Thread’s title
Are poorest students more deserving of being debt-free than middle class students?
Well they probably have fewer family resources for paying it back.
^ Agreed, OHMomof2 (post #21). It’s not that the poorest students are “more deserving” of being debt-free. It’s that a given level of debt debt represents a greater burden and a greater threat to their financial viability. Middle- and upper-middle-class students may have parents who are more able and willing to help out with loan repayment and/or current living expenses in a pinch, or even as part of a longer-term cost-sharing plan in loan repayment. Young adults from middle- and upper-middle-class backgrounds typically get lots of other direct and indirect economic support from parents and sometimes other family members—staying on the parents’ employer-sponsored health insurance until they’re 26, gifts of clothing, money, consumer electronics, sometimes even cars or help with a down payment on a house, or financial help to go on to graduate school—all things that the young adult from a lower-income background will either need to pay for herself, or do without, or borrow more to achieve, making college loan repayment that much more burdensome and that much more challenging. And young adults from middle- and upper-middle-income families are far less likely to be called on to help support other family members in times of need—to help pay grandma’s funeral expenses, or to help Mom buy a car to replace the old beater that died so she can continue to commute to her job, or to help pay for Dad’s hospitalization costs and day-today living expenses while he’s recuperating from that heart attack–again, making college loan repayment a far more difficult burden to work around, given that the successful college graduate from a low-income background may quickly become the most important breadwinner in her extended family.
But it goes well beyond “being debt-free,” and it also goes beyond unequal burdens and financial risks at a given level of debt. Colleges with a high net cost after FA for low-income students effectively compel low-income students to assume a LARGER debt burden than their middle- and upper-middle-income peers. Of course, it’s up to the student to decide whether to attend on those terms. But it’s up to the college to decide whether that’s a fair and equitable and reasonable way to allocate costs among students from various income strata. I say not.
NYU received more applications this year than any other private university in the United States. This is despite the fact that NYU makes it very clear that it will not necessarily meet any applicant’s full need (although it can and does do so for desired applicants).
One of the goals of the ED “Scorecard” was to promote transparency in cost and outcomes. NYU has ALWAYS been one of the most transparent universities out there in that respect. No false promises of meeting need. I say BRAVO to NYU, and shame on all of these others with their overstated promises of affordability. Looking at the average debt at graduation, many, many universities’ graduates have similar or worse average debt than NYU despite their glowing promises.
I object to the very premise of this thread; i.e., the notion of a college “saddling” any student with debt. Nobody is “saddling” anybody with anything. Nobody is putting a gun to anyone’s head and forcing them to choose an unaffordable FA package. Students and families are saddling themselves if they make such choices.
My beef is with the colleges that “hide the ball” with their promises of amazing FA just to get your application, and then reveal some awful package to you in the spring when it’s too late to apply somewhere else. NYU is NOT one of these schools.
I agree that I don’t care for colleges who “market” their FA. But who would be so stupid to apply to only one college that may or may not be affordable?
^^^. Hopefully, nobody is applying to just one such college, but many try to stay under 8 apps, and this could be the result without good counseling, though that would be atypical and unlikely.
My complaint stands nevertheless; it is expensive and time-consuming to apply to colleges, and rewarding such schools by sending an app their way because you were misled by overstated promises is feeding the monster.
But there’s a reason the loans are called “student” loans, not “parent” loans, and that the loans don’t incur interest until after graduation. The expectation is that the students are capable of repaying the loans when the students are employed after graduation.
The net price calculators are probably the biggest improvement in college price transparency in recent years. Whatever colleges claim or do not claim, their net price calculators are likely to give more useful estimates than generalized averages for individual students and parents (unfortunately, it seems that many students and parents do not use them when looking for colleges).
Regarding NYU in comparison to other colleges, in http://www.collegedata.com/cs/search/college/college_search_tmpl.jhtml , it looks like NYU has the third highest student debt levels out of 53 colleges which are “most difficult” to gain admission to and for which student debt levels are listed (5 others do not have student debt levels listed). The two with higher student debt levels are Lehigh and CMU. Gettysburg, Brandeis, USC, Harvey Mudd, Juilliard, Notre Dame, and Emory are the next several after NYU. The lowest debt levels among the “most difficult” to gain admission to colleges were at Princeton, Webb, Williams, Harvard, Yale, Pomona, Wellesley, Haverford, Caltech, and Amherst.
