The high cost of frivolous ammenities -- Do we really need them?

Paying for College
1

<p>The Washington Post admissions forum just featured a debate about the rising cost of tuition. </p>

<p>Apparently a recent survey was conducted by Independent 529 Plan, a group that promotes prepaid college saving plans. You will find it under "Press Resources" on this website: 529</a> College Saving Plan</p>

<p>They asked the financial officers of 100 private colleges why their tuition increases were so far ahead of inflation, and they said the number one reason was a need to spend more to keep ahead of their competitors in stuff like cool dorms, technology, recreational facilities---and a new one---environmental sustainability. They ranked this academic arms race as more responsible for tuition hikes than rising healthcare costs, declining government support or faculty salary demands. </p>

<p>So my question is: Do we as students really need these things? Are we really going to choose one school over the other because of the cool dorms? I'd like to right an article about what students really think because personally, I would rather cut my cost of tuition instead of enjoying the luxury of a "super cool" dorm.</p>

<p>Please way in.</p>

2

<p>I'll weigh in ;)</p>

<p>I just met with an alumni rep from my college, a small LAC in the midwest. She said that there were two reasons tuition was being raised. 1) the college needed the money to do extensive renovation and building on campus in order to be more "attractive" to prospective students. 2) The previous tuition was on the low side of this college's competitors, and so in order to be perceived to be in the same value as competitors, tuition needed to be raised. </p>

<p>Conclusion: it's all marketing, and presumably the college did the marketing research to be able to support these two assertions. My opinion: yes, the college does need to maintain its facilities and provide an attractive environment for its students and recruits, but raising tuition just because other colleges did seems pretty dubious.</p>

3

<p>Actually an article about this situation in the online Chronicle today. Spending on professors and other classroom staff has not increased much since 1998. As far as glittering facilities, well not uncommon and as noted it is a form of marketing.
However a larger part of the increase in tuition has been the result of Federal and State cutbacks in support in both direct and indirect aid. And that includes such direct student aid as pells, a trend beginning back in the 90's which was attendent to the push to privatize the SL system. However colleges bear some responsibility for their choices to spend an increasingly limited budget on building improvements and glitter rather than instructional budgets or teaching staff.
At smaller schools one of the means they've used to meet budgets is an increasing number of part time instructors. Increasingly this trend is keeping many from even considering college teaching as a career. And those who've done so as adjuncts are economically quite strained.
Since college costs have increased an average of 6% a year since 2000, perhaps proper funding will be required before the system becomes self referential and trapped into its own marketing schemes. And just maybe, spending a bit more money on the people who do the instruction might be appropriate.</p>

4

<p>Internet access has become a 'must have' for most colleges-- these kids live and breathe being connected. And a wide variety of recreational facilities helps provide a healthy, well rounded experience for students. Gone are the days when a college can get by with just football, basketball, track, and swimming facilities. So I think these things are a good idea-- </p>

<p>Do students need them? Perhaps not. I guess an education could be had in a barn somewhere. But the colleges would be doing a disservice to the kids by not offering them.</p>

5

<p>Everything (private?) colleges do is in their own self interest, shaping their perceived images of themselves; they seek to make themselves attractive to the students they target. The total package is what's most important, with tuition certainly a significant part. But with the recent high number of applicants to selective schools, it seems unlikely (to me, at least) that rising tuition will have much effect on applications. Students already turn down offers of financial aid (due to lower net cost elsewhere), but someone else just as qualified (and desired by the school) is always there to claim the seat. There is a real supply-and-demand component.</p>

6

<p>And public colleges do things only with public education in mind? Gimme a break. Every school tries to make itself more attractive to applicants at whatever cost it can afford.</p>

7

<p>Since I posted this, I also found this op</a> ed piece from the Denver Post: </p>

<p>It's from an admissions consultant that says, tuition has to go up, quit whining. I think this is crap. If tuition keeps going up, we are going to reduce the number of educated people in our country and we won't be able to compete globally. I think this is a slippery slope.</p>

8

<p>If tuition keeps going up, we are going to reduce the number of educated people in our country</p>

<p>No, there won't be any empty seats at these schools, but there may be other reasons we don't compete.</p>

