Why is college so expensive?

[vt]

Tuition has gone up over twice as fast as inflation and population growth. Too many administrators?

In addition living expenses are much higher. Too fancy dorms? Too much Starbucks vs. make your own?


https://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html

[dcarrigg]

Re: Why is college so expensive?

Tuition has gone up over twice as fast as inflation and population growth. Too many administrators?

In addition living expenses are much higher. Too fancy dorms? Too much Starbucks vs. make your own?


https://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html

Prices still didn't go up anywhere nearly as fast as prescription drugs or lots of other healthcare stuff. And I think they didn't really go up faster than rent either.

So there's a few things happening in tandem, I think.

1) College, like healthcare, can't really be offshored. Not the bulk of it. So you don't get the cheap labor inputs.
2) A larger percentage of the population is applying to college, for better or for worse.
3) A larger percentage of the population is being accepted into some various college program.
4) For profit colleges drive up aggregate prices and didn't used to exist before about 20 years ago.
5) State budgets did cut back on spending despite how this article frames it.
6) I agree with you, too many administrators, and too much money paid to administrators. But a lot of them exist because people didn't like congressmen just assigning universities money by law and demanded a transparent system of complicated and convoluted competitive grant applications to federal bureaucrats instead. So now every professor and grad student spends a quarter of their time writing grants and an army of administrators spend all day processing them and the budget lines attached to them and all the various riders the bureaucrats can invent. Hurray for "trimming the pork!"
7) Active fundraising because more important as income inequality spiked. No longer can you rely on consistent tax revenue from the state, and so you go after alumni cash because every college just by sheer law of averages is bound to have a couple of multimillionaires who hit it big or whose mommy and daddy were rich the day they signed up who they can milk for money. This becomes the President of the university's number one job, and a whole army of administrators are hired to wine and dine and beg and cajole these people too. And this ties directly into...
8) College sports, which now are basically as big as professional sports were 40 years ago, and professional sports are now so big that middle class people can no longer afford to go see a game in the biggest markets. This means coaches making tens of millions, assistant coaches making millions, massive hundreds of millions of dollars stadium construction, the whole nine yards. They say this brings in more in revenue than it costs, they say the same about the alumni begging strategy and the grant funding strategy. But it sure adds up to a confused central mission that spends a lot on missions unrelated to education. Then, with that logic firmly entrenched, there's...
9) The starbucks inside the air conditioned luxury dorms etc. This, they rationalize, as a necessary recruiting tool to get students to apply to their university. And they need students to keep the tuition money to keep enough kids in the classes to justify enough faculty, which are required to get accredited, which is the base requirement to participate in all the federal grants and alumni fundraisers and sports events stuff that an army of administrators does all day, and then, of course,
10) This new army of administrators and starbucks workers and everything else requires an equal-sized army of new buildings and construction and grounds workers and maintenance folk and all that just to house the administrators and sports fans and alumni balls, etc.

But really, even though all that's true, these last couple years, college prices have been kind of flat compared to inflation, believe it or not. Especially compared to other things. Check it out:

[BK]

Re: Why is college so expensive?

1.Echo Boomers - demographic surge of children of baby boomers
2. Colleges need to raise revenue to support higher and higher institution debt - higher revenue = better deal on new debt

PS: A friend works at a College and tells me they discovered that raising tuition attracts more/better students. Yes, Americans flock to the most expensive schools - crazy.

Read http://jeffselingo.com/book/college-un-bound/

[LazyBoy]

Re: Why is college so expensive?

2) A larger percentage of the population is applying to college, for better or for worse.

2a) Student loans are easy to get. There's no loan officer looking at the risk.
2b) Until recently, perhaps, borrowers weren't looking at the ROI.

[dcarrigg]

Re: Why is college so expensive?

1.Echo Boomers - demographic surge of children of baby boomers
2. Colleges need to raise revenue to support higher and higher institution debt - higher revenue = better deal on new debt

PS: A friend works at a College and tells me they discovered that raising tuition attracts more/better students. Yes, Americans flock to the most expensive schools - crazy.

Read http://jeffselingo.com/book/college-un-bound/

Usually, we're in agreement. And I think mostly we are. The only thing I'd throw in is that the class of 2020 is already here. MOOCs aren't taking over the world. Online courses still kind of suck just as bad as they did 10 years ago. And a ton of the college experience is still doing stuff on the ground: running a radio show on college radio, publishing a column in the college paper, playing on the college team or in the college band, organizing your first college benefit, starting your first college company, engineering your first college circuit board, sleeping with your college boyfriends/girlfriends, going on your first trip abroad, sequencing your first genome, collecting your first specimens, unearthing your first artifacts, catching your first rare sea creature, etc. etc. All this stuff happens at colleges, and you just can't do it all online. Even the time you spend in a mandatory civics or english type course isn't wasted. You make friends, get in debates, learn to talk openly and be responsible for yourself in a social setting and accept constrictive critiques. It's not stuff an 18 year old can do in isolation with a screen and a keyboard.

[dcarrigg]

Re: Why is college so expensive?

2a) Student loans are easy to get. There's no loan officer looking at the risk.
2b) Until recently, perhaps, borrowers weren't looking at the ROI.

I think it's impossible to know the ROI. I mean, you can take some guesses. But there's no rule of thumb other than try to be as close to the best that you can be in whatever your chosen field is, recognize that it's licenses and certifications that get professional jobs, not degrees (some degrees directly align with a license/cert, others don't, but either way you need one), and probably skip the bottom-ranked school, especially if it's for-profit, unless you know some employer who will keep/take you on because of it. As far as majors go, the most likely to end up unemployed are business and psych, believe it or not, and not art history and philosophy. But as with anything, the license/certification rule applies. If you just tell a kid, "when you graduate, what license/certification will you get, and how will you prepare for it while you're getting your degree?" and insist that the kid answers those questions, they'll probably be just fine with ROI. On average, the ROI is quite positive.

So far as the loans go, the criminal thing there I think is the damned origination fees. 1% for shooting fish in a barrel. The second criminal thing is the billions in profit the feds make off them. The third criminal thing is what the for-profits do with them to run scams. I don't mind kids who legitimately get into college having access to capital--it shouldn't all be about how rich mommy and daddy are anyways. But they should do a better job warning kids and really hammering home what debt means, for sure.

[jk]

Re: Why is college so expensive?

there are a lot more business and psych majors than art history or philosophy majors. are you sure you're talking percentages and not raw numbers?

[dcarrigg]

Re: Why is college so expensive?

there are a lot more business and psych majors than art history or philosophy majors. are you sure you're talking percentages and not raw numbers?

Last, best data I saw, yes. Clinical psych and business management specifically were bad, I believe. Both do much better if students go on and get a graduate degree. Data's long in the tooth now, b/c it was based on the census, so it came out in 2011 based on 2010 number [Hosted by WSJ as NILF1111], and we won't have a good solid refresh until 2021 based on 2020. 2010 was a particularly bad year for unemployment, so perhaps it's not the best year to use as a baseline, but in the US, it's the only one we really have short of a couple survey jobs from georgetown that are a bit more squishy. Nevertheless, they largely agree and say something similar.

I think the problem is that people draw their inferences from the years immediately following college graduation, so they don't get the big picture of what happens over the course of a life/career.

So, for early grads, unemployment can be pretty high. And Business majors can do quite well compared to their peers. Here's the latest survey data on that:

Philosophy majors were 92% employed at a median salary of $48k (but 20% were stuck in part time work).
Art History majors were 91% employed at a median salary of $50k (but 24% were stuck in part time work).
Psych majors were 94% employed at a median salary of $42k (but 21% were stuck in part time work).
Business majors were 90% employed at a median salary of $60k (but 10% were stuck in part time work).

But, the big shift comes in the early-mid career when you look at graduate degrees:

21% of business majors go on to get graduate degrees, proving an average median earnings boost of about 40%.
47% of philosophy majors go on to get graduate degrees, providing an average median earnings boost of about 53%.
35% of Art History majors go on to get graduate degrees, providing an average median earnings boost of about 51%.
45% of psych students go on to get a graduate degree, providing an average median earnings boost of about 43%.

By this point, the Art History major and the Philosophy major are doing pretty well. Maybe it's an irony thing, and the bit of struggle in the early career causes more to focus and bang out a graduate degree. Also the marginal value of the graduate degree may be a bit less. It could also be that an Art History major with an MBA is simply more interesting than a Business Major with an MBA. But overall, when you add in the full lifetime career from 22 to 65, you find that most people land jobs after a couple rocky years; people with "worthless" degrees are much more likely to get a graduate degree, which positions them to out-earn their peers who get comfortable early and never earn one. And in the grand scheme, Philosophy and Art History aren't really doing so poorly.

