After college, what will you earn?
If college is an investment, students should have some idea what they’ll earn with a degree in nursing or marketing or whatever from College X vs. College Y, writes Daniel de Vise in College, Inc. Soon more information will be available about post-college employment.
Especially as college continues to get more expensive, students rightfully want to make sure that that their investment has value. They’re asking: What are the chances I’m going to get a job earning a decent wage? And if I’m choosing between two or three schools as a prospective student, which will give me the biggest bang for my (and my family’s) buck?
The Labor Department is working with the states to share data on earnings and employment. In addition, the Education Department will be releasing “gainful employment” reports on how for-profit and community colleges’ vocational certificate earners are doing in the workforce.
“If these reports show wide disparities among graduates from different colleges, can it be long before the same data are demanded for all bachelors’ degree programs?” asks de Vise.
The drive to raise graduation rates doesn’t address degree quality, he points out. For most students — and especially those from low-income and working-class families — it’s important to earn a credential that puts them “on a path to earning a decent living.”
If students understood college costs and potential earnings, they’d be wary of enrolling in a high-cost for-profit college, especially for a bachelor’s degree program. They’d also avoid high-cost private colleges that don’t offer a lot of financial aid and an elite degree.
In Student Loans Weighing Down a Generation With Heavy Debt, the New York Times introduces a debt-doomed borrower: Kelsey Griffith, 23, borrowed $120,000 to earn a marketing degree from Ohio Northern University. She’s working two restaurant jobs and will move in with her parents while looking for a marketing job.
Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters. But when she visited Ohio Northern, she was won over by faculty and admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price.
“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” said Ms. Griffith, a marketing major. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”
Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993, according to a Times analysis of Department of Education data. This includes federal and private loans.
“Pursue your dreams” — but don’t do the math — is a cruel hoax being played on 18-year-olds and their financially naive parents.
To and through college
To raise college completion rates, students must work harder in high school and reach out for help in college, says Kai Drekmeier, co-founder of InsideTrack, in a Hechinger Report interview. Drekmeier’s company provides coaching for college students, but those who need help the most are the least likely to ask for it until it’s too late, he says. In particular, community college students “need to be proactive about reaching out to use” the help that’s available.
And if they don’t, they’re not going to get help. So what happens is the more motivated students who use the resources effectively are going to be fine, and the students who need more support don’t get the support that they need. Also, community colleges are often—as far as the advising needed for incoming students—there aren’t enough resources.
College readiness includes understanding “the amount of time and rigor that success in college takes,” Drekmeier says. “We’re not expecting enough of our students.” Working a low-wage job to avoid taking out student loans is “shooting yourself in the foot if it is interfering with your ability to focus, pass your classes and finish on time,” he concludes.
Sallie Mae drops ‘unemployment penalty’
Under pressure from an online petition, Sallie Mae, the nation’s largest private student-loan provider, will stop charging a $50 quarterly fee to unemployed borrowers who’ve asked for forbearance, reports the New York Times.
The “good faith deposit” now will be credited to the borrower’s account.
Stef Gray, 23, a New Yorker who owes $600 a month on four loans, saw it as a predatory effort to squeeze blood from a generation of turnips — graduates already buried under a mountain of student debt. In November, she started a petition, “Tell Sallie Mae: Stop the Unemployment Penalty,” with Change.org., a group based in San Francisco.
“Sallie Mae is preying on people like me and cashing in on the fact that we need more time to find work before we can repay our student loans,” it said.
Despite working while in college, Gray borrowed $40,000 to earn a bachelor’s and master’s degree in geography. With interest, she now owes more than $65,000. Despite her expertise in geographic information systems, she’s been unable to find a job analyzing census or health statistics.
Orphaned as a child, she didn’t understand the difference between federal and private loans when she borrowed, she said.
Stop Sallie Mae’s unemployment penalty
Tell Sallie Mae: Stop the Unemployment Penalty demands a Change.org petition by Stef Gray, a recent public college graduate who borrowed at 9.75 percent to pay college costs.
I graduated in May with honors, but even with an advanced degree in a technical field, I still haven’t found full-time work. I’m doing everything I can to avoid defaulting on my loans, but Sallie Mae has charged me hundreds of dollars in extra fees because I’ve had to delay my payments (called forbearance).
