This week I gave a keynote address at the American Marketing Association Symposium for the Marketing of Higher Education.  The meeting in New Orleans had approximately 1,000 attendees, most of whom were marketing and communications professionals in colleges and universities, the remainder largely representatives of firms that sell marketing services and products to higher education institutions.  The organizers were encouraging attendees to tweet throughout the conference, and one of the sponsors was offering a prize to tweeters (though it wasn’t clear whether the prize was going to the most prolific tweeter, the most salient, or perhaps the luckiest).

My talk was the luncheon keynote, and the lunch was a Thanksgiving meal – just what every after-lunch speaker wants, a large dose of tryptophan delivered to the audience.  I joked to the person introducing me that they might as well have put a football game on the large screens flanking the stage, that way everyone could have just gone to sleep.  But undaunted, I embarked on my talk titled, “Higher Education Under Attack: Why Doesn’t Anybody Like Us and How Should We Respond?“  While I have given a number of keynotes in the past, and I’m sure throughout some of the recent ones people were tweeting, this is the first time that there was active encouragement of tweeting.

During the talk itself, as I looked out on the audience and saw individuals with their fingers and thumbs on phones or iPads, I wondered just how many of them were tweeting.  During the speech, I felt at times a bit like someone who was the target of a voodoo doll; I would make a statement, and then a few seconds later would feel a pinch, as someone fired off a tweet in response.  So after I returned to the comfort of my office, I was curious to see what people had to say during the talk.  I was interested not just in whether they liked it or not, but also which of the things that I said elicited the most Twitter traffic.  I had some specific comments that I thought were the most important parts of my talk, and that I tried to highlight, so I wanted to see whether people responded to those the most.

So I pulled up the Twitter stream from the symposium.  I’ll admit I’m not a Twitter user, and have had little experience looking at such a stream.  To the beginner, Twitter doesn’t make it easy; even if you know the hashtag for the event, you have to wade through the whole stream to get to what you are looking for.  It is in chronological order, which does make it a little easier, but you still have to read through a lot to find specific comments.  Eventually I got to the tweets during my talk, and enjoyed seeing what people had to say. They ran the gamut, from the snarky to the informative.

So here’s the good, the bad, and the ugly (not necessarily in that order), along with my commentary.

• Don Schindler ‏@donschindler: RT @lizgross144: #amahighered idea for next year: recliners provided to all attendees during lunchtime keynote. Sit back, relax, and…
  Blame it on the tryptophan, Don, not my content.  Okay, maybe just a little on my content.
• Allison Turcio ‏@allisonturcio: .4% of undergrads have >$100,000 student loan debt. Grad/law/medical is 6.4%.
  You nailed it, Allison – this was a key point in my presentation, that with all of the talk about a student loan bubble, only .4% of undergrads – or about 8,000 per year, are graduating with student loan debt in excess of $100,000 per year.
• SarahWarfieldMurrill ‏@kirkwoodgirl73: 90% with 100k in student debt are grad student loan debt. Only .04% with > 100k in student debt are actually undergrads grads.
  Close, Sarah – it was 0.4%, not 0.04%.  One of the problems with Twitter is that misinformation is easily – and immediately – distributed.
• Nancy Raskauskas ‏@NancyR10: #amahighered very interesting presentation by Dean Heller. Good points. Many former journalist in marketing though, don’t diss NYT too hard!
  My favorite kind of tweet – combines a compliment and criticism in under 140 characters.  But sorry, Nancy, I’m not going to go easy on the Old Gray Lady just because many in the audience were former journalists.  She was referring to my criticism of the Times in this blog post and in this one.
• beth_wolfe ‏@beth_wolfe: “We should not make public policy based on outliers and poor decisions of individuals.” Don Heller, Mich State. AMEN!!
  Thank you, Beth – that was one of my key points, so glad to see you responded to it.
• Irene Neller ‏@IreneEN: Dr. Heller:There’s no student loan debt bubble! Makes 4 great media hype-counteract with facts. Comparing apples to asparagus
  I thought I said “apples and artichokes,” but close enough.
• RickJSmith ‏@RickJSmith: Heller: There is no student loan bubble. #amahighered. Credit to non-credit worthy? Beyond ability to repay? Total value outstanding?
  I agree, Rick – there are probably some students taking out student loans who are not credit-worthy, or taking out loans beyond their ability to pay.  But that in itself does not make for a bubble.
• Liz Gross ‏@lizgross144: I’ll have a Ph.D. in a year or so. Still won’t have close to $100K in debt.
  Glad to hear that, Liz.  We work really hard with our graduate students to help them minimize the amount of debt they incur during their Ph.D. studies.
• Jennifer Umberger ‏@UmbergerJL: Reasonable borrowing for student loans is still a good investment
  Thank you, Jennifer – this was another key point from my talk.
• Elaine Meese ‏@ElaineMeese: Loans under $100K are also relevant.
  Good point, Elaine.  I used the $100,000 threshold because that is what so many of the media stories focused on.
• Liz Gross ‏@lizgross144: Speaker tells everyone to tweet something, then says he made it up. Twitter lies!!!
  Yeah, Liz, I was messing with your head.  I put up a slide with some data that was flattering to the marketing profession, and suggested that people tweet it.  Then after a few seconds, I told them I had made up the data.  Glad you enjoyed my dig at Twitter.
• Allison Turcio ‏@allisonturcio: #shoulabeenafootballcoach
  Allison was undoubtedly responding to my slide showing the salaries of the highest-paid football coaches.
• Amy Morton ‏@AmyMMorton: I can’t look at that salary chart without shuddering.
  Not sure if Amy was responding to the football coaches salaries, the presidential salaries slide, or the average faculty salaries slide.
• Shana Glenzer ‏@sglenzer:  Fave moment @ #amahighered may have been Dean Heller saying “You can tell this isn’t a regular HE conference. You’re all dressed so well.”
  And this may have been my favorite tweet.  Thanks, Shana.
  

