Between this summer's battle over student loan interest rates and President Obama's recent move to give colleges economic grades, the high price of college has moved front-and-center in the news. On Thursday, we looked at some of the reasons that tuitions have been skyrocketing, and what you can do about it. Dylan Matthews, at The Washington Post's Wonkblog, has been doing some outstanding work on this, and today Jaeah Lee and Maggie Severns, writing for Mother Jones, offered a solid follow-up. Their focus is on one specific spending item -- salaries -- and their articles look at what happens when college presidents and celebrity faculty members are paid like rock stars -- and given the kinds of perks that are usually associated with Wall Street.
In a lot of ways, trends in higher education mirror the rest of the economy, in which a few top-level executives have seen their salaries rise exponentially, while lower-level workers have seen their pay and benefits shrink. A recent article in the Chronicle of Higher Education laid this out, noting that, while faculty members have had modest salary growth in the last few years, these gains have been swallowed up by a 3 percent inflation rate. In other words, when it comes to bottom line spending power, faculty members have experienced between a 0.8 percent and 1.4 percent drop in their salaries.
But if rank-and-file faculty members are making less money, top-level administrators are making a lot more. On average, Lee and Severns report, college presidents make 3-4 times as much as their average professors. And, with an ever-increasing number of non tenure-track and part-time instructors filling the ranks of the faculty, it's not surprising that that gap is getting even wider.
Lee and Severns also offer a list of outrageous perks paid to college administrators. While strange, the list of low-interest loans and staggering retirement/severance bonuses is likely to be depressingly familiar to anyone who has watched Wall Street for the last few years. And the justification for these bonuses is also familiar: like their Wall Street brethren, these top-earning academics were paid outrageous sums because, in the words of one university administrator, "In basic financial terms, the return on investment is remarkably high."
Fair enough, but one question remains: is this return on investment, which is usually measured in terms of fundraising and building projects, accruing to students? Or are America's students borrowing a record amount of money to pay for a fundraising staff whose efforts have little to do with improving educational outcomes?
Another Reason the Tuition Is Too Damned High: Overpaid College Presidents
One solution is to take advantage of some of the loan forgiveness opportunities that are already out there. The military, the federal government, and state governments offer dozens of programs that will wipe away at least part of your debt, in return for a few years of service. Most are tied to specific, in-demand professions in areas such as health care, law enforcement, and education. but others -- like the military, the Peace Corps, and AmeriCorps -- are open to people from a variety of majors and disciplines.
American Student Assistance, a nonprofit group that helps people manage their student loan debt, has produced a free list of occupation-based loan forgiveness programs. It's worth a peek -- even if you don't plan to become a firefighter, policeman, speech therapist or social worker.
Several programs will allow you to structure your repayment of federal student loan debt based on your income. For example, if your loan payments are more than 15 percent of your discretionary income, you may qualify for income-based repayment, under which your monthly payment calculated based primarily on what you earn, and after 25 years of payments, any remaining money owed gets forgiven. Other programs, including income-contingent repayment and pay-as-you-earn forgiveness, are pegged to different income levels.
Nobody wants to die, go through bankruptcy, or suffer a total and permanent disability. However, if you experiences one of these life events, your federal student loans will be discharged. The banks behind private loans, however, may still go after your cosigners in an attempt to recoup their losses.
Assuming you're not a too-big-to-fail bank, the idea of going deeper into debt in order to make more money may sound counterintuitive. However, in many fields, a graduate degree can vastly increase earning power. "What's It Worth," a publication of Georgetown University's Center on Education and the Workforce, ranks graduate programs by their return on investment. Not surprisingly, degrees in medicine, the social sciences and hard sciences top the list.
Ultimately, student loans are like any other debt: Getting out from under them requires that you understand your situation and keep your focus on repayment. In this regard, the best advice is also the most obvious. First, be aware of how much money you owe and what the interest rates are on each of your loans. Work on paying off the highest-interest loans first, while making minimum payments on the rest of your loans. As you pay off each loan, take the money that you were spending on it and roll it over onto your highest interest loan.
But, while discipline is good, it's also important to reward yourself. Paying off loans is a big deal: give yourself a nice present every time you put one to bed!