<p>Posted below is an article that appeared in today's Wall Street Journal on the 'Opinion" page A 10. I leave the interpretation up to all of you----</p>
<p>August 23, 2005</p>
<p>Commentary (U.S.)
Why Does College Cost So Much?
By RICHARD VEDDER </p>
<p>As college students begin a new academic year, many parents are reeling from tuition fees. This fall's probable average 8% increase at public universities, added onto double-digit hikes in the two previous years, means tuition at a typical state university is up 36% over 2002 -- at a time when consumer prices in general rose less than 9%. In inflation-adjusted terms, tuition today is roughly triple what it was when parents of today's college students attended school in the '70s. Tuition charges are rising faster than family incomes, an unsustainable trend in the long run. This holds true even when scholarships and financial aid are considered. One consequence of rising costs is that college enrollments are no longer increasing as much as before.....</p>
<p>This is what I was referring to in one of the other threads, college is being priced out of reach to the regular consumer. Many will argue that a lot of schools are private institutions and can do what they like. However, this leaves the schools in a position to catering only to those that can afford to pay thus fostering the perception that they are elitist institutions.</p>
<p>Not sure what could or should be done but tuition that is triple in real dollars what it was in the 70s should raise a concern.</p>
<p>The elite institutions, the private ones, give massive amounts of money in grants to those who cannot pay. How does this make them catering to only those who can pay???</p>
<p>Though some schools provide significant financial aid, i.e. Princeton, harvard, Yale, not all of them do. Further, schools like Princeton, Yale and Harvard are just starting to address this perception by providing more financial aid to those who really need it. The criticism may only a perception but it is also a reason many lower income students have not applied in the past. Further it may be why there is such a low attendance rate of students that qualify for Pell grants.</p>
<p>Because of the concern for the cost both today and in tuition increases many lower income students will apply elsewhere. From their perspective those schools do not "cater" to them. For more on this perception do a search on some of the older threads for the recent article in USNews on this topic.</p>
<p>"Not sure what could or should be done but tuition that is triple in real dollars what it was in the 70s should raise a concern."</p>
<p>Oh, maybe, maybe not. Real income of those in the top 5% of the population (those receiving no financial aid at 100% of need institutions) has well more than tripled since the 1970s. So, for them, private colleges are now in fact cheaper. And they make up the majority of students at 100% of need institutions.</p>
<p>"The elite institutions, the private ones, give massive amounts of money in grants to those who cannot pay. How does this make them catering to only those who can pay???"</p>
<p>Well, massive is questionable. At my alma mater, the dollar subsidy that goes to ALL students (the difference between per student costs, and what a student who requires no aid would be paying) is much, much larger than the amount of financial assistance given to those accepted and attending, and the percentage of those receiving need-based aid has, I am pretty sure, declined since the mid-70s. In other words, "assistance" has gone up, but disproportionately for the wealthy.</p>
<p>I don't need to do a search. Many reasons exist for the dearth of Pell Grant recipients at "Catering Schools". One can think of apples not falling far from the tree as well as not enough information at the HS regarding Financial Aid policies. One can think that without good preparation they cannot compete for the admission it goes on and on. I don't however believe it is the cost of attending because for them it is all covered. This is a misnomer. I am all for need based aid and am not whining but the money is there for them.</p>
