Review: Paying the Price

Review: Paying the Price

Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream by Sara Goldrick-Rab

My rating: 4 of 5 stars

Soaring rhetoric about the value of hard work obscures the fact that family money has long been one of the best predictors of college success.

Among the so-called developed nations, the United States is unique in many respects, not least in higher education. Whereas going to university is either free or quite cheap in most of Europe, in America college can often be a serious financial burden. Admittedly, America also has many of the best universities in the world, so perhaps the extra cost is justified for the small fraction of students who attend these elite institutions. But costs are also high in public universities; indeed, even our community colleges are expensive by European standards.

This book is not primarily concerned with why the cost is so high. Instead, sociologist Sara Goldrick-Rab focuses her attention on how students go about paying for it. To do this, she conducted Wisconsin Scholars Longitudinal Study, in which she and her team followed 6,000 low-income students from 2008 onwards. The study involved many surveys and much statistical work, but also in-depth interviews of selected students. Her aim was to find out how the various forms of financial aid—grants, loans, work-study—affect graduation rates. With such a wealth of evidence, Goldrick-Rab can speak with quite a bit of authority about the challenges faced by low-income students.

The picture that emerges is of a complicated and often ineffective financial aid bureaucracy, which allows too many low-income students to fall through the gaps. Much of this is due to financial aid being outpaced by the rising cost of college. Consider the Pell Grant, the primary economic subsidy provided by the federal government to low-income students. When it was passed into law, in 1965, it covered 80% of an undergraduate degree. Nowadays, however, a Pell Grant covers less than 1/3 of that price. Meanwhile, contributions by state governments have steadily dropped off, leaving students with ever-higher tuition costs.

Federal loans have arisen as a way to bridge the gap between the rising price of attending college and the decreasing purchasing power of grants. Though better than private student loans, even the federal loans cannot be discharged through bankruptcy. To qualify, the student must fill out a FAFSA application every year, which determines what types of loans the student qualifies for, how big a loan, and the “expected family contribution”—the amount the government expect the student’s family to be able to pay.

In Goldrick-Rab’s telling, there are many ways in which this system fails. One obvious difficulty is the expected family income. Most obviously, even if a student’s family has the available money, they may not be willing to pay; and of course the government cannot force families to make the expected contribution. What is more, the formulas used by the government to determine how much a student’s family can pay are not always realistic. They do not account for the reality that, rather than being financially supported by their families, many students financially contribute to their families while they are studying.

Basing financial aid on last year’s tax returns can also subject students to sudden shifts in their aid. If a parent gets a new job, for example, a student may suddenly find that they no longer qualify for grants or subsidized loans, and that their expected family contribution has drastically risen. To take an example from my own life, FAFSA also factors in whether a student has any siblings in college; and the graduation of a sibling can also cause a dramatic reduction in financial support.

The call for increased financial aid has sometimes been met with the response that students ought to work more in university. But this advice is misguided for a multitude of reasons. For one, students are already working a great deal. But the days when students could pay their way through college by stacking boxes during the summers are long gone. The students in this book did work, often for long hours, making the minimum wage of $7.25 an hour. At that salary, it is difficult to even make a significant dent in the cost of attending college (the average debt of a graduating student is about $37,000).

Working while in school presents other difficulties, too. Scheduling is an obvious example. Most college classes are during normal work hours, which forces many of the students in the study to work night shifts and weekends. Time spent working is time spent not studying, and often time spent not sleeping, which hinders academic progress. The requirements on loans and grants only compound the problem of balancing work and study, since many forms of financial aid require a minimum GPA and full-time enrollment. This can result in a double-bind, since if a student drops one class to focus on the others, she may switch from full-time to part-time; and if she keeps all her classes, her GPA may suffer.

The Federal Work-Study program provides financial assistance to students working on campus, and according to Goldrick-Rab is a beloved program. However, the rules for applying to the program are somewhat confusing. Many students assume that acceptance into the program means that they will be given a job. But this only means that they can start applying to jobs that are covered under the program. Aside from this, work-study depends on the amount of funds and work available at a given moment, and so has not proved to be a reliable way for most students to pay for college.

College is meant to be a stepping-stone to a greater life. But for many of the people in this book, their time at university became a weight around their neck. As low-income students struggle to balance family, jobs, and study— negotiating a complex financial aid system that relies heavily on loans—they often found themselves unable to keep up with their classes and unable to pay for even basic living expenses. Indeed, since there is no university equivalent to subsidized school lunch programs, many of the students were literally too hungry to focus.

Worst of all, if a student decides that they cannot complete their studies, then they do not only lose the opportunity of a degree: they are saddled with debt, without the job opportunities to pay it off. As a result, the decision to study in university carries considerable financial risk in the United States, especially for low-income students. If a student succeeds in graduating, they will have significantly better job opportunities than their peers; but if they fail, they will be significantly worse off than their peers who did not even try.

