6 ms·

This has been studied in other places. It appears to have a lot more to do with the subsidy of student loans: http://www.nber.org/papers/w21967 http://www.nber.

This has been studied in other places. It appears to have a lot more to do with the subsidy of student loans: http://www.nber.org/papers/w21967 http://www.nber.org/papers/w21967 I.e., more dollars chasing the same amount of education. A bit more explanation here: https://fee.org/articles/student-loan-subsidies-cause-almost-all-of-the-increase-in-tuition/ https://fee.org/articles/student-loan-subsidies-cause-almost...

yequalsx 10y ago
I have a hard time believing this. I teach at a community college in Minnesota. Our state funding per student has been halved in the last 20 years. Salaries are not exorbitant. We went almost 5 years without a pay raise. We aren't frivolously spending money. We raise tuition because the bills have to be paid. The money isn't coming from the state. There's really only one way to raise the needed money and that is tuition increases. I wonder how it can be determined that tuition wouldn't have increased as much as it has in the absence of eussidized loans. Would salaries be even lower than what they are? Would administration not have increased as much?
- dsp1234 10y ago
  Have you considered that state funding has been lowered due to the fact that federal loans to students have increased? We aren't frivolously spending money. We raise tuition because the bills have to be paid. The ballooning of the 'administration' staff at my wife's university over the last 20 or so years is the same type of staff explosion seen at larger public companies. Except that those companies are responsible to share holders, and thus constrict when profits cannot be maintained. Whereas the University can forgo layoffs by increasing tuition, and know that the federal (and private) loan system will fill the gap. I cannot remember there ever being even a 2% layoff of staff at the university, let alone something you'd see from MS/IBM/etc.
  - mathattack 10y ago
    Universities do it more softly. They don't lay off tenured faculty, but they do fill more open positions with adjuncts and grad students rather than tenure-track professors.
  - yequalsx 10y ago
    I think you have cause/effect backwards. Funding per student decreases because it's easy for politicians to say we increased funding by x% without mentioning that the number of credit hours has increased by (x+y)%. The politicians can then claim that universities are being wasteful and bloated because despite increases in funding tuition is going up.
    - metaphorm 10y ago
      it's not just one thing. here's like 5 different factors that all result in tuition increases 1. state budgets for universities are cut for political reasons not having much of anything to do with the university itself. budget shortfalls must be made up from other sources, primarily from tuition increases. 2. increased student enrollment due to increasing economic and social pressure for people to get a college degree. more students requires more facilities and more staff, which requires more funding. 3. natural aging of physical plant of university facilities, combined with other long-term maintenance costs (pensions, for example) that have historically been underfunded and now need more funding. 4. a price spiral relationship between availability of student lending and tuition costs. tuition costs increase so student lending amounts increase so tuition costs increase etc. 5. real actual greed. this isn't universally true but it can't be dismissed. some universities will just raise tuition simply because they can.
  - fredgrott 10y ago
    State support of Colleges GOES DOWN per student as the number of students increase..the actual number to watch is the increases in enrollment... Increasing Fed subsidies tends to de-fund Colleges at the State budget level..its very counter-in-thinking as the more Fed subsidies the greater the student enrollments.. Thus if the Fed decreases student subsidies student enrollments will decrease and thus serve to reverse de-funding colleges at the State level.. ITS NOT ANY INDIVIDUAL BUDGET ITEM FOLKS..that is an illusion
- _cal 10y ago
  I attended both state school and community college. The federal money available to me while attending both places was considerably different, e.g. while I was at state school easily double the money was available.
- aaron-lebo 10y ago
  > community college Community colleges are not representative of bigger colleges. They aren't supported as much (as you say), and tuition is drastically cheaper.
- twblalock 10y ago
  State funding decreases (or lack of necessary increases) are easy for legislators to justify, because the students can just get loans. This was pretty obvious over the past 10 years in the University of California system -- every time state funding was cut or tuition was raised, the availability of financial aid, including loans, was used to defend the decision.
- ocschwar 10y ago
