Just as U.S. Education Department tells colleges to better support pregnant and parenting students, a sophomore says she was turned away from an exam for bringing her baby. Whether the new U.S. guidance applies is unclear.
This week, the U.S. Department of Education announced changes to the PLUS loan underwriting standards that may help previously denied PLUS loan applicants obtain loans. This will be welcome news to previously approved loan applicants who found themselves unexpectedly denied last year.
But federal PLUS loans can be risky business for graduate students and parents of undergraduates who can use them to borrow up to the full cost of attendance at college. Much more can be done to protect consumers from getting too deeply into debt. The Department of Education recently added PLUS loan underwriting standards to its list of items to potentially consider during negotiated rule-making, the process where students, advocates and colleges work with the federal government to hash out new regulations.
The National Association of Student Financial Aid Administrators offers three recommendations to add vital consumer protections to Federal PLUS loans.
Separate Parent PLUS Loans from Graduate PLUS Loans. Currently, there is one PLUS Loan program available to both parents (Parent PLUS) and graduate/professional students (Grad PLUS). This is a relatively new development: the Grad PLUS program was simply added onto the existing Parent PLUS program in 2005 to help graduate students cover the increasing costs of their programs.
While the borrowing profiles of parents and graduate students differ greatly, the same credit standards are applied to both. Lumping these groups together makes little practical sense. Separating the Grad PLUS and Parent PLUS programs would allow for vital variations in credit standards, loan limits, and interest rates that should be tailored to these two different populations.
Increase Loan Underwriting Standards on Parent Loans for New Students. Appropriate underwriting not only protects the lender (in this case the taxpayer), but also borrowers, by preventing them from getting into unmanageable amounts of debt.
The underwriting criteria for PLUS loans are minimal, resulting in approvals for parents who may not actually be in the best financial position to borrow. In fact, each year colleges field thousands of pleas from parents who have been approved for PLUS loans but believe they should have been denied. These parents know they cannot afford the loan debt on their income or have little experience with any form of significant debt. Yet, in order for dependent undergraduate students to receive additional federal loans in their own name, parents must first apply for -- and be denied -- a PLUS loan.
The sole credit criterion for PLUS loans is that an applicant “not have an adverse credit history,” meaning they cannot be 90 or more days delinquent on any debt or have defaulted or received a bankruptcy discharge in the last five years. Put another way, having no credit is tantamount to having good credit for purposes of a PLUS loan and -- perhaps even more troubling -- approval from the government doesn’t require even a simple debt-to-income analysis.
Using the current definition of adverse credit makes sense for graduate students who haven’t had time to build a credit history. Ignoring debt-to-income ratios also makes sense for graduate students whose earnings will increase based on the very educations they’re financing.
But parental earnings don’t increase because of an educational investment in their children. And unlike graduate borrowers, parents lack access to loan forgiveness programs offered through public service or the government's Pay As You Earn plan. When determining credit worthiness, parent eligibility credit criteria should include some measure of likely ability to repay, such as a debt‐to‐income measure, FICO score, or another test of adequate resources. Allowing parents to assume unmanageable amounts of debt presents a fiscal and moral hazard to both the taxpayer and borrower.
It must be noted that any changes to restrict access to Parent PLUS loans should only impact new students, so as not to disrupt current enrollments. ED learned this the hard way after the agency unexpectedly, and with little fanfare, tweaked underwriting standards last year. The move resulted in harsh criticism from some students, institutions, and lawmakers. Rep. Marcia Fudge (D-Ohio), chair of the Congressional Black Caucus, claimed in an August 1 statement that the change disproportionately impacted students attending historically black institutions and demanded that ED “immediately suspend use of the new ‘adverse credit’ criteria as a determinant for Federal Parent PLUS Loan eligibility.”
In response, ED has begun reconsidering previously denied PLUS loan applicants. Lest anyone believe the lesson here is to never reconsider underwriting standards that ultimately protect parent borrowers, it should be pointed out that the furor would likely have been much less had this not disrupted currently enrolled students who are now depending on these funds to graduate.
