Tag Archives: Tuition

Why are college tuition and college textbooks so expensive?

As subsidies increase, so do tuition costs
As subsidies increase, so do tuition costs

This article from Investors Business Daily is very helpful.

It says:

Grey Gordon and Aaron Hedlund, economists at Indiana University and the University of Missouri, developed a method to test various explanations for the share rise in tuition costs. Is it state funding cuts? Or the increased wage premium for a college degree? Or is it related to general cost increases in the services industries?

Not exactly. In a working paper published by the National Bureau of Economic Research the economists report that these factors contributed insignificantly to the rapid rise in tuition between 1987 and 2010.

What did account for almost all of it was, ironically enough, the massive explosion in federal aid over the past several decades. Federal aid — in the form of subsidized loans, grants and tax credits — shot up 134% in the past 15 years, according to the College Board. It’s climbed 22% just under President Obama.

Combined with state aid, the government is pouring more than $239 billion a year into programs designed to make college less expensive.

What the authors found is that all this aid money has simply let college administrators spend more and jack up tuition to pay for it, without hurting enrollment. The result is there to see for anyone who visits a college campus these days — gourmet kitchens, luxurious dorms, shiny new administrative buildings, beautiful landscapes, state of the art workout facilities, etc.

[…]Not only does the increased federal aid lead to higher tuition, the authors found, but it perversely leads to “more debt, and in the absence of higher labor market returns, more loan default inevitably occurs.”

This hypothesis – that it is government subsidies that drive up tuition rates – is supported in the radically leftist New York Times, of all places.

This is by Paul F. Campos, law professor at the radically leftist UC Boulder, explains that government handouts is causing the rise in college tuition:

[…][T]he astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.

[…]As the baby boomers reached college age, state appropriations to higher education skyrocketed, increasing more than fourfold in today’s dollars, from $11.1 billion in 1960 to $48.2 billion in 1975. By 1980, state funding for higher education had increased a mind-boggling 390 percent in real terms over the previous 20 years. This tsunami of public money did not reduce tuition: quite the contrary.

But where is the money going? Is it mostly going to research? To the classroom? To hire more and better professors?

No:

Interestingly, increased spending has not been going into the pockets of the typical professor. Salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.

By contrast, a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.

Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.

Do you wonder why college is so liberal? It’s because instead of hiring professors to teach you how to do useful work for money, they are hiring useless administrators who just enforce politically correct secular leftism onto the students.

The cost of college text books is skyrocketing
The cost of college text books is skyrocketing

College textbook prices are also going way up because of government subsidies.

One way the textbook market is insulated from competition and market forces is that the professor, not the student, makes the decision on the textbook for a course, and it’s probably the case that many professors are unaware of the retail cost of the books they assign for their students. And once the professor decides on a textbook, there are no substitutes for the new edition of the book assigned. If a professor assigns Mankiw’s Principles of Economics textbook, students can’t substitute McConnell’sPrinciples of Economics textbook.

Another reason for skyrocketing textbook prices could be that they are being fueled by easy and cheap credit in the form of student loan debt, which now exceeds $1.36 trillion and has doubled in less than eight years, and tripled in the last decade! Students borrow money not just for college tuition and fees, but also to finance the purchase of textbooks that now routinely cost more than $300, and sometimes approach $400.

What should young people considering college do? If you’re going to college or trade school, go to a low-cost school. Do a STEM degree (e.g. petroleum engineering) or learn to do a trade that pays well (e.g. – electrician). Try to get tuition assistance even if it means going to a less prestigious school. And work at every opportunity you get in the most serious job you can find. Don’t spend your money – save it. Especially don’t spend your money on fun, vacations and alcohol. As soon as you grow up, you’re going to wish you could have it all back.

Why is college so expensive?

As subsidies increase, so do tuition costs
As subsidies increase, so do tuition costs

This article from Investors Business Daily is very helpful.

It says:

Bernie Sanders, Hillary Clinton and the rest of the Democratic leadership are constantly complaining that college education costs too much. What they never bother to explain, however, is why.

Two economists set out to do so, and Bernie and company will not like what they found.

Grey Gordon and Aaron Hedlund, economists at Indiana University and the University of Missouri, developed a method to test various explanations for the share rise in tuition costs. Is it state funding cuts? Or the increased wage premium for a college degree? Or is it related to general cost increases in the services industries?

