12 ms·

The Truth about College Costs

92 points by imgabe 3y ago

aynyc 3y ago
Maybe I missed something, do colleges publish detail cost like hospitals are now required to do? Like cost per credit, food cost, room and board cost.
- aikiplayer 3y ago
  The department of education does publish this. They've apparently changed their website a bit but here it is: https://collegecost.ed.gov/ https://collegecost.ed.gov/
- lotsofpulp 3y ago
  Colleges in the US have always published that, search college name and tuition and it will come up easily.
- shireboy 3y ago
  Article addresses that, says the numbers they submit are not verified. The gist as I understand it is that these numbers are not typically what students actually pay.
- Joker_vD 3y ago
  Can't they just chalk up almost any amount of money up to the "wage fund": which includes wages not only of the professors and teaching assistants themselves, but also of an arbitrarily large amount of administrative staff that can be paid arbitrarily large sums of money? After all, you can get passionate teachers to work for peanuts (since they're passionate about teaching), but not the competent managers, right? Admittedly, I have rather passing (and anecdotal) connection to accounting, and not the US-based accounting at that, but I was given an impression that the art of showing arbitrarily large costs and expenses as justified and necessary is an important accounting art, in quite high demand.
- dboreham 3y ago
  Colleges (at least private ones) have personalized pricing, so any such publication wouldn't be useful. (They call this "scholarships" but in reality it depends on how much money you have. Also you can negotiate pricing, like a car dealership.)
  - OkayPhysicist 3y ago
    Not just how much money you have, but also how valuable you are to the school. Private schools, unlike public ones, tend to give out merit based scholarships regardless of income status, because introducing potential founders to potential investors is a key selling point.
PopAlongKid 3y ago
>Another source of comfort is the fact that these fantastical figures are uncritically accepted by the Department of Education and, apparently, the IRS. The article mentions IRS Form 990 several times. This is "Return of Organization Exempt From Income Tax", so the IRS would not necessarily care about the phantom accounting. Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax.
- tptacek 3y ago
  I think the article agrees that the accounting here is not trustworthy, right?
- rahimnathwani 3y ago
  Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax. I guess the proportion of a university's revenue reported as being paid out in grants might influence the IRS's determination of whether the institution is providing enough public benefit to maintain its non-profit status? An increase in sticker price (with no increase in net price) would make this ratio higher, making it look like the college is spending a large % of revenue on public benefit?
SkipperCat 3y ago
I always wondered why the amount of college tuition you pay which becomes a wealth transfer to a subsidized student could be classified as a charitable donation, and therefore you'd be credited with a tax deduction.
- panzagl 3y ago
  You already get both a deduction and a credit for paying for college.
- deleted 3y ago
  [deleted]
PopAlongKid 3y ago
>In the late 1980s and early 1990s, colleges discovered that the appearance of high tuition was good for marketing. I believe the re-vamped FAFSA aid system also had a big impact in that time frame[0]. The article barely mentions student loans, but having nearly unlimited education loans that can't be discharged in bankruptcy, along with more generous income tax credits for higher education, certainly has fueled some of the tuition growth. Interestingly, male college-age students are no longer required to register for the draft (Selective Service) before applying for federal aid. [0]" When Congress reauthorized the HEA in 1992 they created a standardized federal form for all prospective students seeking aid. The stated goal of FAFSA and other government funded education programs was to create equal opportunities for students seeking higher education." https://en.wikipedia.org/wiki/Fafsa https://en.wikipedia.org/wiki/Fafsa
- throwaway2203 3y ago
  When did the Selective Service requirement get dropped?
  - PopAlongKid 3y ago
    > the FAFSA Simplification Act removed this requirement starting with the 2021–2022 school year. The FAFSA Simplification Act was a part of the Consolidated Appropriations Act, 2021. [Wikipedia]
- tptacek 3y ago
  I've also operated under the received wisdom that the college loan system mostly serves to allow universities to take a larger bite out of the lifetime earnings premium from a degree, that it essentially subsidizes higher tuition. But the article makes claims incompatible to that; that if you follow the Form 990s, the total amount schools are taking in, in constant dollars, hasn't tracked the increasing availability of loans. But: surely there are solid statistics on increased loans from buyers? Where is that money going?
  - strictnein 3y ago
Pet_Ant 3y ago
I've thought about this and I wonder why we couldn't have an exam model for education. One cost for the exam, and one for the prep program. If you wanted to you could study at home on your own, and then just pay to take the test/get your essay graded. If you want, separate price for the study program guided by a professor. Driving works the same here, the test is run by the government, but there are various driving schools that you can sign up for to get prepped and get some practice.
- imchillyb 3y ago
