Why College Is So Expensive In America — Transcript

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1. 0:00College in America: it's four years of all nighters, keg stands, ethnically
2. 0:06diverse welcome brochures, Pinterest perfect dorm rooms and crushing
3. 0:10student debt.
4. 0:12I have $69,812, $47,000, $90,000, $35,000, $350,000,
5. 0:20$60,000 worth of student loans. My minimum student loan payment is $1,000
6. 0:26a month.
7. 0:26It should take me about 10 years to pay that back, I will be roughly 36,
8. 0:3145-years-old, I don't know how old I'll be when I pay that off. I was
9. 0:35actually on campus at Penn State and I saw that I had so much to pay and
10. 0:44it just was overwhelming. I didn't know how to do it, I never saw a number
11. 0:47that big. I just went to school for a few months found out that it was not
12. 0:52what I wanted at all, and now I have this forty thousand extra dollars
13. 0:57that I have to pay and nothing really to show for it. If I wasn't paying
14. 1:02this student debt, oh my God, I would just invest all of my money. It feels
15. 1:06like I will have a roommate for the rest of my life because my debt is so
16. 1:10much. You can't point at someone and say, this person made your student
17. 1:15debt load so much more, it's the whole system. So why is college so
18. 1:21expensive, and is it worth it? Higher education today is made up of three
19. 1:30main sectors. They all bring in money from tuition but where they get the
20. 1:34rest of their revenue varies.
21. 1:37Public schools are your state schools like SUNY or Iowa state. They get
22. 1:41money from the government. Private for-profit schools like the University
23. 1:45of Phoenix or Capella University get money from shareholders. And private
24. 1:50non-profits are those like Yale an American University, they get a lot of
25. 1:54their money from donors. More on that later. But choosing a college hasn't
26. 2:00always been so complicated. In 1636, America's first college was founded.
27. 2:06You might have heard of it before, Harvard University
28. 2:10For hundreds of years college in America was a pretty exclusive club to get
29. 2:14into. But we've come a long way from Harvard's first graduating class of
30. 2:19just nine men in 1642. In 2018 more than three million Americans were
31. 2:26expected to receive a college degree.
32. 2:28The demographics of American higher education have been utterly
33. 2:32transformed.
34. 2:33In 1944 the G.I. bill was signed into law giving veterans money to attend
35. 2:38school.
36. 2:38The G.I. Bill of Rights looks after the money end too. That's right.
37. 2:42Tuition is taken care of. Funds are provided for laboratory fees, books,
38. 2:46supplies and equipment are included.
39. 2:48Just a few years later, nearly half of Americans enrolled in college were
40. 2:52veterans.
41. 2:53You cannot underestimate the G.I. Bill. This educated an entire generation
42. 2:59of men and some women too. And it opened the doors people who hadn't even
43. 3:04thought that they might go to college. The G.I. Bill changed what American
44. 3:09families could aspire to.
45. 3:11But not everyone was able to take full advantage of the bill's benefits. It
46. 3:16was significantly harder for women and people of color to get the tuition
47. 3:19money and enroll in college because of the widespread discrimination by
48. 3:23both schools and banks.
49. 3:26Dateline Russia 1957.
50. 3:29In a moment the story. In the 50s a little beach ball sized satellite
51. 3:33launched into space by the Soviet Union had a big impact on the American
52. 3:38education system.
53. 3:40The first Sputnik. People were worried about this clash between the Soviet
54. 3:45Union and the United States. And suddenly it was popular to study science
55. 3:49and math. It was patriotic.
56. 3:51In the 60s the civil rights movement helped push the doors open even wider
57. 3:56to give women and people of color access to higher education. In those
58. 4:00years students at University of California schools paid less than a
59. 4:04thousand dollars in registration fees. No tuition if you were a resident.
60. 4:08But with the 70s came the taxpayer revolt.
61. 4:11If you want something you pay for it. Don't expect me to pay for it. It's
62. 4:17your problem not mine. And so what happened was the student loan process
63. 4:24exploded. And then came the U.S. News and World Report.
