The Debt Crisis at American Colleges

[Candid]

The Atlantic had a recent article on college debt that I found both interesting and depressing as I look forward to children in college:

 

http://www.theatlantic.com/business/print/2011/08/the-debt-crisis-at-american-colleges/243777/

 

Here's a couple of snips to get you curious:

 

Fully two-thirds of our undergraduates have gone into debt, many from middle class families, who in the past paid for much of college from savings. The College Board likes to say that the average debt is "only" $27,650. What the Board doesn't say is that when personal circumstances go wrong, as can happen in a recession, interest, late payment penalties, and other charges can bring the tab up to $100,000.

 

Why has tuition climbed to $41,304 at Carleton, $42,384 at Wesleyan, and $43,190 at Vassar, three times over inflation since 1982? The short answer is that colleges have embraced a host of extraneous activities - from obscure sports to overseas centers - and tacked most or all of their tabs onto students' bills. Unlike businesses, which cut losing operations, colleges simply hike their tuitions. In our view, good higher education could be had at much lower costs.

 

And most annoying:

 

Nor is it just about money. There are moral dimensions as well. Recent actions by Dartmouth and Williams, two wealthy schools, convey a lot about academic priorities. In the past, both schools announced that anyone they accepted would be able to enroll without having to take out loans. That is, the colleges would ensure all the aid that was needed to make attendance possible. This was heralded as the kind of noblesse oblige we hope for from well-off institutions. That was before 2008. But when Dartmouth and Williams' endowments tanked, hard decisions had to be made. Among the first was telling their needy students they would henceforward have to borrow, just like those at Loyola and Franklin Pierce. What struck us was who was chosen for sacrifice. At no point did their senior professors, whose total packages average $189,600, volunteer to take even a five percent cut. That could have preserved many if not most of the scholarships.

 

Okay, after those, you'll have to read the rest on your own.

[In The Great White North]

But when Dartmouth and Williams' endowments tanked, hard decisions had to be made. Among the first was telling their needy students they would henceforward have to borrow, just like those at Loyola and Franklin Pierce. What struck us was who was chosen for sacrifice. At no point did their senior professors, whose total packages average $189,600, volunteer to take even a five percent cut. That could have preserved many if not most of the scholarships.

 

So, to do a little math. Dartmouth, according to their website, has 29 academic departments and 10 academic programs. Let's assume each of them has two "senior professors" whose pay averages $189,600. That's 78 - let's assume 100 for even easier math. The 5% pay cut the article mentioned is $9480 each, times the hundred senior professors, is $948,000. With a tuition and fees annual cost of $58,638, again from their website, that would provide a whopping 16 scholarships.

 

That would certainly not have preserved "many if not most" of their scholarships!

 

A little more accuracy and less emotions, please.

[lavender]

Thanks for the article. Very interesting read.

I agree that college costs have become a bubble, just like real estate....watch us taxpayers have to bail out "Big State U" too. :glare:

 

Lavender

[-M-]

The article you linked reads like a companion piece to the Chicago Tribune editorial I posted last week (link here).

 

More, the first paragraph under the subhead "What you should do" in the Atlantic article is essentially the same plan I've been suggesting on the (old) boards and at Mental multivitamin for eight years.

 

In one of my other lives, I accumulated eight years of experience as an admissions counselor and as a financial aid counselor, first as an intern at the four-year state college where I earned my BA, then at a private two-year college, and finally at Temple University. It's not as if I were offering advice sans experience. Heh, heh, heh.

 

Anyway, more folks are listening now, which a Very Good Thing. May the articles that are appearing in popular magazines and newspapers save some family the burden of overwhelming college debt.

[Serenade]

The Atlantic had a recent article on college debt that I found both interesting and depressing as I look forward to children in college:

 

http://www.theatlantic.com/business/print/2011/08/the-debt-crisis-at-american-colleges/243777/

 

Here's a couple of snips to get you curious:

 

 

 

 

 

And most annoying:

 

 

 

Okay, after those, you'll have to read the rest on your own.

