New Data On Whether College Is Worth The Debt

MS. DIANE REHM

10:06:53
Thanks for joining us. I'm Diane Rehm. In this graduation season new data suggests a college degree has never been more valuable, but many recent grads, burdened with debt, will struggle to find a good job. Joining me to talk about the value of a college degree, new proposals for college rankings by the federal government, and whether some levels of higher education are worth the debt, David Leonhardt of The New York Times, education policy expert Vince Sampson, Nina Marks of the counseling firm, Collegiate Directions, and Dan Porterfield, president of Franklin and Marshall College.

MS. DIANE REHM

10:07:38
I invite you to be part of the program. Your comments, your questions are always important to us. Give us a call at 800-433-8850. Send us an email to drshow@wamu.org, follow us on Facebook or send us a tweet. Welcome to all of you.

MR. DAVID LEONHARDT

10:08:03
Thank you.

MR. VINCE SAMPSON

10:08:04
Thank you.

MS. NINA MARKS

10:08:04
Thank you.

MR. DAN PORTERFIELD

10:08:04
Thanks for having us.

REHM

10:08:05
Good to have you here. David Leonhardt, where is this data coming from? What does it tell us?

LEONHARDT

10:08:12
So there are two sets of data here. The first comes from the Economic Policy Institute, which is a left-leaning research group here in Washington that takes a look at wages by education level and what you see when you look at this data -- but it's true when you look at any data. So the particular data set doesn't matter that much -- is that the gap between what college graduates earn and what everyone else earn has reached a record high.

LEONHARDT

10:08:36
And I think it's important to say there's nothing inevitable about that. It's not like the price of lettuce, that we should expect, that goes up over time. If we were producing too many college graduates, the gap -- the difference between what they earn and everyone else would shrink. It's supply and demand. If we're not producing enough, the gap between what college graduates earn and everyone else earned would grow. And that's what we're seeing.

LEONHARDT

10:08:55
We're seeing this continued growth. That doesn't mean everything's great for college graduates. We've had 15 years of a bad economy. So they are suffering like everyone else. But for an individual, the choice is not do you have to live in this economy or not. You don't get to choose. The choice is do you go to college or not. And the value of a degree seems to have never been higher than it is now.

REHM

10:09:15
And, Vincent Sampson, I gather we've reached kind of a record as of last year.

SAMPSON

10:09:23
I think that's right. And, you know, one thing that we notice when we look at education and -- from a policy perspective, it hinders on light foot -- if you grafted it out there'd be macro scale and a micro scale. And at the macro level I think the data is absolutely right. I think David's right and I think other commentators are right, that the value is significant. I think the value proposition changes as you go down. And when I think about -- when I say that is when you think about an individual and how they look at how they value a college degree, that is a very subjective decision.

SAMPSON

10:09:58
And one thing that I think is fascinating about this point in time, as we, you know, hopefully, emerge from the great recession and people are evaluating higher education in a new context, we've got a much smarter higher-education consumer than we had 15, 20 years ago.

REHM

10:10:15
Smarter in what sense?

SAMPSON

10:10:16
Smarter in the sense that they're starting to better understand what the investment is, you know, what, what type -- what aid means, what the value of a loan is, but more importantly they're starting to take a look at what the higher education degree means. And what we're also seeing is new disrupters in the space. Education technology is coming in. We're seeing people offer different types of degrees, which is, again, changing that value proposition. And that's a word I probably will -- hopefully not overuse, but I think it's one that's very important as we have this conversation.

REHM

10:10:51
And to you, Dan Porterfield, David Leonhardt mentioned the supply and demand side of this. Is that how you see it?

PORTERFIELD

10:11:03
Well, I think that the responsibility of every college in America, to make sure its students provide a high value education and are well prepared for professional, academic and personal opportunity after college. Every single school should be doing that. There's not one single way to create value for our students and our society, but every institution should be intensifying its effort to make a college education count.

REHM

10:11:30
And make it worth it, but are you following students after they graduate?

PORTERFIELD

10:11:38
Yes, we are. And I'd say there's three things that have to be brought together around the idea of value. First, let's make sure that our pricing is fair and that we have very ample financial aid, with reduction of loans. Secondly, let's make sure the education we offer is very high-quality. Lots of direct faculty student interaction. Lots of opportunity for internships. Tremendous campus environment for learning outside of class.