64. 4:29It was one of the luckiest or most ingenious publishing decisions ever.
65. 4:35In 1983 U.S. News and World Report published a list of America's Best
66. 4:41Colleges. It became a highly data driven ranking. Every one of the
67. 4:48criteria that U.S. News used depended on name recognition, traditional
68. 4:53quality, prestige and most of all wealth. Rankings played a big thing for
69. 4:57me.
70. 4:58I was an athlete and so I was pretty competitive.
71. 5:00There have been a ton of new lists since the 1983 ranking but the U.S. News
72. 5:06and World Report still reigns king. And colleges keep a pretty close eye
73. 5:11on it.
74. 5:12If you ask them they will say they pay no attention to it. But within the
75. 5:17conference rooms of the admissions office and provost offices across the
76. 5:20land, I can assure you they pay very close attention to it.
77. 5:25One thing they're paying attention to are their test score averages. By the
78. 5:3090s, colleges started boosting base tuition and using the extra money to
79. 5:35give merit based scholarships to kids who tested well. The chief data
80. 5:39strategist at U.S. News and World Report downplayed test scores as a major
81. 5:44factor in their ranking, saying it's less than eight percent of the
82. 5:48methodology today. And that "We've seen schools perform best in the
83. 5:52rankings if they emphasize and perform strongly in student outcome areas
84. 5:56like graduation and retention rates. He also said they further decrease
85. 6:01the weight of SAT and ACT scores. Tuition costs at both public and private
86. 6:06colleges have doubled since the late 80s, even when you account for
87. 6:10inflation. Even so, more Americans are getting college degrees. But state
88. 6:16funding for public universities has taken a hit. States spent less on
89. 6:21higher education in 2017 than they did in 2008 before the recession. And
90. 6:27that means students are spending more. The tuition they're paying is a big
91. 6:32moneymaker for colleges. 2017 was the first year ever that most state
92. 6:37schools got more money from tuition than they did from government funding.
93. 6:41If you're sitting in the state legislature and you're looking for money,
94. 6:44the university system is one of your biggest costs. So when you realize
95. 6:48well we cut them 2 percent last year, they didn't go out of business.
96. 6:51Let's cut them another 2 percent. What happens is you pass the buck. It
97. 6:55goes from the taxpayer to the student.
98. 6:58The average student graduates with about $37,000 in student debt
99. 7:04altogether. The U.S. has $1.5 trillion dollars of it.
100. 7:17I had this mindset that I was gonna go to college undergrad and then I was
101. 7:20gonna go to grad school and get my PhD. I thought that I would get through
102. 7:24it and then come out on the other side with a job and then be able to pay
103. 7:29it off. But that did not go according to plan.
104. 7:32Rachel Brandt got her undergraduate degrees in math and economics from Iowa
105. 7:37State. Then she moved to New York to pursue her master's in economics.
106. 7:42She left grad school after her first semester to better cope with mental
107. 7:46health issues she was going through.
108. 7:47I thought that I would just withdraw and be fine. But then a couple of
109. 7:51weeks after I withdrew, I got an email from the school saying that I owed
110. 7:55them $6,000 right away. And that was rough. So I didn't know how I was
111. 8:01going to pay that. And that was very stressful.
112. 8:03Three, four, five, six,
113. 8:12seven different student loans that all have to be paid with different
114. 8:18interest rates.
115. 8:19The number just keeps going up. I will be paying $867 in rent a month
116. 8:28and that's about how much I'm going to have to be paying in loans. I look
117. 8:34at my bank account every day and it's very scary.
118. 8:38Rachel is far from the only one not to finish a degree she started. Only
119. 8:43about 57 percent of undergrads complete their degree within six years. One
120. 8:48option students turn to for a more flexible and at times more affordable
121. 8:52path to a degree are for-profit colleges like University of Phoenix or
122. 8:57DeVry University. The industry has been in flux, but today a little more
123. 9:04than 900,000 students attend for-profit colleges in the U.S., many of whom
124. 9:09use federal loans to help cover the cost.
