Rising tuition trumps interest rate among students’ worries
Sometimes, it’s the “principal” of the thing. Particularly when “the thing” is a loan.
As lots of homeowners learned, borrowing too much money can lead to trouble even if interest rates are relatively low. If college students are wise, they’ll realize the current debate about the interest rate for their loans is a sideshow compared to rising prices.
President Barack Obama visited college students last week to argue for keeping the interest rate for federal student loans at 3.4 percent. He urged them to tell Congress, “Don’t double my rate” to 6.8 percent, as current law requires.
He was arguing against … no one. Republicans and Democrats alike propose holding the rate steady. As is often the case, they differ only over how to offset the cost (Republicans would cut spending; Democrats would raise someone’s taxes). Obama’s presumptive GOP opponent, Mitt Romney, also favors holding down the rate.
No doubt, a higher rate would be a blow to students. And the job market, still stagnant almost three years after the recession ended, means they’ll have a hard time finding a job to pay off their loans, whatever the interest rate. But the student-loan interest rate has fallen each of the past three years, and student debt rose sharply anyway. It now tops $1 trillion, more than Americans collectively owe in credit-card debt.
The root of the problem is the soaring amount of principal students are borrowing due to the rising price of tuition.
Tuition at Georgia’s public colleges has doubled during the past 10 years. Add the mandatory fees that figure more and more prominently into their prices, and the price has nearly tripled at both Georgia Tech and the University of Georgia.
In fact, given the past decade’s growth rate, students can expect a four-year degree to run them more than $47,000 at Tech and some $46,000 at UGA. And that’s just for tuition and fees: Living expenses for four years add thousands more.
Ten years ago, the cost of two semesters at either school was about $3,600, for an expected cost of $14,500 over four years (again, for tuition and fees only). It’s much the same story at Georgia’s other colleges. Is a degree really worth three times as much now as then?
Now, like most state agencies, colleges have been getting less from the Legislature: an average budget cut of 3 percent a year since 2008. So they’ve jacked up tuition and fees by 10-14 percent a year since then, depending on the school.
But that doesn’t explain why in the previous five years, when their take from the state budget was growing 5 percent annually, tuition and fees were still rising 6 to 8 percent a year. General inflation was about a third as fast. (The generosity of the HOPE scholarship almost certainly explains part of the faster growth for college prices.)
Had tuition and fees grown at even a 4 percent clip during the past decade, a loan to cover them at UGA for four years — even at that doubled federal interest rate — would wind up costing a student about $31,000, according to the feds’ online calculator.
At current rates of tuition growth and even assuming the lower interest rate, that same student is looking at $54,000. That’s an extra $200 a month in loan payments. For 10 years.
If this tale sounds similar to that of health care, you must have aced the SAT. Health care, education, energy: Markets in which the government plays a large role have seen prices grow wildly. And that’s a big reason many Americans feel they aren’t getting ahead, college degree or not.
– By Kyle Wingfield
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
199 comments Add your comment
Hillbilly D
April 30th, 2012
12:02 pm
Is a degree really worth three times as much now as then?
It isn’t but the colleges and universities, which are a big business, have done an excellent job in selling the notion that every person needs and must have a college degree. They’ve created a market and it’s a seller’s market. The can charge just about whatever they want due to the laws of supply and demand.
In my part of the world, the only construction going on, is rapid expansion of college and university campuses. New buildings are sprouting up faster than people’s gardens. In a time of belt tightening for most everybody else, they’re still spending money like sailors on shore leave.
There are also other external factors at work, but those aren’t unique to the education system.
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
12:03 pm
Ever notice how anything the government gets involved in gets all hosed up and more expensive?
Just a long series of coincidences, I’m sure.
Jefferson
April 30th, 2012
12:03 pm
If you are financing food and board under the guise of going to college, this is not a good idea. Some folks who were lucky enough to not have to be in debt and go to college will have a hard time understanding those who are not so lucky. It is indeed a struggle.
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
12:06 pm
“but the colleges and universities, which are a big business, have done an excellent job in selling the notion that every person needs and must have a college degree.”
One of my favorite movie lines, Hillbilly D:
http://www.youtube.com/watch?v=eiRGRvE_Wqg
Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)
April 30th, 2012
12:06 pm
Tiberius, paying your monthly bill in full each month is “slow” payment?
Do you pay your cable bill one month ahead? Do you prepay on your monthly gas bill?
You equate someone who pays their bills ON TIME and IN FULL as a deadbeat? With poor ethics and morals?
