This article hints at schools inability to justify their ever increasing prices. Why is tuition continuing to rise so much faster than inflation? Is this simple supply and demand? Government backed loans create infinite supply to anyone who wants them? How can not for profit schools justify gauging their students?
1. Infinite supply of loans. Dept of Ed isn't even allowed to deny a loan to a person.
2. Culture since the Clinton era of "everyone should go to college". Massive cultural stigma for those who don't.
3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect.
The most heinous thing though is that student loans are exempted from American bankruptcy laws. The gov't will give you a loan, without doing any diligence on your ability to repay, but make it impossible to discharge your debt if you go bankrupt.
Spot on. There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost. (Separately, let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.) But I think items 1 and 2 above -- and a lack of education about what loans are and the value of a higher ed degree to the potential student -- are the true culprits here. There's a cultural expectation that all students will matriculate to college, and many high schools measure their success in terms of college attainment. Meanwhile, there's a lack of counseling/education for students, so few know that they're expected to repay loans and fewer explore the options (college and non-college) in front of them, and counselors would be working at cross-purposes with the secondary institution's goals if they advised against attending college. As demand for higher ed continues to grow, for-profit higher ed institutions continue to spring up to suck up federal loans and lower acceptance standards.
>> let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.)
I had a friend of mine who I knew when I was working at Thomson Reuters back when they still had their educational publishing wing of the company. He was in sales and said educational publishing is one of the biggest rackets nobody has heard of.
He said he would do his due diligence and meet with professors and educators regularly during the year and let them know what the publishers were doing, but in the end, he said it was always a 50/50 roll of the dice if a professor or school bought the books he had been pitching them since they got the last version of the textbooks they ordered.
He said it mainly came down to name recognition, and Thomson had that - but he also said it was similar to how agents woe professional athletes. Lots of perks, free dinners and baseball tickets to the professors making the decisions. He said as a sales person, they had a "client account" card where they could wine and dine clients and had a monthly stipend between 5K-10K specifically for this purpose.
He said you'd be surprised how greedy these professors get once they know they can influence what books are going to be purchased for the following year and from what company.
>"There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost."
That was my impression of University/College. Having only experienced what was shown in movies and the media, I was under the impression that college meant getting your own "apartment with a roommate". Unfortunately, in the non-US university I attended, it meant "4x6" meter room, two beds, two cupboards, two desks, and two-roommates.
Then again, the entire year's tuition did only cost about $3500, about 9 years ago.
At least in my experience at a UC, the media portrayal was fairly accurate. It seemed like there was a never-ending onslaught of concerts, "multicultural events", sporting events, "community center" activities, safe spaces, Greek events, etcetera (all of which receive school funding in some form or another). I appreciated the occasional guest speaker, but looking around I couldn't help but notice money pouring from everywhere, namely for things that had nothing to do with academics. Far too many administrators with too much time on their hands.
The loans are the key to the whole mess. So long as the loan is guaranteed to all and non-dischargeable through bankruptcy, the cost will tend to rise to match the total expected lifetime earnings the education enables.
In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.
"In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead."
That is by far the most concise summary I've ever read of the nature of the problem.
Would you say that the same thing is true to a lesser extent in the housing market? It's not as bad, but there's a huge amount of loan subsidy there that's driving the price of housing crazy.
Is there a general principle here? Do loan subsidies lead to a condition in which the loan recipients are able to reap the benefits intended for loan originators through progressive inflation and risk transfer?
I think what we've got here is a misalignment of the participants' roles courtesy of unintended consequences.
The recipients have become the schools, deriving all of the benefits with no risk. The originators have escaped their traditional role as gatekeepers and risk takers. That leaves the students for all of the risk to concentrate on while they receive few of the benefits.
Essentially becoming sharecroppers of their own minds.
The incremental lifetime earning from a Bachelor's degree is something like 0.5 to 1.5 million dollars[1]. The cost of attending college could double at least once before the ROI goes negative.
But these studies are all flawed because they are based on historical data when 4-year degrees were scarcer. In an era when many graduates can't get a job or end up with one that does not require a degree (i.e. barista) it's obvious that their ROI prospects are grim.
Ok, that's fine. It's still within the range I mentioned above. But, I'll just note for the record that you rounded $587k down to $500k, and $840k down to $800k.
> But these studies are all flawed because they are based on historical data when 4-year degrees were scarcer. In an era when many graduates can't get a job or end up with one that does not require a degree (i.e. barista) it's obvious that their ROI prospects are grim.
I don't think that's at all obvious. We are rapidly approaching the moment [1] when over half of the U.S. population has some sort of college degree, and already 2/3rds have at least "some college" education.
Applying to a front-line retail job with a Bachelor's degree no longer marks you as desperate and over-qualified. You are assuming that an employer will hire a person with only a high school diploma when she can just as easily hire a person with an associate's or bachelor's for the same wage. That will put downward pressure on wages for those without a college degree.
It may very well be the case that sending "everyone" to college does nothing more than depress the wages of those with only a high school education. However, that is not an argument against the positive ROI of college. Spending $100k to avoid $200k in lost wages is still a positive return.
Finding a job with a B.A. or B.Sc. may be difficult, but finding a job with only a high school diploma is even more so.
The page I cited actually breaks down lifetime earnings by age (a.k.a. "annual income"). It's true that non-college graduates get an earlier start on savings, but the overall trend is that their annual income starts to decline as they get closer to retirement age (they peak in their mid to late 40's).
You have to assume totally unrealistic investment gains in the first four years to make up for the $500k less total income.
Hear, hear. Agreed on point 2. I believe we are seeing this stigma evolve right before our eyes.
