Another SL article... 120K for a BA

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A Generation Hobbled by the Soaring Cost of College




Photographs by Ruth Fremson/The New York Times and Ty William Wright for The New York Times

Taking on debt has become a central part of the college experience for many students. More Photos »

By ANDREW MARTIN and ANDREW W. LEHREN

Published: May 12, 2012


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ADA, Ohio — Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.




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“If anything ever happened, God forbid, that is my debt also,” said Ms. Griffith’s mother, Marlene Griffith.

Ms. Griffith, 23, wouldn’t seem a perfect financial fit for a college that costs nearly $50,000 a year. 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.”

With more than $1 trillion in student loans outstanding in this country, crippling debt is no longer confined to dropouts from for-profit colleges or graduate students who owe on many years of education, some of the overextended debtors in years past. Now nearly everyone pursuing a bachelor’s degree is borrowing. As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden.

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 an analysis by The New York Times of the latest data from the Department of Education. This includes loans from the federal government, private lenders and relatives.

For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports. Average debt for bachelor degree graduates who took out loans ranges from under $10,000 at elite schools like Princeton and Williams College, which have plenty of wealthy students and enormous endowments, to nearly $50,000 at some private colleges with less affluent students and less financial aid.

Here at Ohio Northern, recent graduates with bachelor’s degrees are among the most indebted of any college in the country, and statewide, graduates of Ohio’s more than 200 colleges and universities carry some of the highest average debt in the country, according to data reported by the colleges and compiled by an educational advocacy group. The current balance of federal student loans nationwide is $902 billion, with an additional $140 billion or so in private student loans.

“If one is not thinking about where this is headed over the next two or three years, you are just completely missing the warning signs,” said Rajeev V. Date, deputy director of the Consumer Financial Protection Bureau, the federal watchdog created after the financial crisis.

Mr. Date likened excessive student borrowing to risky mortgages. And as with the housing bubble before the economic collapse, the extraordinary growth in student loans has caught many by surprise. But its roots are in fact deep, and the cast of contributing characters — including college marketing officers, state lawmakers wielding a budget ax and wide-eyed students and families — has been enabled by a basic economic dynamic: an insatiable demand for a college education, at almost any price, and plenty of easy-to-secure loans, primarily from the federal government.

The roots of the borrowing binge date to the 1980s, when tuition for four-year colleges began to rise faster than family incomes. In the 1990s, for-profit colleges boomed by spending heavily on marketing and recruiting. Despite some ethical lapses and fraud, enrollment more than doubled in the last decade and Wall Street swooned over the stocks. Roughly 11 percent of college students now attend for-profit colleges, and they receive about a quarter of federal student loans and grants.

In the last decade, even as enrollment at state colleges and universities has grown, some states have cut spending for higher education and many others have not allocated enough money to keep pace with the growing student body. That trend has accelerated as state budgets have shrunk because of the recent financial crisis and the unpopularity of tax increases.

Nationally, state and local spending per college student, adjusted for inflation, reached a 25-year low this year, jeopardizing the long-held conviction that state-subsidized higher education is an affordable steppingstone for the lower and middle classes. All the while, the cost of tuition and fees has continued to increase faster than the rate of inflation, faster even than medical spending. If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years, according to the Department of Education.

Much like the mortgage brokers who promised pain-free borrowing to homeowners just a few years back, many colleges don’t offer warnings about student debt in the glossy brochures and pitch letters mailed to prospective students. Instead, reading from the same handbook as for-profit colleges, they urge students not to worry about the costs. That’s because most students don’t pay full price.

Even discounted, the price is beyond the means of many. Yet too often, students and their parents listen without question.

“I readily admit it,” said E. Gordon Gee, the president of Ohio State University, who has also served as president of Vanderbilt and Brown, among others. “I didn’t think a lot about costs. I do not think we have given significant thought to the impact of college costs on families.”

Continued-Very Long
www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?_r=1&src=rechp

[Daria Morgandorffer]

At least the mom is smart enough to take out a policy on her daughter. Jaysus.

[wise_rita]

Where to even begin on this shit storm of a topic?

I think the Drexel letter to an accepted student is downright fraudulent:

"The expected payment to Drexel, it said in highlighted bright yellow, would be a negative $5,900. The calculation presumed grants, student loans and a $42,120 loan taken out by the parents toward the $63,620 estimated cost"

Student loans plus parental loans equals the student makes money on the deal (if I'm reading that correctly)?! That is absurd.

