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The College Debt Crisis Leads To A New Way to Make College Calculations

Teens and their families put a lot of time and energy into the college process: searching for schools, identifying which ones seem like a good fit, visiting, applying, and worrying. I’d be rich if I had a dollar for every hour devoted to pondering my kids’ chances of getting into their dream school. It’s an exercise in futility trying to calculate whether an admissions officer will add together grades, extracurricular activities, essays, and service projects and come up with a result that ensures acceptance.

Part of this fervor lies in the belief that certain colleges may just be the ticket to future happiness and success on a professional and a personal level. There are many who feel that the cost of college, no matter how high, is worth it. And universities have gone out of their way to glorify the idea that a diploma with their institution’s name on it is worth the debt a student might incur to earn it.

The College Debt Crisis

It’s not a secret that college has become increasingly expensive. By the time tuition, room and board, books, and other expenses have been tallied, a year at a four-year private university can cost upwards of $50,000. A student attending an out-of-state public university will pay around $40,000, and if they opt for an in-state university, that may get as high as $25,000.

Students take out college loans with the assumption that they’ll land a job upon graduation that will enable them to repay their debt. However, an article in the New York Times points out that there are particular programs at colleges that leave graduates unable to pay back their loans. This is a problem for the student, the college, and the money lender.

Currently, the Higher Education Act tracks how many borrowers repay their loans at each college. If too many students fail to pay their debt, the college is no longer able to receive federal funds. This legislation serves as a way to protect students from colleges that do not deliver on their promises.

Breaking Down Debt Based on College Degrees

In an effort to better evaluate colleges and universities and to do something about the one million people who default on their college loans every year, the Department of Education recently released a new set of information. The goal of this data is to reveal the debt incurred by graduates of different programs at each college in the U.S. In other words, rather than report the average earnings of all graduates, the report breaks the numbers down according to each program of study within the college or university.

Two key findings could prove to have a significant impact on the college-decision process. The first finding is likely no surprise to parents: graduates earn vastly different incomes depending on their degree. For instance, the Times article points out that social workers make less than engineers regardless of what school a student attends. If you go to Harvard and earn a degree in social work, you are still going to earn less money to pay off your Ivy League debt than your roommate who graduates with a degree in mechanical engineering.

To this end, the second finding reveals a truth that many of us also suspected: what you do for a living is a bigger determiner of income than where you get your degree. According to the Times, there is a bigger difference in graduate earning power when we compare the programs within each college than when we compare similar programs between colleges.

How Will This Information Impact College Decisions?

Legislators and the Department of Education hope that this information about specific programs will cause a shift in how we look at higher education. Recognizing that attending a prestigious university will not automatically lead to a high salary, students and their families can make better informed choices by evaluating programs based on loan repayment rates.

Certainly, it makes sense to carefully consider what one’s potential earnings will be upon graduation and use this information as a guide—especially if a student knows what field they want to go into. For instance, the Times article’s claim that a systems engineer who graduates from University of Virginia will earn double that of an environmental studies major from the same university could influence the college choice of a student who wants to study climate change. Why take on so much debt at a prestigious university if your degree and ensuing job will make it hard for you to repay the loan you take out?

Politicians like Senator Lamar Alexander, Chairman of the Senate Education Committee, hope that holding colleges accountable in this manner will motivate institutions to not only lower tuition, but to also provide support for graduating students to find jobs that will allow them to repay their loans.

This information provides a more detailed lens with which to evaluate the college experience, but it remains to be seen whether it’s enough to shift the focus away from a college’s reputation, a factor that seems to permeate the process for so many students. For now, this is only a starting point, and it’s certainly one worth considering.

There’s Always More to the Story

It’s important to recognize that all data has its limitations. In the case of this program-specific reporting, the data measures earnings immediately upon graduation. As the Times article points out, there are certain areas of study, such as liberal arts or the humanities, that don’t lead to immediate payoffs. It’s too simplistic to judge the value of a program based on a graduate’s first job. Most of today’s college graduates will have several jobs over the course of their lifetimes and there are many professions that require entry-level experience in order for employees to work their way up the ladder.

So what does all of this mean for teens and their parents who are researching colleges? That depends.

It’s good to have as much information as possible before making a life-changing decision and this information adds to the college choice conversation. But while being able to get a job after graduation is important, it’s not the only purpose of a college education. You can’t measure all of the benefits in terms of dollars that the right college experience can offer. The personal value of those intangible qualities and experiences will always remain an individual, but no less important, factor in leading a happy and purposeful life after graduation.

Jody Podl


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