Good Monday Moanin’ – Sept. 7, 2015
Is college a good investment? Banks thinks so!
By Jeff Salisbury JeffreyLSalisbury@gmail.com
Michigan high school juniors, like my grandson Auston, will be the first to take the SAT college admission standardized test next spring instead of the ACT. The switch, announced by the State in January, lowers testing costs for the state, although it might increase anxiety levels of students, their families and local school officials, who could worry that the switch might negatively impact test scores since often those scores are used in four-year college and university admissions and/or enrollment.
Reporter Ron French in Bridge magazine recently examines four basic questions for students and parents.
Is the ACT prep Michigan students have completed worthless now?
Will Michigan students perform worse on the 2016 SAT than they would have on the ACT because they aren’t as familiar with it?
If I want to go to college outside of Michigan, will I be at a disadvantage compared with students from elsewhere accustomed to the SAT?
If the SAT given in March is new, is there any way to prepare for it?
For the answers, he consulted several sources including Tim Parros, founder of Parros College Planning in Ann Arbor; Randy Johnson, executive director of the Michigan College Access Network; and Patrick O’Connor, associate dean of college counseling at the prestigious and private Cranbrook Schools in Bloomfield Hills and past president of the National Association for College Admission Counseling.
You can read for yourself their thoughts at this link – http://bridgemi.com/2015/07/worried-about-michigans-switch-to-the-sat-six-reasons-to-calm-down/
What a wicked web… I won’t touch on Parros or O’Connor. They are likely well-informed, well-meaning educators and most likely very good at their jobs and I will presume provide support for parents and students.
But let’s look at this group that calls itself the Michigan College Access Network…their stated goal? “60% college attainment by 2025” — think about that for a moment – recent statistics show that about 60 percent of high school students (some high schools it’s higher and some it’s lower of course) attend college after high school – the census figures tell us that about 25 percent of adults (in and out of the workforce) in Michigan have college degrees… that includes people whose degree qualified them for their current employment, as well as people for whom their degree is meaningless or unnecessary and those persons who are retired and no longer in the workforce. So, think about what “60% college attainment by 2025” REALLY means.
FOLLOW THE MONEY… MCAN is funded by a group called the Lumina Foundation… which has “invested assets” in excess of $1 billion,” making Lumina among the nation’s top 40 private US foundations…. and with ties to ALEC… plus note that Lumina is funded by SALLIE MAE (SLM Corporation), the largest education finance company in the U.S. with over $21 billion in student and parent loans… dwarfing the next three Citibank, Wachovia and Wells Fargo (combined) with about $5 billion EACH. Sallie Mae is the parent company of Nellie Mae, which also funds student loans. Just to give you an idea how profitable the student loan busienss is, in 2006, Sallie Mae revenue was $9.1 billion with profits of $1.1 billion.
No, parents and students… this is not about ACT or SAT test scores – not at all – it’s about “college for all” – “60% college attainment by 2025” – and more students in college means more tuition dollars into the coffers of Michigan colleges and universities who continue to do nothing but raise tuition and fees year after year after year, which means more student loans which means more interest and which means more profits for SALLIE MAE and NELLIE MAE and Citibank, Wachovia and Wells Fargo and on and on.
College Loans are BIG BUSINESS… A July 2012 report, Private Student Loans, released jointly by the U.S. Department of Education and the Consumer Financial Protection Bureau (CFIB), found that private loans account for more than $150 billion dollars of the massive 1 trillion dollars in outstanding student debt. This is the first government report on private student loans. Student loan debt has surpassed credit card debt as the number one source of unsecured debt in the country.
- American borrowers currently owe more than $150 billion in private student loans
- More than $8 billion in private loans are in default
- In 2009, the unemployment for private student loan borrowers who started school in the 2003-2004 academic year was 16%.
- Ten percent of recent graduates of four-year colleges have monthly payments for all education loans in excess of 25% of their income
- Fueled by investor appetite for asset-backed securities, the private student loan market grew from less than 5 billion in 2001 to over 20 billion in 2008 to less than 6 billion in 2011
- Banks between 2005 – 2007 were marketing loans directly to students, reducing the involvement of the schools in the process and reducing the certification of need from the school.
- Some students who had not reached their limit on federal loans took out private loans simply because they did not understand the process
- More than 90 percent of the dollar amount of private students loans originated in 2011 were co-signed
Political contributions & Lobbying
Sallie Mae gave $572,000 to federal candidates in the 2006 election through its political action committee – 52% to Democrats and 48% to Republicans. 
Sallie Mae (SLM Corporation) spent $2,758,700 for lobbying in the first half of 2007
Unless you’re a bank, maybe college isn’t such a good investment after all
In a recent article in the New Yorker magazine (online) Writer/author/critic John Cassidy asks, “What’s the real value of higher education?” Many students and their families he says extend themselves to pay for a college education out of fear of falling into the low-wage economy. But how sound an investment is it? Promoters of higher education have long emphasized its role in meeting civic needs. The Puritans who established Harvard were concerned about a shortage of clergy; during the Progressive Era, John Dewey insisted that a proper education would make people better citizens, with enlarged moral imaginations. Recently, as wage stagnation and rising inequality have emerged as serious problems, the economic arguments for higher education have come to the fore. ‘Earning a post-secondary degree or credential is no longer just a pathway to opportunity for a talented few,” the White House Web site states. “Rather, it is a prerequisite for the growing jobs of the new economy.’ Commentators and academic economists have claimed that college doesn’t merely help individuals get higher-paying jobs; it raises wages throughout the economy and helps ameliorate rising inequality.” http://www.newyorker.com/magazine/2015/09/07/college-calculus?
After you read the article… see if you still think college is a good investment?