<p>“The full cost to educate someone at a private school exceeds $70k, so everyone who attends is subsidized…”</p>
<p>bluebayou, what is the source for this statement?</p>
<p>One of my BIL’s said that Amherst makes a claim like this. Of course does that include the fancy plant and equipment?</p>
<p>Concerning taxpayer support for education there are considerable amounts of government taxpayer money which is redirected through programs which do not provide direct support.
But these amounts are not exactly publicized well, so many do not perceive them as coming out of the taxpayer’s pockets. So some of the conditions BlueBayou alluded to definitely do exist. </p>
<p>“But by the first quarter of 2008, three-month commercial paper interest rates had declined, guaranteeing lenders a rate lower than the interest rate paid by borrowers, triggering a rebate from lenders to the Department of Education. According to the Office of Management and Budget (OMB), the federal government paid lenders $7.7 billion in SAP payments in fiscal year 2007. Outstanding FFEL loan volume was $368 billion in 2007.” (New America Foundation. Education Policy Program) </p>
<p>“Guaranty agencies receive a number of subsidies from the federal government for their role in the FFEL program. These include a “loan processing and issuance fee,” an “account maintenance fee,” and a “default aversion fee,” each of which is calculated as a percentage of the loan principal. Guaranty agencies also retain 16 percent of any successful collections on defaulted loans, which represents a cost to the federal government. According to OMB, federal payments to guaranty agencies totaled $877 million in fiscal year 2007.” (New America Foundation, EPP) </p>
<p>“The figure above illustrates the SAP subsidy structure for a Stafford loan made in the first quarter of 2007. In each financial quarter of 2007, the lender interest rate was higher than the borrower rate, triggering SAP subsidy payments to lenders. But by the first quarter of 2008, three-month commercial paper interest rates had declined, guaranteeing lenders a rate lower than the interest rate paid by borrowers, triggering a rebate from lenders to the Department of Education. According to the Office of Management and Budget (OMB), the federal government paid lenders $7.7 billion in SAP payments in fiscal year 2007. Outstanding FFEL loan volume was $368 billion in 2007.” (New America, EPP) </p>
<p>These are the numbers for 2007 and partial information on '08, the complete accounting of the 2008 numbers seem to be hidden specialist journals or in some desk at the USDOE. But we’re not talking about pocket change here…</p>
<p>But there has been some information published about 2009 projections…</p>
<p>"Hidden in the Stimulus Bill
Jason Delisle -
January 15, 2009 - 5:43pm</p>
<p>Last December Higher Ed Watch caught wind of back-room maneuvering on Capitol Hill to retroactively change the way the federal government sets lender subsidies in the guaranteed student loan program. Education Secretary Margaret Spellings sent a letter to key members of Congress asking them to quickly enact legislation to change the index used to determine the quarterly interest rate subsidy paid to lenders. The change would calculate the subsidy based on LIBOR instead of commercial paper</p>
<p>No action was taken…until now. The stimulus bill released today by the U.S House of Representatives Appropriations Committee would make the change. Specifically, it would recalculate the subsidy for last financial quarter (October through December 2008) owed to private lenders. And the change would also apply to all loans issued since 2000.</p>
<p>According to our estimates, the change would retroactively increase the subsidy paid to lenders by about 0.50 percentage points. Multiply that across hundreds of billions of dollars in outstanding loans and the extra payments could reach into hundreds of millions. Strangely, the Appropriations Committee reports that the cost will be only $10 million." (Higher Education Watch January 15th) </p>
<p>Plus when the amount support of state schools by reduction of federal grants is considered that’s yet more bleeding from the taxpayers pocket which is not perceived as such because it is an indirect effect.</p>
<p>cadbury:</p>
<p>the way to account for private education is to look at the financial statements of the LACs such as Williams and Amherst. A lot of their annual operating budget comes their endowments, so no one is paying for 100% of their educations.</p>
<p>Williams spent $75k/students in 2002. There is no reason to believe that their costs are out-of-line to other privates, particularly LACs. Of course, major Unis have a lot of research dollars comingled.</p>
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<p>[Williams</a> College :: News & Events - Press Releases](<a href=“http://www.williams.edu/admin/news/releases/345/]Williams”>http://www.williams.edu/admin/news/releases/345/)</p>
<p>BCEagle91 - You are right “Pride often does go before a fall” At the same time, from what I have seen - lack of success goes before the whining. My whole point was that the system does work for quite a few middle - middle class people. Obviously not for everyone. The day that I believe anything put out by the Army war College, is the day that I stop believing that military inteligence is not an oxymoron. You are certainly entitled to your opinion and I wish you the best of luck and success.</p>
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Most commonly from schools’ web sites. Here’s an example: [REED</a> COLLEGE REVENUE AND EXPENDITURES](<a href=“http://web.reed.edu/ir/revenue08.html]REED”>Revenue and Expenditures 2009-10 - Institutional Research - Reed College) shows that 28% of the cost is paid by non-tuition sources.</p>
