Cara Philips is the VP of Creative at Commonbond, a leading student refinancing platform. She sits at the cross-section of students, teachers, parents, and universities, giving her a concrete understanding of the student debt crisis and decision-making during a fraught time. Cara explains why the cost of tuition has gone up and how students can plan for their financial futures.
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MESH VO: Hey everyone, Mesh here. In our last episode, we dove into the changing meaning of higher education for a post-pandemic world. We’re finally starting to question the cost of college -- and the value of the education versus the experience. Today, we’re revisiting one of our interviews from that episode. I’m talking to Cara Phillips, the VP of Creative at Commonbond, one of the largest refinancing platforms for student debt. Cara’s insight into college today helps us understand how students can get the education they need, without drowning in debt.
Let’s get started.
Cara Phillips: [00:00:00] So a lot of the bigger institutions have really significant research, like scientific research programs. So they have huge government grants or private industry grants to develop things. So you think about, you know, we sometimes forget that American universities is where a lot of our scientific breakthroughs come from, medical breakthroughs. [00:00:17] So there's a lot of money that those universities have from those types of endowments and government programs for research. Then you talk about the endowment of, you know, I think I read a quote that said [00:00:30] Harvard's endowment was bigger than the GDP of some small countries. [00:00:37] But you know, some of these universities have been around a long time. Their ROI, so to speak, of going to them is very high. And they have had the ability and the privilege of really getting kind of all the spoils. And that's allowed them to build up war chests. If you're a small liberal arts school, for instance, in my own case I went to Sarah Lawrence. [00:01:00] Now, whether this is true or not, when I went to school there, what I used to hear from faculty members and administrators was that part of the reason Sarah Lawrence was so expensive and so difficult, is that, you know, especially women who had gone to school there, like in the forties or fifties, even sixties, who might've been passing away and endowing the university or leaving money. All like traditionally, especially because of the gender norms and [00:01:28] the culture they were, they, were [00:01:30] raised in, left money to their husband’s universities. So, even if they survive their husband, like the husband had wrote the will and the money was going to his college. So they don't really have a legacy of women, you know, which a lot of colleges do. A big part of their endowments often come from people leaving money to their school in their will. [00:01:47] But for whatever reason, Sarah Lawrence has just never really had that. They focus on having no more than 12 to 15 students in a classroom. So in some ways I read an article that was saying like someplace like Sarah Lawrence is really [00:02:00] well-equipped to have in person classes. [00:02:02] They don't do the big lecture classes. It's a small number of students who go there. They focus on small groups for learning. But it's actually on the list of universities that might not survive. So, I think it's a lot of reasons why some schools are in better position than others. [00:02:18] Obviously sports programs, like if you're a big 10, a very, very lucrative sports program that has a contract to be played on national television. That's a huge, huge amount of money. [00:02:30] So I imagine they depend and have their entire budget based on the fact that they sell television rights to their basketball games, their football games. [00:02:42] So those universities are probably in some ways struggling because they rely on like a huge portion of income from that. So I think it's a lot of things probably coming together all at once. But Harvard certainly doesn't depend on its basketball program, right, [00:02:55] for money. Neither does Stanford. So I think universities that don't heavily [00:03:00] depend on a sports program that have really strong endowments and also have research programs are probably best positioned right now. And people are always going to want to go to Harvard, whether it's online or not, because they'll still have a Harvard degree at the end.
Mesh: [00:03:12] Well, it's interesting because universities are not optimized for online learning. What do you think are the challenges there with online learning and in terms of what professors actually have to change and what they're going through? It's not ideal for them as well.
