The Education Bubble, Part 3: ‘Shared Responsibility’ To Shrink Student Debt

As college tuition costs keep rising, student loan debt has increased significantly. Two-thirds of students take on loans, with the average debt load now more than $23,000. And as there’s a renewed push for youths to attend some college, there’s also worry that debt levels and default rates will continue to rise as well. Part 3 of a WBUR Series: The Education Bubble.

BOSTON — In a recent interview, a Boston-based college and career consultant stressed the need for cooperation to ease the escalating student debt we’ve covered in this series.

“There’s got to be a push for some shared responsibility in informing students up front as to whether or not the decisions that they’re making make any economic sense,” said Craig Powell, CEO of ConnectEDU, a website that aids students in their collegiate and professional transitions.

On the students’ behalf, Powell says applicants and their families need to ask themselves a series of questions to make sure the math “makes sense at the outset.” He advises students to consider their target institution, the general career path they’re interested in, the starting salary of a person in that career, how well the institution places graduates in that career and whether a target degree correlates to target career opportunities.

He also pointed out two specific data points he says are rarely discussed when weighing financial needs: The cost of transferring credits for the 47 percent of students who switch colleges in their first two years; and that, on average, students take 5.4 years to graduate from four-year programs.

“Many parents and families are still operating under the notion that you graduate from college in four years when in fact, statistically, that is not the case,” Powell said.

Powell also took issue with the sometimes hands-off approach he sees colleges employing regarding their students’ debt loads. He says institutions shouldn’t wash their hands of responsibility “because we live in a free country” and noted that some industries levy penalties for not informing consumers of potential future pitfalls.

“Many parents and families are still operating under the notion that you graduate from college in four years when in fact, statistically, that is not the case.”

– Craig Powell, ConnectEDU

Part of the problem, in his view, is that it’s a worst-case scenario for an institution when a student cannot graduate, but it’s a different story upon graduation.

“That institution has no ownership once that student has left the institution as to whether or not that debt burden actually gets paid back or not,” Powell said. “That’s the sole responsibility of that student loan underwriter.”

While Powell has seen the upside of the student loan system — he says he never would have attended an Ivy League school without supplemental, private loans — he concedes that the high default rates are starting to resemble the busted housing market.

“I think the notion, in concept of ‘bubble,’ as defined by inflation off of debt, is absolutely alive and well in the education space,” he said. “I think you’re seeing particularly mid- and lower-tiered, higher-priced institutions sort of careening toward a course of not being able to make the hours add up.”

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  • Stefan Johannson

    The one alarming entity that gets the attention of most everyone (but find there isn’t a lot one can do about it) is INFLATION! The Housing bubble was as obvious as the encroachment of the next winter season, and the FEDS knew it! Also, the immense degree of immigration labor that for the most part is ILLEGAL, as many corporate giants hire illegals, to pay them minimum wages and INCREASE the prices for the services that their labor does (i.e. nursing homes)! And these corporate giants won’t allow unions to stick their influence into their inflationary profit making fiefdoms!

    I said that the next domino to fall is the Education nonsense that is being perpetuated on students that are guaranteed one thing from their education… that is debt!

    Just like the mortgage industry, that is great at manufacturing debt that is saleable commodity on the open market in a variety of confusing terminologies that is manufactured by them, to create an illusion of security…, along comes college tuitions that similarly create debt that is most likely saleable like mortgages! As long as there is an interest charge along with the principle.., they can call it anything, as long as it’s saleable!

    Someone please tell me, how a college graduate can graduate with a debt that in many cases is as much as a HOME MORTGAGE, and then expect to buy a home with another MORTGAGE? Well, I guess one way is to do what so many do, and that is charge as much as one can for the services that they do, so they can get some, but hardly ever complete…, control over the American way of filching everything it can out of the populace of people who in many cases, just “want a life”! They don’t need more, they just want enough, but as long as certainly these two industries get to do whatever they want and drive up the price of housing unrealistically and now a college education that is questionable about getting a grip on the power of inflation…, other then adding to it! And don’t get me on the stump about insurance, medical and utility costs (Thank You ENRON and Kenneth lay, who is maybe Bernie Madoff’s cell mate?)!

