Why does College Tuition out-pace inflation ?

Great Debates
42

Wow; that 27% seems high, no?

[total hijack] This reminded me of something I’ve not thought about for decades. U.C. Berkeley’s School of Optometry/Ophthalmology(Note 1) offered a low-cost examination by a student. I availed myself of this twice: once in the mid 1970’s, again in the mid 1980’s.(Note 2) The difference between the two visits was huge.

On the first visit the student examined my retinae with great care, calling in her Professor to check out some anomaly she didn’t like(Note 3). The second visit had completely different procedure and tone — it was all about encouraging me to buy expensive frames; I don’t think they did a retinal exam at all.

Note 1: When I Google “uc berkeley school of ophthalmology” all the hits are “Optometry.” Now I’m wondering if UCB once had an ophthalmology school but my two visits were to two completely different schools (though IIRC they were to same building). Unfortunately it is often difficult to Google the past.

Note 2: These dates are VERY rough. They might be (early 80’s, late 80’s) or something else entirely.

Note 3: I assume the anomaly had nothing to do with my map-dot-fingerprint dystrophy that came to ophthalmological attention 25 years later.
Warning to incessant computer users: Don’t forget to blink frequently!

43

You don’t think that both private and public universities have gone over the top with administration positions and salaries, new dorms/housing, new HUB/student buildings, etc.? The spending has increased dramatically, though to be fair, parents have obviously coughed up the dough for the first-class lifestyle their kids are living at college.

Puddlegum’s post indicates that state governments have continued to finance public universities at a rate that has increased commensurate with inflation. But the overall cost has skyrocketed much more than general inflation.

44

When I started college in 1954, the tuition at private Ivy League Penn was $700 and it went up $100/yr while I was there, so in 1957-58 it hit $1000. Penn State was about half that in 1954, but I never tracked its further trajectory. Temple was about $500 and it was not yet state-related.

Penn didn’t even have a president until around 1930. They had a board of trustees, but the highest office was provost, essentially the dean of deans. By the 50s, they had a president and some administrators, but not many. The dorms were spartan, to say the least, not that I stayed in dorms, but I had friends that did. The food service was, in a word, dreadful. Needless to say there were no climbing walls or any other frills. A new instructor might make $5000, but even a full professor probably didn’t go over maybe $12-15,000 (I am guessing, but I know what I was paid as an associate prof with tenure at U IL (a state school) ten years later. Then I came to McGill in 1968. I was paid CAD13,000. Four years later I made full prof at $17,000. The administrative staff consisted of a principal (= president), five vice-principals, one of whom wore a second hat as dean of graduate studies. Plus deans of the various faculties and schools. Arts and Sciences were one faculty; they soon split in two each with its own dean. Each vice-principal and each dean had his own staff, usually an office with a couple secretaries. And while the principal was well-paid, probably in the vicinity of $200,000 and the VPs in the neighborhood of 150,000, deans received only a small supplement over profs (7,000 in 1960).

Now there are 9 VPs, maybe another 9 associate VPs. all with gigantic salaries and big staffs. The principal “earns” (a word I use advisedly) over a million. And with it all, the tuition for foreign students (who get no government subsidy) is probably about $15,000 and we are not notably suffering at that rate. I once asked a student from Schenectady why he had come to McGill since he was practically in commuting distance from SUNY at Albany. He told me it was considerably cheaper. Incidentally, students from Quebec pay about $3000 and other Canadians somewhat more.

Meantime, at Penn, the tuition is now pushing $60,000, the president is paid a couple million, the dorms are fancy, the food is much better (and there is likely a climbing wall).

Although the student loans have made it possible for schools to raise tuition, it hasn’t made it mandatory. But I will tell one story, absolutely true. In the mid-90s, I was talking to the principal of McGill who had been hired to clean up a substantial accumulated debt (he was largely successful). His twin brother was president at Princeton (from which one of my sons graduated) and I remarked to him that when he and his brother get together and discuss their problems, his, mainly financial, would be entirely different from his brothers. “Oh yes, he assured me. My brother tells me that Princeton could afford to abolish tuition. Their endowment is so large that they could live off the interest.” He added that the reason they don’t is that they want a contingent of students from wealthy families who would continue to grow that endowment.

So there are many causes, beside inflation. Faculty salaries have grown faster than inflation, but not much faster, certainly not enough to justify and increase tuition from, say, $7000 in today’s money to at least 8 times that. Administrative bloat certainly accounts for some of it, but not all. Faculty salaries for some of it, not much. Fancier accommodations help.

In 1954, it was possible, with a lot of luck, to work your way through college. Today, it is impossible. For one thing, I am not sure that Penn even permits commuters. It was a large contingent in my day.

