It’s been a week since we announced the 2012 class of Dell Scholars. Within hours of notifying our newly minted Dell Scholars that they had been accepted to the program, we were on the phone with one student to discuss the financial implications of attending an out-of-state public university. Since then, we’ve identified seven other scholars facing similar decisions.
For these first-generation students, acceptance to the program often feels as though it puts them one step closer to their dream colleges. But the situation isn’t that clear cut. The reality for some of our Dell Scholars is that, even with the $20,000 in financial assistance that’s part of our overall persistence program, their dream schools may still be out of reach.
The situation is particularly acute at out-of-state public universities with out-of-state price tags and at high-priced private universities whose aide packages don’t come close to covering the cost of attendance. Even attending an in-state public school doesn’t guarantee affordability. Sure, these schools may provide aid packages that meet the full cost of attendance, but they sometimes offer minimal institutional aid (e.g. university grants, scholarships and fellowships,) and are instead over-indexed on private loans, many of them loaded with burdensome interest rates and repayment terms.
Breaking the news
Let me tell you: Being the bearer of such bleak news can be tough.
As much as I love talking to new scholars, it’s incredibly hard to pick up the phone and dial if I know a kid has her heart set on a college that puts her at long-term financial risk. Why? Because I know I may be about to earn a new title: “Dream Crusher.” More than once, I’ve seemingly been the lone pragmatist telling a super-excited Dell Scholar that attending his dream school may result in financial disaster. During several of these difficult conversations, scholars have told me and my colleagues at the foundation that we’re the only ones that have ever brought these issues up. Everyone else, they say, has encouraged them to dream big and not let cost deter them.
But at a certain point, that dream-big message can do these amazing kids harm. In our collective rush to get more kids – particularly low-income kids – into college, we’ve often adopted a “whatever it takes” attitude, and with the best intentions, we’ve inadvertently set some of these students and their families up for potential financial disaster. Some of them will graduate with exorbitant debt. Hopefully they’ll find entry level jobs, but for many, student loan payments will eat up more than half of their take-home pay. Others will drop out with a boatload of unsecured student loan debt and no college degree to fall back on. From a financial perspective, the bitter truth is that this latter group would have been financially better off going straight into the workforce after high school.
The “college readiness gap:” Financial aid literacy
It doesn’t have to be this way. It’s a given that everyone should be financially literate. And it’s a given that every entering college freshman should be “college ready.” But there’s a gap. We haven’t made a connection between “college readiness” and financial aid literacy skills.
To my point: If you’re a high school counselor or part of a college readiness program, I ask you: How much time have you spent teaching your students about comparing financial aid award letters, understanding the difference between loan types, or how poor academic performance will impact financial aid? Can you look yourself in the mirror and say you’ve fully equipped them to make the right choices, and to select schools that will challenge them academically, develop them personally and, most importantly, not require them to mortgage their futures?
Whatever your answer, there’s still time to act: The college selection season is in full swing, acceptance letters have been received and financial aid award offers will follow shortly. There are many great financial aid resources that have been around for years. I’m especially excited about the beta version of Paying for College developed by the Consumer Financial Protection Bureau. The site makes major steps forward in creating a more simplified, uniform way for kids and their families to compare financial aid offers. (Side note: Try the College Cost Comparison Tool, and let us know what you think.)
Bottom line: We all know that the long-term implications of such heavy student-loan burdens aren’t good news for any of us. We also know that the seemingly endless year-on-year increase in college costs must be addressed. But until that happens, it’s imperative that anyone tasked with helping students attend college also arm them with the critical thinking and decision making skills to help them make informed decisions.
So I keep picking up the phone, calling excited new scholars and delivering what may sound, on first blush, like hard news.
I hope I never earn the title “Dream Crusher.” It’s not one I want, and it’s not one I think I deserve. But I firmly believe that the concept of “living the dream” categorically excludes student loan burdens that extend into retirement. So if the cost of my belief is a title I don’t like, I guess I can learn to live with it — especially if the long term tradeoff is a Dell Scholar who makes it through to graduation without a mountain of debt. How about you?* Photo credit: cryptic_star / Creative Commons