Last week, the Wall Street Journal (WSJ) highlighted Columbia University’s Masters In Fine Art (MFA) Program, the exorbitant amount of debt graduate students incur to complete their degrees, and the low-paying jobs that await them after school. Indeed, gargantuan loans and low remuneration have left a growing number of Columbia MFAs with piles of debt they have little chance of ever paying off.

The Journal did an excellent job explaining the conundrum MFAs at Columbia face. However, scant attention was paid to who should be held accountable – the school, the students, or some combination thereof - for a ticking financial time bomb that is unsustainable.

In our view, both the debt-laden students and Columbia University bear a portion of the responsibility.

Columbia University

According to Julie Kornfeld, Vice Provost for Academic Programs at Columbia, master’s degrees “can and should be a revenue source.” And, indeed, at Columbia they are. Over the last decade, the cost of an MFA at the prestigious Ivy League institution has risen by a greater percentage than for a Bachelors degree in the same discipline. However, a disproportionate amount of financial aid at Columbia is awarded to undergraduates. Said university president Lee Bollinger “undergraduates have the most moral claim to financial aid.”

A strong case could be made to buttress Bollinger’s argument. But that said, another reason Columbia steers a disproportionate number of graduate students towards loans is because it buoys the universities’ bottom-line.

Grad Plus Loan

The federal Grad Plus Loan program was enacted by congress ~15 years ago. The “advantage” of a Grad Plus Loan: a graduate student can borrow as much money as they want (caps are in place for undergraduate borrowers). Funds can be used for tuition, room, and board.

Interest rates on Grad Plus Loans can be as high as ~8%. This is onerous to the borrower but makes no difference to the school. The key stipulation is that the university receives the entire amount of the tuition upfront. If a borrower defaults, the school has zero financial risk. For a set number of years (typically around 25) borrowers pay a fixed percentage of their wages towards debt repayment. Any unpaid balance can be written off; taxpayers absorb the losses.

From a school’s perspective, why not expand the number of graduate degrees on offer, raise prices, tell their grad students to borrow more, and take in more money in the form of tuition?

Sure enough, since Grad Plus’ debut, many universities have done just that. In fact, this year will mark the first time in academic history where graduate students borrowed roughly the same amount of money as undergraduates; ~$11billion in graduate loans were written in 2020. (Keep in mind, the number of graduate students dwarfs the number of undergrads).

Columbia University is no exception in joining the Grad Plus gravy train. However, where Columbia does stand out vs its peers is the number of “high-debt master's degree programs in low-paying fields…that don’t provide graduates enough early career earnings to begin paying down their federal student loans.” For example, according to the WSJ, “recent film program graduates of Columbia University who took out federal student loans had a median debt of $181,000. Yet two years after earning their master’s degrees, half of the borrowers were making less than $30,000.…theater graduates who borrowed took on a median $135,000 in student loans, four times what they earned two years after graduation.”

Among the Columbia students profiled in the WSJ article were MFAs in film, Zack Morrison, Matt Black, and Patrick Clement.

Mr. Morrison graduated owing ~$300,000 in federal loans. Mr. Black finished his degree with $233,000 in federal loan debt; his balance now stands at $331,000. Patrick Clement is ~$360,000 in the red.

Since graduating, Mr. Morrison has been working as an assistant in Hollywood for ~$50,000 and doing freelance work in film and photography to supplement his income. Mr. Black works as a “writer and producer.” He earns ~$60,000 “in a good year.” Mr. Clement teaches film at a local college and supplements his wages working in an antique shop.

The examples above are a microcosm of a stark reality. Too many MFA students at Columbia incur so much debt to obtain a degree that ironically confers one certainty: the inability to pay that debt off.

Accountability

In our view, Columbia bears some responsibility for their MFA’s dire financial predicaments. The school can make a solid argument that their graduate programs (and the rolodex that goes along with them) are second to none. Hence, an MFA from the school is worth the cost. That said, it is clear that Columbia – and to be fair many other institutions – are leveraging the unique properties of the Grad Plus Loan to line their coffers at the ultimate expense of the taxpayer.

Regardless of their credentials, Columbia is not naïve to the fact that for every film or theatre major that “succeeds,” the vast majority struggle to earn a lot of money in those respective fields. Columbia’s primary responsibility is to educate students. However, a secondary concern should be the cost of doing so. In that regard, Columbia makes a failing grade.

”Zack Morrison said ‘How the hell am I ever going to pay this (debt) off?’ Matt Black said he was “financially hobbled for life” and argued Columbia was culpable for his “calamitous financial situation.” Mr. Morrison and Mr. Black are not alone. Most students profiled in the WSJ’s piece also blamed Columbia for their precarious financial predicaments. Their position was seconded by James Bundy, dean at Yale University’s drama school who argued, “There’s a virtual army of young people, most of whom may be naive about the financial obligations they’re undertaking.”

At TQC, we agree with Dean Bundy’s statement but reject the students’ and Dean Bundy’s arguments. Mr. Bundy’s statement is spot on. There are too many MFAs who are naive about their finances. But absolving students of any personal responsibility is off base. When deciding to pursue an MFA, there must be a degree of personal accountability.

Due Diligence

Unlike a blissfully ignorant 18-year-old freshman setting foot on a college campus for the first time, graduate students are adults. They are at least ~22 years old when they decide to pursue an MFA. Hence, the decision to pursue an MFA and incur the cost of doing so is theirs and theirs alone.

The internet is a free (or relatively inexpensive) resource. As part of engaging in basic due diligence, any prospective student can log onto Columbia’s homepage to find out how much tuition costs for the MFA that piques their interest. They can google “average annual salary for MFA graduate student” and read the results. We did just that. The first result was an excerpt from a US News article. It read “According to PayScale, a compensation data company that publishes the going rates for various types of jobs, the average MFA degree-holder in the U.S. earns an annual salary of $58,000.” This exercise took us 30 seconds.

A prospective MFA student must consider the following: Tuition costs X. The average annual salary for somebody with a degree in my field is Y. Is going into debt worth the knowledge I will obtain, the professional connections I will make, the personal relationships I will forge, and greater opportunity to become “successful?” The consequences of failing to do so are primarily the responsibility of the student.