Actually, some other majors do way better, middling, or worse than you'd think too. Here's a select few:

Early Political Science majors were 93% employed at a median salary of $59k (but 14% were stuck in part time work). 47% of them went on to get graduate degrees, an average boost of about 62%.
Early Chemistry majors were 95% employed at a median salary of $58k (but 13% were stuck in part time work). 60% of them went on to get graduate degrees, an average boost of about 93%. Early Computer Information Systems majors were 94% employed at a median salary of $62k (but 6% were stuck in part time work). 20% of them went on to get graduate degrees, an average boost of about 25%.

So you see what happens mid-late career and how it all stacks up over time...

[vt]

Re: Why is college so expensive?

Hopefully this insanity will come to an end:

https://www.fa-mag.com/news/texas-a-...f809-234424509

[dcarrigg]

Re: Why is college so expensive?

It's only going to get worse as inequality increases. You can get normal dorm housing with a roommate and a meal plan for the year at A&M for about as cheap as $7,000 per school year. $9,000 if you want 3 squares per day and don't throw an apple and a cookie in your bag at dinner for lunch the next day, etc. Or you can pay $16,000 and get a fancy luxury dorm and all the meals you want and a few hundred per semester to spend at the campus store to boot. Or you can live in a fancy luxury apartment with your own kitchen and all those amenities from your link and all the meals you want etc. for about $18,000.

In all honesty, Texas rent is cheap. Imagine what a studio goes for at Berkeley? You're talking more like $40,000 for something comparable there. And that's not counting tuition. So you better pray you get into the dorms.

I don't know the west coast so well personally. But I do know someone who spent most of his graduate degree at Columbia University homeless because of housing costs. It's not so bad if you're a student, since you can sneak off to the gym to shower and the dining halls to eat and find a couch to nap on. But having no bed for a couple years to get a master's degree at an Ivy League school is just a sign of our times, I guess. Apparently that kind of thing is not uncommon there. Actually it's not uncommon in NY generally--NYU's library has been basically a homeless shelter for students for years.

I mean, this is the sort of logical end-game of inequality, right? New, public-private partnerships that build opulent brand new luxury dorms for the haves, homelessness for the have-nots, a shrinking number of aging dorms for the shrinking number of middle class in-between. After all, if it's what The Market demands, who are we to judge? Thine will be done.

It's just a microcasm of the larger shifts in society.

[jk]

Re: Why is college so expensive?

It's just a microcosm of the larger shifts in society.

not many generations ago college was just for the wealthy. democratize it and, yes, it will reflect society at large.

what have we become? and when and how will this country find common purpose? i had thought we were better than this, but we live in a hobbesian society.

[dcarrigg]

Re: Why is college so expensive?

not many generations ago college was just for the wealthy. democratize it and, yes, it will reflect society at large.

what have we become? and when and how will this country find common purpose? i had thought we were better than this, but we live in a hobbesian society.[/COLOR]

It is amazing how many institutions seem to have really lost sight of their core mission though, isn't it?

I mean, universities are there to make knowledge and to train the next generation of knowledge makers. University housing is there to ensure that those making knowledge and those being trained to do so in the future have shelter while they work. You pretty much should be certain that nobody in this situation is homeless, never mind hundreds for years. And yet the luxury dorms and new stadiums go up without a hitch. Even as full time faculty are laid off for adjuncts. Universities just operate like this.

But you see this everywhere. New hospitals are becoming more like luxury shopping malls every day, even as 10s of millions go without care, and those with it are often discharged before they probably medically should be for profit purposes. The rest of us deal with aging, old-style hospitals with our roommate. Hospitals just operate like this.

82% of all new housing units built in the US from 2010-2015 were luxury housing. They only build luxury condos now. No more little ranch homes on postage stamp lots. And yet the homelessness numbers are increasing as the rest of the middle try to make due with aging, old-style housing if they can afford it. Cities just operate like this.

Or look at corporations. How many new ones have never offered a dividend and never will? How many pay their workers bottom barrel prices, and like Walmart hand out food stamp applications at employee orientation, or like Uber, offer even less than minimum wage by misclassifying them? And how many of those pay their executives astronomically record level sums? The big winners are not even the shareholders anymore. In fact, there's a record, unprecedented decline in publicly traded companies. It's all going private. Corporations just operate like this.

