
Colleges are full of it: Behind the three-decade scheme to raise tuition - ph0rque
http://www.salon.com/2014/06/08/colleges_are_full_of_it_behind_the_three_decade_scheme_to_raise_tuition_bankrupt_generations_and_hypnotize_the_media/
======
withdavidli
I'm very opinionated about colleges / tuition. Many people find value in it,
or they justify it somehow like they couldn't get the education / experience
some other, more affordable, way.

My thoughts on the solution is the same for housing increases. Get rid of the
government loans. In this situation also make student loans able to discharge
by bankruptcy, that way banks will think twice about it as well.

The easier it is to finance something the more people will likely buy it. Look
at cars, houses, colleges, even the use of credit cards. Peope will be angry
when the loans go away, because it has become a part of the American Dream
along with owning a house. But this will cause a huge decrease in demand and
hopefully lower the price. And maybe students will work a few years before
attending college and know what they want to do in life (can't say I had much
of a clue when I attended).

Another side of effect with less graduates is that maybe we can get rid of the
college degree requirements (you know, the ones that require a BA in any
field).

~~~
wcummings
What positions require "BA in any field"?

~~~
bsilvereagle
Last I heard, in some cities you had to have a BA to be a barista.

~~~
jrockway
When did you last hear? Which cities?

------
adminprof
I'm a professor at an ivy league university who has gotten some insight into
the budgets. There's a few things that are often not reported in the media:

1) The tuition sticker price is going up, but the actual price paid remains
about the same due to increasing financial aid given to students.

2) The largest cost driven in the past decade is partially due to a successful
increase in recruiting+admitting underrepresented minorities and low-income
students. Because of a program called "need blind" among many universities,
students are admitted regardless of ability to pay. So when more of these
students come, not only are they unable to pay tuition, but the university
pays them a stipend which results in a double financial cost.

3) There are administrative programs that cost money and are not flat screen
TVs and new buildings, and actually benefit students at the same time! This
includes funding for student organizations, undergraduate research or teaching
assistantship programs, writing centers and tutors, etc.

~~~
Balgair
1) Source? I can't believe that the sticker price has gone up this much and
that financial aid went up in essentially the same amount. Let's see data on
this.

2) Again, source? What I get from this is that minorities are financial
leeches, then. Is that a correct reading? (No of course not, but that seems to
be a correct interpretation of this insane premise the OP stated; one I do not
agree with at all)

3)Again, source? So, get rid of the student's needs and you get rid of the
costs? Really, this says that needy students are the reason costs have gone
up. Did you even read the original article at ALL? Over 30 years of needy
students have pushed the costs up this much? That is blatantly false.

Sources for ANY of these points are needed.

~~~
adminprof
The source is me attending university budget meetings, discussions with the
provost, etc. University administrators are obviously not going to be saying
this in public (exactly because of how it looks, as you note). If you think
you're going to see the accounting books of a private university on such a
sensitive topic, you may be waiting a while. But feel free to continue
believing online columnists in the meantime; it seems like you've already made
up your mind.

For 3), I think you misread my statement. I just said that there are useful
programs to students that cost money, and not just the usual useless examples
provided by journals. The other stuff is your creative interpretation :-)

~~~
Balgair
I don't want to disparage a new user on HN, but your account was created 2
hours ago as of this writing. Please, do continue to use this site, but to
make such broad claims about insider access and then claim that you cannot
provide sources does stretch the veracity of your statements. Thomas Frank at
Salon has his 'spit-bio' stating:

"Thomas Frank is a Salon politics and culture columnist. His many books
include "What's The Matter With Kansas," "Pity the Billionaire" and "One
Market Under God." He is the founding editor of The Baffler magazine."

You, however, disparage him as an 'online columnist' and say that I have
already made up my mind. Well, with no proof provided to your examples, even
after asking for it, I must make up my mind in Thomas Frank's favor. You cloak
your data with the caveat that you can never provide sources for it. This
forces me to not use you as a reliable source for information. At least tell
us your university or job title.