  If the goal of higher-education is to educate persons, then the model you propose would seem to be in the best interests of citizens. If, however, the goal of higher-education is profiteering off the citizenry, then your model would prevent those profits from occurring. Which model do you believe the US follows, education, or profiteering? The answer is unsurprising and able to be gleaned from financial statements, and enrollment data alone.
- maegul 3y ago
  Absolutely agree. Part of the problem though is that this would reveal that undergraduate education and the universities that provide it can be thought of as merely a certifying process/body. Not quite the same glamour and prestige.
- Eumenes 3y ago
  The tuition/room/board and Aramark/Sodexo lobbies wouldn't like that!
- aleph_minus_one 3y ago
  You proposal has the built-in assumption that the central value that the university provides is the certificate at the end. I don't think this is true: a much more important value that at least good universities provide is having been exposed to the whole intellectual environment most of the days for years.
  - brigadier132 3y ago
commandlinefan 3y ago
> lists tuition levels much higher than what students pay Being in the college grind, what my wife and I found when our children started applying is that this is true of the colleges you've never heard of, but the "big name" colleges do tell you pretty much what you're going to pay, unless you're dirt poor. University of Boise? Free ride. MIT? The price is the price, deal with it.
- freeopinion 3y ago
  Ummm. MIT specifically posts one tuition, then gives you a calculator that asks a bunch of questions to approximate your financial status to calculate a needs-based scholarship guess. If your parents make less than $100k, your actual costs drop 90%. It is the epitome of advertising one very high price for prestige, but doing something very different in reality.
  - NickC25 3y ago
    I can see how base tuition can be dropped significantly if you're poor. I have a hard time believing that your actual costs (some that the university cannot control) can be dropped as well, so poor kids don't really stand a chance unless the university is handing out money to cover non core costs. You're still going to have to deal with a high cost of living (Boston real estate is not cheap; food isn't cheap, transportation costs aren't cheap), textbook prices (usually set by 3rd parties such as publishers), and other essential costs. Granted, cutting base tuition by 90% might leave room to cover these expenses, but still. But good on MIT for having the ability to drop tuition by 90%, that's a great start. However, their endowment is massive and has the ability to play with numbers. A state school might not have that ability.
habosa 3y ago
We made very similar mistakes with college education and housing. Both things that we’d like people to have more of, in theory. In both cases the government provided massive subsidies in the form of loans and tax breaks. That does wonders for the demand side. However the government didn’t find a way to increase supply (esp of the good stuff) at the same rate nor did they find a way to prevent the excess profits generated from falling into the same few hands. So what did we get? A seemingly endless cycle of price growth.
- oerpli 3y ago
  [flagged]
  - macintux 3y ago
    > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that". https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - kaesar14 3y ago
      I mean in this particular case it’s a fair question, the top question is a literal contradiction of the entire purpose of the article
      - macintux 3y ago
        So offer a counter-argument based on the article.
        tekla 3y ago
        Why? The argument was already made in bad faith when it was clear that no-article reading had taken place
        kaesar14 3y ago
debacle 3y ago
Does "paid" in the chart include loans?
panzagl 3y ago
This article holds with my experience- 2 daughters, 2 different colleges, both tuitions worked out to about $15K, one in-state, one out-of-state but with an achievement scholarship that brought it down to the same price as the in-state. And the achievement scholarship was not particularly onerous- mid-percentile SATs, good grades, no essay. The trick lately has been housing- apartments in a college town are not much cheaper than room and board in a dorm anymore, with lots of BS fees added in.
freitzkriesler2 3y ago
My alma mater, Ithaca College precisely fell prey to the fallacy of, "more expensive means more prestige". Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree. The truth is, outside of ivy league schools and brand name tech schools (mit, Caltech, etc) your alumni network means jack diddly for finding a job for the majority of graduating students. I told alumni reps repeatedly back in the 2010s that high tuition prices and student loans levels will directly impact student giving. They didn't listen to me guess what? The giving rate for the college has gradually collapsed YoY and they supposedly have no idea why. Couple that with having a huge operational deficit, they made the wildly unpopular move of cancelling degree programs and merging departments together which further impacts alumni giving. The combination is a death spiral because reduced alumni giving means less scholarships which makes the sting of a high tuition hurt even more. Meanwhile, the administration which is notoriously overpaid compared to other private school salaries, $250-350k year salary for a private school in BFE New York, looks askew with underpaid faculty when their roles get cut and they kept their big salaries. The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier. Combined tuition room and board tops $100k and you'd be a fool to ask yourself, "what am I getting for this right now" because again the dubiousness of finding a job after college means you better provide value for your money. And the final blow to this is the fact that birth rates are collapsing so the total addressable market for higher education shrinks every year. Higher education needs to have a come to Jesus moment like academic publishers have and realize that their market is shrinking. Either figure out how to become more affordable or spiral the drain. Big schools need not worry. Small overpriced private liberal arts colleges? Watch out. Even non profits need to think like cit throat businesses.