Look at politicians. How many take giant unlimited sums from SuperPACs? How many refuse to even meet with constituents who don't have the money to donate them thousands? How many push for incredibly unpopular things just to appease the donor class? Politics just operates like this.

Look at sports games. How many hundreds of dollars does it take to bring the family to a Pats game now? How many kids will be fans their whole life and never get the opportunity to see a game? How many new luxury boxes and seats are built into the new luxury area with special luxury restaurants? Sports just operates like this.

I mean, I think we've all discussed from our varying viewpoints and positions in life the decline in trust in American institutions. We can all feel it. Not a one of them feels like as a group they're actually really focused on their core mission and core stakeholders. It's the plutonomy. It's like pulling apart a grilled cheese sandwich. If your networth is not a minimum of 8 figures, the institutions probably are no longer interested in you.

I believe the US had almost no billionaires--inflation adjusted--between 1932 and 1978 or somewhere there abouts. Maybe the Mellons and the Rockefellers depending on if you started adding the kids' inheritances up or not, maybe Hughes at the end. There were a couple by 1980, barely. No $10-billionaires, for sure. That doesn't happen until somewhere in the 1990s. Now we live in a billionaire-celebrity culture where we simply cannot stop talking about them and we elected one to the oval office--hundreds of them, permeating our lives.

So there's a trend accelerating, right? There were many billionaires adjusted for inflation before the 30s, back in the Gilded Age. So time and events can come to reverse a trend. But so far, it shows no signs of slowing that I can see.

So I think it will just be tough for those of us who remember the time before the great coming apart. I mean, I think this says it all. And it's easy to get tired of repeating it. Because it's easy to say, "Hell this idiot has been going on on this stupid forum for well over a decade yelling about the same thing over and over." And yet, it's still the elephant in the room, probably driving a larger amount of the institutional, cultural, political, economic and social change of our time than people realize without stepping back and reminding themselves of it.

If you're middle or working class or poor (anywhere in the bottom 80%), you need to realize:

New homes constructed are not for you.
New products in development are not for you.
New stadiums (and stadium sections) being built are not for you.
New hospitals and drugs are not for you.
New university dorms and amenities are not for you.
New highways and high-speed transit lines are not for you.

These things are being built. But they're going in for the top 20%, and they're not designed for mass public use. Atlas already shrugged, years ago.

Remember this?

What are the common drivers of Plutonomy? 1) Disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments, an international dimension of immigrants andoverseas conquests invigorating wealth creation, the rule of law, and patentinginventions. 2) We project that the plutonomies (the U.S., UK, and Canada) will likely see even moreincome inequality, disproportionately feeding off a further rise in the profit share in theireconomies, capitalist-friendly governments, more technology-driven productivity, andglobalization. 3) Most “Global Imbalances” (high current account deficits and low savings rates, highconsumer debt levels in the Anglo-Saxon world, etc) that continue to (unprofitably) preoccupythe world’s intelligentsia look a lot less threatening when examined through theprism of plutonomy. 4) In a plutonomy there is no such animal as “the U.S. consumer” or “the UKconsumer”, or indeed the “Russian consumer”. There are rich consumers, few innumber, but disproportionate in the gigantic slice of income and consumption they take.There are the rest, the “non-rich”, the multitudinous many, but only accounting forsurprisingly small bites of the national pie. 5) Since we think the plutonomy is here, is going to get stronger, its membershipswelling from globalized enclaves in the emerging world, we think a “plutonomybasket” of stocks should continue do well. These toys for the wealthy have pricing power, and staying power. They are Giffen goods, more desirable and demanded themore expensive they are.
...
We make the assumption that the technology revolution, and financial innovation, arelikely to continue. So an examination of what might disrupt Plutonomy - or worse,reverse it - falls to societal analysis: will electorates continue to endorse it, or will theyend it, and why. Organized societies have two ways of expropriating wealth - through the revocation ofproperty rights or through the tax system. [Governments probably won't do anything about it.] 1) However this does not mean that governments are incapable of revoking property rights.While this tends to be something more often seen in countries with a shorter history ofcapitalist democracy, such as the Ukraine (attempts to undo prior privatizations), orRussia (where some of our clients believe events surrounding Mikhail Khodorovsky tobe a form of nationalization), it can happen in the strangest of places. 2) The more likely means of expropriation is through the tax system. Corporate tax ratescould rise, choking off returns to the private sector, and personal taxation rates could rise- dividend, capital-gains, and inheritance tax rises would hurt the plutonomy. 3) There is a third way to change things though not necessarily by expropriation, and that isto slow down the rate of wealth creation or accumulation by the rich - generally througha reduction in the profit share of GDP. This could occur through a change in rules thataffect the balance of power between labor and capital. Classic examples of this tend tofall under one of two buckets - the regulation of the domestic labor markets throughminimum wages, regulating the number of hours worked, deciding who can and cannotwork etc, or by dictating where goods and services can be imported from(protectionism).

