Reforming the Expected Family Contribution

by Marissa Daniels-Benditt  

In today’s world, earning a college diploma is considered the key to success. However, when the cost of college is too high and you’re swimming in debt after you graduate you don’t feel so successful. According to the New York Times, There may be a way to fix this.

A majority of Americans turn to the government for financial aid which is based off of the Expected Family Contribution (EFC). The EFC formula uses the financial information a student provides on his or her FASFA to calculate the how much aid they are entitled to.

Believe it or not, the way to cut college costs is by eliminating Congress’ power over the EFC formula. Congress is trying to make the EFC more realistic but there are already so many problems with it that it is unable to be fixed. The New York Times article says that the EFC should be cut by 75 percent and by doing so it would force colleges to construct finanical aid packages without the “artificial price supports of inflated contribution numbers—and make paying for college less agonizing.”  

Do you think this could be a way to lower college costs? If this is a plausible way, do you think that it would pass? 

Keep in mind, lobbying expenditures by colleges, universities and other higher-education organizations have totaled more than a half-billion dollars over the past five years. Making them the 8th highest interest group attempting to influence Congress! 

http://www.nytimes.com/2014/03/21/opinion/a-quick-way-to-cut-college-costs.html?_r=0

College Costs Out of Control

by Emily Bonney

In an article from Forbes Magazine, contributor Steve Odland provides some cold, hard numbers concerning the rising costs of college. Odland reminds readers that a there is a correlation between the amount of education a person has received and their average income. People without any college education earn almost $18,000 a year less than the US average wage, and less than half of what someone with a four year degree makes. While it is said that everyone has the same opportunities to receive this education, it is obviously not the case. Only 17% of the US population has earned an undergraduate degree, but the costs of college may change this in the future. Accounting for inflation, Odland states that while the consumer price index has risen 115%, but college education inflation rate has risen nearly 500% since 1985. Even with government aid, private funding, and scholarships, many students in today’s education system still have to take out loans which accrue interest. Odland attributes this rise in costs to the tenure policies, and the rise in spending on administration for the institutions rather than on professors or other capital expansions that would benefit the colleges.

The Burden of Higher Education

by Carly Wray

Today, one out of four students with loans cannot afford to pay them back. According to the Consumer Financial Protection Bureau, about 25% of graduates are in default with their college loans. The issue with these loans is there is no guarantee for financial prosperity and a way to pay for them out of college. Higher education does not have the same value as it once did in the economic world. The job market is weak and the average student owes more than their annual income straight out of college with an entry level position. However, Georgetown University’s Center on Education and the Workforce states that a bachelor’s degree pay is higher than a high school graduate’s by 84 percent. In this case, the price of college needs to be reasonable and it is not.

http://www.stltoday.com/business/columns/jim-gallagher/student-borrowers-are-going-broke/article_0d4a7c36-72e4-5f2a-9bcb-353f8614fbd5.html

College Cost: A Universal Issue

by Patrick Lamarra

For those of you that enjoy the musical stylings in Les Miserables as much as I do, there is quote sung by Enjolras during the revolution that can help to inspire hope into our noble cause of lowering the college cost for Middle Income Families.  In the hope to inspire his men, Enjolras sings “We are not alone, the people too most rise.”  This quote can serve in a way to reflect what must be done by college students in regards to college cost.  CSCubed is not the only group that wants to challenge the rising college cost in America.  Students from Babson College, Emmanuel College, Merrimack College, and Newbury College all went to the Massachusetts’ State House the other day in order to lobby for more funding towards the ever growing college cost.  Students there were lobbying for $9 to $10 million to be added on to the state’s financial aid budget.  This stand by the students in Massachusetts offers a similar situation done by the students involved with CSCubed.  The push towards helping Middle Income families afford college is ever evident in modern day America.  If college students can band together and lobby for reforms in the area, much can be done about college cost.  But, the people most join together.  To learn more about the Massachusetts’ student led lobbying efforts click on the link below.

http://www.lowellsun.com/breakingnews/ci_25222858/students-appeal-help-college-costs?source=rss

Rise in Higher Education Costs Outpace Other Expenditures

by Philip Wubbolt

Higher education costs have been rising for years and compared to how the prices of other goods have risen, there is a significant difference in how much those prices had risen.  From 1985 until now, the costs for higher education had risen in excess of 500%.  Compared to other goods and services, this is absolutely significant.  Medical costs have risen in excess of 280% and 120% in the consumer price index.  This rise in higher education costs, further exacerbates the problem of the inequality and income gaps.  If a family is unable to pay for college, this can inhibit that child’s ability to further his education and have a higher paying job.  This then has a compounding effect  on further and later generations.  There are efforts from politicians to lower or slow the rising costs for education, however these efforts have not made much of a difference.  The question now is, are students and kids getting what they paid for?  Are the jobs kids are receiving after college, making up for the significant prices?

See: College Costs Surge 500% in U.S. Since 1985: Chart of the Day

Florida is further than you think: Today’s college graduates won’t be retiring any time soon

 

by Michael Pacitti

It’s no secret, retirement is a long way away for all recent college graduates. It’s fair to say that they’re worrying about finding a job now, not relaxing on a beach somewhere 40 years down the line. Let’s face it, retirement isn’t exactly a top priority for this demographic. But what if I told you that your retirement wouldn’t happen for an additional ten years?