9

<p>It's from an admissions consultant that says, tuition has to go up, quit whining. I think this is crap. If tuition keeps going up, we are going to reduce the number of educated people in our country and we won't be able to compete globally. I think this is a slippery slope.
Yesterday 09:50 PM </p>

<p>Unfortunately yeoldstudent the decline in our ability to compete globally because of a reduction of educated people is already well underway. As you note the costs of American higher education has risen exponentially. However as a society we have chosen to not properly fund state higher education an unfortunate trend which has been growing since the 90's. As a result the system has been co-opted by private companies masquerading as public entities and as public service. Very few countries coerce their students into graduate with often crushing debt loads. As such upon completion of their studies they do not work for their elevation or that of the common good, but their efforts are being fed into the maw of an ravenous financial beast. And colleges wanting the money (and sometimes outright kickbacks) are often driven by necessity, or by simple greed, to lay with that same beast.
It never had to be like this, as there are other countries which can educate their people without selling them body and soul to finance companies. Australia for example, does lend for education but only a certain percentage of income can be taken, and after a set number of years the loan is forgiven. Other countries have free higher education provided one can meet the admissions standards. They do this knowing that the investment they make by providing that low cost or free education provides greater returns for their national economy. These systems work, but because of the lobby power of the financial 'services' industry the US government will not even discuss the possibility.
What it will lead to is another manifestation of the increasing and potentially destructive social stratification which has developed here in the US. Because of escalating costs higher education will no longer be the route to elevation of the common people. They will not be able to afford it, be it before entering academe or after leaving it.
It has come to the point that many faculty including myself, are starting to advise students to be very, very careful in their desire to further their education. Or even to not pursue their education beyond a certain point. The mere fact that those within the 'halls of learning' have been compelled to utter such things is demonstrative of a system which has become very sick.
And if changes are not achieved that same system will die. Of course until the moment it does die, those who have profited from being the cause of that same demise will continue to do so.</p>

10

<p>I agree with yeoldstudent...what comes up must come down. </p>

<p>I don't have a degree in economics but when I read about record number of foreclosures (which I did see coming several years ago), and I read that Freddie Mac and Fannie Mae are facing financing issues, and I read that banks and lending institutions are battening down the hatches I have to wonder HOW are potential students going to afford the high costs of private school tuitions? As I understand it, mom and dad are going to have a hard enough time trying to secure loans, let alone a student who has no credit history so to speak. Add to that, that many homeowners are now losing what equity they may have had in their homes and that does not add up to a positive financial situation for many, many families. If students can't get loans, schools are unable to give $$, and mom and dad can't cover the costs of that LAC then I suspect we will be seeing many more students staying closer to home (and saving some big $$) to go to school.</p>

<p>Thoughts?</p>

11

<p>Oaksmom, In part the finance issues of such as FM, SM, NN and etc are because the bubble has burst. The sweetheart deals given them by their pets in Congress and the often excessive lending practices which resulted have broken the system. Have to keep in mind that the 'loan crises' and recent massive infusions of federal funds to these entities related more to lobby politics than a anything else. It seems more than coincidental that the liquidity problems arose so quickly after congressional threats to cut their massive subsidies. These companies have made billions since the 90's with their stock outpacing even Microsofts. And as such a liquidity problem on their part is equivalent to a pinhole in the Hoover dam. Even under the current problems the average daily intake of these companies is some 15 million.
The silent crises of the whole situation is that whatever liquidity crises these entities are experiencing it is nothing compared to the trouble that many who did borrow for their education are facing. In a downturning economy an increasing number will no longer be able to pay the excessive demands of the SL industry. But, unlike other debtors the people who will be in trouble because of their education, have virtually no protections. Which is appalling given the horrible situation those who've been caught in the mortgage collapse are experiencing. Perhaps the solution here is not to give yet more government money to the lenders which have cause the problems, But rather to those students (past and present) who've been caught in the edu-trap.
If they are relieved of some of the pressure their money will go to housing, transportation or other aspects of the consumer economy. Which may not benefit some CEO and his private golf course schemes but it will certainly be of more benefit to a staggering national economy.
The greater concern is whether or not our leadership will realize that the current system of SL's needs to be junked for a more equitable process. Or realize that it will be necessary to funding higher education properly with the clear proviso that that funding isn't provided for buying bell towers.</p>

