WBEZ | higher education

Parents put off retirement to pay for kids' college

Wed, 13 Mar 2013 15:51:00 -0500

Patty Halajian is a seamstress in Lake Zurich, Ill. Mostly she sews costumes for local theater shows. She’s never been rich, but always made ends meet.

Halajian has two daughters. Her husband died of a heart attack right before their oldest daughter graduated high school. When it came time to pick a college, her daughter was still mourning. So when she got in to Butler university, everyone was relieved to have some good news.

But her daughter's student loans couldn’t cover the cost. So Halajian borrowed $14,000.

“I mean you’ve nurtured them their whole life," Halajian said. "They get to the goal line it’s finally they are going to graduate from H.S. and go to a great college. And you know if you do this for them they are going to have a great life. You do it. You just do it.”

The loan Halajian took out is called a PLUS loan. Nearly a million parents took out these loans last year. On average, they borrowed $12,000.

The loan is federally distributed, but has higher interest than a student loan: 7.9 percent.

Parents can borrow an enormous amount of money--up to the full amount of tuition--with no regard to for income or other debts. So it’s easy to get in over your head.

Often these decisions are the last hoop to jump through to get to college. The decision is fast. And often no one is there to explain the consequences.

“I didn’t understand it all," Halajian said. "I was adrift at sea.”

Jason Delisle is the director of the Federal Education Budget Project, a non-partisan organization that provides research on education spending.

“I call it predatory lending," Delisle said. "You got someone in a vulnerable situation. They don’t want to say no. You just sign on the dotted line"

PLUS loans were put in place to help poor and working class kids go to college. Student aid advocates have pushed for a long time to make loans simpler and easier to get. But now advocates say these PLUS loans may be hurting the people they intended to help.

“These are essentially sub prime loans," Delisle said. "Only it’s not the government that’s being predatory, it’s the institution of higher learning."

AARP recently examined data on people between age 50 and 65. They don’t know exactly how many of them had PLUS loans, but one in 10 still had some sort of education debt. The average amount was just over $28,000.

That education debt is nearly impossible to erase through bankruptcy, and can be garnished from social security payments. PLUS loans can't be turned over to the student, making a parent responsible until it's paid off.

That’s forcing some parents like Halijian to put off retirement. She is 60 and still working as a seamstress. She owes $8,000 dollars on a PLUS loan and will likely still be making payments into her 70s or 80s.

“I am just going to sew until I can’t sew anymore,” she said.

She never expects to retire, but Halijian doesn’t regret taking out the loan.

“I’d do it again," she said. "If she needed college I would have walked through fire for her.”

Explore PLUS loans in Illinois
(Data via Chronicle for Higher Education)

MOOCs? Distance learning? Technology's impact on higher education

Thu, 29 Nov 2012 05:00:00 -0600

This past summer I traveled to South Africa to lecture at a number of private and state universities. South Africa has 23 institutions of higher education, which offer a full range of majors and curricula. And while these schools offer their students a traditional classroom experience, each of these institutions also offers its students some distance learning options. Depending on college and the major requirements, a student is able to take all, a large portion or at least some of their core classes online.

The various methods of distance learning include the old fashioned “snail mail” correspondence school method: Students do a series of written assignments and mail them to an instructor, who corrects and grades them. There are also telecast lectures, interactive broadcasts that allow students to interrupt a lecture to ask a question or request more detailed information. Finally, there are computer-based classes that offer either one-to-one experiences or MOOCs — massive open online courses — that operate on a virtual classroom and chat room model.

South African schools have invested so heavily in distance-learning methods for both practical and pedagogic reasons. South Africa needs to educate its growing population in order to maintain its relatively new status as a democratic nation. Distance learning reaches more potential students at a much more affordable price.

In American education, cost is nearing a tipping point. Post 9/11, nearly all universities have dramatically increased their tuition and most state schools have experienced a significant diminishment of government support; some state schools have been forced to more than double tuition since 2001. Both parents and students are looking for ways to diminish the overall cost of a university education.