College has been improperly marketed. I've mentioned this on other threads, but my view is that college should be used as a forum to learn, not a means to get a job. The reality though is the opposite.
The pressure against this reality is mounting. I feel we're nearing the point where one is better off going straight into the workforce to receive on-the-job training instead of pursuing a college degree. In other words, the market forces are starting to take effect.
But do we need to fast track this shift in mentality? If so, how? How much do we leave up to the invisible hand to flesh this issue out and how much should the onus lie on third parties (e.g. the end of federal government loan subsidies, corporations, etc)?
+1 for the role that guaranteed, subsidized student loans play.
University financial counselors are very well versed at helping students obtain the maximum amount of loans, along with an obligatory brochure cautioning them not to over-borrow.
> 3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect.
Not only that, it's downright bullshit.
I remember seeing once a comparison. Non college degree average salary: let's say it's 30K. College degree: 40K. Instead of college, take those 4 years and at least $50K of educational expenses and invest in the S&P 500. Do nothing. Earn more over your lifetime that the more sophisticated 40K college graduate.
Or better yet, take that 50K, use the plethora of free online learning resources and become an entrepreneur. For a large portion of the population, college is simply not worth it.
of the 2.9 million "good jobs" (i.e. full-time, high paying with benefits) created since 2010, 2.8 million have gone to people with college degrees.
It fun to say that you don't need a degree to get a good, high-paying, satisfying job, and there are plenty of anecdotal examples to reference, but the data clearly indicate that the odds are not in your favor if you choose an alternative path, at least in the US. I suspect that software engineering and some related industries might be a little more degree-agnostic, but that's far from the norm.
What 50K? Are you telling me I could've applied for 50K in government-issued student loans and then turned around and spent that on a free online school and started a business?
One argument I've encountered that holds water, at least with regards to being unable to discharge student debt: you can't repossess someone's mind. (Technically you can, but that'd be a messy affair.)
That's a terrible argument that I've never heard an actual policy-maker or politician make. Besides, unsecured debts are all around us, credit cards being the most common.
But it is much harder to get other forms of unsecured debt. An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit let alone a $100k loan. The lack of being able to discharge the loan in bankruptcy needs to go hand in hand with the guaranteed availability of the loan. Instead of changing one of those things, we are are better off coming up with a new system like no upfront tuition and income based repayment plans.
> An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit
Wow, citation please? Credit card companies set up pop-up stands and give away free t-shirts to students who apply for their credit cards. The VAST majority of the applications are happily approved.
Update: excellent citation kileywm. I guess my perception was a bit dated.
The Credit CARD Act of 2009 [1] made it considerably more difficult for an 18 year old to get a credit card, but I should add that circumstances change when an 18 year old has a co-signer. At any rate, pop-up stands and such have been curtailed by this provision:
"(5) Eliminates excessive marketing to young people. Consumers under the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from mailing offers to consumers under 21 unless they "opt in," and prohibits companies from wooing students with T-shirts, free pizza and other free gifts at university-sponsored events."
As an anecdote, my experience (within the past decade) reflects the parent post's perception. My first credit card had a very low limit of < $1000, and was surely because I was then young, a student with no stable income, and had a lack of credit history.
When I was 21 I was only able to get a secured credit card. That didn't change until I got a full time job. I would've loved to know where I could get something better; I just wanted something low limit to build my credit score without tying up $1k (a lot for a college student).
As an anecdote, after intentionally avoiding credit cards through college, I was rejected from several when I applied for my first after graduating in 2010— and was only approved for a 'student' card (despite having graduated) at a bank where I had a savings account.
Thats not legal anymore. Its no longer legal to advertise credit cards on college campuses.
My first credit card as a student came with a $500 credit limit for what its worth. I wasn't able to get a $5k limit until I was out of school and working in my field and made a dent into my student loans.
I've been full-time as a software developer for >10 years, and still haven't been able to get a credit card with a $5k limit. Fortunately, I don't need credit for anything.
That's only feasible if you have limits large enough to put the whole balance on.
Also, the interest will kill you unless you actually plan on declaring bankruptcy, in which case say goodbye to any chance of buying a house in the next seven years.
I would think that in your early twenties, defaulting on student debt and declaring bankruptcy would have roughly the same net impact on your life.
>> The gov't will give you a loan, without doing any diligence on your ability to repay, but make it impossible to discharge your debt if you go bankrupt.
No due diligence.. guaranteed loan.. cannot be discharged in bankruptcy. Makes sense to me. If the gov't could discriminate on who it loans to for risk assessment then that's a different story.
that plus they don't necessarily restrict the loans with regards to the education you are receiving. it is one thing to go into a field that is experiencing good growth it is another to enter one that is saturated or quickly saturating.
It has always been my belief that if government is going to provide loans it should set limits on the cost of the education it is taking the risk for. It already sets limits on medical care through reimbursement rates, how hard would it be to limit course costs? The means test should be on what you are receiving, not necessarily who is receiving it.
That’s not really true. You have student loans and state colleges – two very useful tools which make a college education possible for many poor people, too.
>"If the gov't could discriminate on who it loans to for risk assessment then that's a different story.
"
If they could, they wouldn't be allowed to. As soon as a hint of racial/sexual/anything disparity is shown in who is getting the loans, there would be a massive uproar to "incentivise" the non-proportionately-represented class with loans. Then you're back to square one, as the loan process is then "not" to be used as a corrective measure for society's ills.
I totally understand this aspect but what I do not understand is why anyone would ever pay $150K for a media studies degree or a degree in baking. Are Americans that stupid to pursue meaningless education at such price ?
Administrative bloat is the culprit on the spending end. You'd think that the increased spending would go to hiring professors and improving academic life. But instead, the administrative bureaucracies are sucking up all of the money and wasting it on pet projects and excess labor.
Basically, all of the mismanagement that people associate with government applies to colleges as well. They have guaranteed revenue, so they have no incentive to control costs. Project planning and approval are more about politics than about cost and value. Leadership is weak and more interested in covering their own asses than in making the right decisions. There's constant mission creep, with colleges strangely obsessed with running all aspects of students' lives. Adding new spending is easy, but eliminating existing programs is near-impossible. The workers are unionized, and are often able to recruit naive students to their protests against any cost-control measures.
At my college, there was an administrative department for every kind of minority, each with its own budget and staff. What goes in inside of these departments is its own scandal. Some were far-left outfits that spread the toxic identity politics that's been in the news lately. That's not the kind of instruction that parents think they're paying for.
The government needs to stop its irresponsible loan and grant programs. Colleges need to refocus on academics and basic services for students. The only way they will do that is if they are forced to justify their costs on the market.
I went to Boston University for my undergrad degree, one of the most expensive schools in the USA. Current tuition / room / board is $63k, and another $3k is estimated for expenses [1]. If you could lock in these rates, a 4-year degree would be $264k.
But that is assuming a lock-in. Costs increased 3.7% this year [2]. If there was a 3.7% increase every year during your 4 years, you would pay $279k for a 4 year degree. This is a $15k increase over 4 years.
What's even worse, because of the magic of compound interest, only 9 years after you graduate, yearly costs would be $102k per year.
I personally see this as insanity. It will have to self correct itself, because no one can afford those fees.
So how does BU get away with it now? Primarily through allowing any foreigner with the ability to pay in, regardless of their educational merits. BU has a massive amount of Asian, Indian, Eastern European, and Middle Eastern students who pay the full costs. Anecdotally, a man in my freshman dorm was the young scion of a wealthy family from Dubai, worth over $100 million.
US students rarely pay the full tuition, which is why the outrage isn't so large.
BU class of 2018 is only 22% international [1]. Although it is true that most foreign students are wealthy and pay full tuition, [2] I think you're discrediting how much rich American parents (78% of population) are willing to pay to get their children a good undergrad degree. Would be interested to see stats on how many American students receive aid, and what the average and median aid packages are.
> Why is tuition continuing to rise so much faster than inflation? Is this simple supply and demand? Government backed loans create infinite supply to anyone who wants them?
I'm not convinced government backed loans have much to do with it. Here's a table comparing Stanford tuition growth to inflation over periods of 10 years.
Each row represents the 10 years ending in the year given in the first column. Second column is how much inflation multiplied prices over that 10 years. Third column is how much Stanford tuition multiplied over that 10 years. Final column is the ratio of the Stanford column and the inflation column.
Government backed student loans didn't really start taking off until the mid '60s, so maybe some of the Stanford spike in the 10 years ending in 1970 can be attributed to that, but after that it falls back to its "normal" faster-than-inflation rates.
It would be interesting to compare to other schools, in particular to other top private schools, top state schools, and other private and state schools, because it is quite possible that factors that can affect tuition affect it differently at different kinds of schools. My Googling only found sufficient historical tuition data for Stanford which is why that's the only one I was able to compare against inflation.
You've picked a very unfair data set. Stanford is one of the top universities in the country and has a $22B endowment [1]. The could choose to simply make tuition free if they really wanted to. Stanford optimizes everything they do (including pricing) to attract the best and brightest.
You're also only looking at cost, which is only half of the equation. You also need to scrutinize lifetime earnings of graduates. For Stanford, this metric would obviously be excellent (see: endowment). For many of the mediocre to bad universities in the United States, this metric is likely terrible.
Column 3 is exponential behavior. Multiply those numbers together to get 28 times faster than inflation in 80 years.
Since the boomers 1970s the cumulative ratio is 5x. In the 1970s you could pay for and education working 1000 hours summer and part time, it is more like 5000 hours according to this ratio.
1. Services in general don't benefit from productivity improvements like goods do. As productivity goes up, services tend to get more expensive in terms of physical goods. Education is a service (as is health care, which is also out-pacing inflation).
2. Saving is extraordinarily difficult on a national and generational scale. Outside of saving easy-to-extract natural resources (oil) for later, basically the only other option is to make the next generation promise to make things later. This is why the lending standards are like they are for student and home loans - the economic pressures of retirement planning demand it.
3. Education is a positional good - you only need a degree for entry level jobs because you're competing against degree holders. Since we're getting better at providing absolute goods for our society, more resources are getting freed up to chase positional goods.
4. A good chunk of the price increases are getting made up with corresponding scholarships and need-based awards. Universities are less trying to gouge all their students, and more realizing that they can pull much more money from higher-income students. This is especially true for Ivy League and other prestigious schools.
> Services in general don't benefit from productivity improvements like goods do
Very not true. Productivity for paralegals, accountants, and programmers has certainly risen over the decades. We could define education as "person at chalkboard talking about things to other persons sitting at desks", which probably doesn't scale well. There's no reason to think that, in abstract, distributing information won't scale well.
> Saving is extraordinarily difficult on a national and generational scale.
Exactly. Leaving money to the next generation without getting a huge tax hit is non-trivial. If I got cancer tomorrow, I'm not deciding between leaving my daughter a college fund or going through chemo to eke out five more years. I'm "not paying" for the healthcare, so I'll spend whatever I can on lasting a couple extra months. I certainly can't opt to forgo treatment to leave $250k to my grandkids.
I may have used the wrong phrasing for generational - I meant it much less in terms of inheritance, and more in terms of "doing things now that mean I have food on the table forty years from now." Like, if you want to do things now so that someone staffs your nursing home when you're old, the net effect is that you're trading real goods and services for "I will do valuable things for society later, such as staffing a nursing home."
