WEBVTT - Why a College Degree is Worth the Cost

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Tim

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<v Speaker 1>Stenebeck on Bloomberg Radio.

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<v Speaker 2>Well, Molly, as the high school class of twenty twenty

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<v Speaker 2>four begins to start applying for colleges this fall. Believe

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<v Speaker 2>it or not, but tuition continues to keep climbing so

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<v Speaker 2>Earlier this year, Bloomberg News reported that the increase and

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<v Speaker 2>US college cost is pushed the annual price for this

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<v Speaker 2>academic year at Ivy League schools toward ninety thousand dollars.

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<v Speaker 2>So is a college degree worth the cost right even

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<v Speaker 2>at today's high At rising prices, a bachelor's degree does

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<v Speaker 2>tend to pay off in earnings power, though that can

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<v Speaker 2>obviously vary widely depending on the major, and at the

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<v Speaker 2>most elite US schools, there's no sign of a slowdown

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<v Speaker 2>in demand for those covetive spots, as you know, Mollie.

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<v Speaker 2>So joining us is Janet Lauren, higher education finance reporter

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<v Speaker 2>at Bloomberg News, and Christopher Eiscruber, President at Princeton University,

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<v Speaker 2>both in the Bloomberg Interactive Broker Studio. I want to

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<v Speaker 2>first start off before we get into that too. When

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<v Speaker 2>you joined a Christopher, you did actually put a statement

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<v Speaker 2>out this week on how the terroist attacks in the

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<v Speaker 2>war in the Middle East. Can you kind of walk

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<v Speaker 2>us through that, because you talked about how even in

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<v Speaker 2>a world torn by violence and hatred, this Hamas murder

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<v Speaker 2>and kidnapping a hundred of Israelis over this past week

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<v Speaker 2>and is among atrocious of tarists asks, and there's been

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<v Speaker 2>so much pressure on a lot of people to come

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<v Speaker 2>out and make statements. What's your view on this.

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<v Speaker 3>And why did you decide to put this out?

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<v Speaker 4>Well, first of all, thank you for the opportunity to

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<v Speaker 4>be on the program. With regard to the statement, you

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<v Speaker 4>quoted the first line for it, as I made the statement,

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<v Speaker 4>and I made it in my own voice, I thought

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<v Speaker 4>it was really important to call out the terroristic character

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<v Speaker 4>of this attack by Hamas and also to recognize that

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<v Speaker 4>lives were going to be lost, both Israeli and Palestinian

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<v Speaker 4>lives as a result of a war that had been

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<v Speaker 4>provoked by these extraordinarily cruel and inhumane attacks. That was

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<v Speaker 4>important for us because we want to make sure that

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<v Speaker 4>our students, faculty, and staff on the campus as they

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<v Speaker 4>deal with anguish and anger around these attacks, feel seen,

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<v Speaker 4>heard and supported, and we live right now. As I

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<v Speaker 4>said in the message, in a world torn not only

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<v Speaker 4>by violence but by hatred, one might hope that those

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<v Speaker 4>things could be taken for granted. But I think it's

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<v Speaker 4>often important for university presidents to speak out and make

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<v Speaker 4>sure that their community knows that that level of care

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<v Speaker 4>and support is there.

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<v Speaker 3>And you talked about how your university did reach out

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<v Speaker 3>to those students and then other community members from Israel

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<v Speaker 3>and the Palestinian territories. Have you heard, sort of anecdotally,

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<v Speaker 3>anything that you think is important to note as far

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<v Speaker 3>as maybe people that are impacted that we're going to

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<v Speaker 3>your university.

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<v Speaker 4>We've heard lots of different things, obviously, lots of us,

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<v Speaker 4>and I include myself in that category. I have relatives

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<v Speaker 4>in Israel and are concerned about the safety. There are

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<v Speaker 4>people whose families have been affected. There are our students

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<v Speaker 4>and even faculty members who are making decisions about whether

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<v Speaker 4>or not to go back and serve to support Israel.

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<v Speaker 4>I think there are all kinds of personal stories right now,

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<v Speaker 4>and I'm sure we will hear more of them over time.

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<v Speaker 5>Yeah, we thank you for giving us your perspective on that.