<p>Let’s not forget their trust funds took a tremendous hit with downturn in the stock market. The universities are just making up for their losses by passing it along to us.</p>
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<p>Well, I grew up in a poor family and managed to do pretty well before I received my degrees (paid for by companies when the tax benefits for companies and the prices for college were more attractive). Yes, hard work and delaying self-gratification were part of that but so was a healthy dose of luck.</p>
<p>I have residences in an inner-city and a suburb. In the city, a bank robbery per week isn’t that uncommon. In the suburb, it’s more like one or two a year. I used to live outside of Boston and drove friends home in some pretty bad neighborhoods. I stopped driving them home when the drive-by shootings started. The economic recovery in the 90s resulted in a huge drop in crime. It’s only reasonable to expect an increase in crime with economic deterioration.</p>
<p>Back in 2001, I wrote a financial article talking about the demise of our banking industry and it was published. I guess that I was a little early. It was amazing to me that the industry continued to grow but then they had another bubble to feed on at the time which I didn’t fully recognize back then.</p>
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<p>Our best recent example of a debt crisis is Argentina where the middle-class was wiped out. The US has the advantage of controlling the world’s reserve currency but that’s been getting shaky this century. The US dollar index has dropped about a third from its high around 122 early this century. There have been benefits to this for our companies as they can more easily sell their products globally if there is demand worldwide. We had a nice rally coming out of the bottom in Fall 2002 peaking at 2007. Several bubbles popped starting our downward spiral into deflation - mortgage, oil and other commodities.</p>
<p>Your argument is of the ad-hominem variety. Anyone with a superior education should recognize that as fallacious reasoning.</p>
<p>ST2,
Actually BCEagle was not the one who mentioned the Army War College. I used it as an example of how our own government is expecting dissent from its own middle classes. And assessing it as effective propaganda the publication of those projections from the Army War College was a masterful move. In that it serves two ends; one is a discrete reminder for an increasingly disaffected middle class to behave, and the other is that it is a form of agitprop which will be a quite effective means to identify various nascent extremists. More and more of whom will be wafting out as the economy worsens. </p>
<p>Concerning the cost of education and taxpayer money being washed through our higher education funding system to the subsidized entities, perhaps some overall numbers are in order;
7.7 billion SAP payments (see below)
877 million LPIF payments (see below)
1.7 billion estimated over billings of the USDOE (Chronicle)
564 billion X .50% (expected payments with Spellings 2009 proposals) </p>
<p>Not considering the 2009 proposal-the amount of the preceding costs is about 10,227,000,000. That amount divided by an average Bach tuition of 30,000 (which is on the low end of tuition) means that over 340,000 college students could have had their educations paid for by the same taxpayer money which went to these subsidies. That 340,000 is a sizable portion of the total bachelors degrees awarded in the US yearly (1,439,0009 (national center for education stats 2006). And would reduce by a substantial amount the average amount needed to be borrowed to get a bachelors if this were used for direct support to students. </p>
<p>Not exactly a particularly workable system this…</p>
<p>BCEagle & Atana - I am indeed sorry if you did not have the hope for results in the college application process. But since this is a college forum, I see no reason for continuing a political debate. You are indeed entitled to your opinions and I certainly hope that you take some positive action to implement them. After all action speaks louder than just posting on an annonymous site. I think many of your points have merit and would offer benefits if implemented. In the meantime us average middle class people have to make do and take advantage of what is available. Many years ago I was part of radical student movements - I guess time has a way of mellowing ones outlook.</p>
<p>The problem with Colleges is the same as the Health Care Industry: If someone else is paying, the price is going to go up.</p>
<p>With the Health Care Industry, insurance separates the customer from the cost. From the consumer’s perspective, it is practically free, so why not demand the most expensive health care.</p>
<p>With Colleges, financial aid, and loans in particular, separate the the consumer from the cost. People don’t see loans as a “cost” because they don’t have to pay it today. Thus, if the government is paying a large part of the cost, people will send their kids, regardless. Your EFC is the same regardless of whether the college costs $10,000/yr or $50,000/yr, so why not send them to the best school for the same cost?</p>
<p>A college can keep raising its tuition because the government keeps funding the additional cost.</p>
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Maybe at public schools, but not at privates, where this downturn will cause staff cuts, construction postponements, discretionary spending cuts, and tuition increases (which only the wealth will pay, subsidizing the middle and lower groups).</p>
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<p>Is that a strawman or a non-sequitur?</p>