More Transparency in Federal PLUS Borrowing. Good public policy must be built on good data, yet the availability of data on federal PLUS borrowing is abysmal. Basic information about PLUS loan approval or denial rates, default and delinquency rates, and repayment plan distributions are difficult if not impossible to obtain. While Congress and the Education Department have significantly increased disclosures requirements placed on colleges regarding graduate earnings, dropout rates, repayment rates, educational costs, and Stafford loan defaults, there is no comparable level of disclosure from the department on Federal Parent or Grad PLUS loan borrowing.
The feds certainly have this information, so why not share it?
Efforts to better target the PLUS programs to the groups they serve, bolster underwriting standards for parent borrowers, and increase transparency would significantly strengthen the programs and help ensure that these federal loan dollars are used to provide access to higher education without crushing current and future borrowers.
Justin Draeger is president of the National Association of Student Financial Aid Administrators.
More than 45 years ago, Benjamin Braddock left an indelible mark on the American public in "The Graduate." Politely yet palpably rejecting advice to choose “plastics” as a career, Benjamin submerges into the darkness of a swimming pool in an attempt to escape the looming decision: what’s next?
The lack of clarity that plagued Benjamin’s generation has only been heightened for today’s graduates who receive equally cryptic messages to pursue jobs in technology, business, or fields for which they have little interest or knowledge. But they also find themselves competing with record numbers of college graduates, often for low-paying or part-time jobs while shouldering college loans.
For most, the college experience was itself stuttered and uncertain. Only slightly more than a third now obtain a bachelor’s degree within the traditional four-year window. Eight years in, only 60 percent graduate. More than a third churn through at least two institutions, and most change their majors along the way. Coming out, debt loads and default rates are at record highs.
Despite these problems, the United States continues to have the highest number of college graduates in the world and ranks fourth internationally in the proportion of college graduates among 25-to-64 year-olds, at 42 percent. For those with degrees, unemployment rates are lower and lifetime earnings are higher. The basic contour of the college storyline persists, even in the face of the Great Recession: College brings rewards to those who finish. It not only makes a difference in employment and wages, especially over one's lifetime, but also in many aspects of health and well-being. The exclusive focus on jobs and wages is shortsighted. These non-economic rewards need to enter public discussion of the value of higher education.
The short-term problem, and a serious one for many young Americans, is getting started after college. One major challenge is unrealistic expectations. That college degree isn’t a fast-pass ticket to a high-status high-wage job. Most young graduates will have difficulty finding full-time work, and there are few options for stable jobs with real opportunities for advancement. Graduates and parents see the popular unpaid internship as a portfolio-builder for “real” work later on. Be forewarned: These internships are not likely to lead to employment and meaningful skills. At some point, graduates need to get started in a job rather than wait too long for the right job. Just how long one should wait is a tough call. But there will inevitably be some waiting up front. Graduates and parents need to be prepared for it.
A bigger problem is that graduates do not know what they want to do or, if they do, what options exist for getting there. Their career aspirations are often too high for their abilities and backgrounds — but no one has told them otherwise. For many there are feelings of regret: “I shouldn’t have screwed around when I had the chance to buckle down.” “What was I thinking when I decided to major in art?” Many mistakenly assume that enrolling in graduate school to earn yet another degree or two will automatically make them more marketable or be profitable as they pile on new debt. Graduate school is an expensive place to find oneself and an ineffective place to warehouse young people.
What should we do? Young people need to align their aspirations with their skills and abilities and know the odds of their ambitions, and parents must aid them in helpful and honest ways. Not everyone is going to be a screenwriter or real estate mogul -- and a few years as a barista are unlikely to be well-spent if one’s career ambitions are not in coffee service.
Young people need a better understanding of the labor market and a strategic plan that focuses on who they are, not just on what they want to be. They also need to know the truth about adulthood: that we seldom land where we expect. Successful pathways into adulthood are fueled by flexibility, resilience, and adaptation -- not exactly the stuff of college textbooks and learning outcomes.
