Until about December 2019, it seemed like most conversations about higher education revolved around the relevancy of entrance exams or the size of freshman lectures. But those topics seem to be a thing of the past. Yes, Covid-19 is changing how the higher-education system works.
Let’s start with applications. Some colleges have temporarily ditched standardized testing as an admission requirement because groups of students haven’t been able show up in person to take the exams. The testing freeze also highlights a larger issue about opportunity that has stalked these tests in the past.
The New York Times noted that “… education reform groups have criticized the SAT and ACT, which they contend give wealthier students an advantage because their families can afford expensive prep exams and coaches.”
An opinion piece in The Hill said that making standardized test scores optional would be “a striking development that would help close the wide opportunity gaps in a key sector of American life.” The Hill’s piece recapped a study that showed “smart test-optional policies increased applications from first-generation and low-income students by encouraging students to apply who otherwise might hesitate because of low test scores.”
Going test-free or test-optional could potentially widen the pool of applicants, but they might not show up come this September. A wave of students is deciding to take a “Covid gap year” instead of enrolling in classes this fall.
The financial impact of this change could alter colleges and universities. “Many small liberal arts college[s], for example, are largely dependent on tuition revenue and lack a large endowment. So, if they don’t have full-pay students returning in the fall, they’re going to be hurting,” college coach Amy Alexander told John Mallory, head of Goldman Sachs’ Americas Private Wealth Management, in a recent interview.
Yet whether or not students are physically on campus, college remains pricey. Although CNBC reports some colleges are offering things like 2-for-1 college semesters or tuition freezes, the bill for a college degree is still relatively high. As of August 2020, average yearly tuition and fees at a private four-year college comes to around $32,410 per year, according to College Board (not including other expenses like housing and books).
So why bother plugging into classes and spending at least $32K a year? It’ll eventually pay off. The New York Federal Reserve’s blog says average college graduates earn around $33,000 more per year than employees who only have their high school diplomas.
Taking an even longer view, the Social Security Administration says men with college degrees earn about $900,000 more in median lifetime earnings than high school graduates, and women with college degrees earn $630,000 more. FYI: This pay split got our attention too, but that’s another topic.
And if you’ve taken out a loan, backing out of a college degree could extend financial pain. As NPR noted in 2019, this plays out in two ways. The first has to do with student loan debt: NPR found that students who drop out of college default on federal student loans more often than students who graduate, and they “don’t get the wage bump that graduates get that could help them pay back their loans.”
The second is that the financial impacts can be far-reaching. NPR points out that student loan defaults can also lead to being turned down for other loans (e.g., mortgages).
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