Still, thank you for providing a different alternative to the OP. Please do
not let my diatribe for sources distance you from commenting on other stories
here in HN. I myself am guilty of doing just what you have done on here as
well, ie. not posting sources outside of my own experience. Still, if you ever
do find sources for your claims outside of your own experience, I would love
to see them and be able to let others see them as well.

~~~
adminprof
No worries, feel free to form your own opinion. I've been around the block
quite a bit on HN to not mind criticism.

------
parennoob
"Administrators...blamed students, who were supposedly demanding all manner of
luxuries and would not be denied. “Students today want carpeting, they want
furniture, they want voice mail,” an administrator at a Nevada university told
USA Today for a 1997 story about the tuition spiral. "

I believe this is one of the biggest generally unaddressed aspects of this
problems. The large public university near me has near-luxury dorms, a bunch
of massive flat screen TVs in libraries and the student centers (which don't
serve much of a purpose apart from broadcasting random news or campus stuff --
a couple devices would suffice) and keeps on revamping equipment / OSes in the
general access computer labs (despite the fact that most students have their
own laptops, and use the computer center ones for relatively mundane tasks
like quickly checking facebook or typing out a Word document). The official
reason given for this is, "Well, we won't be able to attract the best students
if we don't offer them the best amenities."; and from all accounts, _it works_
\-- student enrollment, specially the wealthy ones, keeps going up.

As long as parents keep rewarding these lavish universities by saying, "Wow!
Look how great that is. If Bobby hangs out in an expensive looking place,
maybe he'll get a high-paying job by some sort of osmosis! Let's totally send
him to the University of Money-Down-the-Flatscreen-Hole." instead of taking a
hard-nosed look at the return on investment they are getting, this vicious
cycle is going to continue.

~~~
watwut
Any analysis that assumes that whole generation of students and their parents
are stupid is suspect. So, two remarks:

* Wealthy students are probably choosing more comfort over price. Less wealthy but good student might have different preferences. Wealthy and good student are not synonyms.

* All things being equal, I would find it rational to choose school with better tv. All things being equal is important there.

You school, or schools in general, seem to be trying to attract the most
wealthy students. Whether they are proxy for good student or not does not
matter. Even if they would be the best students ever, it would still be just a
coincidence. If it would be about quality of attracted people and quality of
graduating people, schools would not be so eager to save on professors,
adjuncts and so on.

I think the whole thing has less to do with students and more to do with
administrators incentives. They seem to choose short term grow over long term
whatever all too often. Preferring quality of tv over quality of staff is
preferring visible effect now over hard-to-see effects in long term.

------
bullfight
This has very little to do with some conspiracy between bankers and
universities to indebt students and raise massive capital by massively
expanding the university far beyond it's means.

Deep into this article the author hits on what is really at the core of steep
tuition inclines. A rapidly reducing share of university funding coming from
state governments turning once public institutions into defacto privatized
universities.[1]

In this chart [2] UWashington lays out in 2013 dollars that total tuition per
student has been around 17,000 for 25 years, however during that period the
state contribution was reduced from $14,000 to $5000, while student tuition
rose from $3,000 to $12,000

> "This is an important shift in who pays for higher education. In 1990, the
> state provided nearly 80% of the funding per student and UW students paid
> 20% of the funds. In 2011, the state will pay around 30% and UW students
> will pay 70%." [3]

[1]:
[http://www.insidehighered.com/news/2006/08/10/private#sthash...](http://www.insidehighered.com/news/2006/08/10/private#sthash.P6L2EJpu.dpbs)

[2]: [http://imgur.com/HqVVc0P](http://imgur.com/HqVVc0P)

[3]:
[http://www.washington.edu/externalaffairs/files/2012/10/tuit...](http://www.washington.edu/externalaffairs/files/2012/10/tuition.pdf)

~~~
brazzy
> In this chart [2] UWashington lays out in 2013 dollars that total tuition
> per student has been around 17,000 for 25 years

If true, that would make UWashington a shining beacon of frugality and
equality (or a really low-end university). That tuition has been massively
outpacing inflation is something I have heard from too many different sources
to dobut, so the question is: Is UWashington lying in that paper, or is
exploding tuition something that affects only a small number of universities
(and thus students), and in the latter case why don't students switch to
cheaper universities?

~~~
Avshalom
"Total tuition" and "tuition charged to student" are two different numbers in
this formulation.

"tuition charged to student" has jumped ~9k on top of inflation to compensate
for a ~9k decrease in per student state funding.

