Tag Archives: Higher Education

Student Debt as a Moral Issue

Student Debt as a Moral Issue

By Noam Shpancer

A few months ago I took several of my students to a conference in Chicago. Many of my students come from small towns in Ohio. Many have never been to a big city. Many have never left Ohio, never been on a plane before. It was thus particularly rewarding to chaperone them and witness their excitement and joy as they experienced the Second City.

One evening, strolling down Michigan Ave, the conversation turned to money. I casually asked my students about their loan burden. One of them, a perky senior psychology major planning to get her Masters and become a social worker, said she had $80,000 in student loan debt. I was shocked.

Now, I am not entirely naïve about the problem of student loan debt. Until this year, I had one myself. A university degree is still—and perhaps more than before—the passport to the American middle class life.

Demand for education is high, classroom seats in good schools are in limited supply, and so prices tend to go up. Tuition rate hikes routinely outpace inflation. Thus, students are pushed into larger debts. According to the NY Times, the average student loan debt in the US topped $23,000 last year. Much has been written recently about the attendant economic and social hazards. A debt of $23,000 is a troubling burden, for students and parents.

But a debt of $80,000 is something else entirely.

You can perhaps make a case that debt of this magnitude is justified in some unique cases—such as in the process of obtaining a highly valuable degree from a top notch institution. Some professions pay very well. And Ivy League degrees practically guarantee higher starting salaries. But in this particular context—in my reality and that of my students—such a debt is simply not justifiable.

The difference between 23k and 80k debt is a bit like the difference between drinking and driving drunk. If I see a student of mine drinking beer, I may feel uneasy, or worried. I may even say something about responsibility. But if I see a drunken student get behind the wheel, I’m obligated to intervene. An $80,000 debt, for my students, is akin to getting behind the wheel while plastered. it is a recipe for disaster.

Like most private liberal arts institutions, my university prides itself on nurturing students. Many formal systems and procedures are in place to identify and address potential problems and pitfalls students may encounter as they pursue their degrees. We track student attendance, we track their grades, we advise them on which courses to take so as to stay on track toward graduation; we make sure they take the right load—that they don’t over-burden themselves.

There is a medical clinic on campus, as well as career counselors at the ready and free psychotherapy sessions. There are writing labs and tutors and study groups and remedial classes for those who are academically behind, or unprepared. There are assorted advocacy and support group and myriad religious activities.

There are social clubs and Greek organizations and many opportunities set up to help students find company, identity, a sense of belonging; we’re trying to take care of them while they learn the tools that will facilitate their ascent in the world.

Yet nobody, it seems, is looking out for their financial well-being. Nobody is there to monitor their debt load, throw up red flags and email notifications, set up consults, supports, or interventions.

One would be hard pressed to name three issues more critical to a young person’s chances of success in America than financial solvency, know-how, and responsibility. Yet we do little to help our students achieve these goals. In fact, we systematically undermine them.

You can probably guess why that is. Private liberal arts universities like mine are tuition-driven. We need that money to survive. Moreover, money matters in the US are private and personal. Adult Americans such as our students are entitled to act however they want with regard to their money. Americans, it is a well established fact, are entitled to do dumb things with their money. And they often take spectacular advantage of that entitlement.

But universities are not just businesses. They play a unique role in the life of young people and the life of the culture. A university in this regard is like a church—it requires money to exist well, but money should not be the goal of its existence. If a church is in financial trouble, it still should not sell its soul to the devil for an endowment. If it did, it might become wealthy, but it would cease to be a church.

The goal of university is to facilitate the future success of its students. A university that lets a would-be social worker (around 30k average starting salary, after graduate school, if they find a job) take on $80,000 in debt is negligent in terms of that goal.

The university may become solvent by taking this money, but in doing so it ceases to be a university.

Now, it’s true that professors and administrators in liberal arts institutions all around the country have not been in a very good mood of late. The business model that has sustained many small, private, non-Ivy League colleges around Ohio and the nation is dying. Online education is about to take many such institutions out of business. Soon enough, students will be able to receive great lectures, study materials, and help online; they will be able to take tests and earn diplomas and certificates matching their performance. They will be able to earn reputable degrees and acquire real knowledge and skills at home through the digital college, on their own time, for a fraction of the cost of traditional college.

