What is the “Root Cause” of College Debt?

by Prof. Mark Werwath

The College Debt Crisis is old news–old, but still relevant. The current amount of college debt in the United States is now over $1 trillion dollars. In numerical terms, that’s $1,000,000,000,000; a one followed by twelve zeroes. That is a lot of zeroes. Clearly, people are right to be concerned about the cost of education, but make no mistake, the source of the problem–or in engineering terms, the “root cause”– is not what you would think.

The obvious assumption is that students who attend more expensive colleges are burdened with more debt than those who attend less expensive schools. That explanation makes sense, but, ironically, it is not true! Take a look at the following list of the top 5 in each category:

List A: the most expensive colleges in the US                       List B: the colleges that burden their students with the most debt

        1. Columbia University                                                              1.  The University of Phoenix (online)

        2. Vassar College                                                                         2. ITT Technical Institute

        3. Trinity College                                                                        3. Kaplan University

        4. St. John’s College                                                                     4. DeVry University

        5. Connecticut College                                                                5. Ivy Tech Community College of Indiana

(For more detailed information, please click the links provided above.)

Notice that these two lists have NO point of intersection, not even one. You will notice that List A contains only world-class universities with stellar reputations for academic excellence, while List B is populated with for-profit and online colleges.

Why is there such a discrepancy between these two lists? Well,  the world-class institutions, such as Columbia University, that compose List A ensure that their domestic students who have affordability issues are provided with stipends and other similar options to help them avoid having to pay the full cost of tuition. These universities also have endowments that fund all sorts of items that other schools have to pay for out of operating income. Meanwhile, the for-profit schools such as the University of Phoenix and Kaplan University provide little financial assistance to their students, so the astronomical default rates these places boast are not surprising.

Thankfully, Northwestern University is not on either of the lists above. Like the more expensive schools, Northwestern endeavors to provide its students with viable financial aid options like stipends, scholarships, and grants, while still maintaining a lower tuition rate than the others. For more information about Northwestern’s financial aid options, please click here.

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