> Think about it. Universities get to decide how much money to charge their students. Likewise, parents and students decide if they can afford to pay it. It’s a pretty simple proposition. But when the government suddenly makes hundreds of billions of dollars in student loans readily available — under the popular (and voter-friendly) theory that “everyone should go to college” — we see an unintended consequence.
Well that's also ignoring the point that colleges used to get the majority of their funding from States, and almost every major University now has the majority(and sometimes a >90% majority) of its funding coming from other sources. College used to be subsidized by society, and now it just isn't subsidized, and in his argument that entire position is ignored.
Like most subjects this is a much more complex problem than either side lets on, but just because Mike Rowe is eloquent in his response doesn't mean that it isn't ignoring rather large portions of the facts.
I looked into this a bit for the University of California system, and that did indeed seem to be the issue in that case. Tuition has gone up, but less than state funding has gone down. In other words, the university is getting cheaper to operate on a per-student basis, but nonetheless getting more expensive to attend, because of a large shift in who pays (from taxpayers to students). The historical public funding levels were around $25k-$30k per student, in present-day dollars, while today the state kicks in a bit under $13k per student: http://www.kmjn.org/misc/uc_funding.txt
It's not entirely due to the increase in student population, either, although that's part of it. If you look at just the total funding column, it's gone down since the '80s, despite the state's increasing population and GDP. Someone should double-check my numbers, but last time I looked into this I remember a back-of-the-envelope calculation that California used to put ~0.3% of state GDP into the UC system, and now puts in only about 0.1%.
You can look at british uni's for another data point, though. It all has to do with demand, not the cost base. Uni's were free, but seeing how much the 'stupid americans' were paying (thanks to leverage), the UK started to reduce grants to 'tap into the damand', and they now purposefully issue debt to students as a from of highly targeted TAX.
The demand comes from the 'social marker' heuristic that a university degree conveys (ie, social proof) for employment and personal networking. Until there is a competing "commodity" whith this aspect of social utility, a degree with have economic value proportional to GDP, in a way like housing stock. The main problem with broad based inflation of the costs of college is that there is only so much "beach front" real estate in the degree system. The top 10 schools are typically the ones that matter, for social signalling, and quite frankly nobody cares how much you paid to get the degree. A "free" degree from cambridge (UK) has a good value, just like a $$$ degree from MIT or Stanford. Heck, many will argue a <dropout> from a top 5 school has more going for them than a degree holder from a middle of the pack school.
The great thing about Berkeley is its one of the few state schools that has a powerful global reputation. And in that sense it remains good value for money (if you are a resident Californian). But the taxpayers and politicians seem to be playing a rather sophisticated game of stealth-taxation with the Higher Education system as a whole. It really doesn't matter the details until one unpacks how the system is really working. And what is driving supply and demand at a more 'meta' level.
Not to mention, barely anyone pays the "listed price" in the USA for any school.
but seeing how much the 'stupid americans' were paying
What an amusing and inaccurate stereotype. Brits who repeat it have apparently never been to the further reaches of England. For example, Birmingham or Liverpool... See how stereotyping isn't helpful?
Easy there...Its not in 'inverted commas' for nothing. After all, the point is that the Brits copied the US model because the 'thought they were onto something'. Also, It may help to note that the UK <had> previously a policy of charging US students 3x cost prior to the increase in fees. Which seemed like a deal only a crazy person would take.[1] But...The US/other foreign students were still paying 1/2 price vs what the US-based schools cost, hence they viewed the 3x cost as a bargain. So, the Brits might pay $5K, the US would pay $15K and the North American Uni's would charge $30K. Theat is, notwithsatnding, the US students were paying 10x in their home country for the same services. After the changes, the UK students may pay about $15-20K pa, closer to what they charged the non EU people before. And the others (non-locals) are paying double that, much closer native costs for them. And thus a no-arbitrage position.
[1] There is a long history of "fleecing" rich foreign kids at schools, where they are looked at as cash cows. This is both true in the US (where they pay 'retail' with no financial aid) and in places like the UK/EU where locals are heavily subsidized.
Also, because the US has an increasingly unequal income distribution, that makes a college degree relatively more valuable. In addition to the social-status factor it certainly still seems to pay off despite the increased tuition (http://priceonomics.com/is-college-worth-it/).
My point is simply that maybe college costs so much more now because it's just worth it. It used to be that you could still do alright without a college degree, but a ton of manufacturing jobs have moved overseas and there's a ton of downward pressure on peoples' wages who don't have engineering and computer jobs.