PORTERFIELD

10:12:07
And third, at Franklin and Marshall College we've also collapsed our traditional career center into a much bigger office of student and post-graduate development that helps students, A, focus on choosing courses and choosing a course of study that will prepare them for life after college. B, helps them prepare to compete for opportunity when they're juniors and seniors. And, C, provides free career coaching to students the first five or six years after college, as they transition from job 1 to job 2 and build their professional trajectories. And all three of those commitments should come together at every institution.

REHM

10:12:46
And yet, Nina Marks, what we're reading, what we're hearing is that many graduates are accepting jobs for which they are over-qualified, simply to earn something of a living.

MARKS

10:13:05
That's right. That's an enormous problem. The even greater problem is for the students for whom going to college is the biggest game changer, which is our low-income population. The students with whom we work at Collegiate Directions, average family income $34,000 for a family of four. And what we see is that those students who beat the odds and actually matriculated a four-year college, which is an extraordinary endeavor, only 11 percent of them graduate in six years. So they…

REHM

10:13:38
In six years.

MARKS

10:13:39
In six years. They graduate -- if they graduate, they graduate burdened by debt, but at least they have a degree. The worst situation is no degree and tons of debt. And we have an enormous problem. It's not just low-income students, mind you. Our overall college graduation rate in this country leaves much to be desired.

REHM

10:14:01
Vince?

SAMPSON

10:14:01
And I think the important point there is less the debt, but more the completion. Right? I mean, I think focusing and getting students to understand at the earliest possible phase that completing college, completing a degree is the most important part, will put that debt in perspective. I know that there's been a lot of talk about the trillion dollars of student debt.

REHM

10:14:28
Right, right.

SAMPSON

10:14:28
Which is a number that is interesting, but I don't think it's telling. Right? I mean, because I think, David, in your piece you talk about the average debt per student, which is a little bit more relevant, but we don't want to scare students away from taking on debt, responsibly. That can be a loan, that could be -- and it can be a loan from a lender, it can be loan from Uncle Lou, it can be whatever, but scaring students away from making a personal investment because we've told them that it's not worth it or we shower them with these large numbers, I think is a disservice to higher education.

REHM

10:15:03
Well, and of course that trillion dollar debt is burdening the overall economy, as well. But there was a new study forwarded to me today, from the Chronicle of Higher Education, saying that two years on, two-thirds of the graduating study -- the graduating class from a study at the University of Arizona are not financially sufficient. So indeed it does come down to the individual student, but being in debt two, three years on and not being able to support oneself without the help of parents, without the help of additional loans, that does burden the entire economy, David.

LEONHARDT

10:16:01
It does. And I think the fact that we have a lot of people in their early 20s or mid 20s who are struggling is a reflection of how bad the economy has been. I mean, we had a very weak expansion last decade. We had a terrible financial crisis. And now we've had a disappointing recovery. And so the struggles that people are having are real. I think it would be a mistake to put too much weight on the short-term struggles of college graduates.

LEONHARDT

10:16:24
The fact is the unemployment rate for people with four-year degrees between the ages of 25 and 34 is 3 percent. That's extremely low. It's not what you guess -- to be self-critical for a minute -- from reading the popular press. You would think it was much higher.

REHM

10:16:38
But do we know what kinds of jobs those folks are in?

LEONHARDT

10:16:42
Well, we know the pay gap between college graduates and everyone else is at an all-time high. Right? So if what we saw was massive underemployment of college graduates, relative to everyone else, that gap would be shrinking. And it's not. Again, I don't want to say that college graduates are doing fine. Because the economy is in such bad shape. But relative to everyone else, college graduates continue to do really well. In fact, the gap is growing.

LEONHARDT

10:17:04
Perhaps my favorite article on this subject was several years ago by someone named Kevin Carey, who's now at the New America Foundation. He wrote it in The New Republic. And he did something fairly brilliant. He went back and found the people who had been quoted in newspapers during the recessions of the early '80s, the early '90s and the early 2000s. The unemployed college graduates who had been quoted back then. The 23-year-old who was looking for work. And he found out what -- how they were doing now.

LEONHARDT

10:17:29
They were all to a one doing very well. The idea that they shouldn't have gone to college because they were unemployed at 23 would have been a life-altering and damaging decision for them. So I don't want to dismiss the struggles of people in their early 20s. I've graduated from college without a job. It is not fun. On the other hand, to say that people in their early 20s with college degrees are struggling is often stated as a "Well, maybe they shouldn't have gone to college." And I think that implication is almost always wrong.