Cara Phillips: [00:03:26] For sure. I can share sort of two things I think point to [00:03:30] what might be happening. One is a totally different industry. We had someone speak to us recently who was in the insurance industry and he was saying that for some agents, this is the best year they've ever had. [00:03:41] Cause obviously insurance is like an in-person job. Like people buy life insurance from people. You go into an office, you sit down, you create a relationship like you know, you're talking about your will. It's a very personal thing. Obviously that can't happen right now. [00:04:02] So some agents have just really taken to doing things on Zoom. They're really comfortable with technology. They don't have to drive to and from places anymore. So they're actually more productive. For other people, you know, depending on your comfort level with technology, your personality, they're [00:04:30] really struggling. Like // they don't know how to connect with other people online. So they're just sort of avoiding and not really doing as well and really struggling financially. [00:04:42] And I think for professors, it's probably a lot like that. I think I was reading the average age of professors in the United States, tenured professors, is like 57 or older. So we're talking about a generation of people who may or may not be as comfortable using online tools or spend as much time talking [00:05:00] with people online as younger teachers might. [00:05:03] And then, you know, I have several friends who actually teach in universities and for them, they actually have expressed a lot about how much more preparation and time it takes for them to teach online because it's just such a different experience. So they're actually spending double the amount of time they used to, to prepare for class. Even classes they've taught three, four, five, six years in a row. [00:05:27] So it's a class they're very familiar with the [00:05:30] syllabus, but they have to spend double the time preparing for class. And also they're just really struggling to keep students engaged. Young people love their, these little like electronic devices, personal electronic devices. So, if it's in class, a lot of teachers can have a no cell phone policy or things like that. [00:05:48] But, you know, it's a lot harder online to be like, are they on their phone? Are they on Instagram? Or, or like Tiktok, or are they, God knows what else is going on. So I think they're, they can't really tell, like, is the student [00:06:00] here? Am I reaching them? Are they understanding the material? [00:06:03] So I think a lot of the things that make them good teachers, they've just had to find // new ways to do those things. You know, if you've probably been teaching for a long time, you're in person, you're like this kid totally understood what I was talking about. This kid has no, no idea. This kid is just not here today. [00:06:17] This person is totally present. It's just much more difficult online to know that stuff. Professors are working really hard to try to figure out how to provide a good [00:06:30] education this way. Um, but I don't think any of them are particularly happy about it either.
Mesh: [00:06:34] So I want to move from this and, and talk about something that you and I had discussed before. But given that there's a lot of commentary out there right now, like don't go to school, you can better use your tuition, start a business, do this, do that. [00:06:48] What are your thoughts when people think about higher education as a return on investment? Is that a smart way to look at it? Or should we be thinking about education differently, especially in undergrad versus maybe doing a master's.
Cara Phillips: [00:06:59] For sure. I mean, my opinion is a little different from like our CEO and our company. I think there's definitely a big movement right now to hold universities accountable. To ask for transparency. To expect them to provide a guarantee to some extent, or an ROI on, I paid $70,000 a year to go to school here. [00:07:20] For this degree, I will earn this much money. I completely understand where that comes from. You know, a lot of schools have, for the past 20 years, [00:07:30] really the prices have gone up extraordinary amounts, right? Salaries have not. So I think part of the issue is that while the cost of college has skyrocketed, there's very very very slow growth in salaries in the United [00:07:44] States. So salaries barely move and sort of inch up like 1%, 2% a year if people are lucky, cost of living. But the cost of college is going up 5%, 10% // like those numbers just don't add up. So I think [00:08:00] that's a big piece of it, as well as, I have many friends who teach and tenured professors, like if you're a full-time tenured professor and you're there a long time, you can actually make a nice living. [00:08:10] But it's certainly not most of the professors. There's a lot of adjuncts who fill up and take care of a lot of classes. They're not making a lot of money. It's not that, you know, teachers are getting all the salary or whatever. It's that colleges have huge, huge administrations now. There’ve been a lot of articles about sort of the [00:08:30] competition for students, so that they now have amenities. I sometimes think about it, you know, I live in Brooklyn, New York. And