Written by Dr. David P. Haney, President of Centenary University.
Published by the Star-Ledger on November 5, 2017.
To many, “private college” suggests billion-dollar endowments and wealthy parents preparing Junior to manage the family’s hedge funds. But most of the private, non-profit institutions represented by the Association of Independent Colleges and Universities of New Jersey (AICUNJ) are very different. These largely tuition-driven, regional colleges and universities serve the same student population as state schools, at a fraction of the cost to taxpayers and only marginally greater cost to students. They also offer the added value of small size, individual attention, and distinctive programs.
Let’s look at five of the most common myths about private colleges.
Myth # 1:
Private colleges cost much more than public colleges
Dr. David P. Haney, President of Centenary University
The truth is that because of greater financial aid, the cost of a degree at a regional private institution is not much more than at comparable state institutions Despite a $32,580 sticker price, full-time undergraduate tuition and fees at private Centenary University (where I am president) average $18,000 per year after institutional financial aid is factored in (wealthier families pay more, needier families less). By comparison, Montclair State charges $12,454. Students at both are eligible for the same federal grants and subsidized loans, and New Jersey private college students are eligible for more state aid than public college students through the Tuition Aid Grant (TAG), which factors in both financial need and cost of attendance: the maximum TAG grant is $7,236 for state institutions and $12,686 for private institutions.
Myth # 2:
Private colleges are for elite, mostly white, traditional-age students
The truth is that regional private colleges and universities serve the same students as their public counterparts. According to AICUNJ, 49% of students in New Jersey private institutions are white, as opposed to 47.6% in public institutions. Some 13.8% of students in private institutions are African-American, as opposed to 10.6% in public institutions, and each sector has a similar percentage of Hispanic students. In New Jersey, the percentage of students eligible for Pell grants (and therefore in a lower income category) is 32.4% at private colleges, compared to 34.6% at public institutions. The percentage of first-generation students is almost the same at 55% in the private sector and 54% in the public sector. New Jersey independent and state institutions each serve 30% of the state’s adult (over 25) students.
Myth # 3:
Students who go to private college incur much more debt than those who go to public colleges
Students at private institutions do carry more debt per degree than students at similar public institutions. But the difference is not great. Nationally, according to a recent study by the Council of Independent Colleges (CIC), the average is $25,506 for privates and $20,619 for publics. But with graduation rates at private colleges about 12 percentage points higher than at similar public institutions, the slightly higher debt burden is offset by a greater chance of earning a degree. Students at private institutions are also less likely to default on their student loans.
Myth # 4:
Private colleges have plenty of money hoarded in their endowments
The colleges with multi-billion dollar endowments have very little in common financially with regional private colleges like most of the 14 private New Jersey schools (with the obvious exception of Princeton at $22 billion). Centenary’s endowment is about $10.7 million. We spend the interest generated by that endowment at a rate of about 5% per year, which is only a little over $500,000 of a $40 million expense budget. While it is an important source for certain kinds of revenue, especially scholarships for students, it is hardly a hoard.
Myth # 5:
Private colleges should not get financial support from the state
While public colleges and universities provide some cost savings to students, a New Jersey public college degree is on average six times more costly to state taxpayers than a degree at one of the private institutions, which serve 16% of NJ higher education students and grant 23% of the state’s baccalaureate degrees. Each student at a public institution costs the state $11,600, while each student at a private institution costs the state only $1,938. For a bargain like that, the state should be willing to help out with some operating costs and the occasional capital project. Private colleges in New Jersey receive only $1 million collectively in direct operating aid (down from $20 million before the recession and $16 million when Governor Chris Christie took office); most of our state aid comes in the form of TAG money given directly to students, which provides them with a broad choice of institutions to attend.
In choosing between public and private colleges, students should focus on the best educational fit, rather than perceived differences in cost, debt, and students. And if you think $20,000 to $25,000 of debt for a college education (mostly in low-interest subsidized loans that only charge interest upon graduation) is too much, look at your last car loan and compare its value to the roughly $1 million in additional earning power—not to mention the value of an educated citizenry—that a college education provides.