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Dr. Lawrence M. Schall Headshot

Higher Education and Debt: Another Perspective

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Andrew Martin and Andrew Lehman have a front page story in Sunday's New York Times: A Generation Hobbled by Debt. The top of the fold color picture features Kelsey Griffith, age 23, in debt $120,000 from her college loans, now working two restaurant jobs. She's about ready to move back in with her parents. Her mom co-signed her loans. Kelsey is one of five sisters. The article doesn't say whether she is the oldest or the first to attend college, but I imagine so. It's impossible for anyone to read the story and not ask: What the heck was she thinking? Maybe more importantly, what the heck were her parents thinking? Martin and Lehman actually don't ask those questions. Instead, their question boils down to this: what the heck was Ohio Northern thinking when they allowed her to attend?

The story is full of good information:
  • The percentage of students who have to borrow to attend college has doubled in 20 years.
  • The average student debt is $23,000. 10% borrow as much as $50,000. Fewer than 3% of students borrow as much money as Kelsey.
  • 11% of students attend for-profit colleges, yet they receive 25% of the federal grants and loans. The rate of default on those loans is twice that of students who attend non-profit institutions and the rate of graduation at for-profit colleges is about a third of private non-profits.
  • State and local funding of higher education has reached a 25-year low, adjusted for inflation, and is down 24% nationally.
  • In the last ten years, the cost of a public higher education degree has gone up 72%; for a private non-profit degree, it's up 29%.

I've written about most of this before. The trend of our society choosing NOT to invest in our public institutions of higher education is unmistakable and unsustainable. I've also written that while funding for education has declined, tax dollars have been poured into building residence halls in prisons and for guards to staff them.

I don't quarrel with much in the article, except the proclivity to feature extreme cases like Kelsey's. She represents one in a hundred, but the story focuses on her and others like her. It makes for dramatic reading, I suppose, but I'd prefer to focus on the more typical student with a more typical debt burden. That story is compelling enough.

As president of a private liberal arts college, I see young people every day who are graduating with $20,000 of debt after four years. A young woman from Florida came to see me last week. She had just finished her first year and had excelled in and out of the classroom. She loves Oglethorpe and has made a difference here, but her mother had to take out a $10,000 loan for her to complete just one year. She knew that was not sustainable and I told her the same thing. I asked nine trustees to join me and personally cover a substantial portion of her tuition next year, on top of the generous financial aid she was being awarded. Every trustee said yes. But even though she gets up at four a.m. every morning to work her shift at the nearby Starbucks, that will only help her complete year two. She very well may have to transfer to a less-costly school a year from now. If that is what happens, I know that at least she has received two great years of an exceptional education, and no one can ever take that away from her.

What I would like to share here is a little sense of what it takes to provide that kind of education. With precious few exceptions, nobody's getting rich working in higher education -- instead, a steady erosion in public dollars being invested in colleges and universities has driven up the cost and accessibility of public higher education, while most private non-profits are struggling mightily to hold costs down. I hope when you are finished reading this, you will understand what one school is doing everything to hold its costs down (and in this regard, there are hundreds and hundreds of colleges like us).

I've been President at Oglethorpe University since 2005. Since that time, I think in only two of my seven years were we able to provide a cost-of-living increase to faculty and staff -- a mere one or two percent. One year, we had to cut everyone's pay and stop making contributions to pension plans. Happily, those days of cuts are behind us, but austerity is very much a way of life here. A new full-time faculty member with a Ph.D., chosen from over 300 applicants, made all of $50,000 his first year. Our staff is tiny; everyone is doing two or three jobs. We provide $15 million dollars a year in financial aid on a budget of about $37 million. And with these limited resources, we still manage to provide our students an exceptionally rigorous education and our faculty has been recognized by the Princeton Review as one of the best in the country.

At commencement this past weekend, many students had a job lined up, and many others are headed off to the finest gradate programs in the world. Our typical student pays $1,650 a month for this kind of education, and I'd be hard-pressed to suggest a better investment. If a student wants to live on campus and eat 20 meals a week, he or she will pay about $1100 a month for room & board -- not bad for living in the heart of Atlanta.

It is true that Oglethorpe is one of the less expensive private options. Some schools cost twice or three times what we do. I've explained to thousands of families that Oglethorpe is every bit as good a choice as one of the higher priced options. Some listen; others make a different decision. If money is the overriding concern, I suggest they consider a lower-priced school, at least for the first two years. We have also created a viable option for well-prepared students to complete their degree in three years.

One of the great things about higher education in this country is its diversity: for-profit, not-for profit, public, private, online, in classroom. Until the last couple decades, I would have said our public policy was designed to provide access to cost-affordable higher education for the less financially able, but I can't say that anymore. Instead, we have consistently and deliberately acted to limit access and deny opportunity by the budgetary choices we make in our state and national legislatures. The consequences of those choices are yet another secret hardship imposed on the middle- and lower income families of America, and a frightening forecast for our educational future.