Published tuition and fees at private, nonprofit colleges rose 3.9 percent for the 2012-13 academic year, the lowest increase in four decades, according to the results of a tuition survey released on Thursday by the National Association of Independent Colleges and Universities. In recent years, private colleges’ tuition increases have hovered in the mid-4-percent range, the association found, and this year’s increase is the lowest since the 1972-73 academic year. Meanwhile, student aid at the colleges increased by 6.2 percent, slightly less than last year’s increase of 7 percent. The survey was based on responses from 445 of the association’s member colleges.
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Many Colleges’ Net-Price Calculators Are Still Hard to Use, Report Says
Nearly all colleges that receive federal student aid have been required to publish net-price calculators on their Web sites since last October, but a year after that rule took effect, many of those online tools are still difficult to use, according to a report released on Wednesday by the Institute for College Access & Success.
The report, “Adding It All Up 2012: Are College Net Price Calculators Easy to Find, Use, and Compare?,” examined 50 randomly selected colleges’ calculators and found that nearly a quarter of the colleges lacked a link to a calculator on their financial-aid Web sites. Three had no calculators at all. The number of questions each calculator asked also varied greatly, from eight to about 70.
The report offers a series of suggestions to improve the tools that echo those proposed in the group’s early look at net-price calculators. The report recommends that colleges limit the number of questions and keep them simple.
The deficiencies outlined in the report could explain why, in a recently released poll of students, only 35 percent of college-bound high-school seniors said they had used a net-price calculator as they considered colleges.
13.4% of Students Defaulted on Loans Within 3 Years of Repayment, U.S. Says
More than one out of eight student-loan borrowers who entered repayment from October 1, 2008, to September 30, 2009, defaulted within three years, the U.S. Education Department announced on Friday as part of its first release of official data on cohort default rates for federal student loans measured over three years.
The new figure on overall default rates, 13.4 percent, was released as the department switches from measuring the rates over three years instead of two. For-profit institutions had the highest average three-year default rates, at 22.7 percent, which was more than double the 11-percent rate among public institutions. Private, nonprofit institutions had an average three-year default rate of 7.5 percent.
The department also announced that two institutions—the Centro de Estudios Multidisciplinarios, in San Juan, Puerto Rico, and Tidewater Tech, in Norfolk, Va.—faced possible sanctions for having two-year default rates of 25 percent or more. Unless they bring successful appeals, those institutions stand to lose their eligibility to participate in federal student-aid programs.
No institutions will face sanctions based on the new three-year rates until three years of data have been collected, though institutions with rates of 30 percent or higher must create a default-prevention task force and submit a management plan to the department.
The department said 218 institutions had three-year default rates above 30 percent, and 37 institutions had three-year default rates higher than 40 percent.
For more, see this article, with data, from The Chronicle.
Nearly 1 in 5 Households Owe Student-Loan Debt, Report Says
Nineteen percent of households owed student-loan debt in 2010, and that debt burden is greatest at the bottom of the income scale, according to an analysis released on Wednesday by the Pew Research Center’s Social and Demographic Trends Project. The analysis uses data from the Survey of Consumer Finances, which is conducted every three years and is sponsored by the Board of Governors of the Federal Reserve and the U.S. Treasury Department.
The report says that the percentage of households with outstanding student-loan debt increased to 19 percent in 2010 from 15 percent in 2007. Among households that owed such debt, the average outstanding balance increased to $26,682 from $23,349 over the same period. Forty percent of all households headed by someone under the age of 35 owed student-loan debt, which is the highest share among any age group, the report says.
The analysis also found that the increases in debt were greatest at the highest and lowest extremes of the income spectrum. “While those at the upper end of the income scale are more likely than others to owe student-loan debt, when one considers the resources that households have at their disposal to meet their debts, the relative burden of student loans is much greater for those at the lower end,” the report says.
Senate Passes Stopgap Spending Measure, Lawmakers Leave Town
The Senate finally approved a stopgap measure to pay for the government’s activities for six more months in the wee hours of Saturday morning, and lawmakers went home, The Washington Post reports. After a procedural vote delayed the work that a bickering Congress hoped to finish on Thursday, the Senate approved, 62 to 30, a measure to pay for the government beyond September 30, the end of the fiscal year, avoiding a government shutdown right before the election. Although the original Senate version would have restored a pathway for students without high-school diplomas to receive federal aid, and the House version would have prevented the Department of Education from enforcing the gainful-employment requirement of the Higher Education Act, those provisions were absent from the compromise that was passed and will have to wait until Congress resumes after the election.
