The headline says that “College freshmen are wealthier than ever, according to a study,” which casts it in the usual “rich get all the breaks, poor get shafted” class warfare rhetoric. But the real story is that college tuition rates are higher than ever, meaning only those with the personal resources to attend can do so.
This academic year’s entering class came from families with income 60 percent greater than the national median, as tuition increases shut out lower-income students, the Higher Education Research Institute at the University of California, Los Angeles, said in a report yesterday. The gap was 46 percent in 1971, according to the study of more than 8 million students compiled over 40 years.
So where’s the problem? The way the headline puts it, the wealthy are the problem because they’re too wealthy, when in reality it’s the colleges for raising their costs too high.
Of course, no one asks why costs have soared so much. What is driving the tuition faster than inflation?
For years going back to when I was just starting out, colleges have claimed that even while they were raising tuition and fees faster than the rate of inflation, they were also making financial aid and scholarships more available … which is not unlike furniture stores that have perpetual sales on their vastly overpriced wares.
But in this scenario, the wealthy are unaffected and even the poor get by on financial aid, but it’s the middle class who get the short end of the stick who are told they have too much money to qualify for enough aid, but in order to use it they’d have to sell their home, liquidate their retirement funds and live on tuna all so Junior can attend a mediocre state college or second-rank private institution.
More taxes on Joe Q. Public
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Actually, the current system, in which the list price for college education is set sky high, but everyone except the rich gets a discount (i.e., financial aid) based on family income, is that allows the colleges to practice almost perfect price discrimination. That is, the effective price is not set at a single level, based on the demand function of the market as a whole, but tailored for each student, and calculated with his individual demand function in mind. This is only possible because each student seeking financial aid opens up his family’s finances to the scrutiny of the college, which thus can guess pretty accurately, not just what the traffic will bear generally, but what this particular family will bear.
Car dealers (and other merchants who typically discount from a posted list price) also practice price discrimination, but they rarely are given detailed financial information on their customers that makes such discrimination so easy.
(See http://isteve.blogspot.com/2007/01/college-financial-aid-applications-as.html)
(And as for Billy Bulger, give him a break: his brother’s on the lam, and probably isn’t able to help out his family as much as he’d like.)
“You wasted $150,000 on an education you could have got for a buck fifty in late charges at the public library.”—Matt Damon in “Good Will Hunting”
Dom, I largely agree with what you’ve said, but I do think the second tier state institutions are quite reasonably priced – in Pennsylvania the tuition at these schools is around 8,000 a year. Even a very low middle class college aged student can earn much of the tuition through his/her own job, and the rest is usually provided for through financial aid, if parents are not able to contribute.
My nephew is going to attend Ohio State – a first tier state school – in the Fall. My brother tells me he will be paying less tuition for his son to attend and live on campus than he is currently paying for that son at the diocesan high school. I think Ohio’s state tuition is unusally low, or at least it’s cheap compared to Penn State (about 20,00 to attend and live on campus), but still, state schools aren’t out of the ordinary family’s reach just yet.
Eileen: I’m not sure how it is in Ohio and Pennsylvania, but the dirty secret in Massachusetts is that tuition is kept artificially low while mandatory fees can sometimes be more than the tuition itself as seen in this Salem News story:
Good post, Dom!
Two thoughts – First, as one of those middle-class kids I was effectively shut out of all financial aid until I conveniently turned 24 years old, even though my parents (who were older when they had me) had just retired before I entered college and could not afford what “they” said they could. I ended up transferring between three different colleges and two cities as I job-shifted over five years, finally ending up (at last!) at my first-choice university to complete my “real” classes for my chosen degree.
It drives me insane how completely illogical the current US university system is – the state and colleges not only have the power to find out every financial detail (just like the Borg – you must comply) but they have an absolute monopoly on your cost for attending. Every single person pays a different amount, no matter how “fair” they say they are. It’s NEVER fair. Sports players get random full rides, while committed and high achieving students get varying partials – perhaps because the schools know that these kids generally are the ones who really want to be there to learn and will tolerate not getting as much aid as they wanted, unlike the sports kids. The scholarly kids, who give the school it’s academic rating, are thus used and abused. And then we’re the ones paying the loan bills forever working in scholarly jobs that pay crap.