If you aren't trading current goods for future promises of them, then you're doing things like building machines and roads that deprecate and require maintenance, or growing crops that rot, or otherwise making stuff that won't be very helpful when you're older.
And since a lot of people want to be taken care of when they're older, and they're making tons of things that people today want, there's absolutely zero surprise that they're extending shitloads of credit (especially to young people, and college/housing in particular).
I see it as the natural consequence of the shift in mindset as to the primary beneficiary of a college education that happened during the Reagan era. It may seem bizarre to us now but, prior to that, students having a college education was viewed as being beneficial to society first and to the student second. And the funding model where states paid for almost everything followed from that.
But once you make the mental leap from it being about a public good to it being about an individual good, the arbitrage starts, just as it does for any item where the cost is significantly below its value. Colleges would have faced a massive backlash if they'd tried to just adjust directly to the point of equilibrium, so they've been moving to that point over the past ~30 years.
Students are advised by parents and counsellors whose experience is one generation behind but believe they are current.
My wife teaches high schoolers and a huge percentage of their parents think admission to an out of state private school guarantees a solid career. She (an older millennial) is often the only voice in favor of a strong in state public school or picking a major that actually leads to a job.
Prediction: the problem gets worse until the leading edge of millennials have high schoolers of their own.
"How can not for profit schools justify gauging their students?"
In the U.S. everything is for profit. It's just that some of the for-profits find it beneficial to file as a non-profit for the benefits it confers.
Look at just about any big American university or hospital. You have marketing, customers, revenue maximization, ruthlessly driving down labor costs, and as much cash as possible captured by the CEO (er, president) and other high level executives.
The great thing about running a business like this, is how the U.S. government earmarks massive amounts of the national GDP, which can only be used on your product. School loans, as others have mentioned, and Medicare/Medicaid for health care.
It's important to realize that true out of pocket costs for the median student have not grown nearly as fast as "sticker price" tuition[1].
That being said, easy government loan money and a growing pool of students demanding a much-slower-growing number of slots at "well regarded" private universities has made it easy to keep ramping up the price.
Actual amount paid is very different from sticker price. It's basically sliding-scale ie wealthy students pay full price to and poor students pay very little.
It's quite likely that by the time my 11-year-old hits 18, private universities will cost over $100,000 per year (tuition plus fees, housing, and food plan), and public schools will be $25K [EDITED orig. $50K] (plus or minus, depending on state subsidies and other funding such as corporate donations).
While the university experience is undoubtedly a valuable one for the 18-22 age range, with tremendous intellectual and socialization opportunities during this formative period, I wonder whether it's still going to be the best and only pathway to intellectual and social growth.
With MOOCs and other online learning resources flooding the internet, many free or for moderate fees, the focus now has to be on justifying the classroom experience. Are you still best off in a 300-seat lecture hall, scribbling/typing notes while a grad student or adjunct spews information from the lectern, at an arbitrary time of day that if you somehow miss it, you're out of luck? You can't exactly ask the lecturer to pause while you go to the toilet, or "please rewind 10 seconds, I missed something". Maybe they have videoed the lecture and maybe the videographer remembered to zoom in on the powerpoint screen at the right times.
You hope that meeting all those fellow students will lead to a group learning experience -- "Hey, let's meet at the coffeeshop and go over this stuff together!" That's possibly the best way to learn material, to teach it to your colleagues and have them quiz you as well. But is that not reproducible in the online model, e.g. chatrooms, skype, etc.?
In my opinion, the U.S. government should get out of the business of providing and guaranteeing educational loans. It has resulted in a vast, bloated system of exploitation of the students and the loan system, and we are now facing possibly a trillion dollar bubble that may burst in the next few years if all those freshly minted degrees don't lead to good paying jobs to retire those loans.
Universities in the U.S. must be put on notice that the free ride is over, and they have to get costs under control, stop with the billion dollar student centers and bloated administrative offices, and try to get back to basics of providing lecture halls and white boards and reasonably secure jobs for professors to do what universities ought to focus on: teach.
I think the MOOC thing is a game changer, but only for actually learning stuff (as opposed to prestige), and mostly for stuff where it can be proven that you've learned it.
What I mean is you now have a huge variety of ways to learn STEM type stuff. When I was an undergrad, you had some topic like transistors to learn about. You had maybe 3 or 4 books with explanations, not all good. You had a lecturer, and a tutor, and your fellow students. If combined they didn't lead you to understand the secret to transistors, you were buggered.
Nowadays, you have forums like stackexchange where you can get a well informed answer to some pretty obscure questions. You have a whole load of lectures from various universities as well, and you can also get a variety of books delivered wirelessly. So really if you're ignorant about something, it's not because you couldn't have found a good explanation.
The reason I mention provable stuff is that you have certain subjects where, let's face it, it's easy to BS. Sure, there's agreement that some people are better at discussing history or politics than others, but it's just not the same as a STEM subject. There's an xkcd about this.
For those subjects, I reckon no matter how smart you sound, people will give you more credit if you went to a big name school.
I'm still waiting for the MOOCs to have credible exams. I mean in the eyes of the public, of course. Once that happens, and I believe it can happen quickly, there will not be quite so much pressure to do a specific, old fashioned residential college education.
I agree with getting the US Gov out of the loan business, but i think we the market to react, and it has begun to.
For many professions, colleges can be substituted by trade schools. We are already seeing this surge in software, and i think we can expect the trend to move into other verticals. At some point, and for some majors this has already happened, a BS/BA stands to lose you money over a lifetime.
