9486 in the collection
Is college worth it?
Pulitzer Prize-winning
journalist David Cay Johnston (author of
Free Lunch: How the Wealthiest Americans
Enrich Themselves at Government Expense (and
Stick you with the Bill) points out that
if students take out loans they'd better read
the fine print in the contract very very
carefully. The lenders are VERY deceptive about
how they can raise the interest charges.
CONSUMER WATCH
Is college worth it?
With graduates earning less and tuition rising,
it pays to weigh your debt against likely
career earnings
By Megan Twohey
Kelly Stevens is suffering from buyer's
remorse.
The 29-year-old from Fargo, N.D., took out more
than $60,000 in loans to pay for a bachelor's
degree in fashion marketing from the Illinois
Institute of Art. She was convinced it would
allow her to open her own store or work for a
major fashion company—basically, to make more
money.
But nearly a year after graduating, she is
waiting tables at a comedy club. Every week,
she gets rejected from half a dozen marketing
jobs. She can no longer make payments on some
of her loans. She can barely scrape by.
"I can't open my own store in this economy,"
Stevens said. "Marketing jobs are among those
that have been hardest hit. Sometimes it feels
like I should never have gotten that degree."
Money is only one of the reasons to go to
college, of course. But with college costs
skyrocketing and the economy worsening, the
question of whether higher education is a
worthy financial investment is no longer a no-
brainer.
For decades, the earnings gap between college
graduates and high school graduates grew and
grew. Get a bachelor's degree, and you were
almost guaranteed to be a lot better off.
But the gap in income has started to shrink in
recent years. U.S. Census data show that in
2007 people with a bachelor's degree earned 90
percent more than high school graduates, down
from a 96 percent gap seven years earlier.
Meanwhile, more students are taking on debt.
The debt levels are growing. And some graduates
are unable to land jobs that allow them to pay
back their loans.
Most experts insist that going to college is
generally worth it. College graduates still
earn substantially more than high school
graduates on average: $59,365 annually compared
with $33,609.
But they caution that some college choices are
no longer a wise investment. Students destined
for low-paying careers, they say, simply cannot
manage certain debt levels. Loans can surpass
$100,000 depending on the school and the
borrower.
"If you're going to be a nursery school teacher
your whole life, you should not be taking out a
lot of loans," said Sandy Baum, senior policy
analyst for the College Board and an economics
professor at Skidmore College. "That's the
problem. It's an investment people make without
knowing how they will pay it off."
People in business jobs can manage $46,000,
according to calculations the Tribune made with
a formula created by Baum. So for Stevens,
paying back nearly $65,000 in loans was almost
certain to be a struggle. Now that she is stuck
in a low-paying service job, it's become
impossible.
Meanwhile, about one-third of college students
drop out—dashing any return on their
investment.
Does attending an elite college make a
difference? The answer is unclear. While some
researchers have found that graduates of top
schools earn more on average than those from
less prestigious institutions, others have
found no difference.
Debbie Quinn, director of guidance at West
Aurora High School, said she doesn't dissuade
students from going to college because of the
cost. But she encourages them to think about
their career path and potential earnings.
Recognizing that the cost of college could
steer students away from important but low-
paying professions, Congress passed legislation
last year that will gradually cut interest
rates on certain government loans, allow
borrowers to make smaller loan payments if they
are earning less, and forgive the loans of
students who serve in public-service careers
for 10 years.
Private colleges are increasing the assistance
they offer, so fewer students are required to
take out loans and those who do will take on
less of a burden, said Ron Ehrenberg, director
of Cornell University's Higher Education
Research Institute.
"The concern was that with high loan burdens,
we were influencing the professional outcomes
of students," Ehrenberg said.
Experts point out that the college experience
is not just about financial rewards. There is
also that business about learning a few things.
Students are able to explore their interests.
They often become inspired by subjects they
never knew existed and are able to view the
world through a broader lens.
"There's value added when it comes to critical
thinking and moral reasoning," said Ernest
Pascarella, a University of Iowa professor who
has studied the effects of college.
The education also extends outside the
classroom, through exposure to classmates from
different backgrounds and participation in
extracurricular activities.
And the rewards might just keep on coming,
according to the College Board. During their
working lives, college graduates are more
likely to engage in organized volunteer work,
vote, donate blood and live healthy lifestyles—
though it's possible that people in those
categories also were more likely to attend
college in the first place.
Priscilla Adeniji, 22, a finance major at
Chicago State University, says her choices at
college appear to be paying off.
Scholarships have covered almost the entire
cost of her education, making this the first
year she's had to take out a loan, for $5,000.
She graduates in December, and the Big Four
consulting firms already are dangling jobs with
salaries starting at $55,000.
Adeniji said she also gained a lot from her
classes and participation in a sorority and
other activities.
"Career-wise, college has been very important
for me," she said. "But it's also about
knowledge. If I wasn't in school, I wouldn't be
able to understand what's going on with the
economy and with other things that affect my
life."
Tribune reporter Jo Napolitano contributed to
this report.
— Megan Twohey
Chicago Tribune
2008-10-14
www.chicagotribune.com/business/content/education/chi-college-costs-14-oct14,0,1864072.story
INDEX OF OUTRAGES
Pages: 380
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