Editor's note: Richard Vedder is distinguished professor of economics at Ohio University, director of the Center for College Affordability and Productivity and an adjunct scholar at the American Enterprise Institute. He is the author of "Going Broke by Degree: Why College Costs Too Much." Matthew Denhart is administrative director of the Center for College Affordability and Productivity.
(CNN) -- College costs too much, both for students and for society as a whole.
This year, according to the College Board, average published in-state tuition and fee plus room/board charges exceed $17,000 at four-year public institutions, a 6% increase from only one year earlier.
In 2009, spending by Americans for post-secondary education totaled $461 billion, an amount 42% greater than in 2000, after accounting for inflation. This $461 billion is the equivalent of 3.3% of total U.S. gross domestic product (GDP) and an amount greater than the total GDP of countries such as Sweden, Norway and Portugal.
The public is taking notice. The Occupy Wall Street protesters have featured student debt forgiveness as one of their demands, and students in California have demonstrated several times in the past year after their tuition was raised twice.
Earlier this week, U.S. Secretary of Education Arne Duncan addressed some of these concerns in a speech where he urged colleges to get serious about their cost problem. But there's only so much the federal government can (and should) do. The underlying structure of American higher education needs dramatic reform before there will be any relief in sight.
Whereas private businesses cut prices for consumers and costs to themselves through efficiencies that increase profits and incomes, universities lack those incentives.
Indeed, the typical successful university president views his or her key constituencies not to be the customer (students and their parents who pay tuition charges or the granters of research funds), but rather others -- the faculty, important alumni, key administrators, trustees and occasionally politicians. They please these constituencies by raising, and then spending, lots of money.
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How to save on school
They effectively bribe powerful faculty with low teaching loads, high salaries and good parking. They give the alumni successful intercollegiate athletic programs that are expensive and usually financed off the backs of students. They give trustees whatever they want, no matter how costly or eccentric.
Universities do a second thing unheard of in the private sector -- they often deliberately turn customers away.
A fast food chain or discount store succeeds by selling more hamburgers or television sets; no customer was ever kept from spending money at McDonald's by an "admissions office." Yet for American universities, the "bottom line" is measured by college rankings that often reward schools for turning people away, becoming more "selective." Many believe the Ivy League offers the best education in the world, so why do we encourage those elite institutions to deny access to thousands of highly qualified students every year?
Like health care, prices are rising rapidly for higher education because of the predominant role of third-party payments -- federal student loans and grants, state government support for institutions and students, private philanthropic gifts and endowment income. College seniors who borrow to finance their education now graduate with an average of $24,000 in debt, and student loan debt now tops credit card debt among Americans. When some else is paying a lot of the bills, students are less sensitive to the price, thus allowing the colleges to care less about keeping prices under control. And the nonprofit nature of institutions reduces incentives for colleges and universities to be efficient.
The key to getting costs under control is contained in three words that begin with the letter "I"-- information, incentives and innovation.
Customers are ignorant of college outcomes because we do not measure in any coherent and consistent manner what students actually learn, how well they do after graduation or whether they think better in a critical manner as a result of the college experience. Even basic financial information on how colleges spend money is often not fully shared with trustees or key politicians who help fund or oversee college operations.
As mentioned above, incentives to conserve resources are few. Once, as a department chairman, I successfully battled for more faculty members to do the same amount of work, thus lowering productivity. The result? My faculty evaluated me highly so I got a nice raise. Where else do the employees get to decide who their bosses will be or how much they will be paid?
If information and incentives are provided, innovation will come. Already, we know several online and other innovations can work to deliver high-quality education services at potentially lower prices. Duncan highlighted Western Governor's University, a nonprofit online institution, as one such example.
Nondegree forms of education need more emphasis, since the number of college graduates exceeds the number of jobs available in occupations for which degrees historically have been desirable -- jobs in the managerial, technical and professional areas. According to data from the Bureau of Labor Statistics, in 2008 some 29.7% of flight attendants, 24.4% of retail salespersons and 17.4% of baggage porters had a bachelor's degree or higher.
According to my analysis of the data, more than 17 million college graduates were "underemployed" in 2008. Surely these people needed some form of post high school training, but an expensive four-year degree may not have been the best approach. Rather, perhaps we should be encouraging some students to develop skills at lower costs by utilizing innovative free courses provided by groups such as the Saylor Foundation and Khan Academy.
College costs cannot rise faster than income forever -- we cannot afford it. Necessity is the mother of invention. Like it or not, American higher education is in for big change in the next generation.
I can only hope so for the last bold text I did.
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Quote:
Originally Posted by Dakota Tebaldi
willing to do the naughty dance.
“A girl should be two things: who and what she wants.” ― Coco Chanel
"Everyone is entitled to their own opinion, but not their own facts." ― Sen. Daniel Patrick Moynihan
My 2nd oldest daughter wants to go to an art school in Florida because Pixar Studios hires most of their artists from this school's pool of graphic artists and animators and she wants to work for Pixar. She's definitely got the talent, initiative and grades to get into the school, but it costs $50k a year to go there. I cannot for the life of me figure out why it costs 10x more to go to art school in Florida than it costs to go to the art school (accredited at the bachelor's level) where I teach.
College has become increasingly a business rather than a public service and it's disgusting. I went to both a private college and a very good public University in the mid to late 80s and both cost about $10k/year tuition. That was a bit a struggle but not totally unreasonable. But the costs I am seeing now are way out of control. Even adjusted for inflation.
I'm not sure I want more regulation but something has to be done.
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Brian Johnson (Breakfast Club) "Can you describe the ruckus sir?"