- NoMoreNicksLeft 3y ago
  > Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree. Ithaca college has an endowment of $350 million, is heavily subsidized by the government, and the "everyone should go to college" lunacy they push in public schools will pay dividends for decades to come. I don't think they're hurting, or that they will notice that a few people are "re-evaluating". > The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier. Standard operating procedure is therefor to spend a few hundred million through financing to upgrade the dorms to resort spas, turn the cafeteria into some mall-style food court with prices double what they are 3 miles down the road at the identical restaurant name, and raise tuition to cover all these additional costs. > Either figure out how to become more affordable or spiral the drain. That spiral can last decades, until a date far past the retirement of anyone currently in charge.
fultonb 3y ago
I go to a top-100 private college and I can confirm this experience. Virtually everyone I know has at least a 40-60% tuition "scholarship" (I'm personally on a 60%). I suspected that are university simply had an automatic discount for most people. Didn't realize this was a thing at most private institutions. Fascinating article.
morpheuskafka 3y ago
> To the contrary, since colleges care about student quality, they give larger "scholarships" to better students, and those students disproportionately come from more affluent families. As a result, rich families often receive more aid on average than poor ones. My experience at a state flagship is that if you have a 100% EFC (called SAI now, supposed to represent what you can afford), you don't really get considered for any aid regardless of merit, except for a very extremely selective programs with their own applications and outside committees. However, that could also be because with in-state tuition, someone whose EFC is around the size of a private school would already be paying only a fraction of that. > Johnny's parents and grandparents proudly tell their friends about "how much money Baker gave to Johnny," and Johnny chooses to attend Baker over Able. I can't stand the newspaper articles that talk about how someone applied to 20 colleges they were likely to be accepted to and got "$X million in scholarships." Aside from the author's point that some of them would be expected, totaling them all up is pointless since they are mutually exclusive.
markphip 3y ago
I am sure there is truth to the article, but as someone forced to pay the full price for 2 kids, the idea that tuition is not going up is laughable. I'll pay $80,000 this year for my daughter and about $40K for my son who chose the in-state university. College prices are insane. My daughter is in her final year, and even in those years, including a Covid gap year, the cost went up $10,000 for those of us stuck paying full price. I am in no way wealthy, but thankfully went through 2 small exits in my career where I could bank enough away to cover this. There will be nothing left though. I also put money in a 529 for each kid their whole life. For my son's account I actually lost a small amount of money over the life of the investment and for my daughters it only went up slightly. If that had been all I had I could have paid for 1 year of school each.
- beambot 3y ago
  It seems counterintuitive that one of the largest bull cycles in modern history would result in flat or negative returns. Is this due to the 529's limited investment vehicles...? At that point, wouldn't you be better off putting the funds into a taxable account instead?
  - runako 3y ago
    A lot of 529s have relatively high fees and low returns. I stopped funding 529s for this reason.
  - deleted 3y ago
    [deleted]
  - bombcar 3y ago
    529s are not really worth it unless you have need for additional tax shelter (owning broad-market mutual funds is already relatively "tax advantaged" if you buy and hold) OR you can get tax write-offs for contributing (which is true in some states). As with all investments, when you get in and when you get out can affect total return, even though you can't time it perfectly. The problem with 529s is you can't really "choose to let it ride" when college starts, whereas with retirement you DO have that option (by using other funding sources). Unfortunately the way the college racket is setup, it's often much better to simply be a paper pauper when the FAFSA comes around (hint: they ignore the house and the car(s)).
rubyn00bie 3y ago
I would like to see citations for what the author purports. It’s a very clever bit of writing in the sense they’re as careful about what they say and show, as what they don’t. The tables reference private school prices but not public, and again no links are provided. To me it feels more like a narrative than anything else where the author attempts to gently side step anything which may be contrary to their opinion as unnecessary or difficult to gauge.
- rconti 3y ago