To me it seems clear that the American system for funding higher education is not working. Student debt is the fastest growing type of debt, and the second highest private debt category in the country, after house mortgages. This was not true twenty years ago. Collectively, $1.5 trillion is owed by 45 million students—about 7.5% of America’s GDP. Roughly one in ten students defaults on their loan payments within three years, and, unsurprisingly, default rates are three times higher among students who did not complete their degrees. When you consider that education has one of the highest returns on investment of any government expenditure, our failure to support it is especially baffling.

Why has higher education become so outrageously expensive? I am still unclear on this, and it is not the main focus of this book. But we are not powerless to change it. In so many other countries, the decision to study in university is not nearly so fraught with financial peril. Indeed, the phrase “Student Debt,” like “Medical Debt,” is virtually unknown here in Spain. Of course, this is not an isolated problem. Even if we fixed financial aid, students from poorer neighborhoods would still be at intense disadvantages, not least because American public schools are funded by property taxes (and so reflect a neighborhood’s wealth). But making higher education affordable and financially risk-free would go a long way in bolstering the economy and widening opportunity.



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Letters from Spain #14: Public Education

Letters from Spain #14: Public Education

Here is the next episode of my Spanish podcast. This one is about the enormous price differences between Spanish and American universities:

Here is the Apple Podcast:

https://podcasts.apple.com/us/podcast/letters-from-spain-14-public-education/id1469809686?i=1000465633689

For the transcript, see below:


Hello.

I’ve come back to work from a rather pleasant weekend. To celebrate our anniversary, Rebeca and I took a little trip to the Madrid mountains. It’s a beautiful place. The geography is dominated by grey granite formations (a material that also forms many of the local buildings) and the landscape is covered in pine trees. There are endless trails for hiking and lots of cute little villages to visit. The pueblo we happened to be in was populated by a bunch of hippies, eating vegetarian meals and drinking craft beer. It was a nice escape from the city center.

Well, anyways, in this podcast I don’t want to talk about Spain’s many vacation possibilities. Instead, I want to talk about something that is a source of envy for many Americans: public education. Specifically, public higher education. As with the cost of medicine, the cost of university in Europe is strikingly lower than it is in America. To give you an extreme example, going to New York University for one year costs (according to the internet) over $70,000. Now, admittedly NYU is one of the most expensive universities in the world. But even if you want to go to a much more modest college in America, like I did, you can still pay quite a lot. In my case, I went to a public university, Stony Brook, and had to pay well over $20,000 a year.

Meanwhile, my girlfriend went to the Universidad Autónoma de Madrid—one of the best universities in Spain—and paid around 3,000 euros per year. And a chunk of that was covered by a scholarship. Needless to say, she didn’t need to go into debt to get an education. Meanwhile, I graduated with well over $20,000 of debt and I’m still paying it off. So what is the deal with this huge price difference? It’s worth remembering that this wasn’t always the case. Every millenial has heard stories of Baby Boomers working their way through college. Just the other day I heard an economics professor say he paid for college by lifting boxes during the summers. Clearly, that’s impossible nowadays in America, so it’s worth asking what the deal is.

Obviously a big difference is how much the state subsidizes higher education. In Spain, as in many European countries, the government foots the bill. You could make the argument, therefore, that in Europe college isn’t really free after all, since the people pay for it in higher taxes. That’s one side to the story—and, of course, it’s a big one. But I think there is another, less-mentioned aspect to the college cost debate, and that is the culture of college.

In America, going to university is a rite of passage. It has been turned into a basic phase of young adulthood. You live away from your parents for the first time, and you live in a dorm with a bunch of other young people. Suddenly you find yourself in a world of young people with very few responsibilities. It’s a crazy time. People go to parties, fall in love, form close friendships, and very occasionally study. And campuses can be very comfortable places. My campus, for example, had free gyms all over the place, and even a pool to use. I joined an a capella club and volunteered in a local rock venue. The point I’m making is that college consisted of a lot more than just going to classes.

In Spain, college is not nearly such a huge personal step. It’s not mythologized like it is in America. I’ve never met a Spanish person who has a lot of pride for where they went to school, or strong nostalgia for their college days, or who has even really talked about their college experience at all. Meanwhile, I know Americans who dreamed of going to specific schools and whose whole friend group is from their college days. Really, university in Spain—and in much of Europe, I think—is a continuation of high school. It’s going to school. Most students don’t even move out of their parents’ house to get their undergraduate degrees. And if they do, it’s quite rare to move onto a dormitory on a college campus.

So one significant reason that college in America is so expensive, I think, is that it has become so much more than just going to school. Think about college sports. Each university in America has its own mascot, its own spirit band, its own star athletes. This doesn’t exist at all in Europe. My girlfriend doesn’t know her school’s animal. (My school’s animal is entirely fictional: it’s the Seawolf. And we had our own cheer: “What’s a Seawolf? I’m a Seawolf.”) In America, we expect a high profile guest to give a speech at our college graduation, where they praise us for being the best and the brightest the world has ever seen. Leaving college is a major ritual, too, after all. Again, nothing of the sort happens in Spain. There are no viral Spanish graduation speeches.