2 things I take away from every article I read like this (because these issues ALWAYS come up, in every single article):

1) How are these small, private, expensive colleges still in business? At some point naive 18-year-olds will get the memo that shelling out that kind of cash makes no sense.

2) The economy cannot support 100,000 new Media/Communications graduates (and the like) each year. What's it going to take for naive 18-year-olds to realize their Mass Comm major is a dime a dozen and will yield them nothing (or very little)?

The article makes a very valid point about the necessity of every single college/university offering every single major. There is definitely an overlap in course offerings, which could save tons of money if they were consolidated.

[Deleted]

May 13, 2012 6:49:05 GMT -5 Daria Morgandorffer said:

At least the mom is smart enough to take out a policy on her daughter. Jaysus.

This stuck out to me as well. I think it's unusually canny and I'm wondering how she was smart enough to think of doing this but not smart enough to make sure her daughter did the math to figure out what her monthly payment would be??

[Deleted]

How do some of these people qualify for so freaking much student aid? Good lord. Did she not sign the loan papers? I understand the high cost of tuition (I just made my tuition payment last week) but some of these kids are morons. They need to stop handing out student loans like candy.

[Deleted]

May 13, 2012 9:12:56 GMT -5 papiercherri said:

How do some of these people qualify for so freaking much student aid? Good lord. Did she not sign the loan papers? I understand the high cost of tuition (I just made my tuition payment last week) but some of these kids are morons. They need to stop handing out student loans like candy.

There is plenty of blame to go around:

Colleges for charging ridiculous tuition
Students for expecting ridiculous on-campus facilities (see any college's student center), not realizing the implications of taking out so many loans
Parents for not properly guiding their children
State Legislators for essentially defunding public colleges
Lenders for handing out candy like candy

[315bride]

I have definitely had plenty of conversations with my students about FA and SL recently. I have more and more students turning down private colleges and going instead to local, cheaper public schools. Getting a degree with no debt is going to be what gets them ahead in some cases.

In general, I wish states and fed would stop subsidizing tuition and costs. Maybe then, colleges would be forced to charge reasonable rates or subsidize via other means.

[katrana]

I wish my little sister would read more articles like this.....she is going off to college in the fall (very good school, but not ivy league good). She is ecstatic because she got $40k of assistance (not sure if that is a scholarship or loans). Even if it is a scholarship, the school costs 60k a year, so she will have to come up with 80-100k depending on how much costs rise.... If it is loans instead..... *shudder*

At least I think I have convinced her to minor in something useful in addition to majoring in marketing/business...

[hannamarin]

Where are the high school guidance counselors? Not about the debt, I think that is outside their scope, but to advise on what degrees to get? I remember figuring out what kind of job we wanted and then working back to the degree we would need. We even figured out the chances of reaching that job goal ie how many openings there are, how hard to get into post grad programs, etc.
And, also, I am thankful for our cheap (yeah, right) universities in Canada. Post grad programs tuitions are deregulated, but undergrad has a cap

[jentervention]

May 13, 2012 10:08:55 GMT -5 trident0 said:

Well, there is mandatory "counseling" before you take out your loans, but for me it was a one page letter on a website and I clicked ok.

I just did "entrance counseling" last week. It's a joke. The questions are so easy that you can answer them without truly reading the information. And then you sign the Master Promissory Note online using a PIN. I can't imagine kids and their parents are taking that process seriously, and I think that's what colleges and lenders are counting on.

[tehsp]

New to the boards--
I started at a private school and there was a full 2 hours on why they were just as smart of a financial choice compared to a state school.
After three semesters I left, and my parents had $35,000 in loans and I had $5,000. I moved to a state school, lived at home and only accumulated an additional $9000 in SL for the rest of my bachelor's degree. I feel like they definitely stretched the truth, if not lied, at the the educational seminar at the private school. I received all of the scholarships I could receive except for the ones you had to "compete" for (awarded to a few students a year). If had stayed there, I would have accumulated around $100,000 in SLs. Ug.

[315bride]

May 13, 2012 10:35:05 GMT -5 @88mangoes said:

OTOH, there are a lot of suggestions that sound good 4-5 years before, and then, oh, I don't know, the fucking economy crashes and the government redefines priorities, and new graduates are SOL. That defines too many of my former college classmates.
People who want to be math teachers? Good luck.
People who want to be lawyers? HAHAHAHA.
Or how about those who want to run a restaurant or hotel, and we say- but you really need that piece of paper to fall back on-- that will get your foot in the door much faster than working for them for 4 years?- NOT TRUE ANYMORE, especially with the advertised starting salaries from those majors getting in the way of little Sally's ego. Then, those with hospitality degrees are too educated to work at the front desk anymore, and will always be seen as a flight risk, looking for more than $10/hr.

