A cost-benefit calculation of college in a recession
By Natalie-Mae Schaefer
INDIANA, Pa. -- Overstuffed binders form piles on the floor. Window sills are stacked with leaning towers of fat folders that melt into one another. A bookshelf is bursting with intimidating labels. Indiana University of Pennsylvania economics professor David B. Yerger sits in his cluttered office behind a desk buried under paper.
INDIANA, Pa.-- Overstuffed binders form piles on the floor. Window sills are stacked with leaning towers of fat folders that melt into one another. A bookshelf is bursting with intimidating labels. Indiana University of Pennsylvania economics professor David B. Yerger sits in his cluttered office behind a desk buried under paper.
The paper reflects the daunting economic prospects for IUP students struggling through a recession.
"There are going to be IUP students who do not come back next year because some household families will not be able to come up with enough financial support," Yerger said while scrolling down a U.S. Bureau of Labor Statistics Web site. "This economic slowdown is serious. Finance really starts to matter."
According to Yerger, the recession will hurt IUP students three ways: the availability of loans, grants and scholarships; the ability to work part-time during the summer and the school year, and the amount of financial support coming from family members.
"The worst-case scenario for college students in Pennsylvania is if the state budget goes down," said Yerger. "That means any faculty member at IUP who retires, dies or just leaves will not be replaced. With lost revenue, it also becomes harder to sustain a large number of classes. This impacts the quality of education."
Pennsylvania Gov. Ed Rendell proposes to legalize an estimated 17,000 state video poker machines to raise approximately $50 million in emergency relief to pay for tuition at public colleges and universities. If the legislature passes the proposal, it will target families making less than $100,000 annually in an effort to make the 14 Pennsylvania State System of Higher Education schools and 14 community colleges more affordable, Rendell said during a Feb. 18 appearance at the Community College of Allegheny County.
At the federal level, President Barack Obama's economic-stimulus bill will apply $30.8 billion toward college affordability. Of that amount, 55.2 percent is aimed at closing a shortfall in the Pell Grant program and boosting grant amounts by up to $5,350 in the first year and more in the second year, according to the U.S. Department of Education Web site.
IUP already has seen a boost in federal benefits.
"Overall, student federal aid has increased," said Leslie Thomas, a financial aid staff member in IUP's Clark Hall. "I think it is significant that students can now earn an additional $2,000 in federal loans."
But Yerger predicted that federal aid may not be enough.
"What is going to impact a majority of students will be the ability to pick up part-time and summer work," said Yerger.
Federal data from the Bureau of Labor Statistics suggests a recent rise in national unemployment rates for younger workers.
In January 2007, unemployment for Americans ages 20-24 was 8 percent. For ages 16-19 it was 15 percent. Two years later in January 2009, unemployment for the 20-24 age group rose to 12 percent. For the 16-19 age group, January unemployment was 21 percent, according to the BLS Web site.
Yerger said he expects these figures to continue rising until at least 2010.
On the IUP campus, recession-related student-unemployment trends are not yet evident in either university student employment or in federal work-study programs.
An IUP wage report performed with the university's System Analysis and Program Development -- or SAP -- program revealed a .02 percent difference in the number of IUP students on the university's payroll at the end of the fall 2004 semester compared to the number of students on the payroll at the end of the fall 2008 semester.
"I think it may be too early to tell the effect the recession has on payroll here," said Mary Smelko, director of payroll services and an IUP staff worker for 17 years. "Around the fall things may start happening. Our headcount may shrink. Or it may grow."
According to Feb. 13, 2009, payroll records, 1,585 students received a check that payday for both federal and university work study, and 100 more students are already on a list to be added to the current pay period.
Meanwhile, tuition, fee and other cost increases may force students from lower-income families out of school, Yerger predicted.
A Jan. 16, 2009, story published in the IUP campus newspaper The Penn reported that students enrolled in academic year 2008-2009 are paying $12,437, according to overall cost-of-attendance figures provided by the university on its URSA Web site. The total cost of attending IUP will rise to $15,183 for the 2009-2010 academic year, an increase of 22 percent.
"It will be interesting to see how this plays out for IUP," said Yerger. "What we may see is a decrease in the number of lower-income students enrolled here but not a decrease in the number of students enrolled overall."
According to Yerger, schools such as Penn State and Robert Morris University have a greater percentage of enrollments from higher-income families. But if lower-income students take a semester off to cope with financial pressures, Yerger estimates that higher-income families will conserve money by transferring to the more affordable IUP.
For those who can afford the expense, a college degree pays off, Yerger concluded. As President Obama noted at a White House announcement in May, "Someone who doesn't have a college degree is more than twice as likely to be unemployed as someone who does."
"The college degree is going to be worth it," Yerger said. "It just may not pay itself off quite as quickly. If you are 23 with $25,000 in school debt, but you have a bachelor's degree and a good academic record, that makes you a more marketable individual. That college debt becomes money well spent."
Natalie-Mae Schaefer, a sophomore majoring in journalism and anthropology at Indiana University of Pennsylvania, is from Gibsonia.