Are College Costs Reaching a Breaking Point?

<p>A friend who works in admissions at a local private school said that they are losing many of their top applicants to the state schools and they are starting to feel the pressure. The local private already lowered their tuition and overall cost of attendance to about $35k. In addition, they regularly give $14k academic scholarships to to A students with above average test scores, leadership scholarships, and talent awards and still are losing to the state schools.</p>

<p>I guess we are in the minority. Both schools my older two attend have seen record apps and record attendance this year (having steadily gone up). Oldest is at a small Christian LAC that rarely gets mentioned on here. It is in the Forbes top 650, but otherwise seldom makes any lists. Middle is at a USNews Top 30.</p>

<p>Maybe whatever appealed to my guys about those schools appeals to others making them buck the trend? Who knows… Both schools offer merit and need-based aid, so that probably helps.</p>

<p>Youngest applies this coming year. We’ll see what happens.</p>

<p>The breaking point will cocur when there is a slow decrease in enrollment in the top 100 instittuions. When they have hard times finding people to pay their prices and endowments to fund their programs, then we will be at a breaking point. Is it now? No. Are people hurting? yes.</p>

<p>In addition to tuition, colleges have a huge incentive to discount their price structure (i.e. “merit scholarships”), especially for wealthy families due to the future funding stream potential.</p>

<p>Admit a rich kid and give him $5,000 off sticker for four years, but generate twenty times that much in her future tax-deductible alumnae gifts. Rich families are far more likely to donate to colleges because: (1) they have disposable income to give and (2) they receive the greatest benefit from tax dedcuctions.</p>

<p>^^^The discounts in those cases are more likely used to improve the current funding situation. </p>

<p>Let’s say tuition is 40K. You have 20K in scholarship money to give. Now, let’s say that you have a student whose EFC is 20K, and 4 students whose EFC is 40K–essentially they are full pay. If you ‘meet full need’, then that 20K will go to one student, who will end up paying you 20K. But if you ‘discount’ or give a ‘merit scholarship’ of 5K to those 4 students to attract them, you might end up getting 140K for that 20K.</p>

<p>This is a simplistic example, but that’s what’s happening now with the use of ‘merit’ scholarships.</p>

<p>While some percentage of the population attend college with a “money is no object” view, that is certainly not the norm. Overpriced colleges will eventually feel the pressure from colleges charging far less where you can also get an excellent education. It is really just supply/demand at work. Also, no one if making you attend a college your parents can’t afford.</p>

<p>As long as colleges are turning away students who have money - either their own or through loans, there is absolutely no incentive for them to build more bureaucracies and keep increasing tuition. If your car dealer can’t find enough cars to sell to everyone who comes to his showroom with money, why would he not keep increasing prices?<br>
The worst solution is to get taxpayers to bail out the students while the colleges go unscathed.</p>

<p>This topic happens to be a particular pet peeve of mine. Colleges are supposed to be non-profit institutions, however they have been behaving as if they are profit maximizers (I would love to see a graph of university president pay versus tuition increases – I bet there is a correlation. The other part of my conspiracy theory is that Wall Street bankers are disproportionately represented on the board of regents of these schools and they encourage this type of behavior – makes sense, doesn’t it? ). These schools will just keep raising tuition every year until they see a decrease in enrollment or if they have to accept lower SAT/GPA students so their reputation goes down. All these schools have long ago lost sight of the fact that their mission is to education students and NOT to charge an arm and a leg. My son is going to one of these wacko tuition schools next year, but he would not have gone unless the FA was in line with what it would have cost to go to a state school.</p>

<p>Also, one thing I would like to add is that I don’t understand why a tier 2 school wouldn’t try to tow the line on tuition, and try to move up the SAT/GPA curve and attract better students and increase its reputation. Seems like that would be a good strategy to me. Also, if one committed university president would do that, I bet a lot of others would follow. This whole tuition situation does not make sense to me, but neither does healthcare. We have some large segments of our economy that are really screwed up!</p>

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<p>Note that non-profit organizations still need to avoid making losses over the long term – bankruptcy tends to make fulfilling whatever mission they have more difficult. So they must still care about their financial performance.</p>

<p>Note also that the principal / agent problem can exist in non-profit organizations as well as at for-profit organizations. The agents (e.g. administrators / faculty / staff) may have their own motivations that may be at odds with the organization and its mission.</p>

<p>Health care and college tuitions are killing the middle class. I feel that any money I make is going towards paying off a doctor/hospital bill or my daughter’s future college. AND I have health insurance and a decent job as a part time professor. You really have to be rich to send your child to a good university these days.</p>