Institutions of higher education have a moral obligation to open these difficult conversations with students early on -- but in a competitive marketplace, under-resourced institutions are often unwilling or unable to be honest about the chances of their graduates. Institutions expend virtually all of their energy getting students in the door and then keeping them in -- that’s where the financial incentives are -- than they do to see their students out. Graduation largely marks the end of the university’s commitment to the student. Apart from career fairs and basic advice on resumes, cover letters, and interviewing, it’s goodbye and good luck. To leave school is to become adult: You’re on your own. The day after graduation, institutions turn their attention to the incoming class.
The bottom line is that if young people are graduating from college but not getting jobs that are even marginally aligned with their career hopes, or that pay enough to get them on a path toward economic independence, we have reason to be concerned. We also acknowledge that institutions of higher education have a responsibility to foster student understanding and appreciation of arts, humanities, and social sciences, which are at the foundation of our global society. These problems signal a dire need to stimulate public debate about the purpose and effectiveness of higher education in the United States.
Amid the refrain that “college is for everyone,” parents and educators are so focused on getting students to the finish line that graduates are left with little guidance or support in how to cross the line from the confines of college into the messiness of adult life.
Barbara Schneider is the president of the American Educational Research Association, professor of education and sociology at Michigan State, and author of The Ambitious Generation (Yale). Richard Settersten is a member of the MacArthur Research Network on Transitions to Adulthood and Public Policy, professor of social and behavioral health sciences at Oregon State, and author of Not Quite Adults (Bantam/Random House).
Jill (not her real name) has been a student in two of my classes and has a 4.0 grade point average. She writes for the campus newspaper, serves on the executive board of our university’s professional journalists organization and works a full-time job. With her exemplary writing and class attendance, she is easily one of the shining stars of our department.
She also comes to me at least once a semester for a cathartic cry.
Jill’s world comes crashing down on her often. Sometimes the pressure and time constraints get to her. Other times, there is an issue at home or with roommates.
But the underlying cause of her stress is an issue she tries to ignore in everything she does: Her parents think college is a waste of time.
Jill’s issues at home and all the time constraints that put pressure on her academics and her social life stem from the fact that she pays her own way through school, with only a small amount of help from student loans and scholarships.
Sometimes she will ask me or whichever professor or adviser she is confiding in that day the question that many of us are scared to ask ourselves: Is it worth it?
There are tons of self-made success stories of billionaires abandoning their college educations in the pursuit of grander things, a la Steve Jobs, Bill Gates, and Mark Zuckerberg. Their stories float around social media, distributed via Facebook memes, chain-letter emails, and Wikipedia entries, and they provide fodder for parents and teenagers who would rather not spend money on or fund four-plus years in a classroom when they could be out making a living and getting started with their occupations now.
And why wouldn’t they?
Jill’s story is like those of so many of my other students who work themselves into exhaustion just to be here in school. For me, their circumstances raise two important questions: As a professor and club adviser, how can I work around these students’ extenuating circumstances in a way that is sympathetic yet firm, and how can I convince these students that college is worth their while?
I often have students come in with late assignments or club members who have fallen short on fulfilling their obligations to the group. They need more time or more help or they just drop the class or club completely. The most common excuse: I had to work.
My gut reaction is to be sympathetic to these students. I know how difficult it is to maintain a job, or in some cases many jobs, to support oneself in school -- I was in the same boat when I was there. At work, students have little control over their schedules or the demands put upon them. The bottom line is simple: You don’t show up, you don’t get paid and you get fired.
But in their academic lives, students become their own boss for the first time in their lives. Suddenly, there is no parent or boss or teacher breathing down their neck, leaning on them to go to class, do their homework, or attend that meeting.
When an exhausted, newly autonomous 18-22-year-old has to make the choice between work and school commitments, the scale is hardly balanced. On one end, there is the job they cannot afford to lose, and on the other, there is the education or organization that looks good on the resume, but produces few immediate tangible effects. After coming home late at night following a full day of work and classes and meetings, that paper due tomorrow might just have to wait.
The party line for most professors when dealing with this situation is this: School needs to be each student’s top priority. But is that really always fair to assume?
