Despite The Burden, Degree Still Worth The Investment

Soaring student-loan debt is raising red flags for economists, who warn that it could be “the next debt bomb” to derail the fragile recovery. U.S. student loan debt has passed the $1 trillion mark, surpassing what is owed on credit cards and auto loans. The average for individual borrowers is $25,250 and the default rate is 8.8 percent — a real cause for concern by the American taxpayer because most student loans are either issued by or guaranteed by the U.S. government.

At Florida Atlantic University, the picture is much brighter. The average debt load carried by FAU’s graduating seniors in 2010 was $19,022, and the current default rate is 5.4 percent. FAU students benefit from the fact that their average yearly tuition bill of $5,372 is a real bargain compared to the national average of $8,244 at state universities and $28,500 at private institutions. Public university tuition rates in Florida are the 45th lowest in the country.

Playing in grim counterpoint to the escalating student loan statistics is the fact that the current unemployment rate for recent college graduates is 8.9 percent.

What can America’s universities do to help turn this around?

The first thing that must be addressed is the apparent inability of many students to anticipate the effect that thousands of dollars in student loans will have on their post-college lives. Universities must put programs in place that will contribute to the financial literacy of students as they pursue their degrees. And students need to take a hard look at the return on investment they can expect to receive from those degrees.

The process of making an informed choice should begin in high school because many of the most financially rewarding college majors, such as those in engineering, science and business, require preparation through advanced courses. Choosing wisely can begin to yield benefits immediately upon graduation.

As an example, many of the students who received accounting and engineering degrees from FAU during last month’s commencement ceremonies have already found employment at starting salaries substantially above those of college graduates in some other fields.

At FAU we are putting renewed emphasis on attracting students to disciplines that hold promise for them personally and for our state’s economy as a whole. I am referring to the STEM disciplines — science, technology, engineering and math. As Florida’s economy makes the transition from one that is based on tourism and agriculture to one that is rooted in high technology, people entering the workforce with STEM degrees will have a definite employment advantage.

Regardless of where their career interests may lie, all students need to work as hard on becoming financially literate as they do at mastering the fundamentals of any other worthwhile skill. FAU has put systems in place to help them do this. The principles of personal financial management are built into many courses, and the Office of Financial Aid strives to give students “the big picture” about managing their debt burden both before and after they graduate.

Despite the problems posed by escalating student debt, it still makes great financial sense to get a college degree. According to the U.S. Census, those with bachelor’s degrees can expect to earn almost $1 million more over the course of their careers than they would if they had not continued their education beyond high school. The payoff grows larger with the acquisition of additional degrees, culminating in multi-million-dollar advantages at the doctoral and professional levels.

Universities have a responsibility to help direct their students into career fields that offer high employment potential and to give them the tools they need to become knowledgeable consumers of loans and other financial products. Personal financial management is a lifelong skill that must be developed to a much greater degree at the undergraduate level for the benefit of individual students and our nation as a whole.

Robert J. Stilley is chair of the Florida Atlantic University Board of Trustees.


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