At a point, college is no longer fiscally viable. In these cases, a cheaper, more targeted approach is highly marketable.
If you separate the testing and certification from the education, it isn't quite so important where the knowledge/skill came from, so long as the person has it.
For instance, if you take the rock guitarist certification test, and pass, you should be able to play guitar passably well in a rock band. It doesn't matter if you studied in a music conservatory for a few years, or worked small-time gigs in bars and clubs, or played a guitar-learning video game.
It's not the education that's the bottleneck. It's proving to others that you have the knowledge/skill in an efficient way.
The professional associations for actuaries (SoA, CAS) runs their own testing regime. You can take a university course to prepare for the tests, but you don't have to. That testing and certification process has led to the situation where passing another exam usually triggers a pay increase. And actuaries consistently rate as having very high job satisfaction.
ABMS runs certification tests for specialist physicians.
Lawyers have the bar examinations and board certification for specialists.
The same could happen for other careers. A group with a narrow focus could poach the testing and certification function from the generalist universities. For someone who has no need for external guidance with respect to a general education, and who knows what sort of career they want, they could skip college, and climb the ladder of a testing authority. That would present some risk that the authority itself fails in some way before all the tests are passed, and the career position established.
I've edited it down to $25K. I was thinking of 25 year estimates I've read, rather than 10 year estimates. In-state public 4-year tuition averages $9K or so right now, plus housing. In ten years this number will likely double or at least grow 150%, if the 5% growth rate continues to hold. If the Fed's monetary policy continues to push up interest rates, though, who knows how much more it might increase during that time.
Illinois State, a public university (and my alma mater), is currently citing $28k per year for total expenses (including room/board and personal expenses) for someone who lives on campus.
Tuition by itself is only $14k, but that's not a student's only expense. 16 years ago, tuition was less than $6k per year. If it matched inflation, tuition should be less than $9k right now. $14k is beyond ridiculous.
Why did you edit it? The total cost of attending the University of Washington today is $27k. Virginia is $29k. Texas is $26k. If you're child is going to college in 6 years, $40-50k sounds completely possible.
Cyber Dildonics asked me to back up the $50K figure, and I realized I could not. The current state university tuition rates, from several sources, range from $8K to $14K.
$29K is a sobering number - and thus, $50K in 8 years is quite plausible.
Let's hope something breaks soon, or it's going to be out of reach of all but the moneyed classes and those willing to indenture themselves to 20 years of debt.
What makes all the difference in the world now compared to the jaw-dropping prices in '81 is we have alternative education options. There were virtually no other paths to career success 30 years ago... heck... 15 years ago! A traditional path towards a degree was the only way to assure a positive career outlook.
I don't think MOOCs are the panacea, but all types of learning resources (books, classes, organizations, events, people) are all more accessible. The entrepreneurial approach to learning.
I feel like this is backwards. 30 years ago you could potentially work your way up the ladder without a degree. Now you need a degree to get a job working in a coffee shop, because college degrees are so ubiquitous that they've become a prerequisite for employment at many places.
Sure, you could do some learning on your own now, but you could also do that 30 years ago, and I'm not certain most employers are going to put much stock in self-directed education regardless, not when there are so many underemployed college grads available.
I know a lot of people in their 30s-50s who would never be able to get hired for their jobs now since new hires in their position need a college degree which, by the way, is hilariously stupid. Employers expect you to have a college degree to clean the toilets now.
I'm still waiting for a dramatic disruption of the college/post-secondary industry. I hope it comes really soon, but I'm starting to doubt if it'll come within the next 5 years. I think it's going to take lots of people to disrupt education especially since the government will get involve.
I'm starting to feel that some courses in college/university isn't worth that much money. Like a 50,000 degree that has lectures and materials freely available online? Seriously?
Furthermore, some professors are amazing at research, but has no business in teaching.
This looks like a massive waste. It's a huge problem and there are big opportunities in this area.
> I'm still waiting for a dramatic disruption of the college/post-secondary industry. [..] I'm starting to feel that some courses in college/university isn't worth that much money.
It's still coming. As college grads increase in supply their value decreases (top-tier colleges/students aside). More and more students are realizing their college education has a negative ROI... in fact, outside of software, most of my friends are not using their degree at their job.
I think the "code-school" trend is the start of a "micro-degree" program. Self-service fluff-free education with a standard certification exam is pretty compelling. As we see that proliferate to other domains, we'll start to see micro-certifications (just the test). The missing component seems to be the in-person meetings and networking that comes with physical college. I predict we'll see more online school(s) supporting a physical meeting space for students to network and learn from each other... maybe even a new campus model that strips out the cruft of traditional centralized education institutions.
One thing that I think gets lost in these debates is that those college professors who do amazing research and are terrible teachers are still important for society and shouldn't be kicked to the curb. In my experience, these are the type of people who wouldn't be able to land on their feet particularly well outside the academic system - the unorthodox, unsociable weirdos who work on some obscure problem for years. These are also the types of people who occasionally make fundamental breakthroughs, or the ones whose dogged pursuit of a seemingly impractical goal ends up reaping unexpected rewards in terms of new discoveries. I wouldn't want to take a class with the versions of this type that I know, but I'm still glad they exist and have a home in academia.
I just finished my first semester as a history professor and based on my experiences I very much agree that the current system of university education and especially administration would benefit from some kind of fundamental change. But university research is a separate issue, and I worry that trying to "disrupt universities" without thinking through the societal implications might end up harming this amazing apparatus for pursuing advanced research that the US has built up over the past century. I'd argue that those professors who are terrible teachers but amazing researchers have a real value and that we need to keep in mind that universities have always been about more than teaching. (The ultimate case in point is Oxford's All Souls College, which literally doesn't allow any students onto their campus without a letter of reference - but is nonetheless an amazing institution which has given the world real benefits).
