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May 24th, 2010
09:00 AM ET

The Cost of College: Families placing premium on value

(CNN) – With college costs skyrocketing and a recession raging, it's not just about getting in to the best school these days. For many students and their cash-strapped parents, prestige is taking a back seat to price. Our Alina Cho reports for the first part of a week-long series, "The Cost of College."

Program Note: Tomorrow on American Morning, in part 2 of "The Cost of College," our Alina Cho profiles a young man who turned down a scholarship at one university to attend a more expensive and prestigious school. He says that decision left him buried in debt that will take decades to pay off.

Filed under: Cost of College • Economy • Education
soundoff (20 Responses)
  1. Jeff Kallay

    As a consult to colleges and universities, it appears that the press is has replaced the housing finance crisis with a soon to be student loan one. There are myriad means to pay for both public and private education. In fact the national discount rate hovers between 47-52%. There are some 3200 schools out there. And families have to weigh their choices with their heads and their hearts.

    Bloomberg Businessweek recently reported on NYU's president John Sexton and NYU's global expansion into Abu Dhabi. NYU's endowment of only $2 billion limits aid. From the article, "The university has a $2.2 billion endowment. Though its stash dropped almost a third in the financial crisis, Harvard University still has $26 billion, the richest in the world. Its investment pool amounts to $1.3 million per student, Yale University has $1.4 million, and Princeton University, $1.7 million. NYU: about $50,000."

    The article continues, "NYU ranks more poorly by some other measures. Half its faculty is part-time, compared with about 20 percent at Columbia and Harvard. The average NYU undergraduate leaves with about $35,000 in debt because NYU offers few scholarship grants, according to the nonprofit Institute for College Access & Success in Oakland, Calif. NYU's average undergraduate debt level is almost twice Columbia's and three times Harvard's, the institute says. NYU's tuition, room, and board fees are $53,600.

    Maria Louis, 21, who is from San Francisco, says she left NYU in 2009 after two years because of the cost and scant contact with full professors. "NYU is not affordable in any capacity," she says. "I don't want to have to spend the rest of my life in debt."

    The university is working to improve aid, even with its small endowment, Sexton says. Tenured professors make it a priority to teach undergraduates, and many adjuncts are often accomplished professionals, he says. "

    Bright lights and big city have their appeal. Who wouldn't want to live on the island of Manhattan in their youth? But at some point the piper has to be paid. Decisions were made and the outcomes go with them are ultimately belong the one who signs on the dotted line.

    At the core most admissions professionals are about helping students navigate a seemingly daunting process and to find the right fit. They want to have the such conversations with families and are ready to do so. I'd advise prospective parents and students to work with the professionals in admissions and financial aid.

    Jeff Kallay
    VP Consulting

    May 31, 2010 at 8:54 pm |
  2. D.J. Seomun

    Liam Coffey is a smart young man. It's not easy making that kind of a wise decision at eighteen.

    May 27, 2010 at 1:45 pm |
  3. The_Mick

    You really have to try hard to find a college that costs so much you end up $300K in debt. You also have to make a leap from common sense to do it. No question – we Baby Boomers have made it much more difficult for today's kids to work their way through college than our Depression Era parents did for us. But keeping total loans down to $20K or less is possible in most places. I wanted to go to a top-name school as well when I got out of high school in the late 1960's. So I commuted from home as an undergrad, working my way through the local campus of the University of Maryland, UMBC, THEN I got a scholarship and teaching assistantship in 1973 ($10K/year scholarship plus $325/month for teaching 2 lab classes per week) to grad school at the Illinois Institute of Technology (IIT), and $10K represented a very expensive private collage at that time. My mother looked at the scholarship notification and couldn't believe it. She kept saying over and over: "What's the catch." Fortunately, there wasn't any and my IIT sheepskin opened doors in the future.