  I upvoted this as I left the article after reading and nodding along with it... and noticed the author's history which definitely leaves me feeling he's coming at it from an angle. That doesn't invalidate what he's saying, but it makes me curious for more detail.
- MilStdJunkie 3y ago
  As I read the piece I was having the same increasing unease, and then my eye wandered to the top right of the frame . . EDIT OK, I can hear the keyboards spinning up with their ADDRESS THE ARGUMENT NOT THE SOURCE thing they do. I'm going to make something completely, absolutely clear: if Andrew Wakefield self-publishes a Fantastic Miracle Cure, and you do not read that with icy suspicion, you are - and I am so sorry to say this - a fool. An easy mark that stands out in a landscape of very, very easy marks. So yeah, the source matters, especially when THEY DON'T CITE ANYTHING.
deleted 3y ago
[deleted]
dpweb 3y ago
Have paid school tuitions for 15 years now, pre-K to 12, and in 2nd year of college now. Some thoughts.. College is just like private K-12 - there is no set price, it's indexed to your income. They have to set a high list price so the wealthy can pay that and they aid those w less income. Don't forget about car and health insurance! Do every single aid and scholarship app you can find. Use the appeals process especially if you have extenuating circumstances. Read the rules carefully about which assets/income is relevant. If you're divorced (I am), read the rules carefully about income and asset reporting in those circumstances. It's not that you're paying for the credential, you're paying for the experience, education, and credential. Just the credential is the expensive part of it. Example, I've been a DJ (just for fun) for 30 years. Just saw an ad for DJ school. Even if they wanted to be a professional DJ (ok, if that's your dream), I'd NEVER pay for my kid to do it. There's a legit cost in educating anyone. But the credential is worthless. A university degree has some value. Of course, you can learn ANYTHING online for free. Anything. The credential is the expensive part of it. So make sure it's a credential with value. You may have to say NO to your kid(s). This is VERY tough. But weigh your options carefully as spending your entire retirement fund on college (mostly for the credential) is a dubious proposition.
downrightmike 3y ago
Absolute perversion. Of the institutions and the systems. The action of raising tuition for decades to keep it unobtainable, so you can give out discounts to become a charity, and therefore not taxed, is an absolute perversion of charity.
- NoMoreNicksLeft 3y ago
  > The action of raising tuition for decades to keep it unobtainable That was never the action. The action was raising amenities and allure for decades, to attract ever greater enrollment. Unless you're Ivy League, or one of the other few high status universities, it's difficult to attract students... every other lower-tier university competes with you. So you build better dorms and better lecture halls, newer labs. You hire more faculty and staff. You build big pretty gardens and fountains, and hire people to maintain those. And suddenly your costs are through the roof. You raise tuition some, to deal with this. But tuition is also the benchmark of affordability (at least when you start this), so you also tack on fees and other costs that were never billed separately before, to try to hide the rising costs. All the while, other universities are doing the same. You're in an arms race with them, so to speak. > and therefore not taxed, is an absolute perversion of charity. Wait, you think they ever paid taxes, but now they're engaged in some sort of tax evasion shenanigans and the IRS just doesn't notice, somehow? I keep forgetting that so many people live in this reality, but are unfamiliar with the basics of how it operates.
  - downrightmike 3y ago
    Your first point is wrong, they raised tuition and told all kids they needed to go, and then they started tacking on luxury amenities later. Amenities like lazy rivers are a new development. Tuition increases go back to the early 90's. Yes they paid taxes, and the whole story is a wild one, they tried to dodge the IRS with redacted filings and that got taken to the SCOTUS in 1993. https://casetext.com/case/us-v-massachusetts-institute-of-technology https://casetext.com/case/us-v-massachusetts-institute-of-te... And that decision is what allowed the massive tuition increase and all other schools followed or went defunct. If you want a longer story of universities dodging taxes: https://time.com/5952901/universities-tax-exemption/ https://time.com/5952901/universities-tax-exemption/ Same thing google et all do with their IP and the Irish sandwich.
JackFr 3y ago
I mean I'd like to believe I'm some sort of one-percenter, but I don't believe I am. I paid full sticker price for two children and with my third there was some nonsense with institutional aid, but the hit was still way over $25000. The problem with his central thesis though, I find is the reason behind jacking the price up. The reason isn't to make the school more prestigious, but rather to be able to soak all buyers at the proper price point. You can't state a lower tuition and then jack it up for the children of lawyers and hedge fund managers. You need to start high and then offer assistance to the children of mechanics and plumbers. (I know -- many plumbers are rich) The funny bit is while airlines and car dealers have to resort to judgment and tricks to figure out your price point, colleges get the FAFSA handed to them.
- lesuorac 3y ago