Just to be clear, I'm not saying that this is the reason why college is so expensive these days, but I think that it's a point which isn't brought up enough.
I think there's a tendency to say: "oh well not everyone can have these high-paying jobs", "college isn't right for everyone", etc. which Rowe also says. Maybe that's true, but we certainly seem to have a shortage of qualified people in this country. Seems to me to be a failure of the educational system and while it makes sense not to saddle yourself with tons of debt for a degree if that degree won't help you pay off the debt, I don't think encouraging people not to get a higher education is a good idea either. Now I'm just rambling - I just wanted to point out that that attitude is a sign that something is wrong.
I'm not going to doubt that... I'm just saying there must be some underlying economic reason why that's true. Seems that things are in an equilibrium, but maybe not the optimal one (blasphemy, I know).
The reason is no longer true but it was true that corporations needed more educated workers to perform certain tasks and college graduates were relatively rare. Most of the college graduates in my parents' generation were gainfully employed consistently in my childhood. That is definitely not the case among my college educated peers today. Many are underemployed and in debt.
Some of the issue is that people are chasing the economic signals from an age past where the conditions were just different.
He's also implying that whether one should go to college is determined by his parents' finances, not academic skill, quality of the schools they've been admitted to, etc.
I'm not sure the linked data is correct. The charts from the 2012 SHEEO report [1] shows revenue/student increasing from $10,869 in 1991 to $11,095 in 2012 (these are 2012 dollars).
I think you're right, something's wrong with my source.
I'm not sure the SHEEO number's usable "raw", as it uses its own ad-hoc inflation calculation (HECA) instead of CPI or GDP, but even correcting for that I can't reproduce the numbers in the NCHEMS site from its supposed source.
How much does it actually cost to educate a student? A full load is about 12 or so hours a week in class (at least back when I went to community college). If a class has 40 students, and the instructor spends 2 hours outside of class for every 1 hour teaching (office hours, curriculum structure, grading), and makes 80K a year, that is 2K per student per year.
Now add in the facilities expenses (roof, walls, lights, hvac), and some labs need labs, how much should that cost? I still can't see that being more than another 2K, but I haven't run the numbers on that yet. Overall, it makes 20K a year seem outrageous.
I'm a nearly-finished Ph.D. candidate, and when people complain to me about how bloated and inefficient the government is, I think to myself "Wow, that sounds like a pretty good system."
A typical graduate teaching assistant at my university has about 10 lab sections per academic year. The lab fees--just the lab fees, not tuition--from just one section is enough to pay the TA's salary for the entire year. Even if you include the outrageously-inflated graduate tuition that a TA-ship pays, lab fees from just three lab sections cover the entire compensation package.
The tuition from just one big lecture section is enough to pay a tenured professor's salary for almost two entire years (and a tenured professor should be teaching 5-6 courses per year).
Some of the rest of the money goes to pay for the country-club campus, but most of it disappears into the black hole of bureaucracy.
And we haven't even started to talk about the scam of "overhead" that the university charges on federal research grants--30% straight off the top, except for very large purchases. Want to have a new electrical outlet installed in the lab? You have to use the university's maintenance department (and its inflated hourly rates--at least 3x what you'd pay a licensed/bonded union electrician) and pay overhead on top of that!
There is a reason community colleges exist: they are the place where the sole focus is teaching students, and so they can keep prices low.
Of course, you get a somewhat worse education there, due to the fact that the people teaching are essentially similar to grade school teachers in motivation.
Additionally, another important thing to consider is that the degrees that are actually useful have to compete for professionals with industry to some extent if they want to not be left with the dregs. A professor is going to pull $150,000 a year or more in many places, because that is what they could earn elsewhere.
And yeah, then there is the administration, IT, upkeep, dorm housing, campus police, facilities, student medical coverage, and so on.
But if you really want to know... any public university will have public records. Go check. I know that my local university has only slightly increased student tuition rates, and had a massive influx of students seeking lower prices. The problem is that once the slight surge of money is distributed, they are still on the brink of fiscal collapse due to how much the state has cut funding (they lose money for every in-state student, and have to accept them anyways) and are leaking their top researchers left and right due to the incredibly low wages they pay, relatively speaking.
Well that's also ignoring the point that colleges used to get the majority of their funding from States, and almost every major University now has the majority(and sometimes a >90% majority) of its funding coming from other sources. College used to be subsidized by society, and now it just isn't subsidized, and in his argument that entire position is ignored.
Like most subjects this is a much more complex problem than either side lets on, but just because Mike Rowe is eloquent in his response doesn't mean that it isn't ignoring rather large portions of the facts.