Yahoo Finance reported that American families spent 16 percent more on college this year. This comes from information from Sallie Mae’s annual report, “How Americans Pay for College.”
Families “shelled out” an average of $24,164 to cover college cost during the 2014-2015 school year, compared to $20,882 the year prior.
The conclusion drawn by Yahoo is that parents are feeling better about the economy and their ability to keep a job. They also see home values not declining and job prospects improving for their children. These observations do not track with most polls and attitudes, but it’s nice to see.
The story did make a valid point by saying those high tuition costs really hurt the middle class. It stated, “On the downside, limited income means lower income families do not have cash on hand to meet emergencies and are more likely to rely on student loans than other income groups.”
The Wall Street Journal was much more on the mark in its editorial, “College Aid Means Higher Tuition.”
As politicians ask for more money to make college more affordable, in truth cheap loans and taxpayer cash achieve the opposite.
Annual student loan originations have more than doubled since 2001 to $120 billion. The federal government guarantees 90 percent of the debt, which cannot be bankrupted away as other obligations.
William Bennett, Secretary of Education, reported in 1987 that student aid, “enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase.
“Sure enough students took out more loans, but universities gobble up most of the money.”
The New York Fed study found that for every new dollar a college receives in direct loans, a school raises its price by 65 cents.
This money should have gone to transportation, housing or other daily expenses – not to bloated administrations and meaningless programs such as black studies and women’s studies and a host of other income limited majors.
I have long felt that school officials should let incoming freshman know which degrees supported a living wage. Unfortunately, making a living rarely comes up.
Another problem with the education system is the inability of public education to teach. Most freshmen will need a year of remediation before starting their formal education.
All this adds to the cost of education. The average student borrower now owes $28,000.
The WSJ article concluded, “College will continue to be expensive as long as government aid amounts to a wealth transfer to universities.”
The Lumina Foundation’s spring addition of Focus magazine put real faces to the problem with an article entitled Stymied Students. Despite sincere efforts, too many are being lost in higher ed’s shuffle.
Case in point is Tony Havens, who left Indiana University in South Bend fifteen years ago owing $15,000 with no degree. He pays $64 a month on this debt that will last a lifetime. Another example is Quanisha Smith, who was notified by the Penn State Bursar that if $5,000 was not paid by 5 p.m., her semester grades will be erased. Seven classes, four months of work, 21 credit hours – wiped out.
Higher Ed is great at talking freshmen into the experience and debt. The schools made the loans so they should stand the loss if it’s not repaid. If the schools were held responsible, far more people would graduate and go to work instead of losing credit hours and being shown the door.