Northwestern University President Morton Schapiro, speaking at the Evanston Public Library Wednesday night, said that despite the dramatic increase in student debt levels, a four-year college degree is still a bargain — considering how much more college graduates earn.
And Bruce Carruthers, director of NU’s Buffett Institute for Global Studies, said the average net cost of a college degreee has increased far less than the sticker price tuition figure that gets the most attention.
Carruthers with a chart showing the change in the net price of a four year degree since 1970 (the solid blue line) compared to the tuition “sticker price” (the dotted blue line).
Both speakers said conditions are much worse for students studying at proprietary schools — which typically rely much more on loans than grants for financial aid and whose graduates have much lower career success rates than those at private or public four-year schools.
Carruthers cited figures from the Pew Research Center that show typical student debt more than doubled in inflation-adjusted terms from 1992 to 2012 — from $12,424 to $26,885. And the proportion of college graduates who have debt increased from 49 percent to 69 percent during that time.
Bruce Carruthers.
The largest proportionate increase in borrowing occurred among students from high-income families — where borrowing more than doubled from 24 percent to 50 percent. But the share of students from low income families who incurred college debt also increased — rising from 67 to 77 percent.
Schapiro, an economist who has co-authored several books on the economics of higher education, said that when he graduated from college in 1975, it took average college graduates 23 years to repay the direct and indirect costs of four years spent in school, compared to what they could have made in a blue collar job as a high school graduate.
Now, he said, it takes fewer than 10 years — mainly because the wages that high school graduates can command have failed to keep up with increased living costs.
The “sticker price” of college tuition has skyrocketed, Schapiro said, but only 14 percent of students pay that price. Most of those are from very weathly families — often from overseas.
At highly selective schools like Northwestern, Schapiro said, the inflation-adjusted average net cost of attendance has actually gone down over the last 15 years.
Asked whether students should opt to attend the best-rated school that will admit them, or choose a lower-ranked but less expensive school, Schapiro said studies suggest several factors to consider.
First, he said, for students from families earning less than about $140,000 a year, who might have to pay the sticker price tuition to attend, say the University of Illinois at Urbana, net costs might actually be lower at a school like Northwestern.
And, the answer is complicated, he added, because higher-ranked schools tend to have higher graduation rates and more students completing their undergraduate degrees on time in four years — which reduces the overall cost of attendance.
But assuming a student would get the degree in four years, he said, for white males the career outcomes don’t seem to change much based on the selectiveness of the school. White females, he said, see a slight advantage in going to the prestige school. For black females the advantage is larger, and for black males “it’s off the charts better.”
Schapiro speculated that one reason for the difference may be that having the degree from the top-tier school offsets some of the discrimination that minorities and women may otherwise face in the job market. It signals that this is a person who has the right “ticket” for success.
The foxes are guarding the hen house
You have two Northwestern administrators saying college tuition is a bargain, considering what the job market pays. The bias in these statements is profound. It’s like the fox guarding the hen house. Of course they are going to defend sky high college costs – they are employed by the same industry they are defending.
In any regard, student loan debt is now the second highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans. Student loan debt is a crisis and a balloon ready to pop. Last year, the number of defaulted federal student loans hit a new high- about 8 million borrowers have given up paying on more than $137 billion in education debts.
Overall, the total amount of defaulted federal student debt grew by about 14% in 2016, and it happened in a relatively strong job market that dipped below 5 percent. I’d love to hear Schapiro and Carruthers explain away those facts. Consider that college costs have skyrocketed in spite of the fact that universities, which do not pay property taxes, are swimming in the dough.
Northwestern has a $9.6 BILLION endowment!!!!! What’s behind the rising cost of college? The federal government that backs all student loans no matter what and so the banks lend money like its water. Universities know this so they keep jacking up tuition. The same concept happened in the mortgage lending market. We saw the results of those policies, beginning in 2008.
To make matters worse, there are politicians, mostly Democrats, who run on the platform of loan forgiveness in order to get votes. The problem there is that it does not solve the problem but only exacerbates it at the expense of taxpayers.
What causes college costs to
What causes college costs to increase? Perhaps too general, but for state funded universities, it is the cost to service the guaranteed pensions; for private institutions, it is simple supply and demand.
Where the problem starts
School official, politicians and other rail against debt but don’t want to deal with the first causes—the high cost.
How many schools [starting with high school] tell students before what majors will provide enough money to live well and pay their bills during and after graduation ? I don’t mean just majors that are professional training like music, journalism, theater, hotel management [yes UNLV and Cornell have]. Students should have courses that provide a good ‘liberal arts’–not current liberal indoctrination—like math, science, classics of literature, world and American history, exposure to music/art. Instead students are allowed to blindly major in obscure subjects that not only don’t give them a liberal arts education but may actually scare manager away from hiring them.
Then there is the costs of sport teams [and coaches !!], sports training facilities, fancy recreation buildings that few use [mostly built for the want-a-be pro-athletes], dorms that are probably better than apartments they will be able to afford for years, VPs and SVP for every possible function [many to hold student’s hands and tell them how superior they are and grade inflation that convinces them they are], institutes demanded by donors—but then paid for by tuition, meal plan costs [not quality] that would shock grommets and every possible demand students can think of or some special interest groups think they should. Then there are the high salaries, bonuses, benefits, [even housing] for administration all the way to the top.
Oh, yes. They are suppose to be there to be educated. But are large percent of faculty are taken up with teaching useless courses and so students have a hard time getting needed courses to graduate in four years, libraries cut back on books and journals—and even ship the books to a far off-site where you have request the books.
No wonder students are in debt. But it is easier to blame the banks that loan the money so students can go to school—and many times don’t/won’t pay back their debt.
This grousing is all well and
This grousing is all well and good for those (like the writers I suspect) who already have their college degrees and can sniff and snuff about inflation and waste. The point of the article, and Shapiro’s point, is that college is worth the cost in terms of enriching your life both in increased salary and increased understanding and enjoyment of the world around you. Surveys alone show a college grad earns a million dollars more than a high school grad over his lifetime.