College: A Degree or Debt Sentence?

According to Business Insider, it is 400% more expensive to go to college in the United States
today than it was just 30 years ago. What is the cause of this massive inflation?

There are over 18 million students enrolled at the nearly 5,000 colleges and universities in the
United States. Many of these schools are charging between $20,000 and $40,000 a year for
tuition and fees. These numbers typically do not include room and board.

As a college student myself, it was important for me to attend a school where I wouldn’t
graduate with debt. The tuition was a big consideration as I narrowed down the schools I wanted
to apply to.

A Forbes article stated that U.S. colleges and universities have been increasing tuition costs by 2
to 5% per year. Not all of this funding is going towards improving student education systems.
Spending binges to construct academic buildings, dormitories, and recreational facilities have
left colleges and universities saddled with large amounts of debt. These new facilities are often
built lavishly in order to attract students and to compete with other college’s facilities.
Oftentimes, students are left picking up the bill.

Some colleges and universities have also borrowed large sums of money. This borrowed money
goes towards vast expansions and amenities aimed at luring wealthy, academically strong
students with luxurious elements like movie theaters, wine bars, workout facilities with climbing
walls and “lazy rivers”, and dorms with single rooms and private bathrooms. Students end up
covering some, if not most, of the colleges’ debt in the form of higher tuition.

High Point University is a great example of this phenomenon. At first glance, it looks like your
typical small Southern, private liberal arts school. However, it boasts that it is one of the nation’s
most extravagant universities. Under the leadership of Nido Qubein, president of High Point
since 2005, the university has poured about $700 million into expansions. These projects —
financed almost entirely through increased borrowing and student fees — have provided

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amenities such as a movie theater, flat-screen plasma TVs in every dorm room, a complimentary
shuttle service, hot tubs, and weekly massage sessions. Enrollment at High Point increased by 50
percent after these projects were completed. Room and board also increased by 60 percent.

A 2015 study by the National Bureau of Economic Research found that colleges, particularly
less-selective ones, receive a greater marginal benefit from investing in amenities rather than
improving academic quality. In other words, schools seeking to boost enrollment — and their
flow of federal tuition dollars — would be better off building another climbing wall than, say,
upgrading a science lab or library collection.

A student debt website, Student Loan Hero, claims that graduates of the class of 2016 face the
most student-loan debt in history, averaging $37,172, which is up 6% from the previous year.
Student Loan Hero also claims that U.S. college graduates have more than $1.48 trillion of
student-loan debt. To put this number into perspective, it is about $620 billion more than the total
U.S. credit card debt.

The student debt crisis has become such a big issue in the United States that it’s even captured
the attention of presidential candidates searching for ways to make college more affordable. In
the 2016 presidential election, both Hillary Clinton and Donald Trump had sections on their
respective campaign websites addressing the costs of higher education to capture the attention of
those indebted or about to be.

A Student Loan Hero article informed me of a rippling effect in the ways student debt impacts
the economy. People with student loans are less likely to start businesses of their own. Those
with higher levels of student debt show lower growth in the formation of small businesses,
defined as firms with one to four employees. Considering that 60 percent of jobs are created by
small businesses, if the ability to create new businesses is hindered, the overall economy will
also end up being negatively impacted.

Student debt is one reason that 20- and 30-somethings seem to be living an extended
adolescence, including living with their parents, failing to contribute to retirement accounts and

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postponing big consumer purchases such as cars and houses. Their extended adolescence is due
to them being more focused on paying their loans than anything else.

Roxy Novo, a recent graduate from a private college, told Business Insider that her $60,000
student-loan debt has slowed down her life plans. The 22-year-old commutes two hours every
day from New Jersey to her job in New York City because her $500 monthly loan payment is
equivalent to a portion of what it would cost to rent an apartment in the city, she said. "I
definitely cannot consider moving closer until I get a higher-paying job and get a good chunk of
my debt paid," Novo said. "I'm trying to do the responsible thing and eliminate loans before
considering any expensive, fun things, but it can be really hard when your friends are out
traveling the world and moving to the city and you're swimming in debt."

When I was touring colleges, I wanted a school that would use my tuition money wisely, not for
facilities and amenities to attract potential students. While Elon does offer beautiful facilities to
its students, it’s clear that academics are Elon’s first priority and that luxurious amenities are
thought of afterward. Kiplinger’s Personal Finance even named Elon one of the nation’s top 50
“Best Value” private universities for 2017 and #18 in lowest total cost.

Before applying to colleges, find out where your tuition money goes before writing a big check.
Look to see how much the tuition increases every year. Read about people who have graduated
from the institution and see how much debt they leave with. It is better to be informed on this
issue than to realize too late and still be paying student-loans well after college.

References

Bhatia, Pooja. “The Long-Term Impact of Student-Loan Debt.” USA Today, Gannett Satellite
Information Network, 3 Mar. 2014,
www.usatoday.com/story/money/personalfinance/2014/03/03/ozy-student-debt/5976111/.

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Snyder, Michael. “16 Shocking Facts About Student Debt And The Great College Education
Scam.” Business Insider, Business Insider, 26 Dec. 2010, www.businessinsider.com/facts-about-
student-loan-debt-2010-12.

Castellano, Jill. “College Students Are Paying More, But Many Schools Are Spending Less On
Them.” Forbes, Forbes Magazine, 3 Aug. 2015,
www.forbes.com/sites/jillcastellano/2015/08/03/college-students-are-paying-more-but-many-
schools-are-spending-less-on-them/#635a4f7d1afb.

“U.S. Student Loan Debt Statistics for 2018.” Student Loan Hero, studentloanhero.com/student-
loan-debt-statistics/.