One plan widely discussed in the halls of academia is to reduce the on campus university experience from four to three years without radically changing the course load — students would be in residence for three years and be charged three years of tuition. While in residence, besides taking face-to-face classes, they would also fit in one year of virtual classes at their convenience at no extra charge. These virtual classes would usually be required courses not in a student’s major. The primary argument for this plan is that it gets students through school at a faster pace and at a lesser cost without sacrificing their overall learning experience.

I’m not sure this curriculum telescoping will really work. But, like South Africa, we’ve got to learn how to be more creative and experimental. Just as South Africa needs to educate its youth to service and maintain its democratic form of government, so do we!

Al Gini is a Professor of Business Ethics and Chairman of the Management Department in the Quinlan School of Business at Loyola University Chicago.

What's a liberal arts degree worth nowadays?

Wed, 25 Jul 2012 13:47:00 -0500

Doomsayers be damned: America’s higher-education model, and its price tag, ain’t broke. So says Northwestern University President Morton Schapiro. In a recent op-ed for the L.A. Times, Schapiro and Lewis & Clark College President Barry Glassner argue that the college premium — the ratio of college earnings to high school earnings — justifies the investment in higher education. Individuals with a college degree now make almost 85 percent more over a lifetime than those with only a high school diploma.

But statistics are tricky — while one economist opts to focus on the long-term returns, another is focused on the immediate future, which, for many recent college graduates, is bleak. More than 50 percent of bachelor’s degree-holders under the age of 25 were jobless or underemployed in the last year. So if and when a college graduate gets a job, he’s likely to earn, on average, $20,000 more annually than a person with a high school diploma. But when the average student is graduating with $25,000 in student-loan debt, he or she might be a bit more focused on getting a paycheck, any paycheck.

This might explain why, as Ohio University economics professor Richard Vedder is quick to point out, there are 80,000 bartenders and 115,000 janitors with bachelor’s degrees.

It's true, some majors pay more than others. PayScale did a salary survey of the top college majors that lead to high salaries. You won’t find liberal arts in the top 10 below — the classic course of study is about 75 down from the top of the list.

Best Undergrad College Degrees By Salary

Methodology
Annual pay for Bachelors graduates without higher degrees. Typical starting graduates have 2 years of experience; mid-career have 15 years. See full methodology for more.

The median starting salary for a liberal arts major is just under $38,000. And the mid-career average is just over $63,000 — so is a liberal arts education worth it? President Schapiro and Professor Vedder help provide a cost-benefit analysis on Afternoon Shift.

So what do you think: What’s the value of a liberal arts education? Call (312) 923-9239 or join the conversation on Twitter at #AfternoonShift.

Quinn signs bill that will help undocumented college students

Mon, 01 Aug 2011 10:09:00 -0500

A college education could soon be more affordable for thousands of undocumented immigrants in Illinois.

Gov. Pat Quinn on Monday signed into law a bill that will set up privately funded college scholarships for children of immigrants, legal or not. The program’s backers say it will be the nation’s first state-created scholarship fund benefiting undocumented immigrants.

“[It’s] certainly something that will get noticed around the country and in the Congress,” says Margie McHugh of the Washington, D.C.-based Migration Policy Institute.

The Illinois measure could build support for a federal bill called the DREAM Act, McHugh adds. That bill, introduced in May by U.S. Sen. Richard Durbin, D-Illinois, would lay a path to citizenship for many undocumented students and military members who arrived in the country before age 16. Durbin has been pushing versions of this measure since 2001.

Opponents say helping out the young people rewards their parents for violating immigration laws.

Quinn signed the scholarships bill at Benito Juárez Community Academy, a mostly Mexican high school in Chicago’s Pilsen neighborhood. Chicago Mayor Rahm Emanuel attended the ceremony after announcing support for the measure in May. Lobbying led by the Illinois Coalition for Immigrant and Refugee Rights helped push the bill through the Illinois Senate and House that month.

Under the measure, the Illinois Student Assistance Commission will create a nonprofit organization to manage the scholarship funds. High-school guidance counselors will receive training about the program. The immigrant families will also be able to join state-run college savings programs.

