Although this blog is about personal injury matters, sometimes I can't help myself, and I go outside the strict parameters of the blog. I suppose that's the privilege one has as a "blogger". (No great feat, by the way, as anyone can start a blog.)
This piece is, therefore, slightly off the reservation, but what the heck.
One of the most aggravating issues many families are currently facing is the cost of college education. It aggravates me.
I have three kids. As I write this, my son is a college graduate, my middle daughter is a junior at The University of Pittsburgh, and my youngest daughter is a freshman in high school, who will follow in her siblings’ footsteps’ in a few short years. I am intimately aware of the costs of paying for a college education.
I am, nevertheless, quite convinced that most parents and their children approaching college age and in college have a general lack of understanding of what it takes to actually pay for school. There is essentially no support by the federal and state governments in financing those costs. As a parent, you have two choices: pay out of pocket for your child’s college tuition yourself, or let your child pay for it himself/herself. Unfortunately, they are the only choices most families have. What's more unfortunate is that these choices are often financially unrealistic. Ultimately, many intelligent, hard-working kids may not be able to go to college.
When you take your child to visit schools (typically in their junior year of high school) you tour the schools that are of interest to you and/or your child, usually being led throughout campus in a group of other young, hopeful college students and their parents, often by a cheery and dedicated undergrad. You will invariably be shown the dorm rooms, the athletic fields, gym, classrooms, etc. Cost is not discussed in any great detail, but the information is nevertheless provided by the school in some form and available so that you can throw up on the car ride home. Those costs include tuition, room and board, food, books, transportation and additional spending money for your kid. They will need money for pizza when they finally break for dinner at 11 o’clock at night, between studying for exams. How you and your child are to obtain the resources to fund even the first semester of college is never fully explained.
I was one of those crazy people that set up college funds for each of my kids when they were born, and I funded those accounts. Regularly. That paid off big time. But I still got an education in how to finance a college education when I sought out additional sources of funding, particularly when my first child, my son, was applying to college. Parent Plus loans, Stafford subsidized loans, Stafford unsubsidized loans, HELOCs - this stuff is not for the faint of heart. FAFSA is a ridiculous and confusing exercise of futility, and in my opinion only useful as a tool for the schools to determine what the parent or student can be stiffed for.The FAFSA may be beneficial for some parents or students. For me it was a waste of time.
The amount of money in available loans at relatively low rates is pitiful. Parent plus loans are a rip off at 7.9 percent. HELOC’s are scary, but at today’s low interest rates, they are in my opinion the best deal if you have to borrow. Care in these areas is required. Informing yourself is required. The banks, federal government and Commonwealth of Pennsylvania do not give a hoot about how much you or your child borrows (if they even permit you to borrow), but they do want their money back-- and with interest.
But I am no college financial adviser. I am just a personal injury attorney with an opinion on something that hits home with me.
The cost of college education continues to far exceed the inflation rate. Why? Somebody has to pay for those really nice gyms you saw on the school tour; someone has to pay for the high speed internet access and high tech computer equipment. Don’t get me wrong, I want my kids to have that experience, all of it, and everything that goes along with it. My problem is the rate of the cost of sending your kid to college has to somehow be brought down to earth. It is simply not correlated in any way to the rate of inflation of other goods and services.
Here are the long term problems of our current system of paying for college as I see it. It is a bubble and it will burst. We are living in difficult times, and leaving college with$30,000 in debt is an untenable position for any student, parent or our system of education. The average debt per student is, in fact, much higher for local colleges and universities.
Now for some Q&A....
Q: How can students with that kind of debt upon graduation expect to get a jump on their career of choice?
A: They have to take whatever job they can get. Smart, college grads with tons of debt, working at the local T-Mobile store.. not even as a manager.
What does this say about our ability as a country to create jobs for our young people? How can parents who take on debt for their kids ever see the light of day? Will they be forced to stay in the labor market longer than they and wished to, thus closing the door on a younger job applicant?
Lately the press has started to cover the issue, which is a good thing, but it’s not nearly enough. In my opinion, the federal government and the state governments need to have a good hard talk with college administrators and presidents.
This is from a Wall Street Journal article of December 15, 2012, entitled,
Who Can Still Afford State U?
A number of factors have helped to fuel the soaring cost of public colleges. Administrative costs have soared nationwide, and many administrators have secured big pay increases—including some at CU, in 2011. Teaching loads have declined for tenured faculty at many schools, adding to costs. Between 2001 and 2011, the Department of Education says, the number of managers at U.S. colleges and universities grew 50% faster than the number of instructors. What's more, schools have spent liberally on fancier dorms, dining halls and gyms to compete for students.....For generations of Americans, public colleges and universities offered an affordable option for earning a college degree. Now, cash-strapped states across the country are cutting funding for colleges and directing scarce resources to primary and secondary schooling, Medicaid and prisons. That is shifting more of the cost of higher education to students and their families.
