Tim Palacio Drexel University June 4, 2010

“Unemployment lasts longer, saps benefits” (Kesler, 2010) 6.7million Americans unemployed 890,000 Californians unemployed 12.6% unemployment in California

Ninety Billion Student Loan Debt The challenge is to be able to repay loan if students have no job and very little prospect of gaining employment

Individual Benefits of College Greater earning potential Higher compensation (both wages and benefits) Significant income gap between college graduates and high school graduates Ability to recoup tuition/opportunity cost quickly Ability to better prepare their children to become productive citizens Greater return on investment.

Societal Benefits Lower unemployment and poverty rates Less dependence on social programs An upward effect on the earning potential of others in the workforce Lower smoking rates and more healthy lifestyles on the whole Increased volunteerism and participation in their communities Greater receptiveness to feedback (Ma, 2007)

Types of Federal Aid Pell Grant Subsidized Stafford Loan Unsubsidized Stafford Loan Federal government pays the interest on the former once student goes to school part time

Campus Based Programs Perkins Loan Program Federal work study program Supplemental Educational Opportunity Program

Financial aid worse debt 2/3 of college students need financial aid Average Undergrad owes $20,000 Graduate Student owes 42,000 Law student owes 120,000 (Collinge, 2009)

30 % have no debt “Of the 65 percent who face debt, the average they owe is around $20,000. That’s just below the starting price of a 2009 Ford Escape.” (Wilson, 2009)

Student Loan Good Idea Still, many economists say that borrowing for any kind of higher education is generally a smart idea. That’s partly because student loans typically carry low interest rates. “College is a very good investment, and most students take out too few loans, not too many,” (cited by Hoxby,Wilson, 2009)

Merit Aid Grants, scholarships and discounts that a college awards to an admitted student without regard to financial need. Merit aid may be based on academic or athletic achievements, special talents such as music, where the student lives or other demographic characteristics.

For some – no concern of access Harvard acceptance includes: Legacies - the children of alumni or (10 to 25% of students) Recruited athletes (10 to 25%) Development cases or children of wealthy non alumni (2 to 5%) Children of politicians and celebrities (1 to 2 %), Children of faculty members (1 to 3%) Minorities (10 to 15%).

Rationalization of the student loan policy Postsecondary institutions developing a moral obligation to control costs The dismantling of some of the harsh provisions in place to discourage student loan defaults Acknowledging a special obligation to provide inexpensive and worthwhile educational opportunities for low-income and minority individuals (Fossey & Bateman, 1998)

Conclusion Invest the time and energy seeking merit aid Limit the amount of student loan to a minimum Have a concrete plan of repayment so as not get caught up in defaulting of their loan.

References Collinge, A. M. (2009). The Student Loan Scam The Most Oppressive Debt in US History - and How We Can Fight Back. Boston: Beacon Press. Dynarski, S. M. (2007). The Economics of Student Aid. National Bureau of Economic Research. Fossey, R., & Bateman, M. (1998). Condemning Students to Debt COllege Loans and Public Policy. New York: Teachers College Press. Golden, D. (2006). The Price of Admission How America's Ruling Class Buys Its Way into Elite COlleges and Who Gets Left Outside the Gates. New York: Crown Publishers. Haynes, M. (2008). The Impact of Financial Aid on Postsecondary Persistence: A Review o the Literature. NASFAA Journal of Student Financial Aid, Kane, T. J. (1999). The Price of Admission Rethinking How Americans Pay for College. Washington D.C.: Brookings Institution Press. Kesler, D. (2010, May 31). Unemployment lasts longer, saps benefits. The Sacramento Bee, p. 1. Ma, S. B. (2007). Education Pays The Benefits of Higher Education for Individuals and Society. College Board. Mangan, K. (2010). Law Schools Get Advice on Helping Students Cope With a Tight Job MArket. The Chronicle of Higher Education. Wilson, R. (2009). A Lifetime of Student Debt? Not Likely. The Chronicle of Higher Education.