Not exactly. In a working paper published by the National Bureau of Economic Research the economists report that these factors contributed insignificantly to the rapid rise in tuition between 1987 and 2010.

What did account for almost all of it was, ironically enough, the massive explosion in federal aid over the past several decades. Federal aid — in the form of subsidized loans, grants and tax credits — shot up 134% in the past 15 years, according to the College Board. It’s climbed 22% just under President Obama.

Combined with state aid, the government is pouring more than $239 billion a year into programs designed to make college less expensive.

What the authors found is that all this aid money has simply let college administrators spend more and jack up tuition to pay for it, without hurting enrollment. The result is there to see for anyone who visits a college campus these days — gourmet kitchens, luxurious dorms, shiny new administrative buildings, beautiful landscapes, state of the art workout facilities, etc.

The authors call this the “Bennett hypothesis,” after former Education Secretary William Bennett, who wrote in 1987 that “increases in financial aid in recent years have enabled college and universities blithely to raise their tuitions.”

Not only does the increased federal aid lead to higher tuition, the authors found, but it perversely leads to “more debt, and in the absence of higher labor market returns, more loan default inevitably occurs.”

In other words, the Democrats’ plan to provide still greater amounts of federal aid will only make matters worse.

Basically, college administrators know that people are willing to pay X to go to university.

This hypothesis – that it is government subsidies that drive up tuition rates – is supported in the radically leftist New York Times, of all places.

This is by Paul F. Campos, law professor at the radically leftist UC Boulder.

He writes:

[…][T]he astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.

[…]As the baby boomers reached college age, state appropriations to higher education skyrocketed, increasing more than fourfold in today’s dollars, from $11.1 billion in 1960 to $48.2 billion in 1975. By 1980, state funding for higher education had increased a mind-boggling 390 percent in real terms over the previous 20 years. This tsunami of public money did not reduce tuition: quite the contrary.

The more money that is attached to students, the more money universities charge – simple.

But where is the money going? Is it mostly going to research? To the classroom? To hire more and better professors?

No:

Interestingly, increased spending has not been going into the pockets of the typical professor. Salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.

By contrast, a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.

Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.

Do you wonder why college is so liberal? It’s because instead of hiring professors to teach you how to do useful work for money, they are hiring useless administrators who just enforce politically correct secular leftism onto the students.

UPDATE: My friend Drew posted this in the comments:

What should young people considering college do? If you’re going to college or trade school, go to a low-cost school. Do a STEM degree or do a trade that pays well. Try to get tuition assistance even if it means going to a less prestigious school. And work at every opportunity you get in the most serious job you can find. Don’t spend your money – save it. Especially don’t spend your money on fun, vacations and alcohol. As soon as you grow up, you’re going to wish you could have it all back.

Ideas for higher education reform from a disillusioned professor

We need to reform higher education
We need to reform higher education

A friend of mine who is a full professor sent me this article from the radically leftist site Vox. I was so surprised to find that I agreed with the author – a university professor  – pretty much across the board. See what you think of some of his points about how higher education needs to be reformed, and then I’ll comment at the end.

He complains about the university bureacracy and the office politics, then says this:

I realized not even students were too invested. When my best friend visited my campus to give a talk, he observed one of my lectures. I’ve got many shortcomings as an academic, but lecturing isn’t one of them. I’ve been on TV, radio, podcasts — you name it. By professor standards, which admittedly aren’t that high, I could rock the mic. But while my friend sat there, semi-engrossed in the lecture, he found himself increasingly distracted by the student in front of him.  That student, who like all in-state students was paying $50 per lecture to hear me talk, was watching season one of Breaking Bad. In a class with no attendance grade, where the lectures were at least halfway decent, he was watching Breaking Bad.

Later during that same visit, my friend asked me, in total sincerity, “Why aren’t you doing something meaningful with your life?”

“This is important,” I insisted. But there was no passion behind my words. I was a priest who had lost his faith, performing the sacraments without any sense of their importance.

So why are there so many students who have no interest in university who nevertheless attend in order to get the credential? After all, university is very expensive.

Here is his explanation:

As recently as a year ago, I remained willing to work inside that fractured system of pay-to-play higher education. If students wanted to take out federal loans to buy degrees, who was I to stop them? Let the chips fall where they may; graduate them all and let the invisible hand sort them out.