REHM

10:17:58
So why do you think these studies are all coming out now, bunched together and sending, maybe, exactly that message?

LEONHARDT

10:18:09
Two reasons. One, the economy really is bad and people are frustrated. And it's been bad for a long time. So the reason the gap between college graduates and everyone else has grown is because college graduates' pay has gone up just a tiny bit and everyone else's pay has fallen. That's really frustrating.

LEONHARDT

10:18:22
And the second thing is what we've all been talking about, which is going to college and graduating with $25,000 in debt, which is the average debt for a four-year graduate, that's fine. Going to college and getting $15,000 or $20,000 in debt and not getting a degree, that's terrible. And that is a real problem.

REHM

10:18:37
David Leonhardt. He's managing editor of The Upshot, a New York Times website covering politics. Short break. We'll be right back.

REHM

10:20:00
And welcome back. I'm sure we're going to hear from lots of folks. Going to read you this first email from Jeff in Walpole, N.H. who says he has a BA from a private liberal arts college dating back to 1971. "Fast forward," he says, "30 years for my son's education at a similar college. It required student loans, his mother taking a fulltime teaching position plus a small amount of family debt. When I now consider my grandsons I am blown away by the current costs. I don't know how it will be accomplished. The only plan I can think of" -- and this is pretty extreme -- "the only plan I can think of," says Jeff, "is to die so my life insurance estate can do the heavy lifting."

REHM

10:21:07
I mean, that is the fear out there that the cost of college -- what is it now per year per -- it's about $50,000 at some of your higher ranking colleges.

LEONHARDT

10:21:24
Well, that's the list price but the fact is most people pay vastly less than that, right. At a public college, what is the average, $10,000 a year?

PORTERFIELD

10:21:31
Yeah. Well, and at Franklin & Marshall College we have such a robust financial aid policy that we discount 45 percent of the incoming students...

REHM

10:21:41
And many colleges do that now, don't they?

PORTERFIELD

10:21:44
Yeah.

REHM

10:21:45
Yes. But nevertheless, the concern of going to a private college is something else again, Vince.

SAMPSON

10:21:54
I think that's right. I mean, that fear is real. It's repeatable. It's been fanned by a lot of stories and discussion. But I think, you know, the services and the counseling that folks like Nina provide is helpful because we just talked about it here, right, sticker price versus real price. And I think as I talked about a more educated consumer, it's not just about, you know, looking at the school that you went to and that your children went to and your grandchildren went to. And then trying just to, you know, add in your head this increase at the double the rate of inflation story that you hear. We really have to understand how that pricing works.

SAMPSON

10:22:38
And I think it's incumbent upon all of us who participate in higher education at the policy level or at the practical level to continue to educate folks to make them more aware of the real costs.

REHM

10:22:49
Okay. But we do have to, Nina, factor in not only rising tuition costs which have far out -- exceeded any kind of inflation elsewhere, but also the rates on student loans are rising. So how do you counsel young people who are considering taking on all this debt? And 25 to $30,000 as a debt sounds pretty reasonable but I hear much higher debt involved.

MARKS

10:23:29
I think there are two issues. One is, who's informing the judgments that the student is making. It's very difficult if you are not an educated consumer to understand actual college costs. With due respect to Dan and his colleagues across the country, it isn't always transparent. And even if it were transparent, our most needy people, the people whose parents did not go to college themselves, but even those who did like Jeff, understanding what a college actually costs is tricky.

MARKS

10:24:06
Also, who then is advising the student on not just a financial fit but also an academic, a social, a personal one? We find you have to do this early and often, Diane. You can't do it at the point at which most families make these decisions, which is way too late. They haven't thought about the colleges that are the right fit for them, not just in cost but in post matriculation support, retention, graduation rates. And some of the proposals in the new rating system, I have to say from our perspective, makes sense.

REHM

10:24:46
You know, it's interesting, Senator Elizabeth Warren was on this program just a couple of weeks ago. And she said in a statement earlier this month that exploding student loan debt is quote "crushing young people and dragging down the economy." The Fed Reserve Bank of New York issued a report in early May showing that in the 27 to 30-age category, 22 percent of those without student debt had mortgages one point higher than those paying back college loans. She wants to see the congress do something about not only the cost of college, but also student debt, David.