  A lot of the bloat in the 4 year colleges comes specifically from administrative bloat on the dorms and student-life side. Not so much the luxury dorms, though they are a problem, but the sheer number of deans and vice deans getting hired. At a community college, you won't see any of this.
- jandrese 10y ago
  How much of it is due to things like the Health Insurance costs skyrocketing at a rate considerably faster than inflation? Or pension liabilities becoming a burden as more of the older staff retire? These kinds of insidious costs can really eat out the foundation of any business, even when they previously weren't a big deal (when the workforce was young and healthy).
  - Kevguy 10y ago
    In my experience working at a community college 20-25 years ago, no one got a pension, so no long-term liability. This may be different at universities.
- yummyfajitas 10y ago
  Salaries are not exorbitant. We went almost 5 years without a pay raise. How many qualified people - currently working as PTLs or postdocs - would happily take your place for 10% less money? [1] If the answer is 10+ (from what I recall of the academic job market, that seems accurate within STEM, outside of STEM it might be 100+) then you are frivolously spending money. [1] Gerald Epstein elaborates on this argument, though he of course applies it to finance rather than education. https://promarket.org/rents-high-cost-high-finance-qa-gerald-epstein/ https://promarket.org/rents-high-cost-high-finance-qa-gerald...
  - locopati 10y ago
    Hey! Let's race to the bottom - everyone's a winner!
  - yequalsx 10y ago
    It depends on your philosophy of morality and what constitutes frivolity. If one considers lowest cost the end all and be all then perhaps my college system is being frivolous. Fortunately there are enough people who do not have such a crude view. Certain cocoa farms in Africa have decided to do away with frivolous salaries by using slave labor. I am certainly not a slave but the point ought to be clear nonetheless. That we can find someone willing to do a job for x% less is not evidence that the current wage us frivolous. Woe would be the lives of most of humanity if your view were widely accepted. We don't need a race to the bottom in this area.
    - yummyfajitas 10y ago
      By "frivolity", I mean spending which is not necessary to provide satisfactory service. Bringing up slavery is a bit confusing. Why not just bring up Hitler? I understand that you want to keep collecting your paycheck while the next guy on the totem pole makes $12,000/year as a PTL. Similarly, the Donald wants to build a giant wall of ice guarded by rapers, bastards, criminals and political exhiles to prevent unskilled white men from losing their rents (while keeping the Mexicans in poverty). I guess that in my morality, rent seekers are evil and Trump is a bad person for appealing to them. You seem to disagree.
- nkurz 10y ago
  Salaries are not exorbitant. Given that this is a global audience, and that even within the US the salary disparity across regions and industries is tremendous, could you be more specific than "not exorbitant"? My guess, from having a parent who taught at a likely even lower paying institution in rural Wisconsin, is that real numbers would make your case better than a euphemism to which people will attach their own expectations.
aaron-lebo 10y ago
It is absolutely this. When an 18-year old can take on tens of thousands in loans with mostly no strings attached (well, no bankruptcy) so that they can attend a big college which is little more than a summer camp with some classes thrown in, you've got a problem. I'm a phd student at a state school. As a graduate student I am allowed to take on up to 240k(!). I love learning and I enjoy school, but anyone who has been in academia for any length of time at all and doesn't realize it's largely a scam with good intentions which is designed to pass money around baffles me. Any education reform that doesn't cut back on loans and rethink how we do it is broken. The amount of money that gets poured into my school combined with the incompetence I've seen at so many levels is astounding. The education system in America is largely broken. Many high schools are worthless because it's expected everyone's going to go to college and take remedial classes in order to get a piece of paper which they probably won't use for their job and they'll spend the rest of their 20s and 30s paying off.
- joesmo 10y ago
  "no strings attached (well, no bankruptcy)" Yeah, because it's worse than bankruptcy. You can't even get rid of the student loan debt if you go bankrupt. I'd say that's a bigger string attached than any other type of loan available. This is the ultimate string of death and why we're in this crisis right now!
  - jandrese 10y ago