<p>Sometimes I really do feel like I am being conned! First, it is established that your child's education is the most important thing in the world. Then you are told that college is required in today's world. Maybe you could get by with a HS education in the past, but college for all is necessary today. So now they are free to jack up the price, higher and higher because it is something that is crucially important. And the final piece, the "Sting" is that giving money to higher education is virtuous! You get a tax deduction and the more you give, the better of a human being you are. If you give enough $millions your name will be memorialized in stone on a plaque on a building for all to see what a wonderful and good person you are. Exactly as if you had given money to feed the starving millions or cure disease. :) </p>
<p>I'm not saying it all IS a con game, just that sometimes I get that sneaky feeling! :)</p>
<p>we were pleasantly surprised when the fin-aid pkg of the ivy u my son will be attending this fall will cost us less than that of the fin-aid pkg of our state u. the private institutions have a large cache in endowments to help out the neediest of its applicants. And being private entities they could very much do whatever they wish with their funds with less government restrictions.</p>
<p>We need to make sure we are talking about the real price, not the sticker price.</p>
<p>Sticker price at Swarthmore for tuition, room, and board is about $42,000. But net of financial aid, the average price is $26,585. That's a significant difference.</p>
<p>The actual per student expenditures (not inc. finanicial aid) are $68,305. So, the $26,585 average price represents more than a $40,000 subsidy.</p>
<p>These headline grabbing news articles about tuition are a big disingenuous. It would be like an article about airline fares using as an example someone who walks up to the counter and pays $1300 for a round trip NY-LA flight departing in 30 minutes. Yes, that is the full-fare price, but it is not representative of the average cost of NY-LA travel.</p>
<p>I think Vedder is the economics professor from Ohio University who has recently published a book about finances and education. One of his solutions to this crisis is to privatize public secondary educationto make it more fiscally sound. Another solution is to move to the University of Phoenix model of higher education--no campuses, no athletics, and no activites beyond what happens in the classroom. IMO these cures are worse than the disease.</p>
<p>I just started reading Vedder's book. It was published by the AEI Press. </p>
<p>Here's a direct quote about his solutions:</p>
<p>""Can economies be made here? There are at least four ways these costs can be reduced: by increasing the student-faculty ratio; by ending or modifying tenure; by increasing the use of part-time or adjunct faculty; and by using more capital-intensive instructional techniques."</p>
<p>Wouldn't we love his solutions:</p>
<ul>
<li>larger classes!</li>
<li>more part time faculty who can never be found</li>
<li>more videotaped lectures.</li>
</ul>
<p>His editorial is shameful. He says, as a criticism "Salaries of full professors at research universities are up well over 50% in real terms since 1980. Mid-six-digit salaries are becoming commonplace for superstar faculty, coaches, and university presidents"</p>
<p>Has he looked at private sector upper management salaries in the same time frame? Has he looked at CEO salaries?</p>
<p>I understand that he may not have the right solutions but I think he more clearly defined the problem in economic terms. I think the economic point, using the Swarthmore example above, is why does it take $68K per student to teach that student? I do not know what the solution is but I do see it as an issue for most people.</p>
<p>Perhaps mini has the reason it is not as big an issue with more people. The top 5% of wage earners have had salary increases well above the inflation rate so they do not see the impact that perhaps others see. These are often the customers that many schools want to attract because they can pay the full price for tuition and they may also have high acheiving students.</p>
<p>
[quote]
...why does it take $68K per student to teach that student?