First rate research institutions that don’t depend on tuition money will survive, as will private Ivies that cater to rich clientele and offer the benefits of national brand identifications and connections. But places such as the one that employs me are feeling the financial squeeze, and may go out of business in the not-too-distant future. And so it is no surprise that faculty and administrators are reluctant to do anything that might reduce enrollment and undermine further their already shaky financial stability. Little wonder the issue of student debt doesn’t get much attention on campus right now.

However it should. If we decide to fight to sustain the old classroom model of college education, it should not be on the backs of our students. If small liberal arts colleges are destined to fade out, we should not go out in a bitter, clueless and self pitying cloud of shame, dragging our students down with us.

The academic life—in particular the small liberal arts college tenured professor life—has been for a long time the best life America could offer. And for a while yet, that remains true. The quality of life in academia emerges from a unique blend of intellectual challenge, personal autonomy, and financial security. But in no small part, the quality of life in academia hinges on the palpable sense that you are doing good; that you are providing young people with real benefits, both tangible and intangible, that will help them—and if they don’t help, at least they won’t hurt. This sense of being on the side of goodness is what’s being undermined by letting a psychology undergrad take on $80,000 in student loan debt.

Universities, and faculty, should honor core commitments even—perhaps particularly—when under great duress. Our biggest commitment is to our students. Our biggest commitment to our students is to try to tell them the truth. The truth is that, for most people, taking on $80,000 in debt in the service of a social work degree is not a move that makes any sense these days. Universities should explicate their commitment to student solvency. They should establish effective formal mechanisms to supervise student debt, dispense sound, timely advice and guidance to students and their parents in this regard, and insist on first doing no financial harm. Failing to do so means that we are complicit—by fatigue, by willful ignorance, by lazy habit, by self-deception, or by wickedness; in other words by all those things we try to teach our students to shed and reject—in betraying our charges, and therefore also ourselves.


The Biggest College Admissions Edge

The Biggest Admissions Edge

Steve Cohen

Every year, parents pay through the nose for college-admission counselors who will supposedly let them in on the secret to getting into a first-choice school. So let me save you from emptying your bank account and tell you, right now, the single biggest advantage students can easily give themselves for getting into a top university: Apply early decision.

By applying early decision—for which the application deadline is usually Nov. 1, two months before most regular-admission deadlines—the applicant agrees to attend that school should they be accepted. Which means kids can only apply early decision to one school. If the school says yes, so must the student.

Many people don’t know that early-decision applicants get an edge when applying to college. What even fewer know is just how big that edge is. It’s enormous. Applying early admission can often double or even triple your child’s chances of getting into a top school. It is the single most effective admissions strategy there is for most students—and the most underutilized.

Every sign suggests that this year’s college-admission sweepstakes is going to be crazier than ever, and last year’s numbers were positively insane. Six of the eight Ivy League schools had admission rates under 10 percent, as did Stanford, MIT, and a handful of other very specialized schools. But even several dozen colleges that aren’t in the very top tier had regular admission rates under 20 percent. For example, Bowdoin, Emory, and Hamilton all had regular admission rates under 20%. Just five years ago, there were all over 30 percent.

But here’s the big caveat: Those are admission rates for regular applicants. For early-decision applicants, the data look a lot rosier. A couple of examples: Brown reported an overall acceptance rate of 8.7 percent last year, but for kids applying under the regular deadline, their odds were actually worse than that: only about 7.5 percent of them got in. By contrast, a whopping 20 percent of kids who applied early decision received a fat envelope from Brown—one of the most selective schools in the country.

The story repeated itself at other Ivies. Penn accepted just 11 percent of kids who applied under the regular deadline, but more than 34 percent of kids who applied early decision. Cornell was even more dramatic: 16 percent of kids who applied under the regular deadline were admitted, but fully 36 percent of early-decision kids found good news in their mailbox.

This difference was just as pronounced at highly selective non-Ivies. Amherst took just 12 percent of regular applicants but 34 percent of kids applying ED. Midwest powerhouse Northwestern took just 26 percent of the regular pool but 39 percent of the early group. And Bucknell accepted 27 percent of kids in the regular pool, and a staggering 62 percent of early-decision applicants.