    The no bankruptcy thing still boggles my mind. Schooling is far from a sure return, so cutting out the final safety net seems just plain insane. I mean these are people who largely aren't qualified for the debt otherwise having either no job or a low paying job and little credit history and are given the money on the promise that their degree will get them a career when they graduate, even thought that's far from a guarantee. It's the kind of outrageous overreach some fat cat banker would put in the contract to reduce his liabilities but then the person in the government who's job is protecting the general public was asleep at the wheel and failed to have it struck from the contract. Did the clause pass because the kids don't put up any collateral? The college loan business is so screwed up.
knucklesandwich 10y ago
The paper even admits that it probably exaggerates the effects of grants and loans since their model doesn't incorporate private and public schools with different funding characteristics or competition[1]. [1]: http://www.nber.org/chapters/c13711.pdf http://www.nber.org/chapters/c13711.pdf
matwood 10y ago
100%, and we have seen it in other areas. Remember the housing bubble caused by anyone and everyone being able to get loans for insane amounts of money that could never be paid back? Same thing. When lots of money is loaned out with artificially low rates (because they are not able to be discharged and are backed by the gov.) this is exactly what happens.
brightball 10y ago
Generally, anytime the federal government aims the money fire hose at something the price goes up. You remove the cost of a thing from the thing and demand naturally increases. See it everywhere from student loans to housing to health insurance. When people don't feel the cost of something, they have no reason to say no to a price increase.
- hackuser 10y ago
  When state and federal governments provided more funding, tuition was lower. When they cut funding, tuition increased.
  - adventured 10y ago
    That's false. The Federal Government has massively increased its funding via guaranteed loans. What changed is how the government is doing the funding: now the Feds are printing huge profits - more than Wells Fargo and JP Morgan's annual profits combined - via the interest. The net result is a very large increase in the amount of dollars flowing toward universities over the last 15 years courtesy of the Federal Government's guarantees. Further, the Federal Government increasingly owns most of the student loans that exist. Federal funding didn't decrease, the nature of the money being made available shifted into a very easy to get loan that the Feds now make money off of. Not only do they print huge profits on it, they also ensure the laws remain such that you can't discharge the debt, to their own benefit. This has helped replace the red ink that Social Security is now generating, as previously the Feds were stealing from SS funding instead of actually safe-guarding the inbound revenue flows. Now they can't steal from the positive SS flows, so they had to come up with a 'revenue replacement' - what better way than to hitch young workers to massive debt they can't get rid of, yielding a perpetual interest bonanza for Federal spending. It will generate over half a trillion dollars in interest for the Feds in the next ten years.
    - knucklesandwich 10y ago
      Federal funding generally comes in the form of grants and lending, not budget disbursement. So the states making budget cuts to schools (which may or may not be politically justified by increased lending and grants) is not the federal government changing the mechanism for funding schools.
guelo 10y ago
The fact that Colorado cut per student spending by $7.8k and tuition went up by $7.7k is pretty convincing. Complex economic models that make unsupported assumptions about the cause and effect of increased availability of loans, much less so.
hourislate 10y ago
I suppose we could also add sports to the reason of rising student tuition. Students are paying more for education to pay the salaries of sport staff and the other supporting costs. http://projects.huffingtonpost.com/ncaa/sports-at-any-cost http://projects.huffingtonpost.com/ncaa/sports-at-any-cost When Football coaches earn more than any of the other faculty there is a serious problem. My sons high school and every other high school in my county has spent more on sports facilities than on any other aspect of education. Football stadiums, tennis courts, baseball diamonds, several football fields, a parking lot the size of a football field for band marching practice, At least 3 massive indoor gyms, wight rooms. Everything is watered and manicured all year around and I would say about 30 - 40 % of the schools students actually use these facilities. I wonder why my property taxes are 14k a year. This just carries on to post secondary education but instead of property taxes it's student tuition that is paying for it.
- ourmandave 10y ago
  Like this list of Highest Paid Employee by State. http://www.msn.com/en-us/money/savingandinvesting/the-highest-paid-public-employee-in-every-state/ http://www.msn.com/en-us/money/savingandinvesting/the-highes... (A slide show of uni coaches.)

