Student Financial Aid News

President Brian Rosenberg of Macalester College writes in an op-ed. From Inside Higher Ed:

Given the enormous demonstrated return on investment, I do not believe that there is anything inappropriate about borrowing toward the costs of college, so long as that loan burden is kept within reasonable limits. At Macalester College, where I serve as president, the total indebtedness from all sources among students who borrow averages, after graduation, roughly $18,800, or about $2,000 less than the sticker price of a Kia Sportage. Neither am I convinced that the elimination of loans is the best way to increase access even to the most elite colleges and universities in the United States.

Commentary

Mr. Rosenberg misses a key difference between a college education and a Kia Sportage.

Looking at the data from the USDA economic research service, the number of students who complete a college degree in metropolitan areas is 33%. For non-metro areas, the completion rate is 19%. Imagine buying a Kia Sportage and having 4 out of 5 be lemons for which you can’t get refunds and any auto loans you took out were due regardless of the condition of the car. Consumer advocates would be screaming at the top of their lungs and no one in their right mind would buy a Kia with a 67%-81% chance that it wouldn’t ever run.

No one says the same about college, yet it has an exceptionally low completion rate given what you pay for it. Failure to complete your degree is not a condition for having your student loans be cancelled, either.

The question is not whether students should borrow loans or student loans increase access to college. Access is only half the equation, if that. The question is, if a student has a choice to spend money on an education versus a Kia Sportage, is the money well spent? At a failure to complete rate as high as 81%, the student might actually be better off with the car. At least they can drive to work, and the Sportage is more likely to not be a lemon for the same dollars.

College affordability doesn’t come from student loans. College affordability comes from a sustained focus on a desired outcome by colleges – a desire to see 100% of qualified students who are enrolled graduate with a degree. Anything else – plush dormitories, the highest paid faculty, the nicest athletic facilities, the best executive conference center – is at best a financial distraction that both colleges and students can ill afford.

What are your thoughts on the value of college compared to a car?

Scholarship Update

Scholarship Points is offering a $10,000 scholarship with a drawing on July 31, 2009. Entry is free and fast.

Details and application here.

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