As to why students don't switch to cheaper universities? Because when it comes
time to find that first job academic reputation and professional network
matter at least as much and often way way more than having a particular
degree.

~~~
brazzy
> "tuition charged to student" has jumped ~9k on top of inflation to
> compensate for a ~9k decrease in per student state funding.

I got that, but that's a factor 4 increase, whereas the OP article's claim is
that it has increased by a factor of 12.

> As to why students don't switch to cheaper universities? Because when it
> comes time to find that first job academic reputation and professional
> network matter at least as much and often way way more than having a
> particular degree.

But if it's a mainstream problem, wouldn't that imply that the majority of
students are now visiting "reputable" universities with great professional
networks, which would make it less valuable as a distinguishing
characteristic?

------
carsongross
When it ends it be non-linear: the debt system that we've built our economy
and currency on is going to eventually throw up all over itself as we reach
Keynes' "long run" and, at that point, experience consumers simply won't have
the choice to screw themselves with unproductive debt.

EDIT: And, of course, the elephant in the room is the fascist
government/corporate cooperation on student debt, which is now larger and more
important than credit card debt in the overall economic credit environment.
You kill student debt growth, you kill debt growth and, in todays insane
economy, that means you kill growth period.

~~~
aliston
I'm not sure what you mean by "throw up" but my prediction is that a large
portion of these education loans will end up being forgiven. It's housing
bubble 2.0 and there's just no other way around it -- millennials leveraged up
after being told for years that college was the path to prosperity and simply
haven't seen the prosperity. The default rate on student loans is way up
because, by and large, we're not making as much money, are less likely to have
a job, aren't forming households and have massive debt/income ratios in
comparison to our parents generation. If the government doesn't bail us out,
the pyramid scheme implodes.

Of course, it's a terrible message to send and creates a moral hazard, but
that's the way the game has been played for the last 30+ years. Your best bet
to make it in America is to leverage yourself to the hilt. If you succeed, the
benefits are privatized and you can sail off into the sunset. If you fail, the
losses are eaten by the public.

In 2007 it was the bankers, mortgage lenders, GSEs and insurance companies
working together to line each others pockets. This time around its the same
deal, with (in order), the bankers, student loan originators (i.e. the
government), Sallie Mae and the universities. Why would things play out any
differently this time around?

~~~
carsongross
It's easy to say that "they will be forgiven" but that's a huge evaporation of
debt in the system: these are assets being marked at par in pension funds,
etc.

Students are poor and don't vote. That's why it will be different this time.

EDIT: (I really should take more time in my replies) Also, let me say that I
am in 100% agreement with you about the morality of the situation and how GenY
(and GenX) were sold a bill of goods on the debt issue. But I think we are at
the end of the line (in the next decade or so) and now it's a matter of who
takes the most pain. I wouldn't bet on that being the banks, insurers or
pension funds, and evidence so far confirms my non-bet.

~~~
aliston
I wouldn't either. It will be the government, just as it was last time. Here
ya go:

[http://www.politico.com/story/2014/06/student-loan-
repayment...](http://www.politico.com/story/2014/06/student-loan-repayment-
white-house-107608.html)

Capped payments and all debt forgiven after 20 years.

------
teuobk
My favorite explanation of why tuition continues to rise is simple: people are
still willing to pay ever higher prices. One step removed from that, the
explanation hinges on student loans being too cheap and easy to get.

I've always found it baffling that anybody expected to solve the college
affordability issue by making student loans cheaper and easier to get. When we
do the same thing with mortgage rates, we expect the prices of homes to rise.
Why do we expect any different of college tuition prices?

------
tzs
Stanford tuition from 1920 through 1993 [1]:

    
    
        Year    Tuition    Annual Growth
        1920    120       
        1930    300        9.60%
        1940    345        1.41%
        1950    660        6.70%
        1960    1005       4.29%
        1970    2400       9.09%
        1980    6285       10.11%
        1990    14280      8.55%
        1991    15102      5.76%
        1992    16536      9.50%
        1993    17775      7.49%
        1994    18669      5.03%
        1995    19695      5.50%
        1996    20490      4.04%
        1997    21300      3.95%
        1998    22110      3.80%
        1999    23058      4.29%
        2000    24441      6.00%
        2001    25917      6.04%
        2002    27204      4.97%
        2003    28563      5.00%
        2004    29847      4.50%
        2005    31200      4.53%
        2006    32994      5.75%
        2007    34800      5.47%
        2008    36030      3.53%
        2009    37380      3.75%
        2010    38700      3.53%
        2011    40050      3.49%
        2012    41250      3.00%
        2013    42690      3.49%
    

Note: the growth column I added is annual growth. It is the annual rate
tuition would have had to rise to get from one line of the table to the next.