yequalsx 10y ago

I have a hard time believing this. I teach at a community college in Minnesota. Our state funding per student has been halved in the last 20 years. Salaries are not exorbitant. We went almost 5 years without a pay raise. We aren't frivolously spending money. We raise tuition because the bills have to be paid. The money isn't coming from the state. There's really only one way to raise the needed money and that is tuition increases. I wonder how it can be determined that tuition wouldn't have increased as much as it has in the absence of eussidized loans. Would salaries be even lower than what they are? Would administration not have increased as much?

dsp1234 10y ago
Have you considered that state funding has been lowered due to the fact that federal loans to students have increased? We aren't frivolously spending money. We raise tuition because the bills have to be paid. The ballooning of the 'administration' staff at my wife's university over the last 20 or so years is the same type of staff explosion seen at larger public companies. Except that those companies are responsible to share holders, and thus constrict when profits cannot be maintained. Whereas the University can forgo layoffs by increasing tuition, and know that the federal (and private) loan system will fill the gap. I cannot remember there ever being even a 2% layoff of staff at the university, let alone something you'd see from MS/IBM/etc.
- mathattack 10y ago
  Universities do it more softly. They don't lay off tenured faculty, but they do fill more open positions with adjuncts and grad students rather than tenure-track professors.
- yequalsx 10y ago
  I think you have cause/effect backwards. Funding per student decreases because it's easy for politicians to say we increased funding by x% without mentioning that the number of credit hours has increased by (x+y)%. The politicians can then claim that universities are being wasteful and bloated because despite increases in funding tuition is going up.
  - metaphorm 10y ago
    it's not just one thing. here's like 5 different factors that all result in tuition increases 1. state budgets for universities are cut for political reasons not having much of anything to do with the university itself. budget shortfalls must be made up from other sources, primarily from tuition increases. 2. increased student enrollment due to increasing economic and social pressure for people to get a college degree. more students requires more facilities and more staff, which requires more funding. 3. natural aging of physical plant of university facilities, combined with other long-term maintenance costs (pensions, for example) that have historically been underfunded and now need more funding. 4. a price spiral relationship between availability of student lending and tuition costs. tuition costs increase so student lending amounts increase so tuition costs increase etc. 5. real actual greed. this isn't universally true but it can't be dismissed. some universities will just raise tuition simply because they can.
- fredgrott 10y ago
  State support of Colleges GOES DOWN per student as the number of students increase..the actual number to watch is the increases in enrollment... Increasing Fed subsidies tends to de-fund Colleges at the State budget level..its very counter-in-thinking as the more Fed subsidies the greater the student enrollments.. Thus if the Fed decreases student subsidies student enrollments will decrease and thus serve to reverse de-funding colleges at the State level.. ITS NOT ANY INDIVIDUAL BUDGET ITEM FOLKS..that is an illusion
_cal 10y ago
I attended both state school and community college. The federal money available to me while attending both places was considerably different, e.g. while I was at state school easily double the money was available.
aaron-lebo 10y ago
> community college Community colleges are not representative of bigger colleges. They aren't supported as much (as you say), and tuition is drastically cheaper.
twblalock 10y ago
State funding decreases (or lack of necessary increases) are easy for legislators to justify, because the students can just get loans. This was pretty obvious over the past 10 years in the University of California system -- every time state funding was cut or tuition was raised, the availability of financial aid, including loans, was used to defend the decision.
ocschwar 10y ago
A lot of the bloat in the 4 year colleges comes specifically from administrative bloat on the dorms and student-life side. Not so much the luxury dorms, though they are a problem, but the sheer number of deans and vice deans getting hired. At a community college, you won't see any of this.
jandrese 10y ago
How much of it is due to things like the Health Insurance costs skyrocketing at a rate considerably faster than inflation? Or pension liabilities becoming a burden as more of the older staff retire? These kinds of insidious costs can really eat out the foundation of any business, even when they previously weren't a big deal (when the workforce was young and healthy).
- Kevguy 10y ago
  In my experience working at a community college 20-25 years ago, no one got a pension, so no long-term liability. This may be different at universities.
yummyfajitas 10y ago
Salaries are not exorbitant. We went almost 5 years without a pay raise. How many qualified people - currently working as PTLs or postdocs - would happily take your place for 10% less money? [1] If the answer is 10+ (from what I recall of the academic job market, that seems accurate within STEM, outside of STEM it might be 100+) then you are frivolously spending money. [1] Gerald Epstein elaborates on this argument, though he of course applies it to finance rather than education. https://promarket.org/rents-high-cost-high-finance-qa-gerald-epstein/ https://promarket.org/rents-high-cost-high-finance-qa-gerald...
- locopati 10y ago
  Hey! Let's race to the bottom - everyone's a winner!
- yequalsx 10y ago
  It depends on your philosophy of morality and what constitutes frivolity. If one considers lowest cost the end all and be all then perhaps my college system is being frivolous. Fortunately there are enough people who do not have such a crude view. Certain cocoa farms in Africa have decided to do away with frivolous salaries by using slave labor. I am certainly not a slave but the point ought to be clear nonetheless. That we can find someone willing to do a job for x% less is not evidence that the current wage us frivolous. Woe would be the lives of most of humanity if your view were widely accepted. We don't need a race to the bottom in this area.
  - yummyfajitas 10y ago
    By "frivolity", I mean spending which is not necessary to provide satisfactory service. Bringing up slavery is a bit confusing. Why not just bring up Hitler? I understand that you want to keep collecting your paycheck while the next guy on the totem pole makes $12,000/year as a PTL. Similarly, the Donald wants to build a giant wall of ice guarded by rapers, bastards, criminals and political exhiles to prevent unskilled white men from losing their rents (while keeping the Mexicans in poverty). I guess that in my morality, rent seekers are evil and Trump is a bad person for appealing to them. You seem to disagree.
nkurz 10y ago
Salaries are not exorbitant. Given that this is a global audience, and that even within the US the salary disparity across regions and industries is tremendous, could you be more specific than "not exorbitant"? My guess, from having a parent who taught at a likely even lower paying institution in rural Wisconsin, is that real numbers would make your case better than a euphemism to which people will attach their own expectations.