[jk]

Re: Why is college so expensive?

yes, i remember plutonomy. i started a thread with that title in '06. how far do you think this process can go before either a. it requires a frank police state to keep the masses in line; or b. there is a countertrend reaction, wealth taxes. much increased estate taxes, etc. the next recession should be a doozy, and might bring about a big political shift.

is there another alternative? kurt vonnegut once wrote somewhere about american culture making workers hate themselves for their own lack of "success." if that can be maintained it's much slicker than a police state, and cheaper too.

[dcarrigg]

Re: Why is college so expensive?

yes, i remember plutonomy. i started a thread with that title in '06. how far do you think this process can go before either a. it requires a frank police state to keep the masses in line; or b. there is a countertrend reaction, wealth taxes. much increased estate taxes, etc. the next recession should be a doozy, and might bring about a big political shift.

is there another alternative? kurt vonnegut once wrote somewhere about american culture making workers hate themselves for their own lack of "success." if that can be maintained it's much slicker than a police state, and cheaper too.

Oh yeah, the 'remember' was rhetorical, I knew you would.

I think it's interesting that way back 12 years ago you pointed out that Chinese universities were offering masters degrees and PhDs in plutonomy.

I mean, I'm of the mind that it can get much worse and go on for a very long time. And I suspect it probably will. As in, I don't think it will be resolved in my lifetime. Probably one of two ways it could happen. First is political, but it would take an active and very determined long-term, consistent effort to change. That's unlikely, but it's a good fight and a noble effort and worth doing regardless if it's what you believe in. The second is more likely, I think, but I don't think there's any way to put real odds on it over any meaningful timeframe any more than predicting the weather. That's something sudden and terrible--major depression, war, etc.

I think the closest thing to another alternative is more cloistering. When the material world fails peasants, they always turn to the spiritual. It's possible a good chunk of the millennials and post-millennials might realize the ante's too high to play the game and just opt for exit. Move somewhere more rural, or smaller cities far enough away from a major metro to not get sucked into the orbit of capital bidding all the assets and services up, with lower costs of living. You can't lose if you don't play. It's a way to escape hating yourself for lack of success. Might be better to have your masters' degree and half the salary in a small town in Maine where it buys a little house and a yard than earn double and blow it on a closet in the Seaport in Boston where you're stuck watching all the stuff you can never afford roll by your window day in and day out. Funnily enough, that will exacerbate the microcosm of the larger system anyways. With lots of bigish fish hopping into smallish ponds. But from time to time in history Americans will lean on the old agrarian values and agrarian justice myth and turn on the perceived depravity and excess of city life. One can judge oneself and/or others rich in spirit if poor in material, and morally superior to those poor in spirit and rich in material. At the very least, it's a coping mechanism.

But I suspect if we think the amenities vt's article listed are over-the-top luxuries in 2018, we'll be blown away by what they cook up in 2030. More homeless students, and the same old broken down mid-20th-century dorms being used past their intended life for the majority, sure. But luxury or the sort you wouldn't believe for the kids with rich folks. I'm certain, for example, there's a market for concierge professors just waiting to be tapped. For $2,000 per semester per student, adjuncts would jump on it. Why bother to get dressed or go to class with all the rabble or leave your luxury digs? And if the prof has to come to the kid, it's almost a guarantee the kid will be at every class and get at worst a C. And here the pundits were thinking MOOCs were the future...

[jk]

Re: Why is college so expensive?

the low occupancy rates of the luxury student housing described in the articles posted here makes me less convinced that that's the future. students from wealthier families have long had their parents buy condos or homes off campus, perhaps collect rent from a couple of roommates, take some depreciation and expenses off their taxes, and then sell after junior graduates. they don't need luxury mass housing; they already have it.