Education's ROI | Fed's place spotlight on student debt
Photo/Matthew L. Brown
TUITION AND FEES: Students at Worcester Polytechnic Institute have a federal loan repayment rate of 88 percent. That's the highest rate of any college in the region. A new report from the federal government is placing more scrutiny on college debt and whether students are able to pay the money back after they leave the school.
College is many things: an unforgettable experience, a chance to grow intellectually and meet lifelong friends, a brief reprieve from full-time work. And an investment—often a highly leveraged one.
One measure of the return students can expect from that investment can be found in figures recently released by the federal Department of Education showing how likely recent graduates of particular schools are to be able to repay their federal loans.
New federal figures show the percentage of former students actively repaying their loans from Central Massachusetts schools ranges from well below 50 percent to as high as 88 percent. Meanwhile, the percentage of students that have defaulted on their loans is just 1 or 2 percent at some schools and more than 10 percent at others.
While a high default rate may seem like an indictment of a college program, experts argue that the numbers are much more nuanced. Colleges differ not just in their prices and the marketability of their degrees but also in their ability to help students financially, and the types of students they attract to begin with.
What It’s Worth
Donna Connelly spends much of her time and energy helping students to think about the return on investment they can hope for from a college education. She works for the Colleges of Worcester Consortium as director of the Worcester Educational Talent Search and Collegiate Success Initiative, which helps local high school students consider their options for college.
For some students, Connelly said, it’s worthwhile to take on significant debt to get a valuable degree.
“If, for example, they’re going to WPI and they’re going to come out with a mechanical engineering degree… you know that they would come out with a pretty good starting salary,” she said.
Indeed, the federal numbers show that students leaving Worcester Polytechnic Institute with federal loans in recent years had a median debt of nearly $16,000, but 88 percent have repaid at least some of that money, and just 1.6 percent defaulted on their loans.
The numbers are similar for other selective colleges, even if they don’t offer as obvious a route to financial success.
Lynne Myers, director of financial aid at the College of the Holy Cross, said the Worcester college meets 100 percent of students’ financial need with a combination of grants and loans, thanks in part to its large endowment. And she said the school actively discourages students from taking on more debt than they can handle, even if that means they may end up choosing not to attend.
Dealing With Demographics
But Iris Godes, assistant vice president of enrollment management at Quinsigamond Community College in Worcester, noted that another factor contributing to the numbers is the kind of students who get into a college like Holy Cross.
“They have much a wealthier student to begin with,” she said, noting that Holy Cross students on average come from families that are more capable of providing financial support before and after graduation. She said the students are also generally high achieving to begin with, boosting the chances that they’ll do well in their careers.
In contrast, Godes said, community colleges like Quinsigamond accept all, and their students tend to have lower incomes and more challenging personal circumstances.
Recent Quinsigamond graduates who left the college with debt had a median $3,697 to pay back. Sixty-one percent have paid at least some of the money back, and 7.6 percent have defaulted on their loans.
Godes said community colleges work hard to keep students’ debt manageable. Quinsigamond and Mount Wachusett Community College in Gardner both use their own grant money along with federal and state funding to make sure that students whose incomes are low enough to qualify for federal Pell grants don’t have to take on any debt, according to Godes and JoEllen Soucier, director of student records and financial management at Mount Wachusett.
At Dean College in Franklin, a private college that offers both associate’s and bachelor’s degrees, John Marcus, vice president of enrollment services and marketing, said school officials make sure all students sit down with financial aid counselors to consider what kind of debt they’re taking on and what sort of job they can anticipate finding down the road.
“I think that there’s a real expectation on the part of schools that we have to be proactive,” he said.
Similarly, Sandy Lashin-Curewitz, communications director for Becker College in Worcester, said in an e-mail that the school has strengthened its exit program to help graduates manage their debt. That’s especially important since many Becker students are the first in their families to attend college, and many must hold jobs while they’re enrolled at the school, she said.
Alluring Ads
While students’ ability to repay their loans varies among different public and private nonprofit institutions, the colleges that have come under the most scrutiny in recent months are for-profit institutions. In July, the federal Department of Education proposed regulations that would drop federal student aid for some programs depending on repayment rates and debt-to-income ratios of former students.
Marsha Forhan, a colleague of Connelly’s who works with nontraditional students at the Worcester Educational Opportunity center, said she sees many people drawn by TV advertisements to take out big loans to attend the for-profit schools.
“They look at [these schools] as the answer to all their problems… They’re the ones we see down the road in a few years for the defaulted loans,” Forhan said.
Godes said she sees students applying to Quinsigamond after deciding that it’s costing them too much to take courses at Salter College, a West Boylston school run by the Connecticut-based for-profit Premier Education Group. But because Salter is not accredited by the New England Association of Schools and Colleges, she said, Quinsigamond can’t accept credits that they earned there.
“They’re running their own business, so they aren’t telling the students, ‘Just so you know, the credits won’t transfer,’ ” Godes said.
Salter has a repayment rate of 38 percent and a default rate of 7 percent.
PEG CFO William Anjos declined to comment for this story except to note that the Department of Education proposals for shifting aid policies are open for public comments and won’t be finalized for some time.
Use As Directed
The repayment rate numbers, which were released for the first time in August, aren’t intended as a way of judging nonprofit and public schools. Ultimately, a different version of the data will be used together with other information, to evaluate certain job training programs. Because of that, and because the numbers were released so recently, many local colleges were unable to comment on how they stacked up.
According to the Department of Education, there are two major ways the repayment rate differs from the default rate calculations. It doesn’t consider former students to be repaying their loans if they’re in deferment or forebearance—for example, because they’ve gone on to graduate school or had a medical emergency—and doesn’t automatically count consolidated loans as “paid in full.”
On the subject of deferments and forebearances, a DOE fact sheet says that “while these protections are appropriate for individual students, academic programs that produce large numbers of students who are forced to rely on these safety-net provisions due to large debts and low incomes may not be serving students well.”
For some schools, these differences mean that the two data sets appear to show wildly different things.
At the University of Massachusetts Medical School in Worcester, no former students are in default, but the repayment rate is just 27 percent. A DOE spokeswoman said that’s likely because so many new medical school graduates defer payment of their huge loans until after they complete their residencies.
At Quinsigamond, Godes said she’ll be watching closely to see what the final repayment rates look like.
“It will be interesting to see where this goes longer term,” she said.
WBJ Web Partners
Most Recent
Most Recent
0 Comments