In the President's radio address this week he announced or called for changes to make student loans available to cover the cost of college. Seems the credit crunch is causing some lenders to leave federal and private programs. The President says these loans will make college more accessible and affordable. Really?
If you can't afford something, does borrowing money make it more affordable? Forgive me if something has change since I graduated from the UW Business school, but in the old days interest was charged in addition to the principal. That means the cost of your education with loans will be larger than without loans. It may give you access that you might not otherwise have, with the expectation of future income streams that would cover the loan payments. Michelle Singletary, personal finance columnist, makes the point better than I ever could (she hates debt - I like her).
If you're going to treat college as a financial investment that pays off in the long, thereby justifying the costs of borrowing, then you need to treat it that way. Study in a program that offers a likely payback in terms of high paying jobs, don't waste time on stuff you don't need and don't screw around and take classes over again. Just use the same good judgment you exercised when you used margin borrowing to buy tech stocks in the late 90's and second mortgaged your home in '06. So how's that working for you?
Instead of student loan programs and new branch campuses we could use that money to reduce the cost of education, making it truly more affordable. Students at state colleges and universities have been hit from two sides. First, the cost of education has grown at rates exceeding both the per capita income and inflation. The Higher Education Coordinating (HEC) Board published figures showing tuition and fees growing at over 6% a year since 1996 while Washington per capita income grew at just over 4% a year and inflation averaged just 2% a year.
The second factor is the percentage of the cost of instruction that is covered by tuition has also grown over the same time period. (cost of instruction = tuition + state general fund subsidy.) If you were at the UW in 1995, your tuition cover 33.3% of the cost of instruction (with the State paying the remaining two thirds). Students attending last year had to pay tuition to cover almost 53% of the cost of instruction. (The preceding statistics come from the 2006/2007 Washington State Tuition and Fee report, starting on page 21.)
Which leaves with two options to make college more affordable, either cut the cost of instruction or increase the percentage the State funds. In my opinion, the $1 billion we are going to spend on a UW branch campus would go along way to reducing the out of pocket costs for students today and for years to come.
Tags: President Bush, Student Loans, Michelle Singletary, HEC Board, Cost of Education
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If there is a real, urgent and unmet need for post-secondary education in Snohomish County, then spending 20 years and nearly a billion dollars to build a university is inexcusable and irresponsible. Unless, of course, what you really want is construction spending, development and growth.
Profile: Corey Smith
Corey Smith is a life-long south Snohomish county resident. He attended public schools in Edmonds and graduated from the University of Washington. He serves on advisory boards for a local community college and two local school districts.