Provost John Etchemendy, left, talks with parents during Parents’ Weekend at Stanford. (Photo: L.A. Cicero)
Provost John Etchemendy welcomed parents and other family members to Parents’ Weekend on Feb. 21. In his speech, he asked parents to help curb risky drinking among students, increase bike safety and ensure students pick majors for the right reasons. Following is an edited version of his talk.
Thank you to all the family members who have joined us for Parents’ Weekend.
In the brief time we have, I’d like to review the results of some assignments we gave parents over the past year. Now, I can see some of you squirming. Assignment? What assignment? But, don’t worry. Nobody’s getting expelled.
As a reminder, we asked you, first, to talk to your kids about expectations around drinking and, second, to encourage them to wear bike helmets on campus. After I touch on both subjects and give you a new assignment, I will speak about university finances and what they mean for the resources and financial aid we provide your students.
First, let’s talk about student drinking.
Cardinal Nights non-alcoholic events are attracting increasing numbers of students.
For the past two years, we’ve asked freshman parents to have candid conversations with their children about alcohol use. We’ve also published articles in the Parents’ Newsletter, hoping that parents would read them and have the same conversation.
Our surveys show that about 70 percent of parents do have those conversations. That’s good news because studies show that students who talk with their parents have fewer alcohol-related issues.
At Stanford, we’re seeing increased participation in the Cardinal Nights non-alcoholic student events we sponsor.
But we have a long way to go—as do our peers—in changing a student culture that equates risky drinking with fun. We hope you will help us end that culture by talking to your kids about your expectations around their drinking. We will continue to do so, too, but we don’t hold a candle to you when it comes to influencing their behavior.
That’s true, as well, with the second area of concern. In a recent Parents’ Newsletter, bike coordinator Ariadne Scott described her struggles to get your kids to wear bike helmets.
Here’s some quick background: There are thousands of bicyclists pedaling around Stanford each day in a constant whirl of wheeled chaos. Ninety-one percent of undergraduates ride bikes, but 89 percent of those won’t wear helmets, even though doing so reduces the risk of brain injury by 85 percent. Only 11 percent of undergraduates admit to wearing a helmet. The problem is that students don’t like helmet hair.
We do our best to convince your children to protect their most valuable asset: their exceptional brains.
Student testimonials help. For instance, Kali Lindsay talks to other students about crashing while on her way from her freshman dorm to an appointment at Meyer Library. She wasn’t wearing a helmet. All she recalled from that day was getting out of bed. The next thing she remembered were her parents coming to the hospital around 2 a.m., more than 12 hours later.
Kali sustained an epidural hematoma, which led to short-term memory loss and dizziness. Her head injuries prevented her from reading for almost two months and forced her to take the quarter off.
But Kali was lucky. She recovered. When she returned to school, she helped us create a program that last year provided helmet subsidies through the Campus Bike Shop to about 1,000 students.
I hope you will continue to help us convince your children that suffering a little helmet hair is far better than the alternative should they crash.
And now I have a new assignment for you. I hope you will talk to your children about the major they have either chosen or are considering. Please make sure that they are choosing a major because they love the subject, not because they think that major will earn them a job.
Over the past several years, Stanford has seen an increase in the number of students majoring in computer science and a decrease in those selecting the humanities or social sciences. Now, there’s nothing wrong with majoring in computer science—except if you don’t really want to, but feel you have to for financial reasons. The same is true of students pursuing economics because they feel compelled to go into business, or biology because they believe they must become doctors. These are all great majors for those who have a passion for the subjects, but not for those who feel forced into them by imagined employment or parental pressure.
According to a report from the Association of American Colleges and Universities, humanities and social science majors earn a similar amount as pre-professional majors do over a lifetime.
Mark Zuckerberg, founder of Facebook, speaking at Stanford. (Photo: L.A. Cicero)
Mark Zuckerberg, founder of Facebook, recently spoke at Stanford about his decision to major in psychology at Harvard and his interest in the classics and humanities. He told our students that the most interesting discoveries are being made at the intersections of disciplines. Technology, he explained, is a tool that you can use to solve different problems. But you have to know how to define a problem before you can solve it. And that’s where a broad liberal arts education comes in handy.
But we understand the urge to seek a return on investment from the substantial commitment to a child’s college education. After all, we’re parents, too, and we, too, pay for tuition.
Myths of college finances
And that brings me to the subject of college finances. I’d like to correct some of the mythology that has grown around the college-cost debate.
The first of these myths is that the financial return for attending college is less now than it used to be because of the high cost of tuition and challenging employment prospects.
That’s just not true. The value of an investment in college is higher now than it’s ever been. The college premium, which measures the difference between the earnings of college graduates and high school graduates, is at its highest level ever. And nationwide, the proportion of recent graduates who have gotten jobs coming out of college has been virtually unchanged from before the recession. Throughout the recession, in fact, the unemployment rate for bachelor’s degree holders has consistently been half that of non-college graduates. College remains a wise investment.
