A Sobering Look at College Affordability

Chicago — It’s no secret that many of the metrics used to gauge families’ ability and willingness to pay for higher education are headed in a direction that’s a little bit frightening for colleges. Brian Zucker ran through some of those measures during a presentation here on Sunday at the annual meeting of the National Association of Student Financial Aid Administrators.

The measures matter, said Mr. Zucker, president of the Human Capital Research Corporation, a higher-education consulting firm. “Education finance,” he said, “is joined at the hip with family economics itself.”

The median income of families whose head of household is 45 to 54—prime college-parent age—has dropped, Mr. Zucker said. The same is true for families led by 25-to 34-year-olds.

As if that weren’t bad enough, median family net worth dropped 40 percent from 2007 to 2010, Mr. Zucker said, a trend that wiped out two decades of accumulation.

Unemployment is worrisome, especially for the young. Students and their parents are borrowing more and more, shifting a greater part of the college-financing burden to future earnings. And a growing proportion are borrowing too much compared with new graduates’ starting salaries.

In addition to those well-known, if sobering points, Mr. Zucker raised two that aren’t mentioned as often.

First, many students plan to attend graduate school. In a new survey of some 30,000 incoming freshmen who will attend the private colleges that work with Mr. Zucker’s company, more than two-thirds said they planned to go on to graduate school right after college. An additional 15 percent plan to go eventually. Those plans for further study are likely to rein in what families will borrow for a student’s undergraduate education.

Second, cohort-default rates are not really reflecting borrowers’ repayment woes, Mr. Zucker said. In fact, Mr. Zucker found an analogue for the cohort-default rate in the divorce rate. Both repayment and marriage, he said, appear more successful if you look only at the first few years.

So where does that leave colleges? Back in the day, tuition discounting was a way for colleges to get ahead, Mr. Zucker said, bringing in a better class than they otherwise could. Now, he said, with all of those economic forces working against students and their families, discounting is “necessary to live to fight another day.”

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