College Scoreboard Releases Student Debt Data

On May 21, as a step in implementing the Improving Free Inquiry, Transparency, and Accountability at Colleges and Universities Executive Order, the U.S. Department of Education released detailed information showing the average amount of debt students incur by field of study at American colleges and universities. This data release differs from previously available data in its focus on informing students about debt incurred by academic program, rather than institutions as a whole.

Program-level data reveals important variations
Program-level data could change how we look at higher education. Federal laws that regulate college success affect how colleges are funded, regulated, and understood by consumers (such as potential students). But in measuring college success, each university’s results are averaged across their different programs. While it is intuitive that different majors have different economic payoffs, there isn’t an easy way of comparing those differences for programs within universities. This information could be important for regulators and consumers.

For example, taking a closer look at program-level data reveals a greater-than-expected overlap in earning results for graduates of two colleges in Virginia that differ widely on prestige and selectivity. The University of Virginia (UVA) is a highly prestigious and selective public university, with less than a quarter of applicants admitted each year. George Mason University is less prestigious and accepts approximately 80% of applicants. On average, George Mason graduates may earn less than UVA graduates-- but there is a wide range in average earning results for graduates from each college, depending on which academic program they studied. UVA systems engineers, for example, make almost double what UVA environmental science graduates earn. A large percentage of graduates from both universities thus fall within the $35K - $50K income band (see Figure 1).

Source: The New York Times

For Mr. Mark Schneider, the director of the federal Department of Education’s institute of education sciences, the key insight is that there tends to be more variation in earnings results between programs and within colleges, as compared to between colleges.

Where are students incurring the most debt?
The data shows one sector in particular with outsize debt: graduate school. With more public universities and nonprofit schools getting involved in the graduate school business, more students accepted into a graduate school program are also taking on loans to earn master’s degrees.

There is large variation in the master’s degree market. The types of programs offered, and students’ incurred debt can vary widely even in the same fields.

An accredited university can essentially create a master’s degree in anything, set whatever price it likes and then start signing up students for federal loans. Even within the same fields, incurred debt can vary widely depending on which universities they attend:

  • Students borrowed $153,000 on average to get a master’s of dispute resolution from Pepperdine University. 
  • The next-highest amount for the same degree, from Creighton University, was $88,000. 

What the new federal data suggests is that the graduate school market can behave in “strange and erratic ways” (Carey, June 2019). Demand and prices of graduate school do not necessarily correspond with the value of the degree offered. In fact, Master’s degrees in fields like computer engineering, education, English, history and math seem to have fewer outlier programs and lower borrowing amounts over all. In less mainstream programs, it seems, students tend to take on greater debt.

Implications
The new, more detailed college loan data was created in response to an executive order issued in March by President Trump. Education Secretary Betsy DeVos described it as an effort to address the student debt crisis. Access to the loan amounts, she said, will allow students to make informed decisions about choosing colleges. Meanwhile, other lawmakers are also looking towards reform in higher education.

Currently, the federal government measures the percentage of borrowers at a given college who pay their loans back. If too many students fail to repay, colleges are barred from receiving federal funds. Senator Lamar Alexander of Tennessee, chairman of the Senate Education Committee and a former university president, proposed a “new accountability system” in February. This system would be based on loan repayment rates for individual programs within colleges. This, said Mr. Alexander, “should provide colleges with an incentive to lower tuition and help their students finish their degrees and find jobs so they can repay their loans.”

Thus far, the data released is still preliminary; hence the Department of Education does not recommend using the data to inform enrollment decisions. College Scorecard is expected to release the final version of the data in Fall 2019.

Further reading:

Eunice Yau

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