Hi! Here is an article written this weekend by Dr. Karen Gross referring to your topic for this morning’s College Crisis talk…Please feel free to quote the article or she would be happy to call in…Her direct line is (802)447-6319. Thank you!
susan Biggs, Dir. of Communications.

LOST IN THE RHETORIC OF RECESSION:
THE VALUE OF EDUCATION

By Karen Gross, President, Southern Vermont College

The recession is official, and economic doom and gloom surrounds us. We’ve been bombarded by media stories about the ever-growing cost of education and the bloated salaries of some college and university presidents. We predict a paucity of student financial aid and assume an avalanche of families struggling unsuccessfully to pay for education.

The news adage is working: if it bleeds, it leads. No wonder students and families, particularly fiscally vulnerable families, are worried — we’ve created quite the frenzy.

What’s troubling is that the rhetoric is distorting reality and homogenizing students, colleges, presidential compensation and financial aid. This can lead to unwarranted singular bad-mouthing of higher education. But, more importantly, the current hyperbole can lead to students unnecessarily dropping out of, or delaying entry into, college. That would be a mistake. A big mistake.

We need to stop, take a breath, step back, and look at the facts — which are neither uniformly dismal nor accurately reported.

Federal grants and loans for the current academic year and for academic year 2009 – 2010 do not appear to be at risk. In my state, Vermont, the Vermont Student Assistance Corporation has already indicated that it has funding for federal loans for the current and coming academic year. That is important, good news.

For financially vulnerable families, Pell Grants and Supplemental Educational Opportunity Grants are not being eliminated either, although the dollar amounts of Pell awards could decrease due to the growing pool of needy students. ACG and Smart Grants do not appear to be on the chopping block. There are no indications that federal work-study money is disappearing from the landscape.

The point is this: for students and families who are fiscally vulnerable, there will be ways in the coming academic year to get quality loans and grants to cover a sizable portion of the costs of tuition, room and board at many quality colleges and universities – both public and private.

Here’s another news flash. There are affordable colleges out there, including in the all-expensive Northeast corridor. Some of these institutions (both two and four year) were previously denigrated because people equated lower cost with lower value. Affordable excellence is looking a whole lot better in today’s economy. Long story short: Many students will not be priced out of higher education at quality institutions.

It will be harder, in some cases much harder, for students and families to find the private and often more costly loans to cover the “family share” of education’s costs. It is also true that some parents may be unwilling or unable to take out Parent Plus Loans to pay for their children’s education. It is also true that former “full pay” students will have a more difficult time meeting the sticker price.

Educational institutions will need to work hard to help students and their families fill these gaps in the coming year or two – through increased institutional grants or loans, through new scholarships or loan programs offered by the institution or elsewhere, through unprecedented personalized assistance from college financial aid offices. Some colleges will need to consider spending more of their already diminishing endowments.

Colleges also need to be creative, like offering to make interest payments for parents on certain types of loans while students are enrolled full-time at their institution.

As to the compensation issue: there are clearly some presidents who are handsomely rewarded for their efforts and in this economy, as with corporate leaders, some seem more than a tad out of whack. But there are many presidents who are not over-compensated – just look at published data on presidential salaries (both public and private) in my home state.

It is time to stop the apocalyptic rhetoric.

Judicious borrowing for education remains a wise investment. The data are clear: students with a college degree earn more and lead happier, healthier and more productive lives than their high school compatriots. Over a lifetime, college graduates earn 60% more over than those with a high school degree. This amounts to a differential in excess of $800,000. Most of the employed graduates can repay their debt within a decade of receiving their degree.

But there is more to the argument than increased income streams.

Without college graduates, we will have serious problems insuring workforce development. Our future economic strength depends on an educated workforce, and many of the fastest growing occupations in the nation and around the globe require a college degree. Quality careers in healthcare, criminal justice, education, and information technology all require a minimum of an undergraduate degree.

Education matters. Just read Three Cups of Tea.

Given our economic woes in the US, we cannot afford not to educate our young people. As a colleague recently pointed out, educators are not selling crummy American cars that were not selling in a good economy. What has gotten lost in the fear and debt rhetoric is one simple point: higher education offers real and lasting value; in today’s economy, it is the one investment that holds both power and promise.

Karen Gross is the President of Southern Vermont College, a small private liberal arts college located in Bennington, Vermont. She also holds a position as a Distinguished Visiting Professor of Law at New York Law School where she specializes in consumer finance and over-indebtedness. In addition, she is the past President and CEO of an educational non-profit organization that designs, implements and studies programs to improve the financial literacy skills of consumers. She has served as a consultant to non-profit organizations, including United Way NYC, the Council on Legal Educational Opportunity and the Campaign for Working Families. She sits on several boards, including Vermont Campus Compact, the Bennington County Industrial Corporation, and the Marlboro College Graduate Center. She is also on the Advisory Council of Office of Financial Empowerment, NYC Department of Consumer Affairs.

What is interesting here on the Western KY University world is how the administration “had” a plan to increase enrollment but sacked it due to budget cuts – tuition has been raised and yet the university president received a bonus of nearly $100,000.00 … this certainly doesn’t add up!

I went to college in 1982 and payed $6000/yr how do schools justify today’s prices even with inflation figured in? How could their costs of operation increase so much?

We need private loans to be available for students and not harder to get. This isn’t about living in a bigger home or living in an house versus an apartment. This is about the richest nation in the world educating its populace and training those who will keep this country strong in the future.

What can be done?

Lehman was a huge lender through their CampusDoor company, they never should have been allowed to fold.

Obama should give bailout money to companies specifically willing to extend longterm private student loans.

What about Gordon Gee’s salary at Ohio State University — a pay package worth $1.4 million with the potential to earn $600,000 in bonuses?

American college education prides itself on its non-elitism…that said, consider the difference between the populations of HARVARD and TRINITY COLLEGE DUBLIN. Both of these colleges were founded to educate the PROTESTANT ELITE however the Irish education system got rid of the elitism.

The public should fund most of education costs and recoup them from high earners (perhaps specificly scaled to their personal education). Warren Buffett once offered to fund college for anyone who who would pledge 10% of his (excess?) earnings in return.

Universities want grad programs so they can lure international students to them, who usually pay rack rate.

Study abroad is a gravy train. Full tuition is charged for the credits a student earns abroad. The university provides minimal service for a year, the institution abroad charges a lower amount, and the home school keeps the difference.

There were (3 months ago) 75 schools with endowments over $1 billion. Harvard and Yale’s endowments are larger than the operating budgets of the states in which they reside. The same tax deductible contribution to platinum-plate something at Harvard could do a lot of good at any number of other schools that are hurting.

Meanwhile, schools such as historically black colleges and Universities (HBCUs) have been straining financially for decades.

What about distance learning? Quality education online for lots of students, but colleges shouldn’t have to charge full price if bricks and mortar aren’t involved.

If the University of CT is anything like other national colleges, someone needs to take a serious look at the administrator’s salaries.

In the face of huge budget cuts at these schools, maintaining these administrators, and the perks they receive needs to be adjusted. Teachers and the students need the funding!

As an academic, I think it’s unfortunate that people think that undergraduate education a) is a priori more important than graduate education and research; and b) can subsist in a healthy way separate from graduate education and research. Undergraduates are benefited by being taught by active researchers; also, when a university has active research, that brings attention and grants to the university. Do we want an active intellectual life in this country? If so, we need to support research.

–Sarah Jacobson
Atlanta, GA

Expenses are rising at colleges, but as someone with three children (one in college, the other two knocking at the door), a question I have not heard addressed is the quality of the education provided. Do students leave college capable of the kind of critical thinking required in an increasingly-interdependent world? What percentage of students at any given college are thrown out because they do not meet academic standards that are stated and adhered to? Who can assert ‘quality’ if they cannot identify failure? The curved system of marking may maintain income flow, but does it assure that parents are getting the academic bang for their buck … not to mention creating students who can stand toe-to-toe (which frequently they cannot) with students graduating in many other countries.

It is tiring to see the ‘elitism’ wand waved and cowered-before while the willingness to address what might be ‘dumbed-down’ goes less and less challenged.

Is this money well spent? As a parent, I sometimes wonder.

Has anyone addressed the idea that, finances aside, our entire higher education system is misguided and broken? There has been a large push for a liberal arts education, which is great if you went to Plato’s school or are a trust fund baby, but leaves you s.o.l. if you are expected to support yourself post-graduation.

We are taught that schools exist in order to teach you to think, but who exactly is supposed to train us to do the actual work required once we are no longer walking down those hallowed halls? Why the focus on needing a diploma that is a worthless piece of paper? Why not trade school, technical school, or something that actually teaches our youth how to contribute to society and then philosophical pedagogy on the side?

We already have more Ph.D.s than we do jobs for them. How can we continue to produce them and not produce jobs to use their talents? Not only that, but many companies say they can’t find properly qualified individuals.

Remember, science and research are usually the first areas cut because companies think future technology is a drain on them. If we are to change anything, we need to change this corporate mentality or we are really doomed for failure in this country.

As I caught only the last half of this interesting program, I hope I am not simply repeating what I think is a salient point about higher education governance which explains a lot of the cost increases during the past few decades: A wide swath of four-year colleges and universities are governed by Boards of Trustees which have come to be dominated by business leaders. Although these trustees are nominally appointed by the Boards themselves, in virtually all cases they are functionally appointed by the institution’s president. These days s/he is, as mentioned in your program, almost always the chief fund-raiser, and one of the pillars of successful fund-raising is a Board packed with wealthy and/or well-connected trustees. These trustees, usually coming out of successful business careers, almost universally call for the institution to be run “as a business.” This has had myriad unintended consequences, including an emphasis on marketing over quality, amenities over academics, playing to the artificial ratings systems popularized in magazines, AND compensating the “CEO” who had the great wisdom to recruit these trustees in ways that reflect the U.S. business compensation system which the trustees understand. What may be “peanuts” to a corporate CEO is ruinous in higher education. Although the backbone of U.S. higher education is overwhelmingly “non-profit,” it is now being largely administered as if it were “for-profit.” This comment arises out of my nearly fifteen years of dealing with Trustees at three different colleges, plus chairing a dozen regional accreditation visits.

Back in the 70s when I went to Michigan State University, an economics professor pointed out that college education was good for America because college graduates became taxpayers…

I hear stories of young people trying to get a college education and getting a lot of debt as part of the process. It is one more sad reflection on the lack of morals and common sense that characterizes our culture at this time.

Just because a few people got rich after attaining a college degree doesn’t mean that many people should have to go into debt to get ahead. Its a shame to see parents of young children struggling to get their own degrees and know they will carry debt with them while they try to raise their kids and save money for their children’s college education.

It’s not only a shame, but it is a truly disturbing trend that doesn’t bode well for America’s place in the global economy.

Great choice of music during breaks! (Pink Floyd “Another Brick in the Wall, Pt. 2).

I enjoyed the show. My only quibble is that you offered a lot of gloom and doom but not a lot of helpful advice about how parents (and kids) can plan better so that thy don’t get saddled with so much debt, so that they can maximize their financial aid, and still get a great education.

Part of the strategy is to find the college that fits best…financially as well as academically. Here are some of my own tips for how families can play there cards better.

http://greatcollegeadvice.com/ten-college-planning-tips-for-tough-economic-times/

Thanks!

Karen Gross saying there are government grants and aids means the institutions are relying on others to make college affordable. A fact is that as government grants go up, then colleges know they can raise tuition and do not work to hold down college costs.

Colleges have become educational resorts with luxurious residence halls, lavish recreational facilties, and a broad array of atheletic facilities.

Until people take to the streets, there will be no change. Marie Antoinete’s dismissal phrase today would be: “Let the students watch sports.”

College education should be free if you get in to college.
We now have a generation of students who will graduate with an average of 80 to 100k in debt at graduation.

Gordon Gee’s salary at Ohio State University — a pay package worth $1.4 million with the potential to earn $600,000 in bonuses

This is outrageous and students, parents should be protesting this kind of BS.

My father-in-law teaches at OSU. A week before Gee’s salary and bonus package were announced, he sent out an email to faculty telling them that hard times were coming: budget cuts, stagnant salaries…

All these guys benchmark themselves off of private-sector pay packages; this is why things are getting worse and worse.

That said, I recently heard about a study which suggested that tuition increases were mostly due to investments in infrastructure (property, plant and equipment) not faculty salaries.

I caught your rebroadcast yesterday on the economy downturn and its possible effects on higher education. I wish that I had caught it earlier b/c I would have definitely called in. Much like your last two callers, my concerns are very similar. As a recent “grad”, I too, now am in over 50,000 dollars in student loan debts and counting as interests accumulates.(that’s right 50k) Of course, I am grateful that I received the education that I now have, but it becomes a toss up on what was better. My life pre-college – making ends meet paycheck to paycheck at maybe 8-10 $ an hr living at home with parents but no debt OR post college- same situation making more money but also living pay check to paycheck with an additional 50 k of debt hanging over you- not able to get ahead in this market esp.
I have wanted to continue my education with possible medical or dental school but not only am I looking at the cost and quality of schooling but I am also contemplating our possible health care system that will be changed. Yes, education is always and investment but when your looking at anywhere from 100k – 500k (depending on the university) for tuition and the possibility of implementing a more “socialized medicine” type of healthcare; will I ever be able to get out from under this burden. These are a few among many reasons myself and others are undecided when it comes to furthering our education esp. when we are the sole resource of income.
I have attended both public and private schools and I must say that when compared; the quality of instruction I received was by far better at the two year , community college (where I was charged only 11$ a unit) , yet they did not offer the accredited program I needed. That led me to the private school, thus, my accumulation of debt.(I chose to lessen my debt by commuting and living @home) I also have heard claims that these high tuition costs are to pay not only paychecks but for programs and sites such as my field of interests (clinics). I have to say when a dental student at USC ,( for example* ) is paying 50 k a trimester for 4 yrs and with who knows how many student in a class(100-200?) each , paying that; one might expect the equipment to be top of the line, or at least in excellent condition. I invite you to take a tour and judge for yourself I assure you this money is not going to that clinic…I can go on but I will end my rant there for I fear I will get off on another tangent. Thanks for your time
Undecided

*I did not attend USC; it was an option but too expensive for me, I chose the lesser of the private schools.

And might I add, in the medical/dental community esp. in CA; patients and employers are picky about which university their health professional has graduated from, regardless of your grades, rank, licensure. Brand name is very important to them.

Even though other schools may be accredited and have very high pass rates of boards and licensure. People have to have their PRADA, or Gucci Education.

Unversities were major beneficiaries of the credit/debt bubble, for decades, so that even if they started careful with money in the 1980s, but the 2000s the rule is living high on the hog.

Now that living on credit is ended, just about everyone in the US is experiencing living on less. This same reality will come to lawyers, doctors, bankers, professionals of most stripes, and even….university adminstrators and employees.

The only question is….how quickly will they realize the reality they are facing?

One way for colleges to address their financial problems is to seek new revenue streams.

Dozens of academic institutions nationwide have been exploring the possibility of hosting 55+ active adult communities on or near their campuses. Residents can take advantage of the programs and facilities of the university. They are encouraged to engage in volunteer opportunities both on and off campus.

The college benefits both financially and nonfinancially. It may sell or lease land for the project. In any case it generates recurring revenues in exchange for making its facilities available to seniors. And it may generate donations and bequests from residents—assuming people are treated in a warm and welcoming way.

Campus Continuum, which develops such residential communities for life-long learners, has conducted market demand assessments with four institutions and the results are generally quite positive. [I’m the Managing Director of the firm.] A list of senior communities affiliated with colleges is available at http://www.campuscontinuum.com.

It’s pretty clear this has been a bubble in US higher Ed. The collapse of this bubble will be ugly.

For example, with Purdue, the state government’s funding went up 25% over 9 years (above inflation). During the same period student fees tripled — a 200% increase. Is Purdue’s educational output 3x better than nine years ago? Is it at all reasonable to expect people, who’s incomes haven’t increased on a median per capita bases since 1974, to pay for these increases?

Unfortunately, the panel on this show wasn’t sufficiently critical of the situation. They not only failed to point out it was a bubble, but they had the audacity to ask government to bail out the excesses in higher ed.

The problem with the discussion it that it has been focused on the current market for the colleges but not on how students can best afford college. The answer for students and their parents is to understand the financial aid process before choosing a college in the first place. Here is a link to a page on my website discussing the questions families need to ask of colleges to get the best financial aid possible. http://www.collegeadmissionspartners.com/resources/info-to-know/financial-aid-basics/

Once families understand that they need to be informed consumers, they will be in a better position to find the best college for their academic and financial situation.

The days of big four year colleges is over. We are moving into a time of small, specialized colleges that have a specific focus. Adapt or die.

For years innumerable (and students innumerate — the latter, not our fault), we have been purveying an educational product that made no sense (and I fought the mythos, but the insanity was invincible). OF COURSE, students will migrate to community colleges, now that the luxury no longer can be afforded of courting economic Armageddon for the sake of exposure to pedagogy delivered by professors who are actively punished for each second benightedly devoted to serving their students well, rather than publishing as incessantly as if possessed by the injunction from Thessalonians about when to pray. And where, I’d like to know, have those prodigious sums been going, the tuition moneys that have been escalating at rates that can only be described with exponential expressions? I’ll tell you one place they haven’t been going. Into the pockets of the academicians who do the actual teaching, as virtually any retired professor who’s actually labored in the trenches, and experienced the system of incentives will tell you. More sense would accrue from a policy of hiring professional football players on the basis of their ability to play chess than now emerges from the ideology of hiring and tenuring only teachers to whom teaching is anathema, and devotion thereto to the detriment of grant-grubbing an immitigable disgrace. I will profoundly grieve the loss of any institution and any teacher who falls to the current economic climate, but my God, what *have* we been doing?
–retired, exhausted, and sad as all get-out