades that it becomes overwhelming. Once applications are in, Donnelly wants students to “let it go” and celebrate the completion of the process rather than stressing about where they may get in.
Catch more of her tips in the video above.
Graduate students make up just 14% of university enrollment, but account for nearly 40% of student debt
An Army veteran, Anthony Manfre paid for his associate’s and bachelor’s degrees mostly with his GI Bill benefits, although he also took out $4,000 worth of student loans.
“At the time, I thought that was a lot,” he says. “And now I look back and wish I only owed that much.”
That’s because Manfre went on to graduate school, picking up a master’s degree before setting off on the long road to a doctorate in marriage and family therapy while borrowing to also pay his living expenses. And now he’s $200,000 in debt.
“In the back of my mind I was always thinking, this money is an investment — that later on, when I graduate and get a job, I’ll be able to pay it off,” says Manfre, who earns $61,500 a year working for the Veterans Administration. “But now I don’t think I’m going to get the return I thought I would.”
Much of the concern about ballooning student debt has focused on undergrads taking out steep loans to pay for the rising cost of college. Largely overlooked are a principal source of the problem: graduate students like Manfre, who are less likely to have support from parents or other sources, and who face almost no limits on how much they borrow.
Graduate students now collectively owe as much as 40 percent of the estimated $1.2 trillion in outstanding student debt, according to the New America Foundation, even though they make up only 14 percent of all university enrollment.
“People focus on the undergraduates, because there are more of them and they’re younger and more naïve,” says Joel Best, a professor at the University of Delaware and coauthor of The Student Loan Mess. “They aren’t really paying attention to graduate students, but graduate students are really stacking up substantial student-loan debt.”
This indifference helps graduate programs get away with continually increasing their prices, Best says. “They can charge whatever they want and say to themselves that they don’t need to worry about it, the students can get loans.”
It has also freed lawmakers to raise interest rates on graduate and professional students, who are being charged rates nearly 50% more than those paid by undergrads. In 2012, to save about $1.8 billion a year, Congress also stopped subsidizing the interest that accumulates on federal student loans taken out by graduate students while they’re in school and for six months after they finish. And a proposal to streamline existing federal tax credits would reduce the deductions they will be able to take for educational expenses.
Often past the point at which their parents help them pay for their tuition, room, and board, graduate students borrow an average of nearly three times more per year than undergraduates, according to the College Board. And while the average debt of undergraduates has more than doubled since 1989, according to the Brookings Institution, it has more than quadrupled during that time for graduate students.
This comes at a time when the Bureau of Labor Statistics projects that the fastest-growing careers through 2022 will require workers to have graduate degrees.
“We might have a philosophical discussion about, ‘Do you need a master’s degree for X, Y, and Z,’ but in a free and open marketplace employers are asking for them,” says Suzanne Ortega, president of the Council of Graduate Schools.
It’s also true that those workers will make more money than people without graduate educations. An employee with a master’s degree earns about 20% more than one with only a bachelor’s degree, while those with professional degrees can make around 55% more, according to BLS calculations.
But not all of them. Teachers, for example, can have a particularly hard time earning enough to pay back their debt. About 16% of U.S. master’s degrees are in education and the median debt for graduates is $50,879, according to the New America Foundation— up from $30,724 a decade ago. The yearly salary for the average public school teacher with a master’s degree is $57,830.
And while enrollment in graduate programs has increased 41 percent since 2000, according to the U.S. Department of Education, the Council of Graduate Schools reports that the pace of applications has stalled — in part because people are put off by the cost.
“We’re going to have graduate enrollment going down in our universities, because people can’t afford to take on that level of debt,” says Neleen Leslie, president of the National Association of Graduate-Professional Students and a doctoral student at Florida State University. “There’s a misperception that people who pursue advanced degrees are going to be able to make enough to pay back those loans. That’s not necessarily true.”
Now a new measure to help ease student debt could cause problems for everyone else.
In an executive order issued in June, President Obama expanded a little-known provision called income-based repayment that allows borrowers to limit their monthly federal loan repayments to 10% of their incomes, and forgives any remaining debt after 20 years. That’s down from 15% and 25 years, respectively.
Obama said the change was meant to help undergraduates. “If you got a professional degree like a law degree, you would probably be able to pay it off,” the Harvard Law School grad said when he signed the order. But federal loans account for the largest share of graduate student debt, and some education policy experts worry that it could encourage grad students to borrow even more than they already do.
“Why the hell should you worry about how much you’re borrowing? Borrow a million, you’ll still have to pay off the same amount,” says Best.
The potential benefit for higher-earning graduate students is “a policy accident,” says Jason Delisle, director of the Federal Education Budget Project at the New America Foundation. “And who’s going to figure this out? Probably people with graduate degrees.”
This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.
Professors, the campus and even the university as an institution need to be replaced
Despite a college degree’s enormous cost, almost half of college freshmen (43%) don’t graduate even if given six years. If they graduate, a 2011 national study found, 36% of the 1,600 students tested “did not demonstrate any significant improvement in learning” in four years. And in the just-published follow-up, which tracked those students since their graduation in 2009, one-quarter were living at home two years after graduation and more than half said their lives lacked direction. Twenty percent were earning less than $30,000 a year, half of those less than $20,000.
