The High Cost of Student Loans and the Colleges They Support

High College Debt is a Deterrent to Economic Recovery

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Delaying the American Dream
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The High Cost of Student Loans and the Colleges They Support
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The High Cost of Student Loans and the Colleges They Support

In August, President Obama signed a bill preventing the doubling of interest rates on federal student loans for those entering college this year.

Students borrowing the maximum amount this year will save about $4,600 in extra interest...but it’s a temporary fix.

Next year’s rates, while capped at around 8%, are tied to the fluctuations in the market.

But even if the rising interest rates on college loans can be brought under control, it’s doing nothing to slow the rise in the cost of college.

Student loan debt is topping $1.2 trillion dollars this year, and 13% of students are defaulting on their loans.

Today, we're talking about student loans and the cost of college. And, we want to hear from you. Are you paying back a student loan? How big is your debt?

 


  

Comments

Katherine writes:

I listened to the episode on college loans with Sen. Blumenthal, etc. this morning and found myself disappointed in the lack of any substantive dialogue. The conversation was characterized by political doublespeak and condescending attitudes ("it's the parents and students' fault because they aren't educated enough about loans, etc...really, that's your excuse?) I recommend you read Matt Taibbi's article, "The College Loan Scandal," Rolling Stone, Aug. 29, 2013 for a more in-depth examination of the topic. However, my real reason for writing today is to encourage you to address the real elephant in the room -- the cost of college itself.

Why should private schools cost upwards of $60,000 per year? For what? Why should UCONN administrators make $200,000 to more than $400,000 per year? Why is the UCONN athletic director paid a ridiculous amount of money for managing a sports program that in the long run does nothing for the majority of students except provide entertainment (vs a pathway to a career)? Why are universities so top heavy with management? Why are professors allowed to require expensive textbooks only to discard using them after students have already bought them? In fact, why do textbooks cost so much? What are the actual unit costs of running a university, private or public? Why does college tuition continue to outpace inflation, salary increases, etc.? What is the actual return on investment for students?

As the parent of four children, two of whom have graduated from college and two who are currently in college, I am amazed that we don't demand more transparency and healthy debate on this topic. The question is not how to pay for college but why does college cost so much? Can colleges and universities honestly say they are run as efficiently and effectively as possible? When is the last time they evaluated their operating models? How productive are employees? How streamlined are their core processes, e.g. Admissions, enrollment, housing, etc.? How do they define and reward performance for all employees, including administrators and professors? Are there better ways to deliver their "products and services?" For example, do we really need the current number of General education requirements (I.e. core curriculum)? Could we not consolidate or cut back on some of these courses, depending on your major? I recognize that I am speaking in generalities, but I think many would agree that a closer examination of costs is warranted.

As parents, we need to start thinking more like consumers when it comes to choosing colleges. College today is a family economic decision, and as such we need better information as to how schools will create value for our children, including more transparency on what we are actually paying for and why. Much like other industries (And let's be honest, higher education has become a self-sustaining industry), it's time to hold college administrators accountable for how they run their schools and the value they create for their customers.

I hope you will consider taking on this issue in a future program.

Thank you.

Reverend Jacquelyn writes:

One topic in the conversation this morning that never came up was taking it slow or saving. I think our culture is so focused on instant gratification that no one thinks ahead anymore or pay as you go. I got my Master's degree which normally takes three years in seven years. I started on September 11, 2002 and took one class at a time (during the summer as well) Hartford Seminary, then transferred to Yale for the my last 3 years taking two classes at a time, and finally graduating in 2009. I paid as I went and have no debt.

We also have 529 plans for our 3 children. They each have a certain amount. My older son went to a prestigious engineering school but the plan had only enough for three years tuition so he co-oped. It took him an extra year to graduate but the money he earned in his co-op job paid for the extra year and gave him job experience for his resume. My younger son went to UCONN and was able to cover his undergraduate degree and his Master's degree. These are the choices they made.

Please don't get me wrong...I am all for need based and merit scholarships. The need based are especially crucial for many under served communities. But I get a little tired of hear people who want their loans forgiven because they didn't think ahead and plan or think of other ways to fund their education because they wanted it 'now.' Neil deGrasse Tyson spoke at my older son's graduation in 2010. He was speaking about people 'doing the math' and mentioned the housing crisis at that time. He said if people did their own math instead of relying on the lenders (who want their money), he felt we wouldn't have been in that particular crisis.

I agree education is an investment. You need to put something in to get something more out. But students and maybe especially their parents need to 'do the math' and not bankrupt the students themselves or their parents'retirement.

My two cents.