While federal loans let the unemployed defer payments without fees, Sallie Mae charges $50 per loan every three months, writes Gray, who has three loans that can’t be consolidated. Meanwhile, interest is accruing.
If I don’t find full-time work before the end of January, Sallie Mae is going to charge me another $150 in “forbearance fees” — while my total debt continues to grow by approximately $1,200.
Please join me in asking Sallie Mae to stop double-dipping. Sign my petition calling on Sallie Mae CEO Albert Lord to stop charging forebearance fees to unemployed students wishing to avoid default.
Sallie Mae spokesperson Patricia Christel described the fee as “a good faith deposit that acknowledges the importance of and commitment to resuming payments in the future,” reports the Chronicle of Higher Education.
“When I pay a deposit on my apartment, I get my money back at the end of the lease,” Gray responds. “If this were a ‘deposit,’ borrowers would either get their fees back at the end of the forbearance or the money would be applied to the loan’s balance. Neither of these is true.”
Obama: Raise tuition, lose federal aid
College affordability was the theme of President Obama’s speech at the University of Michigan yesterday. He called for spending more on Perkins loans and work-study programs — going from $3 billion now to $10 billion – but only at colleges and universities that provide “value.” Students at colleges that raise tuition could lose access to loans and work-study jobs.
In addition, the president’s plan (pdf) includes a $1 billion “Race to the Top for college affordability” and a $55 million “First in the World” competition to encourage productivity innovations, reports the Washington Post.
Higher education — including community colleges and lifelong learning for workers — is “an economic imperative,” Obama said. While he proposed increasing tuition tax credits and keeping interest rates low on student loans, he said that’s not enough. “Look, we can’t just keep on subsidizing skyrocketing tuition.”
So from now on, I’m telling Congress we should steer federal campus-based aid to those colleges that keep tuition affordable, provide good value, serve their students well. (Applause.) . . . If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.
If “provide good value” and “serve their students well” means anything, it means the federal government will monitor graduation rates and employment outcomes, as well as tuition, for the entire higher education sector. Currently, “gainful employment” rules, which monitor former students’ earnings and ability to pay back loans, cover only for-profit colleges and community college vocational programs.
Following the speech, Molly Corbett Broad, president of the American Council on Education, issued a statement saying there’s concern that the proposal would “move decision-making in higher education from college campuses to Washington, D.C.”Sen. Lamar Alexander, R-Tenn., a former education secretary, said the autonomy of U.S. higher education is what makes it the best in the world, and he’s questioned whether Obama can enforce any plan that shifts federal aid away from colleges and universities without hurting students.
“It’s hard to do without hurting students, and it’s not appropriate to do,” Alexander said. “The federal government has no business doing this.”
President Obama also touted college “report cards” showing college costs and how well graduates do in the job market.
The U.S. Education Department and the Consumer Financial Protection Bureau are working on Know Before You Owe, a financial aid shopping sheet that will let future students estimate their debt, monthly payment and likely ability to repay loans. Parents and students also have requested a breakdown of college costs and information on repayment rates for graduates at each college.
More women choose college over a bad job
While young men will take any job they can get, young women are passing up dead-end jobs to seek more education, reports the New York Times. “The next generation of women may have a significant advantage over their male counterparts,” economists say.
“It doesn’t surprise me that in a poor economy women are ramping up their schooling,” said Heather Boushey, an economist at the Center for American Progress, a left-leaning research organization. “The real question is: Why aren’t more men doing that too?”
Of course, women who leave work for college are gambling their investment will pay off. The Times‘ lead anecdote, Laura Baker, quit her Starbucks barista job to pursue a master’s degree in strategic communications at a private university. She hopes to work at a nonprofit.
Including the loans that financed her undergraduate education at Wartburg College in Waverly, Iowa, she will complete her master’s program next year owing about $200,000 in debt.
“I have to have faith that I will eventually get a good job that pays enough to pay my living expenses and pay back my loans,” she said, “and hopefully make me happy in the process.”
Communications specialists with a master’s start at $37,500 a year, estimates PayScale. Nonprofits tend to pay less.
It’s crazy to borrow $200,000 for a communications degree, adds Cost of College. The FinAid loan calculation website estimates a debtor who spends 10 percent of gross monthly income on repaying student loans will need an income of $213, 044.40 to repay $200,000 in student loans. “If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $142,029.60, but you may experience some financial difficulty.”