You do not have to wait 5 years, I am working on an MVP to directly compete with private, public, and degree mill schools. Expect dramatically lower costs in the short term as we landgrab.
it has already started in the tech sector. There are dozens of coding schools that teach you to get a developer positions in less than a year. It is the equivalent of a trade school for developers. It will be interesting to see how the industry adapts to a large percentage of their workforce not having university education. will there be distinction between those with CS degrees and those without?
If you're looking for a legit degree for around or under $10,000 check out International Programmes at University of London. There's even some undergraduate degrees from the LSE you can take remotely. http://www.londoninternational.ac.uk/courses/search/?solrsor...
I should add that I'm sharing this because I wish I knew about this before I took on a oil tanker full of student debt to go to a "prestigious" US school only to leave before graduating to do a startup. Startupers, consider this option on your own time for (relative) cheap from a prestigious uni.
and 1981 when the article was written was a period of hyper-inflation
" 'families will still allocate about the same percentage of income in real dollars' because college charges have only paralleled the inflation in the nation's disposable personal income"
Adjusted for inflation, that's over $26K in 2015 dollars [0]. But of course the punch line is that price increases since then have significantly outpaced inflation. This phenomenon is known as Baumol's cost disease.
Many schools require taking said "total package" for the first semester or first year. I know at my university, all incoming freshmen were required to live on campus and purchase a meal plan. For anyone who lives nearby or planned on shopping around, this is an additional cost.
Many, if not most, schools exempt local students from that requirement. Georgetown, for example, has a strict requirement for freshman residency, but they exempt students living with parents or guardians within 70 miles of campus.
That's a good point. My university did not have this requirement, however I should point out, even if you lived at home, or moved out on your own - you will be spending this money anyway.
As-in, it doesn't matter if the university requires you to take this package the first year, since you're spending it no matter what (on living somewhere). It's just a matter of who you give that money to.
If you don't want to spend student loans on normal living expenses, one should work while attending university, this way your loans are only for your tuition and related school expenses... not for rent and food.
Well, no, not exactly. If you're living at home, your parents are paying for your housing. It's money that is already getting spent. If you have to live in the dorms, your parents don't get a break on their mortgage or rent because you moved out. If your parents are helping you out, they now have their own rent to pay, plus a new rent for you, where before they essentially got "your" rent "for free".
Similarly, adding one person to the home grocery bill was not anywhere near as expensive as the meal plan. Most universities run their cafeterias as profit centers. You're paying restaurant prices. Cheap restaurant prices, typically, but still more than cooking at home.
The main point I was making, is it's unreasonable to complain about high student debt when majority of it is living expenses.
People often complain about the high cost of attending university, but don't differentiate between tuition fees and living expenses, often lumping them together to reach a seemingly egregious yearly tab. It's not so egregious when you examine where the money is going...
You would have spent near the same, or the same amount on just existing (living expenses)... had you not gone to university.
Sure, if you live with your parents, they'd be picking up the tab for you, but once you've joined the "real world" and moved out, you're having to cover your own living expenses.
But you'd have a job, so you wouldn't be going into debt to pay your living expenses, debt you're going to pay interest on. With the repayment schedules many people end up on, they spend two to three times more in just interest payments than was the original cost of everything.
It's not equivalent at all. You wouldn't take on unsustainable debt to move to a new city to sit around for 4 to 5 years with no job, with the hopes that it would open up a job that you could eventually use to pay your debt before or after the degree. But we make kids do it during their degrees.
It took me seven years to pay off my student loan debt. I was lucky. I know people on 15- and 30-year plans. 4 to 5 years of lack of income, then missed investment opportunities because--even though you're technically making more with this degree--you have less disposable income because of all the debt servicing you have to do. It adds up. it's not 1-to-1 at all.
I think I understand the point you're raising - students should focus on school-work and not have to worry about working to pay bills.
I would disagree, however.
> I had to quit working in my second year to be able to have enough time to study as much as I needed.
Wrong, you chose to prioritize school over working (and I presume the resulting outcome was more student debt to continue paying for your expenses).
You didn't have to quit working, you chose to. You could have easily reached an equilibrium between work and school by reducing your classload, and continuing to work. School would have taken longer, but you would have less debt (and I'd argue you'd be a better workforce candidate after graduating).
Getting back to the main point, if you decide not to work and pay your living expenses yourself, then you will need to either borrow that same money (in a loan for example), or get a relative to pay your way for you. It's the same dollars at the end, it just matters how you obtained them.
So when people complain about very high school fees, and it breaks down to 60-80%+ are normal living expenses, it's tough to find sympathy. The only real way to get rid of those fees entirely is to have the Tax Payer foot them for you (and now we're back to just moving numbers around to wind up with the same exact dollars spent on living expenses). Somebody's got to pay for it.
Further, I would argue students who work while attending university gain invaluable experiences that a normal "professional student" would not be exposed to. Working with others in a true team environment, typical interactions in an office, exposure to "real" work in industry, "real" consequences for missing an assignment or due date, etc. It matures the individual a great deal - where-as a typical "professional student" graduates with none of these experiences, then spends 1-3 years in industry having to learn them before becoming truly productive and valuable to their company.
Yes, but a dining plan can be significantly more costly than buying food at a grocery store. When MIT tried to require that all students get on a dining plan, there were protests from the less-expensive dorms on the east side.
http://dining.mit.edu/meal-plans/options
Their current plans are still $100 to $150 a week for 30 weeks. Thats about three times what jusdicious grocery shopping could get you. Same ratio as when I attended decades ago.
