dagblog - Comments for "Why College Costs So Much, Part 1"

Good Post. I don't have a lot

Saladin — Sat, 17 Mar 2012 01:20:48 +0000

In reply to Why College Costs So Much, Part 1

Good Post. I don't have a lot of time, but I am looking forward to your series.

I am curious what you think about the advent of the IBR? It seems to me to open the door to eventual full federal financing via student loans. I expect student loans continue to grow even more quickly then tuition, and much of it will never be paid back (which is fine with me, but I despise the financial middlemen who are taking their 6.8%).

And I will add this, there

tmccarthy0 — Fri, 16 Mar 2012 23:38:44 +0000

In reply to Why College Costs So Much, Part 1

And I will add this, there has been much research into the relationship between the rising cost of higher education and the Randian property tax revolt 1976 - present.

Two excellent papers to peruse are:

State-Financed Property Tax Relief

Fred C. White

American Journal of Agricultural Economics , Vol. 61, No. 3 (Aug., 1979), pp. 409-419

Published by: Oxford University Press on behalf of the Agricultural & Applied Economics Association

In the first White attempts to create and analytical model to evaluate the potential impacts of alternative approaches to property tax relief. I think what White is saying in his paper is that from what state expenditures will property tax relief originate. It was an important question in 1979, and we are seeing some of the outcome which is the cost of post secondary education where property taxes shared by one and all were the solid tax base for funding state programs including education at all levels.

The federal government doesn't really fund higher ed, they provide financial aid opportunities for students by funding Pell Grants, Perkins loans, and subsidizing Stafford Loans, it is the role of the state to provide and fund education.

Prop. 13, Prop. 13, Prop. 13, Prop. 13 aargh

State Higher Education Spending and the Tax Revolt

Robert B. Archibald and David H. Feldman

The Journal of Higher Education , Vol. 77, No. 4 (Jul. - Aug., 2006), pp. 618-644

Published by: Ohio State University Press

Archibald and Feldman in this piece simply reiterate that it is the individual state(s) responsibility to fun education how they see fit. And with tight budgets this is what happens. They directly state that even though the public supports funding higher ed, from the late 1970's until now, tax reform has sacrificed higher ed. They used data spanning from 1961 - 2001. It is a solid study.

People have made the connection. It is a tough sell to get the general public to listen rationally to efforts to raise property taxes, in that sense Republicans won the ideological war. We are privatizing everything, and that was their goal.

(I do not believe either paper is available on-line)

These are excellent points,

Doctor Cleveland — Fri, 16 Mar 2012 23:27:10 +0000

In reply to hey Genghis & Doc Having

These are excellent points, and well taken. Yes, only the richest schools can do without the kids whose parents can pay full tuition one way or another. And actually, the Harvards and Yales only become rich enough to not worry about ability to pay fairly recently ... sometime after 1960.

And absolutely, the way college expenses are structured now tends to reinforce existing class structures and restrict upward mobility, whereas from 1945 to circa 1980 higher education promoted upward mobility.

hey Genghis & Doc Having

tmccarthy0 — Fri, 16 Mar 2012 22:37:58 +0000

In reply to Fair point about the baby

hey Genghis & Doc

Having worked in Admission for years as a Data manager/analyst for both private Universities and Public, some with endowments some without.

The problem I found at the smaller Private colleges I worked for was their over-reliance on middle and upper middle class families who had access to loans and would select those students above the student whose parent was financially unstable.

I realize the larger schools you are talking about have huge endowments and can help students who are economically disadvantaged. However, most people don't attend large schools but they attend small private colleges or the state system. I can't tell you how many times I've seen economically disadvantaged students in particular rejected out of hand. Can't qualify for a loan, you can't come here, that was the mantra.

State Colleges and Universities have a different mission, they are required to educate everyone who qualifies. But they lack large endowments and are now playing catch up.

In the 60's and 70's attending college in California was cheap, as little as 60.00 per semester. Schools then were fully funded through big property taxes and when Prop 13 came to fruition suddenly in colleges in CA were on the line, tuition began to rise as a result of that particular Proposition. And then came Reagan as President and the mantra of cutting taxes all the time for everything. Then budgets began to shrink at a quick rate, as no state constitution in the Union has a requirement to fund completely education above k-12.

And here in Washington people went crazy with Initiatives like Prop 13, and slowly, no quickly actually tuition began to rise exponentially like I documented in my blog.

I think in large part the rising cost is directly related to the slashing of taxes across the boar, prop 13 is the perfect example and much has been written about the effect it had on public education in California.

Financial Aid is what keeps smaller private colleges running, and that pool of money has also been shrinking since the 1980's, with some of the biggest cuts made to Pell and Perkins. Both of those programs are absolutely necessary to fund an economically disadvantaged student through a college education. Those used to cover tuition and books now they simply pay for a small portion of tuition and books.