    Congress was making noise about this college cost stuff a while back, but nothing more! Now, just like an over-looked oil gusher that is screwing up Gulf coast beaches from Texas to Florida, there will be some noise, but just like the beaches, it’ll be a lot of rhetoric just too late! And since inflation is doing SO MUCH to cause costs of labor to just get to be too much, corporate industries, if they aren’t able to get the cheap labor within its borders, they are going to send it THERE (i.e. India for computer programming) to get it done cheaper! Now that is some of what Obama ran on, that is simply NOT going to see the light of day! That is transparency! Yet the housing bubble and now the Education bubble are as clear as the sun in the sky at noon in the time zone you are in, but both (housing and the Education bubbles), may get somewhat deflated a bit, but they will not deflate much, as there is simply too much money to be made out of them, and that is what drives the capitalistic enterprise and the marketing (or fear) for getting control of these entities is simply more $$$ and the way to that is an education?

    And I notice that even a not-for-profit radio station like WBUR, advertises nice stuff like museum of fine arts stuff, they also advertise for colleges! Do they do that as a community service, or profit? I suggest the latter! WBUR is no different! Look at the cost for education at BU… mid 50k minimum! Looking for perpetrators of this story? Look in the mirror you hypocrites!

  • Christopher Hoffman

    I’ve listened to the college debt series, and it has been very informative. However it fails to address the crucial question that is actually causing student debt levels to rise: the skyrocketing cost of a college education. Why do college costs rise 10% per year, in an economy that supposedly is running a 2-3% core inflation rate ? Every private or public company in the marketplace is under pressure every year to deliver more and better products and services for lower prices. However, for colleges and universities the inverse seems to be true. Why ??

  • Stefan Johannson

    The last gentleman took the words that I wanted to say in my last and said them for me, the 10% per year rise in college tuition. Thank you! Why??? Is it, he asks? American Corporate greed! And the ability for the United States to compete globally for a chunk of pie is growing less and less…, simply because it cost too much to educate, and other places, like India, is better at it! So, of course, American Industry is going to send the work there rather then here as paying 40 cents on the dollar there is obvious! Granted, it’ll most likely be a worst product due to language, communication issues and the constant scrabble book nuances that the corporate mindset wants, but they don’t know completely in they want, or how to do it, but they want it? Sort of what happened with the DOT COM (or DOT BOMB) crisis where everyone and his brother wanted a zillion dollars on the marketed fruits of the internet! Jeesz, does America ever wake up and just do the job… nope! Because they have a mortgage… and their kids…, have to go to college…, and then the mortgaged life crisis just keeps right on going! Remember when George Bush, said “no child left behind”? Well, hello! Most are left behind anyhow, as long as the cost of a college education WILL leave so many left behind, but then I think he was talking about YOUNGER children…, not the older children, yet children nevertheless!!

    And the alumni club etiquette that most colleges have…, talk about racial profiling? Or, where corporate industry sells to alumni’s everything from life insurance, funerals to cutting your grass…, you want to hire someone from your alumni…, don’t you? They make it seem like a sacrilege, if you don’t! Essentially, colleges manage their marketing, and the creation of an illusion of the “safety”, or like belonging to a club, if you pay the money to get into the “right” colleges! And the colleges ride that illusionary idiom directly into the face of all manners of so-called in discretionary behaviors, but since it’s an alumnus…, it avoids detection! How fortunate, is that?

    Look at Harvard! How expensive is it to belong to THAT club? That alumnus is not far removed from behaving like the KKK! Yet, is the assumption that being from the most liberal City/State in the country, that there is something THERE about a community spirit? Or, that WBUR actually has an INTEREST in community spirit? Sorry, but I didn’t fall off the turnip truck yesterday, and the fact that WBUR is owned by a MUCH larger CORPORATE entity, that makes a zillion dollars by simply “controlling” the message, makes me suspect of most of the junk you popularize! Marshall McLuhan in his books about national media, said it that the “message is in the media”, and those that control the media, has an ENORMOUS control potential. And when NPR, you come begging for public handouts 2 or 4 times a year now proclaiming all manner of mindful altruistic benefits of gifting to NPR, I yell at my radio, and turn you off! And unless I hear that BU does something about ITS cost of education, I’ll just stay away from 90.9 all together! I like folk music better anyhow and the UMASS costs to its college seem a bit more sensible! Call it “boycott mentality”, it works for creating fairness in the workplace, same thing applies here!

  • SJH

    Why does the cost go up? 13 UMass employees (Administration & Professors) were making over $400,000 in 2009! How many this year? What merits that type of pay at a Public University on the backs of the citizens already paying outragouse taxes in this state. Just one contributing factor.


  • jeh

    Echoing the posters above: I was disappointed that your series did not address the components/composition of the college price tag. What does the money pay for? Why have college costs risen so much? Will they continue to do so? Please, please do a follow-up.

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