125. 9:12I feel like I want to do something practical that would that would clearly
126. 9:16lead to a specific job. The Art Institute of New York City was suggested
127. 9:20to me. Now, I really regret that it was because it turned out to be a
128. 9:26terrible financial experience.
129. 9:28Despite for-profits being just a small fraction of all colleges in the
130. 9:32U.S., for-profit students default on their student debt at a much higher
131. 9:37rate.
132. 9:38Chyna is a first generation college student from New York who studied web
133. 9:42design and interactive media at the Art Institute of New York City when it
134. 9:46was run as a for-profit.
135. 9:49I withdrew from the school, that was something could have entirely taught
136. 9:53myself using tutorials.
137. 9:54For-profit schools date all the way back to colonial times. Not everyone
138. 10:01could attend institutions like Harvard, so entrepreneurs saw a business
139. 10:05opportunity and began teaching reading, writing and trade skills *** for a
140. 10:09fee. Benjamin Franklin was a big fan of for-profit schools and the
141. 10:14practical skills they offered. In 1994, University of Phoenix's parent
142. 10:20company Apollo Education Group went public and laid the groundwork for the
143. 10:26for-profit education corporations of today.
144. 10:29But this big business approach to education hasn't come without
145. 10:33controversy.
146. 10:34With so much money on the line many turn to the schools that show the best
147. 10:37numbers, the best chances at a new job when you graduate. But can you
148. 10:41believe what some of those for profit colleges tell you?
149. 10:44When I went there for the so-called tour it was it was basically a sales
150. 10:49pitch.
151. 10:50That should have been a red flag but it wasn't because I was 18, not having
152. 10:56parents who completed college, you know, being a first generation student
153. 11:01it's like I didn't have the discernment
154. 11:04to just leave those kind of schools alone. The Art Institute did not
155. 11:09respond to a request for comment. However the director of Cato's Center
156. 11:14for Educational Freedom defended the for-profit system, saying non-profits
157. 11:19make a lot of money too. They just distribute it differently. He
158. 11:23said traditional colleges often use it to "make the lives of people
159. 11:27working in them more comfortable." He also said everyone in higher
160. 11:32education is almost certainly seeking profit and there is little evidence
161. 11:36that people in for profit schools are less focused on students best
162. 11:40interest. Since Chyna left, the Art Institute of New York City along with
163. 11:4543 other Art Institute campuses shut down.
164. 11:48There are a number of lawsuits against various campuses. However Chyna's
165. 11:53not able to qualify for loan forgiveness because she left the college just
166. 11:57before the cutoff date. And she feels trapped. Since she hasn't paid off
167. 12:02her student loans in full, she's not able to get her transcript, which she
168. 12:06needs that to apply to state schools. So for now she's enrolled in another
169. 12:10for-profit school in the hopes of using the degree to apply to a master's
170. 12:15program at a state school.
171. 12:17I feel like all these for-profit schools they prey on people who are
172. 12:21already who come from low income backgrounds. Enter the non-profits.
173. 12:30Amari Lilton is from St. Louis but went to undergrad at a private college
174. 12:35in Chicago. Now she works at an advertising agency in New York City and is
175. 12:40paying off her more than $40,000 in student debt.
176. 12:44You want to have the college dream without the student debt, because you're
177. 12:49just coming into something and you feel like I'm gonna have all this
178. 12:51independence I'll be able to pick my own classes I'll have this freedom
179. 12:55I've never had before. So you want to go to the coolest place you can.
180. 12:59Every college wants to be the best. They want to compete with the next
181. 13:02college. They want to attract the top students. That means they have to
182. 13:06have the best facilities they have to build new buildings.
183. 13:09And remember tuition discounting? While the sticker price of non-profit
184. 13:13colleges are rising, so is the tuition discount rate. The price you see on
185. 13:18a college website is higher than what many students end up actually
186. 13:21paying. You would think that most of the money is going to the cost of
187. 13:25running the school, but nearly half of undergrad tuition at non-profits
188. 13:29goes to help other people pay for their schooling. Amari didn't pay the
189. 13:34full price of tuition at her private college but she's still facing more
190. 13:38debt than she was expecting.
