2 minutes
From the editor
Recent life events have me thinking of college days—both past and future. Sorting through my parents’ long-stored financial records this week, I chanced across a canceled $554 check for my second semester of college tuition. Thirty-five years later, I can still remember the campus-wide outrage at its $50, or 10 percent, hop from first semester.
Despite what seemed like drastic increases, my total tuition tab at the University of Wisconsin-Madison after eight semesters was roughly equal to one semester for a UW-Madison student today. And my return on that $5,000+ investment was nearly 300 percent in my first year at my first job.
What will the risk/reward picture look like when my high school freshman heads off to college in four years? If tuition stayed flat (ha!), she’d be looking at a $40,000 tuition investment at my alma mater, just under the current average starting salary for graduates of $46,400, according to the PayScale website.
Add room, board and, for many, debt repayment to the equation, and it’s easy to see why people question whether a college education is still a good investment—and why some credit unions are loathe to enter the student lending market.
Earlier this year, Brookings Institution, Washington, D.C., sought to answer the question “Is a Student Loan Crisis on the Horizon?” using Federal Reserve survey data through 2010, then updated its findings when data that reflects young households from 1992 to 2013 became available.
Bottom line: “The 2013 data confirm that Americans who borrowed to finance their educations are no worse off today than they were a generation ago,” the researchers wrote. Specifically, the increase in earnings received over the course of 3.2 years would pay for the increase in debt incurred. However, they note, this is up from the 2.4 years that was reported through 2010, as borrowing continued to increase and mean wage income fell slightly.
For additional conclusions and background on the study, download the report at http://tinyurl.com/studentdebtreport. Then check out the state of private student lending as it relates to credit unions specifically, starting on p. 30.
Mary Auestad Arnold
Editor and Publisher
