One thing missing in this analysis is the contribution of more stingy state funding to the decrease in affordability of public universities. For example, the University of California is actually cheaper per-student now to operate than it was in 1990, by about 25%: if you take the total budget, divide by total students, and adjust both numbers for inflation, the result now considerably lower. And that increased overall efficiency comes even despite an increase in administrators.<p>So if the per-student budget is lower, why are per-student fees much higher, rather than 25% lower? Well, the state portion of the funding has declined even faster: from $16,500 per student to somewhere in the $8-9k range in the upcoming budget (inflation-adjusted). So tuition has gone up to compensate.<p>The situation differs at different universities, but in the UC system it's close to being a dollar-for-dollar replacement of declining state funding by increased tuition.
College tuition is too high and rising too fast -- that's nothing new. But this article wasn't (primarily) about that, this article was about how borrowing by colleges and universities is shooting up.<p>In their defense, I want to say that I think it is an example of wise financial management with a long-term view. Most institutions struggle to consider any time horizon beyond the current year (if not just the current quarter), but often schools can take a longer view. And right now, interest rates are hitting a once-a-century record low. I contend that an institution would be WISE to borrow as much as possible on a long-term basis. In a few years that 2% loan may be LESS than they are making on their investments (if their investments were locked in years ago, it may be less right now). Do all the building possible right now, then plan to ride out a couple of decades.<p>The article suggested that taking on this debt wasa sign of mismanagement and recklessness, but it seems to me like a sign of long-term vision. What do you think?
What can't go on, won't. There's no reason a college needs to charge $40k to an undergraduate. What's changed in the US over the last few decades is the ratio of administrators to students. I don't remember the exact numbers, but it went from something like 1 in 9 to 1 in 3. Colleges will simply have to make due without the third assistant to the vice dean in charge of diversity and lower the tuition they charge to new students.<p>Fewer people will get degrees, of course. Some courses of study are investment, and some courses of study are consumption. You'll see a drop in the consumption degrees, since those people could only get jobs by continuing on to get a law degree. There aren't any jobs for newly minted lawyers right now.<p>I would like to see the law changed so colleges can't ask about your family's finances. The kind of perfect price discrimination they practice would be flatly illegal in any other industry. Imagine going to a car dealer and having him tell you "Well, the list price for a new car is $100k. But if you turn over all your financial information, you know, how much your family's house is worth and how much your parents make, we'll adjust the price of the car so you can just barely afford it."
The craziest part, IMO, is that I had to make a decision whether or not to take on $175,000 in debt (I went to RIT, it costs $44,000 per year) when I was 18 years old and had never handled more than $300. Sure! Sign me up! I couldn't even imagine what that much money would look like, let alone feel like to pay back- at that time, it was as equally mysterious as $10,000 or $1,000,000.<p>Luckily, I left after my 2nd year and only walked away with $50k in student loans. It was one of the best decisions I've ever made.
I have a hard time imaging a world is with a huge crash in education. Does this mean fewer colleges and more students going into trades? Radically lower tuition? Fewer tenured professors, and more adjuncts and visiting professors with three-year contracts?<p>Speaking of the latter, there is the disruption of online course offerings. These are creeping in from the bottom, replacing introductory lectures, and working their way up. Online classes allow schools to take the already squeezed adjuncts and grad students and pay them even less to help grade/moderate the online variants. Meanwhile eating away at the consensus that education is a series of seminars amongst the wise.
Back when Mark Edmundson wrote a piece for the NY Times saying that one should attend college for the joy of it, not as a vocational school, I had a look at the University of Virginia tuition about the time he started teaching there, and at the minimum wage. At the end of the 1970s, a summer of minimum wage work would pretty much cover U.Va. tuition and fees, though not room and board. At the moment, the equivalent number of hours falls far short.<p>A sort of institutional will has taken over the universities, one that leads them to expand at all costs. The area occupied by George Washington University in Washington, DC, has considerably increased over the years, and they have campuses in Alexandria and along Foxhall Road. AU, Catholic, and Georgetown have all expanded--the last, which is hemmed in with expensive real estate, is looking to open a campus several miles away across town. And they all seem to have Schools of Professional Studies (or some such name) where one can earn a credential by the investment of a couple of years of evenings and money that one's employer might pay for.
Never underestimate the power of easy lending to the population.<p>Especially if this lending will <i>allegedly</i> give more status/money to the person<p>Housing bubble, Education bubble, Healthcare bubble
Fewer jobs, more education required to fill those positions, education becoming more expensive and debt unavoidable. What will make this bubble finally burst?
My advice is to go to a college that you can afford. I spent my first two years at a local community college and transferred 60 credit hours (about half of what's needed to graduate) to a large state university where I graduated Phi Beta Kappa with honors and I only had about 15K in student loan debt. I could have avoided the loans entirely if I had worked a few more part time jobs.<p>You don't have to go to a high-priced private university for four years to have a good career (that you enjoy) and live a nice life.
The most relevant question is "whether the college experience (including life experiences and consequent employment value) is worth the attached price tag?" It's one thing when you are paying $5,000 per semester, but at $40,000 per year for 4 years? Unless those 4 years leads to an positive cash flow of $10,000 per year thereafter to repay this debt, I just don't see the rationality of paying so much for non-incoming producing B.S./B.A. degrees (biology, psychology, sociology, languages, etc.).
I would be curious to know the costs and implications for adopting an Australian solution.<p>Here in Australia everyone can go to college and what happens is that the tax office keeps track of the money you owe and then as you start earning money they pay the loan back through a tax increase. You also get a discount if you have the loan back quicker. It's all seamless and you can also add books/computer to the loan as well.