Who Should You Trust?

Sallie Mae and the Gallup Polling Organization recently released the results of a survey entitled “How America Pays for College.” The survey was conducted during the 2007-2008 academic year and questioned 684 students and 720 parents of traditional-aged undergraduates.

The results underscore the lack of understanding in general about the entire college process and the expected payback resulting from an expensive and prestigious college degree.

Most respondents felt that “the best assistance available on figuring out their family’s financial situation was the college’s financial aid office.” This belief can be compared to following the financing and purchasing advice of your local car dealer when buying an automobile!!

One respondent to the survey results wrote: “when I went to college, I was pushed hard by the FINANCIAL AID OFFICE to take out the full $40,000 in federal and private loans. They told me it was because a BA degree GUARANTEED me a starting salary of $50,000. Well, it’s 9 years later, and I’m still waiting to see that starting salary. Sometimes it’s NOT what the consumer knows, but what the financial aid people do to the consumer.”

Perhaps the most startling finding was that 40% of families DO NOT CONSIDER the cost of a college when making a decision on attendance!!

A Reasonable Tuition Increase?

With gasoline prices increasing by 33% in the last 12 months, it appears that a 5% annual tuition increase is equitable. What is not factored in is that private college tuition prices have increased 375% in the last 25 years, while housing is up 124% and medical care is up 223%.

What is driving these astronomical college price increases?

Viewers who watched Davidson College's men's basketball team perform so well in the recent NCAA basketball tournament might be surprised to learn that students at the North Carolina college get free laundry service. Drop off a bag of dirty clothes, and two days later you can pick up shirts and pants, pressed and on hangers, with the rest folded and tucked into a brown paper bundle.

Just as there is no "free lunch," there is really no "free laundry service." Incoming freshmen at Davidson will pay $42,950 in the fall of 2008, and as seniors they will pay approximately $55,000 per year!

Average salaries for college administrators rose by 4% in 2007-2008, beating inflation for the 11th straight year. I'd like to wonder why that is, but then I look at the huge increases in college tuition, and I see.

Last year, Princeton froze tuition (at $44,000 per year). However, they also saw fit to increase room and board by 18%. Obviously the increase in gasoline prices was anticipated by the economic department.