Good math teachers are still in demand. It's English, Social Studies, and elementary ed that is tough right now.

[Deleted]

You borrow money, you owe money. Not hard to figure out. Blame the parents.

[Deleted]

I feel like a lot of schools sucker you too.

NYU and Northeastern seem to make the news the most, but they offer very generous FA packages and then reduce them each you until the point you are "stuck". Not much FA your senior year and you can't transfer easily without having to pay for 2 more years of school because most schools require you complete 60 hours in-residence.

[jentervention]

In the US, many of them still say things like "Well, what do you enjoy? Do what you love and the money will follow. ie and other bullshit.
My Middle School counselor, who was an ex-Navy Seal, was the only one who would push me. I went to talk to him all the time in HS when the counselors were being ridiculous.

Counselors in my school district are overwhelmed by state testing and have very little time for career counseling.

When I was making plans for undergrad, my counselor was in the "dream big" camp. I'm glad my parents were around to tell me, "Hey, you're about to be an adult, so you better start thinking like one." Some kids don't have that. That's a big part of the reason I want to be a counselor.

[shortstax]

May 13, 2012 10:44:26 GMT -5 @septimus said:

I feel like a lot of schools sucker you too.

NYU and Northeastern seem to make the news the most, but they offer very generous FA packages and then reduce them each you until the point you are "stuck". Not much FA your senior year and you can't transfer easily without having to pay for 2 more years of school because most schools require you complete 60 hours in-residence.

Agreed. Front-loading of school grants is a huge problem in financial aid, and I'm sad that this article didn't touch upon it.

Technically, some schools try to "justify" it because the cost of attendance the first year is higher because they require students to live on campus. Thus, a student's "need" is higher.

I used to work for a private college that nearly all students received a $4k school-funded grant the first year. Grants are non-renewable because they depend on FAFSA results and need for the following year. So many students lost the grant in future years because if they moved off campus, their COA would significantly decrease.

I currently work for a very large state-funded university. We routinely tell students that they should look at the cost of all schools, and we might not be the best choice for them. However, we have a waitlist a mile long. Small, public schools rarely have that convenience.

[nygalinpa]

((lurker coming out )))
Like others have said, so many factors at play. I feel at 17/18, kids should understand about debt. Debt is something that can make you or break you and kids need to know about it and the pros and cons of it. If they are adult enough to declare a major and decide a career path, they are adult enough to know that SLs dont equate magical free money that unicorns bestow upon you.
with that said, most people think higher education=SLs and that is how it is. You want to go to XYZ school, well take out loans because an education is worth it. You need the loans to get the education to get the job to pay back the loans. This mentality needs to go.

[MadamePresident]

While 18 years old is when you are seen as an "adult", many people really have no clue.
Why are the parents allowing their kids to make such bad financial decisions and not trying to guide their kids? Are these some of the same people who owe a gazillion in credit card debt and bought houses they couldn't afford?

While I think college is great, and I do think the "college experience" can be a good part of growing up. I hate how society has made it seem like everyone has to move far away from home to attend a university right after high school. I think many people would be a lot more successful in college if maybe they took a year off in between to work full time, save up money, and really decide what they wanted out of college. Instead you see all these people who go freshman year, get terrible grades, because they don't quite understand how to be responsible for themselves yet. Then return home to attend the local community college for a couple years. Only now they have a bunch of debt.

[isabel]

May 13, 2012 10:35:05 GMT -5 @88mangoes said:

May 13, 2012 9:51:48 GMT -5 @hannamarin said:

Where are the high school guidance counselors? Not about the debt, I think that is outside their scope, but to advise on what degrees to get? I remember figuring out what kind of job we wanted and then working back to the degree we would need. We even figured out the chances of reaching that job goal ie how many openings there are, how hard to get into post grad programs, etc.

In the US, many of them still say things like "Well, what do you enjoy? Do what you love and the money will follow. ie and other bullshit.
My Middle School counselor, who was an ex-Navy Seal, was the only one who would push me. I went to talk to him all the time in HS when the counselors were being ridiculous.