Secondly, after studying in Rome for a year at the Angelicum, I’ve realized how stupid our system of higher education really is. In Rome, you can study at the Angelicum and pay a tuition of like 10% of the average public university’s tuition here. I’m convinced that a huge reason for this (aside from the fact that the Angelicum has a lot of religious order professors that don’t need lay salaries) is that the Angelicum and indeed most European universities exist SOLELY for academics. The public university system in Italy is very similar from what I understand. These European schools know why they exist and they don’t waste time trying to appeal to those who don’t really want them for what they are – a school. They do not waste money on making “university kingdoms” like our schools do, there are no college sports teams, there are no fancy dorms (or much student housing at all – you’re free to find the best deal on your own, which is both challenging and freeing). These are schools not “youth camps” that extend childhood a little longer for mommy and daddy. Yes, there is unfairness here too (notably the typical Italian “it’s not what you know it’s who you know” reality that lies continually under the surface) but it’s at least a more consistent unfairness—and not solely based on money. If you figure out who you need to know to get somewhere and make the effort to get to know them, well, there you go.
And if you don’t know them, then you can still get somewhere based solely on your academic performance – and you won’t be penalized for being academic instead of a sports star.
It made me sick to realize that I was paying close to $30,000 for a year in Rome through my US college’s program sitting next to regular Angelicum students from America who were living in Rome for a total cost (TOTAL) of like $12,000 a year. Even if you couldn’t work at all during your time in Italy and had to take out loans for everything, you’d STILL come out way ahead in the end I think. Ridiculous.
Therefore – there is no question in my mind that if I do go on to grad school I will be doing it in Europe, not the US, and probably back at the Angelicum (this time as a regular studentessa!). And, should I have any children, I will also be encouraging them to look into study abroad literally, not just the “experience” programs that our US universities offer.
In Canada, while every university is theoretically a private institution, all but a few tiny ones are so heavily dependent on public funding that provincial governments treat them effectively as departments of government. No university can or would even dream of risking the wrath of government.
Dependent since the 1960s on massive government subsidies (and tuition freezes), Canadian university tuition is vastly underpriced—large numbers of American students come to Toronto, Queen’s, McGill, etc. where even paying international student fees leaves their families with far more money in pocket than if they had sent their children to comparable American schools. Even more dramatically underpriced are Canadian law schools, medical schools, dental schools, etc.
In the name of “accessibility” the higher income groups, who have a whole portfolio of educational advantages, share in the heavily subsidized tuition fees, which still are sufficiently high to be a burden to really disadvantaged students. Not long ago I was walking along a group of students who were returning from the Legislature with their tuition protest signs discussing the merits of taking reading break in Cuba or the Dominican Republic. At the same time, university endowments are minuscule in comparison to those of American universities, alumni giving is far lower, and scholarship support, while growing, is limited and seldom related to genuine need.
While I appreciate the “price point” argument, there is much to be said for policy, adopted at many American universities, of “need-blind admissions and merit-blind financial aid”. In my own case, it enabled me to attend what was in its day a superior American liberal arts college with only a slightly greater burden on my family than they bore to send my brother to a local public institution.
Two points. First, while our primary education is inadequate, our higher education is outstanding (and actually is a large “export” with foreigners coming to the US for school). This costs money, and we should continue to maintain the quality (though perhaps reign in the ideological indoctrination).
Second, our society has a responsibility to all citizens that if they are intellectually able and of firm will, they should be able to maximize their God given gifts. To have a system that does not allow this would be of detriment to society and the individual.
That is why I am solidly for guarantees for student loans and grants for the neediest.
I don’t think anyone’s opposed to quality higher education. But perhaps we need to ask if high tuition=quality education. What are they spending all that money on? Is it worth it? Does it result in a better education?
