My oldest daughter is graduating from 8th grade in a couple weeks and moving into her high school years. I’m mentally prepared for her to go into high school, but what makes me nervous is that she is a mere four years away from college. Aside from the fact that I cannot fathom her leaving the nest in such a short time, contemplating the cost of college and the value it will provide her keeps me up at night. That is why I read with interest this morning, a piece from the WSJ’s Marketwatch by Brett Arends on the College-Industrial Complex.
According to Arends, recent college grads have paid 30% more for their education than students did 30 years ago. That 30% doesn’t reflect any inflation, that percentage reflects constant dollars. It certainly makes you wonder if colleges are providing 30% more value than they were 30 years ago. Arends believes much of this increase in cost has nothing to do with the actual education of the students. Rather he believes it is due to “the arms race of fancy facilities being built by colleges. Part of the answer lies in escalating salaries, especially for academic “divas” – the marquee names recruited at great expense to bring in the customers… er, students. Part of the answer lies in institutional metastasis – the expansion of bureaucracy, like any bureaucracy.”
If college costs keep rising, I am concerned that a college education will become, again, something only the financially elite can afford. At some point, parents and students are going to wonder if it is worth going into tens of thousands, or hundreds of thousands of dollars in debt in order to get this education. Colleges always counter with the value argument: college graduates have a lower percentage of unemployment and generate more income over their lifetimes than non-graduates. By that value model, some in the College Industrial Complex believe, college is actually under priced. Tell that to the 22 year old kid working as a waiter after graduation and not being able to afford their student loan payments.
The tide may be changing already. Forbes is reporting that 288 colleges are reporting they have empty seats for next fall. From that 288, Forbes picked 50 colleges that were a part of Princeton Review’s popular 377 Best Colleges. Forbes then used government data to determine how likely the colleges were likely to give “institutional grants or scholarships” (also known as a discount on tuition). The end result was a list of 50 good colleges and universities that did not make their enrollment numbers this year that are more likely to discount their tuition. Free market pricing in college education? Who would have thought that was possible.
Some pretty solid schools are included in this list: University of Maryland, Lake Forest College, Hofstra, Albion, New School, University of Arizona, and Xavier to name a few. No Ivies, but solid schools. With a college deposit a merely several hundred bucks, some of these schools that are claiming to have a full freshman class, may experience “summer melt” — their enrollment numbers fall as kids determine which school they actually want to attend next year. This May 1 college deadline may start to become less meaningful, except for the most prestigious schools.
This information does give me hope that perhaps the college cost bubble is about to pop. Unfortunately, it appears that universities won’t be sacrificing their pretty buildings and facilities in order to reign in tuition. It looks like they are moving more towards educating less or differently. More colleges are moving toward online videos versus actual time with an instructor. The University of Phoenix-ification of college at $50k+/year. Sad.
In four short years, my husband and I will be writing a big check for our oldest daughter’s education. I wonder if the dollar amount on that check will continue to increase way beyond inflation. More importantly, I wonder if she will be able to interact with her professors and get enough value from that dollar amount on that check.
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