OTOH, there are a lot of suggestions that sound good 4-5 years before, and then, oh, I don't know, the fucking economy crashes and the government redefines priorities, and new graduates are SOL. That defines too many of my former college classmates.
People who want to be math teachers? Good luck.
People who want to be lawyers? HAHAHAHA.
Or how about those who want to run a restaurant or hotel, and we say- but you really need that piece of paper to fall back on-- that will get your foot in the door much faster than working for them for 4 years?- NOT TRUE ANYMORE, especially with the advertised starting salaries from those majors getting in the way of little Sally's ego. Then, those with hospitality degrees are too educated to work at the front desk anymore, and will always be seen as a flight risk, looking for more than $10/hr.

This could not be more true. I graduated in 2010 with a hospitality degree from a school with a great program. I was one of the lucky few from my graduating class who had a good, well-paying (read: for the industry) job when I graduated.

People wanted to know why I didn't go for my MBA straight out of undergrad. Simple: School is worthless in the field that I work in. I am pleased to have my degree and I have a relatively small amount in loans ($19K), but additional schooling is not going to advance me anywhere; it's the experience that's important.

I just think if I'd had any idea what I wanted to do when I got done with school I might not have picked such an expensive school, especially knowing more about the industry itself. But our high schools don't set kids up for having any sort of understanding of what college and life afterward can bring them.

[lolo]

This is what stands out to me: 'Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993.'

That's a huge jump and also means only 6% DID NOT take out a loan. That makes borrowing for college pretty pervasive.

Perhaps the exit counseling that is mandatory for student loan borrowers should happen up front (or a similar session should), or perhaps the promissory note should have to disclose the estimated monthly payment?

For what it's worth, sometimes small, private schools are a good value to students. I applied for five schools, one public and four private. It was cheaper for me to go to all but one of the private schools compared to the public school, as I had better financial aid and scholarship packages. Of course, had I applied to other public schools, that may not have been true, but I don't think the argument that sometimes small, private schools can be a better value than a state school is total baloney; the consumer just has to inform themselves, which seems to be what others argue isn't happening.

[Pom]

I was accepted to Ohio Northern University and offered a decent scholorship back in 1988. My dad died my senior year and my mom had enough on her plate without having to assist paying this tab. I sat down and did the math that even with the scholorship, I would be in so much debt, it would be hard to dig out. I fear that too many kids/parents have no idea how to calculate what they can afford and how evaluate future earnings vs. SL debt.

DH wanted to be a math teacher. He did his research and realized that it would not meet his future financial goals. He went into Petroleum Engineering instead, which has been an excellent choice for him.

[Pom]

May 13, 2012 23:35:54 GMT -5 isabel said:

May 13, 2012 10:35:05 GMT -5 @88mangoes said:

In the US, many of them still say things like "Well, what do you enjoy? Do what you love and the money will follow. ie and other bullshit.
My Middle School counselor, who was an ex-Navy Seal, was the only one who would push me. I went to talk to him all the time in HS when the counselors were being ridiculous.

OTOH, there are a lot of suggestions that sound good 4-5 years before, and then, oh, I don't know, the fucking economy crashes and the government redefines priorities, and new graduates are SOL. That defines too many of my former college classmates.
People who want to be math teachers? Good luck.
People who want to be lawyers? HAHAHAHA.
Or how about those who want to run a restaurant or hotel, and we say- but you really need that piece of paper to fall back on-- that will get your foot in the door much faster than working for them for 4 years?- NOT TRUE ANYMORE, especially with the advertised starting salaries from those majors getting in the way of little Sally's ego. Then, those with hospitality degrees are too educated to work at the front desk anymore, and will always be seen as a flight risk, looking for more than $10/hr.

This could not be more true. I graduated in 2010 with a hospitality degree from a school with a great program. I was one of the lucky few from my graduating class who had a good, well-paying (read: for the industry) job when I graduated.

People wanted to know why I didn't go for my MBA straight out of undergrad. Simple: School is worthless in the field that I work in. I am pleased to have my degree and I have a relatively small amount in loans ($19K), but additional schooling is not going to advance me anywhere; it's the experience that's important.

I just think if I'd had any idea what I wanted to do when I got done with school I might not have picked such an expensive school, especially knowing more about the industry itself. But our high schools don't set kids up for having any sort of understanding of what college and life afterward can bring them.

My niece called me the other day to ask if she should spend another semester in school to finish a hospitality certificate her advisor was pushing her to finish. She had started this to go along with her major and double minor (unrelated). My experience is all hospitality and I explained to her that she was most likely going to start in the same place in this field with or without a certificate or even a hospitality degree. Experience is key in a lot of fields and hospitality is definately one of them. It makes me sad that she will be graduating soon and still has no idea, what she wants to do.... There is no point in throwing more money at it.