The second myth is that colleges are not preparing students with the skills needed in the current workplace. That’s not true either. All of the economic data suggests the exact opposite — the productivity of U.S. college graduates in the workplace is actually increasing. To take just one example, a recent Milken Institute study found that for each additional year of college attained by the residents of a region, the per capita gross domestic product of the region increases 17.4 percent. The authors of the study attribute the increased regional productivity to the increased productivity of a college-educated workforce.
Then there are a host of myths about college debt. Figures reported in the national press about the typical student debt tend to be greatly inflated. What most people are interested in is how much a typical student must borrow to finance an undergraduate degree. But most of the reported figures lump together all student loan debt—for both undergraduate degrees and professional degrees. Graduating with $100,000 in debt from medical or business school is not the same as getting a bachelor’s degree with that kind of debt burden.
They also fail to differentiate between types of schools. The debt at for-profit colleges is, for instance, much higher than at public institutions or private ones like Stanford. Furthermore, the press tends to report data on the average debt level among those who borrowed, not the median debt among all students, both those who borrowed and those who did not.
The most recent reliable Department of Education report for those earning bachelor’s degrees was done in 2008, and it shows that about a third of college graduates have no debt, and about 65 percent have debt less than $20,000. The median debt for all graduating seniors was slightly over $10,000 for those receiving a bachelor’s degree. Less than a half of one percent graduated with $100,000 in debt.
These levels have no doubt gone up since 2008, but they are nowhere near what is usually reported. At Stanford, 77 percent of the Class of 2013 graduated debt-free. Of the 23 percent who graduated with debt, the median amount was $13,000. This is probably less than an average new car loan. I wish more people involved in this debate understood those numbers.
Nevertheless, college indebtedness continues to be portrayed as a crisis, and that’s the fourth myth that concerns me. College debt does indeed exceed total credit-card debt and total auto loans, both of which have dropped since the beginning of the recession. It is in fact the only kind of household debt that continued to increase throughout the recession.
Why is this happening? Well, partly because more students are going to college, and that’s a good thing. It is in the interest of the students and the nation that more high school graduates go on to college.
But another reason is that the cost of college has been increasing, and that’s not a good thing. The largest price increases have been at public universities, because states have been reducing their general funds subsidies.
But there is another nuance missing in this debate: What we are also seeing is a decline in college savings. In other words, a lot of families are substituting debt for college savings. They have chosen an alternative way of spreading the cost of college over multiple years, just as they might buy a refrigerator with debt rather than a layaway plan.
So is it a crisis? When corporate America increases its debt to invest in physical capital — new factories, for instance — we do not consider it a crisis. It is an investment in future productivity. So I don’t believe it is necessarily a crisis when individuals borrow to invest in their own human capital, especially given the unquestioned return on investment in a college degree. Indeed, the Hamilton Project estimates that a student’s spending on college has a financial return of over 15 percent, more than twice the average return of a stock market investment over the past 60 years.
Which brings me to my final myth—that is that college costs are increasing faster than inflation largely because of wasteful spending on, for example, lavish dorms, recreation centers and sports facilities.
The truth is that in a university’s overall budget, capital costs for so-called amenities, such as recreation centers, constitute a very small fraction of the budget. Amortized over the life of the asset, they may account for a few dollars of the annual tuition bill, but not much more.
In the past decade, Stanford has indeed invested in its recreational centers and sports facilities, as have many of our peers, largely in an attempt to encourage healthy life styles among our faculty, staff and students. You should know that Stanford’s facilities have all been privately financed through philanthropy.
So what caused Stanford, for instance, to increase its tuition this year? Ironically, one of the main factors pushing up costs here and elsewhere is the college premium — again, that’s the wages paid to highly educated employees — that I alluded to earlier.
Fifty-nine percent of our expenditures at Stanford are for people. And virtually all of our employees—whether faculty, staff or administrators—are highly educated. They benefit from the college premium. In other words, the same phenomenon that increases the financial return of going to college also increases the cost of attending college.
But, thanks to substantial increases in financial aid, the average net price of a Stanford education—meaning, the average amount students pay to attend Stanford, taking financial aid into consideration and adjusting for inflation—has actually dropped 5 percent over the last decade. As good as that sounds, I know it’s hard to believe, especially if you are footing the entire bill.
That doesn’t mean we are satisfied. Please know that we work hard to keep a Stanford education accessible. While the total amount we spend on an undergraduate’s education is almost $100,000 per year, thanks to gifts and endowment income, we can keep even full tuition substantially lower than this.
In closing, I simply want to make this assurance to you as parents: We remain committed to keeping a Stanford education affordable and to preserving access for the brightest undergraduates, regardless of their financial circumstances. We are one of the very few institutions lucky enough to still be need-blind, meaning that we will meet a family’s full demonstrated need. Concerns about the cost of higher education will likely lead to changes here and elsewhere in the future. But I don’t see Stanford’s commitment to making its education affordable to those who are admitted changing anytime. That is our number one priority.