Why Poor Students are Going to the Wrong Colleges and Why You Should Care
Recently the Hechinger Report published “The universities that enroll more poor students have less financial aid to give,” detailing the disparities in funding at public flagship universities compared to their counterparts. The piece lists a number of interesting data points, including:
- 41% of public four year colleges cost more than their state’s flagship university.
- These colleges are enrolling more than twice the high-need students.
- Even if the universities were tuition-free, the other costs make college out-of-reach for students,
- Fewer than half of full-time freshman graduate in six years and most are dropping out due to funding issues.
For both of my companies, Vielka Hoy Consulting LLC and Bridge to College Inc, this isn’t new information. We’ve built the companies around the premise that underserved students are simply going to the wrong colleges. And the above seems bad, but it gets worse:
- Graduation rates are way worse than they seem. The Hechinger Report looked at student experiences as the University of Wisconsin-Madison and its counterpart in Milwaukee. Madison graduates 60% of its students in four years, while Milwaukee graduates 14% in four years.
- The difference in the return on investment for these degrees is also huge. According to a Georgetown study, degrees from Madison have a net value of $125,000 while the net value at Milwaukee is $95,000. That doesn’t seem like that huge a difference, but the net value is accounting for how much a student is paying back in loans so that difference may only be loan repayments, something that could have been avoided.
- Loans become really huge really quickly. Students often times think that borrowing $30,000 isn’t that bad but once we account for default rates and penalties, and interest, $30,000 turns into $60,000 and into $120,000 really quickly.
Most people in college access have known all of this for a very long time.
We’ve also known more important information:
- Private colleges are usually cheaper than public colleges.
- Graduation rates matter.
- And so does the return on investment for the degree.
I am often told why no one actually cares that much about the above–those are things that only seem to impact the student and the role of college access professionals is really only to get students into colleges. How they pay for it and if they graduate are not their concerns.
And that’s the thing you should care about. Not just that they’ve known. But that they are gate-keeping by withholding information or telling the wrong information, when a college degree is the only sure way to advance self and community.
Before I get into that, a bit more about why that matters.
Last year, the Washington Post published an article titled, “7 ways $1.6 trillion in student loan debt affects the U.S. economy.” The article lists some of the ways that carrying six figures of debt at an early age does for the housing market, marriage, and retirement, among other consequences.
Here is the punchline: Having a significant portion of the population unable to participate in the economy makes capitalism tough to implement.
Regardless of what we think about Bernie Sanders, he is absolutely correct on this one.
And to keep tapping into my inner Warren & Sanders, all of this is intentional, which makes even less sense.
In the Hechinger Report piece, the student stated that the other university, “seemed ‘more financially accessible’.” That feeling isn’t coming out of nowhere. There are tons of companies, universities, banks, and more entities that intentionally misinform students and the counselors that support them because they are making money off students going into debt.
As a company owner, I can talk about the number of banks who have asked to partner with us, if we recommend colleges that we know the student can’t afford. And there are investors who expressed interest in investing, if we did things that way. We’ve rejected them and I believe that’s a huge part of the reason why it took us three years to complete a pre-seed round.
We’ve also rejected marketing partners who would give us a percentage of the loans the students take on.
We’ve had venture capital reject us because we don’t partner with for-profit colleges and vocational schools.
The money isn’t the critical piece here; the important part is that there are companies that aren’t rejecting this cash, and continuing to push the narrative that public colleges are just as good as these others and the debt isn’t that big a deal.
It’s like how the fast food industry tells people it isn’t the food; they just need to exercise more.
Or social media companies saying it isn’t the large amounts of paid, false online content people are consuming; they just don’t know how to analyze it correctly.
Or beauty companies doing their best to tell us we’re all beautiful…as long as we buy their cosmetics.
The difference here though is that the gatekeeping is hurting communities and stifling our growth as a people.