[Deleted]

May 13, 2012 19:41:53 GMT -5 nygalinpa said:

((lurker coming out )))
Like others have said, so many factors at play. I feel at 17/18, kids should understand about debt. Debt is something that can make you or break you and kids need to know about it and the pros and cons of it. If they are adult enough to declare a major and decide a career path, they are adult enough to know that SLs dont equate magical free money that unicorns bestow upon you.
with that said, most people think higher education=SLs and that is how it is. You want to go to XYZ school, well take out loans because an education is worth it. You need the loans to get the education to get the job to pay back the loans. This mentality needs to go.

I completely agree with this. I attend a top business school at a large state university. I got my associate's degree some years ago and have been working on my bachelor's degree for years (too long, really, but I'm rather comfortable with my situation.) I'm 26 and should graduate when I'm 27. I won't have student loans and my main focus over the last 8 years has been experience. I'm kind of the odd student in most of my classes, as it's certainly not a school geared toward working adults. My eight years of experience has proved to be very valuable though. The last time I decided to find a new job I had options, which is more than a lot of new graduates can say. I also have excellent benefits and a healthy salary.

I can't tell you how times I've sat down to talk with my advisor or a professor about my classes or progress and I get a whole speech about how I've been in college forever. My advisor actually suggested I quit my $75k+ bonus per year job and finish my degree a few semesters sooner because "you have to have that piece of paper." I realize that piece of paper will open up doors, but unless it opens up a magical door that's going to provide me with $75k+ worth of income to sit a year out of working and pay for my tuition and medical bills, I think I'll keep my damn job.

[Deleted]

May 14, 2012 7:02:40 GMT -5 lolo said:

This is what stands out to me: 'Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993.'

That's a huge jump and also means only 6% DID NOT take out a loan. That makes borrowing for college pretty pervasive.

It also shows that it's a systemic problem. As septimus said, there's a lot of blame to go around. Putting all the blame on the 17- and 18-year-olds heading off to college without putting any blame on the sophisticated institutions that are contributing to this is just silly.

As for hannamarin's question about high school guidance counselors - in my limited experience, most counselors simply don't have enough time to spend much time with any one student. I think we had 1 counselor for every 500 students.

[pinkdutchtulips]

May 13, 2012 9:12:56 GMT -5 papiercherri said:

How do some of these people qualify for so freaking much student aid? Good lord. Did she not sign the loan papers? I understand the high cost of tuition (I just made my tuition payment last week) but some of these kids are morons. They need to stop handing out student loans like candy.

its VERY VERY VERY easy to qualify for federal student loans ... all you have to do is ask and they're yours. no credit check, nothing.

[lishie]

May 14, 2012 8:16:04 GMT -5 papiercherri said:

May 13, 2012 19:41:53 GMT -5 nygalinpa said:

I can't tell you how times I've sat down to talk with my advisor or a professor about my classes or progress and I get a whole speech about how I've been in college forever. My advisor actually suggested I quit my $75k+ bonus per year job and finish my degree a few semesters sooner because "you have to have that piece of paper." I realize that piece of paper will open up doors, but unless it opens up a magical door that's going to provide me with $75k+ worth of income to sit a year out of working and pay for my tuition and medical bills, I think I'll keep my damn job.

This is insane and everything that's wrong with higher education today. In what world is getting a diploma a few months faster worth leaving a high paying job?

If you quit your job and could very possibly end up in a $40K no bonus position due to other circumstances, but now you have that ever-important "piece of paper." Yep, those advisors would have really helped you, huh?

[partiallysunny]

Don't get me started on guidence counselors and advisors! Ugh.

[phunluvin82]

May 13, 2012 10:41:12 GMT -5 @spenjamins said:

You borrow money, you owe money. Not hard to figure out. Blame the parents.

I think this is over simplified. I work with a lot of students who are first generation in higher ed...and many in this population also happen to be first generation high-school grads. They come from low SES backgrounds with families/parents who are often struggling to meet basic needs and/or relying on public assistance.

Their parents (if they are even still in the picture at that point) aren't SL & money savvy enough to steer their children clear of bad school/loan choices, let alone downright deceptive and/or predatory practices of some of the (particularly for-profit) colleges.

These kids don't always have someone to steer them towards good choices when it comes to taking on SL debt...and yet they are constantly being bombarded with the message that a college degree is the only thing that will ever give them a chance at a better life than what their parents have.