Student loan market freeze-up necessary for lower tuition? on clarkhoward.com

For months, Clark has been telling you how the student loan market has fallen apart, and how difficult it is to put together financing for school. The latest blow now comes with news that MyRichUncle.com has gone bust. MyRichUncle.com was an online student lender that offered clean, legit deals with low interest rates.

The U.S. Department of the Treasury has been trying to restart lending. Clark, however, wishes they'd just stop. Part of the problem with the tuition run-up over the years has been that it was too easy to borrow money.

Universities have become inefficient providers of education. Much of the money goes to large bureaucracies and to research -- not to the actual cost of educating undergraduate students.

You'll get more bang for your buck at community colleges and so-called "directional colleges." The latter is simply any school with a description of where it is geographically in the name, such as Clark's alma mater Central Michigan U. These kinds of schools tend to devote more of their money to educating students instead of running a bloated operation.

Remember, if we open the student loan spigot again, we take the pressure off schools that is necessary for them to reform.

What others are saying

Tuition increases
The increased availability of loaned money may not be the primary driving force for tuition increases. Flat (or declining inflation adjusted) federal competitive grant funding for research has occurred at the same time that actual costs of research are increasing. The result is fewer grants, smaller grants and fewer dollars flowing to our universities to support basic research (a key to our competitive standing in the word economy - but that is another topic). While this may not seem linked to tuition costs...overhead charged on grant dollars pays for everything from electricity to campus police and directly pays salaries for researchers. This is an important point since those researchers are also the professors the students learn from. Without the grant dollars for research the university must cover salaries and other costs primarily from tuition. The result has been and will continue to be large tuition increases until research funding is normallized or another funding mechanism for our larger universities is found.
By Theresa Thompson @ 04/21/09 03:41:54 PMreport abuse
Great book that addresses this
Hi,
I'm a mother of a large family, and am very motivated to find economical methods of education. We found a book "Accelerated Distance Learning" by Brad Voeller, which describes a legitimate and time and money saving strategy to get a college degree. It involves using CLEP testing, Dantes testing, and similar equivalent test services. It describes three colleges in the US, Thomas Edison State College New Jersey, Charter Oak State College-Connecticut and one other-the name escapes me, but it's in New York. These colleges are ideal for this strategy. My son is two courses away from getting a Bachelor's Degree, and although he didn't use the testing strategy, his cost for four years was under $12,000.
By Beth @ 03/08/09 11:04:34 PMreport abuse
Thank you for adding your voice to the growing chorus of those questioning "value" in higher education. Anyone who thinks the subsidies government offers for college students don't end up producing offsetting price increases at the colleges needs to retake Econ101.
By anonymous @ 03/07/09 02:31:39 PMreport abuse
It shouldn't be up to the colleges to "allow students to be irresponsible" but parents and students should have a better grasp on economics. No one should owe hundreds of thousands of $$ and only have a Spanish or sociology degree to show for it. Community colleges are a great resource- cheap and better instructors than the same freshmen classes at big U.
When the people who pay the bill stop writing the check for kids who take Bowling and Ecological Feminism classes then the universities will stop funding useless and money wasting programs.
By kat @ 02/19/09 11:06:03 AMreport abuse
College Loans are bankrupting our kids
My sister has 2 daughters who have graduated with almost $100,000 each in college loans. One graduated with an Art degree and another with Dance...neither has a chance of landing a job that will pay more than $30,000 a year. How can colleges be so irresponsible to allow students to borrow this amount of money. Students have no idea of how much their debt will grow and how unable they will be to pay it back. Some of the interest rates are very high on these loans as well. Unfortunately, not everyone can afford a private college educaiton and they find out too late when the student loans come due.
By Sandy D @ 02/17/09 06:55:38 PMreport abuse
comment
Clark, four years ago I lived in Jax FL.I would listen to you everyday on the way home from work on my radio.I just loved listening to your advices. My husband retired from the Navy and we bought a place way up north in Wisconsin. I sure missed listen to you but I started watching CNN everyday.So four years later here you are on CNN and now I got the best of both word. Congratulation on having your own show. Now I'm not missing you no more.
Best wishes from your long time fan...!
By Diane @ 02/17/09 02:57:14 PMreport abuse
Thank God
I graduated from a state University in 1993 with only about $3000.00 in debt. I wanted to go to a private college to get my baccalaureate degree but now thank God I didn't.
By Denny @ 02/17/09 02:25:37 AMreport abuse
Tuition and debt
We are heading into a world where lots of people will have $100k education debts and $30k salaries. I think the most financially comfortable people in another decade or two will be those with a bachelor's degree from a mid-sized state university in their own state. Mid-sized state universities are where the bargains are, if they offer what you're looking for; go elsewhere only if you have a specific need.
By prof again @ 02/16/09 06:05:38 PMreport abuse
Research does not compete with education
Tuition money does not, in general, go to research -- that is funded by outside grants and contracts and helps keep tuition down.

Bureaucracies, yes. But remember that students now expect really elaborate computer services that weren't thought of 25 years ago. That's one thing tuition pays for.

The biggest needless cost run-up that I've seen is that student services such as dining halls have become very high-priced. What became of the idea that a dining hall was supposed to be cheaper than a restaurant?