But that system is unsustainable. Liberal arts programs, and the humanities in particular, have become a place to warehouse students seeking generic bachelor’s degrees not out of any particular interest in the field, but in order to receive raises at work or improve their position in a crowded job market.

Once upon a time, in a postwar America starved for middle managers who could file TPS reports, relying on the BA as an assurance of quality, proof of the ability to follow orders and complete tasks, made perfect sense. But in today’s world of service workers and coders and freelancers struggling to brand themselves, wasting four years sitting in classes like mine makes no economic sense for the country or for the students — particularly when they’re borrowing money to do so.

See, this is not going to make any sense to my readers who have STEM degrees or vocational training. When STEM or vocational training students are in class, we learn, because we expect to have to do the job shortly after. We were not preparing for easy “talking” jobs, we were preparing for “doing” jobs. We were there to learn how to do something for money, not to have fun. We were there to learn how to produce value for customers, not to be indoctrinated by liberal professors holding red marking pens. Many liberal arts students are not there to learn to do a job, they are there to get a credential. In fact, many of the graduates of liberal arts programs these days have to be retrained by their employers.

The author of the Vox article has a solution:

Our federally backed approach to subsidizing higher education through low-interest loans has created perverse incentives with disastrous consequences. This system must be reformed.

When I started out, I believed that government regulation could solve every problem with relatively simple intervention. But after four years of wading though this morass, I’m convinced these solutions should be reevaluated constantly. If they’re not achieving their objectives, or if they’re producing too much waste in the process, they ought to be scrapped. We can start with federal funding for higher education.

The quickest and most painful solution to the crisis would involve greatly reducing the amount of money that students can borrow to attend college. Such reductions could be phased in over a span of years to alleviate their harshness, but the goal would remain the same: to force underperforming private and public universities out of business. For-profit universities — notorious for their lack of anything resembling good academic intention — should be barred altogether from accessing these programs; let them charge only what consumers in a genuinely free market can afford to pay for their questionable services.

Without the carrot of easy access to student loans, enrollments would shrink. Universities would be forced to compete on a cost-per-student basis, and those students still paying to attend college would likely focus their studies on subjects with an immediate return on investment. Lower tuition costs, perhaps dramatically lower at some institutions, would still enable impoverished students eligible for Pell Grant assistance to attend college.  Vocational education programs, which would likely expand in the wake of such a massive adjustment, would offer inexpensive skills training for others. The liberal arts wouldn’t necessarily die out — they’d remain on the Ivy League prix-fixe menu, to be sure, and curious minds of all sorts would continue to seek them out — but they’d no longer serve as a final destination for unenthusiastic credential seekers.

I agree with this idea, in fact I blogged about it before. This is the right solution to the problem. The problem of higher education costing too much will be solved when we stop attaching taxpayer money to students and urging them to attend university. If they want to get a job, then they should be trained to do a job. Only the students who are really interested in liberal arts should be there, and they should have to weigh the costs against the benefits. Maybe we should be taking the student loan decisions out of the hands of the government, and back in the hands of bankers who actually expect the money to be paid back. Or maybe we should give a tax credit to private sector businesses who agree to stake a student through his education, in exchange for working for them for some period after graduation. Anything is better than the mess we have now.

Why is college so expensive? Why does university tuition cost so much?

The correct answer appeared in the radically leftist New York Times, of all places.

This is by Paul F. Campos, law professor at the radically leftist UC Boulder.

He writes:

[P]ublic investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s. Such spending has increased at a much faster rate than government spending in general. For example, the military’s budget is about 1.8 times higher today than it was in 1960, while legislative appropriations to higher education are more than 10 times higher.

In other words, far from being caused by funding cuts, the astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.

Some of this increased spending in education has been driven by a sharp rise in the percentage of Americans who go to college. While the college-age population has not increased since the tail end of the baby boom, the percentage of the population enrolled in college has risen significantly, especially in the last 20 years. Enrollment in undergraduate, graduate and professional programs has increased by almost 50 percent since 1995. As a consequence, while state legislative appropriations for higher education have risen much faster than inflation, total state appropriations per student are somewhat lower than they were at their peak in 1990. (Appropriations per student are much higher now than they were in the 1960s and 1970s, when tuition was a small fraction of what it is today.)