I’ll stop there, but there were plenty more.  Suffice to say it was an interesting experience, and thanks to all the audience members who took the time to respond – for better or for worse – to what I had to say.  While I do not tweet, I will ask someone from our college’s communications staff to tweet a link to this blog post with the #amahighered hashtag.

In yesterday’s post, I described how I believe The New York Times in a front-page story misrepresented the state of student loan borrowing.  I pointed out that the Times story prominently (above the fold on page one of the Sunday Times) featured the statistic that 94 percent of all graduating bachelor’s degree recipients borrow to pay for higher education, a figure that was far in excess of other data published by the U.S. Department of Education and known to those of us who conduct research on financial aid.  After having the figure questioned by a number of people, most prominently economist Sarah Turner of the University of Virginia, the Times finally issued a correction and edited the story.  It now states that “About two-thirds of bachelor’s degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates; the total number of borrowers is most likely higher since the survey does not track borrowing from family members.”

This last hedge leaves open the door that perhaps its earlier claim that 94 percent of students borrowed to finance college, if one included borrowing from relatives.  But the Department of Education data don’t allow us to determine this number.  There is also the issue that borrowing from family members is different from borrowing in the federal student loan programs or from a bank.  Borrowing from family members is much squishier (yes, that is a technical economics term) in that the contracts are not as enforceable and there is sometimes a fine and indeterminate line between what is a loan and what is a gift.  In addition, mom and dad are unlikely (in most cases, at least) to resort to the kind of draconian debt collection practices that have been highlighted in the media recently.  And unlike student loans taken out from the federal government or a bank, borrowing from the Bank of Mom and Dad can most likely be discharged under bankruptcy.

Because of these differences, the norm in conducting research on financial aid is to focus on borrowing in the federal student loan programs or from private, i.e. bank, sources.  The Times would be best to stick with this standard.

The New York Times is currently running a series on student loans, a topic that has been at the forefront of both the media and the general public for some time now. There has been widespread publicity (here’s just one recent example from USA Today) regarding the fact that student loan balances now exceed $1 trillion, an amount in excess of the balances of either consumer credit card debt or  automobile loans.

The first installment of the Times series ran in a most visible location: above the fold in the Sunday paper (the headline and image above is from the web version of the article).  Here’s the article’s lede, which seemingly establishes the case for the headline:

ADA, Ohio — Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.

 “If anything ever happened, God forbid, that is my debt also,” said Ms. Griffith’s mother, Marlene Griffith.

Ms. Griffith, 23, wouldn’t seem a perfect financial fit for a college that costs nearly $50,000 a year. Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters. But when she visited Ohio Northern, she was won over by faculty and admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price.

“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” said Ms. Griffith, a marketing major. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”

It’s hard not to feel great sympathy for this young woman, struggling to pay back student loans with a balance that approaches what some people borrow to buy a house.  But to put Ms. Griffith’s borrowing in perspective, just a few paragraphs further down in the article, the Times notes that, “For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports.”  So Ms. Griffith is hardly emblematic of “A generation hobbled by the soaring cost of college.”  While her circumstances may be difficult, they are not typical.  She is in fact an outlier, in roughly the top 2 percent of all borrowers.  And while outliers might make for good stories, as the Times has demonstrated, they do not provide the examples on which we should base policy.

