Author: csccubed

by

Student Loans for Toddlers?

New York City mayoral candidate Christine Quinn has created a new program to help the middle class pay for expensive day care by offering student loans. In a column titled “Owe, Baby, NYC”, The New York Post describes this “first of its kind” pilot project:

The program…allows Neighborhood Trust Financial Partners, a local credit union, to offer 6-percent-interest loans through a $300,000 city subsidy. Families with children between the ages of 2 and 4 can get loans up to $11,000. In the first year, they’ll be available to 40 eligible families….New York City has some of the highest child-care costs in the country, averaging $13,000 per year, according to the Center for Children’s Initiatives. Applicants must have an annual income of $80,000 to $200,000, a credit score of at least 620 and agree to attend a free financial counseling session with a Neighborhood Trust counselor. Once parents are approved, the payments will be disbursed directly to the day-care providers. The program also allows parents to make interest-only payments until their children reach kindergarten-eligible age.

This is a surprising development given the current national discussion about college student loans. According to a study by the federal government’s Consumer Financial Protection Bureau there is $1.2 trillion in outstanding student loans ($1 trillion through the federal government). Currently 1 out of 8 student loan borrowers is in default.

Given these statistics is it wise to extend student loans to the parents of toddlers? Matthew Yglesias of Slate says no.  He differentiates college and preschool loans in the following way:

Perhaps the best way to understand the problems here is to start with the deep logic behind student loans for college. College is expensive, and difficulty paying the tuition bill can be a major barrier to attending or completing college. Yet completing college appears to be quite financially rewarding, with degree-holders earning a lot more money over the course of their lives than those who don’t have a college degree. So it’s a very natural situation for a credit market to arise. Having the money to cover your college tuition makes you much more likely to be able to repay the loan in the future….

Day care lending, meanwhile, has basically none of the features that make college tuition loans seem attractive. Being able to get a loan for your 3-year-old to get some child care doesn’t in any clear way increase your income three, five, or 10 years down the road. For lots of hard-pressed New York families, a loan like this is going to be a great lifeline out of a difficult situation. But down the road, you’re going to end up with a new set of difficult situations as people struggle to repay the loans.

Ultimately the voters of New York City will decide on the wisdom of City Council Speaker Quinn’s plan when they vote for mayor.

by

Finding College Value Through “ROI”

Yesterday’s Sunday New York Times included a special section on Education Life. One of the articles helps potential students evaluate the “return on investment” from various colleges and universities. The ROI is defined as “the cost of attending set against future earnings”.  While there are many reasons why students choose to attend a specific university,

middle- and low-income students who can’t afford to make mistakes, and students considering low-paying professions like social work or art, may want to figure in R.O.I. “The qualitative benefits of college, such as how fun the dorm life is, are temporary,” said Katie Bardaro, lead economist for PayScale, a Web site that reports compensation. “Your after-graduation earnings are permanent.”

The Following the Money article provides a number of websites with tools that compare ROIs.

 

by

Who Takes MOOCs & Why?

A new survey of 1800 students taking Massive Open Online Courses shows an interesting profile of the average person taking a MOOC. According to a summary in the Wall Street Journal (click here for article) the clientele of these courses

are not your typical college kids. These are older people, many with advanced degrees. They participate in online courses because they are curious about the subject matter, and they are motivated, in part, by the courses’ being free of charge.

Specificially

The survey found that of the highly-engaged students, those who completed several MOOCs, 55% have a master’s degree or higher. Age-wise, 74% of the highly engaged students are between 24 and 53 years old. And 63% of them are female.

According to another story about the survey posted on PR Newswire (click here for article)

The study found that course topic is the main motivator for enrollment among 35 percent of MOOC participants, followed by personal or professional development (24 percent) and the fact that MOOCs are free (16 percent). Among those who didn’t complete, 29 percent said the main reason was the learning experience didn’t match their expectations, and the same number said they were too busy to finish.

The survey found active engagement among the students in the MOOCs.

Surprisingly, MOOCs are converting fence sitters into active participants during the course.  About 72 percent of participants reported engaging in course discussions, compared to only 60 percent who expected to do so at the outset.

The study also suggests that engagement with other students in course discussions is particularly important in the virtual environment. About 24 percent of those who completed their courses reported being highly engaged in course discussions with fellow participants, compared to only 3 percent of those who failed to complete.

No link to the actual survey was available at the time of this post.

by

How Do People Pay for College?

Sallie Mae has just released its annual report on “How America Pays for College”.  Conducted since 2008, the report is based on interviews with students and parents currently in college concerning the sources used to pay for higher education. The overall trends show that parents are contributing less, and relying more on scholarships/grants and cost-cutting measures to pay for college. Over the next several blogposts CSCubed will breakdown some of the important findings of this report.

by

CSCubed Featured in Delaware County Times Story on Student Loans

The recent spike in interest rates for federally subsidized Stafford Loans has captured a lot of media attention. As of July 1, the rates jumped from 3.4% to 6.8% for new loans. An article in today’s Daily Times of Delaware County includes commentary from one of our members, Dr. Wes Leckrone of Widener University (click here for article).