You should really listen to the drivel that comes off your fingertips day in and day out.
Trolls Bane
April 30th, 2012
12:13 pm
Riddle me this … why has the GA legislature decreased funding for higher education in this state? How can this decrease not result in higher costs for students?
I guess the priority is a good education for the scions of the already successful and best of luck to every one else .. unless you get a full scholarship to Harvard
Trolls Bane
April 30th, 2012
12:16 pm
Hillbilly, since you claim a college degree is not required, how then can you even get your foot in the door in corporate America without one? Last time I checked most good / well paying jobs REQUIRE a college degree, some even REQUIRE a masters or doctorate ( MD – Doctor of Medicine, JD – Doctor of Laws), etc. …
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
12:17 pm
why has the GA legislature decreased funding for higher education in this state?
———
Maybe they needed to balance the budget.
A foreign concept to you Obozo receptacles.
JDW
April 30th, 2012
12:21 pm
@Kyle…”My belief is that education simply hasn’t faced the same competitive pressures, because it essentially can increase its prices at will: either by raising property taxes at the k-12 level, or by increasing tuition and telling 18-year-olds they’ll be failures in life unless they pay up”
People once believed the world was flat…they didn’t have any evidence either. On the other hand to say that property taxes can be raised at will to create an unlimited pool of education money is simply utter nonsense….if that were true we would have no funding issues. As for the bit about “fear mongering” 18 year olds…are you trying to say that a college education has no impact on one’s earning ability. In spite of mountains of data to the contrary?
“Kyle wrote…Of course higher education makes one more likely to be able to repay the loan than if they had taken out the same loan and not gotten more education — but that’s not the issue.”
That is EXACTLY the issue. If you can across a population increase earning by 150% and up you should do it across as wide a population as possible. If you want to “limit” non performing investments then do it by institution class…the class that leads the default parade by a huge margin….
FOR PROFIT EDUCATIORS…they make up 50% of the defaults and “educate” 10% of the population. http://www.nytimes.com/2011/09/13/education/13loans.html
Sounds to me that is the problem….poor regulation of private educational enterprise.
Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)
April 30th, 2012
12:24 pm
as long as Bernanke is in charge of the money supply, there is no chance of ever running out of money.
Put a Republican in there and the fed’s strategy will change dramatically? Yeah, right.
Dusty
April 30th, 2012
12:24 pm
Kyle write a good column reminding all that “borrowing too much money can lead to trouble”. He’s talking about student loans and government involvement.
In the first place, you don’t have to have government loans. Where are the parents? Are they not considered responsible for their children up to 24 years on some government entites?
I speak from experience. Our five children have seven college degrees(including a recent PhD in science) and not one of them ever got a government loan. They took advantage of local universities,scholarships, lived at home sometimes, worked part time, bought used books, and were always economical. We, the parents did help them financially when there was a need and we are happy middle class.. But the children paid for much of it themselves because they wish to pay for it independently. Independence! But they knew that we, the parents, were always there for them
Our family stressed education and expected each child to go as far as possible. They did. We helped. So did the government with state universities and federal participation also. But we must look to ourselves to cut costs and demand the same from education, healthcare, and all aspects of our government. Let us start with ourselves as family conservatives remembering, “borrowing is bad!”.
We can manage!! We thrive on independence.
Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)
April 30th, 2012
12:26 pm
FOR PROFIT EDUCATIORS…they make up 50% of the defaults and “educate” 10% of the population.
You can’t get a job with those degrees….there is a reason for that.
Hillbilly D
April 30th, 2012
12:27 pm
Trolls Bane
The majority of people in the U.S. don’t work in “corporate America”. Most tradesmen make pretty good money. And if everyone in America has a Doctorate, as you suggest, then a Doctorate loses its value. Somebody still has to pick up the garbage, plant the crops, fix what’s broken, etc.
And by the way, I spent many years in the car business and I couldn’t even count how many car salesmen I knew that had 6 figure incomes and a lot of them had a high school diploma and that was it. They had a skill, which could be refined, but basically can’t be taught. They were born with the ability to sell.
Darwin
April 30th, 2012
12:28 pm
The government plays a large role in energy? Please explain.
Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)
April 30th, 2012
12:31 pm
Our five children have seven college degrees(including a recent PhD in science) and not one of them ever got a government loan.
So, now taking out a loan to better yourself is a bad thing? If you pay it back on time and in full you are a bad person?
