The Loan Arranger

Right now, student loans are a big campaign issue. Today’s lunchtime news chum brings together a few articles on the subject:

  • What We Owe. NPR’s Planet Money has an interesting blog entry on what we owe on student loans. It is an interesting example of how statistics can mislead*. For example, we all know that Americans now owe more on student loans than they owe on their credit cards, and that the amount is increasing every year. What isn’t mentioned is the “why”: more students are attending universities than ever before. Average debt per college graduate is rising — but not nearly as fast as total student debt. There are some interesting charts in the blog entry.
  • When We Pay. I was lucky enough not to have student loans, but many aren’t that lucky. President Obama went to Occidental. Erin applied there–they are over $68K/year! So it is not a surprise to read that President Obama didn’t finish off paying his student loans until 8 years ago!
  • What We Pay. The Huffington Post has a nice article on something college parents know: those financial aid letters lie! Specifically, when they are presenting how much aid “the college” is giving, they include in that aid both college-offered and federal loans. I’m sorry, but a loan (unless it is 0%) isn’t aid–it actually makes college cost more when you include the interest. How does this make college more affordable? We saw this with Erin’s aid letters: One university (it was either American or Occidental) indicated we had something like 40K in aid… $15 K in merit scholarships (good), and the rest in parent loans (bad). I’m pleased to see that work is being done on a standard, non-misleading form of aid letter.
  • What It Costs. USA Today has an interesting piece on how some universities are charging more for “harder” majors (translation: those that will earn more money). That’s just wrong. Given how students change majors and take minors and such, plus all the breadth requirements, the major shouldn’t affect the cost (with the exception of certain self-supporting programs).

*: Another example of misleading statistics. We’ve all been seeing the reports about how over half of college graduates are either unemployed or underemployed. People are taking this data, combining it with the student loan statistics, and saying that we don’t need as many people going to college. But that’s misleading. What they aren’t doing is comparing it to people with just high school educations or without high school diplomas. I couldn’t easily find current numbers, but in July 2009, the unemployment rate for high school dropouts was 15.4 percent, compared to 9.4 percent for high school graduates, 7.9 percent for individuals with some college credits or an associate’s degree, and 4.7 percent for those with a bachelor’s degree or higher. Extrapolate that out. Those without college degrees are doing far worse than half under- or un-employed. Further, they didn’t look at the salaries earned — I’d be willing to guess that, on average, those with college degrees earn more than those with high-school degrees. They may even earn enough to pay off their loans 🙂

Music: Drive Time (Doyle Lawson and Quicksilver): The Greenbrier Hop