Hidebound higher education
College hasn’t changed much in centuries. For the most part, there’s still a research-oriented Ph.D. sage on the stage lecturing on the liberal arts to a student body too often ill-prepared and uninterested in that. That occurs on a plush campus with a porcine administration, which results in a four-year sticker price at a brand-name private college of more than $200,000. (And those are 2012 figures. They’re higher now. Plus, those figures exclude tens of thousands of dollars in books, travel, living expenses and miscellany.)
Time, not for reform, but for reinvention
The meteoric rise in Massive Open Online Courses (MOOCs), which see an average enrollment of 43,000 students per course, is an early sign that the public wants change. But MOOCs aren’t the answer. Sure, they’re free and available to all, but because they’re still taught largely by those professor types to often unprepared students, the completion and learning rates are low. MOOCs have a completion rate of only 10%.
Undergraduate courses should not be taught mainly by Ph.D.s. The gap between their and their students’ intellectual capabilities and interests is too great. The instructors should be mainly bachelor’s-level graduates who themselves had to work hard to get an A. Just as you’d probably learn computer basics better if taught by someone who had to work to acquire mastery rather than by a born computer whiz, the same is true of most undergraduate courses. To be licensed to teach, prospective instructors should have to complete a pedagogy boot camp, a one-weekend to one-semester intensive, which ironically, in most colleges, is required of teaching assistants but not of professors.
Most courses would be taught via online interactive video, which would both save much money—no campus required—and allow a dream team of the world’s most transformational instructors to teach. That way, everyone—from the poorest, weakest student to the most brilliant—would have access to the best in interactive instruction. In addition, the online format allows for individualized pacing and exciting simulations impossible to provide in a nation’s worth of live classes.
Extracurriculars would occur at local gyms, swimming pools, theaters and athletic fields. Where those were insufficient, facilities on existing campuses would be used, but much of campuses could be sold off.
Importantly, courses would not be attached to any institution. Anyone could submit his or her course for approval to the U.S. Department of Education. Screening would be done only for quality and rigor, not for censorship of content. If approved, the instructor, when posting availability of the course on one of the existing MOOC sites (Coursera, edX or Udemy), could include a badge saying the course is U.S. government–approved for X units of undergraduate credit. When a student has completed the specified number and type of courses to comprise a bachelor’s degree, the student would submit proof of completion to the Department of Education, plus the results of a proctored exam that would assess if the student had acquired bachelor’s-level skills in reading, writing, critical thinking and mathematical reasoning. If so, they would be granted a U.S. bachelor’s degree.
The result would be a far better college education at far lower cost.
A high-quality pathway for academically weak students
Today, we push nearly everyone to college, even those who did poorly in high school, for whom college is unlikely to be the best way to spend their years and money. America needs a major apprenticeship initiative like those in Germany and England: a partnership between schools and employers that creates a high-quality experience for high schoolers whose track record indicates they’re more likely to succeed in a practical curriculum than by deriving geometric theorems, deciphering the intricacies of Milton or applying quantum mechanics.
In the meantime, what to do?
Higher education’s glacial pace of change, despite years of withering criticism, does not portend major improvement in the offing. So what’s the current crop of would-be college attendees to do?
Attending college should not be a fait accompli. If you did poorly in high school or are burned out on academics, you’re likely to join the almost half of college freshmen who don’t graduate even if given six years. So you might want to consider a noncollege path. For example, while not ideal, America does have a system of apprenticeships. Or try to work at the elbow of a successful, ethical business owner or nonprofit executive. Or consider the military: It offers training in a wide range of career fields. Or take just a gap semester or year to refresh and edify yourself in the real world before starting college. Try some focused traveling—for example, visit elementary schools in different areas and keep a blog. Or start a simple business. Even if it fails, you will have learned much about entrepreneurship, organization, people and life.
A College Report Card
If you are planning to attend college, you’ll make a wiser choice if you ask each prospective school’s admissions office for the following information, which collectively make up what I call the College Report Card:
- Results of the most recent student-satisfaction survey.
- The most recent report by a visiting accreditation team (for a college to retain accreditation, a team of experts periodically visits for a few days and writes a report listing the identified strengths, weaknesses and recommendations).
- The four-year graduation rate.
- The average four-year student’s growth in writing, analytic reasoning and mathematical reasoning (many institutions use a standardized exam like the Collegiate Learning Assessment).
- The percentage of students who graduate with their intended major who are professionally employed or in graduate school within six months of graduation.
It would be a consumer boon if the government mandated that all colleges post the College Report Card on their home page.
We claim that American higher education is the world’s best. Like many claims, it deserves closer examination.
Marty Nemko is an award-winning career coach, writer, speaker and public radio host specializing in career/workplace issues and education reform. His writings and radio programs are archived on www.martynemko.com.
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Letter to university signed by 28 well-known academics
More than two dozen current and former Harvard Law School professors asked the university to reverse its new, more stringent sexual assault policy, arguing in a letter published Tuesday that the new rules unfairly disadvantage students accused of misconduct.
The new policy, which took effect this fall, includes a provision that requires a “preponderance of evidence” to determine whether sexual assault occurred and creates a university-wide Office for Sexual and Gender-Based Dispute Resolution to handle misconduct complaints like harassment and rape, the Boston Globe reports.
It was announced after the U.S. Department of Education said in May that the Ivy League university was being investigated for its handling of those and similar claims.
The letter, which was signed by 28 well-known academics, alleges the new guidelines “are overwhelmingly stacked against the accused.”
Harvard disagreed in a statement Tuesday, saying the new guidelines “create an expert, neutral, fair, and objective mechanism for investigating sexual misconduct cases involving students.”