<p>[Parents</a> Shell Out Less Money for Their Kids’ College - WSJ.com](<a href=“http://online.wsj.com/article/SB10001424127887324144304578622343932131354.html?mod=WSJ_WSJ_Careers_PublicSearch]Parents”>http://online.wsj.com/article/SB10001424127887324144304578622343932131354.html?mod=WSJ_WSJ_Careers_PublicSearch)

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<p>Another ‘duh’ story. We’ve been saying that here on CC for 2-3 years anyway. Certainly, costs seem to have plateaued after decades of increases, but what’s important is to identify what type schools will be affected first.</p>

<p>The niche that is going to feel pinch initially–if they haven’t already–will be the Ivy-wannabes, the ones where the student population is higher than most privates & the endowment not self-perpetuating. They will bear the brunt of declining enrollment, just because the $45,000+/year out-the-door cost for a second or third-tier private has become unworkable. They either will have to throw more grant money at prospective students–bringing the net cost down–or market themselves better.</p>

<p>Another interesting by-product of the tightening of the screws is the increased competition at flagship state schools. Their bottom line is improving–although they will not admit it–because of two main factors: 1) previous Ivy candidates opting for state flagships, and 2) proliferation of full-pay international students, which has reached as high as 25% of the undergraduate population even at some Midwest flagships. Good or bad, those $40,000+ OOS tuitions are absolutely depended upon by these universities that are getting less & less funding from their respective states.</p>

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<p>The following colleges’ cafateria food is ranked in the top 52. Meals usually cost in the range of $8.12 (UCLA) - $12 -$16 (Cornell, Bear Basic). </p>

<p>[52</a> Best Colleges for Food in America Slideshow | Slideshow | The Daily Meal](<a href=“Daily Meal | Cooking Tips, Restaurants, Food Reviews, Recipes”>52 Best Colleges for Food in America Slideshow)</p>

<p>The average cost per meal is around $10. </p>

<p>Note that 7 out of top 10 of the schools above also boast of indoor rock climbing. Cornell’s climbing Wall is the largest indoor natural rock climbing wall in North America. (<a href=“Cornell Team and Leadership Center | Student & Campus Life | Cornell University”>Cornell Team and Leadership Center | Student & Campus Life | Cornell University)</p>

<p>IMHO, the colleges, instead of boosting instruction investment in lowering the ratio of #students/instructor in many freshmen and sophomore classes, are reacting to “customer” demand for state of the art gyms, cafetarias and student living quarters. Our students are saddled with an average of over $30K in loans. In a globalized world, where the multinationals can locate their facilities anywhere they choose, they can recruit fresh graduates at lower wages. Graduating students in many parts of Europe pay a pittance in fees & tuition, and are not under financial pressure to repay loans. </p>

<p>Wonder how long the current financial model of high, multi tiered pricing by (US) colleges will be sustainable.</p>

<p>RE rock climbing and gourmet meals . . .
"Where is this? I’d certainly be up for all of this fun! "</p>

<p>The University of Arizona! - the new rec center is sick!</p>

<p>The counterpart to the “best college food” slideshow is the “worst college food” slideshow:
[The</a> Worst College Food in America | Slideshow | The Daily Meal](<a href=“Daily Meal | Cooking Tips, Restaurants, Food Reviews, Recipes”>The Worst College Food in America in 2012)</p>

<p>Many students in our area are headed straight for CC for two years end then on to state U. These are kids that easily have the grades and scores to go all 4 years to University, it is strictly to avoid the debt.</p>

<p>@glido - sounds like a wise area where you live. There’s still tremendous pressure in our town for kids to leave the nest and attend some prestigious university away from home. Its the downside of living in a rising suburb I guess where the expectation is to attend the best university you can and shame on the parents if they are unwilling to accommodate. It really takes household discipline to follow this path.</p>

<p>“customers” is the key word. College has become a “must have” commodity, and means little unless you go to a certain set of schools, or some other specific programs.</p>

<p>For example, at the college I teach at, they take kids with a C average in HS and no college prep. We get kids who can’t take pre-calculus as freshmen they are so far behind.</p>

<p>There are kids wealthy enough to go to college who shouldn’t go, and kids too poor to go to college who should. But instead, we get all four categories - rich and poor, should go and shouldn’t go. Then we end up throwing out kids who weren’t ready, and we blame them.</p>

<p>College should be only for certain people, ones who want a professional career. If they don’t know what they want to do, WORK first. My best students are those around 25 years old as freshmen, they know what working is and often they get their job to pay for classes, so they do very well in classes.</p>

<p>It used to be about 25% of kids went to college; now it seems like if you count in junior college and community college, 75% are going. What a great revenue stream!</p>

<p>DadII…didn’t your daughter graduate already? Did you mean your SON’s EFC?</p>

<p>And yes…your EFC would be LOWER for each kiddo when you have two in undergrad school at the same time.</p>