Dear Commons Community,
As the U.S. Senate gets ready to vote to avert a sharp increase in college student loan rates scheduled to be implemented on July 1, 2013, , Samuel L. Stanley, Jr., the president of SUNY-Stonybrook, provides a review of the issues from the perspective of a university administrator. As reported in the Huffington Post:
“To begin with, we must do everything we can to keep the costs of higher education under control. Showing increasing concern about costs, Congress ordered higher education institutions to publish net price calculators on their websites. We’ve done that, but that alone is insufficient. Across the country, declining state support of public institutions has increased the difficulty of cost containment. But we continue to work on it. For example, Stony Brook University, the University of North Carolina, and the University of California, Berkeley, all took a close look at operating budgets, searching for greater efficiencies. In the following year, Stony Brook was able to cut operating costs by nearly $12 million. Predictability in tuition costs is also crucial. New York Gov. Andrew M. Cuomo, the State Legislature and the State University of New York recognized that in 2011 with the adoption of a rational tuition plan that allows families to know what tuition costs will be over the next several years. Despite the trends in higher-education costs, state universities still provide high-quality education at reasonable prices.
We also need to make this reality clearer: Student loans are a serious long-term obligation, but they are also far and away the smartest debt that a young person can incur. The college degree that you help finance with those loans will increase your lifetime earnings by hundreds of thousands of dollars. Economists have found that the gap between the earning power of college graduates and that of high school graduates has been growing. There is also evidence that unemployment rates among college graduates are lower than among high school graduates — even after the recession. Those results represent an excellent return on investment.
So student loans are a smart strategy, if students and parents make the right choices about them. That’s another serious obligation for university administrators: We have to provide high-quality advice by experienced financial aid officers, to steer families in the right direction as they put together the package of loans, grants and family contributions to get their young people through the college years with a manageable level of debt.
Finally, as Congress considers the current welter of proposals to avert the sharp interest rate increase that will take place July 1 without congressional action, university administrators and the organizations that represent us should make our views known.”
In all likelihood, as has been the style of the present Congress, the likeliest outcome will be a temporary solution, postponing the interest rate increase for a year or two.