Consider this, forgive me, rather crudely produced chart:
The education at NYU is excellent. But is it over five times as excellent as Brooklyn College? Is an NYU undergraduate education a better investment than a BC one?
Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle.
Today's New York Times tells the story of the other debt crisis: student loans. Just like the mortgage business, in the last decade there was explosion in derivative-based student loan trading. This brought easy and quick loans to the masses, encouraging institutions to increase their size, scope, and most importantly their price by astounding levels:
The financial aid office often has the best picture of what students like Ms. Munna are up against, because they see their families’ financial situation splayed out on the federal financial aid form. So why didn’t N.Y.U. tell Ms. Munna that she simply did not belong there once she’d passed, say, $60,000 in total debt?
"She simply did not belong there." That's a tough assessment many young people have to face. The article goes on to note how Ms. Munna earns $22 an hour working for a photographer--and that is the highest salary she has received since graduating from NYU. She is also looking for a second job. The salary for a starting Grade 1 city letter carrier for the United States Postal Service is $20.48 an hour. After 18 months, it climbs to $22.25 with federal benefits and union protection. No degree required. Is her degree and the debt that came with it worth it? Could she have attained her current salary and position by going to Brooklyn College and saving $60,000 for graduate school?
I often look back and believe I should have gone to Brooklyn College or City College and saved the debt load for my professional studies. I borrowed many thousands of dollars from Citibank and Sallie Mae just like Ms. Munna. In fact, I remember Sallie Mae sending me checks directly for obscene amounts of money. I quickly paid that forward to various cabbies and scantily-clad bartenders in the East Village. I later calculated some of those beers set me back $28 with interest. I was in my late 20s when I went to school. One can only imagine what a 20 year old would do. When I advise young people these days, I tell them: Don't go into debt for Harvard College. Go into debt for Harvard Law School.
The tough job situation for new graduates. Flat or declining wages even among the college-educated. Increasing demand for specialized professional education. Tuition costs at elite institutions far beyond the reach of the middle class, even with financial aid. These are all factors that should lead parents to start being frank with their children about their options. Not everyone can or should go to Harvard or Columbia. The education at your local, inexpensive, state or city community college is likely to be perfectly sufficient for admission to a top-notch graduate school. It may not be the very best, but it certainly isn't going to be five times worse.
