OT - The real reason college tuition costs so much
Contrary to what we are often told, it's not really due to state funding but rather skyrocketing administrative costs, among other things.
NYT article by Paul Campos, a U-M alumnus.
http://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-colleg…
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Yeah, I have to agree. If my boss offered me more money, I wouldn't turn it down because of some undefined sense of "excess".
Al Kaline would.
/RightFieldHero
Well shouldn't their bosses deny them those raises then? I agree in principle but if some mid level adminstrator asks for and gets a raise or gets a higher paid position elsewhere its not really his or her fault.
This issue is that due to the massive expansion in student loans, the "market" demand has become far more inelastic. The resistance to cost increases from the consumer has been muted.
I would never suggest that someone take less money than they are being offered. The problem is that economic forces are being warped by availability of student loans. And the very programs constructed with the belief of making college more affordable are having the exact opposite effect.
This is a compelling argument with a lot of intuitive appeal. It sounds right to me, and this had not occurred to me before. (I believe in a parallel cause which is the wrong-headed notion that every kid in the US "deserves" to go to college, when in fact many of them gain little to nothing by attending - except a buttload of debt. But try to tell that to someone who is sincerely chasing their life-ambition at DeVry, etc.)
Do you have any studies or data to support your theory, mjv? Again, it sounds valid to me, but it would be great to see analysis to support the hypothesis.
If they are not the market will quickly be explained.
Good one.
Assuming they're accurate, he's got some solid figures to back up his conclusion, but student loans are a glaring omission only mentioned in juxtaposition with baby boomers paying out of pocket.
No decrease in demand despite higher prices will push prices even higher, which means there's zero incentive for rolling back any of these new costs. Any real solution has to take the changes made in loans as well as administration (and state funding and shiny new things on campus, and everything else) into account.
Well the devaluing of trade schools in this country certainly doesn't help.
Useless degrees for potential blue collar business owners?
Degree sounds better I guess.
positions in the trades. My buddy took over his father's plumbing business and he has to turn jobs down left and right. I ram in to this problem the other day, a friend asked me if I knew a good electrician, and I realized that I don't. I don't know a good roofer either.
I took welding for 2 years in high school, and I know if I practiced for a month or two I could get the hang of it back again. I know for a fact I could be making more money as a welder than I am right now, but potential earnings in my current industry with my degree are much higher down the road.
The way out will be painful and extremely unpopular because the opponents will paint it as being anti-opportunity. The easiest way would be to simply take away the guarantee of repayment and allow student loan debt to be wiped out with bankruptcy. Lenders will become more selective and probably raise rates and fewer people will go to college.
Trying to walk the tightrope between politics and political process, but it's not even as simple as your comment because the loans are administered through the DOE and serviced by banks with lobbying interests as well. A lot of the student aid program is actually done by statute, which means changing anything like interest rates will require rolling back existing programs and prior legislation, which is extremely tough to get done.
I'd be breaking the no politics rule to say much about what I think should be done, but I think most can agree that we've gotten ourselves into a shitty situation.
would be a good start.
I often wish more people in charge of things had played SimCity to understand the consequences of making poor decisions.
x1000
Everyone who runs for government (or in charge of anything involving money really) should be required to prove they can manage a city in SimCity for an extended period of time without it burning to the ground or going bankrupt. If they can't pull that off, they don't go on the ballot. :)
Your point on bank lobbying is spot on. There is ZERO chance that the Too Big Too Fail cabal will allow themselves to be exposed to the risk of default from students declaring bankruptcy. And if it somehow did come to pass, recent history has demonstrated that the losses would be passed along to the tax payers.
by the inability to pay the student loans due to poor job prospects caused by worthless majors-the barista with an art history major.
Cheap easy money is why tuition continues to rise unabated. So long as the pockets are deep and lush with cash and there's no incentive for institutions to compete for dollars which aren't scarce, they'll continue to raise tutiion and spend the windfall on such niceites as administration costs.
I attended college in the 1970's(Walmart Wolverine). The buildings, dorms, athletic areas were clean, but nothing fancy. The dorm food was lower cost, but filling.
When I looked at colleges with my 3 kids I was amazed at the sparkling modern dorms and other fancy buildings. The variety of food choices was also amazing. I am glad the younger generation had first class colleges, but this all comes with a price. Lower student debt with be worth going back to old school college basics.