aaron-lebo 10y ago

It is absolutely this. When an 18-year old can take on tens of thousands in loans with mostly no strings attached (well, no bankruptcy) so that they can attend a big college which is little more than a summer camp with some classes thrown in, you've got a problem. I'm a phd student at a state school. As a graduate student I am allowed to take on up to 240k(!). I love learning and I enjoy school, but anyone who has been in academia for any length of time at all and doesn't realize it's largely a scam with good intentions which is designed to pass money around baffles me. Any education reform that doesn't cut back on loans and rethink how we do it is broken. The amount of money that gets poured into my school combined with the incompetence I've seen at so many levels is astounding. The education system in America is largely broken. Many high schools are worthless because it's expected everyone's going to go to college and take remedial classes in order to get a piece of paper which they probably won't use for their job and they'll spend the rest of their 20s and 30s paying off.

joesmo 10y ago
"no strings attached (well, no bankruptcy)" Yeah, because it's worse than bankruptcy. You can't even get rid of the student loan debt if you go bankrupt. I'd say that's a bigger string attached than any other type of loan available. This is the ultimate string of death and why we're in this crisis right now!
- jandrese 10y ago
  The no bankruptcy thing still boggles my mind. Schooling is far from a sure return, so cutting out the final safety net seems just plain insane. I mean these are people who largely aren't qualified for the debt otherwise having either no job or a low paying job and little credit history and are given the money on the promise that their degree will get them a career when they graduate, even thought that's far from a guarantee. It's the kind of outrageous overreach some fat cat banker would put in the contract to reduce his liabilities but then the person in the government who's job is protecting the general public was asleep at the wheel and failed to have it struck from the contract. Did the clause pass because the kids don't put up any collateral? The college loan business is so screwed up.