LEONHARDT

10:25:51
I think some of the fears about student debt are exaggerated. I really do. I think, again, people who have a lot of debt and don't graduate, that's a really big problem. But when you hear stories of people with $100,000 in debt, it's worth knowing those people are extreme outliers, right. The average debt for a graduate is $25,000.

REHM

10:26:09
But that's the average.

LEONHARDT

10:26:10
That's the average, right.

REHM

10:26:11
Okay.

LEONHARDT

10:26:12
So for -- but that means that for everybody with 35 or $40,000 in debt, there's also someone with only $10,000 in debt. And so having said all that, even though I think some of these fears about student debt are exaggerated, I think, for example, I would much rather have someone take on student debt than credit card debt. Or to be honest, mortgage debt. A college degree brings a vastly higher return than a house does.

LEONHARDT

10:26:34
Having said that, I do think that there isn't enough accountability or enough transparency about colleges. The fact is, we as taxpayers turn over enormous amounts of money to colleges in the form of aid. And we often don't ask anything in return from those colleges. We say, here's a lot of money. Just put a student in a seat. We don't say, here's a lot of money. Make sure you're actually educating that student.

REHM

10:26:58
And that is this new ranking procedure that President Obama is talking about. Vince, explain it to us.

SAMPSON

10:27:09
So the administration is trying to put together a ratings system. And I'd like to be the expert on it but I'm not. But, you know, I'm more of an observer of it and I think it poses a couple of interesting questions. But before that I wanted to address Senator Warren's issue and tag onto what David said. When it comes to debt in large measure, it's very cold comfort to suggest that there are outliers. And I think, again, this macro -- or this micro issue, if you're feeling that you can't pay your bills, it feels very, very crushing.

SAMPSON

10:27:46
But when we look at the effective interest rates on student loans, that's an economics problem. That's people with or without jobs. It's not a point or a point-and-a-half on an interest rate. There's a number of lenders offering very low variable rate student loans. The federal government has had some policy efforts to try and adjust student loan interest rates.

SAMPSON

10:28:08
I think, you know, policymakers need to be cautious as they take bold steps at a macro level when the micro level may be impact. But turning to the rating system, I think it's a very interesting approach to a very complex problem.

REHM

10:28:24
All right. Let's talk about what it would do and how it would do it.

SAMPSON

10:28:29
Well, the -- as we see it and note that there is not a formal proposal yet, the administration is being very deliberative in rolling this out. The president made a speech, I believe it was last August. And there's been several, you know, updates to it. I think that's telling in and of itself. They've been in a listening mode as opposed to action mode, which is unique in Washington to some degree. But it would ostensibly assign an excellent, good, fair, poor rating. And I think they're very cautious not to use the term ranking but rating to schools on a number of factors

SAMPSON

10:29:01
I think, Diane, the key question there that the administration has to be a little bit clearer on is this -- is it a consumer tool, meaning it's designed to give more information, or is it an accountability tool designed to affect some public policy on the cost of college?

REHM

10:29:16
All right. Here's what I am understanding about that rating ranking system. It would compare schools on factors like how many students graduate, how much debt students accumulate and how much money students earn after graduating. Is that a fair assessment?

PORTERFIELD

10:29:44
That's some of what has been discussed. But they've also discussed assessing how many colleges are able to expand access to the colleges to kids from lower income or lower middle income backgrounds. Because that too is very definitely in the nation's interest as we think about competing in a global economy and meeting students from all walks of life to have a strong college education.

PORTERFIELD

10:30:09
And so from my perspective at Franklin & Marshall College, I would say that the ranking proposals, which are not definite yet, generally I'm open to them. I think that it could do some good. I like the idea that schools will tell their own story through their results. At Franklin & Marshall College, for example, 91 percent of our graduates from one year ago are either working or in graduate school. We have a good story to tell. I'm not afraid of telling that story.

PORTERFIELD

10:30:35
Similarly we've reduced average debt from 33,000 to 27,000 and it's going to keep going down because of our aid investments. So I want to tell that story. And we've increased the percent of our Pell eligible students incoming from something like 5 percent in 2008 to the last three years, 17 percent every year. So I want to tell that story. And our graduation rates are excellent. So...

REHM

10:30:58
Nina.

PORTERFIELD

10:30:59
But I would say one thing. Many other college presidents have expressed some concerns about the ratings.

REHM

10:31:03
Yes.

