Published on: August 20, 2018by Kevin Coupe
Got an email on Friday from MNB reader Mike Bach:
Kevin, I was surprised that the NYU free tuition story didn’t get mentioned in Friday’s MNB. It’s often mentioned that the student debt is one of the major issues that impact spending for college students / graduates … Hopefully this action will encourage Universities around the nation to carefully consider “investing back” in their student population. I can’t imagine these Universities (that follow same pathway as NYU) won’t get their rewards. To me, this is big news and NYU is to be congratulated on this decision.
The fact is that I saw the headline before posting MNB on Friday, but didn’t immediately connect to the relevance of the story to my audience. But Mike makes a good point.
The original New York Times story went like this:
“The New York University School of Medicine announced on Thursday that it would cover the tuition of all its students, regardless of merit or need, citing concerns about the ‘overwhelming financial debt’ facing graduates.
“N.Y.U.’s initiative comes at a time when affordability has become an increasingly urgent issue in higher education, with some graduates struggling with thousands of dollars in debt … The plan does not cover room and board or fees, which together are an additional $27,000, on average.
About 62 percent of N.Y.U.’s School of Medicine graduates leave with some debt; the average debt incurred by members of the class of 2017 was $184,000.”
The Times writes that “only a handful of institutions have tried to make medical education tuition-free, according to Julie Fresne, senior director of student financial services of the Association of American Medical Colleges, a nonprofit organization that represents medical schools. At UCLA’s David Geffen School of Medicine, a $100 million fund announced several years ago pays for the entire cost of medical school for all four years, including tuition, fees, books and living expenses for roughly 20 percent of its students. But that program is based on merit, not need.”
And, the Times point out, “Most of the roughly 20,000 students per year enrolled in American medical schools take out sizable federal loans to support their studies. According to the Association of American Medical Colleges, in 2017, the median debt for graduating medical students was $192,000. The median cost of medical school attendance, including living expenses, was $60,945 a year for public medical school and $82,278 for private medical school.”
I’m glad Mike drew my attention to this, and not just because I had no idea how many Americans enroll in in medical school each year. (Though, to be honest, I’m not sure if 20,000 is higher or lower than I would’ve guessed.)
He’s right about the issue of student debt, not least because the adults who enter adulthood saddled with enormous amounts of college-related debt will not be able to engage in the kind of discretionary spending for their age group that traditionally has helped to drive economic growth in this country.
It is, I think, just part of a broader series of changes that threaten many traditional retailers. How many of them are engineered for a world in which young adults get married, buy a house with a basement and lots of storage space, have two or three kids, and then buy a minivan or SUV? What they are facing is a growing number of young adults are waiting longer to get married and have fewer children, are living in an urban environment, and may not even own a car … while having less money because of oppressive student debt.
Seems to me that more companies need to have their Eyes Open to the implications of this sort of future and preparing action plans. This can take a lot of forms, though I’d suggest that one powerful way is to invest in student loan repayment programs as an employee benefit (that would have the added advantage of making a company an employer-of-choice).
Just a thought for a Monday morning.
- KC's View: