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How long can college tuition increase?
Posted on 3/4/16 at 1:02 am
Posted on 3/4/16 at 1:02 am
We all know higher education is not cheap.
Tuition has increase 10x since 1976. If milk had the same rate, Milk would be $14 a gallon. Avg new car would be $42k. Family income has not keep up with this. Enters student loan. Student loan is approaching 1.4 trillions. Student loan forgiveness is not a viable option as that will make the cost of borrowing though the roof. Would you lend to someone who wouldn't have to pay you back?
So what will happen? Will there be a cap on lending? How will this affect an ever expanding administrative positions which have increase by 60% from 1993 to 2009? For ex, Cal Poly tech faculty increase from slightly above 11,500 to 12,000 members from 1975 to 2008. However, administrators grew from 3800 to 12,000. This is not all school but you get the point. Bureau of labor stats show that avg salary of administrator is 88k in 2014.
Tuition has increase 10x since 1976. If milk had the same rate, Milk would be $14 a gallon. Avg new car would be $42k. Family income has not keep up with this. Enters student loan. Student loan is approaching 1.4 trillions. Student loan forgiveness is not a viable option as that will make the cost of borrowing though the roof. Would you lend to someone who wouldn't have to pay you back?
So what will happen? Will there be a cap on lending? How will this affect an ever expanding administrative positions which have increase by 60% from 1993 to 2009? For ex, Cal Poly tech faculty increase from slightly above 11,500 to 12,000 members from 1975 to 2008. However, administrators grew from 3800 to 12,000. This is not all school but you get the point. Bureau of labor stats show that avg salary of administrator is 88k in 2014.
7
Posted on 3/4/16 at 1:07 am to PeteRose
until people stop paying it (i.e. when government stops paying for it)
Posted on 3/4/16 at 5:59 am to kingbob
Easy money for schools with the Fed loan programs. Another instance of the government making things worse not better.
Posted on 3/4/16 at 7:16 am to kingbob
quote:
until people stop paying it (i.e. when government stops paying for it)
Posted on 3/4/16 at 7:24 am to PeteRose
You hit the nail on the head with all those jobs that were added that aren't direct labor (ie professors, instructors, etc). When you have what really amounts to non producers, costs skyrocket. Also as long as the fed gov is backing the loans, they have a guaranteed money flow. I'm not for student loan forgiveness even though my wife and I have a lot, lowering the interest rate would help out a lot of people. Plus allowing more of a student loan interest deduction would be nice. We paid about $12k in student loan interest but because of our income, we couldn't even take the full $2500 deduction. They are essentially penalizing us because we are doing the right thing and paying off our loans.
Posted on 3/4/16 at 7:25 am to kingbob
quote:
when government stops paying for it
Posted on 3/4/16 at 8:09 am to LSUSUPERSTAR
quote:
Plus allowing more of a student loan interest deduction would be nice.
Not to be too socialist on the MB, but I'd like to see the deduction expand to principal paid, too. With loans at 6.8% I'm plenty motivated to pay them off ASAP, but the increased deduction would be a game changer.
This post was edited on 3/4/16 at 1:22 pm
Posted on 3/4/16 at 9:47 am to PeteRose
The only thing keeping tuition high is the availability of unlimited government loans.
The population is shrinking dramatically, so far fewer people attend college now, and the US Treasury will be bankrupt in roughly 5 years, so the bubble will pop pretty soon.
The population is shrinking dramatically, so far fewer people attend college now, and the US Treasury will be bankrupt in roughly 5 years, so the bubble will pop pretty soon.
Posted on 3/4/16 at 10:09 am to GaryMyMan
quote:
Not to be too socialist on the MB, but I'd like to see the deduction expand to principle paid, too. With loans at 6.8% I'm plenty motivated to pay them off ASAP, but the increased deduction would be a game changer.
The deduction needs reform. The $2,500 cap needs to be removed, and the caps on who can deduct it need to be removed.
Having it expand to principal needs to be looked at, because in some cases, some of that principal may have already qualified for a tax credit or a tuition and fees deduction.
The ultimate thing needs to be the ability to deduct all student loan interest when paid, and a credit/deduction for all tuition payments when paid.
Posted on 3/4/16 at 10:12 am to GoIrish02
quote:
US Treasury will be bankrupt in roughly 5 years, so the bubble will pop pretty soon.
According to straighterline.com, by 2021 the avg cost of 4 year public tuition will be $95,000 vs $240,000 for private schools. Can you imaging sending two or three kids to college in 5 years?
Posted on 3/4/16 at 10:12 am to PeteRose
As long as there is a private student loan market, rates will continue to rise.
If companies ever stopped lending to students, the thud would crater the economy. The bubble burst would be insane as large numbers of people stopped attending college, and many, many colleges would close.
4 year college would be only for the very rich (who can pay cash) and the very smart (who can get a scholarship).
If companies ever stopped lending to students, the thud would crater the economy. The bubble burst would be insane as large numbers of people stopped attending college, and many, many colleges would close.
4 year college would be only for the very rich (who can pay cash) and the very smart (who can get a scholarship).
Posted on 3/4/16 at 10:28 am to LSUFanHouston
quote:
The bubble burst would be insane as large numbers of people stopped attending college, and many, many colleges would close.
That would definately happen. But there will be changes in higher education as a result. Online learning removes some of the costs associated with face to face learning. I don't expect all online classes. But we can expect a mixed of both.
In fact dept of education did a research of mixed online/face to face, online, and face to face. Mixed had the best results, followed by online, and then face to face.
If you think about it, you can learn on YouTube these days. By the time a student gets up, goes to class, sits in accounting 101 for an hour....he can watch 3 quality videos on the same topic at home on YouTube.
Posted on 3/4/16 at 12:22 pm to PeteRose
quote:
But there will be changes in higher education as a result.
Totally agree, and I'm almost to the point of saying it "needs" to happen. My only hesitation is good god, it's going to be ugly for a few years. I think we are going to be better in the long run, but in the interim, it's going to be bad.
Many years ago, college was a place of learning, high-level thinking. At some point, we got this idea that a college degree was necessary for many jobs. In fact, it's not. There are many, many people working today with college degrees in which the degree has nothing to do with their job.
I personally think more professions should follow the IT model. Many people in IT don't have a college degree, but they do have various certifications that they have learned over the years, many of them outside the traditional classroom/college environment. To do the technical stuff of an IT person, that's what you need - those certifications. Our IT guy at work doesn't have a college degree, and he gets paid VERY well, and many other IT guys I know are the same.
Now, sometimes, IT guys want to go beyond the tech stuff and they want to understand how it truly impacts a business, they want to sell it, they want to manage other IT guys, etc - and that's where a business education could come in handy.
Look at my field - being a CPA. The CPA exam is huge. But I don't think the skills you need to pass the CPA exam HAVE to be learned in a college environment. It's a ton of learning, but there is no reason that could not be online, or by non-traditional providers.
Posted on 3/4/16 at 12:34 pm to PeteRose
quote:
Tuition has increase 10x since 1976
The vast majority of this rise has been costs not directly related to instruction - American universities do a ton of stuff that is not within their core competencies, and students increasingly demand a fancier and fancier college experience. Compare to French universities, for example, that don't even run dorms. They're literally just buildings with a bunch of lecture halls and offices; it's a very sink or swim approach. US universities are primarily modeled on the Ivy League, which in turn is modeled on Cambridge & Oxford, with eating clubs, sports teams, etc etc. And that approach is fine for institutions, like the Ivy League or Oxford, that have more money than they know what to do with. But that's obviously not true of every college own down to Nicholls State.
Posted on 3/4/16 at 12:45 pm to LSUFanHouston
quote:
As long as there is a private student loan market, rates will continue to rise.
Obama effectively ended the private student loan market recently, and consolidated all student loans with the federal government. The private loan market is very limited, mostly to medical professionals. Obama also doubled the rates one federally consolidated.
The changes and layoffs are already here. Loyola New Orleans has already laid off a third of their faculty after their freshmen applications dropped off 25+%. The WSJ had a series on colleges who are cutting 30-40% of teaching staff across the country. Spring Hill's struggles were featured prominently.
I'm on the local alumni board for a top 25 university. Local applications have been half of what they were 10-15 years ago, the school's acceptance rate has doubled and their yield is half from 10 years ago, just so the school can get the same size class to enroll (about 2,000 students).
This university used to have one of the highest yields of any school in the country, and the highest among top 25 universities. Now they don't even mention it. (Yield is % of admitted students who enroll)
Their yield used to be 95%+ for the last 15+ years, now their yield is barely 50%. This school used to admit 2,000 students and 1,900+ would enroll, now they admit 4,000+ to get the same 2,000 to show up.
This post was edited on 3/4/16 at 12:48 pm
Posted on 3/4/16 at 1:23 pm to GoIrish02
quote:
Their yield used to be 95%+ for the last 15+ years, now their yield is barely 50%.
Notre Dame is a safety school.
Posted on 3/4/16 at 1:28 pm to Cold Cous Cous
quote:
American universities do a ton of stuff that is not within their core competencies, and students increasingly demand a fancier and fancier college experience.
This is key to understanding why tuition is rising. AS schools compete to win US News and World Reports, they need to build fitness centers, dining halls with action stations, and theaters worthy of the NY Philharmonic. All things that on the surface make college a "more well rounded" pursuit, but in factuality increase overhead with no reciprocal benefit to the tuition payers.
Posted on 3/4/16 at 1:57 pm to kingbob
quote:
(i.e. when government stops paying for it)
See also: Medical care
Posted on 3/4/16 at 2:01 pm to LSUFanHouston
quote:
4 year college would be only for the very rich (who can pay cash) and the very smart (who can get a scholarship).
the way it should be
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