Incidentally, had a stayed at U IL, I would now be worrying seriously about my pension. The state contribution was entirely unfunded and we were not part of social security. So I would be getting a small pension, no social security, and worrying about what would happen if the state declared bankruptcy. My McGill pension is fairly generous, by contrast.

45

You got a bad result on Google or didn’t read it well. $31k is the limit for Federal Student loans for a dependent student undergraduate. The similar limit is $57k for a non-dependant undergraduate student, and $138k for a graduate student. And that’s ONLY for student loans from the federal government, it doesn’t include private loans, which are the ones handled in a more predatory manner and which don’t have a limit at all.

What you’re doing is similar to looking only at FHA loans when discussing issues with mortgages in general; the fact that one possible source for borrowing money is limited doesn’t say much about the other possible sources. What I don’t get is that you later said:

When I never limited my initial comment to federal student loans. So it seems like you realize that there isn’t a $31k cap on student loans, but were arguing like you believe there is one.

46

D. None of the above.
A is not right because lowering tuition would send a bad signal. High tuition means a good education. When George Washington University wanted to increase its reputation the first thing they did was jack up the tuition so they were one of the most expensive schools in the country. Any school that seriously lowered tuition would have a commensurate drop in prestige. Schools would not decrease tuition but many lower tier colleges would not be able to find students and collapse.
B is not right because with government getting more involved in healthcare, there is not going to be any extra money. Private foundations mostly serve the already rich schools and they are not going to expand.
C is not right because America is a much richer country than it was 80 years ago. Many more people are going to be able to afford college than back then.
What would happen is that many fewer people would attend college and there would be many fewer colleges. This would be a great thing for our country. 90% of college is signalling and while signalling make sense of an individual level, at a national level it is all waste.

47

For everyone who thinks the reason for high tuition is bloat and unlimited borrowing, here’s something to ponder.

I graduated from a Catholic diocesan* high school in 1970. Tuition for seniors was $225, including books, graduation fees, athletic fees, etc. Adjusted for inflation that $225 would be $1,496.88 today.

Tuition and fees for a senior today? $9,730. (Students who attend all four years get a $1,500/yr. “scholarship” if they keep their grades up, so I’ll go ahead and use the figure $8,230.

This being a Catholic school, there are no unions, fewer layers of administration and not quite as many services as a public school. And being a high school of course, there are no subsidized student loans.

And yet, the tuition has risen multiple times the inflation rate. In fact, my old high school’s listed tuition is actually HIGHER than Harris-Stowe State University (the second-tier state school less than 10 miles away.)

So, what’s the explanation for that?

*"Diocesan means the school was owned and operated by the diocese and run essentially as a religious version of a public school – open enrollment, broad curricula that offered both college-prep and general academic studies, etc.

48

That misses a key factor, Dewey. Private student loans, whether by commercial lenders or Sallie Mae, are guaranteed by the federal government and continue to be non-discharge labor via bankruptcy. Any lender can loan nearly any amount with very little risk. Why the hell WOULDNT they loan to kids under that circumstance?

I’m in the student loan blame camp. Eliminate them and we’d see real price competition exert market forces on colleges.

49

Up front, I’ll admit I don’t know much about parochial schools, but it seems pretty clear that the similar escalation in public school cost is due to a) teacher salaries increasing at rates far exceeding general inflation and wage inflation in other sectors over the past five decades; b) many more administrators per school district, with salaries that have outstripped inflation; c) fewer pupils per teacher over the past five decades; and d) capital expenditures on new buildings with amenities. One particular problem with “d” is that (at least in my state) public school districts have to pay “prevailing wage” for school construction, which tends to cost 10 to 30 percent more than private construction.

So, in general, the same factors are at play. I realize in some ways parochial schools utilize a different pool of teachers and administrators than public schools, but they still have to attract employees to work there.

50

I’d like to see a cite for that. Because the Sallie Mae website says, “Unlike federal student loans, private student loans are not sponsored or guaranteed by government agencies and don’t require a FAFSA. They’re credit-based, which means a borrower’s credit score and history are taken into consideration, along with other factors. That’s why applying with a creditworthy cosigner may increase the likelihood that a student is approved for a private student loan.”

51

I also think the increase in student loan availability and lending practices have had inflationary impacts on tuition and other related costs. I wouldn’t be surprised if student loans are the next bubble because going 50-100K in debt to get a degree that doesn’t have high income potential isn’t sustainable.

52

I’ve heard the same thing, about there being a bubble in student loan debt. Wikipedia says the total amount is $1.2 trillion, with an average debt load of $37,000. And as mentioned, you can’t get rid of this debt in bankruptcy.

53

It’s a bubble sorta, but not really, because it’s not going to “pop” and cause problems in the wider economy. More likely students will figure out that it’s stupid to take out that much debt, or the government will stop supporting degrees with little job market value to that extent.

