US Colleges Flush With Cash Saddle Poorest Students With Debt
A ProPublica analysis of newly available federal data shows that some of the nation’s wealthiest colleges are leaving their poorest students with plenty of debt 
New York University is among the country’s wealthiest schools. Backed by its $3.5 billion endowment as well as its considerable fundraising prowess, the school has built campuses in Abu Dhabi and Shanghai, invested billions in SoHo real estate, and given its star faculty loans to buy summer homes
But the university does less than many other schools when it comes to one thing: helping its poor students. 
A ProPublica analysis based on new data from the U.S. Department of Education shows that students from low-income families graduate from NYU saddled with huge federal loans. The school’s Pell Grant recipients – students from families that make less than $30,000 a year – owe an average of $23,250 in federal loans after graduation. 
That’s more federal loan debt than low-income students take on at for-profit giant University of Phoenix, though NYU graduates have higher earnings and default less on their debt.
NYU is not the only university with a billion-dollar endowment to leave its poorest students with heavy debt loads. More than a quarter of the nation’s 60 wealthiest universities leave their low-income students owing an average of more than $20,000 in federal loans. 
At the University of Southern California, which has a $4.6 billion endowment, low-income students graduate with slightly more debt than NYU’s graduates: $23,375. At Boston University ($1.5 billion endowment), it’s $27,000, and at Wake Forest University ($1.1 billion endowment) low-income students graduate with $29,150 in debt. 
This new data on student debt is drawn from numbers that the Obama administration assembled as part of a planned effort to create grades for every college. In the face of fierce lobbying from universities, the administration backed away, but has made much of the data public on a new website called College Scorecard. ProPublica has used that material to create Debt By Degrees, an interactive database that allows you to search information for almost 7,000 schools. The data provides an unprecedented level of detail on the financial burden that the poorest college students face, showing for the first time how much federal debt poor students take on compared to their wealthier peers, and how well these students are able to repay their loans. The database also shows how much graduates earn on average after leaving school. 
The implications of these numbers can be far-reaching. Studies have shown that even small debts can increase a student’s chances of dropping out, particularly for minorities and low-income students. Also, federal loans, which are typically capped at $27,000 over four years, often don’t cover the full expense of college. Many students also take on private bank loans or work jobs outside school. 
“Student debt is not the same to every borrower,” said Mark Huelsman, a senior analyst at Demos, a public policy nonprofit. “It can look a lot different to a first generation student from a very modest economic background than to someone going to graduate school getting a law degree.”
Indeed, undergraduates take a fraction of the loans of graduate students but default at much higher rates. Debt can put low-income young adults at a disadvantage for years to come, limiting a graduate’s ability to save, get a mortgage, or get the job they aspire to.
“At the end of the day, you’re talking about households that don’t have nearly as much wealth to fall back on,” said Huelsman.
Rebecca Arthur wanted nothing more than to study photography at Tisch, NYU’s arts school. Her mother, however, made less than $25,000 a year working at a nursing home, so Arthur knew the school’s four-year price tag of over $250,000 would be a stretch. When Arthur was accepted, she was shocked – not only because she had gotten into her dream school, but also because the school only offered modest financial aid. 
“The first bill was $32,000 and it was more… Continue Reading…
Courtesy: ProPublica




2 years ago

Offhand (to crudely share common- sense- based - thoughts)
This is quite a shocking anti=people practice; inducing the gullible student community to 'borrow' and get caught in a 'debt trap', for no-knowing -how -long. Deplorable that it is done in the name of 'education' ; and by institutions, with the supposed -primary, rather only -object of imparting 'education'.

What instantly comes to one's mind is the practice of banks - in India, that too by PSBs,- decried by a popular humanitarian- unduly influencing and inducing people to borrow,even if not really in need though, through gimmicks such as 'loan mela'. And the government, as its contribution, in the guise of 'social welfare', provide tax incentives, to encourage such borrowings- for housing, education,car purchase,so on.

Over to well and better informed sociologists and pro activists to ponder.

Mediclaim Blunders
Financial products are complex. Often, what you see is not what you get. Still, some basic principles work in case of bank deposits (they are safe), or blue-chip stocks (they usually offer higher post-tax returns than bank deposits). But Mediclaim is a unique financial product. No one can guarantee that your claim will be paid when you need it. At best, you can hope to have done everything correctly and have a good chance of getting your claim. Unlike many other financial products, it is difficult to pick the best insurer or the best product. Add to it is the complexity of insurance frauds. This can make even an honest insured appear like a sceptical case when a claim is lodged. But the forewarned can be the forearmed, if they are aware of what really happens on the ground. Raj Pradhan has compiled six stories of the insured’s pain and the insurer’s strain; there are no clear-cut winners in many cases. Read these examples in our Cover Story to know about googlies in the policy document, hospitalisation issues, new medical products (like stents) and claims investigation processes. 
R Balakrishnan, in his article, points out how a simple formula like return on capital employed (RoCE) can be used to pick winning stocks. A must read, if you follow our stock-picks or subscribe to our Stockletters, as RoCE is a part of our stock-selection criteria.
After some harrowing weeks for us, Justice Gautam Patel, of the Bombay High Court, issued a scathing order in the NSE Vs Moneylife case. Turn to page 13 for excerpts from this path-breaking order that vindicates our stand thoroughly. This order should put a brake on big businesses using legal threats, running into a few hundred and thousands of crores of rupees, to silence the voice of media. In her Crosshairs column, Sucheta highlights some of the cases that have come up recently. At stake is fair journalism.
Thank you for all the positive comments and support in the NSE case that was very crucial not only for Moneylife but for the entire Fourth Estate. As always, do keep writing in with your comments and suggestions.


Yields Unchanged Past Fortnight

Bond yields have been flat in a fortnight. You can expect to get 8.60-9% for AAA rated bonds...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)