 

Interesting. Thanks for posting this. I've often wondered why college costs have gone up so much more than the normal cost of inflation. When I was in college eons ago, my parents paid for it -- they put three kids through a public university, and I don't think it was a terrible sacrifice. They always watched their money, but tuition costs never hung over their heads like it hangs over mine, wondering how I'll ever be able to afford college for my sons.

[Grace is Sufficient]

It seems to me that the more money the government puts in -- via grants or loans -- the more the costs go up. To some extent, I'm guessing that government trying to 'help' by giving out grants and loans is a large part of the reason costs have gone up.

 

All the bells and whistles? The schools have figured out that families can still pay about what they always could, but with all the extra money provided by the government, they can compete for students with all the fancy new athletic centers, meal options, and dorms.

 

Can of worms here, but the parallel seems too clear to ignore:

Health care seems to have gone/be going the same way...

[flyingiguana]

At no point did their senior professors, whose total packages average $189,600, volunteer to take even a five percent cut. That could have preserved many if not most of the scholarships.

 

That strikes me as a really high "package". The colleges I'm familiar with don't pay anything like that -- unless the professor is generating more income for him/herself via grant writing.

[In The Great White North]

That strikes me as a really high "package". The colleges I'm familiar with don't pay anything like that -- unless the professor is generating more income for him/herself via grant writing.

 

I'm not surprised. It's all about the cost of living.

 

I know professors who took lower paying jobs in the heartland (Bucknell), rather than higher paying jobs on the east coast because the cost of living was so radically different.

 

In Hanover, NH, the average house costs $355,000 and the median income is $120,00

 

http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL3333780.html

 

In Williamstown, MA, the median house price was even worse, $367,816.

 

Compared to Ohio State in Columbus Ohio, where the average house costs $102,000 and the median income is $55,226.

 

http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL3918000.html

 

There have been threads on here about the costs of groceries and gas that show them costing way more in NH too.

 

So that $189,00 would only be about $85,000 at OSU to provide the same standard of living.

[choirfarm]

I'm not surprised. It's all about the cost of living.

 

I know professors who took lower paying jobs in the heartland (Bucknell), rather than higher paying jobs on the east coast because the cost of living was so radically different.

 

In Hanover, NH, the average house costs $355,000 and the median income is $120,00

 

http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL3333780.html

 

In Williamstown, MA, the median house price was even worse, $367,816.

 

Compared to Ohio State in Columbus Ohio, where the average house costs $102,000 and the median income is $55,226.

 

http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL3918000.html

 

There have been threads on here about the costs of groceries and gas that show them costing way more in NH too.

 

So that $189,00 would only be about $85,000 at OSU to provide the same standard of living.

 

Yep, one of my uncles works at a university in CA. I spent time with them 6 years ago when my cousin got married. They have to offer a housing allowance for their profs who make less than 200,000 because they cannot afford what is there. They have owned their home for over 40 years. Here in Texas where I live, their house would cost about 75,000. There it was worth 1.5 million... not kidding. ( Now that was before the housing bubble burst, so it might be worth less now...maybe a million.) He said that the school teachers for their district typically have to live an hour away where they can afford it. Absolutely ridiculous. So a salary of 200,000 for a prof where he lives buys a lot less than it would here in Texas.

 

Christine

[Medstudent]

Yeah, I really don't think that overpaid professors are the problem. In most Universities, professors really aren't paid that well- especially considering their level of education. The thing is, it's a vicious cycle: Harvard gets a new, fancy campus in Singapore and a fabulous student center because a bunch of wealthy alumni donate money. Princeton follows suit. Soon enough, all the "almost-ivies" (where students go after having not quite gotten into the HPYS's of the world) try to get those things too to attract the top students. One school does, then all the others on that level have to compete with that. And so on. It just keeps trickling down to XYZ college which also wants a green campus, a completely wireless campus, a campus abroad, and new lab facilities because all its competitors have similar perks. The student finds herself in a position of having to choose among all these schools that sound a lot alike on paper, with all kinds of cool perks, and that cost a ton- or the "not-quite-caught-up-yet" schools with possibly fewer opportunities (can't do research abroad, can't use the fancy new lab equipment the more expensive schools bought) but also a smaller price tag. There will always be people who prefer to go into debt but have the best college/educational experience possible. And the cycle continues.