  Well, I don't know what state you live in but for most of the HCOL states you need to be over 700k/year so you might not be. That said, the top 5% is roughly 1/3 of what the state's 1% is so pretty much all of FANG is 5-% https://smartasset.com/data-studies/what-it-takes-to-be-in-the-1-by-state-2023 https://smartasset.com/data-studies/what-it-takes-to-be-in-t...
RajT88 3y ago
I'm with a lot of other folks here, in that the article aligns with a lot of what I've seen of the industry (and my wife is a professor). The idea that universities are going broke is put to the lie by the fact that so many of them keep building new buildings for some reason! These are multi-million dollar affairs, and are not usually new dorms, it's facilities which other facilities which already serve the same function just fine but which might be 15-20 years old. Giant budgets are spent building new buildings which are not needed, and do not improve the quality of education in any way. The stories I hear from my wife are exactly the same as I see happening with my own alma mater. Both are private colleges, but I've heard state schools do this too.
- Workaccount2 3y ago
  Building new buildings is how you turn profits into non-profits to keep yourself a non-profit. See hospitals (and their extensive ever growing networks) as even more evidence of this.
phkahler 3y ago
Seems like a good way to discriminate. You can claim to be open to a wide range of students, but if you don't want someone don't give them a discount. If they are willing to pay anyway then enjoy the extra money and take them anyway. Not sure discriminating on scholarships would be any different from discriminating on admission from a legal point of view.
busterarm 3y ago
I was forced out of college 20 years ago due to rising costs. In my first year, going to an in-state school, I was already paying the limit of what I could reasonably get through loans. Then Gov. Pataki killed the Tuition Assistance Program and SUNY decided to raise tuition by 40% into the next year. I heard that the year after that they did another 30% or-so tuition hike, but by then I was already gone and working full-time.
joewferrara 3y ago
Shit is crazy! I did not know about the amount of fake scholarships private colleges give until today! If I knew it in high school I would have applied to more expensive colleges. I only applies to public universities in my state in high school because they’re cheaper. Do the discounts aka fake scholarships rates apply to public schools as well? I’d think not.
- cpitman 3y ago
  At least for elite public schools, the average student receives more in "aid" than they pay, meaning they are paying less than half of the "price". https://www.collegesimply.com/colleges/illinois/university-of-illinois-at-urbana-champaign/price/ https://www.collegesimply.com/colleges/illinois/university-o... And yes, it's a source of bad outcomes that those that cannot afford the inflated price of elite universities do not know that they would never have to pay that.
- OkayPhysicist 3y ago
  Public schools tend to give a lot of "need-based" scholarships, aka "we'll charge you whatever you can afford". Private universities are more open to "merit-based" scholarships on top of that, where they're actively trying to attract top applicants by reducing their effective cost, oftentimes to even cheaper than public universities. As a result, if you're from a low-income background, but overcome the odds and manage to be an academically competitive applicant, most private schools will be offering something close to a full-ride once both need and merit based scholarships are considered.
aetherson 3y ago
When I was a kid, it felt like we had a rough societal consensus that price discrimination was bad. You couldn't stop all of it, but you had laws saying that everyone was entitled to the best price of retail goods, etc. Feels like that's really fallen away, and I think it shouldn't have.
smugma 3y ago
Said another way, it’s a progressive tax. Prices really are going up for the top 1-5 or 10% eg markphip paying $120K/yr for two kids even though he’s in no way wealthy.
graybeardhacker 3y ago
From the article and the comments here I can assume that I'm in the minority since I was ineligible for any financial aid and paid full tuition. We "qualified" for unsubsidized loans which I do not consider to be aid and did not take. I consider my family to be middle class. We have one income for a family of five. Sending three kids to state college would cost us over $375,000. I've only sent one so far and it cost $130,000 with room and board for state college. I guess our tuition is paying for everyone who got a substantial discount.
musicale 3y ago
The charming campus pictured at the top of the article appears to be Dartmouth College, which racks up an eye-popping $87,793 estimated cost for incoming students this fall. Like other Ivies and elite schools, Dartmouth claims "no [required] student loans" but this ignores "unrequired" loans as well as loans that parents may have to take out to meet the parental contribution, which considers assets including home equity. (External scholarship money, if any, is typically deducted from "financial need" which means it has little effect on expected contribution.)
musicale 3y ago
> On the other side of this regulated transaction, families fill out the dreaded FAFSA, on which they are not expected to write down any numbers they want, and the numbers they write will be validated. Colleges use the resulting FAFSA data to calculate information like the expected family contribution. For families, the whole system feels as serious as a conversation with the IRS. It is exactly a racket where the seller sets a price based on complete access to the buyer's financial information, with government enforcement. I'm sure other businesses are envious of this IRS-style arrangement.