An alarming prediction from the financial website NerdWallet concludes that the average college student with loan debt of $23,000 on a 10-year repayment plan could translate up to $115,000 less for their retirement fund. I know what you’re asking- who in their right mind would pay in excess of $90,000 of interest on a $23,000 loan? Rest assured the answer (at least in this scenario) is still no one in their right mind. However, there is an economic factor called opportunity cost that is key to the prediction NerdWallet makes. Opportunity cost is the amount of money one could potentially earn if a certain sum was invested with compounding interest rate over a certain period of time. In other words, if the money spent on paying back student loans was instead invested, it would amount to a sum over $130,000 after 33 years. However, if not invested, this ends up costing students ten additional years’ worth of work before having the savings to retire.

Although it is not an issue for the near future, the ability to retire and live comfortably is a goal almost all people strive for. With the rising cost of student loans, this goal drifts farther and farther away from recent grads until eventually staying out of their reach.

Does Higher Education Really Pay Off? A Second Look

by Taylor O’Connor

To go to college, or not to go to college: that is the question. Some people raise the thought of whether or not getting a higher education really pays off in the long run or if it just a waste of time and money. While some think the latter, new studies are proving that wrong.

According to an article by Megan Rogers, a new 2013 report released by College Board shows that the median earnings of a bachelor’s degree recipient over 40 years of full time work is 65% higher than the earnings of someone with just a high school diploma. That is a large difference in someone’s lifetime of income. The report also found that the median earnings in 2011 for a bachelor degree holder over a high school diploma holder were $21,000 more for full time work. Even just having some college experience gets around $5,000 more in 2011 than a just being a high school graduate.

This report also has shown that the rate of college enrollment for high school graduates has increased for both those from families with high and low income levels. More students are enrolling in colleges in pursuit to further their education.

Despite all these good signs, one big problem with this report is that it takes into account the median report values. Not all students can go into college with these numbers in mind because the report includes students from all different backgrounds with different majors, college experiences, and levels of determination. If the report says that students have a median salary that is $21,000 more than someone with a high school diploma, one needs to remember this takes into account engineers, nurses, and other higher paying major. An education or philosophy major cannot go into the work field after graduation expecting to make this median value. These numbers are all median numbers and need to be viewed that way, without skewing any information as positive when it could potentially be negative.

 

Buyer Beware: Lower Tuition Doesn’t Mean Lower Prices

by Michael Pacitti

When you’re out shopping and you see something on sale for 40 % off, the first thought that comes to mind is, “Wow! What a great deal!” However, when you look closer you can find that the original sticker price was exorbitantly high and the discount actually made it an average priced item. This method of pricing is deceptive, tricking buyers into thinking they’re saving money when actually they’re paying full price. Unfortunately this scheme doesn’t end at your local strip mall.

Private colleges are now using the traditionally high sticker price of tuition to their advantage. With some schools cutting their tuition price as much as 43%, prospective students can get lured into thinking that means a 43% savings in out-of-pocket costs. For example, Converse College has cut their tuition from $29,000 to $16,500 (43% discount), but the average student paid just over $17,000 in 2012. Rather than saving money, students actually end up paying the same price as before (and in Converse’s case, paid more than the sticker price of tuition).

Our next logical question is, “how does that happen?” With a lower sticker price, schools do not have to give out as much financial aid because families can “afford” the lower price. Take Converse for example. Before cuts, tuition was $29,000 but that price was mitigated by financial aid to an actual out-of-pocket cost of around $17,000. However, with a new price of $16,500, Converse no longer has to offer financial aid because it’s considered a “true cost”.

This pricing method in theory sounds honest. It tells the student exactly what they will be paying for college rather than an inflated price. However, when the true cost doesn’t change even after a price cut of nearly 43%, what’s the point? It seems as though these schools are trying to lure students into attending simply because the sticker price is lower.

The next time you go shopping and see a great discount, make sure you check the price tag and see what you’re actually paying.

 

New Data Challenges the Value of a College Degree

By Zachary Hill

New research has recently been issued that links college majors and the job market. The acronym “STEM” may be oversold, some short-term degrees receive higher salaries than bachelor’s degrees, and a flagship institution may not guarantee a higher salary. Eye-opening data has been released about the “S” in “STEM,” which stand for “Science.” Certain science majors, such as biology or chemistry, have starting salaries comparable to those of Sociology, Psychology, and English. On the other hand, engineering majors command tens of thousands more in average starting salaries. The fields of business and healthcare also command much higher starting salaries than those of biology and chemistry. Many people intend to major in chemistry or biology and continue on to be a doctor. However, if someone is stuck with a biology or chemistry degree, their average starting salary will take a severe hit.

Some short-term degrees command higher salaries than bachelor’s degrees. In Texas, Colorado, and Virginia, people who obtain certain two-year associate’s degrees such as technical associate’s and applied sciences actually earn more than those with a bachelor’s degree in those degree programs. In conclusion, some students who pay more tuition and fees to earn a bachelor’s degree end up having a lower starting salary than students who enrolled in a two-year program.

Enrolling in a university with higher tuition does not necessarily ensure a higher starting salary. Colorado State University’s flagship campus’s tuition is $7,494, while CSU’s Pueblo campus has a tuition rate of $4,894. However, the average starting salary of Pueblo students is slightly higher than that of CSU flagship campus’s students. In all states, engineering degrees command the highest starting salaries of any major. Students should carefully consider their choice of major instead of choosing a school based on reputation or sticker price.

The article can be found here:
http://www.usatoday.com/story/news/nation/2013/09/03/how-higher-education-pays/2755345/