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<p>This was an apolitical discussion until you injected politics into it.</p>
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<p>My current battles are at the state level on education. I like to count
the costs, whether in political battles or mundane forum threads. I try
not to take on more than I can chew.</p>
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<p>Perhaps kids are fooled by loans, parents definitely see loans as a cost to them. Interesting how we have heard a lot of stories of students who are bemoaning their debt ridden state and being unable to capitalize on their degree, but we haven’t heard many parent stories.</p>
<p>Is that the next shoe to drop?</p>
<p>Do you mean parents being asked to help out with their kids’ loans or parents suffering under their own debt load. If your kids are in college now, you should have gone through college when costs were far lower along with interest rates. My interest rate on college loans was 2% for $1,000 to be paid over 10 years.</p>
<p>I’m wondering about parents suffering through loans taken out to put kid through college.</p>
<p>If parents aren’t aware that their college loan for their child is a cost, I feel sorry for them because they’re deluding themselves. It’s a mortgage, baby, with your very existence as a lien.</p>
<p>Certainly, the folks operating the Parent PLUS loans make it easy to get the initial loan, and then make it easy to spread out payments longer then 10 years when semester loan after semester loan piles up like so many slices of bread. But you DO it, because you said you’d help your kids through college.</p>
<p>So now you’ve got nearly 70-80-90K in PLUS loans, and see that 7.9% interest rate and you think, well, maybe I’ll roll that puppy into my existing home mortgage at a lower rate. Wait a minute, mortgage man says. What’s your house worth now? Your new, combined mortgage cannot be more than 75% of the value of your re-appraised house. And that’s even if you have pristine credit.</p>
<p>Yuck!</p>
<p>…student support services</p>
<p>was mentioned in the first paragraph of the article and I was surprised not to see a further discussion of it. Beyond counseling and career services, what about all the student services provided to allow your child to live in the style to which he/she has become accustomed. Recreation centers with pools, climbing walls, and multiple weight rooms, dorms with single-room suites and kitchens…</p>
<p>I understand colleges are in competition with each other to look good and be attractive to prospectives, but this is all costing more and more and ultimately gets paid by tuition.</p>
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<p>Not true. Not even close. Not one dime of tuition revenue is going into stadium renovations or athletic training facilities. The athletic department at Michigan generates a substantial surplus (read “profit”) every year. The revenues from football—tickets, TV rights, concessions, paraphernalia—far exceed the football program’s operating expenses. Basketball also generates a surplus, though much smaller. These sports fully support all the University’s other sports teams and athletic facilities, and have several million dollars left over at the end of the year to turn over to the school’s general fund to support general educational programs. So far from being a drain on tuition dollars, revenue sports at Michigan actually supplement tuition dollars and state aid in supporting the University’s educational programs. The reason tuition keeps rising at Michigan is that it costs a lot of monery to remain competitive as a first-class university, and the state of Michigan is chronically broke and has underfunded public higher education since the 1970s.</p>
<p>“…student support services…
…was mentioned in the first paragraph of the article and I was surprised not to see a further discussion of it. Beyond counseling and career services, what about all the student services provided to allow your child to live in the style to which he/she has become accustomed. Recreation centers with pools, climbing walls, and multiple weight rooms, dorms with single-room suites and kitchens…” </p>
<p>Mommusic, quite true that these extra amenities raise the tuition, and that these are a partial consequence of the tendency to use student funds (often via the loans) for non-curricular uses. These kinds of glitter can’t be really described as necessary because for years US academe did not have them and these are not that common in other systems. </p>
<p>But a type of involuntary reform is coming in regards to these type of expenditures. In many states such as California and Colorado the state governments are now in such funding constraints that their ability to provide matching funds for building projects of these kinds is about exhausted. </p>
<p>Projects which are already in progress or paid for by already existing grants, alumni or corporate donations, will be finished. But since state governments will not be able to provide matching funds it’s very improbable future projects of this kind will be approved. </p>
<p>And as the economic difficulties become more marked, projects of these kinds could have a PR effect well opposite of what was intended. Simply because the general public will assume that it’s direct public funds which are paying for these amenities. And as other governmental services are curtailed it’ll be much harder for academe to promote glitter and trophy buildings as being genuinely in the public interest. It’ll be difficult for the electorate to reconcile the need for these type of structures when the roads, public schools, hospitals and etc are declining due to lack of funds.</p>