Children’s Earning Potential Matters More Than Choice of Major, 38% of Parents Say
Thirty-eight percent of parents with children who are planning to attend college believe their children’s earning potential after graduation is more important than which majors they choose in college, and 32 percent believe those two factors are about equally important. Those findings are among the results of a survey released on Wednesday that was commissioned by Discover Student Loans and polled 800 adults with children 16 to 18 years old who are planning to attend college. The survey asked about issues including the cost and importance of a college education. Eighty-one percent of parents said college is very important to their children’s future, and roughly half said cost is a very important factor in selecting a college.
Is a College Education Really a Bad Deal?
The theory that higher education may be a bubble on the verge of bursting is in the news again this week, courtesy of a Newsweek cover story by Megan McArdle. In the piece and in the video above, Ms. McArdle argues that while college is still a good investment for the average student, it’s a riskier bet for students on the margins, who could end up “worse off than they were before they set foot on campus.” In a follow-up blog post, she sums up the story by concluding, “For a lot of kids the system works fine, but it’s definitely not working for everyone, and with budgets tightening everywhere, we need to think hard about how, and why, we invest in college.”
Several commentators have since tried to poke holes in the bubble theory that Ms. McArdle describes in her story. Here’s a look at what they’re saying.
Newsweek Cover Story Lacks One Thing: Evidence — So argues Justin Wolfers, a high-profile economist at the University of Michigan at Ann Arbor. He called some of Ms. McArdle’s numbers on student debt “alarmist.” The Huffington Post
The Necessity of a College Education — Felix Salmon agrees that college price inflation is a reasonable thing to worry about, but argues that the lifelong cost of not going to college is even greater. Reuters
Why College Isn’t a Bubble — A close look at the data reveals that the bubble theory is a dubious proposition, writes Jordan Weissmann. The Atlantic
The Lousy Investment? — Daniel Luzer calls Ms. McArdle’s framing of the issue “a very strange way to look at the purpose of higher education.” Washington Monthly
College is Still a Great Investment, But It’s Getting Worse — Unless increasing tuition costs are brought under control, writes Dylan Matthews, the return on a college education is going to keep falling. The Washington Post
The story has also sparked some buzz on social-media channels. Herewith, some samples of the feedback, in 140 characters each.
Wondering how many Newsweek/Daily Beast staffers will sagely advise their children to skip college: thedailybeast.com/newsweek/2012/…
— N’Gai Croal (@ncroal) September 10, 2012
Things that make me cringe in #HigherEd reporting: 1) The Higher Ed Bubble and 2) Calling college students “kids” thedailybeast.com/newsweek/2012/…
— Rachel Fishman (@higheredrachel) September 10, 2012
Climbing wall metaphor is tired and untrue, but most points here are good.Bloated administration esp. thedailybeast.com/newsweek/2012/… via @newsweek
— Jaremey McMullin (@jaremeymcmullin) September 11, 2012
Justice Department Files Complaint Against Career-College Company
The U.S. Department of Justice has filed a complaint in a whistle-blower lawsuit brought by six former employees of a Texas-based chain of career colleges who allege that the company misrepresented its job-placement statistics in order to remain eligible to receive federal student-aid funds. The company, ATI Enterprises Inc., operates technical- and career-training institutes in Texas and three other states. In a news release describing its complaint, the department outlines a series of fraudulent recruiting and reporting practices that it alleges occurred at three ATI campuses, in Dallas and North Richland Hills, Tex. The department contends that company officials knowingly engaged in those practices “in order to induce students to enroll and thereby increase the school’s receipt of federal dollars at the expense of students, who incurred long-term debt, and the taxpayers.” The Texas Workforce Commission revoked licenses for several of ATI’s programs at the three campuses last year.
Many Families Don’t Consider the Full Cost When Saving for College, Study Finds
Many parents fail to consider the full cost of college attendance when making plans to pay for their children’s higher education, leaving them on track to attain just a fraction of their savings goals, according to the results of a study released on Wednesday by Fidelity Investments. The sixth annual study found that only 31 percent of parents with college-bound children took the full cost of attendance into account. On average, the study found that parents planned to pay 57 percent of their children’s college costs, but the typical family will meet only 30 percent of those costs. Forty-two percent of parents with children already in college or starting college this fall have also encouraged their children to select a particular major in the hope that it might lead to a higher-paying job after graduation, the study found.
Law-School Tuition Still Rising Despite Drop in Demand, Report Says
Despite the recent decline in demand for legal education, the average tuition rates at law schools this fall will rise by more than double the rate of inflation, according to an analysis of published rates by The National Law Journal. Among private law schools, average tuition will increase by roughly 4 percent over last year, to $40,585, the first time average private-school tuition has surpassed $40,000. At public law schools, students who are state residents will see an average tuition increase of 6 percent. The Law Journal noted that this year’s average increase for private-school tuition is one of the lowest annual percentage increases in 33 years.
