Some hard lessons about college costs

In the political battle over college student loans, where will the SMART MONEY go? Democrats and Republicans both say they want to keep the interest rate on subsidized loans at 3.4 percent, but remain at odds over where the money should come from. Of course, what makes the issue so volatile in the first place is that college costs have been skyrocketing, but why? Our Cover Story is reported now by Rebecca Jarvis:

It's as picture-perfect as a college can get. But this idyllic campus outside of New York City is also a portrait of what college is America has become. Really, really expensive. ,/P>

In fact, Sarah Lawrence College has the dubious distinction of being perhaps the most expensive college in the nation.

The all-in costs to be a student there next year will top $60,000, for one year, said President Karen Lawrence.

She insists that her school, which provides an average of $31,000 in financial aid, is worth every penny.

"Ninety percent of our classes are seminars with an average of 11 or 12 in those classes," Lawrence said.

She says those small classes means lots of faculty, and that costs a lot. "Their salaries are not inflated, but you need more people, and that's where the money goes."

"In other industries, we found ways to produce things using fewer labor hours, using more technology," said Sandy Baum, a senior economics fellow at George Washington University (which, at $55,000 a year, is pretty pricey). "We haven't really figured out how to do that in education."

The result? College tuition has risen as twice the pace of inflation. In fact, they've doubled in 10 years.

Baum also said the increased cost is not due to faculty being paid lots of money: "Faculty salaries have been pretty stagnant. But their compensation goes up when health care costs go up."

And higher prices - combined with growing enrollment - means there's much more student debt. The nation's student loan bill now tops all the nation's credit card bills.

Mark Kantrowitz, the publisher of finaid.org, one of the country's leading financial aid websites, said, "More and more students are having difficulty paying for colleges, which often forces them to borrow more, so debt at graduation is increasing quite steadily."

Last year, according to Kantrowitz, the average debt at graduation was $27,200. "If you throw in the parent loans, it's $34,400."

Last month students showed at the Washington, D.C. offices of Sallie Mae, protesting the higher and higher cost of a higher education.

Last week, still more protests.

"I absolutely see this as a crisis," said Natalia Abrams, an Occupy Colleges organizer. "It seems that every state, every school proposes 10 percent increases every year."

Abrams estimated that at least once a week there is a protest at a school against student debt.

Interest rates for new federally-subsidized student loans are set to double this July. Last Tuesday, President Obama spoke out against increasing student debt by asking Congress to extend lower rates for federally-subsidized Stafford loans that are set to double this July. He also worked the college circuit, extolling an audience of students to speak up to Congress: "Tell them now is not the time to double interest rates on your student loans."

Mitt Romney also called for an extension of the lower rates, even though some Republican lawmakers have opposed it: "I totally support extending the low interest rate on student loans," he said.

But how to pay for it? House Republicans voted to use money set aside for the Obama health program. That's a non-starter for the president. For their part, Democrats proposed using money set aside for oil and gas companies.

All of this, in an economy struggling to create jobs for all the students with all that debt.

In Pittsburgh, Chelle Buffone, a recent political science graduate, calls student debt "one of the silent killers of the economy."

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[Moravecglobal]

University of California negate the promise of equality of opportunity: access, affordability is farther and farther out of reach. Self-absorbed Birgeneau, Breslauer are outspoken for public UC Berkeley 'charging Californians much higher' tuition. Cal. Chancellor Birgeneau, Provost Breslauer leave an indelible legacy on access, affordability.

Cal. tuition is rising faster than costs at other universities. Believe it: Harvard College cheaper than Cal. Breslauer's Birgeneau, decision to 'charge Californians higher tuition' means Cal. nationally ranked #1 public university total academic cost - resident.

Birgeneau ($450,000) Breslauer ($306,000) like to blame the politicians, since they stopped giving them every dollar demanded. The 'charge Californians higher' tuition skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic years. If Chancellor Provost had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students. Breslauer Berheneau increase disparities in higher education and defeat the promise of equality of opportunity. An unacceptable legacy for all Californians.