Besides the student loan issue, I'm disappointed the article didn't mention the proliferation of shiny palaces on campuses. Dorms, dining halls, classrooms - every building is starting to be gold-plated. The author provided one figure to back up his claim: a four-fold rise in the number of administrators. Well, tuition has gone up much more than four-fold. Probably the only expense that has kept pace with the tuition hikes is capital and building expenditures. There's the culprit.
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More or less only the wealthy attend high end colleges (like U-M) because it takes lots of money to GROOM a kid that can get into these colleges. "Punishing" these rich kids with goulash and humid dorms seems silly. The kids at U-M in '15 run circles around the kids that were there in '85. Further, cut the comfort and the sharpest kids have the options to funnel to schools that offer the comfort they're used to.
Well, glad to know it's only the poor and middle class who comprise "Entitlement Nation", then.
His math is terrible. He just glosses over the fact that per student spending has drastically decreased over the years and just posts the fact that overall spending has increased (due to being there are more students!).
This is really a very very bad analysis. I am embarassed that a UM alum wrote it.
he doesn't gloss over the per-student part, he just makes no mention of 'drastically'.
http://www.slate.com/blogs/moneybox/2015/04/06/why_is_college_so_expens…
25% to 30% decrease is pretty drastic.
What is really awful is that he uses overall numbers for state aid, but uses per student numbers for costs. He is comparing apples to oranges.
Apples to apples comparison would have been bad enough, but he is using intellectually dishonest slight of hand here and that is embarassing.
And anyway, costs per student have gone up a hell of a lot more than 30%, so to blame it mostly on state funding decreases is still pretty wrong
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A 25-30% decrease is important, to be sure. Campos may be downplaying that a bit too much. But tuition at U-M (and most other schools) has increased by around 100% over the last 15 years.
The column reports that there was a 60% increase in administrative positions (not costs, but positions) from 1993-2009, which is staggering. The article you linked in your post acknowledges that this is an issue. Are all these new positions necessary? Yeah, there's been the growth of IT, but still, I can't imagine how there can be such a need for that many more administrative employees.
-Captain Obvious
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Campos says per-student funding is "somewhat lower" than it was in 1990. Do you have the precise figures?
In any event, he notes that even as per-student funding was increasing, from the '60s to the '90s, tuition was also increasing dramatically. There clearly are factors that go beyond levels of state aid. Tuition is skyrocketing everywhere, at public schools in every state and also at private schools.
Now they are driven by money.
IMO, all of this focus on the cost side ignores the elephant in the room. A college degree has demonstrable economic value to the graduating student. Altruistic universities which once left a lot of that value on the table in a different era now extract close to its full value. Of course, costs will follow; note the Taj Mahal academic facilities of today versus the functional facilities of yesteryear.
We ain't goin' back to the days of lower money influence, either in major college sports or in university budgeting. In this regard, we geezers had it better than the kids today. Going to college was a slam dunk financial decision for just about everyone back in my day. Now, the marginal student might be well advised to look at alternative paths.
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Let me just point out, the "cheap loans" are not always that cheap.
For example, some of my loans are 7.9%... and I'm in a profession that is generally expected to perform well over the long term.
My problem with the education system is that there is demonstrated need for dentists, doctors, physical therapists, etc per peer reviewed research from the ADA, AMA, etc, yet they are charging insane rates to educate these people. The alternative is to import people from foreign trained schools with unknown qualifications... having interacted with these people has given me the opinion that it's a crap shot.
There should be some incentive to go into professions that are in demand or demonstrated to be in demand in the future, instead of giving every history/english/social science person every loan they ask for.
It's certainly an interesting discussion. What is missing is the qualifications said University Administrators today vs. what they used to be. I don't know how it was in the 1960's, but today college administrators tend to be highly educated individuals themselves -- ones with plenty of degrees to hang on the wall and ones who may have even been faculty members at one point. There's this whole recruiting thing that goes on now, trying to get the best names in the department to rank higher compared to the other schools. In tern, getting the better kids to come and spend their money here so the University can brag about their successes after graduation. I think you'd be hard pressed to find simple undergraduate degree holding individuals in Administration positions at UM. And when people get doctorate degrees in things, there's an expectation, especially in academics, that they get paid for well.
Somehow I still don't believe that even high adminstration costs adds up to OOS students paying $40,000 a semester. I mean, think about that. There's like 40,000 UM students and about half or more are OOS students. Even if your average adminstrator makes $120,000 a year, that's only 3 out of state students to pay for that. It just doesn't seem like it's a large enough number to really impact tuition rates as much as it has.