Monday, December 5, 2011

Making College Affordable - Time to Speak Up

I’ve been reading a lot about the cost of college lately. The talk these days is often about how to improve transparency. Thanks to a recent government mandate, families can now go to the website of any federally funded college and try out the school’s Net Price Calculator. This new online tool will ostensibly help families and students estimate their out-of-pocket costs for a college education. That’s the good news. Yet, net cost naturally leads to a conversation about how middle and lower income families will come up with this elusive figure which is still far beyond many family budgets. In fact, Education Secretary Arne Duncan asserts that three-quarters of all Americans believe college is too expensive for most people to afford. The fact that none of this has dampened the year-over-year rise in applications is indeed mind-boggling. Even Penn State’s applications are up this year, but that’s a topic for a different post.

College has become so far out of reach for so many families that last week Mr. Duncan implored higher education officials to make college costs an urgent priority and asked that they think creatively about ways to address this profound issue for our college-going population. Meanwhile, students and families still reach for the golden ring to attend expensive and elite four year colleges, often putting themselves in debt beyond their probable ability to repay. The most recent statistics on student debt show that seniors are graduating with average loan balances in excess of $25,000. Some of this is eligible for Obama’s income-based repayment plan for federal student loans, but more and more students are forced to borrow private loans to close the gap. Interest and principal on these loans will have students repaying their student obligations for much of their adult lives, perhaps forcing them to forego or postpone putting a down payment on a home or making contributions to retirement funds. Forget about funding their own children's education.

Today the Chronicle of Higher Education published a special report, What Private College Presidents Make, which shows compensation for the leaders of our nation’s colleges and universities, and also compares the president's salary to each institution’s pay scale for its faculty. At some, not all, the gap is staggering, not unlike the discrepancies we find on Wall Street. The report is quite timely given Mr. Duncan’s remarks last week. While cutting college chief executive pay won’t in and of itself make college affordable, focusing on leadership compensation seems like a great place to start. Suffice it to say that not nearly enough has been done to stop this runaway train so that we, as parents, are not further mortgaging our own futures and watching our children do the same.

We read about the steady rise in student loan balances and defaults each year, but nothing concrete has really been done to stem the rise of what will, without a doubt, be our next sub-prime crisis. I think about this everyday as I advise families on paying for college. For many it is not really a question of whether the funds are accessible; lenders are still eager to make student loans, and there is an even more tenuous link to affordability than there was in sub-prime mortgage lending where presumably some collateral existed. It is all too easy to hide our heads in the sand and hope that miraculously our children will be able to repay the loans when the time comes and still be able to live the American Dream.

I am not suggesting that everyone go to the nearest computer and sign the Occupy Student Debt Campaign online petition which calls for student debt forgiveness, free public education and greater transparency at private colleges. However, this product of the Occupy Wall Street movement has prompted me to think about my own responsibility to my children and to the families I advise. For the first time, I am encouraged to write to my representatives in Washington and ask that they make college affordability for all students a priority. I am hoping that I can persuade others to do the same. I look down the road and wonder what will happen when college is only accessible to the truly privileged in this country while the majority is saddled with student loans they will never be able to repay. The image is painfully clear and I'm not liking what I see.