I’ve got no worries about whether the government can collect the money. They most certainly can. My disabled mother’s SS check is garnished for student loans.

54

As a nitpick - I believe there are avenues for relief from student loan debt, but they are very rare. The Brunner Test has 3 criteria - poverty, persistence, and good faith. If the debt makes it impossible to sustain a minimal standard of living, there is no foreseeable change to that circumstance, and you’ve made a good faith effort to repay the loans then there is a chance that a judge may agree to discharge the debt. The test may vary in different jurisdictions.

55

Thanks for that. I was fortunate in that I graduated with “only” $20,000 in student debt (although this was in 1988 dollars) and was easily able to afford the payments even on the salary of a not particularly well-paid engineer living in an expensive suburb.

56

The Catholic Schools have less Nuns, Brothers and Priest as employees which were lower cost than lay people, they are less subsidized by the parishioners compared to what they once were. Catholic Schools still charge less than what other Private Schools do and charge less than Public Schools spend per student.

57

While I agree that giving a kid 100K to get a degree in lesbian dance theory is a bad credit risk that would never be done without a government guarantee or a market failure. Its not just student loan capacity because tuition far outstrips guaranteed loan capacity.

Obviously the government loan guarantees are part of it but so is the fact that schools are INCREDIBLY averse to online learning. Once you let people get a Harvard degree online, you cannot put that djinni back in the bottle.

Without online learning, professors have not been able to leverage and improvements in productivity that much of the rest of society has.

For example, continuing legal education used to be a expensive enough that you turned the whole goddam things into a ski vacation in Utah or a summer vacation in the Hawaii. Now I can get a years worth of continuing legal education for $99 along with hundreds of others who just have to click the mouse every 5 to 15 minutes to prove we are still sitting there.

58

Word.

We’ve lost six senior profs in my dept over the last four years (retirement/death/sickness) and we’ve had the funding to hire ZERO fulltime replacement TT profs. Instead we hire dismally paid adjuncts.

About 2/3 of us are 50+ and six folks are 75 and older. When we start retiring/dying there are just five “junior” FT faculty to assume the mantle if we are unable to hire the next generation.

And, to echo previous posts: junior faculty at “ordinary” colleges are paid abysmally. I started signing off on payroll this semester and was shocked by the salaries (think grocery store assistant produce manager). And adjuncts have to teach for us and three+ other schools just to survive.

Colleges have the upper hand: the academic job market has shrunk so dramatically that Ph.D. holders are desperate to take any job.

And don’t get me started on how unconscionable it is for graduate programs in fields like humanities to keep pumping newly-minted Ph.D’s out when there are so very few jobs (the motivation is, of course, that grad students provide dirt cheap teaching labor for universities during their studies).

59

At the risk of being flippant, it sounds like the academic market is returning to some sense of normalcy. Unlike Masters and Doctorate programs where there is some level of market demand from businesses, medical practices, consulting firms, etc., it appears that far too many people continue on with their higher education with the goal of staying in higher education, often with degrees that have little or no outside demand. So, when you get that Masters or PhD in Humanities, the only logical employer is a college or university. That’s fine until the market adjusts or reacts, as it appears to be doing.

And, as mentioned above, online learning is a big threat. For now, the universities are able to charge as much for online classes as on-campus ones, but I suspect that will change in the near future. There should be cost savings.

60

Inflation, the basic cost to do business in 2017 vs. 1977 is probably one factor. Related to that is the price of labor and recruiting faculty and administration. The market value of education is probably a second value - if your school sees other private institutions providing education at $30,000 per year, then they’re going to keep up with the market value of that cost. Furthermore, without the infusion of loan money, they lean more heavily on alumni donations and student tuition. Competition is a major factor. The proliferation of institutions that are accredited to offer education means that your former school has to keep up and provide facilities and services that can attract students. They’re competing with schools that are almost exclusively privatized and those that receive federal funds. And the competition is fierce.

I don’t always agree with Pantastic or Octopus but I do think they’re onto something with respect to federal loan money. Federal loans are given to the institutions, not the students directly. The institutions compete for that money and they have financial aid offices that specialize in getting and disbursing the funds to students. There’s pressure to keep that spigot on. Again, these schools are businesses that are competing with other businesses. In many ways, higher education really and truly is a lot like the real estate market but perhaps with fewer safeguards to assess borrower risk.

61

Most online learning is crap, so I don’t view it as a threat. The real threat comes from employers like those in Silicon Valley who are beginning to find ways to sift through resumes without relying on credentials. If this catches on, if the average company can find ways to avoid using the BA or MA as a screen to weed out tens or hundreds of resumes, then the higher ed machine is in big trouble.