In many admission offices they look specifically for students who are going to be able to come up with the funding necessary to complete the program, and although SAT scores are taken into account, so is financial status. It is a vicious circle, of course many of those students test higher as they have had many advantages. Students now rely heavily on parents, parental college loans, Stafford and now private loans and come out with 60,000 - 120,000 in debt for a damn four year program. Sheesh, how do you unbury yourself from that kind of debt? Don't think we don't see everything, because with the FAFSA we see it all.

Money talks, and it speaks loudly during the admission process.

Yes. The point that they are

Doctor Cleveland — Fri, 16 Mar 2012 20:14:00 +0000

In reply to Fair point about the baby

Yes. The point that they are not competing for sufficient students, but for the best possible students (meaning the students that they expect to provide the most long-term value to the school), is near the heart of the problem.

This is another reason that Romney's "shop around" advice is unsound. To a surprising degree it is the colleges and not the students who are doing the shopping.

Fair point about the baby

Michael Wolraich — Fri, 16 Mar 2012 19:54:23 +0000

In reply to Thanks, G. Your quibble is

Fair point about the baby bust. Moreover, I suppose that private colleges aren't trying recruit some minimum threshold of talent; they're trying to recruit the best candidates they can get. So now matter how large or small the applicant pool, private schools will still feed the need to compete with state schools.

OK but the important thing is

The Decider — Fri, 16 Mar 2012 19:50:23 +0000

In reply to A Harvard education is like a

OK but the important thing is what is Texas A&M? It's gotta be like an orange 83 Chevy half ton pickup or somethin...

Thanks, G. Your quibble is

Doctor Cleveland — Fri, 16 Mar 2012 18:17:25 +0000

In reply to Thanks for this series, doc.

Thanks, G.

Your quibble is gladly acknowledged. I'm struggling for a balance between the data and manageable length; sometimes I err in one direction or the other, sometimes I manage to err in both at once.

I do find that most arguments about why college costs so damn much tend to zero in one particular factor that the writer particularly dislikes (too many rock-climbing walls and espresso bars for students! too many administrators! too many faculty doing research on stuff that sounds nerdy!) and tries to make that the whole cause. But obviously, none of those factors triple a budget. The state budget cuts are the largest factor, just in terms of arithmetic, so that's where I went with installment #1.

And I don't have all the data I want, so that I have to give an impressionistic rather than scientific answer to your last question. The state budgets do begin to be cut in the 1980s, with the beginning of the no-big-government Reagan era, and that is one of the factors driving tuition increases over the past 30 years.

The 1980s is also when we see the rise of national college rankings, like the US News & World Report Rankings, to prominence, and the explosion in hyper-competitive admissions, with kids applying to many more schools and admissions rates dropping like cannonballs off the Tower of Pisa. Those are important factors driving costs (as distinct from market price), and deserve at least one post of their own. But I would point out the the hyper-competitive admissions race was well underway back in the 1980s, in the midst of a baby bust generation applying to schools. So the increased number of applicants over the last ten years isn't the sole or necessarily the main driver of that problem. Selective colleges could get pickier and pickier about the students they took even when the overall number of students was at a low ebb.

Thanks for this series, doc.

Michael Wolraich — Fri, 16 Mar 2012 17:50:17 +0000

In reply to Why College Costs So Much, Part 1

Thanks for this series, doc. Your treatment of the dynamic between state and private tuitions is particularly interesting and original.

One quibble on the data. With regard to public schools, you jump from "it's not the faculty" to "it's the budget cuts," but there are other cost factors besides faculty pay. According to the Delta Cost Project, spending per student at state research universities rose almost 20 percent between 1998 and 2008, easily outpacing inflation. As you observe, the biggest growth did not come from instruction costs, which increased 10 percent. It came from research costs, which increased 23 percent.

That said, tuition at state research universities rose much faster than costs per student--about 50 percent over the same period--so your point that loss of revenue accounts for the majority of tuition increases at state universities still holds.

One other major factor that you don't address is population growth. A big reason that competition for top colleges has become so intense is the baby boomlet that came of age over the past ten years. The increased supply of students would have allowed private schools to attract plenty of talent even if the price competition from state schools had not diminished.

Finally, I don't know how much data is out there, but it would be interesting to correlate the data with more granularity over a longer period. Tuition has been rising rapidly since the 80s. When the did the state cuts begin? Do tuition increases (public and private) correlate closely with periods of large budget cuts?

Anyway, interesting stuff. I look forward to the next installment.

A Harvard education is like a

Doctor Cleveland — Fri, 16 Mar 2012 05:08:18 +0000

In reply to So if Harvard is a Jaguar,

A Harvard education is like a Jaguar in that it's no more useful than a mid-range sedan, but people are impressed.