knucklesandwich 10y ago

The paper even admits that it probably exaggerates the effects of grants and loans since their model doesn't incorporate private and public schools with different funding characteristics or competition[1]. [1]: http://www.nber.org/chapters/c13711.pdf http://www.nber.org/chapters/c13711.pdf

matwood 10y ago

100%, and we have seen it in other areas. Remember the housing bubble caused by anyone and everyone being able to get loans for insane amounts of money that could never be paid back? Same thing. When lots of money is loaned out with artificially low rates (because they are not able to be discharged and are backed by the gov.) this is exactly what happens.

brightball 10y ago

Generally, anytime the federal government aims the money fire hose at something the price goes up. You remove the cost of a thing from the thing and demand naturally increases. See it everywhere from student loans to housing to health insurance. When people don't feel the cost of something, they have no reason to say no to a price increase.

hackuser 10y ago
When state and federal governments provided more funding, tuition was lower. When they cut funding, tuition increased.
- adventured 10y ago
  That's false. The Federal Government has massively increased its funding via guaranteed loans. What changed is how the government is doing the funding: now the Feds are printing huge profits - more than Wells Fargo and JP Morgan's annual profits combined - via the interest. The net result is a very large increase in the amount of dollars flowing toward universities over the last 15 years courtesy of the Federal Government's guarantees. Further, the Federal Government increasingly owns most of the student loans that exist. Federal funding didn't decrease, the nature of the money being made available shifted into a very easy to get loan that the Feds now make money off of. Not only do they print huge profits on it, they also ensure the laws remain such that you can't discharge the debt, to their own benefit. This has helped replace the red ink that Social Security is now generating, as previously the Feds were stealing from SS funding instead of actually safe-guarding the inbound revenue flows. Now they can't steal from the positive SS flows, so they had to come up with a 'revenue replacement' - what better way than to hitch young workers to massive debt they can't get rid of, yielding a perpetual interest bonanza for Federal spending. It will generate over half a trillion dollars in interest for the Feds in the next ten years.
  - knucklesandwich 10y ago
    Federal funding generally comes in the form of grants and lending, not budget disbursement. So the states making budget cuts to schools (which may or may not be politically justified by increased lending and grants) is not the federal government changing the mechanism for funding schools.

guelo 10y ago

The fact that Colorado cut per student spending by $7.8k and tuition went up by $7.7k is pretty convincing. Complex economic models that make unsupported assumptions about the cause and effect of increased availability of loans, much less so.

hourislate 10y ago

I suppose we could also add sports to the reason of rising student tuition. Students are paying more for education to pay the salaries of sport staff and the other supporting costs. http://projects.huffingtonpost.com/ncaa/sports-at-any-cost http://projects.huffingtonpost.com/ncaa/sports-at-any-cost When Football coaches earn more than any of the other faculty there is a serious problem. My sons high school and every other high school in my county has spent more on sports facilities than on any other aspect of education. Football stadiums, tennis courts, baseball diamonds, several football fields, a parking lot the size of a football field for band marching practice, At least 3 massive indoor gyms, wight rooms. Everything is watered and manicured all year around and I would say about 30 - 40 % of the schools students actually use these facilities. I wonder why my property taxes are 14k a year. This just carries on to post secondary education but instead of property taxes it's student tuition that is paying for it.

ourmandave 10y ago
Like this list of Highest Paid Employee by State. http://www.msn.com/en-us/money/savingandinvesting/the-highest-paid-public-employee-in-every-state/ http://www.msn.com/en-us/money/savingandinvesting/the-highes... (A slide show of uni coaches.)