FOUR YEAR DEGREES: A “DYING” BREED

Oxymorons have become a generally-accepted part of American culture. Accurate horoscope, airline food, casual Dress, good loser, long shorts, authentic reproductions, and now, “a four-year college degree”!!!

The latest polling data from the National Center for Education Statistics shows that only one-in-three of every freshman entering college in the Fall of 2009, will graduate by 2015!!

This explodes the prevailing myth that colleges are “four year degree experiences”; six-year degrees are more the norm.

This also contributes to the ever-increasing numbers of students who graduate with staggering amounts of student loans. The most recent statistics show that currently there is $85 Billion in student loans (as measured by the U.S, Department of Education); and most likely an ADDITIONAL $40 Billion in Home Equity loans that cannot be traced to college (but are being used to fund undergraduate studies).

On average, four-year colleges graduate fewer than 60 percent of their freshmen within six years---------but at many institutions graduation rates are far worse.

Examples abound: the University of Louisville (which enrolls over seventeen thousand undergraduates) has a 44 percent six-year graduation rate. At the University of Memphis, the rate is 34 percent and at the University of Alaska, Fairbanks only 25 percent of students graduate within six years.

Colleges and universities receive tens of billions of dollars directly AND indirectly from taxpayers every year, but the graduation rates suggest that many of these institutions are not serving their “customers” well-------------particularly in the area of up-front OR projected cost-of-attendance.

Where have ALL the lenders gone?

Last year I had the privilege of listening to a Senior Vice-President of Western New York's largest bank explain how "his" bank felt it was a public responsibility to participate in the college lending marketplace.

I received phone calls today from two families who placed college loans with this bank last year, and they informed me that this bank now says that they "no longer participate" in college lending.

What happened to the sense of public responsibility that was expressed last year??

OR----has this bank decided (like most American colleges) that families can bear the burden of college on their own.

With the nationwide credit crunch AND lending interest rates under intense scrutiny----all of a sudden responsibility to (and concern for) borrowers has disappeared.

Isn't it about time for families to cease submitting to colleges (which appear to be the LAST NON-regulated industry in the USA)??

Compared to colleges and lending institutions, the oil industry looks like the Pillsbury Doughboy!!

Financial aid - or financial pain?

Recently I have had the opportunity to review many “financial aid” packages from colleges across the country. I am continually amazed at the way representatives of institutions of higher learning can mis-represent and color the facts of financial aid to families.

Let me be VERY clear----loans are NOT financial aid! They represent long term pain, at best, and financial bondage at worst!!

Some quotes from college representatives are:

“When you are thinking about where to attend college, cost should not be your main consideration.”

“I don’t think college cost should be a factor to where students apply for admission.”

And how about this one... “Students should not look at a school because it is affordable. The student's ‘college experience’ is what really matters.”

We are growing a college debt-laden generation that is being led to the slaughter by colleges who should instead be teaching fiscal conservativeness and prudent management of resources.

It seems that our only hope for college debt is a GOVERNMENT BAIL-OUT!

Sub-Prime Loan Disaster

Most people have not connected the dots, but the impact of “liar” mortgage loans on college debt will be SIGNIFICANT!!

Here is how I believe we will get there: the mortgage industry truly drives interest rates, and the current chaos in the housing market is generating HIGHER INTEREST RATES!!! In addition to this upward interest rate pressure, there is increasing pressure on lenders to cease “bundling” OR “packaging” loans for resale---------which the mortgage industry calls “securitization.”

Securitization is also becoming very scarce within the college loan industry. Banks are NO LONGER able to package loans and achieve economies-of-scale by bundling and selling college loans.

I believe it is very reasonable to expect college loan interest rates that are TWO PERCENTAGE POINTS HIGHER than what is available today (in some cases OVER 10%)------------prior to college openings in the Fall of 2008.

Just another reason to use strong consumer purchasing principles when choosing a college!!