How to Pick a College That Won’t Rip You Off

(Mike Segar/Reuters)
A new book gives practical advice to students and parents.

Beth Akers’s Making College Pay gives away a lot in its title. There are plenty of reasons people go to college — a multi-year party at the onset of young adulthood, a route to self-fulfillment, a chance to learn just for the sake of learning. But most also expect college to have some financial payoff, and that’s where Akers’s book comes in.

This is a handy, brief, readable guide to selecting a college worth the cost. It’s directed toward students, though moms and dads might be more likely to realize the gravity of the college decision and the importance of its financial dimension. (Akers describes wandering into her own college choice pretty cluelessly, which is how I remember making my decision as well.)

The book carefully wades through each layer of the process, starting with whether it’s worthwhile to go to college at all. The answer is yes, probably, but with some caveats.

Scientifically, it’s hard to study how much college pays off. People who go to college are different from those who don’t even before college starts; they tend to have higher grades and test scores in high school, wealthier and better-connected parents, and so on and so forth. When college grads then go on to make more money than non-grads — a seven-figure gap, by some estimates — it’s difficult to sort out how much of the difference stems from college itself, and how much stems from these preexisting advantages.

Regardless, the relevant research points to a big payoff on average, which makes sense given how many high-paying jobs just outright require college degrees. Whether so many jobs should require degrees is, of course, another question.

And no, all that evil student debt doesn’t cancel out the higher earnings, at least not for the typical student. An economist, Akers is one of the most prominent voices in the student-debt debate, and in this book she lays out some of the most important facts about how college financing works.

The sky-high “sticker prices” that colleges purport to charge are reduced through financial aid, especially for lower-income students (though, frustratingly, you won’t know how much a college will actually cost you until after you apply). The vast majority of borrowers have affordable payments after they graduate. Thanks to the federal government’s involvement, student loans have low interest rates — so low, in fact, that even if you don’t have to borrow, it might be a smart move to take out a loan anyway and put the extra money toward a good investment, where it should grow in size faster than your debt will. In the event that you do have trouble paying off your loans, the government offers various “income-based repayment” options that guarantee your payments will never exceed a reasonable percentage of your disposable income, and that your debt will be forgiven after you make payments for a set number of years.

So, college is a worthwhile endeavor — with some very important caveats, which Akers discusses in a chapter called “Why College Sometimes Doesn’t Pay.” A shockingly high proportion of students fail to graduate in a reasonable amount of time — perhaps 40 percent, though this number varies across different types of colleges and between full- and part-time students — and failing to get a degree reduces the value of a college education dramatically. Students who do graduate often take more than four years, which increases the cost of their education and decreases the amount of time they spend in the work force. And there are some college programs whose graduates out-earn the typical high-school grad barely or not at all. All of this will be an important reality check for kids who might not be a great fit for college, or who are considering majors that simply don’t pay.

For the others, there’s the question of which school and program to attend. As Akers spells out, kids entering college today have incredibly powerful tools at their disposal for moneyballing their options. There have long been college rankings such as the ones offered by U.S. News and World Report, but now a potential student can see actual financial outcomes for students who graduated from a given college, and even for the subset of those graduates who chose the specific major he’s considering.

Here Akers does a great service walking readers through the basic process of comparing options. The most important thing is to check out the data available on each of your serious possibilities — colleges you have a shot of getting into, based on your grades and test scores, and that you would be willing to attend. The key source here is the government’s College Scorecard, though Akers provides an entire appendix listing other helpful resources and average salaries by field of study.

Start with the graduation rate, she recommends, because a college experience isn’t too valuable without the credential it’s supposed to lead to — and don’t blithely assume you’ll beat the odds if that rate is low. Also check out the typical earnings of graduates, both for the college as a whole and for your potential majors. You can get a rough estimate of your expected price too, though, again, you won’t know your exact financial-aid package until after you’ve applied.

With all that info in hand, you can get a general sense of where each path leads, and with some basic math you can see how much extra income your credential could earn you. This is more than most kids do, but it offers immense benefits.

Akers also spends some time discussing some new developments in the higher-ed marketplace. Some colleges are now offering “income-share agreements,” in which students pay a percentage of their post-graduation income to the college — meaning the college itself takes on some of the risk that the student’s education won’t pay off. There are also some new programs that teach skills quickly, such as coding boot camps and “competency based” options that can give you credit for what you already learned elsewhere. These are important not only to the students who might benefit today, but also to the broader world of higher ed, because they represent ways of making learning more affordable in the future.

We politics junkies have been consumed lately with the question of what the government should do about student loans. In Making College Pay, Akers steps back from that debate to tell us how the current higher-ed system works and how students can navigate it. Her advice is invaluable, and students and parents should take heed.


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