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Saving for college involves some perverse incentives

Letter to the editor in the April 7, 2009, issue of The Wall Street Journal.

Mr. Kahn says that parents of high-school juniors are telling him they aren’t going to let their kids even look at private schools. Before making such a decision, families should consider some things very carefully. For example, what is the graduation rate at the public school they are considering?

A study conducted by the National Center for Education Statistics found that 79% of bachelor’s degree recipients at private colleges and universities earned degrees in four years, compared to just 49% of their counterparts at public colleges and universities, at which it is more common for students to take five or six years to graduate. There are many reasons for this, but one is because students attending private colleges are more likely to be able to get into the classes they need to graduate.

A recent analysis done by the National Association of Independent Colleges and Universities estimated the average price of a degree from a private college or university to be $43,600 if a student graduates in four years, compared to an average price of $47,000 at a public university if it takes a student five years to graduate, and an average price of $80,400 at a public university if it takes a student six years to graduate.

Another commonly overlooked fact is that private colleges typically offer substantially more financial assistance than public ones.

At private colleges, students who demonstrate financial need may actually end up paying close to, or less than, what it would cost them to attend a public university, particularly an out-of-state public university. Ruling out a private college because it seems expensive might not make economic sense.

Jake B. Schrum
President
Southwestern University
Georgetown, Texas