PORTERFIELD

10:31:06
One of the things that my colleagues, I think, agree upon, what I agree with them about is that simply ranking starting salaries, for example, might be a real mistake since so many young people want to serve as teachers, want to serve in the military, want to go into other professions that build social capital and, you know, the sort of quality of life in the country, but don't necessarily remunerate at Wall Street levels. So that's the one, I think, that we better be careful about.

REHM

10:31:32
And Nina, how would a rating system, the likes of which I've just described, have an impact on financial aid to low-income students?

MARKS

10:31:48
I think it could be helpful. You'd have to help students and parents understand what the ratings meant but that's always a challenge. One of the critical issues -- and Dan and Franklin & Marshall are an exception -- is that the colleges that are actually able best to fund low income -- and even middle class people can't afford to go to college either -- you know, are doing a pretty poor job of it frankly.

MARKS

10:32:15
If we look at our low-income students, what we see is that only one out of about 20 of them are enrolled in selective colleges. Only about 15 percent of students on highly selective college campuses are Pell eligible. About 50 percent are from affluent families. So it's not just funding. It's making decisions about whether you allocate money from merit as opposed to aid and how you offer post matriculation support.

REHM

10:32:46
Nina Marks. She is founder of Collegiate Directions, Inc. and principal of Marks Education. And you're listening to "The Diane Rehm Show." I do want to get our listeners into the conversation. Do join us, 800-433-8850. First to Craig in Houston, Texas. Greg, you're on the air.

GREG

10:33:18
Thank you, Diane. Good to talk with you.

REHM

10:33:20
Thank you.

GREG

10:33:21
About three years ago, I had gone back to school to get an advanced law degree. And nine months later at a state school I ended up with $30,000 in loans at an average rate of over 7 percent. And that was the going rate at the time for federally guaranteed loans. And my question to the panel today is, is there anything in the works to reduce the actual rate itself?

GREG

10:33:51
Because to me, when you have mortgages out there in the market going for 4 percent or something similar, to be charging our children over 7 percent for graduate loans and a slightly lower rate for undergraduates, it seems like we're working against ourselves in the long run.

GREG

10:34:10
All right. Nina.

MARKS

10:34:12
I think Vince can speak more specifically to options with loans. But this is the kind of heartbreaking story that we at Collegiate Directions hear all the time. The people who have the heart and the will to do more and do better and are foiled, not just in the degree attainment, but in the debt that they incur.

REHM

10:34:33
Is there any move toward reduction of that rate?

SAMPSON

10:34:39
There's been a conversation about what to do about student loan interest rates on the federal side for the past couple of years as legislation that was passed last year, I believe. Now that -- you know, try to make a more market-based rate but we're going to see that -- those interest rates -- they dip and they're going to climb again.

SAMPSON

10:34:55
You know, the unfortunate story on the federal side is, you know, it is a revenue razor for the federal government. So the interest rates are not as flexible as they are in the mortgage space or in the private student loan space. When it comes to federal student lending policy, it is raising revenue for the federal government. So every tick down is less revenue raised. And now that in itself is a policy question, is that good or is that bad?

REHM

10:35:20
Yeah.

SAMPSON

10:35:20
I think that might be maybe a topic for a different show.

REHM

10:35:22
But on the other hand, didn't the federal government take that out of the hands of private lenders and put it into the hands of the federal government?

SAMPSON

10:35:35
That they did. And now we're seeing the conundrum that was just raised by the caller. Now that it is, you know, 90 plus percent and the federal government is the largest lender, their flexibility, when it comes to adjusting interest rates, is relatively limited. So there is an unintended but very real consequence for that action taken in 2007.

REHM

10:36:01
So David, as we look at this overall, how many students are actually making their choices based on financial aid? How much money they can get the reduction in the real cost versus the discounted price? Is that the driving force?

LEONHARDT

10:36:26
Not enough, is the answer. I mean, I think what we really should have is students making decisions based much more on what they actually are going to have to pay, and not just making decisions but them understanding that early in the process, right. I think students should be able to understand by their junior year, hey if I want to go to this school based roughly on how much my family...

REHM

10:36:45
Junior year in high school.

LEONHARDT

10:36:47
That's high school...

REHM

10:36:47
Right.

LEONHARDT

10:36:48
...or sophomore year. You should be able to -- and some colleges have started doing this. Most of these calculators are just too complicated. Colleges -- Wellesley has done an interesting one. Colleges should have very simple calculators that you do not have to log into and that you put four or five basic pieces of information about their finances.

REHM

10:37:04
Such as...

LEONHARDT

10:37:06
Income, savings. Wellesley puts -- asks people to put retirement savings, even though retirement savings...

REHM

10:37:13
...or the parents.

LEONHARDT

10:37:14
Well, they have no effect on aid, none, right. But people get so confused by that that they want to still ask people for it because they're worried otherwise people will put it together. So it doesn't matter how much in retirement savings you have. So the two things I think people should be able to do is understand the cost very early and then understand the graduate rate of these schools.

REHM

10:37:31
David Leonhardt of the New York Times. Short break. When we come back, more of your calls, comments. Stay with us.

REHM

10:39:59
And welcome back. Here's another comment, this from Fred, who says, I think you're focusing on the wrong thing. You are accepting the inflated cost of college and attempting to pay for it. No one is asking the real question of why has college costs risen so high so fast. Nothing else has increased that much. My contention, he says, is that it's similar to medical costs in that someone else is paying the bill.

REHM

10:40:43
There's not a pushback on the price. Colleges are not as frugal and they have to hire more professors to be ranked high.

PORTERFIELD

10:40:56
Well, there's 4,000 colleges and universities in the country so there's a wide variety of reasons why tuitions have gone up. Includes inflation, includes the reality that it's hard for college to get more efficient while providing a student-centered experience. You can produce blenders and toasters more efficiently today than you can produce educated people because class sizes are still essentially a brain to brain experience.

PORTERFIELD

10:41:20
And the small class size offers a better education. There's a lot of federal regulation now that colleges have to deal with. A lot of expenses that have to go into competing for resources and prestige. All that combines to what the caller is concerned about. I just think it's also important to focus on value, not only on price, but on value because value is why students go to college, because they want to grow.

PORTERFIELD

10:41:44
They want to become the adults they can be. They want to have new experiences. They want to empower themselves to work. They want to go on to medical school, to graduate school. They want to become the leaders of the country. And so I think it's not good if we discourage smart students from going to college without really challenging them to find the college fit that will allow them to develop their talent.

PORTERFIELD

10:42:06
And I think that some of the focus on price and debt has the unintended consequence of discouraging aide-eligible students from realizing there are many great viable options out for them.

REHM

10:42:18
All right. Let's go to Susan. She's in Stowe, Ohio. You're on the air.

SUSAN

10:42:25
Yes, hello. An honor to speak with you.

REHM

10:42:26
Thank you.

SUSAN

10:42:27
Love your show. Anyway, I'm visiting my parents and I found my old catalog from college. I graduated in 1976. And the tuition was $4,380 and that included room and board. Now, it's $49,000. So just the inflation has been exorbitant. But I did receive a wonderful education and every year, my dad would drop me off in September and he could afford to write out a check. So I just want to say we need to address the cost inflation.

REHM

10:43:01
And I think there are an awful lot of people out there who feel that way, Vince.

SAMPSON

10:43:07
I think, you know, that is one of the policy premises behind the rating system is to come up with some type of framework for making this comparison, understanding these costs. Now, there are, I think as was pointed out, 4,000, 6,000 different colleges with myriad programs and experiences. So this, you know, college can be compared like household appliances can be compared, I think, is not accurate at all. I mean, I think the...

REHM

10:43:40
But the question becomes should schools cut back on expenses so as to keep tuition in check. That's what people out there are wondering. You can talk about trying to compete in the marketplace. You can talk about adding bells and whistles to attract young people, but the cost keeps going up at what many people regard as an exorbitant rate.

PORTERFIELD

10:44:17
Well, it depends on the school. So at Franklin and Marshall College, every student is invited to fill out the FAFSA form, which establishes how much financial aid that student will receive in order to go to F&M. And we meet the full need of every single student we accept. So, in other words, the price of Franklin and Marshall College education is what you can afford.

PORTERFIELD

10:44:39
We give a full financial aid package to every single student at the level that they're eligible. That is what's called the need-based approach to building a college class. I think that's the best approach in general. Guarantee that students will get the full financial package they need. And then, it is affordable.

REHM

10:45:01
Nina, how do you advise parents and students? When they come to you, do you talk about, realistically, how much debt they can afford to take on? Do you talk about the difference between this price and cost? Do you talk about all those things so that the young person is fully educated and then how much do they have to pay you to do that kind of counseling for them?

MARKS

10:45:36
So Collegiate Directions, the program operates at no cost to the scholars or their families or their referring high schools or to colleges. We raise money independently.

REHM

10:45:45
I see.

