Tuesday, September 11, 2012

In Tuition


What I find remarkable is the number of people who worked their way through college decades and decades ago cannot for the life of them figure out why the lazy kids today cannot do the same thing. That somehow they believe that inflation has been uniformly applied to all segments of the economy. An August 15th Huffington Post piece (citing a Bloomberg analysis) on the cost of college really puts it all in perspective, and explains why young adults lucky enough to have a college education may also face massive debt, no longer dischargeable in bankruptcy despite a dearth of jobs necessary to support that debt.

Let’s see how prices have changed over the last three decades (since 1978). Food has escalated a whopping 244% in that time period, so we can use that as a point of reference. That price movement can effectively be used as “status quo.” The change in earning power and the inflation of the dollar has pretty much covered that price increase so it has not been particularly impactful on our reducing our standard of living.

We’ve all seen how the cost of healthcare has skyrocketed, and as anybody who has to buy health insurance knows, those costs often go up at a multiple above the CPI. Over thirty years, that number has shown an increase of 601%, well over double the average increase in food prices and consumer goods. This means that medical costs have eaten into the American standard of living by actually reducing the availability of the rest of our income for other spending or savings. This escalation also is completely unsustainable and will eventually bring the system into total collapse.

But as bad as this disproportionate increase in medical costs is for most Americans, perhaps one of the reasons we aren’t producing enough super-educated graduates is that higher education is rapidly drifting away from the average American family’s ability to pay for it. The price hike in this category is a staggering 1,120% increase in the cost of college today versus what it cost in 1978. Well over four times the inflation rate for all the other costs we face. And as state and local governments have just plain run out of cash to support public institutions of higher learning, as philanthropic contributions have fallen during hard times and endowments suffered under perilous market conditions, the average cost of a four-year undergraduate education has increased even faster – by 15% just between 2008 and 2010!

If a college education is literally the backbone of the middle class, it is no wonder that the inability of middle class families to pass that same education down to their children, forces us to stare down at the rapid decline of that middle class. Young men and women today cannot simply put themselves through college as their parents and grandparents once did because the costs represent so much more of an average family’s net worth or earning power.

Indeed, as tuition costs continue to rise and the national student loan debt hits $1 trillion, some people have been left wondering if college is even worth it anymore... Education Secretary Arne Duncan told the Associated Press in June that lowering college costs needs to be priority for the whole country... ‘As a nation, we need more college graduates in order to stay competitive in the global economy,’ Duncan said. ‘But if the costs keep on rising, especially at a time when family incomes are hurting, ‘college will become increasingly unaffordable for the middle class.’” Huffington Post. We are stabbing ourselves in our most vulnerable body parts, and the blood flow is sapping our strength. We have the power to stop the hemorrhaging, but that is not a popular sentiment these days. We’re rather bleed to death slowly, it seems.

I’m Peter Dekom, and when you look at these numbers, really suck up their meaning, you know, absolutely know, this has got to change if we are to survive as a nation.


No comments: