Tough-love advice won't pay the cost of college
Barb ShellyPresident Barack Obama has been making the rounds of college campuses, making much ado of some advice his Republican opponent, Mitt Romney, has been dispensing to students concerned about paying for college.
“Borrow from your parents,” Romney said at one event.
Shop around, he counseled at another.
And to one student he cautioned: “Don’t expect the government to forgive the debt that you take on.”
Nothing Romney has said is wrong. Parents with savings can be a great low-interest lending source. Students and families do have to be realistic about the price tag of the schools they choose.
But neither are Romney’s prescriptions especially helpful. Most families have figured out they need to hunt for bargains, scrounge for scholarships and still borrow money from the federal government or a private lender.
Obama has the advantage in this debate because he isn’t averse to proposing government help. He has initiated a tax credit for families paying tuition, an increase in Pell grants and a program that caps monthly federal student loan repayments for some borrowers.
Student debt has entered the political fray because there is so much of it. Its accumulated amount has topped $1 trillion, and stories abound of college graduates indentured by their loan payments.
But not all college debt is created equal, and not all of it is a trap.
Total student debt has mounted not so much because students are borrowing more than they did a decade ago, but because more people are going to college.
Despite the abject failure of state legislatures to uphold their commitments to public colleges and universities, the average debt of someone graduating from a four-year state school is $12,300, according to the College Board. Ten years ago it was $10,700.
A graduate with the right major should be able to find work at a salary high enough to pay off that amount fairly expeditiously. And a college graduate is expected to earn $570,000 more over the span of a working life than someone with only a high school diploma.
The race to get into expensive private colleges has played a bigger role in driving up debt. The costs of attending some of these schools is bumping up against $60,000 a year, and the average debt after four years is $18,300.
A redeeming factor is that graduation rates at private schools are higher than at public colleges and universities, and a degree in hand increases the chances of getting a decent-paying job and whittling down debt.
The biggest driver of student debt is the for-profit sector. This galaxy of universities, career colleges and technical schools educates 12 percent of students who seek education beyond high school, but it accounts for 25 percent of federal student aid. Ninety-six percent of for-profit students take out loans, and more than half of those who graduate from a four-year for-profit college owe $30,000 or more.
For-profit colleges aggressively recruit students with few resources, offer them little in the way of financial aid and too often leave them with no leg up in the job market.
Don’t look to Romney for reforms. He has promoted for-profit schools at a couple of campaign stops.
Obama’s administration has attempted to cut off federal grant money to for-profit schools whose students have poor records of repaying loans. Its efforts have been watered down in Congress and the courts.
But any prescription for the student debt crisis has to start with reining in the for-profit sector.
Pressure from consumers and politicians may serve to rein in the cost of college some. But we won’t be returning to the good old days when a college degree sometimes cost less than the family car.
Practical advice, like what Romney dispensed, is fine as far as it goes. He might want to add the wisdom of investing early in college savings accounts to his list of practical suggestions.
But tough-love advice is no substitute for sound public policy. And on that front Obama is far ahead.
To reach Barbara Shelly, call 816-234-4594 or send email to bshelly@kcstar.com. Follow her on Twitter @bshelly
Phil Cardarella
9 months, 1 week agoBasically, it depends on whether you see an educated public and work force as a national good or not.
In the 1970’s student loans were at 3% — interest deferred until graduation — when CDs were paying 6%. Why? Because the federal government decided that education was as much a part of the national infrastructure as roads and bridges.
Then the Greed Caucus took over. Student Loans were turned over to banks who charged 6-8% compounded interest. Oh, and the feds not only guaranteed the money to the banks, but changed the law so that the loans could not be discharged in bankruptcy. Graduates — and those who gave up without graduating — effectively became the indentured servants of banks, forced to choose careers based on wages, not public good.
Of course, back then states actually provided higher education in their colleges — at little or no cost. (In fact, the Mo. Constitution actually BANS charging tuition at MU.) But, states quit actually paying for state colleges — and charged “fees” that amounted to dozens of thousands of dollars. A few years ago, Harvard would have blushed to charge what MU does now.
I am tired of hearing about how we value education. Horsemanure! If we wanted good teachers in science and math, we would put our money where our mouth is. If we wanted doctors in rural areas, we would pay for the medical training.
If we wanted any of these things, NO ONE would be paying 13% taxes, and oil companies would not be getting the tax breaks instead of families paying for education. Our policies show our values: What we want is greedy billionaires, even if that means a population educated like a third world country.
Oh, and we aren’t doing so well on our roads, either. But, that is of little interest to those who have a private jet.
Phil Cardarella
9 months, 1 week agoOne minor suggestion: There is no such thing as a “for profit” university or college. If it is “for profit” it is a trade school — and barely that.
Such schools should be elegible for federal loans to students ONLY if they have a 85% graduate employment rate.
George Hunsucker
Northland
9 months, 1 week agoYou are absolutely correct ms. shelly, the federal government, as is clearly delinteated in the Constitution, should provide student loans. The private sector should have absolutely nothing to do with providing loans to students. Only the all-powerful, all knowing federal government, led of course by these overpaid bureaucrats, should be the source of college funds.
I repeat my question, is there any program other then defense that you libs would cut ms. shelly????
5 TRILLION more debt, and all you can spout is more government, more government.. what a friggin joke…
George Hunsucker
Northland
9 months, 1 week agoI presume phil is making voluntary donations to the U.S. Treasury since I am sure he pays a very low effective tax rate. Willing to release your tax returns phil????????
Let’s see if you are walking the talk or merely spouting lib BS like a Buffet….
George Hunsucker
Northland
9 months, 1 week agoWhy Pappy, just look at the thousands spent PER PUPIL on public education in KCMO and you will “see” the value of government education.
There can be no clearer example of the failure of public sector unions and government bureaucrats—a dynamic combination….
Kent Mueller
9 months, 1 week agoPhil…you brought it up. Tell us about those tax breaks for the oil companies. You must be the expert since you inserted that in there.
Kent Mueller
9 months, 1 week agoInterestingly, Barb admits that Obama has the leg up because he is willing to give other people’s money away to voters.
Kent Mueller
9 months, 1 week agoPhil, you said “no one would be paying 13% taxes”. What do you mean? Hardly anyone is paying an effective rate of 13% federal income taxes now. Mr. Romney is one of the very few.
The facts from the IRS back that up, so be careful.
Phil Cardarella
9 months, 1 week agoKent:
As you know, dollars are fungible. Lots of folks pay well over 13% in federal taxes — although much is in payroll, not income tax.
It is called “progressive” for a reason: In theory, the more you make, the higher protion of that “more” you pay in taxes. In theory, Mitt should be paying @30% in income taxes, since only a smidgen of his income is subject to payrol taxes (if any) and his actual income would almost all be in the highest bracket. But — unlike a guy who works for a living and is paid a wave — he is allowed to treat the money he made (somewhat disingenuously) as if it were a dividend and it is taxed at only 15%.
Alas, I am in a bracket where my last dollars are taxed far more than Mitt’s — and I have no money hidden overseas sheltered from taxes. I assure you that if I were making as much as Mitt, I would bitch & moan & pay as little as possible. And I would not deserve to be President.
Kent Mueller
9 months, 1 week agoPhil, you are so amazing. What’s up with your giving up being president just so you could “bitch & moan & pay as little as possible”. That’s easy to say, because it means nothing. If you have to pay a certain amount in tax to be president, then that would be the ultimate poll tax, now wouldn’t it?
The tax tables are progressive, Phil. The debate isn’t that, the debate is the degree of progressiveness. And you a mixing taxes when you include the payroll taxes. Social Security has nothing to do with the discussion. Of course, you point out those that pay a higher proportion of their income in those payroll taxes. But, you never mention that the same proportion of their income is used to calculate their benefit. If you want to bitch, then bitch about Romney getting screwed because his Social Security benefit is based on a much smaller amount of his income than the guy you referenced. That would make as much sense as you complaining as you are.
And before you snidely rip Romney for having a foreign bank account, remember that all but the most partisan tax experts said that Romney’s return was not aggressive in tax avoidance. He could have reduced it to close to zero, but he didn’t.
It is true that Romney made enough money that he doesn’t have to work at a wage earning job now. I worry about our country now because there are people like you that think that is a bad thing. You constantly snipe at him for that. Success is not a bad thing, Phil. In fact, that steelworker in the internet ad….he should thank Romney. It is because of when Romney was working that that steelworker had a job for eight more years than he would have if Romney had not been working.
Phil, please stop criticizing success. Success built this country.
George Hunsucker
Northland
9 months, 1 week ago“and I have no money hidden overseas sheltered from taxes”
So phil, where is the proof for this statement?
Also, have you yet made your voluntary donation since you think it is soooooooooooooooooo unfair you don’t pay enough in taxes….
You libs are so transparent….