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This article from 538 argues that almost 3/4 of the rise in tuition is accounted for by a drop in state support. https://fivethirtyeight.com/features/fancy-dor

• johnnyb9 9y ago
  https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... "We find a pass-through effect on tuition of changes in subsidized loan maximums of about 60 cents on the dollar, and smaller but positive effects for unsubsidized federal loans."
• wmeredith 9y ago
  I came here to say this. My wife left the private sector four years ago to work in higher ed. This was a huge epiphany to both of us after she had been there a while and we could see the big picture from the inside. Sure there are a couple other factors at play, but it's small potatoes, comparatively. If you look at the big state schools and the support they receive from the community, they've systematically had their legs cut out from under them over the last couple decades. It's horrifying. And the students are paying for it. As are the teachers.
  • kchoudhu 9y ago
    Doesn't explain what's happening in private higher education though.
    • rebuilder 9y ago
      If public higher ed. has its capacity and/or quality cut, wouldn't that increase the demand for private education?
      • strommen 9y ago
        The public universities don't cut capacity or quality - they raise costs. And the private colleges follow suit because they can.
    • deleted 9y ago
      [deleted]
    • Retric 9y ago
      Sure it does, if stake school is X, then private schools need to cost more than X to seem exclusive. Further, financial aid makes nameplate number less meaningful. If someone has rich parents or wins a full ride then schools want to milk that for as much as possible. Otherwise they can always add discounts down to whatever someone can pay.
  • fivestar 9y ago
    Um, not sure what you are talking about wrt community support? The community, and the state was supporting the university quite liberally. My observations from attending and then later working at a large southern public university is that a bunch of things happened: 1) The financiers got in bed with the financial aid office, figuratively and possibly literally. 2) The campus went on an inexplicable building boom the likes of which no one had ever seen before. The state funded those projects, but they were clearly handouts to construction companies and pork spending. Sickening, really. 3) The quality of the average student plummeted. I blame the financiers for this, too--asses in seats is a thing. So while it may be generally good that more people had access to higher education, at the same time the quality dropped, and I seriously doubt the outcomes for many of those people actually improved over attending community college or perhaps no college. Their debt loads had to be tremendous, after all.
    • pnutjam 9y ago
      There are huge discrepancies in student preparedness in different areas. It's possible your right, the South has long viewed education with suspicion and this has gotten worse, probably insuring students today are less ready for college. It's also possible that states where education was valued have pulled back funding. There is actual hard data to indicate this is the case, but I'm also trying to avoid dismissing your claims out of hand.
  • moomin 9y ago
    Serious point: let's say that, to you personally, investing in the stock market and going to college are a wash. They're not a wash for the state. The state gets more taxes from your higher-paying job. The chances are you're also helping to support some lower-paying jobs as part of your industry. So it's not unreasonable to expect the state to contribute to actually making this happen. The benefits are actually much larger than I've just described. There's a snowball effect as the industries of the state move up the ladder. America is currently benefiting from past state investment in education. (There's intangible benefits too, but for these purposes let's just talk about the benefits the state accrues.)
    • kesselvon 9y ago
      The federal government is having it both ways right now: it earns interest on the money it loaned to you to get a higher education, and it also generates higher revenues via your increased lifetime earnings. This is a bummer because its not like your state taxes went down along with a decrease in state funding for your in-state universities. Basically state governments off-loaded the burden of funding on the students while reaping the benefits of said investments.
    • ThrustVectoring 9y ago
      >The state gets more taxes from your higher-paying job. That's if you accept the higher-education-as-training model. Under the higher-education-as-signaling model, the primary effect of education is to choose how to allocate a fixed set of high paying jobs. If there's 100 slots for new lawyers this year, then the difference between sending 150 and 151 students through law school is an additional unemployed lawyer.
      • moomin 9y ago
        There's a case to be made for that in particular professions, and there's no way the state should be funding the dodgy law colleges that have sprouted all over America. But then, if you subscribe to that model you should also believe that you should be able to disavow education loans in the event of bankruptcy.
  • flubert 9y ago
    Is there a name for the "law" that you can always find "credible" information supporting both sides of any issue? http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
    • thesagan 9y ago
      "Fair and balanced?"
  • notananthem 9y ago
    I did undergrad at a state school (University of Illinois at Chicago) and later worked there as a researcher and our pension was bankrupt and the state was just trying to murder what was left of benefits and reasons to want to work there. Hilariously enough colleagues at private schools (SAIC, etc) in design in the area are now all bailing to work at UIC because their benefits and pay are far worse. I am in an evening MBA program at UW Seattle now, Foster School of Business, and its half covered by my employer. Everyone's trying to gut funding but improve education..