191. 13:40I just cried. Yeah I just cried because I had no clue how I was going to do
192. 13:44it. I dream about it.
193. 13:46It's always on my mind. If I'm like going out to lunch and I'll just say,
194. 13:51oh my God I hope this goes through because I know they just took my money
195. 13:53out. I just hope, I hope. I want to double my payments by the end of this
196. 13:56year so $2,000 a month. My goal is to not go into my 30s with debt. If I
197. 14:03go to Wells Fargo and say like I want a portfolio with all my best
198. 14:07investments help me out, they won't take me seriously because I have $250
199. 14:12in the bank.
200. 14:12So where do we go from here? I've been studying this for a long time and
201. 14:17advocating for reform and this is the hardest type of problem to fix
202. 14:22because
203. 14:24it's structural. It's all of us. It's the whole market.
204. 14:27Jarrett Freeman ran for New York State Senate in 2016 when he was just 26
205. 14:32years old. I declare my candidacy for New York State Senate. And a big
206. 14:38part of his platform was education and student debt.
207. 14:41I was actually on campus and I saw that I had so much to pay and it just
208. 14:50was overwhelming. I didn't know how to do it.
209. 14:52I never saw a number that big. Americans are becoming less convinced that a
210. 14:56college degree is worth it. In 2013, 53 percent of people thought a four
211. 15:01year degree was worth it. In 2017 only 49 percent of people thought so.
212. 15:06I think that it's so ingrained in your head that you have to go to college,
213. 15:11that college is the next step after graduation. I think in hindsight I see
214. 15:17that college is not for everyone.
215. 15:19Overall I feel a little jaded about college being worth it for everyone, or
216. 15:25at least for students directly out of high school.
217. 15:29Knowing what I know now, I would have even taken a few years off before I
218. 15:33went to college. There is this idea that 18-year-olds are supposed to know
219. 15:39what they want in life. And now that I'm turning 25 tomorrow, I still
220. 15:42don't know exactly what's going on.
221. 15:44That mindset could be a problem for the future job market. It's expected
222. 15:50that by 2020, 65 percent of jobs in the U.S. will require people to have
223. 15:55some college education to even be considered. So there are a lot of jobs
224. 16:00that require you to spend some money on school before they'll pay you to
225. 16:03work. In many cases that sum is a lot of money.
226. 16:08Student debt is a national crisis. Unfortunately we don't have bills on the
227. 16:13floor that are actually addressing that.
228. 16:20The reality is there probably isn't just one solution that's going to solve
229. 16:24everything. It will take a lot of different approaches, and different
230. 16:28approaches are being tested across America. One of the proposed solutions
231. 16:32is an income share agreement. Essentially, instead of taking out loans,
232. 16:37students could agree to repay an investor a percentage of their income for
233. 16:41a set amount of years after they graduate. The idea has support from
234. 16:45politicians on both sides of the aisle and some schools are starting to
235. 16:48test it out. In New York City, Governor Cuomo implemented a program that
236. 16:53gives middle-class residents free tuition at select state schools. And
237. 16:57some billionaires like Bill Gates are giving their own money to try and
238. 17:00fix the system. And of course there's the idea to offer free college.
239. 17:05I do not agree with free college. I think that when you give someone
240. 17:09something for free they do not realize the value of it, and that's just my
241. 17:14opinion, and I think that there should be some cost associated with it.
242. 17:18Free college is a great idea. I am fully supportive of free college. The
243. 17:24catch is: who's going to pay the bill?
244. 17:27In other countries taxpayers foot most of the bill. So instead of paying
245. 17:31student loans later in life, you're paying higher taxes. Roughly two dozen
246. 17:35countries across the world provide free or almost free college to its
247. 17:39citizens.
248. 17:40The solution probably won't be that simple in the U.S. But with student
249. 17:45debt rising and the need for a college degree becoming more and more
250. 17:49important, the future of American education depends on figuring this out.