Additional funding should sunset. The sluggish economy and 10% unemployment devistate family education savings. Simply asking for more taxes to fund self-absorbed Cal.senior leadership, old inefficient higher education models and fund excessive faculty staff compensation, burdensome bonuses, is not the answer.

UC Berkeley is to maximize access to the widest number of Californians at a reasonable cost: mission of diversity, equality of opportunity. Birgeneau's Breslauer's 'charge Californians higher' tuition denies middle income families the transformative value of Cal.

The California dream: keep it alive at Cal. fire (honorably retire) Provost George W Breslauer. Birgeneau resigned.

Opinions? UC Board of Regents [e-mail] Calif. State Senators, Assembly members.

[cameliawill]

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[RewardGoodDecisions]

What really bugs me about the whole discussion is that there is this assumption that students must take loans to go to school. Whatever happened to saving for college? Or working your way through college? My parents were blue collar middle class. I am the first and only person in my family to earn a bachelors degree (followed by a master's). I worked in hospital evenings and nights while I was in college to pay my expenses. I went to state universities and studied subjects that would help me get a JOB. My parents helped with undergrad tuition and I found a JOB that would help pay for my graduate degree. And my husband's parents saved for him to go to school. I think we made responsible decisions. And now we are saving for our kids to go to college. Sure-- we don't have money to spend on the latest and greatest "stuff" but our kids will not need student loans. And this is a good responsible decision. Yet we are paying heavily in taxes for those who feel everything should be given to them and that debt is okay. Something is wrong with this picture.

[Amtica03]

My oldest daughter went to college full-time. She had an apartment and had two jobs. She did graduate with all As. It was rough. She now has a pretty good job. However, She will be paying for her college for at least 10 more years. My younger child is now struggling with college costs. Maybe I should tell her to get pregnant and become a single parent so she can attend college for low cost or free? She is considering going to college in South America. It won't cost her anything. They care about their young people.

[makofoto]

Can someone tell me why the student loan interest rates are so high? 8.5% when most loan interest rates are quite low. I have a credit card that I'm paying off at 4%. I certainly don't earn very high interest rates with my savings accounts!

[viewerone]

I thought the story carried a bias. I usually like the segments on Sunday Morning very much. But this one irritated me. I can see how the reporter attempted to show 'both sides' but it seemed to me that there were too many interviews with college staff and personnel, who of course are going to defend what they do as legitimate. But I don't accept the idea that it's all due to legitimate personnel costs. If tuitions are rising that fast, then something else must be wrong, very wrong and they either won't admit it or just can't see it. I expected to get a little more in-depth analysis of where the college budget dollar goes, about the increasing irrelevance of a 'college education' not only in the world in which we now live, but in the world we're about to be living in, which will be fundamentally different from the one we're in now. If anything, we need radically new thinking in the area of the transition of young people into adulthood. There are many misconceptions about college, many myths about how to go about deciding whether or not to attend one, as well as which one to attend. I was very disappointed that this program did not dig into those myths more aggressively.

[Moravecglobal]

University of California Provost and Chancellor say "Charge higher instate tuition". University of California Berkeley (UCB) Chancellor Robert J Birgeneau is outspoken on why elite public universities should charge more. With Birgeneau's leadership UCB is more expensive (on an all-in-cost) than private Harvard and Yale. Cal. is the most expensive public higher education in our country. World ranking of prestigious universities has Harvard #1, Cal # 5.

Birgeneau would like to blame the politicians, since they stopped giving him every dollar asked for. The Chancellor's 'charge more' instate tuition skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic year. If Birgeneau had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students with the help of affordable student loans. Increasing Cal's funding is not the solution.

UCB is a public university designed to give maximum access to the widest number of instate students at a reasonable cost: with a mission of diversity and equality of opportunity. Unfortunately Birgeneau diminishes the principles which underlie our state and our country: equality and inclusion. Birgeneau's and Provost George Breslauer's senior management decisions deny middle income Californians the transformative value of university education.

Birgeneau's tenure as Chancellor is a sad unacceptable legacy. University of California Berkeley is now farther and farther out of reach for the sons and daughters of Californians.