Since moving to Spain, I’ve come to see the American rituals of college as a bit ridiculous. A lot of it is fueled, I think, by our culture of competition. In the United States there are a handful of extremely prestigious schools with a limited number of spots, and where you go to school is a big determiner of your career. It thus becomes a part of your personal journey (and Americans love talking about their careers as personal journeys) and even your identity. This is partly why we demand so much from our college experiences. We don’t just go for the knowledge, but to take our rightful place in the hierarchy of society. We are supposed to emerge transformed, imbued with the prestige of our institution. If you don’t believe me, just talk to anyone who has gone to an Ivy League school. Either they reject it or it’s a part of who they are.

When universities are responsible for providing such an all-inclusive package—dormitories, food, social life, entertainment, psychological and physical health, and a life-defining education—it is no wonder that they cost a lot. What you are paying for is basically the brand itself. Even public universities in the United States pay huge amounts of money in marketing, in order to bolster the university’s brand. The better the brand, the higher the ranking, the more prestigious the university, and the more money it can charge to bestow its prestige on its clients—I mean students. 

I’m getting a bit carried away here, but I hope you see my point. In Spain, you are paying for your classes and little else. You emerge from university with a degree—more knowledgeable, hopefully, but not transformed into a vessel of prestige. To me, I think it’s a healthier system, not least because people don’t drive themselves crazy competing to get into the best university possible. Where you go to school does not determine your social status.

I have a limited experience going to a Spanish university. Last year, I completed a masters at the Universidad de Alcalá de Henares, in the Instituto Franklin (which specializes in American studies and courses for Americans abroad). The masters took one year to complete and cost me about $4,000. That’s not a bad deal. As an aside, Alcalá de Henares is worth visiting just to see the historic university buildings, which are quite beautiful. The oldest continuously operating university in the country is in Salamanca, which was founded in the 12th century. If you are in Salamanca—a beautiful city—this is also worth a visit.

Anyways, I didn’t want to talk about higher education the whole time. I also want to mention about the Escuela Oficial de Idiomas (the official school of languages). This is an initiative of the Spanish government to subsidize low-cost language classes outside of the university, mainly for adults. This year I began taking classes at one of the official schools in order to revive my atrophying German skills. And it’s been a great experience. I paid a little more than 200 euros for a whole academic year of classes. That works out to—what… about two euros per hour of class? It’s a very, very good deal. And the classes are quality, with properly qualified teachers and a well-established curriculum. I’m learning a lot this year.

There are dozens of official schools in Madrid alone and about half a million students enrolled in Spain. My particular school has a very wide range of languages on offer. Besides German, there are other major European languages like French, Italian, and English. There is Spanish for foreigners—quite useful for immigrants—and there are also the other three official languages of Spain: Basque, Catalan, and Galician. Aside from this, the school offers Dutch, Danish, Arabic, Greek, Gaelic, and Chinese (to give you the short list). If you want to become a polyglot, this is a place to be. And the school’s resources extend beyond the classroom. There are language exchanges, where you can find someone and “trade” languages, and also lots of cultural talks and events. There’s even a choir!

Of course, being run by the government, there are a few things to be desired. The school is in an ugly old building. One of the two elevator’s has been broken for two months, so I have to walk up the five floors to my class. And enrolling is a pain. But for what you pay, it’s really a great deal. In fact, I think that having a public school for language training is a wonderful idea, and one that we should embrace in the States. At the very least, it would be a great resource for immigrants. And it might help us with our famous monolingualism. I’d go even further, and suggest that the model of the Official School should be extended for other sorts of things. Computer coding, for example, or even photography—any kind of skill that adults might need to learn. Even on purely economic terms, investing in education usually pays off. After all, a multilingual workforce can outcompete a monolingual one.

In general, my experiences in Spain have made me a strong believer in public education, as uninspiring and inefficient as it can admittedly be sometimes. I think we lose a lot more than we gain by conceiving of college as a giant competition for limited amounts of prestige and status. Education should be about equalizing opportunities and not exacerbating differences, which it so often does in America.

And needless to say, graduating with tens of thousands of dollars in debt isn’t ideal. Let me give you a concrete example of the difference that debt makes. A few weeks ago I met a man from Scotland living in Germany. He had begun to study German language and literature, but a few years into his undergraduate he decided he didn’t like it—since he didn’t want to work as a translator or a teacher—and he stopped. Now, in America he would have been deeply in debt and without a college degree to help him get a job to pay for it. He would have to start working like mad to try to pay his loans off, and he’d have a difficult time for sure. (Even the loans we get from the federal government in America can have a high interest rate.) But this guy didn’t have to do that. He didn’t sink under the weight of debt since he didn’t have any. A few years later, he re-enrolled as an undergraduate to study music. And now he’s working his way through college—just like we used to do in America—paying for his living expenses with a part-time job as an audio engineer.

To many millenials in America, stories like that seem too good to be true. But are we willing to give up our mythologized college culture and settle into treating university as just additional schooling?—schooling that isn’t necessarily transformative and which isn’t necessarily the right step for every person? That’s hard to tell.

Thank you.