MARKS

10:45:45
And the most important piece of the work that we do, I think, is understanding the need for allies. So there are people in the referring high schools who need to help get this message across early and often to families.

REHM

10:46:01
And unfortunately, that's what has gotten lost in the mix because high schools have had to cut back on those kinds of counselors.

MARKS

10:46:12
Particularly, on advisors, on college advisors because the national average, as people, this panel know, is about 500 to one, between 400 and 500 to one. In some states, significantly worse. There is no way you're having the kinds of conversations that we've been talking about with 10th graders, 9th graders when you have that kind of a case load.

REHM

10:46:32
David.

LEONHARDT

10:46:32
Despite the fact that college clearly remains worth it, I think one of the most alarming trends of the last several years are the ways that as a society we've cut back our investments in education. Whether it's high school counselors, whether it's investments in public university systems like the University of California, which is really one of the most impressive institutions in this entire country, in terms of its excellence and in terms of how many low-income kids it admits.

LEONHARDT

10:46:59
That is deeply worrisome because the return that education brings for the individuals in a society is enormous and the idea that we've cut back on that, I think, will have some really long term damaging consequences.

REHM

10:47:11
All right. Let's go to Jeff in Bethel, Connecticut. You're on the air.

JEFF

10:47:18
Yes, thank you, Diane, for taking my call.

REHM

10:47:20
Surely.

JEFF

10:47:22
Yeah, I think it's remarkable that we can have a discussion about return on investment in college education without discussing different fields of academic discipline because I think that the return that students of STEM fields, science, technology, engineering, mathematics, I think that the return they get on their degree is probably very different from perhaps fields in liberal arts.

REHM

10:47:46
Let me stop you right there and see what our panel has to say. David?

LEONHARDT

10:47:52
I'm not that worried about an English major from the University of California, Davis or from Franklin and Marshall or from the University of Maryland at Baltimore County. I think most of them will do quite well. I do agree with the caller that as a society, we would benefit from having more students in the science, engineering fields.

LEONHARDT

10:48:11
But I don't think that a four-year graduate who majors in the humanities is doing anything wrong. I think we want people like that as well.

REHM

10:48:18
Do you want to continue, Jeff?

JEFF

10:48:21
Yes. And, you know, secondly, is the question of institutional responsibility here. When subprime lending blew up the real estate industry and caused a housing crisis, fingers were towards the banks for predatory lending practices. And I don’t understand where the institutional responsibility lies either with the university system or the lending system or some combination of both to insure that there is some kind of risk assessment that goes along with student lending to make sure that the income potential exists to allow for the payoff of the loans that students incur.

REHM

10:48:59
Absolutely. Nina, I'm sure you would agree.

MARKS

10:49:02
Absolutely. And I think one other piece of the current White House proposal, which is very interesting, is that question of student responsibility for academic performance as a potential, you know, piece of the rating system, that they need to complete a certain percentage of classes, perhaps before receiving continued funding because one of the questions is how long is it taking to degree completion so you get your degree. How long does it take?

MARKS

10:49:33
When I read that at some schools, they're rating degree completion 10 years out, that's absurd to me.

PORTERFIELD

10:49:41
Yeah, it's interesting also to only attribute increasing debt to colleges and universities when, in fact, the federal government has not invested in the Pell Grant at the right level. The state governments across the country have cut funding to public institutions and essentially shifted costs to their own citizens. And the economy itself, which colleges don't create, has not rebounded.

PORTERFIELD

10:50:06
And colleges must do our part to be more accountable, absolutely, but it's going to take a partnership of all sectors working together to solve these problems.

REHM

10:50:14
All right. Let's go to Carol in Swansea, Massachusetts. You're on the air.

CAROL

10:50:23
Yeah, hi, Diane.

REHM

10:50:25
Hi.

CAROL

10:50:25
It's nice that you're back.

REHM

10:50:28
Thank you.

CAROL

10:50:30
There's been an awful lot of data coming out from every direction and the last gentleman mentioned his stance on the humanities and that was the gist of my call. It's been my experience that the flood of emphasis is put on the computer aspect and I'm always speaking to my own experience. The young people coming out of very good schools sometimes have no background of history. They're lacking in any sort of the classics.

CAROL

10:51:08
And you haven't touched on that today. But I guess my feelings mirror Elizabeth Warren, who states that she started out -- due to the fact that her family was hardly affluent, started out in a very small school which opened a lot of doors. And her experience mirrors my own. I just think that we have to look at all this computer world and all the -- how problematic it can be. I'll take my answer off the air.