The government lends money to consumers at 3.8% and you all squeal. The government lends out billions to banks at ZERO interest and you have no beef with that?
Banks are profiting off interest-free taxpayer dollars. And you got nothing. Government loans AT A COST to individuals to better themselves and “OMG the sinners!”
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
12:32 pm
“Tiberius, paying your monthly bill in full each month is “slow” payment??
No, however, not paying off your student loans as quickly as you are able to (as in the Obama’s instance), since they were given to you at the expense of others, i.e. the taxpayers, is ungrateful.
“Do you pay your cable bill one month ahead?”
No, nor do they loan me their services in advance. Your question is not based on comparable situations.
“Do you prepay on your monthly gas bill?”
See last comment.
“You equate someone who pays their bills ON TIME and IN FULL as a deadbeat?”
No, I see someone who drags out their student loan repayment when they can afford to repay it much sooner as being a deadbeat.
“With poor ethics and morals?”
Yes.
Darwin
April 30th, 2012
12:35 pm
“Health care, education, energy: Markets in which the government plays a large role have seen prices grow wildly.” So, countries that have a single payer health care system – how do they fare in costs vs the U.S?
MrLiberty
April 30th, 2012
12:38 pm
One half of every transaction is MONEY. The government, through the Federal Reserve controls the supply of money. Since the creation of the Fed and more specifically the end of the so-called gold standard in 1971, there has been no limit to how much is being created/printed, etc. More money chasing after a limited supply of goods always results in rising prices. Everyone keeps saying that prices have been rising without government involvement here, there, or somewhere else. Government has had its hand in every transaction via the fiat dollar. It is just that in the areas of heathcare (50% of every dollar spent comes through government hands first), education (grossly low interest rate loans), housing (same as education) combined with all of the regulations, restriction, incentives, subsidies, etc. that govenrment added to the mix as well, the problems exhibit themselves in even great ways than in less restricted, less manipulated sectors of the market.
It is about the dollar. That green piece of paper has lost nearly 98% of its value since the creation of the Fed in 1913. You cannot solve inflationary problems without first getting rid of the Federal Reserve and returning to a market-chosen sound monetary standard (as opposed to just another government imposed/manipulated gold standard as some are suggesting).
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
12:41 pm
“So, countries that have a single payer health care system – how do they fare in costs vs the U.S?”
Better than us. But then, they do not have our standard of living, our legal system which inflates costs by about 30% and they don’t run as many expensive tests as we do.
Because the reasons WHY our costs are so high are more important than the act that our costs are so high, Darwin.
MrLiberty
April 30th, 2012
12:42 pm
Darwin – through rationing, price fixing, longer and longer waits for service, and by hiding the costs of their medical system in other taxes, fees, etc. There is no free lunch and government never does anything well. All single-payer systems are on the verge of collapse. The massive debt that every country carries is where it is all hidden. Nobody is paying for their medical systems each year. They are all just passing it on to the next generations through debt. We are doing that too along with trillions for pointless wars.
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
12:48 pm
Put a Republican in there and the fed’s strategy will change dramatically?
———-
Correct. A Republican would likely push to end the foolish “dual mandate” and return the Fed to its proper role–price stability.
We’ll wait while you go off and Google all that.
Dusty
April 30th, 2012
12:48 pm
No Finn,
Don’t jump on my comments just because I am conservative.
Acquiring a loan is not necessarily a bad thing. But living without a loan and its interest is much safer economically.
ARE you saying everyone should have a loan to be a good citizen? If you want to write exaggerations, I can do it too. You make a habit of it.
Proove it with FACTS
April 30th, 2012
12:48 pm
“But then, they do not have our standard of living, our legal system which inflates costs by about 30% and they don’t run as many expensive tests as we do.”
Please provide an unbiased link to back up these assertions
Breakdown of nations such as Norway, Sweden, Denmark etc not having US std of living would be a great start then you could move into the 30% figure for associated legal costs.
I’m sure this will be easy to back up with unbiased links that we all could agree are accurate sources of information
Thanks in advance for your time and assistance in providing us this information
Kyle Wingfield
April 30th, 2012
12:50 pm
JDW @ 12:21: Of course “to say that property taxes can be raised at will to create an unlimited pool of education money” is nonsense. That’s why I didn’t say that. But the only check on a school board’s ability to raise property taxes is the electorate’s willingness to vote them out, and the electorate has proven itself generally apathetic toward these local-level elections. A school board certainly faces far less pressure to keep its costs, and in turn its prices, low than any business in a competitive industry faces.