buildings get crazier and crazier. Like, it's pretty standard for a new building to have the dog washing station. // But it's like a movie theater that no one ever uses, and a yoga studio that never gets used. So you pay more and more money for an apartment for amenities. [00:08:57] The apartments get smaller. // And I think colleges got a little bit into that game as well. And I think those are sort of the cautionary tales where people look at universities and be like, who's running these places?. They're just like spending all this money. [00:09:17] And now I'm taking on all this debt so they can, you know, there's a fancy building. [00:09:24] So, it's an interesting circle and you could talk a lot about who's to blame. But when people [00:09:30] talk about ROI and, and universities, like certainly there's an argument to be made about where's my money going? What does it actually pay for? But for me, it's really also about university and college is very much about growing as a person. [00:09:51] I worry that if ROI is the only determiner, we'll end up with only majors that result in very specific types of [00:10:00] careers. Like engineers or finance majors, or people on track to become lawyers or doctors. And all of the great liberal arts education will just disappear. [00:10:08] The goal of college really should be like, how to learn. How to write. How to be a person. Um, how to think critically. All of those things help you in any job that you will have in the future. And certainly graduate school is, is meant to be the place where, where you really specialize and learn more detailed things. [00:10:27] Of course not everyone wants that in college. Some [00:10:30] people want to go and, and really specialize or be in a certain type of track. But I, I just, I worry that if we only focus on ROI, some of the things that college really does well, will get lost and that would be really sad. And I worry, we'll end up with, you know, generations of robots who don't know how to think for themselves. [00:10:50] So, it's a real thing.
Mesh: [00:10:52] How do you think that students could be more fiscally responsible to potentially get that education and [00:11:00] get that experience without having to go into serious debt? Because obviously there's ways, even like the way you mentioned earlier, there's ways to do this without breaking your bank.
Cara Phillips: [00:11:09] Hundred percent. You know, one of the things that I feel like there's been a bit of a movement, but has been hard, really hard to change attitudes is lifting the shame around community college. And I say that with no disrespect to anyone who's attended community college, but I know from, you know, the sort of [00:11:27] upper middle class high school I [00:11:30] attended, you know, community college was not anything anybody wanted. And certainly parents would be, you know, mortified, their child went to community college. But when I attended Sarah Lawrence, like it was pretty late in my time being there, I found out // they're very generous with the number of credits you can transfer in. [00:11:46] And there were other students there who were taking a lot of the more basic kind of requirement classes at community college over the summer so they wouldn't owe as much money when they graduated. And I thought, wow, [00:12:00] like, that would have been a smart idea because I'm still paying off my student loans from undergrad. But I do think, you know, I probably have some residual shame about community college. And I think that's the biggest mistake parents and students make is, there's some really, really wonderful teachers and there's some great like community colleges out there. And if students are able to, or even go to a state school for the first two years that's more affordable and then potentially, you know, transfer to their dream school. [00:12:29] I think there [00:12:30] are a lot of ways about being creative about paying for education, rather than just like, I have to go to this one place and go for four years and pay the most expensive thing. If that's really the most important to you and you really believe you're going to be able to pay it back or your parents or family can afford to really do that, great. If not you know, be open-minded. // Look for ways to do it , that don't necessarily put you in that situation.
MESH VO: Cara sees both sides of the college question. On one hand, it plays an important role in the growth and independence of young adults. But on the other hand, she’s realistic about what that costs, and wants to empower students to make better financial decisions.
To hear the full interview along with our other interviews about higher education, sign up at thetalkmoney.com/membership. Cara discusses the current student debt crisis, how we should approach loans, and what the future holds. Make sure to check out our two new guides, on student debt and attending college. You can find it all at thetalkmoney.com/membership, and use the code “podcast” for a 20% discount.
This episode was produced by Olivia Briley and me, Mesh Lakhani. It was mixed by Valentino Rivera with help from Eduardo Perez, and featured music by Blue Dot Sessions. Please share this episode with your friends, and be sure to subscribe to us on Apple Podcasts, Spotify, or wherever you choose to listen. Until next time.