As the baby boomers reached college age, state appropriations to higher education skyrocketed, increasing more than fourfold in today’s dollars, from $11.1 billion in 1960 to $48.2 billion in 1975. By 1980, state funding for higher education had increased a mind-boggling 390 percent in real terms over the previous 20 years. This tsunami of public money did not reduce tuition: quite the contrary.

[…]State appropriations reached a record inflation-adjusted high of $86.6 billion in 2009. They declined as a consequence of the Great Recession, but have since risen to $81 billion. And these totals do not include the enormous expansion of the federal Pell Grant program, which has grown, in today’s dollars, to $34.3 billion per year from $10.3 billion in 2000.

The more money that is attached to students, the more money universities charge – simple.

But where is the money going? Is it mostly going to research? To the classroom? To hire more and better professors?

No:

Interestingly, increased spending has not been going into the pockets of the typical professor. Salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.

By contrast, a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.

Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.

If you’re going to college or trade school, go to a low-cost school. Do a STEM degree or do a trade that pays well. Try to get tuition assistance even if it means going to a less prestigious school. And work at every opportunity you get in the most serious job you can find. Don’t spend your money – save it. Especially don’t spend your money on fun, vacations and alcohol. As soon as you grow up, you’re going to wish you could have it all back.

College of the Ozarks offers students tuition-free degrees – if they work part-time

This article from the Wall Street Journal has been the #1 editorial for much of the last four days.

Excerpt:

Looking for the biggest bargain in higher education? I think I found it in this rural Missouri town, 40 miles south of Springfield, nestled in the foothills of the Ozark Mountains. The school is College of the Ozarks, and it operates on an education model that could overturn the perverse method of financing college education that is turning this generation of young adults into a permanent debtor class.

At this college the tuition is nowhere near the $150,000 to $200,000 for a four-year degree that the elite top-tier universities are charging. At College of the Ozarks, tuition is free. That’s right. The school’s nearly 1,400 students don’t pay a dime in tuition during their time there.

So what’s the catch? All the college’s students—without exception—pay for their education by working 15 hours a week on campus. The jobs are plentiful because this school—just a few miles from Branson, a popular tourist destination—operates its own mill, a power plant, fire station, four-star restaurant and lodge, museum and dairy farm.

Some students from low-income homes also spend 12 weeks of summer on campus working to cover their room and board. Part of the students’ grade point average is determined by how they do on the job and those who shirk their work duties are tossed out. The jobs range from campus security to cooking and cleaning hotel rooms, tending the hundreds of cattle, building new dorms and buildings, to operating the power plant.

[…]”We don’t do debt here,” [School President Jerry C.] Davis says. “The kids graduate debt free and the school is debt free too.” Operating expenses are paid out of a $400 million endowment. Seeing the success of College of the Ozarks, one wonders why presidents of schools with far bigger endowments don’t use them to make their colleges more affordable. This is one of the great derelictions of duty of college trustees as they allow universities to become massive storehouses of wealth as tuitions rise year after year.

In an era when patriotism on progressive college campuses is uncool or even denigrated as endorsing American imperialism, College of the Ozarks actually offers what it calls a “patriotic education.” “There’s value in teaching kids about the sacrifices previous generations have made,” Mr. Davis says. “Kids should know there are things worth fighting for.”

He says a dozen or so students will be taking a pilgrimage to Normandy in June to commemorate the 70-year anniversary of D-Day and the former College of the Ozarks students buried there. Amazingly, four of the school’s graduates served as generals in the U.S. military during the Vietnam War.

[…]Nearly 90% of graduates land jobs—an impressive figure, given the economy’s slow-motion recovery.

“If I were an employer, I’d take our graduates over those at most any other schools,” says Mr. Davis. “The kids at these East Coast colleges strike me as being a little spoiled. Our graduates don’t expect to come into the company as the CEO.” But they certainly join a company knowing the value of work.

I am always encouraging young people to steer themselves to STEM degrees, and away from debt. If you did a STEM degree at College of the Ozarks, then you would really have a leg up on life. It’s not a good time now to follow your heart and do what you like. Now is the time to dig in and do what you have to do to pay your own way later on. It’s going to get a lot harder to have even the same standard of living as what your parents had.