And no, I never said “a college education has no impact on one’s earning ability.” (For someone who likes to accuse me of fighting straw men, you have a nasty habit of arguing against things I never wrote.) But college — not post-secondary education, but specifically “college” — is not for everyone. But that’s not what we tell teenagers. I’ve never seen a high school grad lauded in the same way for attending technical school, even though that might be the best way for that particular person to maximize his earning potential.
What I would like to know about the default rates for the for-profit colleges versus others is how the default rates compare for students of similar academic credentials entering college. The NYT story doesn’t address that, although it hints that the for-profit colleges serve less qualified students when it notes they “typically serve low-income students”: There is a general, although not inescapable, link between a student’s family income (I assume that’s what the reference means) and his/her academic credentials.
Are these students defaulting more often simply because they were more marginal students than the general college population — and thus are less able to a) finish the course work and b) capitalize on it by landing a lucrative job? (The DOE data don’t tell us either way.) If so, did the feds contribute to the problem by underwriting their loans, again without regard to their specific ability to repay them, because the policy was to increase the number of college graduates by any means necessary (perhaps out of the belief that all college graduates are necessarily better off)?
Can you say “subprime mortgage”?
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
12:53 pm
You libtards are arguing about pennies when you should be concerned about pounds.
Your Messiah has you well trained. He tugs on your leash a bit and you start yapping.
Democrats: So easily led.
Dusty
April 30th, 2012
12:56 pm
Hillbilly D 12:27
I appreciate your support of the people who keep us “going” in so many ways and do not have college degrees.
For instance, your neighbor with 80 thousand chickens may not have a college degree but I surely am glad he’s busy raising those chickens. A day without fried chicken is like a day without…….ooh you know. Just pass me one of those wings!!
Proove it with FACTS
April 30th, 2012
12:56 pm
http://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index
If I’m not mistaken the top 3 do have health care for all
Granted they are not the exact countries I mentioned, so want to apologize for not having those listed correctly
If you could assist with the 30% legal cost figure that would be great and also help shut down this lib haters
thanks again
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
1:01 pm
Student loans should be limited to borrowers with worthwhile majors who will likely be able to repay their loans, specifically STEM majors and perhaps medical degrees.
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:02 pm
“then you could move into the 30% figure for associated legal costs.”
Here’s the first backup link:
http://articles.latimes.com/2011/sep/27/news/la-heb-doctors-aggressive-medicine-20110927
Proove it with FACTS
April 30th, 2012
1:02 pm
Does anyone have the cost figures and saving related to health care tort reform efforts for Texas?
Hopefully it was at least the 30% that was mentioned earlier………
Hopefully more and what a saving for the citizens of Texas
They are saving on health care, I hope
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
1:04 pm
Proove it–how much did you donate to charities that provide free health care last year?
Proove it with FACTS
April 30th, 2012
1:06 pm
Didn’t see the 30% figure in the article……… Hoping you have some info on that so I can utilize it myself in the future
I didn’t realize it was that much
That is a ton of money
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:07 pm
And another:
http://www.medicaldaily.com/news/20111228/8456/lawsuit-malpractice-physician-defensive-medicine-patients-for-fair-compensation-florida-health.htm
Proove it with FACTS
April 30th, 2012
1:08 pm
My donations go to a local food bank and time goes to Habitat
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:08 pm
And another:
http://archinte.ama-assn.org/cgi/content/full/170/12/1081
Proove it with FACTS
April 30th, 2012
1:11 pm
Tiberius
The articles you are providing seem to match your overall point which is great. Thanks for the information and info, however do you have anything with the 30% figure or something in that range?
Those articles are great, but the do not say 10%, 30% or 50%.
I know it is high and was looking for a definitive number
Thanks again for taking the time to provide the links
catch up with you later
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
1:17 pm
So when it comes to achieving your dream of health care for all, you were thinking of using other people’s money?
Hypocrite.
Proove it with FACTS
April 30th, 2012
1:23 pm
Barry
Were you directing your last post to me? Not sure what you are referencing. I asked Tiberius to provide some information and he politely did so.
Since you were asking, what charities do you support?
JDW
April 30th, 2012
1:28 pm
@Kyle…”Can you say “subprime mortgage”?”
An apt comparison and another case where LACK OF government oversight and action is the primary culprit.
Kyle wrote…”A school board certainly faces far less pressure to keep its costs, and in turn its prices, low than any business in a competitive industry faces.”
