When I was active with the Klainer Center for Women and Business at SUNY Geneseo in upstate New York, I offered a presentation every spring for any graduating seniors who wanted to come. The topic was essential steps to put in place to begin your adult financial life, and at least as important, things to avoid. I always spoke to a packed house. The SUNY system is selective, and SUNY Geneseo gets very bright students, most of them from middle class families. They didn’t know much about money, or about building financial independence. I think we all, as family members and educators, bear responsibility here. We teach our children how to avoid being hit by a car, but most of us don’t teach them how to avoid financial scams, bad debt, or overpriced and underperforming financial products. We talk to them about making good choices re drugs and alcohol, but not about financial discipline and the need to save.
Back to my recent trip to the small liberal arts college I graduated from during the 1960’s. I should say that this post refers broadly to students and debt, not to any one institution. Anything I’m about to say refers to community colleges, to struggling liberal arts institutions who are passed over by many talented and financially secure students with lots of options, and most egregiously, to the for-profit college chains who enroll a lot of students but graduate relatively few with any marketable skills.
There’s a large pool of students today who are more or less prepared for the rigors of college work — often much less — and more or less savvy about choosing majors that will lead to a well paying job. They are in college on a combination of federal/state aid, scholarship money from the institution, and personal market rate loans.
For the institution, there’s a clear benefit from #1 and #3, a flow of money that they get to bank regardless of how the student performs. And #2 isn’t out-of-pocket money for the institution; it’s simply a discounting of services they have to maintain and offer anyway: dining hall, dorm, health services. Score 3 for 3 for the institution.
The situation for students is different. It’s not clear that anyone is advising individual students on the amount of debt each is incurring relative to progress toward a degree, and relative to what kind of job she or he might get that will allow discharge of the debt within a reasonable period of time. Score 0 for 2 for the student.
For some institutions, most likely the for-profit ones, this is an all-too-tempting flow of money, and probably a pretty robust one. Corinthian Colleges ceased operations in 2015 after the U.S. Department of Education fined the for-profit chain 30M dollars for misrepresentation.
For the rest, I suspect the focus is on staying open while doing good: giving a chance at a college education to kids who might not get it at a more academically competitive school. If some kids — and I have no idea how many — wind up with a lot of debt and not much to show for it, that wasn’t the intent.
Who should care about this? Taxpayers, for one. People concerned about inequality. People concerned about social justice.
I have no idea how to build in a financially savvy advocate for students, an impartial person who can help each individual weight the costs and relative benefits. I just don’t think it’s happening now.