Illinois and several other states already provide undocumented students in-state tuition.

College students navigate financial life

Sun, 15 May 2011 23:01:00 -0500

Part of a series on young people and financial literacy

For many high school and college seniors, graduation is a time of new beginnings and harsh realities. Their thoughts are turning to money — for tuition, rent, and credit card bills. Three Illinois students have already made decisions about debt and finances that will be with them for years to come.

Depending On School Loans

Brandon Smith, 24, is a journalism student who started school at a community college in Ohio, transferred to a four-year Ohio university, then moved to Chicago, where he now attends Columbia College. In all, it's meant six years in school. For the past couple of months, Smith has worked part time at a downtown Chicago sandwich shop. "I'm a barrista, cashier, a prep cook, and I work in catering," he says.

Although he's worked some of the time to finance college, Smith depends mostly on government and private loans.

"I watch the interest rates on the loans I take out," he says. "But it's not like I have an option. If a student loan company wants to give me a loan at 10 percent and there isn't any other company that gives me a loan, I take it at 10 percent."

Smith says he didn't learn much in school about personal finance. At home, the emphasis was on minimizing debt. But when it came to education, the message was get the best you can and a good job will follow — pay the loans off later. After recently checking his credit report, Smith found out he's mired in student loan debt. "It's sitting at [$98,000]," he says. "By the time I pay it off it will be much more than that."

Smith doesn't know what it will take to pay it off. He says, "I have no idea what the future holds and that's scary."

Starting To Budget

Another student, Brittany Langmeyer of Indiana, just graduated from Loyola University in Chicago. The 23-year-old is a double major in theater and journalism and a double minor in political science and dance.

This past school year, she lived off campus with three roommates — all of them penny pinchers.

Langmeyer says she learned how to keep utility costs low after she boosted the heat during cold winter nights and was shocked by the subsequent bill. She and her roommates work to keep each other in line. "We talk about 'OK, we can't go out this weekend because we went out last weekend and we already spent that money," she says. "Or 'let's cook pasta and share it' or 'you buy this and I'll buy that and we'll eat that for the next two days.'"

Yet Langmeyer only recently started to budget, and she'll leave college deep in debt. Her mix of private and federal school loans totals between $60,000 and $70,000. Plus, her father took out about $50,000 in loans on her behalf.

"My mom has always said, 'You know Brittany, paying a student loan is a way of life, just get used to it. Don't hinder yourself because of money,'" she says.

Langmeyer hasn't figured out how many years it will take to pay off her portion of the debt. She plans to work that out with her father. But she says she didn't begin thinking about the consequences of her finances until late in the game. "I feel like I started to be concerned about, 'Oh my gosh, I need to pay these loans,'" she says. "How many loans do I have...and I don't know why I never took more interest in it early on. I think it made me nervous."

Learning The Basics

At Bradley University in Peoria, Ill., 20-year-old Skyy Calice lives with three of her sorority sisters in a house off campus. She says as a freshman, she relied heavily on her parents for money.

"I would spend any money that I made on my own...on what I wanted to and I would go back to them and say, 'Oh, I need this for a book' or 'I need this' and they were OK with that," she says.

But Calice says when she decided to move off campus her junior year, her parents said she was on her own. "I had to get my act together financially," she says.

Calice is a double major in criminal justice and sociology. She says when it comes to finances, she knows the basics. Living on her own has taught her to budget, but she has made some missteps.

"I actually got caught up spending a little too much—doing a little extra shopping when I should have been paying bills," she says. "But I've never been in any serious financial trouble. I've never had any credit cards just because you know I don't want to take that path."

At this point, Calice says her school loans are enough to think about. She's received $24,000 in scholarships and grants each year and funded the rest of her education through loans. Her loan debt when she graduates this December will be slightly more than $30,000.

Calice doesn't think that's so bad. "I talked to other people—their loans are that in one year," she says. "So I'm really not excited about paying them back, but I'm glad that it was such a low number."

College student debt grows. Is it worth it?