Also, you should get on universities for soliciting donations for athletics, separate from academics, when athletics is already a profit-making activity. At one university I know of, donations for 'academic enhancement' go to athletic scholarships -- and that's a place with a multi-million-dollar income from ticket sales and TV. Make college football heavily subsidize education instead of the other way around.
By uga prof @ 02/16/09 06:04:07 PMreport abuse

Tuition increases

The increased availability of loaned money may not be the primary driving force for tuition increases. Flat (or declining inflation adjusted) federal competitive grant funding for research has occurred at the same time that actual costs of research are increasing. The result is fewer grants, smaller grants and fewer dollars flowing to our universities to support basic research (a key to our competitive standing in the word economy - but that is another topic). While this may not seem linked to tuition costs...overhead charged on grant dollars pays for everything from electricity to campus police and directly pays salaries for researchers. This is an important point since those researchers are also the professors the students learn from. Without the grant dollars for research the university must cover salaries and other costs primarily from tuition. The result has been and will continue to be large tuition increases until research funding is normallized or another funding mechanism for our larger universities is found.

By Theresa Thompson @ 04/21/09 03:41:54 PMreport abuse

Great book that addresses this

Hi,
I'm a mother of a large family, and am very motivated to find economical methods of education. We found a book "Accelerated Distance Learning" by Brad Voeller, which describes a legitimate and time and money saving strategy to get a college degree. It involves using CLEP testing, Dantes testing, and similar equivalent test services. It describes three colleges in the US, Thomas Edison State College New Jersey, Charter Oak State College-Connecticut and one other-the name escapes me, but it's in New York. These colleges are ideal for this strategy. My son is two courses away from getting a Bachelor's Degree, and although he didn't use the testing strategy, his cost for four years was under $12,000.

By Beth @ 03/08/09 11:04:34 PMreport abuse

Thank you for adding your voice to the growing chorus of those questioning "value" in higher education. Anyone who thinks the subsidies government offers for college students don't end up producing offsetting price increases at the colleges needs to retake Econ101.

By anonymous @ 03/07/09 02:31:39 PMreport abuse

It shouldn't be up to the colleges to "allow students to be irresponsible" but parents and students should have a better grasp on economics. No one should owe hundreds of thousands of $$ and only have a Spanish or sociology degree to show for it. Community colleges are a great resource- cheap and better instructors than the same freshmen classes at big U.
When the people who pay the bill stop writing the check for kids who take Bowling and Ecological Feminism classes then the universities will stop funding useless and money wasting programs.

By kat @ 02/19/09 11:06:03 AMreport abuse

College Loans are bankrupting our kids

My sister has 2 daughters who have graduated with almost $100,000 each in college loans. One graduated with an Art degree and another with Dance...neither has a chance of landing a job that will pay more than $30,000 a year. How can colleges be so irresponsible to allow students to borrow this amount of money. Students have no idea of how much their debt will grow and how unable they will be to pay it back. Some of the interest rates are very high on these loans as well. Unfortunately, not everyone can afford a private college educaiton and they find out too late when the student loans come due.

By Sandy D @ 02/17/09 06:55:38 PMreport abuse

comment

Clark, four years ago I lived in Jax FL.I would listen to you everyday on the way home from work on my radio.I just loved listening to your advices. My husband retired from the Navy and we bought a place way up north in Wisconsin. I sure missed listen to you but I started watching CNN everyday.So four years later here you are on CNN and now I got the best of both word. Congratulation on having your own show. Now I'm not missing you no more.
Best wishes from your long time fan...!

By Diane @ 02/17/09 02:57:14 PMreport abuse

Thank God

I graduated from a state University in 1993 with only about $3000.00 in debt. I wanted to go to a private college to get my baccalaureate degree but now thank God I didn't.

By Denny @ 02/17/09 02:25:37 AMreport abuse

Tuition and debt

We are heading into a world where lots of people will have $100k education debts and $30k salaries. I think the most financially comfortable people in another decade or two will be those with a bachelor's degree from a mid-sized state university in their own state. Mid-sized state universities are where the bargains are, if they offer what you're looking for; go elsewhere only if you have a specific need.

By prof again @ 02/16/09 06:05:38 PMreport abuse

Research does not compete with education

Tuition money does not, in general, go to research -- that is funded by outside grants and contracts and helps keep tuition down.

Bureaucracies, yes. But remember that students now expect really elaborate computer services that weren't thought of 25 years ago. That's one thing tuition pays for.

The biggest needless cost run-up that I've seen is that student services such as dining halls have become very high-priced. What became of the idea that a dining hall was supposed to be cheaper than a restaurant?

Also, you should get on universities for soliciting donations for athletics, separate from academics, when athletics is already a profit-making activity. At one university I know of, donations for 'academic enhancement' go to athletic scholarships -- and that's a place with a multi-million-dollar income from ticket sales and TV. Make college football heavily subsidize education instead of the other way around.

By uga prof @ 02/16/09 06:04:07 PMreport abuse

Listen Live:

Clark On Demand:

Clark's Advice:

Consumer Action Center:

Quick Links:

Clark Media:

Call The Show:

Feb 16, 2009 -- Student loan market freeze-up necessary for lower tuition?

Add your comment

What others are saying