Debt to Degree: A New Way of Measuring College Success
Researchers Kevin Carey and Eric Dillon from the think tank Education Sector have come up with a new way of measuring college success using a “borrowing to credential ratio” which sheds light on the dual problems of dropouts and debt. For each college they take US Department of Education data showing the total amount of money borrowed by undergraduates and divide that by the total number of degrees awarded.
The Problem with College Debt
The American education system is plagued by high levels of dropouts and debt. Only half of the students who start college get a degree within six years, and graduation levels at less-selective colleges often hover at 25 percent of less. In addition, student loan debt is at an all-time high with rapidly rising loan default rates. America is falling behind its international competitors in educating its populace and creating productive citizens.
-Nationwide, the overall borrowing to credential ratio has increased sharply in recent years
-Certain sectors of the higher education industry-in particular, for-profit colleges- are racking up far more student debt per degree than others. For profit universities generated $43,383 in debt for every degree.
-State policies matter a great deal, with different public university systems achieving disparate results for students. The ratio of debt to degrees at public four year universities was $16,247.
-Among elite colleges and universities, some are faring well on their pledge to help low and middle-income students graduate without major financial burdens while others are riding a wave of student debt to fame and fortune. Private non-profit colleges and universities produced $21,827 in debt for every degree. Princeton was at the low end among elite private institutions with a borrowing to credential ratio of $2,385. In contrast, New York University’s ratio of borrowing to debt was $25,886.
Solutions to College Debt
States and colleges can direct their financial aid policies toward the neediest students. More attention to counseling and support for students who are at risk of dropping out is imperative. States who have managed student debt poorly like Iowa can learn from more successful states as Florida. Moreover, regulations like the “gainful employment” rules implemented by the Department of Education can curb the excesses of for-profit colleges that place students in financial jeopardy.
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