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<v Speaker 5>Christopher wanted to shift a little bit in terms of Yeah,

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<v Speaker 5>the value of a college education right now. So you

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<v Speaker 5>actually went to Princeton. I won't say what year you

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<v Speaker 5>graduated to thank you there, So.

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<v Speaker 1>You've been in the area for a while on the

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<v Speaker 1>campus there, I mean tell us you know obviously you

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<v Speaker 1>know you've got where where's enrollment at right now?

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<v Speaker 4>We are in the process of expanding our undergraduate student

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<v Speaker 4>body right now. So we were at five thousand, two

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<v Speaker 4>hundred students, which would have been one thousand, three hundred

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<v Speaker 4>per per class. We're doing a ten percent expansion up

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<v Speaker 4>to five thousand, seven hundred students, which is fourteen twenty

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<v Speaker 4>five per entering class.

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<v Speaker 1>And how does that rank in terms of where you've

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<v Speaker 1>been historically, Well.

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<v Speaker 4>That'll be the largest that our undergraduate class has been.

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<v Speaker 4>In fact, last year we had an over yield. We

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<v Speaker 4>had one thousand, five hundred students, which would be the

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<v Speaker 4>largest class that Princeton ever admitted. We also have a

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<v Speaker 4>new transfer program. It's very small, but something that we're

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<v Speaker 4>very excited about.

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<v Speaker 2>Jinna, I wanted to bring you into this conversation. How

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<v Speaker 2>do you view sort of the debate when people are

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<v Speaker 2>talking about whether the cost of education obviously getting price

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<v Speaker 2>or in price here is still worth it when you

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<v Speaker 2>look at sort of the dynamic and the competitiveness in

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<v Speaker 2>the markets trying to get jobs right now.

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<v Speaker 6>Well, as we were talking about earlier with President as Grouper,

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<v Speaker 6>the cost of college is certainly going to depend on

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<v Speaker 6>where you're going. In some cases at Princeton, if you're

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<v Speaker 6>making I believe it less than one hundred thousand dollars,

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<v Speaker 6>it's going to be completely free, which seems counterintuitive. However,

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<v Speaker 6>in terms of the cost, we were also talking earlier

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<v Speaker 6>about when you don't graduate, and that's in some ways

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<v Speaker 6>a bigger travesty, especially if you're taking on student loans.

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<v Speaker 6>You have taken debt, you've taken time, and you don't

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<v Speaker 6>have the degree to help you with your earnings. That

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<v Speaker 6>is an issue that you know, again, as we were

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<v Speaker 6>talking about earlier, doesn't seem to get the amount of

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<v Speaker 6>attention right.

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<v Speaker 3>And we have these student loan repayments that have especially

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<v Speaker 3>for these federal loans that began again this month that

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<v Speaker 3>obviously we're on pause because of what happened with the

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<v Speaker 3>pandemic and the spring of twenty twenty. But when it

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<v Speaker 3>comes to the cost and trying to finance that through

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<v Speaker 3>particularly federal loans. How much more expensive is that for

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<v Speaker 3>students right now, whether you're going to a school in

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<v Speaker 3>state or if you're going to more price or Ivy

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<v Speaker 3>League school.

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<v Speaker 6>I had a story last week that looked at the

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<v Speaker 6>annual disbursements for loans, and we're about to see that

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<v Speaker 6>graduate school borrowing is about to eclipse undergraduate borrowing. Wow.

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<v Speaker 6>And graduate school borrowing is often students are using what's

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<v Speaker 6>called the grad plus loan, which is at the highest

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<v Speaker 6>interest rate of eight just over eight percent, the highest

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<v Speaker 6>it's been in a dozen years. And that also deserves

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<v Speaker 6>to get more attention. Is that risk to get a

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<v Speaker 6>graduate degree and be able to pay off your loans?

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<v Speaker 6>That's probably a lot riskier in some ways than borrow

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<v Speaker 6>growing the small amount you're allowed every year federally to

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<v Speaker 6>get a college education.

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<v Speaker 1>So we're looking then at applicants for graduate programs at Princeton.

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<v Speaker 1>Obviously that's got to be a bit of a factor now,

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<v Speaker 1>right or how are you seeing that applicant pool shaping up?

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<v Speaker 4>Well, that applicant pool is also very strong. So when

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<v Speaker 4>we talked earlier about the size of the undergraduate student

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<v Speaker 4>body and growing it up to five seven hundred students.