I don't see much support in this data for the claim many are making in
comments here that government backed student loans are responsible (or even a
significant factor in...) tuition growth.

It would be interesting if someone with better internet research skills than
me could dig up data for other schools (in particular, it would be nice to get
data from some public schools) and see what that looks like.

[1]
[http://facts.stanford.edu/administration/finances](http://facts.stanford.edu/administration/finances)

------
DanielBMarkham
This is terrible.

You can't argue that universities charge more because they are able to, which
is common sense, and also argue that we tried the free market (whatever that
means) and it was part of the problem. E-gads, what a mess.

People today have roughly the same amount of money as they did 30 years ago.
_The cost of college education in terms of the amount of money people directly
and immediately pay has not changed_. It's not like we all became
millionaires. What's happened is that we switched from grants to loans, which
was supposed to allocate more risk on the student and banks, then we made sure
that anybody that wanted a loan could get one, so there was no immediate
penalty for making a bad choice.

We took a trade with tremendous uncertain future returns -- which degree I
should get -- made sure everybody could get whatever they wanted, then pushed
any pain far out into the future. Then we piled on by making the entire scheme
immune from bankruptcy, taking out any risk that creditors might face! It's
like we just kept the grants, but forced the student to pay for his own grant
in terms of future debt. It's a incredibly terrible job of policy, no doubt,
but the free market has nothing to do with it. If anything, it's a nice little
experiment on how screwed up you can make a market before some kind of
feedback mechanism kicks in. We took the purchaser out of the mix, then we
took the lenders out. The only thing left is the political system, which seems
wedded to the policies that led us here in the first place. Continuing down
this road of idiocy, next up we should try to take the political system itself
out of the mix. Perhaps we could have a constitutional "right" to an
university education?

I will agree with the author that colleges charge more simply because they
can. That's the way selling stuff works. You charge more until you start
selling less. I will also agree that reporters (and some essayists) have great
difficulty actually looking at the problem honestly.

This is the tragedy of our times, this indentured servitude we are placing on
the next generation. Somebody is going to have to be a grown-up here and tell
people what they don't want to hear: it is not in society's interests to
guarantee the funding of little Junior's degree in underwater basket weaving.
I don't see that person or party on the horizon, but here's hoping they show
up soon.

------
Spooky23
This isn't a grand conspiracy. Its all about too much of other people's money
chasing a large and growing inventory of academic seats.

Lots of well-intentioned and self-interested advocates have successfully made
the assertion that more college == good. So Uncle Sam dumps billions into it.
Kids and parents are pretty dumb at assessing long terms value.

All education is like this. When you hear about things like schools providing
iPads to the entire student body, that's a signal that there is too much money
floating around.

------
programminggeek
Cheap money means prices can go up and it's all based on an old sales trick...
"3 easy payments of $19.95!"

That makes people feel like what they are buying is $20, or closer to $20 than
$60.

Imagine you are selling an expensive piece of fitness equipment like a Bowflex
or Nordick Track, or Total Gym or whatever. Those things retail for
$500-1,500. How many people go to the store and drop $1,000 on a home gym? Not
many. However, a lot of people buy equally expensive products via
infomercials, QVC, and Home Shopping Network because of the payment plans.

Low interest mortgages and student loans spread out over a 30 year period make
these huge ticket purchases more "affordable". They also totally distort the
cost of the purchase.

The fact is, people make decisions to solve short term pain, not for long term
gain.

The universities, credit card companies, banks, etc. are taking advantage of a
system that we all built and participate in. It might not be what is best, but
it is certainly our own creation and at some point society should take
ownership of our own flaws, not continue to blame other people.

College and homeownership are a choice. There are alternatives. If we don't
like the current system, it's up to us to change it or not participate in it.

------
graycat
Gee, I thought that the resolution of the issue was:

(1) Before 30 years ago or so, a student paid only about 1/3rd of what a
college education really cost. The rest was from 'overhead' taken from
research grants, gifts, endowment income (from gifts), government funding
(say, state universities).