• gozur88 9y ago
  That's only public universities, though. How does that explain the corresponding increases at private schools?
  • ethbro 9y ago
    I'd assume the two are strongly correlated. If state schools raise their prices, then private schools can stay at the same multiple above them and also raise their prices.
  • learc83 9y ago
    First you have to factor in the fact that public schools are a competing good, so when public tuition rises private tuition will as well. Then you have to realize that tuition increases at private schools are misleading. You have to look at what people are actually paying not what the sticker prices. At Harvard, for instance, 70% of students receive financial aid, so they are paying $12k a year on average (not the $60k sticker price). That's tuition, fees, and room and board. Harvard has generous financial aid, but it's not unusual among elite schools. Most private schools worth going to are going to have very good financial aid packages. And even at lower tier private schools most people aren't paying sticker price unless you're talking about for profit institutions.
    • gozur88 9y ago
      But private schools have to compete with each other. If this was really about increased demand from students who would have otherwise gone to public schools, what we'd see is an increase in the number of private schools, not an increase in tuition.
      • learc83 9y ago
        Assuming the number of private schools that students want to go is in no way supply limited, which is an incorrect assumption. How long does it take to build and staff a private school? How long to get it into US News top 500? Even something like increasing the number of students admitted to existing private schools is tricky because they are tracked on their admission percentage.
• conanbatt 9y ago
  Interesting! Does this mean that education budgets for the states has had cuts in the last 16 years? Where is that state money saved going?
  • prostoalex 9y ago
    Pension plans of retired college professors and staff typically include some wildly optimistic investment expectations, and states are on the hook for compensatory payments when those expectations [surprisingly] do not materialize. This is not limited to education pension funds, public sector or prison guard pension funds typically negotiate the same deal, very frequently with people they themselves have helped get elected, so you know those negotiations are extremely tough.
  • fastaguy88 9y ago
    In almost all states, the money has gone to Medicaid. In Virginia (which I know well), the money also went to build a bunch of prisons in the 80's and 90's. But, if you look at the distribution of state budgets over the past 40 years, health care expenses and prisons have been the growth areas.
• prostoalex 9y ago
  For a pure apples-to-apples price comparison it's reasonable to use an out-of-state tuition that's free of state support, grants or scholarships, as that reflects the true price sticker. The rise in college tuition is the most baffling, as this industry refuses the amortize costs. The buildings have been built, the books have been written, the intro courses have been handed down to graduate students, the handouts are sometimes the same handouts that were used a decade ago. Yet the costs keep on rising.
  • fivestar 9y ago
    There has to be a top--there is no demand at some price point, even with loans.
  • ska 9y ago
    What is baffling about it? This has turned into a very effective method of wealth transfer. I think some combination of the rise in administrative overheads and the involvement of private finance with government protection explain almost all of it. Asking young humans with incomplete information to make a decision with long term financial impacts is a good gig, especially when "all their friends" are doing it.
  • maxerickson 9y ago
    The price doesn't necessarily represent the cost.
• jrs95 9y ago
  But would this have been possible without the federal money being available? I don't think the two are necessarily separate.
• replicatorblog 9y ago
  That line of argument would be more persuasive if it explained why tuition has increased at private colleges? Suffolk University is an unimpressive college in Boston that is at risk of losing its accredidation, yet charges $37K/year for tuition. Harvard, arguably the best college brand in the world, costs $43K. It seems like there should be a bigger delta between the two, right? Why not? Might it have something to do with the amount of loans students are allowed to take out with government underwriting? Perhaps.
  • learc83 9y ago
    Or might it have something to do with the fact that Harvard has a massive multi-billion dollar endowment. Tuition is a tiny fraction of their income. 70% of Harvard students receive financial aid from the institution, and they pay an average of $12k a year total. Harvard clearly isn't charging a market rate for tuition. Also government backed loans aren't nearly enough to cover tuition plus housing at these schools, so if your argument is that the prices are similar because they are both near the max loan amount, they aren't.
    • replicatorblog 9y ago
      Is there any literature that explains why the costs continue to rise on a yearly basis? If one buys into the disinvestment hypothesis it seems like the public university traditions should have plateaued at some point once the <$10K difference in state funding and private tuition normalized. Especially considering we've seen dramatic cost reductions in IT and a profusion of programs like MITx, Khan Academy, and others that should allow colleges to reduce costs.