My 2nd oldest daughter wants to go to an art school in Florida because Pixar Studios hires most of their artists from this school's pool of graphic artists and animators and she wants to work for Pixar. She's definitely got the talent, initiative and grades to get into the school, but it costs $50k a year to go there. I cannot for the life of me figure out why it costs 10x more to go to art school in Florida than it costs to go to the art school (accredited at the bachelor's level) where I teach.
She an always count on me, if she comes to Florida.
If I hadn't had scholarships, three years of law school would have set me back $120,000.00.
I could have kept my crappy old job and bought a vacation home up in the woods. As it is, I'm still sitting on almost $50,000 in student loans eleven years later, and I haven't been able to raise my fees for the last three years because the market won't bear it. The cost of college is brutal. I'm pushing my son to go into military service just so he can get help from the GI Bill. (Well, that and the discipline, direction and self-confidence it would give him would do him good)
I have $2,000 left in undergraduate loans.
As a side note Trout, I went through my undergrad on the GI Bill as well.
That is a really great program. The new post 9/11 GI Bill is even better.
They keep improving it which is fantastic.
This will blow you away, for me it cost me $100.00 a month for a year.
So, I paid in $1,200.
It paid for 36 months of continuous school at something like $550.00 a month.
So, it paid for almost 20,000.
Little known fact, so few use it that the government actually makes money on it.
Anyway, my MBA was $48,000.
Yeah... an MBA... I enrolled in 2006 and graduated in 2010.
It was a fantastic idea in 2006.
Not so much now.
I got through college by working, and with one fellowship in grad school.
Course, that was back in the dark ages. With in-state tuition at University of Texas, it was do-able. (Out-of-state tuition at University of Michigan wasn't, which is why I transferred - that and the crazy situation of being in Michigan for the winter and Houston for the summer.) I don't know what UT costs now.
My husband, when I met him, had some college and some college loans. We gradually paid off those loans. Then he finished college by dint of us working our butts off.
He got his master's a couple of summers ago. That entailed going to school at night for several years, while working. I'm glad as HELL that that expense is finally over. Seems like we have spent most of our lives paying for ours (or our kids') education. However, it was a very good investment.
What you have in your brain is something no one can ever take away, and you will never lose, like you do your looks. (Unless you get Alzheimer's or something.) It entertains you for the entire rest of your life, and makes being inside your own head a very good place to be, with yourself as very good company.
The only way that I can see kids being able to afford school these days is if they live with their parents during college. Room and board is insanely expensive.
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"Go away! Last words are for fools who haven't said enough!" - Karl Marx, last words
The only way that I can see kids being able to afford school these days is if they live with their parents during college. Room and board is insanely expensive.
That's how I did it back in my late 80s. First year was away from home in Iowa, the last 5 was living with mom and dad.
Yeah, I have no idea how I would have done it if I had to pay for lodging.
The tuition charged is in part dependent on the amount of state support received by the institution. In the early 1970s the state paid for nearly 85 percent of the cost of running the educational side of The University of Texas at Austin.Today, the state-appropriated fraction of the total budget for UT Austin is below 20 percent. The growing gap between what it costs to run the university and what the state is able to contribute has been covered in part by private donations, efficiency and other actions taken by the university. However, if the university is to maintain delivery of the quality of education for which it has become known, it determined it had to ask the students attending the university to pay for an increasing share of that gap. The University of Texas at Austin’s tuition places it well below tuition at comparable universities, and the university continues to be a nationally recognized great value in higher education. "
As a result, a semester of liberal arts would cost 4,673, or $9346 for the year (not counting any summer courses).
The minimum wage in Texas is $7.25/hr, so it would take a minimum of 1290 hours of work at this pay (not even subtracting taxes) to pay this tuition. Which would be 25 hours of work a week, all year, to pay tuition.
I did not live in campus housing - too expensive - but if your apt and other living costs were $1,000/month, you would also have to work 1655 hours to pay that, which would be 31 hours a week. 25 hours plus 31 hours being 56 hours a week, that would leave very little time for class and study.
Because I worked, I never took a full load, but spread it out to summers, too (and also graduated a semester late). .
I guess if I were to try this today, it would take more years than 4-1/2 to finally graduate.
The GI Bill did wonders for my ex husband who wound up with his masters while we had our son as undergraduates.
I always thought children of vets can get a deal somehow?
My father was a disabled vet it never worked out for me.
The tuition charged is in part dependent on the amount of state support received by the institution. In the early 1970s the state paid for nearly 85 percent of the cost of running the educational side of The University of Texas at Austin.Today, the state-appropriated fraction of the total budget for UT Austin is below 20 percent. The growing gap between what it costs to run the university and what the state is able to contribute has been covered in part by private donations, efficiency and other actions taken by the university. However, if the university is to maintain delivery of the quality of education for which it has become known, it determined it had to ask the students attending the university to pay for an increasing share of that gap. The University of Texas at Austin’s tuition places it well below tuition at comparable universities, and the university continues to be a nationally recognized great value in higher education. "
As a result, a semester of liberal arts would cost 4,673, or $9346 for the year (not counting any summer courses).
The minimum wage in Texas is $7.25/hr, so it would take a minimum of 1290 hours of work at this pay (not even subtracting taxes) to pay this tuition. Which would be 25 hours of work a week, all year, to pay tuition.
I did not live in campus housing - too expensive - but if your apt and other living costs were $1,000/month, you would also have to work 1655 hours to pay that, which would be 31 hours a week. 25 hours plus 31 hours being 56 hours a week, that would leave very little time for class and study.
Because I worked, I never took a full load, but spread it out to summers, too (and also graduated a semester late). .
I guess if I were to try this today, it would take more years than 4-1/2 to finally graduate.
The thing that this doesn't have, and I was unable to find it on their website, are fees. When I was in college, fees more than doubled my tuition.
the cost of college
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