REHM

10:51:42
Hard to turn back the clock, Vince.

SAMPSON

10:51:45
Indeed, it is. You know, on the caller prior, Jeff, was talking about the debt and responsibility. I think there is an issue with respect to some of the federal government's role. We talk about there's a parent loan program that is not very transparent in terms of its data and we don't know what it's doing. We don’t know how much burden it is putting on students.

SAMPSON

10:52:06
I mean, I think there are policy goals that we need to focus on, on that debt side, but to Carol's question, a voice not at the table is the voice of the employer. Right? Here. Or the workforce or answering the question that a lot of us look at is, you know, should we look at higher education as a discreet thing, disconnected from a secondary education and disconnected from workforce?

SAMPSON

10:52:38
I think the proper policy is to look at something, you know, P through 20 plus, is what I would call it, to use a vernacular here in town. But looking at from the earliest point of education beyond and into the workforce, then I think we can start to, you know, answer key questions like Carol's about what fields are we doing and how are we educating folks and what degree contains value.

REHM

10:53:00
And Vince Sampson is an attorney in private practice. He is former principle deputy assistant secretary in the Department of Education. And you're listening to "The Diane Rehm Show." Steve sends an email saying, "please talk about the massive effect reduced state funding for college education has on the cost of college." David.

LEONHARDT

10:53:34
Direct and bad. When what states have done is they've cut their budgets, many of them are constitutionally required to run balanced budgets. They've had to spend a lot more money on healthcare. One thing to remember is when we talk about the problem with healthcare inflation and how expensive healthcare is and how much money we waste in healthcare, we're stealing a lot of that money from schools.

LEONHARDT

10:53:55
And so it's been really quite damaging. If you look at net tuition at state universities, it's still -- it's $12,500, that's after financial aid, which really isn't bad, but that's still a lot of money for a lot of people and it's come up a bunch because of the decline in state funding.

REHM

10:54:14
Are you feeling that at Franklin and Marshall?

PORTERFIELD

10:54:17
We're a private college, but we've certainly seen the impacts throughout Pennsylvania of schools being harmed by the relatively significant disinvestment of the state in public higher education, absolutely. That does affect us because, you know, fewer students, perhaps, who are able to complete their degrees in four years in public institutions if the quality of education, not just the cost, but the quality of education is not strong enough.

REHM

10:54:41
So where do you think we're going here? Is the debt burden of the average college student likely to stay between 25, 30,000? Are there going to be efforts to lower the rate of loans that students take out? Is there going to be more advice given to students to try to ameliorate this kind of pu -- I mean, there are so many issues out there, Vince.

SAMPSON

10:55:18
Well, I think what we have, here in Washington, is one of these unique times where we get to talk about all these things. And in the coming years, we'll see a reauthorization of the Higher Education Act, which will give everyone in Washington and outside of Washington a chance to have a conversation about all of these issues, about debt, about counseling, about what to do about workforce in some respects.

SAMPSON

10:55:39
So it's actually a very good time to be talking about state aid versus the sticker price at a school. I mean, I think David point out, it's really bad. If you think about decreasing state aid and even just keeping tuitions flat, it's always going to look like a spreading delta between an increasing cost. But there is going to be some of those conversations here in Washington so I think it's going to be a very unique time for policy makers to engage.

REHM

10:56:05
David.

LEONHARDT

10:56:05
I think the reason for some hope here is that we actually see some bipartisan efforts to push more accountability in terms of both performance and cost. You see it among Republicans in Indiana. You see if from the Obama administration. I do think there's interest in trying to get more and better information, both from the private sector and the public sector into parents' and students' hands and saying to colleges, hey, you know what? If we're going to hand over all this aid to you, we're going to ask for something in return.

LEONHARDT

10:56:33
And my hope is that that will lead to some improvements.

REHM

10:56:37
David Leonhardt of the New York Times, Vince Sampson, an attorney in private practice, Nina Marks, founder of Collegiate Directions, Dan Porterfield is president of Franklin and Marshall College in Lancaster, Pennsylvania. Thank you all so much.

PORTERFIELD

10:56:58
Thank you.

SAMPSON

10:56:58
Thank you.

MARKS

10:56:58
Thank you.

LEONHARDT

10:56:58
Thank you.

REHM

10:56:59
And thanks for listening. I'm Diane Rehm.
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