(2) Good students with little or no money got various forms of financial
assistance -- scholarships, work-study, etc.

(3) Wealthy students still paid only the 1/3rd.

So, someone got a bright idea: Why should wealthy students pay only 1/3rd
instead of 100%? So, why not let the 'list price' to the students be the full
cost? Then wealthy students will pay the full cost and others will get
'scholarships' based on need and academic qualifications.

So, the 'list price' went from 1/3rd of the real cost to 100% of the real
cost, that is, up by a factor of 3, that is, 300%. The rest of the increases
were due to better prof salaries, higher AdFunk salaries and more AdFunks,
better facilities, etc.

But if have a really good media 'story', why give an explanation that would
end the suspense, interest, drama, sense of scandal, etc. and, thus, end the
story? And lose the eyeballs and ad revenue? Gotta be kidding!

------
daveqr
"Democrats today worship education" Well, they worship credentials, any way.

------
balls187
It's my understanding is that in many (if not most) colleges, the cost for a
single students tuition is exceedingly greater than what the school actually
charges the student.

That is, schools make up the difference by getting grants, and getting alumni
to donate.

With that model, there is no way school can continue to operate at that
deficit.

------
OldSchool
It comes down to at least two things:

1\. Easy (to acquire) debt drives demand

2\. Education is still "Made in America" thus it cannot hide from the real
devaluation of the dollar

~~~
JumpCrisscross
> _thus it cannot hide from the real devaluation of the dollar_

The trade-weighted U.S. dollar index [1], published by the Board of Governors
of the Federal Reserve, shows a 1.2% annualised decline in the U.S. dollar
over the past 10 years. This is sufficiently low and hedge-able as to not be a
key determinant in this pricing process.

Your broader point stands, however. Education is a non-tradable good. This
amplifies the effect of local idiosyncrasies, e.g. non-dischargeable
federally-backed education loans, in a way which would be arbitraged away for
a tradable good.

[1]
[http://research.stlouisfed.org/fred2/series/TWEXBp](http://research.stlouisfed.org/fred2/series/TWEXBp)

------
aswin8728
In my opinion, college is worthwhile ONLY if you attend a university that is
worth the cost. In most situations, students attend a particular university
wishing that it will guarantee them success at some point in their lives
without researching the ranking, quality of education, etc. In terms of ROI,
it is a safer option to attend a Top 50 university than a for-profit
university nobody has ever heard of. The discussion shouldn't exactly revolve
around whether college is worth it, but about how we can improve the quality
of education across the board so that graduates are adequately prepared for
the real-world.

~~~
waps
You think university is about education. To an extent, of course, this is
true. However, the reason "top" universities pay off better is not the quality
of education. The difference in aptitude of students easily trumps the
advantage an Ivy league university has over a state college.

The real value in the university is the sunk cost of education for everyone
already in the workforce. Ivy leaguers control management of most companies,
and choosing against Ivy leaguers means saying they are themselves ill-
educated ... they don't. So higher up jobs are more available to people who've
paid the same sunk costs as the hiring managers.

It's that simple.

This will fall flat on it's face if they really open up admissions.

------
gone35
I wish I could read this, but as with every single Salon.com page, every time
I scroll halfway down the body, the entire second half of the article blinks
and disappears completely (on Safari on iPad). That, or the page stutters
helplessly for several seconds until it crashes the browser.

There better be a special circle of hell for whoever came up with such an
abomination. Memo to all of you Web 3.0 trendsetters: _Please stop ruining the
web_ [1].

[1] [http://motherfuckingwebsite.com/](http://motherfuckingwebsite.com/)

------
vampirechicken
Since the majority of non-menial jobs now REQUIRE a degree (often any degree),
if you want to be in the middle class, you need a college degree.

One explanation I can think of to require a degree for everything is that it
proves that you can commit to a long term goal and achieve it.

The cynic in my thinks it's just a ploy to have a debt-riddle workforce who
will be scared to make waves because they're always one check away form
insolvency.

