Paying for College: What Now?
NYT Motherlode Blog
By Lisa Belkin
October 16, 2008
My son, I am told, is a member of the largest wave of graduating high-school seniors to apply to college in the history of the United States – 3.3 million of them, the peak of a steady numbers climb that has been making college admissions a cutthroat ordeal for more than a decade.
As both a reporter and a parent I have watched this arms race and waited for the backlash: the moment when applicants and their families decide en masse that it is insane to spend four years losing sleep and sanity only for the right to put a $200,000 bumper sticker on your parents’ car; the moment when families say enough, a good education can be gotten for a lower economic and emotional cost.
I am wondering if that moment has come. An online survey of 2,500 users on the website meritaid.com, found that 57 percent of seniors are looking at “less prestigious” schools because they cost less. Add to that a study released this week by the online admissions counseling service ApplyWise.com and Next Step Magazine, a publication for high school students, which found that half of all families polled are limiting their children’s choices to less expensive, in-state public college options in response to grim economic news.
It’s not like parents have only just discovered that it can be daunting to pay for college. But over the past decade or so, the threshold for qualifying for loans has lowered at many of the most elite and expensive schools and those who don’t qualify have at least had fair warning and some chance to start saving. (Whether they actually did so is another story entirely. One survey by Fidelity Investments, of 3000 parents with children 18-years of age or younger, who “are expected” to attend college, found that 62 percent plan to rely on loans, not savings, in order to pay. That’s up from 53 percent last year.
Now, with the hits being taken by the college endowments that fund grants and scholarships and by families whose college funds were in the stock market, money that might have been available is simply gone.
Loans are drying up, too. Last week Fin.org, a website that tracks the student loan industry, reported that 36 lenders have stopped writing student loans completely over the past year, and the situation has only become worse in recent weeks. Those kinds of loans from private lenders account for 22 percent of the loan market (as compared with federally backed loans, which account for 40 percent and are not expected to be affected.)
With no money to pay, the decision tree changes. And while college costs so far seem to have defied the laws of economics – the one that says that as cost increases, demand decreases – that may be about to change. And while the reasons are troubling the result may be for the best. My own parents always told me that they would scrub floors if necessary in order to send me to college. And I have always seen it as my job (and, frankly, my joy) as a parent to give my children the best educational launch in life that I can. I have long believed that means going to the “best” school that will have them. But I am beginning to wonder if my definition is skewed.
Does a $50,000 a year education really buy a better life than a $12,000 a year education? Or does it buy a fancier sticker for the car?
(Stop back here later when I will explore what to do if you are in the boat I’m in – had some money saved, but now there’s much much less …)