Sun, 15 May 2011 23:01:00 -0500

Part of a series on young people and financial literacy

The amount of money Americans owe on student loans recently exceeded the nation's credit card debt. That may lead many to ask: Is it smart to borrow a lot of money to go to college? Student financial aid expert Mark Kantrowitz says that college debt is OK — if you're careful.

"It's smart if it's enabling you to invest in your future," Kantrowitz tells NPR's Steve Inskeep. "But if you borrow more than your expected starting salary after you graduate, you're going to struggle to pay your loans."

As an example, Kantrowitz says if you're going to borrow $10,000 a year for four years, you should hope that the field you've chosen has a starting salary of at least $40,000. If you are going to be borrowing more than that, he suggests looking for a less expensive school.

"I can see someone borrowing perhaps $10,000 a year if they're majoring in science, technology, engineering, mathematics, computer science or nursing," says Kantrowitz, the publisher of the FinAid and Fastweb websites.

"But I can't see borrowing that amount of money for a degree in art, or humanities, or sociology, because the jobs just don't pay as well for those fields of study," he says.

That might make some people wince — especially those who focused on liberal arts in college. Kantrowitz says it's not that those majors are worthless, but that students have to face the reality of how they're going to pay back the money they've borrowed for their education.

So what are the most worthless degrees or, at least, the hardest to monetize later on in life? Kantrowitz says he often hears from religious studies and theater majors who have a hard time paying back their loans.

Ethnomusicology is another example. Kantrowitz describes one student who was thinking of borrowing more than $100,000 to pay for that degree. "There are only two main occupations for a degree in ethnomusicology," he says. "One is being a music librarian, which doesn't pay very well. The other is being [on the] university faculty, teaching other students about ethnomusicology."

Kantrowitz suggests thinking about a double major in a field that will allow you to pay back that debt.

"I'd be the last person to tell a student not to follow their dreams," he says. "You just need to enter into it with a dose of reality, so that rather than trying to figure out how you repay your loans after you graduate, you have that conversation before you incur the debt."

Kantrowitz, who is also the author of Secrets to Winning a Scholarship, says that to a large extent, debt is unavoidable, and two-thirds of students graduate with some amount of it.

Kantrowitz tells students, "Before you spend student loan money on anything, ask yourself if you would still pay for it at twice the price. Because by the time you've paid back that student loan, it's probably going to cost you about $2 for every dollar you've borrowed."

And that money adds up to a tidy sum: For students graduating this year, Kantrowitz estimates that their debt will be about $27,000. And if you throw parents' loans into the mix, he says, the average is going to be more like $34,000. Copyright 2011 National Public Radio.

University of Illinois faculty could receive their first pay raises in years

Tue, 10 May 2011 18:54:00 -0500

University of Illinois President Michael Hogan says faculty at all three of the systems main campuses, including Chicago, could receive their first pay raise in three years this summer if current state budget proposals become reality.

Hogan told The News-Gazette newspaper in Champaign on Monday that faculty on campuses in Urbana-Champaign, Springfield and Chicago could see raises of less than 4 percent. That figure is based on current funding proposals that would see the university's state appropriation either remain flat or be cut by up to 3 percent.

The Illinois House and Senate have proposed cuts of 1.1 to 3 percent for the state's public universities. Illinois Governor Pat Quinn has proposed keeping the state appropriation for higher education flat for the next fiscal year.

Hogan said he's concerned by the exit of some key faculty members over the past few years, and is hopeful the current budget proposals will help reward and retain quality faculty at the University.

Higher education: A conversation with City Colleges of Chicago's chancellor

Mon, 17 Jan 2011 17:22:00 -0600

Those concerned about the education of Chicago’s young people know the problem isn’t just with our elementary and high schools. Higher education in Chicago is also facing tough times; City Colleges of Chicago may lose hundreds of positions this year. Officials have said cuts would most affect administrators, as they try to consolidate personnel across the seven colleges and avoid a tuition hike. That job – cutting costs while maintaining and even improving quality – falls on City Colleges chancellor Cheryl Hyman.

The former ComEd executive joined "Eight Forty-Eight" to talk more about her plans during its Mayor Monday coverage of local education.