New York Times tackles student debt crisis head on
The New York Times is tackling the expanding student debt crisis head on with it's in-depth "Degrees of Debt" series by Andrew Martin. Mr. Martin examines the ever-increasing costs of higher education and the indebtedness it creates for students and their parents. Here are some highlights of the articles, but I certainly encourage you to read the original articles and share your thoughts.
Article #1: “A Generation Hobbled by the Soaring Cost of College”
Date published: May 12, 2012
Source: NY Times Business Day (Degrees of Debt Series, Part One)
Author: Andrew Martin & Andrew W. Lehren
URL: http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html
Summary: Since 2001, state & local financing per student has declined by 24% nationally (according to The College Board - cited in this article). During that same time, tuition and fees have increased by 72% per student at state colleges & universities. Bottom line: The cost of an undergraduate education is rising higher than the salaries of borrowers & their parents, higher than inflation, and assuming that current annual tuition increases remain constant through 2016, the cost of an undergraduate education will have doubled in just 15 years!
Despite these facts, the message that students and their parents often hear from colleges and universities is that they should “pursue their dreams rather than obsess on the sticker price.” The central point of this article is that students and their parents need to have standardized, clear information about the costs of education, the repayment options, and the total cost of a degree (in both dollars and time) in order to make informed decisions.
Article #2: Full Disclosure for Student Borrowers
Article Type: Editorial
Publish date: May 22, 2012
URL: http://www.nytimes.com/2012/05/23/opinion/full-disclosure-for-student-borrowers.html?_r=1&emc=tnt&tntemail0=y
Summary: While this editorial is not part of Andrew Martin's "Degrees of Debt" series, it does add to the debate as to what changes need to be made to provide greater transperancy for borrowers and their families as to the true costs of an education.
For many young bachelor’s degree recipients, the real cost of their education comes as a surprise. Second only to a home mortgage and possibly an expensive car, a student’s education debt load is the next most significant debt that they will carry. Yet unlike a home mortgage or a new vehicle purchase, the conditions of repayment and the real cost of the purchase are often not presented in a straightforward way. Students often receive financial aid letters that blur the lines between grants and loans thereby making the awarding institution appear to be a greater value than it may actually be. This editorial explores the notable absence of standardized, above board information available to borrowers and why such information is so critical to borrowers and their parents in order to make informed decisions about the true costs of education.
The Obama Administration and Congress are both proposing changes to provide more transparency to this process, which is a welcomed first step, but more needs to be done now to shed light on the true costs of each degree.
Article #3: “Slowly as Student Debt Rises, Colleges Confront Costs”
Date published: May 14, 2012
Source: NY Times Business Day (Degrees of Debt Series, Part Two)
Author: Andrew Martin
URL: http://www.nytimes.com/2012/05/15/business/colleges-begin-to-confront-higher-costs-and-students-debt.html
Interviewed for the article, E. Gordon Gee, President of Ohio State University, notes the tuition-based business model is flawed and must change if colleges and universities are to survive. “The notion that universities can do business the very same way has to stop,” said Gee, referring to ways to pay for the costs of education beyond sticking students with higher tuition and significantly higher debt burdens. Walk around any large college or university lately and you’re bound to be impressed. From shiny new dorms to well-appointed reading lounges at the student union to upscale cafeteria food that actually looks edible, today’s high-performing students have a number of features to consider when selecting the destination for their parents’ (or their own) hard-earned dollars.
The dilemma school administrators like Mr. Gee faces – Maintain high academic standards, subjective national rankings, and competitive sports programs, but do it with increasingly scarce state government funding. Yeah, good luck with that…
With student debt now topping $1 trillion and students and their parents crying “Uncle,” public colleges & universities are finally taking long, hard looks at their own business practices to streamline where possible and eliminate redundancies and waste. Some of the changes they are making are small, but seemingly a no-brainer – such as standardizing forms, documents, and shipping methods/carriers as opposed to each college within a university negotiating their own shipping contracts. Other ways to reduce costs are more blunt including cutting staff, eliminating entire departments, and privatizing services such as university parking systems and enforcement.