Send your forceful message to: UC Board of Regents [e-mail] and your Calif. State Senator and Assemblymember.

[JenLev]

I can see both sides of this issue, both as a college graduate who paid off my loans (it took many years) and also as the mother of one college drop out and two in high school. I saved money and put it in trust funds for my kids when they were little, but it is no where near enough. I now am more focused on saving for my retirement, so I won't be a burden to them in my old age.

Right now I am not encouraging my offspring to go to college, at least not right out of high school. I think it is a better idea for them to go to work, try to save money and think very hard about what it is that they really want out of college, if they choose to go. I do not think that most traditional aged college students (18-22)has enough life experience to really know what they want to study, or what it means to enter the contract that a student loan is.

My family has been through hard times. We had to close our family business in 2009. We lost our home at that time, as we lived in the same building as our business. It was truly awful and very stressful. I was fortunate to find another job, and we are barely getting by now. We rent,live frugally and simply. We never had to go on public assistance or get food stamps, but it was looking like we might have to in those dark days in 2009.

My point here is that I accept responsibility for all the decisions I made. I borrowed with student loans for college and I paid them back. I accept that I made a decision to buy a business and it didn't work out. I lost all that I invested in it. I learned a very hard lesson in entrepreneurship: the worst case scenario, when all your hard work gets you nowhere and you lose your life savings. There was no bailout for all the small businesses like ours that didn't survive the great recession.

I think that a college education is way too expensive, and not worth the amount of debt incurred. It saddens me very much; I really had hopes for my kids. I wanted very much for them to have the status and sense of accomplishment that comes with earning a college degree. Our culture has come to expect that college is for everyone. It is unreasonable to require college educations for jobs that really shouldn't require them. The days of well paying jobs with good benefits are over, I fear. I don't think that it is a safe bet to think that your college education is going to pay dividends in your career. As a society, we should collectively work to improve the quality of public education and fight poverty. Sorry, but asking for your student loans to be forgiven after you earned your degree is unreasonable.




I don't think that it is right to ask for student loans to be forgiven. You have to understand what you are getting into when you borrow money. Fighting to change our system of education for our future generations is what we all should be doing.

[anonymous010]

As a college teacher for the past 6 years (started immediately after I finished grad school), I can say that my salary has not gone up much and is certainly not excessive - I make less than the national average (last time I looked) despite holding a Master's degree.

Our education system is a joke. We have one of the worst systems in the world, and rather than modeling our own after the best education systems in the world, we continue to argue amongst ourselves and politicians tout programs dreamt up by 'experts' who clearly have no experience in education.

Recent attempts at education legislation (namely No Child Left Behind and Race To The Top) are proof of this. They both operate under the assumption that if a class doesn't do well, it must be the teacher's fault. At face value I'm sure this seems reasonable to most citizens and legislators, but it's a very unfair assumption.

The truth of the matter is that more than ever, in some low-performing areas of the country, a lot of students just don't care about their own education. This problem has gotten worse with each successive class and I'm not the only teacher who has noticed it. They don't do their homework, they don't study for tests, they goof off in class, and then, at the end of the semester, they expect to pass. Under these circumstances, teachers have a decision - fail these students, as they deserve, and run the risk of dragging their school's score down and maybe getting it flagged for review (and possibly lose their job as a result of NCLB consequences), or pass these underqualified students to save their own jobs.

For a teacher, this is a no-win situation. You either do your job and get punished for it, or you commit fraud and keep your job, but have the release 50-80 underqualified young adults into the workforce (who you know shouldn't be there) on your conscience. People need to understand that when a teacher fails a student, it's generally not a personal thing and that it is absolutely necessary. We don't fail students because we don't like them; we fail them because they haven't demonstrated proficiency in our class and it's part of our job to decide who is proficient and who is not. If we pass students who aren't up to par, it'd be like a construction worker putting up a wall that he knows won't stand up to a good storm or a doctor giving you a prescription for a drug he knows won't cure you.

[jtdev1]

It's because education has become FOR PROFIT.

same as healthcare.

[stephand]

In most "for profit" industries, cost goes down...

[karek40]

I don't know of any profit industry where cost goes down.