It is difficult to pass judgment on the decisions made by individuals without knowing their full story, but based on the information provided in this article, it does seem reasonable to question the decision made by Ms. Griffith to borrow such a large sum of money for her baccalaureate degree.  She majored in marketing, a fairly common major these days.  A quick search of the Department of Education’s College Navigator website shows that there are 11 public universities in Ohio that offer bachelor’s degrees in marketing.  The article reports that Ms. Griffith grew up in Ottawa, Ohio, and at least four of these public universities – including Ohio State University – are within three hours drive of her home, and one, Bowling Green State University, is just as close to Ottawa as is Ohio Northern University.

According to the College Navigator website, student expenses at Ohio Northern this year (including tuition, room, and board) are $47,944.  The equivalent price at Bowling Green and at the University of Toledo, a little more than an hour away from her home, are less than half as much.  Even if you examine the net price at these three institutions, both Bowling Green and Toledo are approximately $6,000 – $7,000 less per year on average than Ohio Northern, depending upon her family’s income.

Perhaps Ms. Griffith could not get into one of these public institutions; while we do not know where else she may have applied, and been accepted or rejected, we do have information on the selectivity of these institutions.  While Bowling Green accepts a slightly smaller percentage of applicants than Ohio Northern (the College Navigator doesn’t have equivalent information for Toledo), 76% vs. 82%, the average SAT or ACT scores of students accepted at Bowling Green are lower than its private competitor.  It is possible that neither Bowling Green or Toledo offered her a financial aid package similar to what is shown on the College Navigator website.

There are a couple of points of note here.  First, as described earlier, Ms. Griffith’s case is by no means typical of the current generation of students completing college.  Yes, this generation of students is borrowing more than prior cohorts of students, and yes, their job prospects are not as strong because of the recession.  But these kind of “$120,000 in debt, $900 per month in payments” stories can serve to scare people off from borrowing reasonable sums of money to pay for college, a decision that for the vast majority of students makes all the sense in the world.  To put this in context, the amount borrowed by the average student as noted in the Federal Reserve Bank of New York study indicated above, $23,300, if borrowed in the federal Stafford loan program, would result in monthly payments of $229 at the current Stafford repayment rate of 3.4%.  Even if Congress is unable to agree on legislation to prevent the interest rate from doubling to 6.8%, as it is scheduled to do under the law, the monthly payment would rise to only $268.  Both of these sums are very reasonable, and represent a good investment on attaining a bachelor’s degree for most students.  And if a student was unable to get a job, they could opt into the income contingent repayment plan, which caps monthly student loan payments at no more than 10% of the borrower’s income.

The second important point here is that Ms. Griffith made the decision to attend Ohio Northern.  While the college may not have communicated the implications of her borrowing as clearly as she may have liked, every student (and her parents) have an obligation to be an educated consumer and to understand what they are signing up for.  I understand that she may have felt that Ohio Northern was a “good fit,” but the reality regarding price and the amount of borrowing required has to be part of that fit.  If she and her family could not afford the institution, or were not willing to borrow the amount required to attend it, then she should not have enrolled there.  And this was not a one-time decision; she had to make an affirmative decision every year to borrow more money.  Much of this borrowing had to be in private loan markets, as her balance is well beyond the Stafford loan limits for undergraduate, dependent students of $23,000 in subsidized borrowing and $31,000 in total Stafford borrowing.

Institutions are not blameless; they do have an obligation to provide accurate, clear, and unambiguous information to students and parents regarding the amount of borrowing that is required to attend the institution, and the implications of that borrowing.  But in the end, it is up to the student and his family to decide whether to accept an offer of admission, and corresponding financial aid offer, or not.

One more statistic in the Times article that is in question.  The story reported that, “Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993, according to an analysis by The New York Times of the latest data from the Department of Education.”  This figure surprised me, as well as many of my colleagues who research financial aid, because the number we are familiar with is that approximately two-thirds of graduating bachelor’s degree recipients borrowed to finance their education, based on data from the National Postsecondary Student Aid Study.  So the Times claim – based, supposedly on ED data – that 94 percent of students were borrowing, seemed incredulous.  My colleague Sarah Turner at the University of Virginia, after sending an inquiry to one of the reporters, believes that she’s tracked down their error.  Until the Times has had a chance to respond I am going to hold off on posting her analysis.  But once they do, I will add an update with an explanation of the discrepancy in these numbers.

[Update May 16, 2012] The Times issued a correction to the figure regarding the proportion of students who borrow.  You can see my post about the correction here.