    May 26, 2010 at 2:35 am |
  4. Turtle

    I think that the main problem lies with the Universities. They are changing Students $30,000 dollars in tuition plus another $12,000 living, $2000 insurance, $5000 food, $1000 books and supplies, $2000 transportation( Car, insurance, gas), and much more. It adds up FAST! The universities are charging $270,000 dollars for a degree that will yield you a salary of $30,000-50,000 per year. That is crazy! This is eerily similar to the housing mortgage that the banks were handing out. Though ultimately the young man has to live with his decisions, but i think there should also be some blame placed with the university.

    May 26, 2010 at 2:13 am |
  5. kd

    He made a choice and expected that the high tuition would payoff with a high salary. Oh well, another bad cost benefit decision. I have $180,000 still left on my loans, but I participated in ROTC for my BA and also have my MD and finished residency for less then his BA? Hope he didn't invest on a business degree!!!

    May 26, 2010 at 1:43 am |
  6. Zack

    When every country and every nation is in debt, the people will most likely be in debt as well.

    It's really modern day slavery, or sharecropping for that matter whats going on.

    All of these online "schools" (and Miller Mott's, etc..) you see are 100% funded because Sallie Mae gives out loans to anyone who has enough brain cells to sign on a dotted line.

    It's funny how our access to information has increased 100 fold over the last 50 years. It should be driving the cost of education down, not up.

    We need a simple system. A place for example like the Army's pass/fail school. You learn information on your own any way you want, then you go somewhere, take a test in a highly supervised area, and if you pass, you get recognized credit for completing the "class".

    Admittedly maybe that's not the best idea, but our whole education system from top to bottom needs a good shaken'

    May 26, 2010 at 1:20 am |
  7. David

    Everyone wants to blame the Universities yet there is no market control on college tuition. You, the voters, were bought by politicians who promised you aid in return for votes, and it worked. You got your third party payment system and now with the feds co-sign your loans, and the universities can charge any price they want in full knowledge that you and the nanny state will be able to pay for it. And believe me, you will pay for it, they'll attach your wages and take what little you have until the banks are paid back. And the colleges walk away with the loot long before you ever pay back your loans, they could care less what happens to your financial situation. You want cheap education? Then pay for it out of pocket like every other good and service you want at low cost and high quality. The free market is the only engine that drives down price through competition. If the feds got out of the way the colleges would have to slash tuition's over night or go bankrupt and no doubt they would put butts in those seats despite the drastic cuts they would have to make. It is the absolute only way, there are no free lunches children, wake up already. Every time the government promises you to "tame" the market and bring you more affordable services, what ends up happening? Education was cheap in this country before the feds got involved, Yale's tuition didn't go up 1 PENNY for over a hundred years, then all of a sudden the government gets involved and the price goes exponential, hmmmmmm, are we really so stupid we can't figure it out?

    May 26, 2010 at 12:23 am |
  8. Franco

    another stupid, disillusioned kid who watched too much TV. Anyone who spends 300K on an average education is dumb, dumb, dumb. Maybe he should go back to HS...after all, he surely peaked there. Hardly prestige...NYU is an average at best institution, full of people who's parents amped it for year...its almost garbage.

    May 26, 2010 at 12:19 am |
  9. Lauren P

    My husband and I made the hard choice last year not to pay for UVA, or Yale for our son. We encouraged him to attend our instate university. This summer he is working for a company that is paying him 4500.00 a month. We are glad he made this choice. He was National Meit, and the top grad in his class. As parents we had to deal with people's comments that we were killing his future. THEY WERE WRONG!!!! He will graduate in 2013 with a degree and no debt. The sale pitch is better at non state schools but in the end is the education worth the debt. We don't think so.

    May 26, 2010 at 12:17 am |
  10. paul

    NYU is not that great a school. The IVYs, MIT, CalTech, Stanford etc would cost the same and get you a job. State schools are as good or better than expensive NYU.