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<v Speaker 4>That's the undergraduate student body. We've got about two thousand,

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<v Speaker 4>six hundred or so graduate students as well, in both

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<v Speaker 4>the undergraduate and graduate programs. Our endowment provides extraordinary support

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<v Speaker 4>for our students. So they're graduating with very low debt

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<v Speaker 4>in both the undergraduate and the graduate programs, and the

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<v Speaker 4>demand for those programs remains very strong. Just to give

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<v Speaker 4>you a little bit more detail on that. In our

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<v Speaker 4>undergraduate program sixty seven percent right now of our students

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<v Speaker 4>are on financial aid. And if you're on financial aid,

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<v Speaker 4>the average scholarship is sixty thousand dollars. That's six zero

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<v Speaker 4>thousand dollars, which is the higher that's the average, and

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<v Speaker 4>that's above the tuition price. And this is why, as

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<v Speaker 4>Janet said, if you just look at a sticker price,

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<v Speaker 4>particularly for a selective institution, you're not looking at the

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<v Speaker 4>real price much less the return on that education.

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<v Speaker 3>Right, And so how do you end up squaring that

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<v Speaker 3>way when you do have students who might be able

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<v Speaker 3>to get accepted but maybe they don't have the scholarship

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<v Speaker 3>opportunities in particular reasons there as far as what they

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<v Speaker 3>could do as like other resources to go there. If

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<v Speaker 3>they are looking at, say particular types of grants or

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<v Speaker 3>like the pel grant.

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<v Speaker 4>Well, we have at this point over twenty two percent

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<v Speaker 4>in our incoming class who are pell students, so we

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<v Speaker 4>have a very significant representation of students. But Princeton University

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<v Speaker 4>will guarantee this financial aid for any student who's able

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<v Speaker 4>to get in. So we are working aggressively and my

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<v Speaker 4>instruction to our mission Dean right now is find more

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<v Speaker 4>low income students, find more middle income students. And because

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<v Speaker 4>of what we can do through the partnership with our

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<v Speaker 4>alumni and the endowment, we will support that financial aid.

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<v Speaker 4>It's not on the student to go out and find

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<v Speaker 4>other sources of scholarship aid. The university will do it.

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<v Speaker 3>Something I'm curious about and for both of you. We

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<v Speaker 3>only have about a minute left. But the haves and

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<v Speaker 3>the have nots because of the pandemic being the disparity there,

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<v Speaker 3>how much are you seeing that now? So as we're

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<v Speaker 3>coming out of COVID.

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<v Speaker 6>In terms of colleges, the federal pandemic aid is schools

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<v Speaker 6>are no longer receiving it. So you're starting to see

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<v Speaker 6>some of the smaller colleges and areas where there's fewer

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<v Speaker 6>eighteen year olds, for example, the Midwest and the Northeast,

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<v Speaker 6>there just aren't as many kids to go to those schools.

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<v Speaker 6>So you're seeing that sector constrained. But on the other end,

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<v Speaker 6>you're able to see a place like Princeton grow and

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<v Speaker 6>add to its student population, and that certainly costs a

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<v Speaker 6>lot of money.

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<v Speaker 1>Yeah, let's just go into then really quickly, Janet. I

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<v Speaker 1>mean we started this out with like, why, you know,

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<v Speaker 1>go into what is the payoff of a college education here?

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<v Speaker 1>So what are the attitudes on it right now? How

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<v Speaker 1>does the current students feel?

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<v Speaker 5>Well?

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<v Speaker 6>I mean I think students are you see this big

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<v Speaker 6>student loan number and there's a question am I going

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<v Speaker 6>to ever going to be able to service your debt?

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<v Speaker 6>And I think people are thinking a lot about price,

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<v Speaker 6>and uh, you know, as students are looking at their application.

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<v Speaker 6>The FAFSA form is different this year. It's it's it's

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<v Speaker 6>it's supposed to be easier, but nothing in financial aid

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<v Speaker 6>is ever easy.

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<v Speaker 5>I imagine that.

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<v Speaker 6>Well, we'll have to leave it there.

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<v Speaker 2>So Janet Lauri and higher education finance reporter here at

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<v Speaker 2>Bloomberg News, and Christopher ice Gruber, President at Princeton University,