Friday, May 15, 2015


Understanding why college tuition costs so much is exceedingly complex. Even with inflation indexing, in the 21stcentury, we are spending more on post-secondary education than ever before in our history. The aggregate of expenditures are up because the sheer number of young Americans attending post-secondary schools, from junior colleges to getting PhDs from the best schools on earth. And the number of such students is still growing. Young folks are being forced into getting such additional educational training because the world has become unbelievably competitive with educational systems all over the world now providing better training for their upcoming generations than do we on average.
Sure we have “the best of the best” – from Ivy League and equivalents to the best engineering universities bar none – but when earnings for “most of us” now depend on advanced skillsets, skillsets that fifty years ago very few nations on earth could provide, how we handle the vast bulk of our educational system matters. Without these advanced skills, the United States will further polarize (for those who can still get into the elite schools) and as a whole, continue to slip down into being an “average” or “below average” developed country competing with countries where education has become a priority.
The hard numbers tell an interesting story, a tale about dollars and results. Simply put, although the total governmental support for dollars has risen, the money allocated has not remotely kept up with the staggering increase in demand for higher education.
Some of this increased spending in education has been driven by a sharp rise in the percentage of Americans who go to college. While the college-age population has not increased since the tail end of the baby boom, the percentage of the population enrolled in college has risen significantly, especially in the last 20 years. Enrollment in undergraduate, graduate and professional programs has increased by almost 50 percent since 1995. As a consequence, while state legislative appropriations for higher education have risen much faster than inflation, total state appropriations per student are somewhat lower than they were at their peak in 1990. (Appropriations per student are much higher now than they were in the 1960s and 1970s, when tuition was a small fraction of what it is today.)” Paul Campos writing for the April 4th New York Times.
But as tuition skyrockets, the percentage of government absorption of the cost of such post-secondary education is declining on a per student basis even as the total sum rises. Catch-22.
Some blame the cost of the faculty, but again, the numbers say otherwise. “Salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.” Campos. Hmmm… another myth exploded.
But there is one clear arena where hard dollar costs are soaring, often without justification. And with seven figure pay to a whole pile of university presidents (not to mention coaches of high-profile sports programs which generate cash to the university), the costs of administration have escalated beyond all reason: “According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.
“Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.
“The rapid increase in college enrollment can be defended by intellectually respectable arguments. Even the explosion in administrative personnel is, at least in theory, defensible. On the other hand, there are no valid arguments to support the recent trend toward seven-figure salaries for high-ranking university administrators, unless one considers evidence-free assertions about ‘the market’ to be intellectually rigorous.” Campos. University departments are also often highly proprietary of their designated buildings, often forcing other departments to build for needed extra classrooms even where they have available space.
There are all kinds of nasty economic consequences from the burdens of the staggering student loans young Americans often carry after graduation. With an unforgiving bankruptcy law slanted against students by a 2005 amendment, young people are not spending the way older generations did – their discretionary incomes are much, much lower. They are postponing marriage, buying houses later (if at all, but rents are soaring too) and just avoiding the kinds of day-to-day discretionary expenses (in my industry, movie ticket sales to this generation are down significantly) that our economy needs to grow.
We really need to address this anomaly sooner rather than later or we will be writing about the “lost generations” of the early 21st century for a long time to come. The graduating class of 2015 is breaking a new all-time record… leaving school with an average debt of $35,000/student just for a bachelor’s degree, $56 billion in total (Edvisors report). Undergrad costs are out of control: “According to College Board, for the 2014-2015 academic year the cost for a moderate in-state public college is a little over $23,000 a year and around $46,000 for a private college.”, May 9th. We’re just short of a total of $1.3 trillion in outstanding student loans (exceeding each of aggregate credit card debt and auto loans), and according to Wikipedia, “As of 2015 over half of outstanding student loans are in deferral, delinquency or default.” This situation has to change!
Universities, particularly in the public sector, need to run more like businesses. Classroom space needs to be allocated via a centralized system. Administrative positions and top university salaries (that look like Fortune 500 compensation levels) need to fall back into reasonable. The old bankruptcy law needs to be restored, and we need to start addressing government support in terms of percentages of actual total cost per student; it’s not about the total, it’s about the average. Failure to address these issues makes our future untenable, and the time to move is now.
I’m Peter Dekom, and just as so many families have prioritized education for their own kids, so must we address our aggregate social responsibility to our future in the same vein.

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