Savvier women are enrolling in community colleges. State budget cuts have pushed up tuition, but it remains a good deal.
Most new students are women at Wake Technical Community College in Raleigh, one of the country’s fastest-growing community colleges. “We now have 6,000 students on a waiting list because we didn’t have the resources to offer more classes,” President Stephen Scott told the Times.
Rethinking federal student aid
Let’s Rethink Federal Student Aid, writes Jeff Selingo in a Chronicle of Higher Education commentary.
The higher-ed establishment in Washington spends most of its time trying to protect the status quo on student-aid programs, all the while arguing for more money to help pay higher tuition prices. But if we’re headed for an age of at least some austerity in the federal government, then the higher-ed associations are going to need a new playbook.
Selingo throws out some ideas, starting with allowing colleges to limit loan eligibility so students don’t borrow well more than the cost of tuition, live off the extra cash and find themselves unable to repay their loans. That’s more of an issue at low-cost colleges and universities.
He also suggests linking aid to measures of student success, such as graduation rates.
Nearly 60 percent of high-school graduates from the bottom income quartile entered college in 2009, but only 7.3 degrees went to students from the lowest quartile. In part, that’s because low-income students tend to choose colleges with a low sticker price — such as community colleges — and low graduation rates.
Needy students and their parents don’t realize the net price of colleges is much lower than the sticker price, says Andrew P. Kelly, a research fellow at the American Enterprise Institute.
If low-income families knew more about the net price of a college, Kelly maintains they would be better able to balance cost with the likelihood of success. Rather than just go to the cheapest college, they might pick a slightly more expensive one with a higher graduation rate.
In addition, Selingo writes, “colleges that fail to graduate a reasonable number of low-income students, whether those on Pell Grants or with sizable loan burdens, should be banned from the federal student-aid programs.”
That could hit community colleges hard: Pell Grant recipients’ graduation rates are low.
More degrees for the dollar?
Productivity push could hurt community colleges in U.S. News, by me, looks at how the push to control college costs could affect community colleges, which are strong on affordability but weak on productivity or dollars-per-degree.
In National Journal’s college cost containment discussion, Lumina Foundation‘s Jamie Merisotis calls for “productivity improvement” to increase “the number of high-quality degrees and certificates produced, at lower costs per degree awarded, while improving access and equity for the least well-served populations.”
That will require rethinking the entire system of grants and loans, improving data analysis and changing from a seat-time system “to one based on learning,” Merisotis writes.
Low-income students ‘maximize debt’
Inspired by Education Sector’s Debt-to-Degree report, the Flint (Michigan) Journal looked at how much local students are spending per degree.
At Flint’s Mott Community College, dividing total degrees awarded by total undergraduate debt, yields a debt load of $10,171 per degree for 2007-09. That’s better than Henry Ford Community College ($22,691) but much higher than Southwestern Michigan College ($81.19).
Unemployment is high and incomes are low in Flint. “Some students take longer to get a degree, stopping and starting school several times because of jobs or families,” reports the Journal. “Some use college loans to pay life expenses as well as tuition.”
MCC Spokesman Michael Kelly said Genesee County’s economy is a big culprit. Many low-income students have their tuition covered by the Pell grant, but still take out loans for other expenses, he said.
“This is also being perceived as a revenue stream, as a source of income,” Kelly said of loans. “They’re taking out more money than education expenses require and using it for rent, groceries and car payments.
“They’re maximizing their debt.”
He said MCC officials last year tried to reduce the amount students borrowed but were told by U.S. Department of Education officials that that wasn’t an option.
Borrowing to pay living expenses is a very dangerous strategy for high-risk students. Student loans can’t be discharged in bankruptcy.
“If students are going to borrow money and pay those loans back, they need to get a degree,” said Education Sector policy director Kevin Carey. “The job market doesn’t give partial credit for going to college and not graduating.
Brandon Kreiner, 24, dropped out of University of Michigan at Flint after three years because of poor grades, then spent three years at Macomb Community College to raise his grade point average. Now back at UM-Flint, he’ll need three more years to complete a degree in secondary education. He expects he’ll owe $30,000 in student loans, despite receiving Pell Grant aid. “As long as I can get a job, I’ll be able to pay it back,” Kreiner said, “but the teaching industry isn’t great in Michigan right now.” Even if schools are hiring, a would-be teacher with poor grades will be competing with stronger candidates.