 

Also, I remember overhearing a conversation once at this top-5 college where I was taking grad classes and working. This school, and especially its medical center, makes a TON of profit. But they're a "non-profit institution", which allows them to have all kinds of tax deals. However, even after salaries and upkeep, they often find themselves with tons of money left and nowhere for it to go. So what do they do? They build stuff. A new wing for this, a brand new piece of equipment for that, a new building for students (mind you, this was before the recession). The conversation I overheard was a discussion between my boss and the head of accounting for the departments, who yelled at him for not spending the money we had been given quickly enough. We actually had to come up with creative ways to spend it.

[In The Great White North]

The conversation I overheard was a discussion between my boss and the head of accounting for the departments, who yelled at him for not spending the money we had been given quickly enough. We actually had to come up with creative ways to spend it.

 

I could help him with that, if he'd like.:D

[Medstudent]

I could help him with that, if he'd like.:D

 

Yeah, I did tell them that I had a very sad bank account that I would be happy to share with their many millions...alas that's frowned upon.

[Laura in CA]

So, to do a little math. Dartmouth, according to their website, has 29 academic departments and 10 academic programs. Let's assume each of them has two "senior professors" whose pay averages $189,600. That's 78 - let's assume 100 for even easier math. The 5% pay cut the article mentioned is $9480 each, times the hundred senior professors, is $948,000. With a tuition and fees annual cost of $58,638, again from their website, that would provide a whopping 16 scholarships.

 

That would certainly not have preserved "many if not most" of their scholarships!

 

A little more accuracy and less emotions, please.

 

Thank you for this. My brother was a professor at Dartmouth until 2 years ago, and although not "senior," was a full, tenured professor. He lived in a small, two-bedroom townhouse near campus. While comfortable, he certainly was not rolling in the dough.

 

I'm not surprised. It's all about the cost of living.

 

In Hanover, NH, the average house costs $355,000 and the median income is $120,00

......

 

There have been threads on here about the costs of groceries and gas that show them costing way more in NH too.

 

So that $189,00 would only be about $85,000 at OSU to provide the same standard of living.

 

Now my brother is a professor at a private univ in CA where the median house price is even higher than in Hanover, NH. Without mortgage assistance from the CA univ there is no way he could have afforded to have a house bigger than a shed out here.

 

Yep, one of my uncles works at a university in CA. I spent time with them 6 years ago when my cousin got married. They have to offer a housing allowance for their profs who make less than 200,000 because they cannot afford what is there. They have owned their home for over 40 years. Here in Texas where I live, their house would cost about 75,000. There it was worth 1.5 million... not kidding. ( Now that was before the housing bubble burst, so it might be worth less now...maybe a million.) He said that the school teachers for their district typically have to live an hour away where they can afford it. Absolutely ridiculous. So a salary of 200,000 for a prof where he lives buys a lot less than it would here in Texas.

 

He (my brother) makes no bones about his (private) univ's ability to lure promising, energetic young (and older) profs away from the UCs, with their recent drastic budget cuts. The UC schools' loss (which is a loss for their students as well) is the private univs' gain. My point, I guess, is that the market for professors is very competitive; losing quality faculty will affect the level of instruction and the school's reputation, and eventually the level of student attracted to the univ.

 

A good friend of mine is a professor at a public univ in the Midwest. All professors had to take one furlough day a month this year because of budget cuts, which amounts to an involuntary 5% pay cut. They also have much heavier teaching loads than professors at most private univs. Given the opportunity, my friend would jump ship to a private university in a heartbeat ...

Edited August 24, 2011 by Laura in CA