The challenge becomes weeding out which students are in Jill’s position from the barrage of excuses from those who are just being lazy. Often times, the difference is obvious. Students like Jill, who genuinely want to be here and are working hard for the privilege, rarely offer excuses.
Sure, I’m aware of Jill’s circumstances and the circumstances of others in her position, but she has never once failed to take responsibility for any lapses in work or effort. These students are here because they recognize the value of education, and they treat it with the same seriousness they do their jobs.
Still, things come up, and I am faced with a choice, too. Do I punish these students with poor grades or boot them from the organization they have let slip to the back burner, or do I find some way to keep them above water and feeling involved?
The easy choice, of course, would be to tell students like Jill that I can’t make exceptions for them because then I would have to make exceptions for everybody. Having to rearrange my schedule, my rules, and my expectations puts more pressure on me, and in this job, who needs it?
But I didn’t become a teacher so that I could be a taskmaster or a tough boss. It’s students like these that need and want our guidance the most, so I try my best to give it to them.
First, I try to work with the student, finding out if there are alternative times or locations to meet or making myself more accessible in case there is something I can do to help him or her understand the assignment better and complete it on time.
When other students complain or can’t understand accommodations given in unique circumstances, I use it as a teachable moment, reminding them that they will come across situations in the working world that they don’t understand, and everyone’s circumstances are not identical to their own. Sometimes as a manager, I say, you have to be flexible and do what is best for each team member to make the operation run smoothly.
Yet, when dealing with students like Jill, I find such accommodations are rarely necessary. Most of the time, all she needs is a little guidance, an open ear, and someone with authority to tell her she made the right decision.
Which brings me to my next big question: How can I convince students like these that college is worth their while?
Tuition costs are skyrocketing throughout the country, and more students are accruing eye-popping amounts of student loan debt each year, which means they will graduate and start their careers in a financial ditch. Programs have been cut to save money, and class caps at many universities have risen to generate more revenue from more students. Many colleges with an eye on the bottom line have increased the number of online classes they offer, in hopes of reaching more students in more distant locales.
There is an easy answer to give students who question the value of a college degree: Most career-track jobs nowadays require them. A high school graduate is not likely to compete with a college graduate for a teaching job or a marketing job. But there are still plenty of vocational careers and office jobs with decent salaries and potential for upward growth to give pause to students and parents who are not sold on the idea of college.
If Jill’s parents were sitting in front of you, challenging you to defend their daughter’s decision to put herself through college rather than going straight into the work force, what would you say?
When I graduated from college with my degree in journalism, I went to work in a small newsroom feeling prepared. I felt poised, brave, and ready to take on whatever challenges were presented to me.
I was a fool.
My journalism degree did not prepare me for every eventuality I would come across in my reporting career. What it did is give me the basic skills and knowledge I needed to secure the job and the ability to learn something new every day. I owe my success to brilliant professors who gave me the footing I needed to succeed and taught me to absorb education not just in the classroom but also throughout my life.
A fool without my background would have taken one look at her new job and run. This fool stayed, knowing I had the tools I needed to learn and grow. And I never looked back.
The opportunities for growth that came my way stemmed largely from professors who knew my abilities and pushed me to flourish. Yes, I learned the ins and outs of writing news stories while sitting in a classroom, but the real takeaway was the belief that I had the ability to fly above a Category 5 hurricane, knock on accused murderers’ doors, and grill disgraced politicians – all of which I did as a young reporter. When it got scary or it felt like too much, I remembered the lessons I learned at my alma mater, and, occasionally, I even contacted my professors for help, and I managed to carry on.
While in college, I was given the fantastic opportunity to fail. I botched articles, mixed up facts, missed deadlines, and, more than likely, offended sources more than once. Had I done any one of those things in my professional career, I likely would have been looking for another job. As it turns out, my college education was like juggling knives while wearing body armor, allowing me to fail without total destruction.
Furthermore, I never would have been a reporter had I not had the opportunity to dip my toe in other waters. I began college as an archaeology major. (Upon realizing archaeology is a science, I quickly turned and ran.)
