Families losing appetite for college debt

By Charlotte Hsu

Friday, Dec. 19, 2008 | 2 a.m.

The financial crisis is forcing many young people to reevaluate college preferences.

To save money, some are considering starting at community colleges instead of four-year schools. Others are exploring options closer to home.

Families are having serious doubts about whether an education from a prestigious institution is worth the tens of thousands of dollars they might have to borrow to buy it.

In recent years, going deep into debt to pay for college seemed natural. From 2000 to 2007, the average student loan debt of borrowers receiving bachelor’s degrees rose from $19,300 to $22,700, or 17.6 percent, after adjusting for inflation, according to the College Board, the nonprofit group that administers the SAT.

Those figures don’t include credit card, home equity or other debt families shoulder to finance college educations.

The willingness to borrow stems from the belief that degrees from elite institutions unlock better career opportunities. A PayScale Inc. survey The Wall Street Journal published this year found that Ivy Leaguers’ median starting salary ranged from $56,200 for Brown University to $66,500 for Princeton University, compared with $45,200 for UNLV.

Top colleges offer grants to assist with tuition, sometimes covering all of it for the neediest students.

But attending a dream school is often impossible without accumulating a mountain of debt. Every penny graduates spend repaying loans could go, instead, toward saving for a home or retirement.

Bret Whipple, a member of the Board of Regents that governs Nevada’s public higher education system, studied at the College of Southern Nevada before attending the University of Pennsylvania’s prestigious Wharton School in the 1980s.

Of CSN, he still offers praise: “The obvious advantage is it costs less money. But I think the stronger advantage is the fact that you get personalized involvement. The teachers are paid to be teachers ... They don’t have to bring in research dollars. They don’t have to write books. They’re simply there to help students.”

Recent research suggests attending an elite school matters less than popular wisdom implies.

A study by faculty members at Wharton and Instituto de Empresa in Madrid found that the percentage of Fortune 100 top executives who earned undergraduate degrees from Ivy Leagues fell from 14 percent in 1980 to 10 percent in 2001. The proportion who graduated from public colleges rose from 32 percent in 1980 to 48 percent in 2001.

“In 1980, an Ivy League undergraduate education played a central role as a gatekeeper to a Fortune 100 executive career,” the authors wrote. “By 2001, graduates from public institutions had greater access to executive positions, especially those with advanced degrees.”

In Nevada, some high schoolers mock UNLV as “13th grade” or “U Never Leave Vegas.” The institution’s graduation rate of about 40 percent and its poor ranking in the U.S. News and World Report Best Colleges guide hurt its image.

UNLV is not Harvard. But it still has some things going for it.

In fall 2007, only 2.4 percent of the university’s undergraduate classes had more than 100 students each, compared with more than 10 percent in fall 2006 at UCLA, a top destination for Nevadans leaving the state.

The cost of attendance, though rising, is below average in the West. And the state covers a portion of public college fees for Nevadans who do well in high school.

Budget cuts could change a lot.

But for now, “not enough people look at UNLV as a potential first choice,” said Regent Steve Sisolak, who will be sworn in as a Clark County commissioner next month. He could cover tuition at any university for his two daughters, but both attend UNLV.