New WILL report argues that universities must be held responsible for the student loan crisis
The News: The Wisconsin Institute for Law & Liberty (WILL) issued a new report, Bang for the Buck-y: How to Direct Students Towards Degrees That Will Improve Wisconsin’s Workforce. The report explains how degree choice can have a significant effect on the lifetime earnings of college students, and their ability to pay back their student loans. The report argues that all post-secondary institutions—from beauty schools to four-year colleges—must do more to make students informed of the costs and benefits of degrees they are considering.
The Quote: WILL Research Director, Will Flanders, said, “There is a substantial disconnect between the degrees that Wisconsin’s college students select and the workforce needs of the state. This means that many graduates must either leave the state, or enter careers that do not provide a positive return on investment. This is a huge contributor to the student loan crisis seen nationally, and Wisconsin’s colleges and universities must do their part to address this crisis.”
Background: The cost of college has exploded in recent decades. Nationally, the cost of college has increased by 747% since the 1960s, even after adjusting for inflation. Since the 1970s, the amount of inflation-adjusted debt students hold has increased from about $1,000 to over $30,000. With such dramatically increased costs, one might expect that the life outcomes for students would have improved dramatically as well. But that is not always the case, particularly if students choose majors with poor job prospects. Using data on the return-on-investment for Wisconsin’s two- and four-year colleges, along with data on default rates on student loans by universities around the state from the federal government, we zero in on the specific programs in the state that are, and are not, generally a sound investment for prospective students.
- Despite tuition freezes, tuition is still more than $3,000 more expensive than a decade ago. At UW-Madison, tuition has increased by an inflation-adjusted $4,359 in real dollars since the 2000-01 school year. At UW-Milwaukee, tuition has increased $3,320 over that same time period.
- Beauty schools have the highest default rates. 6 of the 10 highest default rates in the state are among beauty schools. This further calls into question the usefulness of occupational licensing laws that require attending these schools.
- ROI varies extensively within universities. At UW-Milwaukee, students who choose to earn a degree in dance have a lifetime return-on-investment more than $700,000 lower than those that choose the highest ROI degree.
- Technical college degrees sometimes exceed the value of four-year degrees. Technical college degrees have lower negative outcomes and sound major choices can lead to higher expected lifetime ROI than degrees from some UW system school programs
Policy Recommendations: Based on the findings of this report, WILL recommends the following to Wisconsin’s policymakers:
- Transparency about each degree’s return on investment (ROI) should be required. Universities should be required to disclose information about the lifetime ROI from majors that students are considering, along with the average debt load and projected monthly student loan
- Performance-based funding for universities. Universities with high student default rates and many students in low ROI majors should face funding consequences. Those at the other end of the spectrum should potentially be rewarded.
- Bang for the Buck-y: How to Direct Students Towards Degrees That Will Improve Wisconsin’s Workforce, December 7, 2022
- Video, December 7, 2022
- Example Infographic: UW-Stout Graphic Design Degree, December 7, 2022
- Example Infographic: UW-EC Business Management Degree, December 7, 2022
- Example Infographic: UW-EC Marketing Degree, December 7, 2022
To learn more about this issue, go to will-law.org/college.
Will Flanders, PHD
Writer and Research Analyst