The Times had an article the other day about the warped economics of higher education:
So early in 2000 the board [of Trustees of Ursinus College] voted to raise tuition and fees 17.6 percent, to $23,460 (and to include a laptop for every incoming student to help soften the blow). Then it waited to see what would happen.
Ursinus received nearly 200 more applications than the year before. Within four years the size of the freshman class had risen 35 percent, to 454 students. Applicants had apparently concluded that if the college cost more, it must be better.
"It's bizarre and it's embarrassing, but it's probably true," Dr. Strassburger said.
The Dead Dad, predicatbly, is not amused.
At the same time that the tuition was hiked, though, financial aid also had to be dramatically increased, as middle-class families can't actually afford to pay the exorbitant tuition at top private colleges these days. The cost of attending Union (including tuition, room, board, and various fees) is officially an eye-popping $44,043, but a large number of our students pay substantially less than that, thanks to financial aid packages of grants and subsidized loans. The amount of real money that the college receives from tuition is considerably less than $44K per student (I don't recall the exact figure, and it wouldn't be appropriate for me to disclose it).
And, of course, as the article notes, and the college proudly proclaims on the "costs" page, the tuition paid by the students only covers part of the cost of running the college (even without the financial aid discounting)-- Union claims 70%, while figures given for Swarthmore put it at 56%, and I've heard numbers as low as 40% bandied about by really wealthy schools. The difference is supplied by endowment income and alumni donations.
Why are institutions of higher education, which are propulated and operated by extremely smart people, run on such an insane financial system? Beats me, it just happened that way. How can this system possibly survive, given figures like these:
Average tuition at private, nonprofit four-year colleges -- the price leaders -- rose 81 percent from 1993 to 2004 , more than double the inflation rate, according to the College Board, while campus-based financial aid rose 135 percent,
which clearly show that several years down the road, we'll be paying students to attend college? I have no idea. The current trend would certainly appear to be unsustainable, but then, we've somehow managed to sustain it for something like fifteen years, as I remember the same sorts of hand-wringing conversations about runaway tuition increases back when I was in college.
To quote the theater owner in Shakespeare in Love, it's a mystery.
Comments
This is a point of contention within my family. My cousin, the red-state math teacher, and me, the ivory-tower-aimed lefty, got into a Christmas eve row over his assertion that higher education was a scam. Tuition keeps going up, he says, but students are not seeing any benefits. Obviously professors are pocketing the money. Look at private colleges, I said. They are for-profit and according to conservatives should be more efficient with their money, but tuition costs sometimes twice as much. Doesn't matter, he says, because they're working for profit, and if they can squeeze a few more dollars out of the unsuspecting, then more power to them.
It didn't end well.
So why is tuition so high?
Posted by: Stephen | December 14, 2006 10:09 AM
So why is tuition so high?
If I knew that, I'd be a rich man, not a lowly assistant professor.
It's a combination of things. Colleges are expensive to run in a lot of ways-- research in the sciences in particular is very cash-intensive. Students and parents constantly demand new facilities and programs, and there's a great deal of pressure to keep up with or beat comparable institutions in terms of the amenities offered. There are also huge increases in the cost of things like health insurance and liability insurance-- every year, we're told that health insurance costs are the fastest-growing item in the budget.
(If there's any industry that we ought to blow up and start over, it's the insurance industry, but that's a separate rant...)
Really, though, the whole thing is kind of a black art. I'm not sure even the people making the budgets have a really solid idea of just why higher education is so expensive-- it just is, and we do the best we can with it.
Posted by: Chad Orzel | December 14, 2006 11:35 AM
Stephen,
Most private colleges are not for-profit. Those that are generally aren't all that well respected. I'm sure there's still a conservative talking point in there somewhere about the private sector, though I would think that almost all private colleges get a fair amount of tax dollars through grants of various kinds, and students at those colleges get federal financial aid.
Posted by: KJ | December 14, 2006 12:52 PM
KJ,
Yes, that was but one of the topics we covered in what wound up being a 3 hour argument. He was utterly convinced that science professors patented their discoveries, paid for with public funds, and reaped the financial rewards personally. I can understand health insurance premiums increasing, what with the drunken frat boys jumping out of windows on the weekends (well, at my alma mater anyway). That and construction of brand new gyms and equipment, dorms, parking garages, and academic buildings. Damn kids.
Anyway, as of January my stipend will be covered by grants, so my cousin can no longer hold it over my head that his state taxes pay my salary.
Posted by: Stephen | December 14, 2006 1:30 PM
This recently came up in another blog I read. Greg Mankiw, an economist at Harvard (and a Republican, for those dealing with red staters) said tuition is going up because it college is labor cost dominated. As the GDP goes up, so does the cost of highly educated labor.
The other thing he points out is that college is incredibly cheap for students. The premium for a newly minted BA is, what, $10,000 a year? And the wage growth for people with college degrees is much faster than those without. College quickly pays for itself (on average). This does sweep under the rug the very different wages that, say, people in the sciences and engineering make as compared with humanities, the social sciences and the like.
Anyway, the blog post is here
Posted by: Brad Holden | December 14, 2006 2:35 PM
Philip Greenspun wrote an intesting bit a while back titled Tuition-free MIT.
Posted by: Ron Avitzur | December 14, 2006 6:39 PM
Chad,
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Best regards,
Kandace
Posted by: Kandace | December 15, 2006 2:55 PM