------
Alex3917
The increase in tuition costs has actually been relatively small. The price
for tuition, fees, room and board at public 4-year colleges for in-state
residents increased from $7,400 in 1990-91 (2012 dollars) to $12,110 in
2012-13. At private non-profit institution the net price increased from
$18,330 in 1990-91 to $23,840 in 2012-13.

~~~
Balgair
Source?

UC Irvine is 2x that while not on campus ($24,693.97) and much more on campus
($31,667.97) for CA residents. Add $22,878.00 for out of state to get ~46k off
campus and ~53k for on campus[0].

Granted, it is a UC in Orange County, but your numbers are 1/2 to 1/3rd of the
true numbers. Is the rest of the country really that much cheaper than
California?

[0][http://www.ofas.uci.edu/content/costs.aspx?nav=1](http://www.ofas.uci.edu/content/costs.aspx?nav=1)

~~~
muzz
What percentage of students pay full sticker price?

~~~
Balgair
Unknown to me. Hopefully a source from the post I replied to may provide the
data.

------
chiph
At my alma mater, 2 semesters of tuition, room, & board match what I paid for
3 _years_ of attendance 25 years ago.

------
hellbanTHIS
Can I get a tldr? Where is all this money ending up?

~~~
seanhandley
Read the article - it's worth your time. Or if your time's more valuable,
don't.

------
michaelochurch
_Democrats today worship education, while Republicans today worship the
market, neither of which faith has brought us close to a solution._

Extreme leftists cheerlead higher education under the belief that if you give
the proles a leadership education, they'll eventually revolt and overthrow the
capitalists. After all, the undergraduate experience was designed for
aristocrats, and if people go from young aristocrat to prole in one post-
graduate summer, they might be pissed off enough to take up arms and overthrow
governments, like what almost happened in the 1960s student riots. It doesn't
happen that way, however, so they (the extreme leftists) don't get what they
want.

Lazy centrists and liberals push for widespread higher education because they
believe education to be a magical fairy dust that can be sprinkled on
inequality to make it go away. (In fact, tuition and credentialism and
admissions-- nonacademic admissions elements being the worst offenders-- do
the opposite.) They don't get what they want.

Right-wing, religious nutcases throw their weight behind _religious_ education
because they think it will help them in their losing cultural war against
modernity. They don't get what they want.

The center-right, increasingly fascist, corporate elite cheerleads widespread
education because it gives HR departments a sorting mechanism where the people
being sorted do all the work, and pay exorbitant prices for the "privilege" of
taking part in the indignity. As for this set of people (center-right), they
are the ones who _do_ get what they want.

~~~
pekk
What do Democrats have to do with "extreme leftists"? There is no remotely
viable Communist party in the US, not even a Socialist party. Extreme leftists
do not have any power in the US.

People who don't want to go to college have always had the option of not
going. The difficulty is when people want to go but it is not feasible for
financial reasons. Some people think it is nice to help others do whatever it
is they want to do. There is no 'extreme leftist' conspiracy here.

~~~
TheCoelacanth
Democrats would mostly be the "lazy centrists" in the next paragraph.

------
thetruthishard
It's a free market -- tuition keeps going up because you, your neighbors, and
every other American, is willing to pay for it. Prices will keep going up
until people are so strained that they're not willing or able to pay anymore.

~~~
forrestthewoods
But it's not a free market. It's a market artificially inflated by the
government via Federal loans, guaranteed pay back to the banks, and debt
that's non-dismissable via bankruptcy. Those may or may not better than the
alternative, but they sure as hell mean it's not a free market.

~~~
hga
" _guaranteed pay back to the banks_ "

Not as of June 30, 2010: part of the Patient Protection and Affordable Care
Act AKA Obamacare was using the profits from those student loans to fund it,
the government is originating all "guaranteed" loans after that date.

~~~
muzz
The taxpayer savings don't fund Obamacare but rather go back into higher
education:

"The Congressional Budget Office said the direct-lending approach would save
taxpayers about $61 billion over 10 years. Roughly $40 billion of the savings
will be redirected to higher education. Education programs will get an
additional $10 billion from the health care package."

[http://www.nytimes.com/2010/03/26/us/politics/26loans.html](http://www.nytimes.com/2010/03/26/us/politics/26loans.html)

~~~
hga
OK, 1/3 of the profits, per CBO scoring.

Assuming the arrangement isn't changed in the future.

There _was_ a reason to attach it to Obamacare after all, it helped make the
CBO's numbers, artificial as they are, add up.

