Friday, May 2, 2008

MoneyLaw: The Student Loan Bubble

Some people at the U (Bob, Tom?) don't seem to realize that the student loan debt of our graduates is a disgrace.

We hear things like:

There have been a lot of false statements made about tuition increases. He [Sullivan] said the discussion should focus on the marginal average cost to students of a tuition increase, factoring in tuition discounting, scholarships, fellowships, and other financial aid support.”

Faculty Consultative Committee
Thursday, January 24, 200

What exactly are these false statements, Tom?

Maybe your experience as a law school dean has made you a little too cavalier about numbers that seem small to you - like $25,000. And this is just the average, some students owe considerably more. Most of our student do not have visions of sugar plums dancing in their heads. "Marginal average cost" might sound suave and impressive while sipping sherry at a law school reception, but most students seem to look at it from the eminently sensible viewpoint of how much they owe when they finally graduate.

This is what the discussion should focus on and how this influences what students do next, especially if they are the first in their family to go to college or university, and they and their parents are extremely concerned about this debt load. (I have a little experience with students in my lab in this kind of situation.)

According to Kiplinger (2008) here are the numbers:

Average Debt at Graduation

Big Ten Public Universities

Illinois $15,413

Ohio State $18,130

Indiana $19,756

Iowa $20,234

Purdue $20,102

Wisconsin $20,282

Michigan State $22,147

Penn State $23,500

Michigan $23,353

Minnesota $24,995

Why don't we make it a priority, in our next budget, to systematically work toward lowering (or at least stabilizing) tuition at the University of Minnesota?

Even if this means cutting back on the administration's plans for becoming one of the third greatest public research universities in the universe...

In terms of a first course in economics: It's a guns and butter situation, not one of marginal cost.

(Provost's grade for economic analysis of tuition increases: D+/C-)

1 comment:

Anonymous said...

A perfect 10! Thanks to Northwestern, here's a category in which Minnesota doesn't finish eleventh in the Big Ten.