Saturday, May 29, 2010

Student loan nightmares
Tom Smith

Here.  I suspect a lot of students take on more debt than is economically justified in order to pay for school expenses. Suppose for example a student could go to Harvard for 50K a year or UCLA for 25K a year.  (This is a hypothetical -- I don't think any of my kids is going to apply to Harvard.)  Would the advantages of Harvard be worth the extra 100K in terms of lifetime earnings?  I don't know but I suspect not.

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Tom Smith


This mess is the result of misguided Federal policy, based on the myth that everyone should go to college. This article doesn't mention the new Income Based Repayment options, ( IBR, see ), which weren't available when Ms. Munno was in school. But taxpapers are going to probably going to take a bath on IBR.

Posted by: Ken D. | May 31, 2010 1:50:30 PM

Several years ago, I heard a lecture by Robert Zemsky, presenting research on the economic spectrum of college choices. (Sorry, long ago, so I no longer have a link.) It's true that graduates of the most highly ranked schools earn a lot more, but that is almost entirely because so many of them go on to get medical or law degrees. For graduates who don't, there is little benefit to a super-pricey undergraduate education.

Of course, it may be true that your chances of getting into a top-flight professional program are greater if you're applying from a top-flight undergraduate institution. But it is equally likely to be true that if you've had to borrow close to six figures to get a four-year degree, you can't afford to borrow that much and (usually a lot) more to get a post-graduate professional degree.

Posted by: Linda | May 31, 2010 5:37:22 PM

"there is little benefit to a super-pricey undergraduate education": do you suppose that is because the quality of undergraduate education doesn't usually matter, or because the education is no better at a super-pricey joint anyway?

Posted by: dearieme | Jun 1, 2010 7:05:18 AM

"I don't think any of my kids is going to apply to Harvard": Oxford then?

Posted by: dearieme | Jun 1, 2010 7:06:11 AM

I think there is a tier of university for which this is worthwhile. For instance, I had my choice of a full-ride scholarship to Berkeley, or could pay my own way to MIT. Was the MIT degree worth the added cost (which I offset with an ROTC scholarship and military service)? Absolutely. But then, that may just be the exception that proves the rule.

Posted by: Andy | Jun 2, 2010 12:37:35 PM

And the reason someone should decide to attend the University of San Diego Law School rather than Boalt is....

It's O.K. to make up an answer, and perhaps more interesting!

Posted by: Charles | Jun 4, 2010 8:05:57 PM