Writer, Susan Gregory Thomas, recently posted this in Philadelphia Magazine (January 2013), and it is hard to disagree with this point:
Does the very abundance of student loans encourage colleges to raise tuition? To compete with other schools, do colleges need to have the newest facilities, best technologies and labs, the biggest libraries, the best presidents, scientists/ engineers, professors and coaches?
Are there other choices? Well the European model is a bit different than ours.
This is from an article entitled The Costs Of Higher Ed, from The Philadelphia Inquirer, Tobias Peter, December 9, 2012:
College students in Germany won't be going into debt too deeply for their education any time soon. Consider the mass protests that erupted on campuses when several German state governments called for the end of free tuition. [The protestors claimed that] education is a human right, it should be free to everybody.The protests were largely successful, with only two out of 16 German states still charging tuition - roughly $650 a semester.
Germany is not unique on the costs of college. Finland and Denmark offer free tuition, and other countries charge only about $1,000 a year. In contrast, tuition in the United States can cost tens of thousands of dollars - and costs have been rising in recent years. Of course, education isn't free. Someone is paying those bills in Europe. But the approach of European countries and of the United States couldn't be more different. In continental Europe, it is much more accepted to regard government as a supplier of public goods - and to pay for this service.
An opposing view on free tuition, one that is common in the United States, can be summed up by Mary Ellen Jones, a small-business owner and tea-party member from Delaware County, who was quoted in the same article.
That's just European socialism. I worked hard all day so that I could pay for the college I attended in the evening, and everybody who really wants to have an education can just do the same...Why should I pay with my taxes for other parents' children to go to college? That's crazy.
I asked my intern, Tiffany Leitz, currently a junior at Temple University, what she had to say on this subject. I thought it would be interesting to hear the opinion of someone who is directly involved with and affected by the U.S. education system. Here's what she said.
This view (Jones) is understandable-- to an extent. It is true that the U.S. is not a socialist country, however, when it comes to something as important as solidifying a purposeful and successful future for this country by ensuring higher education opportunities for our youth, maybe talk of change is necessary. As a country that aims to continually move in a better direction, we should be open to this discussion, as the necessity for change in education has become a glaring issue and it’s clear that this subject will have a prominent impact on the shaping of the United State’s future. What’s even more clear is the fact that more and more families are unable to afford the rising costs of college tuition. This means less college educated members of society in the next generation of the workforce. The U.S. as a whole should be investing in the future generations that will lead our country, not stifling them and any hope of a flourishing economy. Maybe Ms. Jones would feel differently on this subject if she had the opportunity to attend college at a more affordable and reasonable rate.
Now, getting back to the article..
'A country's economy benefits from as many people as possible having a good education. That's why some governments consider it worth paying for everybody's college education. It's not all about tuition or public money. A university like Harvard can rely on the assets of a huge foundation, and this is a concept that other countries should pick up and follow, too.' Hans-Dieter Daniel, a professor at the University of Zurich, who believes foundations allow universities to operate more independently, making it easier for them to organize and sustain world-class research.
When it comes to alternative means of financing, European schools can learn from their U.S. counterparts. The reliance on public funding might be one reason there isn't a German Harvard. In a World University Ranking, Germany's top school, Technical University Munich, places 53. The United States offers a wide range of schools, from community colleges up to the Ivy League. In Germany, public universities vary in size and areas of expertise, but they are similar in terms of quality. There are a few private institutions that charge a modest tuition, but they are not considered better than public schools and, as a result, find it hard to attract students.'We want to offer the same high standard to everybody who is attending our universities. 'Rossman. [Protestors like] Katharina Mart insist that offering should be free. She is already preparing new protests against the last two governments in Germany that are charging tuition, organized around next year's elections. Other state governments have already lost elections when tuition was on the agenda.
The American system, which is supposed to promote freedom and opportunity, leaves students with thousands of dollars in debt. Mart questions:'That's not a way to start a life. How are they supposed to build a house, to support a family?'
Is the U.S. Congress going to help anyone anytime soon? Doubtful. Wall Street Journal, Push To Gauge Bang For Buck From College Gains Steam, Ruth Simon, February 12, 2013:
U.S. and state officials are intensifying efforts to hold colleges accountable for what happens after graduation, a sign of frustration with sky-high tuition costs and student-loan debt.Sens. Ron Wyden (D., Ore.) and Marco Rubio (R., Fla.) are expected to reintroduce this week legislation that would require states to make more accessible the average salaries of colleges' graduates. The figures could help prospective students compare salaries by college and major to assess the best return on their investment.
Nice gesture, but more needs to be done.