judging college value Jun 21, 2010 12:44:36 GMT -5
Post by gatordog on Jun 21, 2010 12:44:36 GMT -5
The best may not be the most expensive when choosing schools
BY JIM GALLAGHER
ST. LOUIS POST-DISPATCH
The University of Missouri will sell you a bachelor's degree for about $107,000 if you're a state resident. The cost runs $88,000 at Southern Illinois University.
Both are state schools, subsidized by the taxpayer.
Go to St. Louis University, a private college, and you may pay $194,000. At Washington University, the sticker price runs $218,000.
Those figures are "cost of attendance" — tuition, room, board, books, pizza money — the works. They assume no scholarships, and schools are quick to point out that they give a lot of scholarships.
Still, the great gap in cost between state universities and private colleges is shocking. Are the benefits promised by a private university — smaller classes, cushy dorm rooms, perhaps more prestige — really worth the extra price?
Are they worth starting your working life deep in hock with student loans?
There's not a lot of research on that question, largely because it's tough to do. After all, how can you tell if a CEO who went to Yale would have done just as well if he had gone to the University of Missouri? (The University of Missouri's president, Gary Forsee, is a Missouri alumni and the former CEO of Sprint.)
When the experiment has been tried, the judgment favors cheap schools. Two years ago, SmartMoney magazine used data on what alumni earn at early and mid-career, and compared that to the price tag at the schools they attended. The result was a payback ratio — a measure of return on educational investment.
The result: Texas A&M, a state school, topped the charts. No-name public colleges, such as University of Delaware and University of Rhode Island, beat the entire Ivy League.
Alumni of pricey private schools were earning somewhat more than public college grads by mid-career, but that advantage reversed when the magazine figured in the extra cost of private college.
Kiplinger, another personal finance magazine, ranks the 100 best buys in education, combining cost with quality measures. Nearly all are state schools.
Truman State ranked 26th on the top 100 list for the last school year; Mizzou is 57th; Missouri University of Science and Technology in Rolla is 94th. The University of Illinois is 45th, and Illinois State is ranked 89th.
Going to college makes good financial sense. Over a lifetime, the typical college grad earns somewhere between $280,000 and $900,000 more than a high school grad, depending on the study. College grads are also more likely to be employed. That payoff is worth borrowing for.
But don't overdo it. In Missouri, 69 percent of new college grads take on student debt, averaging $21,342. In Illinois, 58 percent borrow, with debt averaging $20,102, according to the Project on Student Debt.
Those figures mask real problems on the high end of the scale. One in 10 students in the U.S. graduates owing $40,000 or more.
Start out with an English degree and $40,000 in debt and you'll be dining on peanut butter until you're 40.
"A lot of debt does affect later choices — about grad school, buying a house, starting a family," says Matt Reed, program director at the Institute for College Access and Success, which runs the Project on Student Debt.
So, should you ignore high-priced private schools? "I don't think that's the answer," says Reed.
Some private colleges are pretty generous with scholarships. Reed suggests you look at the list of schools that have pledged to limit debt in their financial aid offers. You can find it at www.projectonstudentdebt.org.
Washington U. is on the list. Half of WU students receive some form of scholarship from the university, according to the U.S. Department of Education. Those scholarships average $22,000.
In college administrator-speak, a scholarship is called a "discount" off tuition. The average discount in 2005 was 15 percent at state colleges and 34 percent at private colleges, according to a study by the College Board.
Of course, scholarships don't all go to students who need them. They also go to smart kids the school wants to lure away from the competition. Not surprisingly, pricey private schools doll out a bigger percentage based on need — 68 percent compared to about 41 percent at public colleges.
Reed thinks you should apply to private schools and see what they offer in financial aid. But apply to cheaper schools, too.
Steve Talbott, a former business reporter and part-time college teacher, authored a guide titled "How Much Should I Borrow for College."
The answer, he says, depends on your career choice. A monthly payment of 10 percent of income is the "comfort zone." Payments over 15 percent are the "danger zone."
If you think you'll start work earning $30,000, you can borrow up to $20,800 and stay in the comfort zone. A $50,000 salary justifies borrowing $34,700.
Of course, that assumes you'll find a job.
Talbott's e-book is a cheap, practical guide to figuring this out. It's $7.99 at www.howmuchshouldiborrow.com.
By the way, I asked officials at Washington U. and St. Louis U. to talk about the value question. No one volunteered.