92 points by imgabe 3y ago

Maybe I missed something, do colleges publish detail cost like hospitals are now required to do? Like cost per credit, food cost, room and board cost.

aikiplayer 3y ago
The department of education does publish this. They've apparently changed their website a bit but here it is: https://collegecost.ed.gov/ https://collegecost.ed.gov/
lotsofpulp 3y ago
Colleges in the US have always published that, search college name and tuition and it will come up easily.
shireboy 3y ago
Article addresses that, says the numbers they submit are not verified. The gist as I understand it is that these numbers are not typically what students actually pay.
Joker_vD 3y ago
Can't they just chalk up almost any amount of money up to the "wage fund": which includes wages not only of the professors and teaching assistants themselves, but also of an arbitrarily large amount of administrative staff that can be paid arbitrarily large sums of money? After all, you can get passionate teachers to work for peanuts (since they're passionate about teaching), but not the competent managers, right? Admittedly, I have rather passing (and anecdotal) connection to accounting, and not the US-based accounting at that, but I was given an impression that the art of showing arbitrarily large costs and expenses as justified and necessary is an important accounting art, in quite high demand.
dboreham 3y ago
Colleges (at least private ones) have personalized pricing, so any such publication wouldn't be useful. (They call this "scholarships" but in reality it depends on how much money you have. Also you can negotiate pricing, like a car dealership.)
- OkayPhysicist 3y ago
  Not just how much money you have, but also how valuable you are to the school. Private schools, unlike public ones, tend to give out merit based scholarships regardless of income status, because introducing potential founders to potential investors is a key selling point.

PopAlongKid 3y ago

>Another source of comfort is the fact that these fantastical figures are uncritically accepted by the Department of Education and, apparently, the IRS. The article mentions IRS Form 990 several times. This is "Return of Organization Exempt From Income Tax", so the IRS would not necessarily care about the phantom accounting. Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax.

tptacek 3y ago
I think the article agrees that the accounting here is not trustworthy, right?
rahimnathwani 3y ago
Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax. I guess the proportion of a university's revenue reported as being paid out in grants might influence the IRS's determination of whether the institution is providing enough public benefit to maintain its non-profit status? An increase in sticker price (with no increase in net price) would make this ratio higher, making it look like the college is spending a large % of revenue on public benefit?

SkipperCat 3y ago

I always wondered why the amount of college tuition you pay which becomes a wealth transfer to a subsidized student could be classified as a charitable donation, and therefore you'd be credited with a tax deduction.

panzagl 3y ago
You already get both a deduction and a credit for paying for college.
deleted 3y ago
[deleted]

PopAlongKid 3y ago

>In the late 1980s and early 1990s, colleges discovered that the appearance of high tuition was good for marketing. I believe the re-vamped FAFSA aid system also had a big impact in that time frame[0]. The article barely mentions student loans, but having nearly unlimited education loans that can't be discharged in bankruptcy, along with more generous income tax credits for higher education, certainly has fueled some of the tuition growth. Interestingly, male college-age students are no longer required to register for the draft (Selective Service) before applying for federal aid. [0]" When Congress reauthorized the HEA in 1992 they created a standardized federal form for all prospective students seeking aid. The stated goal of FAFSA and other government funded education programs was to create equal opportunities for students seeking higher education." https://en.wikipedia.org/wiki/Fafsa https://en.wikipedia.org/wiki/Fafsa