Its tempting to chalk up the success gap separating regular and ED applicants to something other than the actual act of applying early decision. Do kids who apply early have significantly better qualifications?

Hardly. In fact, it is often just the opposite. Certain segments of the early-decision applicant pool often have lower grade-point averages and SAT scores than the regular applicants. This is particularly true among college athletes. Because the Ivy League and Division III schools are prohibited from offering athletic scholarships, the tactic favored by coaches at these schools is to build their teams by “encouraging” student-athletes to apply early decision. (Only five of the Ivies—Brown, Columbia, Cornell, Dartmouth, and Penn—use ED.) Coaches can’t guarantee admission—that is the exclusive province of admission officers—but they typically have significant clout.

For the rest of the kids who apply early, the odds are noticeably better as well. Colleges rarely break out the mean SAT scores of kids admitted early compared to kids accepted during the regular round. But the observations of people like Mike Muska, my co-author of Getting In!, and the longtime Dean of College Relations at Brooklyn’s Poly Prep are instructive. “The early decision round is more forgiving than the regular round. They won’t admit a candidate who is not in the ballpark. But they will enlarge the sweet spot. Is it a 20 percent variability? Absolutely. 30 percent? Maybe.”

Why do colleges offer early-decision programs? Simple: competition. Every college is competing with schools both above and below them in the rankings pecking order. And every year they have to get “attractive” kids to apply, and then—the harder part—get those kids they accept to actually show up in September. Early decision is the only way a college can guarantee that an admitted kid will become part of its incoming freshman class.

The following chart shows the percentage of each class that was filled in 2010 by early-decision kids:

The percentage of students who choose to matriculate at a particular school compared to the number who were accepted by that school is known as yield. Every college uses a mix of historical data and newer factors to calculate its expected yield. Did the school play in the Final Four the previous year? Has a particular celebrity enrolled? Was the lavish new $50 million student center finally completed? But in the end, predicting yield is still basically guesswork. Early-decision acceptances help colleges reduce that uncertainty, providing schools a better chance of hitting their target enrollment numbers.

Surprisingly, most kids don’t take advantage of the early-decision option. Last year, more than 245,000 applications were received by the eight Ivy League colleges, but only 21,000 of them were under the early-decision or early-action umbrella. (A very small number of highly selective colleges—like Harvard, Yale, Princeton, and Stanford—offer an “early action” option: apply early in the senior year, and we’ll notify you early. But it is not binding and it doesn’t offer an edge.) Even smaller percentages of kids took advantage of early-decision programs at Amherst, Duke, and Middlebury, all schools that shower love on their early-decision applicants.

So why don’t more kids take advantage of an option that both improves their odds of acceptance and makes the application process a lot less stressful? Three reasons are commonly heard.

First, kids don’t get their act together soon enough. Way too many families begin the college-admission process in earnest at the start of senior year. For most families, that’s too late to do any real investigation of individual colleges.

Second, because of this late start, kids are hesitant to commit to a single school, afraid they’ll choose “the wrong one.

And third, parents are concerned that they will receive a smaller financial aid package because the school knows that the student has already committed to attending.

The most important piece of advice good college counselors give families is to start the admissions process early. At most top private schools, the college selection process gears up in earnest early in the junior year. That gives families enough time to visit colleges, do substantive research about various places, and engage in a thoughtful sorting process.

By contrast, most public schools don’t start the process with their kids until the beginning of senior year. Moreover, many public school districts have cut back on the number of college counselors. With 300 or more kids per counselor, adequate individual attention is rare.

Kids—preferably with a parent—should visit the three or four colleges they are most interested in as soon as possible. Setting foot on a campus is the single best way to know if a school is a good fit.

Second, making a wrong college choice is not the end of the world. Very often, kids visit colleges, do their research, and take the time to make an informed choice—and then, after a semester or less, figure out the place is wrong for them.

Third, schools are not inclined to squeeze families who have shown them loyalty by applying early. Financial aid decisions are based on need, and the award package from one school shouldn’t be too much different from another—at least not for early-decision kids. In the regular admissions pool however, financial aid offers can be affected as the total bank of available money gets depleted.