Journalist Danielle Lynch writes:

Wes Leckrone, an associate professor of political science at Widener University in Chester, said a group of students at Widener are concerned about college costs, too. Those students formed an organization called College Students Concerned by College Costs under his direction during an honors American government course in the fall 2012 semester.

She then mentions CSCubed’s advocacy positions:

Leckrone said the Widener student group advocated for a bill in Harrisburg in mid-April that would have made more Pennsylvania Higher Education Assistance Agency grants available for middle-income students. The Widener University students joined the Association of Independent Colleges and Universities in Harrisburg to advocate for Senate Bill 420. The bill is currently in the state Senate Education Committee. “We push for grants instead of loans because grants make college more affordable,” he said.

At the end of the day this is basically just politics as usual:

 

Leckrone said that even if the interest rates increase on the subsidized loans, the government is paying the interest on the loans while the students are in college. “At the end of the day this still is really a great program,” he said. Leckrone described the debate over this issue as “great political football.” Similar to McClean, he said this is just another example of things not getting done in Washington. “Republicans want to peg interest rates to the market and Democrats are arguing this is just another way college costs are increasing for the middle class,” he said.

For continued updates on student loan interest rates and other topics related to higher education costs please follow us at https://www.facebook.com/CSCCubed or https://twitter.com/CSC_Cubed

by

Cutting Credit for AP Courses: Is This About Money?

A recent article in the Pittsburgh Tribune-Review by Kate Wilcox discusses an emerging trend where colleges are either cutting credit for high school AP courses or raising the standards for test scores. Colleges argue that these changes are necessary to guarantee that students attain the proper academic rigor in core courses. Dominick Frollini Jr., a high school chemistry teacher thinks there might be other motives:

 

“You’ve got to look at the perspective of AP and the perspective of the university,” he said. “Both have a vested interest in whether or not you take the exam or whether or not you take the course. There’s some money issues.”

 

Frollini touched on an issue bandied about on Internet blogs where some have questioned whether colleges are tightening AP requirements to ensure that students will have to pay for classes they might be able to forgo because of their AP courses.

Receiving AP college credits helps students to graduate on time (and sometimes early!) which is an important factor in lowering their student loan debt load. Perhaps colleges need to re-evaluate the trend discussed in this article.
by

What would Student Loan Rate Hikes Mean for the Average Borrower?

Today’s Philadelphia Inquirer has an editorial calling on Congress to address the coming spike in student loan interest rates. Legislative inactivity will cause rates to spike from 3.4% to 6.8% per year beginning July 1. To see what that means to people with student loans let’s take a look at the numbers. According the Project on Student Debt, the average level of student loan debt for college graduates in 2011 was $26,600. This level of debt, paid over a 10 year term, @ 3.4% would require a monthly payment of $261.79 according to a loan calculator.  The same loan @ 6.8% would require a monthly payment of $306.11 0r an increase of $44.32 per month. This number doesn’t seem particularly egregious, but when you factor this over the course of a ten year loan it means that graduates would pay an addition $5318.40.

The Inquirer notes that all of the existing plans for addressing the student loan rate spike are inadequate. According to the editorial

None of these plans recognizes the tremendous public benefit of an educated populace. People with postsecondary education are more likely to become self-sufficient, taxpaying members of the middle class. That contribution to the greater good and to democracy is worth something.

This is food for thought as Congress debates how to keep college affordable.

 

by

State Spending on Higher Education Slowly Increasing

According to Education expert James Palmer of the Illinois State University “[h]istorically, funding for higher ed tracks the economy….As the economy gets better, state funding for higher education increases. That’s been the pattern.” That’s a good thing for colleges as the economy has begun to improve and state tax revenue has increased. An article in today’s Wall Street Journal shows that state financing for higher education started to increase last year after five years of overall state cuts nationwide.

Cash-strapped states across the country cut funding for public colleges and directed scarce resources to primary and secondary schooling, Medicaid and prisons. The budget squeezes sparked debate in state legislatures about whether public-university systems had been doing enough to control spending, including runaway administration costs at many schools.

State legislatures have begun to rethink those cuts. Indiana is increasing its spending by $500 million over the next two years (a 14.6% increase), New Hampshire’s governor has requested an $20 million in additional spending next year (a 37% increase) and Florida approved a budget with $314 million more for higher education (an 8.3% increase).

However, this trend has not been present in all states. “Budget hawks in some states argue university administrators haven’t cut wasteful spending enough and could do more. Others argue schools are doing a poor job of preparing students for life after college.”