    May 26, 2010 at 12:05 am |
  11. njNewsReader

    The cost of college is scam. They lower the price significantly by giving you scholarships if you're really good and/or are really poor. Otherwise they charge you something that goes up faster than even medical cost. The best schools do open doors. For example, Wall Street only recruits from the top colleges. For those schools that are not at the top, then education counts.

    May 25, 2010 at 11:23 pm |
  12. Bill

    Are we supposed to feel sorry for the NYU grad who now has $270,000 in college loans to pay off? It was his decision to attend a very expensive university instead of accepting less costly options in attending other schools for his business degree. Did he ever consider serving in the military before going to college as he would have received the GI Bill monthly payment? Why didn't he accept his scholarship to the "less prestigious" university? I give him credit for starting to pay off the loan but you will not get much sympathy from me regarding this young man's decision.

    May 25, 2010 at 9:32 am |
  13. Maxine M

    So why was it okay for him to go to an expensive school and not the one that gave him a scholarship. Did he think he was getting a free ride? I paid for both of my children's education and no one gave me a dime! It's okay with him that he got a degree to further him in his career, but he doesn't want to pay for it?

    May 25, 2010 at 9:19 am |
  14. Bob L

    Higher education has become a joke in this country! It's simply big business looking to steal as much as they can from the parents! The colleges nickel and dime you to death. Middle class kids get screwed over big time! What's financial aid??? They charge you over $1K per class and throw you in a class of 200 or 300 kids? That's school? Heck, you end up teaching yourself out of a $200 text book. It's sad what education has become!

    May 25, 2010 at 7:34 am |
  15. Colin Ohl

    The cost of attending college has gotten so expensive that it is important for all students to explore all types of financial aid; from filling out the FAFSA to applying for scholarships with your college and local community foundations. I will be a transfer student to Saginaw Valley State Universtiy (one of the lowest tution cost in the State of Michigan) this upcoming fall beginning my junior year and will be completing it with no debt attributed to college! There are ways that students can trim educational costs and one way is by choosing your university carefully and to apply for all possible types of financial aid that is out there.

    May 24, 2010 at 9:21 pm |
  16. TCNJ alum

    The College of New Jersey – The BEST value in higher education!

    May 24, 2010 at 3:05 pm |
  17. Redford

    Price or prestige? It's rarely the either/or situation poll questions tend to sete up. Students should pick a school whose competence and reputation will support getting them the job they trained for when they graduate – that may well mean a trade off between price and prestige.

    May 24, 2010 at 2:09 pm |
  18. Nancy

    I would love to see a follow up story about the cost of college with the focus on how the middle class is being squeezed out. At least in California, higher education is nearly free if you are lower income or have a family hardship such as being brought up in a single family home. However, the children of those of us who have not divorced and have done all of the "right" things after putting ourselves through College are now faced with a mountain of unsubsidized student or Parent Plus Loans.

    I have nothing against helping lower income students go to College – I was one of them 25 years ago. However, now that I have a child of my own, we face extraordinary debt to send her to a state school even though we have saved since she was born. If you are truly wealthy you can cut a check for $30,000 per year and if you are truly needy, your child can basically go for free, but if you are in the middle, you are facing decades of debt for yourself and your child.

    May 24, 2010 at 12:42 pm |
  19. KC Saxon

    In Minnesota, most everyone has an accent. They elongate their "O's" and say "don't you know" often. So does this Bush law include them? If you have a British accent, the Queen's English, and teach in the states, does the law apply to you? What constitutes an accent? What state doesn't have an accent and which one is considered correct?

    May 24, 2010 at 11:55 am |
  20. Jim

    Took long enough for people to catch on to the college hustle. Good for him for fighting off the societal pressure to give up everything for a brand name school. In five to ten years everyone will be parroting the mentality he's displaying now. Whatever school he goes to he will be fine, he is an intelligent and independent thinking man, and they are a rare find these days.

    May 24, 2010 at 9:38 am |