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CFPB to Help Students Understand the Risks of College

Adam Rust's picture

Posted October 26, 2011

The Consumer Financial Protection Bureau says that it will create a standard disclosure form that will make the real cost of college clear to prospective students. The model disclosure is designed to help students gain a sense of the costs of college. It does not break down the costs for individual schools but it does differentiate by the type of school.

College is increasingly become more of a financial risk. The cost of college is still going up,

even as fewer young people find employment after they graduate.

The College Board published a report this morning that finds that in-state tuition prices increased 8.3 percent at public four-year colleges this year. At two-year public institutions, in-state tuition costs increased 8.7 percent. At four-year private not-for-profit colleges, prices went up but by not as much. Even so, one year of tuition at a private university will cost $28,500. When you include room and board, the costs surge to more than $38,000.

The CFPB is hosting a conference on the costs of college and how they will address disclosures at the University of Minnesota today at 1 pm Eastern Standard Time. The CFPB is going to live stream the event.

The University of Minnesota is a good place for this kind of discussion because its students demonstrate many of the practices that are increasingly common in higher education, even if they contradict some of the expected norms associated with college. For one, less than half of (45 percent) undergraduates at the U get their degree in four years. In-state tuition increases have averaged 7.3 percent annually since 2008. The students that borrow to go to school (about half) take out loans for about $6,500, on average, every year. This means that Pell Grants are barely scratching the sum of costs borne by lower-income students.

The payoff for the cost of college is supposed to be a job. The evidence does show that college attendance, even for those that do not get a degree, means that a person will be much less likely to report that they are unemployed. Still, the pay must not be that great. Four out of five college graduates move in with their parents after graduation.

The problem tends to be that colleges are preparing students to get bad jobs. The Chronicle of Higher Education, hardly a critic of going to school, says that 3 out of 5 jobs held by a recent college graduate do not require a college degree. The Bureau of Labor Statistics found that there were 319,000 waiters with college degrees in 2008. Since 1992, one in five people that work as a cashier has a college degree.