As the U.S. economy rebuilds, much attention has been placed on the rising price of higher education and the struggles that students and families face in financing education.
These issues are at the heart of “College Affordability: What is it and How Can We Measure It?,” a paper commissioned by the Lumina Foundation and released at the Lumina Ideas Summit on Monday.
Coauthored by Graduate School of Education and Human Development research professor Sandy Baum and College Board Policy Research Scientist Jennifer Ma, the paper explores possible metrics for determining whether the higher education is affordable.
Dr. Baum sat down with George Washington Today to discuss her research and shine a light on the issues surrounding affordability and value in higher education.
Q: How does your research approach and define college affordability?
A: Most people think of college as “unaffordable” because it is expensive and prices have been rising rapidly. We suggest that understanding affordability requires much more information and a different perspective. What are the expenses that should be considered? Is food and housing part of the cost, or just a part of living? Should we ask whether people can afford any college; the most expensive college? And how do we think about the subsidies that some students can and should receive from parents?
Perhaps most important, we examine how critical the return on the investment is in determining how much students can afford to pay for college. In other words, it is not just the resources available before students start college, but the resources available later when they are in the workforce, that determine how much students can reasonably pay.
Q: Why is the rising cost of education an issue that needs to be investigated?
A: Lack of resources should not prevent people from participating in postsecondary education, but that doesn’t mean going to college should be free. A better understanding of what we should expect from people in different circumstances is critical to our ability to increase educational opportunities and to increase the level of education and skills in the population.
Q: What factors should students consider when determining whether a college is affordable?
A: Students should think about what their different options are, how to compare the quality of the education at different institutions, and how their prospects for well-paid work will change depending on where they enroll and what they study. They should feel comfortable borrowing, but only if they borrow carefully and cautiously. Students should also think hard about their capacities and aspirations to increase the chance that they will succeed when they go to college.
Q: In the study, you say that the burden of college affordability lies with students as well as parents. Explain why students and parents need to consider the “cost” of higher education in this way?
A: The suggestion is not that parents with financial capacity don’t have responsibility for helping their kids pay for college. Rather, students have to determine whether the investment they are making is likely to pay off enough to support the necessary loan payments incurred from financing their education. In essence, students are collecting all the subsidies they can from all possible sources, including their parents. Students are fortunate if their parents can help financially, and those students who can’t rely on their parents are more dependent on grants and scholarships.
Q: You also tackle the issue of insurance for students who are investing in education. What circumstances affect students’ ability to repay their debt?
A: College is an investment with a high average monetary payoff, in the form of higher salaries and upward social and economic mobility, but it is an uncertain payoff. Not all educational paths pay well and there is considerable variation in the expected employment and earnings of students in any institution or program. Students may borrow a reasonable amount of money to finance their education but because of health issues, changes in the economy or something else beyond their control, they may be unable to pay off their loans. The federal income-based loan repayment program provides the kind of insurance we need so that society shares the risk, supporting student investment in higher education.
Q: Why is it important for students and parents to be well versed in the issues surrounding college affordability?
A: Decisions about whether, when, where, and what to study are challenging and complicated, because they can transform a person’s life. Price is an important component of college choice, but most people don’t pay the published price, they receive financial aid. This makes it difficult to know the price you will pay in advance. It could be cheaper to do four years at a school with a high price tag, rather than five years at a seemingly less expensive school. It is also important to remember that picking the right institution for the individual involves more than price.
Anything we can do to help people make better decisions is very important. The federal government is attempting to provide more information for students. While some of their efforts are very valuable, others will probably not be very effective. Some colleges may not be doing a good job of educating students, but there is not a way to pick the “best” colleges because what’s best for one person is not best for another.