12

<p>"I read that Freddie Mac and Fannie Mae are facing financing issues, and I read that banks and lending institutions are battening down the hatches I have to wonder HOW are potential students going to afford the high costs of private school tuitions" </p>

<p>Actually it's less a matter of battening down the hatches than sealing the hatch shut for anybody else. There are some obvious issues with frivolity in college spending, but the excessive rise on college costs does also tie to how student and collegiate funding are approached. For example the selling of loans at a premium, noted in the article pasted below. Ultimately much of the the limited amount of federal money available is being directed away from direct support of colleges. Article below is from today's online edition of the Chronicle of Higher Education. </p>

<p>Sallie Mae Predicted to Gain Market Share From Student-Loan Crunch
Student-loan crises may come and go, but apparently the profitability of Sallie Mae, the nation’s largest student-loan company, remains.</p>

<p>Less than a week after Congress approved legislation designed to ensure that student-loan companies continue to issue federally subsidized student loans, a Wall Street research firm, Lehman Brothers, has issued a report analyzing the bill’s effects on Sallie Mae.</p>

<p>Lehman’s conclusion: The bill, which awaits President Bush’s signature, appears to guarantee that Sallie Mae and some other student-loan companies will not only remain profitable but “potentially gain considerable market share,” given that some competitors have withdrawn from the marketplace.</p>

<p>Congress overwhelmingly approved the legislation last week, strengthening lenders by letting Education Secretary Margaret Spellings pay cash for their loan portfolios, after some loan companies said they could not afford to participate in the government-backed student-loan program.</p>

<p>The bailout legislation was written by the chairmen of the House and Senate education committees, Rep. George E. Miller of California and Sen. Edward M. Kennedy of Massachusetts. After Democrats won control of Congress, in November 2006, Senator Kennedy railed against profit levels at Sallie Mae, promising to “take the money-changers out of the temple in terms of student loans,” The Washington Post reported at the time.</p>

<p>But Lehman, in its report today, says the Miller-Kennedy bill should let Sallie Mae “sell loans to the government at a premium” while maintaining its loan-servicing relationships. It also predicts that Sallie Mae could pick up “as much as 7 to 8 percentage points of market share,” giving the company roughly 38 percent of all loan originations in the government-subsidized program. —Paul Basken</p>

<p>Posted on Tuesday May 6, 2008 | Permalink |</p>

13

<p>Another thought: I am a grad of the University of Colorado and I'm looking into grad school right now. I have made a decent salary since I've graduated and I've never once been asked to give money to my school. I know there are a lot of schools that have effective fundraising, but CU has the luxury of serving a market of wealthy out of staters that will still pay even though tuition is increasing. Maybe if schools didn't have the option to just raise tuition, they would spend a little more time fundraising to keep tuition down. Just a thought.</p>

14

<p>Possibly, or for those schools without endowments other difficult decisions. One potential would be to be more efficient and reduce non academic operations, but I don't see that one happening.
One of the problems with collegiate funding is, even at the bigger schools, is when state funding is unduly constrained they look elsewhere, If they did as yeoldstudent suggested and looked to legitimate fund raising it would help and all might come out well. The problem is, many take the short route and start turning services and decisions on student funding, including loans, over to private corporations for institutional gifts or 'considerations'. This has already been an issue in the East as indicated by the court orders to cease and desist these type of activities. Which are being ignored. Here in Colorado one of the University systems is using the same tactic with one of the notably less ethical SL companies. Obviously nothing which will benefit students.
Colorado in some regards is a poster child of what happens when state schools are inadequately funded by their state government. This situation has been a longstanding problem due to Bruce and the tax limitation amendment which have restricted the ability to adjust for changing demands on Colorado Higher education.
So some schools are in trouble for resources, and others are linking themselves to entities which compromise their mission and institutional morality. The whole situation is weirdly ironic because until recently Colorado was one of the more affluent states and could afford to properly fund higher education.</p>