Again an interesting leap of logic not really supported by facts. You really don’t have to go much further than comparing the expenditures per student of a private school to that of a public one to see that the public school is delivering more value per dollar. I think if you really broke it down you would find that costs in a fast growing business…say Google…are far more exorbitant than you would find in any public school.
Kyle wrote…”And no, I never said “a college education has no impact on one’s earning ability.” (For someone who likes to accuse me of fighting straw men, you have a nasty habit of arguing against things I never wrote.)”
Nor, contrary to the accusation, did I say you wrote that…I asked a question…
“are you trying to say that a college education has no impact on one’s earning ability. In spite of mountains of data to the contrary?”
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:30 pm
“Does anyone have the cost figures and saving related to health care tort reform efforts for Texas?”
They are not saving as yet in Texas, largely due to doctors ALSO getting PAID to run those tests, but as most thing in life, these things take time to hammer into some people.
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:33 pm
I’m trying to find the link to a study out of Tennessee that showed the 30% figure, FACTS, but thus far it is eluding me.
Google is NOT my friend this afternoon.
Dusty
April 30th, 2012
1:35 pm
Well, this looks like a good time to place a “plug” for DOCTORS WITHOUT BORDERS.
They provide emergency heathcare around the world and establish health centers with doctors, nurses and medical supplies in some of the worst places and situations in the world.
One example was Haiti after the terrible earthquake. D W B came immediately even with “portable” operating rooms and many other supplies and help for tragic situations. Their “operating” expenses for the home offices are very small.
Lutheran World Relief is also an agency now pressing for funds to fight malaria. Malaria is a great killer of children in many African countries. With medications and anti-mosquito netting, etc., the death rate is cut drastically. LWR spends very little money on the “home offices”.
You can find info on both of these relief agencies on google. Their good works go around the world. We should never complain about our healthcare when so many people on this earth have little or none.
Kyle Wingfield
April 30th, 2012
1:46 pm
JDW: Oversight, OK. But there was plenty of government action for subprime mortgages: strongly, ahem, encouraging banks to make the loans; giving Fan and Fred, which bought said loans from banks, an implicit bailout guarantee (now explicit), turbocharging the loan proliferation; keeping interest rates so low for so long …
Tiberius - Banned from Bookman's and proud of it!
April 30th, 2012
1:46 pm
“You really don’t have to go much further than comparing the expenditures per student of a private school to that of a public one to see that the public school is delivering more value per dollar.”
Unless you consider mediocrity a “value” in the public schools and “results” a value in the private schools. Then your whole statement is rendered null and void, isn’t it, JDW?
Kyle Wingfield
April 30th, 2012
1:46 pm
Also, being enablers for the ratings agencies, by 1) limiting their number and 2) requiring the use of their ratings.
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
1:48 pm
Proove it, you want health care for all but aren’t doing anything to make that a reality, other than bellyaching and trying to have others be conscripted to paying for your dream.
Don’t be a hypocrite. Give.
Road Scholar
April 30th, 2012
1:50 pm
Dusty: Also Engineers w/o Borders have done some good in 3rd world countries. The Ga Tech chapter has worked on projects to improve the water supply and waste treatment at low costs and it is renewable.
Lil' Barry Bailout (Revised Downward)
April 30th, 2012
1:52 pm
Pretty much every conversation we have here comes down to one question.
How much are the moochers and parasites going to be able to steal from people who work for a living?
Proove it with FACTS
April 30th, 2012
1:54 pm
Barry
You must have me mistaken for someone else……… You seem upset because I was in a dialogue with Tiberius and not you.
I’m no national health care advocate. I noticed the information that was posted and asked questions, so I could also reference the information in the future.
Tiberius provided numerous links and I thanked him for taking the time to do so.
No need to be upset with me and call me a hypocrite for something I do not advocate.
I hope you will be ok
Frontman
April 30th, 2012
2:02 pm
“An apt comparison and another case where LACK OF government oversight and action is the primary culprit.”
It seems pretty obvious that the government’s attempt to ensure that everyone gets a college education is the real problem here. This is very similar to the subprime mortgage crisis – encouraging and shoving people into commitments that they may not reasonably shoulder, then wringing your hands when those people do exactly what you thought they might do – default. And you think that the optimal solution is to let the government regulate more and act more? When are you going to learn that government’s tendency is to create many more problems than it solves when it manipulates social or economic conditions?