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LOST IN THE RHETORIC OF RECESSION: THE VALUE OF EDUCATION
By Karen Gross, President, Southern Vermont College

The recession is official, and economic doom and gloom surrounds us. We’ve been bombarded by media stories about the ever-growing cost of education and the bloated salaries of some college and university presidents. We predict a paucity of student financial aid and assume an avalanche of families struggling unsuccessfully to pay for education.

The news adage is working: if it bleeds, it leads. No wonder students and families, particularly fiscally vulnerable families, are worried — we’ve created quite the frenzy.

What’s troubling is that the rhetoric is distorting reality and homogenizing students, colleges, presidential compensation and financial aid. This can lead to unwarranted singular bad-mouthing of higher education. But, more importantly, the current hyperbole can lead to students unnecessarily dropping out of, or delaying entry into, college. That would be a mistake. A big mistake.

We need to stop, take a breath, step back, and look at the facts — which are neither uniformly dismal nor accurately reported.

Federal grants and loans for the current academic year and for academic year 2009 – 2010 do not appear to be at risk. In my state, Vermont, the Vermont Student Assistance Corporation has already indicated that it has funding for federal loans for the current and coming academic year. That is important, good news.

For financially vulnerable families, Pell Grants and Supplemental Educational Opportunity Grants are not being eliminated either, although the dollar amounts of Pell awards could decrease due to the growing pool of needy students. ACG and Smart Grants do not appear to be on the chopping block. There are no indications that federal work-study money is disappearing from the landscape.

The point is this: for students and families who are fiscally vulnerable, there will be ways in the coming academic year to get quality loans and grants to cover a sizable portion of the costs of tuition, room and board at many quality colleges and universities – both public and private.

Here’s another news flash. There are affordable colleges out there, including in the all-expensive Northeast corridor. Some of these institutions (both two and four year) were previously denigrated because people equated lower cost with lower value. Affordable excellence is looking a whole lot better in today’s economy. Long story short: Many students will not be priced out of higher education at quality institutions.

It will be harder, in some cases much harder, for students and families to find the private and often more costly loans to cover the “family share” of education’s costs. It is also true that some parents may be unwilling or unable to take out Parent Plus Loans to pay for their children’s education. It is also true that former “full pay” students will have a more difficult time meeting the sticker price.

Educational institutions will need to work hard to help students and their families fill these gaps in the coming year or two – through increased institutional grants or loans, through new scholarships or loan programs offered by the institution or elsewhere, through unprecedented personalized assistance from college financial aid offices. Some colleges will need to consider spending more of their already diminishing endowments.

Colleges also need to be creative, like offering to make interest payments for parents on certain types of loans while students are enrolled full-time at their institution.

As to the compensation issue: there are clearly some presidents who are handsomely rewarded for their efforts and in this economy, as with corporate leaders, some seem more than a tad out of whack. But there are many presidents who are not over-compensated – just look at published data on presidential salaries (both public and private) in my home state.

It is time to stop the apocalyptic rhetoric.

Judicious borrowing for education remains a wise investment. The data are clear: students with a college degree earn more and lead happier, healthier and more productive lives than their high school compatriots. Over a lifetime, college graduates earn 60% more over than those with a high school degree. This amounts to a differential in excess of $800,000. Most of the employed graduates can repay their debt within a decade of receiving their degree.

But there is more to the argument than increased income streams.

Without college graduates, we will have serious problems insuring workforce development. Our future economic strength depends on an educated workforce, and many of the fastest growing occupations in the nation and around the globe require a college degree. Quality careers in healthcare, criminal justice, education, and information technology all require a minimum of an undergraduate degree.

Education matters. Just read Three Cups of Tea.

Given our economic woes in the US, we cannot afford not to educate our young people. As a colleague recently pointed out, educators are not selling crummy American cars that were not selling in a good economy. What has gotten lost in the fear and debt rhetoric is one simple point: higher education offers real and lasting value; in today’s economy, it is the one investment that holds both power and promise.

Karen Gross is the President of Southern Vermont College, a small private liberal arts college located in Bennington, Vermont. She also holds a position as a Distinguished Visiting Professor of Law at New York Law School where she specializes in consumer finance and over-indebtedness.

In addition, she is the past President and CEO of an educational non-profit organization that designs, implements and studies programs to improve the financial literacy skills of consumers.

She has served as a consultant to non-profit organizations, including United Way NYC, the Council on Legal Educational Opportunity and the Campaign for Working Families. She sits on several boards, including Vermont Campus Compact, the Bennington County Industrial Corporation, and the Marlboro College Graduate Center.

She is also on the Advisory Council of Office of Financial Empowerment, NYC Department of Consumer Affairs.

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