The Washington Post “Color of Money” columnist, Michelle Singletary, and I have something in common. We are both sending a kid to college next year. A recent column is focused on the financial realities of paying for college, and she is none too impressed with a new tool provided by the Department of Education to price out the cost of college. It’s available here. I agree with Singletary’s critique of the site, but I also see a lot of value, and I’ll get to that later.
Singletary wants the site to include a financial aid shopping sheet and she notes that the Obama Administration apparently will have 600 colleges providing financial aid information on the site as of 2013-2014. There will be several important pieces of information, including the costs for the year, estimate of monthly payments graduates would expect to make on federal student loans. Singletary says “and they will supply information about the percent of students who enroll, graduate and repay their loans.” Actually that information is there now and I found that incredibly helpful as a parent.
So here’s what I liked about the site. I have an aversion for for-profit colleges, as I’ve noted in this blog previously. I think they steal money from largely lower-income, military, and minority students, charge ridiculous tuition and when they do even provide a degree – their default rates are very high – that degree is often worth little in the marketplace.
I tested the information available on the site. I plugged in Strayer University in DC, a for-profit entity, to the search engine. Average tuition is $29,000+, graduation rates are 22.7 percent, and the loan default rate is 13.9 percent. Compare that to Catholic University, a well-regarded and longstanding nonprofit university, also in DC. It may be the least difficult of the four major universities in DC to get into. Tuition is $34,000, graduation rates are 68.3 percent, and default rates are 1.7 percent. Yes, it costs $5,000 more a year than Strayer, but your chances of graduating are far greater and your chances of defaulting on your student loans are far lower.
Let’s try Georgetown University, also highly regarded and in DC, and very selective. Tuition is $26,000. Graduation rates are 93.8 percent and default rates are 1.3 percent. What does that tell you? If you go, you’re likely to graduate and you are very unlikely to default. That’s a good investment.
To my mind, Catholic and Georgetown are priced similarly to Strayer, but are far better investments I think this information is critical for parents and students of all ages. The information I’d like to see added to the site now is how easily graduates find jobs and what they make once they get those jobs. The site wasn’t able to provide that critical information. I have seen that somewhere but I wasn’t able to locate that here. In the next few months, I hope the Education Department make that available.
Thanks to Michelle Singletary for giving these new tools much-needed publicity. The sites are far from perfect, but they do provide some critical information that savvy consumers should be able to use to make a good investment in theirs or their children’s education.