Yes it does matter because I don't eat 1/4th the amount of food that my "meal plan" forced me to pay. I also can't shop around for cheaper options - i am required to buy food from one source. That was almost 2 decades ago so I'm sure its gotten much worse since.
As subsidies increased the upswing in HS students attending college happen..
1970s 25% HS students went to college
2000s 85% HS students went to college
Its not the subsidies that increased its the shear numbers of students per college campus increased beyond what the US state budgets for college could weather..
The correct term would be that US Federal subsidies had a side effect of de-funding public colleges at the State levels.
Another, lesser known side effect of the unlimited access to student loans has been the rise of "degree factory" for-profit universities and their super aggressive and deceptive recruitment tactics. It is yet another lesson in the law of unintended consequences:
LOL, didn't even realize this was a historical piece going in. I was about to be impressed if someone in the modern era created some means of achieving a college degree equivalent for the stated price tag. I was envisioning some sort of online thing, but too good to be true.
I play devil's advocate with a Cuban friend sometimes: an expensive education is better than a free one because it shows that our culture highly values knowledge, at least in terms of money. When education is free or cheap, it is devalued, at least in terms of money. It's a bit of a tongue-in-cheek argument but I think that it's good that people highly value education and it would be even better if the tuition increase would trickle down into pay for professors and post-docs. The high tuition does already trickle down to scholarships for good students, at least in personal experience.
Students in the UK pay £9k (~$13.5k) per year out of pocket for the 3 year university system. They were paying just £3K (~$4.5k) until 2012. University was free in the UK until 1998. Many universities in Germany still remain free.
Is this because the British or German society values education less? No, it's because Europeans pay more taxes on average, and their governments use this to subsidize the sticker price of tuition in tandem with funding and guaranteeing student loans. In the US, tax money is only used to guarantee student loans, while private universities are left to their own devices when it comes to pricing tuition.
Price is not always a good proxy for value. You need to look at who is paying for it, and when.
And of course, free (meaning paid in taxes) in all of the Nordics.
At least for smaller countries this makes total sense, I think. There are enrolment limits, so the brightest get in regardless of their social status or wealth, ensuring that the country gets the educated workforce for its needs to stay competitive.
Classic case of Baumol's Cost Disease. The core of a university education is still sitting in a room writing down what a professor says. This hasn't changed in more than a thousand years. It hasn't gotten more efficient while just about everything else has, increasing its relative cost. Unlimited easy loans have allowed the problem to spiral out of control by preventing economic forces from forcing innovation and increases in efficiency.
Higher Ed in the US has long been a luxury good, where price is no object. Or rather, there is a correlation between price and demand. Or at least, sticker price and demand -- institutions discriminate between customers by offering scholarships and need-based aid to maximize income, and to maintain a high sticker price.
>'If there's no major reduction in Government loans and grants, we're in good shape,' said Donald Routh, dean for financial aid. 'If there are reductions, then we have some very real problems.'
I know its uncool to here to talk about Bernie, but if you dudes are really serious about this- vote for Bernie, even if you're rich because rainy days may come anytime
My tuition fee in a top-notch european technical college (automation engineering) was roughly 3000$/year. But yeah, let's keep cargo-culting the US model.
You probably forgot taxes in that cost (that you will pay for the rest of your life as a high earner) but, that said, that is a great model: the country makes an investment in you, you prove you are serious about it (the $3000 a year), and in return, the country gets a higher wage earner (and more taxes) to pay for the next generation.
In France the very elite students get paid during their studies (equivalent to Msc, not PhD). In exchange they are supposed to work as civil servants for some time (not sure all are supposed to do that), but some go work abroad right after their studies so that investment is mostly lost by the French government.
You're probably referring to the Ecole Polytechnique. Indeed newly graduates are supposed to work as a civil servant or pay the "pantoufle", which according to [1] is roughly 45000€, and as of last May when the article was written, it says only 10% of the graduates were paying it, but the government was starting to go after them.
I was indeed referring to Ecole Polytechnique, but also Ecole Normale Superieure. I think alumni from Polytechnique can be expected to join the army if needed, since it depends from the Ministry of Defense.
No, I didn't. That was the total tuition fee including taxes. Obviously that didn't include any sort of college accommodation or meal plan - as I lived at reasonable distance from the campus. It was just standard "classes & exams".
That said, because tuition and taxes are proportional to family income, I was in the highest and most expensive tuition fee. Most of the students in the campus would roughly pay half of it - unless they would start to repeat classes and not pass exams (for which you automatically jump to the most expensive yearly fee).
What I'm talking about is that most European countries have a higher overall income tax rate than the US. Some of this goes to pay for your education, so 3000 is not the total you are paying for it, you will keep paying for it over your lifetime in taxes.
Again, I think this is a great idea. But that said, there is no free lunch in this world.
For what it's worth, the majority of public US institutions are similar in cost. The outlandish prices are either private schools or out-of-state tuition rates.
It's been ten years, but my undergraduate tuition at a modestly well respected engineering-focused university was ~$2000-year. I think the rates at tech are now about $4000-year, but it's not too outrageous.
Honestly saying "just look at instate costs" is just as misleading. Restricting access to a quality education / future job options (depending on your field, etc) based on geography is one of the most telling failures of American Federalism. The sooner state schools are re-bundled into a federal program for affordable access to all Americans the better.
Given that you can become a resident of a state by not being claimed as a dependent by your parents and having an in state address, makes it possible for most students to get the in-state rate if they choose. Typical path seems to be spend a year at a community college which can transfer credits into your chosen university, attend that college until you have filed a tax return with you as your only dependent, transfer to the state school in the fall (or summer sometimes).