[/quote]
</p>
<p>Why is a Mercedes expensive? Swarthmore competes at the premium, luxury end of the market. Very small scale, personalized education -- more of a "hand-made artisan" product than mass produced consumer goods. All the bells and whistles: stunning campus and landscaping, diversity, funding for everything under the sun. All of these things are expensive.</p>
<p>There are cheaper ways to deliver an education product, but Swarthmore certainly offers good value, selling their product for $40,000 a year less than the cost of goods solds. In fact, all of the ultra-selective colleges and universities discount their product extensively. That's why customers are beating down their doors.</p>
<p>My hypothesis can in fact be tested. If I am correct, prestige private college tuitions/room and board will increase at a rate well in excess of inflation for the next decade in order to move to lowering the subsidy for "full-freight" customers. And, again if I am right, demand will go up rather than down as this happens. Folks will be happy to pay it (as they should be - what else were they going to do with the money?)</p>
<p>The issue, really, is what is happening at the public colleges and universities, as more and more low-income students are unable to access them. This is already a big issue in my state, and will likely get larger. This all happens against the backdrop of the Department of Labor projecting that of all the jobs now requiring four-year college degrees, 76% don't require any of the skills acquired in those four years. As we shift further to a service economy, this percentage will increase, even as more and more employers require diplomas.</p>
<p>Do I think the prestige private colleges are "worth" 190k over four years? Frankly, not even close. The studies of students who got into said institutions and then went elsewhere doesn't show they were adversely affected. But then I don't have $190k to spend - for some folks, the premium is pocket change.</p>
<p>Accountants will be at in strong demand. ;)</p>
<p>The costs of maintaining and heating/cooling some of these massive old buildings must be skyrocketing so I understand these costs are up along with public safety budget and the expansion of computer facilities at almost every school. I do wonder about the public relations budget at some schools that seem to send a half of a tree out to each and every prospective applicant.</p>
<p>How to keep the costs down. Site licences for electronic versions of textbooks, journals and research documents would reduce book costs. There is no longer the need to have the 5th or 6th largest library in the nation since more research is done electronically, so library costs should shift.</p>
<p>I don't question the value of paying over $100,000 for a college professor, since that is what some dock workers make but I also believe a $60,000 lecturer can offer a lot especially in introductory classes or as a co-teacher with a full Professor. I know I leaned a lot from the grad student discussion group leaders and they deserved better pay and full benefits.</p>
<p>Are the elite colleges for the elite? Well what percentage of the middle and lower incomed class families get a kid into these schools...compared to families that earn enough to afford private exclusive prep schools? Even if a school had 2/3 of its population from families below $50,000 a year income that still would represent an admission advantage for students from families with above $50,000.</p>
<p>Because college degrees are required for jobs that once only required a high school diploma...public education should be free for college as it was and is for high school.</p>
<p>Regarding the cost of heating/cooling costs at schools, it was one of the reasons for the mid semester break and no school in the summer here in New England. No cooling costs in the summer because the schools are closed, no heating costs at the end of December until late January, the coldest month of the year.</p>
<p>Now the schools make much more efficient use of their infrastructure by providing summer school and other things like sports camps. From my perspective, it is another reason that the expenses amortized across all the uses of the facilities should help drive the cost to deliver education down.</p>
<p>"Since its inception in the late 1990s, PACE has advocated the idea that high-risk drinking leads to serious consequences, including violence, vandalism and sexual assaults. The problem also costs the city and university more than $1 million each year in policing costs and cleanup expenses" From another posting on Party schools. Here is a cost that could be reduced.</p>
<p>Eagle79 - I agree that year round use of facilities spreads the fixed cost of operation out but haven't you been in a dorm where the temperature was set above 75 in the winter and at 70 in the summer for air. Those costs should be considered along with passive solar retrofits for some of these ancient dorm castles.</p>
<p>I am also assuming that some of those fixed costs are also not being tracked closely and are awarded as a side benefit. For example, I am not sure how much it costs to run an overnight basketball camp for a week. However, I believe that the use of the dorms may be provided to the basketball coach as a perk of their job so they can generate a summer job for some of his/her players and a little extra income.</p>
<p>I can assure you that colleges DO look carefully at costs before making decisions on basketball camps, building renovations and so forth. I can also assure you that decisions regarding facilities maintenance, renovation, replacement and so forth undergo the same scrutiny that a for profit company gives, including financial payback and political pull of tenants (ever notice how the top execs at a company seem to get redecorated first?...)</p>
<p>It's curious how we can criticize a college for still using an "ancient dorm castle" yet put down an alternative place for not having "character".</p>
<p>Anyway, I cannot defend the practices of some schools that spend tens of thousands per year from endowment funds and still charge full freight for those who can (with difficulty) pay. I guess it's a market issue.</p>
<p>In support of your comment, it is also interesting that some schools are tearing down non-descript buildings and putting up new ones that are a bit more interesting. For example, the new Stata center at MIT and the Viterbi school at USC.</p>