By David B Laird Jr

President, Templeton Laird


What part should borrowing have in helping students attend and succeed in college?


The coming year looks like another banner year for student loans. In spite of low inflation and interest rates and continuing low growth in family incomes, tuition increases are expected to be in the 3 to 5 percent range, well above growth in family incomes. Two years ago student loan borrowing became the largest component of national consumer debt and in the last six years defaults on student loans have doubled. As a result of changes in federal student loan programs, they have become one of the largest profit centers in the Federal budget. There is legitimate concern that student loans have made the entire college finance system less sustainable. While some students graduate with reasonable levels of debt, many others leave college with an unworkable yoke around their necks which has a negative impact on personal and regional economies.


The annual ritual of fixing tuition and aid policies by boards needs to be a more strategic exercise. Trustees can work on policies that balance institutional and student needs or they will find themselves without a market. Part of the exercise must be a careful consideration of the ideas that will reduce the reliance on student debt and encourage student borrowers to repay their loans. At the same time it is reasonable to look to state and federal governments to generate moderating repayment programs and to target subsidies to professional and graduate programs so vital to our economic stability and competitiveness.


How should colleges and universities, led by their boards, make a difference in this complex situation?


  • First, they need to rethink their assumptions about the financing model they use for setting tuition and
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In the late 80’s the former Chairman of the Dayton Hudson Corporation, Kenneth Dayton produced the attached essay for the Independent Sector. It has become the classic guide for board members and their executives in the execution of their duties and responsibilities along with a formula for the division of authorities and responsibilities.

Click to read the PDF: Governance is Governance by Kenneth DaytonRead the rest

We recommend reading this very nice piece by the Federal Reserve Bank of New York examining the benefits and costs of college, with the weight of evidence coming down firmly on the side of benefits.

An except from the article:

In recent years, students have been paying more to attend college and earning less upon graduation—trends that have led many observers to question whether a college education remains a good investment. However, an analysis of the economic returns to college since the 1970s demonstrates that the benefits of both a bachelor’s degree and an associate’s degree still tend to outweigh the costs, with both degrees earning a return of about 15 percent over the past decade. The return has remained high in spite of rising tuition and falling earnings because the wages of those without a college degree have also been falling, keeping the college wage premium near an all-time high while reducing the opportunity cost of going to school.

Click to download the entire article.Read the rest

In “Reinventing College for a New Kind of Student,” Jon McGee talks with host Steven Smith about the major demographic, economic, and cultural forces pressing on higher education and their prospective impact on colleges and universities. He cites the imperative for meaningful differentiation in an increasingly crowded, changing, and competitive marketplace.

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According to the Western Interstate Commission on Higher Education (WICHE) the number of graduates nationally began to decline slowly after 2010-2011. WICHE’s projections indicate that the number of graduates will continue to fall through 2013-2014, a reflection of the small decline in the number of births in the U.S. in the mid-1990s. Though not a particularly steep drop—the number of graduates is expected to decline by just 5.6 percent between 2010-2011 and 2013-2014 before slowly beginning to rise again—the recovery period will take years. The total number of high school graduates in the U.S. is not expected to reach 2010-2011 levels again until 2023-2024.

What this means for institutions is that a shift has occurred in the higher education market from one that is seller-centric to one that is tailored to the buyer. This changing marketplace clearly presents students and their families with new college opportunities. Oft-repeated tales of students who receive college rejection letters in spite of 4.0 grade point averages, high board scores and extraordinary high school vitaes are more myth than reality, generally true only at a small number of extraordinarily selective private and public colleges and universities. Most institutions have neither widespread brand recognition nor the luxury of excess demand. Questions about whether they make their class most often trump questions of who is in the class.… Read the rest