I toiled with notions of becoming a theater worker, a “communication specialist” (whatever that is), and a public relations practitioner all before one wonderful journalism professor noted my work and talked some sense into me. Had it not been for college, I might still be looking for my passion and spending and losing a lot of money in the process.
As Jill walked across the stage at graduation last spring, I saw a confident, hardworking young women eager to begin her professional life and sure to be a success. I only hope her parents saw it, too.
Jennifer Brannock Cox is an assistant professor of communication arts at Salisbury University.
New mobile service hopes to provide parents with progress reports on their children's first year of college. Some see a way to boost retention, but others worry students need to learn to solve problems themselves.
As housing prices rose for some working- and middle-class American families, so did college ambitions of their students, study finds. Which leads to the obvious question: Are those ambitions now dropping as home values fall?
Contentious debates about rising college costs during the academic year make summer a welcome break from bad news. One recent headline was “Political Storm Stirring over Student Loans.” The next day a New York Times editorial urged, “Subsidize Students, Not Tax Cuts!” These articles, unfortunately, forecast that summer is going to provide no vacation from higher education’s political heat wave. It merely shifts the focus from the campus to camp.
That’s because the spending and choices associated with the American ritual of sending a child to summer camp today is a rehearsal for the kinds of decisions that will face a family about five years later when they consider sending the same child to college. It also reinforces how advantages and inequities are acquired early in the American college sweepstakes.
For a relatively small portion of prospective college students and their parents who are serious about selective college admissions, here is how choices and opportunity costs have brought camp and campus into a seamless web of deliberations far beyond the planning and pocketbooks of most American families.
How Much Does It Cost?
The answer is that it all depends -- camps are comparable to colleges in their range of prices and services. Among the numerous possibilities is “Pine Forest Camp,” located in the Pocono Mountains of Pennsylvania, conspicuous because it was selected by The New York Times as the subject for a front-page feature story on the changing economics of camp. A glance at the Pine Forest website indicates that in 2011 the charge for seven weeks of a full summer for a stayover camper was $9,700.
Official camp charges do not include such incidentals as travel and supplies. There is considerable discretion on how much parents must pay versus how much they choose to pay. And, for families who are newcomers to deciding about camp for their children, there is new information to absorb about camp expenses. The camp’s website provides a camp packing list. Some clothing items “are only available through Bunkline" -- an internet site for purchase of camper gear. In addition to clothing and accessories, parents can pay for special optional programs: superstar tennis, superstar golf, horseback riding, top cooks, and one-on-one fitness.
Camp as College Prep
Pertinent for connecting camp to college, an upscale camp such as Pine Forest showcases on its website that it offers as a supplement a Scholastic Aptitude Test (SAT) prep course. The catalog elaborates that, “In SAT Prep, campers will spend 4 hours a week preparing for the SAT by learning test-taking techniques and taking 3 practice tests during the summer. Campers have a competitive edge when they return to school in the fall. This extra course is taught by a certified teacher and SAT tutor. Most participants improve their scores by over 100 points."
An option in the leadership track for campers is the “College Bound” program. It is not completely clear whether this entails added charges. Or, if it does, how much? This detail is crucial because it can drive up expenses. Its availability suggests that the clients of the camp are highly concerned about college admissions. The “College-Bound program combines the best parts of being a camper with additional responsibilities and challenges. 11th graders live together with counselors and enjoy the full range of Hi-Seniors activities. CAs participate in leagues, inter-camp games, socials, Color Days, Banquet, Cabaret…the best parts of camp! Plus CAs have unique ‘college-bound’ opportunities.”
The CAs have a trip to Washington, D.C., with visits to American University, George Washington University, Georgetown University, the Holocaust Museum, the Kennedy Center, and on the way back to camp, a visit to Pennsylvania State University. The Boston trip introduces camper-students to Boston University, Harvard University, and Boston College, along with walking tours of Cambridge and historic Boston. Finally, the trip to New York City provided visits to New York University, Greenwich Village, and Broadway.
How Far and How Fast Are Costs Rising?
