Amidst Increased Tuition and Rising Student Debt, W&L Degree Maintains Value
By Philip Aiken and Burke Ugarte One of college education’s most pervasive problems today is simply defined: the price tag. The cost of college has systematically increased in the past 30 years at a staggering amount, consistently outpacing the rate of inflation. In comparison to a 1.4% rise in inflation in 2014, tuition and fees at private nonprofit colleges climbed 3.7 percent on average to $31,231, completing a 10% real increase from 2009-10 to 2014-151. These expenses do not include room and board costs, which have also continued to rise more quickly than inflation, right alongside tuition. When including room and board in these calculations, costs average $42,419 at private schools, still not including other items such as transportation, books and laundry.
However, when observing tuition and fees increases over the past 30 years, one may note that the past decade has not shown increases as aggressive as the previous two Taking this into account, why is rising college tuition such a problem now more than ever? Although overall tuition in the past decade has increased slightly less rapidly than the previous two decades, college price increases are still accumulating. And who is footing the bills for rising tuitions?
In the last decade, student loans have become almost a rite of passage in the United States, increasing 84% from 2008 to 20142. Even more horrifying: By November of 2014, student loan debt reached $1.2 trillion (up from $260 billion in 2004) making it the second largest source of personal debt in the US behind mortgages. Payment plans for federal loans are now as natural to the college process as walking across the stage to re3ceive a diploma. These plans would not be an issue if college graduates could pay them - but according to research from Experian, 39% of open student loan accounts are currently in deferment. In other words, student and graduate borrowers are late on paying a collective $417 billion of their loans.
Considering that both the cost of going to college and average student debt increases every year, is the investment for college education even worth it? Or will the slightly higher salary that your college education earns you simply pale in comparison to the much higher debt that you will suffer? Is a college degree still worth it? Economists and educators alike have debated this topic over the past several years. In 2011, the U.S. News and World Report chose Craig Brandon’s “no” argument as the most credible and well-founded answer to this question4.
Aside from higher tuition and increased student debt, Brandon also cited concerning party habits and lower graduate understanding of economics and politics to back his argument that “It makes no economic sense to send most kids to college.” A more recent study by Liberty Street Economics showed that the average value of a bachelor’s degree has held its all-time high of about $300,000 for more than a decade. However, while the median income of college graduates in 2013 proved over $15,000 higher than the high school graduate median, the study also showed that the lowest quartile of college graduate earnings just barely beat the median income of high school graduates5.
Washington and Lee students have weathered this financial storm very well relative to other institutions, but we are by no means strangers to the current student debt crisis. According to US News, the most recent cohort of graduating students from W&L with student loans averaged $23,224 in total indebtedness6. Still, that sum is nearly $10,000 less than the national average. Furthermore, the same source pegs the percent of students who have borrowed during their four years in Lexington at a meager 32%, far below the national average that punctured 70% in 2013. Of the students who took out loans, the most recent statistics show the default rate was a meager 1.3% in 2010 and even fell to 1.1% in 20117.
Washington and Lee students have been well sheltered from the crisis for reasons that are difficult to quantify. There is no clear answer why W&L students are not drowning in debt like other students across the US. The single biggest driver seems to be W&L graduates’ ability to enter the workforce relatively painlessly. This is in part due to our extensive alumni network that affords a wealth of opportunity and connections for students. However, the alumni network is merely complementary to the strong liberal arts education and W&L experience that teaches students how to think critically and operate in the real world. The current student debt crisis is a reality students face across the US, and presents a just reason to question where and why we are at school. For W&L students, the answers to those questions are self-evident, and should be quite reassuring.
1 http://trends.collegeboard.org/college-pricing/ figures-tables/tuition-fees-room-board-time
2 http://college.usatoday.com/2015/04/08/national- student-loan-debt-reaches-a-bonkers-1-2-trillion/
3 http://academic.mintel.com.ezproxy.wlu.edu/ display/722989/?highlight
5 http://libertystreeteconomics.newyorkfed. org/2014/09/the-value-of-a-college-degree.html#. ViFIlbxVik
6 http://colleges.usnews.rankingsandreviews.com/ best-colleges/washington-and-lee-3768/paying
7 http://www.usnews.com/news/articles/2014/11/13/ average-student-loan-debt-hits-30-000