I'm not aware of major educational problems with in-state schools. I've compared my curriculum at a nobody southern in state school with the CS curriculum at MIT and I don't see any major differences and I don't feel shortchanged.
I'm pretty sure the only your school matters in the real world is at the most elite levels of a few fields and even then its mostly just about hiring people who went to the same school as you and the perception elites must come from the ivy league.
My ancedote here is that it's more about opportunity than educational quality. The "secret sauce" of higher education isn't the course work, or even the individual lecturers (although there is a certain minimum bar there) as evidenced by the growing trend to offer those for free. It is rather a case of brand recognition and access to a given network. The graduate of MIT has pull in pretty much anywhere of her choosing, the Georgia Tech grad faces friction as soon as she leaves the south east, the Clemson grad faces that same friction as soon as she leaves South Carolina (top tier private, top tier public, mid teir public for engineering), all other things being equal. Given the unequal distribution of employment across the nation it seems ridiculous that there are these huge paywalls in connecting qualified students to institutions best suited for them based solely on something as ephemeral as which state their parents are working when they turn 17.
You can't just send EVERYONE to Berkeley/SUNY/UW. "Prestigious" is inherently anti-universal-access. The only solution is to crush the power of these prestigious universities.
I think you're missing the point. The issue isn't that every student can't go to Berkeley, it's that identically qualified students students can be charged 500% more for the opportunity purely because of geography. I suspect this disparity might actually be weakening the "prestigious" nature of many schools given there is now a monetary incentive to accept unqualified students if they are out of state (or even out of country for even more fees).
It's a natural outcome of federalism. State A invests revenues heavily in a world renowned university. State B invests little in its postsecondary education. It is each states prerogative to decide how much to spend on education- federalism.
Naturally many State B residents will want to attend the world class university in State A. But they didn't pay a dime of taxes to support it. Hence, higher tuition rates for out of staters.
You see it as restricting access to education, but I see it more as reaping the the seed you sow. Each state chooses how much to spend on education, and lives with the results of their choices.
Except the people effected are not the people making the choices. No child today voted for a reduction in education budgets. Given how much the volatility of job market causes people to move many people don't have much of a choice when choosing which state to live. Disadvantaging people because their parents happen to work in South Carolina and members of their parents generation decided to cut funding is the exact opposite of "reaping what you sow". An out dated view for a system designed before instant access communication.
Children grow up in a world that was not created by them, but by their parents. News at 11.
Running education at the federal level is not going to suddenly lift education funding to a "10" in all states.
I am not doing a good job explaining this eloquently, but the point is federalism allows states to cut education budgets, or be lavish with them, without answering to other states. States that want to be lavish do not have the clout to force the entire country to be lavish. "Every state has top quality schools with extremely generous education spending" is not an option on the table, because the states that don't want to spend money on education have a vote, too.
I don't see that happening in our lifetime. What's more likely is an increase in the number of interstate agreements and consortia, where two or more states agree to charge each other's residents in state rates.
We also have vastly different levels of social mobility in different states. Since access to quality education for the poorest and social mobility should be correlated, we could have some idea of what education model is the best, and my guess is that it will not be the one in the US.
I have a different perspective. I'm in my mid-30s, and I'm considering going to college. Now, I can get very senior sysadmin/sre roles, and believe I could get a mid-level swe role (certainly could get a junior swe role)
Point being, I do okay; the Stanford budget of $65K/yr[1] would be super easy if I could work a half-time job/half-time school; or something of that nature, and comparing to getting accepted by Stanford[2], paying for it should be trivial. I've talked employers into letting me work part-time before.
I guess that what I'm saying is that for a nerd, the real cost here is not what you pay for college, it's the time off work. Now, maybe it is worth it and maybe it is not,[3] but even when I was 18 (in 1998) I was making close to $50K/yr.[4] Considering how everything has gone, I bet that was rather more than Stanford charged at the time.
I mean, sure, I see that it's a problem that people pay that much for a degree that doesn't convey a lot of privilege, but if my impression of how much privilege is implied by a degree from a top school is correct, two or three hundred grand for such a degree is downright cheap. We're talking like two Teslas, and as far as I can tell, it doesn't depreciate like a car does, unless the school falls in reputation later on.
I don't want to make light of the problems people who work in lower-paying fields have, and personally, I think it sounds absolutely crazy that you ask people who are all but children to decide if they want to take out loans without the fallback of bankruptcy, and I personally don't have a problem to some extent subsidizing people who want "education for education's sake" -people who want to get educated and then work in a poorly remunerated field, but I'm just saying that as far as I can tell, at least for us nerds, if a school can do what is says it can do[5] and you aren't capable of doing that by yourself, at today's prices, it's a hell of a deal.
[2]And qualifying for Stanford will take a lot of test prep, effort and luck on my part. Qualifying is not anywhere near a sure thing for me; and that's the first step. If I can't get into a top-20 type school... I'm probably not gonna bother. My impression is that the benefits drop off pretty sharply.
[3]My impression is that if I want to continue on as an individual contributor, a degree, even a Stanford degree isn't gonna get me all that much. I already can get pretty good individual contributor gigs. But, if I ever want to switch fields or advance into management, a degree from a top college would be extremely valuable.
[4]I haven't yet gone over all the tax details here; all numbers are pre-tax. I do have an accountant, though; if I manage to qualify, I will spend the money to learn what the tax status of educational expenses are in my case. Obviously, if you have to pay for college out of post-tax dollars, that makes a huge difference (and makes the "work half time/school half time" bit essential, because you earn less and pay less in taxes)
[5]The theory is that a school can take a normal person and teach them how to do my job. Maybe this is true, maybe it's not, but If you accept that as true, then even top schools are not expensive.