Also, do guaranteed student loans and gov’t grants only result in tuition rising the maximums?
As we so often see whenever the gov’t is spending, the cost goes up mysteriously. If a student couldn’t get $20,000 in guaranteed loans and grants would tuition still be $20,000? This is a denial of the law of supply and demand.
Finally, maximization of God’s gifts does not necessarily equal a college diploma. In fact, what’s happened since World War II is that the value of a college diploma has been steadily defined down until now you need a bachelor’s degree to do the equivalent of a job that was dine by a fellow who apprenticed for a couple years before WWII.
Rich Galen actually has a pretty good explanation of this phenomenon today.
The government has reduced higher education support levels and tuition has actually increased.
Universities must increase pay to at least pretend to compete with what the hired talent can get in the marketplace outside of education (supply and demand). As someone who opted for the marketplace instead of becoming a professor, I know that schools have a tough time competing.
In the long run, if government support went away, there would be fewer schools and/or with fewer students and/or with lower quality. It is not clear whether tuition would be higher or lower given changes to both the supply and demand curves. I suspect that it would be near current levels (schools would still have to compete in the marketplace for talent).
Reducing education support also hurts society. Educated members of society, especially in an information oriented economy, contribute more to GDP. In other words, providing loans is a good societal investment. Given that most support is loan guarantees, the ROI would be huge, even with only marginal benefits.
Finally, if the ability and will are there for an education, not fostering that education in the name of supply and demand is akin to hanging a sign “poor and middle class need not apply.”
WAAAAYYYYY beyond inflation.
In 1967, a semester’s tuition at Marquette U was $625 (Liberal Arts.) The Labor Department’s inflation calculator puts that at $3,800. and change today.
But MU’s tuition is $15K/year or more, same program.
Similarly, a semester’s tuition at UW-Milwaukee in 1967 was $125.00—adjusted for inflation it should be $761.00 today. But the actual is over $2,000.00
The inflation follows the utterly ridiculous claim (largely by Fortune 500 firms) that “a degree is required” for all meaningful jobs.
Balderdash. With the obvious exceptions, (engineering and a couple of others) a reasonably-well-educated high school grad can do all that’s necessary.
I have actually done some hiring of professionals (not engineers, marketing and research professionals). No way a high school grad can get into one of the high paying jobs. If one does, it is the extreme exception and after years and years of extra climbing. Sorry to say, that is the way it is today.
Now, one can make good money as a plumber carpenter or similar trade. And I am pretty sure these do not need a degree. But good paying jobs in business? It is a prerequisite. In fact, an MBA is preferred.
Education is the great dividing line in America. Denying access to it limits upward mobility for all but the most resourceful.
Yes, a college education is a prerequisite, but is it necessary. In other words does college impart any knowledge for most business jobs that the average high school graduate of, say, 1950 wouldn’t have had?
I’ve known plenty of business administration and MBA college grads who couldn’t write or think their way out of a bag. That’s why so many Fortune 500 companies have to run special new employee training programs teaching them how to write, how to make presentations, how to work with others and so on.
So people doing the hiring may want college degrees, but in order to do the work of most office jobs they certainly aren’t necessary.
A university attracts funds from three sources: grants driven by research activity, tuition – partly covered by financial aid, and state legislatures on a per capita basis.
So why is tuition exploding while universities invest in extravagant facilities, why are adjuncts exploited and good teaching, neglected? why do we see grade inflation and declining standards everywhere?
Teaching doesn’t matter, research matters – unless you are an adjunct and then you had better keep your students happy. State legislatures pay per capita, except they create strong incentives for universities to retain students who have no aptitude, interest or motivation for higher education.
Students and their parents are looking for a certain kind of life experience. No one really knows what higher education is and what purpose it serves – except possibly to make yourself employable. The financial aid system makes many students indifferent to tuition costs since what they pay is based on need. So universities compete for students by building palatial student unions and extravagant Recreation Centers.
The system works this way because that is what taxpayers, parents, students and university administrators want. If you don’t think so propose a few obvious changes and see how much support you will find.