The Bar-On Brief: Increased competition among universities will ease student debt

The Bar-On Brief: Increased competition among universities will ease student debt

Think of the worst customer service you’ve ever experienced or the worst quality food or product you’ve ever purchased. Chances are whoever interested you into buying the product could afford not to put as much effort into pleasing you. In other words, the interaction or purchase was your choice alone — there were no competitors.

It’s common knowledge that increased competition leads to lower prices, better customer relations and overall more benefits to consumers — it’s the simple logic of supply and demand. That’s why the United States enforces an antitrust law and has engaged in trust-busting since President Teddy Roosevelt’s time.

All competition stems from one common denominator: increased knowledge to the consumer. Say what you will about the Trump Administration, and especially about Education Secretary Betsy DeVos, but their policy to release salary earnings data per college per major is a paramount step in forcing universities to offer students better deals for a lower price.

Following through on a March executive order, the Trump Administration recently released first-year salary and average debt data for each college and each major within that college. The data, collected based on federal tax returns, allows prospective students to browse and compare colleges and ultimately make a more informed decision about what school they want to attend based on the financial offer they are likely to be awarded upon finding a job after graduating.

“The best way to attack the ever-rising cost of college is to drive real transparency,” DeVos said in a statement.

While the student debt crisis is in full swing, the data reveals that in the majority of programs, average first-year earnings for students top average debt. The common perception that STEM majors make the most coming out of college proved true, according to the data: The best debt-earnings ratio hails from Massachusetts Institute of Technology, where math students take on an average debt of around $8,000 and earn more than $120,000 their first year out of college. 

Yet the common trend that the more selective the school, the better the ratio also holds true. As The Wall Street Journal reports, the typical bachelor’s degree from the University of Alabama results in roughly $25,000 in student debt and a first-year income of only $14,000.

However, the WSJ, which analyzed the data extensively, pointed out that there are some red flags, proving that students ought to be wise in choosing their majors. Even in a highly selective school such as Columbia University, rhetoric and composition/writing studies majors graduate with a median $28,556 in student debt yet earn just $19,700 in their first year. Similarly, at USC, a master’s degree in drama and theater arts costs graduates $100,796; they earned just $30,800 in their first year.

Thanks to the availability of the data, which excludes programs with too few students to protect their privacy, students have the opportunity to think twice before committing to a particular university given the financial payoff they receive after graduating. The data reveals  that choosing a school like USC, for example, is often a safe bet. USC graduates have an average of $24,000 in debt, less than the national average of $29,000.

That said, if a student is admitted as a sociology major and is projected to have to take more than $13,000 in loans, perhaps that student should reconsider USC, given that the median total debt for a sociology major at USC is $13,000 with expected first-year earnings of $33,600.

Of course, every student and every situation is different. One’s salary shouldn’t be the only factor in deciding where to attend college. The data is meant only to be a supplement to every other factor. However, the salary and debt information are undeniably an important data set to put increased pressure on low-performing schools. It will force them to either better their scholarship offers, better their education or risk losing applicants. That is the nature and power of competition.

Shauli Bar-On is a junior writing about sociopolitical issues. His column, “The Bar-On Brief,” ran every other Tuesday.

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