*Yes, USC might be a target for your ire, as it claims to meet 100% of need but its net price calculator indicates that its definition of “need” is a relatively stingy one compared to others. Harvey Mudd and Notre Dame also claim to meet 100% of need. In contrast, Webb only claims to meet 80% of need.
@ucbalumnus, Webb is also tuition-free.
That would cut down on student loans some.
NYU does not claim to meet need at all. No false promises. NPCs do not work for many applicants, and in that respect, they can also be misleading. Moreover, I was deriving my data from the newly released ED Scorecard, not the collegedata.com website, although I’m not implying that the collegedata.com website is inaccurate or outdated, having not looked at it recently.
Only the Subsidized portion of the loans don’t accrue interest until after graduation, and that amount is not the total.
The only beef you can have is if schools make it difficult for consumers to figure out who they are really set up to serve. No school can be everything to all people.
Harvard is set up to serve wicked smart kids (top 1%) from the top 3% and the bottom 80% of incomes. So Harvard is awesome (academically and financially) if those parameters fit you; but it is worthless if you don’t.
A 90% income kid whose family can’t afford Harvard full sticker may find a great financial fit at USC through merit aid. But USC’s merit dollars going to that kid means there’s going to be less money available to some other kind of kid.
Every school (even Harvard with all of its billions) has a budget. And as generous as Harvard’s aid is, they still have two students from the top 5% for every kid they have from the bottom 50%. Since Harvard is so rich, you can make a compelling case that they (not oft-maligned NYU) are the most stingy money-grubbing school going.
But I think Harvard is just fine – they decide what their resources, priorities and mission are and then act accordingly. NYU and USC do exactly the same.
The only thing you can ask is that the schools make it easier for the families to figure out the places where their kid’s academic and financial fit might be.
All true, except the bit about the loans not incurring interest until after graduation which is true only for subsidized federal loans, not for unsubsidized federal loans or most private loans. But on the other hand, there’s nothing to prevent parents (or grandparents) from helping the graduate repay “student” loans, and my guess is that a fairly high percentage of middle- and upper-middle class families do provide this kind of help, either at the beginning of the loan repayment period while the newly minted graduate is still looking for work or just trying to get established financially, or by paying the interest on unsubsidized loans during college to prevent accrued interest from being added to the principal that needs to be repaid once the repayment period begins, or by stepping in as an emergency funding source if the graduate has a career reversal or unexpectedly large medical or other expenses, etc. There are even some undisclosed number of parents like me & DW who choose to repay the “student” loan in full out of their own pockets, in effect treating the low-interest “student” loan as a convenient and financially sound way for the parents to spread the high cost of a 4-year college education over 5 or 6 years. We could have done this with a Parent PLUS loan, but the interest rates on “parent” loans are much higher than those on “student” loans.
For all these reasons, it’s a lot less scary and and lot less risky for a middle- or upper-middle-class kid to take out $30K in “student” loans, knowing that her family “has her back” financially. Borrowers from low-income families don’t have that same kind of backup.
@northwesty. Bingo. Yes. Transparency is the key. Some colleges are just better at this than others. And no, I’m not going to name names, other than to say it’s not fair to villainize NYU on this point.
@bclintock, you nailed the distinction between low income student loan debt and middle class student loan debt (recognizing, of course, that the line between the two can be blurry depending on where you live).
The middle class student will typically (granted, not always, but typically) have a far better financial support system in place.
Perhaps then the answer is not to let the poor kid graduate debt free, but incorporate generous repayment terms into their loans in the event there is a problem.
2 kids start life with a Harvard degree…their earning power should be equal. (Not including higher income kids with connections, but poor vs a middle class kid.)
Just to be clear, Harvard grads don’t start post-college life with loans. At least very few do (3%), and those that do tend to have very modest levels of debt ($6,000, per the U.S. Department of Education, for which the typical monthly payment would be $67). This is just not an issue for Harvard grads. Though Harvard, as we all know, is exceptional.
They can’t all be like Harvard. That’s why it’s Harvard (or Stanford, etc.) I don’t think anyone expects that level of needs-met at the vast majority of colleges.
Although, like others, I was surprised to see how few students at the most elite colleges are Pell students. Easier to meet full need when so few of your students actually need so much of it.