Both colleges and camps are scrutinized for their rising costs and prices over the long haul. In 1931, when Pine Forest Camp first opened, a seven-week stay cost $85. The summer camp in 1931 costs about 114 times as much today, 80 years later.
Did summer camp really cost 114 times more than now? This may be technically accurate – but it is a calculation so misleading as to be incorrect because it is incomplete. When one accounts for inflation, that $85 in 1931 translates to $1,263.68 in 2011 dollars. Summer camp has increased by 767 percent -- or, stated another way, it is about eight times more expensive than it was in 1931. As for comparing costs of college and camp, college presidents may find some relief from critics in now being able to document that colleges are not alone in escalating prices.
Extra Expenses and the Real Cost of Attendance
As preview for the peculiar consumerism of rising college costs, consider a recent development about summer camp expenses that made front page headlines in The New York Times article, “To Reach Simple Life of Summer Camp, Lining Up for Private Jets.” A number of families were chartering private jets from New York and Philadelphia to take their children to rustic summer camps in rural Maine. What started as an infrequent act spread in popularity, so much so that the small airports in Bangor and Augusta had to increase services to accommodate this expensive practice. Why would parents pay huge amounts for air service instead of the traditional drive in the family station wagon or SUV? The explanations provided a look at family discretionary choices about their children’s education and related support services.
Some parents explained that chartering a private jet was useful because it compressed round-trip travel time from several days to six hours. This could be justified as effective and, perhaps, efficient. There was a secondary, social effect: bragging rights and prestige among parents and children in which chartering the private jet conferred some reflected prestige of “conspicuous consumption.” All constituents henceforth had to be at least aware of this level, whether they mimicked it or not.
All this took place outside the purview of camp officials. To the contrary, for some camp staff, it was a disconcerting clash with the values and experiences of camp life they wished to transmit to adolescents. Regardless of the camp administrators’ views, there was little they could do to encourage or discourage the practice. Parents, meanwhile, had to take these factors into consideration about camp expenses and lifestyle. The summer camp economy had become financially stratified by official price plus added discretionary expenses subject to expensive status pressures. This was a forewarning of decisions about college prices and choices that a family would make in the future. Most important, it shows how numerous variables need to be considered when one calculates the genuine cost of attendance.
Cost of Attendance (COA). Connections to College Costs: From Camp Back to the Campus
Camps and colleges use similar language such as “tuition and fees” charges. Second, a camp and a campus have comparable investments in residential physical plant with recreational and instructional facilities. A residential camp enrolling 450 children has an annual budget of more than $2 million, including $1 million for salaries for a staff of 500. Annual maintenance is about $700,000. The residential dining hall at Pine Forest serves 4,200 meals per day for a summer total expense of $500,000. Third, the proliferation of expensive accessories illustrates how expenses can snowball. The connection between camp and campus becomes more evident when one recalls that a camp offered two optional programs for which families would have to pay extra: the SAT prep program and the Leadership program dealing with college campus visits.
Escalation of supplements was the focus of another New York Times article last summer on the quest for admissions advantage that high school seniors gain by enrolling in (and paying for) programs that provide unusual summer experiences geared to writing an impressive college application essay. This new, expensive option in the summer experience was called “priceless fodder for the cutthroat college application process. Suddenly the idea of working as a waitress or a lifeguard seems like a quaint relic of an idyllic, pre-Tiger Mom past."
If one knows that such pre-college socialization and programs make a difference in who goes where to college and how well they are prepared, does one then include the camp and other activities in plan for compensatory programs that increase promote genuine equity and access? The sociologists Christopher Jencks and David Riesman observed in their 1968 classic work, The Academic Revolution, that for the children of education-minded American families, going to college is not a sprint, but a marathon. Some competitive families start the preliminary heats of this race early, with summer camp as the racer’s edge.
Forty years ago John Gardner, in his 1961 book, Excellence -- asked, “Can we be equal -- and excellent, too?” High prices at camp and campus signal that the answer for today is, “Fat chance!”
John Thelin is professor of higher education & public policy at the University of Kentucky and author of A History of American Higher Education (Johns Hopkins Press, 2011).