Finally, one of the little known secrets about financial aid is that the package offered to families is not engraved in stone. Financial aid officers can exercise what is known as professional judgment. They have some discretion in how much they award and how they craft financial-aid packages. So, fear of a reduced financial-aid package shouldn’t be a deterrent to applying early decision.

One note of caution: use that early-decision application wisely. You only get to pull the trigger once, so the competitive bump shouldn’t be wasted on a school where you have little chance of getting in. If you’re in the ballpark—based on your grades, SATs, and some desired “hook” you’re bringing to that campus—it is worth pursuing early decision. But if you’re a solid B student who can’t sink a basket, consider using that ED bullet somewhere more realistic than a hyper-competitive Ivy.

It is always wise to discuss your ED strategy with the high school college counselor. Many of them will know particular college preferences. For example, the University of Pennsylvania is not hesitant to admit that if you’re a legacy hoping to leverage that edge, you’d better apply ED. Similarly, coaches will tell you that if you don’t go ED, you’ll lose their admission support.

The bottom line? Kids who want to get into a selective or highly selective college should do everything possible to take advantage of the early-decision option. It’s the best arrow in your quiver, so leaving it there unused just seems foolish.

– What do you think about College in the 21st Century? Many have alluded to a natiowide College Conspiracy pushed on the public to encourage the notion that ONLY through College can you become a success. This fallacy is one of many propagated by our Government, Loan Originators and the Public Education System.. The simple fact is College is not for everyone. We seek formal education primarily for monetary gains. Be sure to know your path before you begin the journey of higher education. – PECAN


Student-Loan Delinquencies Rise Sharply! Welcome to Bankruptcy 101

While the job market remains sluggish, student loan debt continues to rise, fueling fears that a higher-education spending bubble may be underway.

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Outstanding student debt has climbed 25 percent since the start of the financial crisis in 2008, according to the Federal Reserve Bank of New York — an increase from $440 billion then to $550 billion now. By contrast, every other major category of consumer debt, including mortgage debt, credit card debt, auto loans and home equity loans, is lower today than it was in the fall of 2008.

Not only has student debt risen precipitously, but more and more of those loans aren’t getting paid off on time. In the second quarter of 2011, the rate of student loans that were more than 90 days past due rose from 10.6 percent to 11.2 percent, according to the New York Fed.

Looking at other major types of debt — again, including home loans, auto loans and mortgage and credit card debt — those delinquency rates either declined or stayed flat for the quarter. But delinquency rates for student loans rose and continue to rise.

Experts have warned for years that a bubble may be developing in higher education, as students take out loans to pay for tuition and then find themselves hamstrung by debt and unable to find a job once out of school.

The problems of student-loan delinquency and default are only expected to get worse. Salaries and employment rates for recent college graduates have dropped: The median starting salary for a member of the class of 2009 or 2010 is only $27,000, down from $30,000 a couple of years ago. A recent report from Moody’s Analytics predicted that over the next few years, “many students will be unable to service their loans as income growth falls short of borrowers’ expectations.”

And the debt-ceiling deal that lawmakers reached in Washington earlier this month contains additional provisions that will make life harder for students taking out loans. One section of the deal changes the way interest is collected on a certain kind of federal loan for graduate students, meaning that those borrowers will start accruing interest on their loans before they’ve finished school.

The Moody’s report found that student lending grew by at least 10 percent each year between 2000 and 2010, including during the financial crisis and the Great Recession.

Over the past several decades the expense in the cost of education has grown dramatically along with an upsurge in attendance. Some have referred to this as the College Conspiracy

“Fears of a bubble in educational spending are not without merit,” the report warned.

Last month, the Chronicle of Higher Education reported that one out of every five government student loans that entered repayment in 1995 has since gone into default.

Yet a college degree still appears to be a significant advantage when it comes to the job market. A recent report from the Labor Department shows that for workers 25 and over with at least a bachelor’s degree, the unemployment rate in July was 4.3 percent — compared with 8.3 percent for workers with “some college,” and 9.3 percent for workers with just a high school diploma.

In other words, while unemployment for high school graduates slightly exceeds the national rate of 9.1 percent, the jobless rate for college graduates is less than half that.