throwaway2203 3y ago
When did the Selective Service requirement get dropped?
- PopAlongKid 3y ago
  > the FAFSA Simplification Act removed this requirement starting with the 2021–2022 school year. The FAFSA Simplification Act was a part of the Consolidated Appropriations Act, 2021. [Wikipedia]
tptacek 3y ago
I've also operated under the received wisdom that the college loan system mostly serves to allow universities to take a larger bite out of the lifetime earnings premium from a degree, that it essentially subsidizes higher tuition. But the article makes claims incompatible to that; that if you follow the Form 990s, the total amount schools are taking in, in constant dollars, hasn't tracked the increasing availability of loans. But: surely there are solid statistics on increased loans from buyers? Where is that money going?
- strictnein 3y ago

Pet_Ant 3y ago

I've thought about this and I wonder why we couldn't have an exam model for education. One cost for the exam, and one for the prep program. If you wanted to you could study at home on your own, and then just pay to take the test/get your essay graded. If you want, separate price for the study program guided by a professor. Driving works the same here, the test is run by the government, but there are various driving schools that you can sign up for to get prepped and get some practice.

imchillyb 3y ago
If the goal of higher-education is to educate persons, then the model you propose would seem to be in the best interests of citizens. If, however, the goal of higher-education is profiteering off the citizenry, then your model would prevent those profits from occurring. Which model do you believe the US follows, education, or profiteering? The answer is unsurprising and able to be gleaned from financial statements, and enrollment data alone.
maegul 3y ago
Absolutely agree. Part of the problem though is that this would reveal that undergraduate education and the universities that provide it can be thought of as merely a certifying process/body. Not quite the same glamour and prestige.
Eumenes 3y ago
The tuition/room/board and Aramark/Sodexo lobbies wouldn't like that!
aleph_minus_one 3y ago
You proposal has the built-in assumption that the central value that the university provides is the certificate at the end. I don't think this is true: a much more important value that at least good universities provide is having been exposed to the whole intellectual environment most of the days for years.
- brigadier132 3y ago

commandlinefan 3y ago

> lists tuition levels much higher than what students pay Being in the college grind, what my wife and I found when our children started applying is that this is true of the colleges you've never heard of, but the "big name" colleges do tell you pretty much what you're going to pay, unless you're dirt poor. University of Boise? Free ride. MIT? The price is the price, deal with it.

freeopinion 3y ago
Ummm. MIT specifically posts one tuition, then gives you a calculator that asks a bunch of questions to approximate your financial status to calculate a needs-based scholarship guess. If your parents make less than $100k, your actual costs drop 90%. It is the epitome of advertising one very high price for prestige, but doing something very different in reality.
- NickC25 3y ago
  I can see how base tuition can be dropped significantly if you're poor. I have a hard time believing that your actual costs (some that the university cannot control) can be dropped as well, so poor kids don't really stand a chance unless the university is handing out money to cover non core costs. You're still going to have to deal with a high cost of living (Boston real estate is not cheap; food isn't cheap, transportation costs aren't cheap), textbook prices (usually set by 3rd parties such as publishers), and other essential costs. Granted, cutting base tuition by 90% might leave room to cover these expenses, but still. But good on MIT for having the ability to drop tuition by 90%, that's a great start. However, their endowment is massive and has the ability to play with numbers. A state school might not have that ability.

habosa 3y ago

We made very similar mistakes with college education and housing. Both things that we’d like people to have more of, in theory. In both cases the government provided massive subsidies in the form of loans and tax breaks. That does wonders for the demand side. However the government didn’t find a way to increase supply (esp of the good stuff) at the same rate nor did they find a way to prevent the excess profits generated from falling into the same few hands. So what did we get? A seemingly endless cycle of price growth.

oerpli 3y ago
[flagged]
- macintux 3y ago
  > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that". https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - kaesar14 3y ago
    I mean in this particular case it’s a fair question, the top question is a literal contradiction of the entire purpose of the article
    - macintux 3y ago
      So offer a counter-argument based on the article.
      - tekla 3y ago
        Why? The argument was already made in bad faith when it was clear that no-article reading had taken place
      - kaesar14 3y ago

debacle 3y ago

Does "paid" in the chart include loans?

panzagl 3y ago

This article holds with my experience- 2 daughters, 2 different colleges, both tuitions worked out to about $15K, one in-state, one out-of-state but with an achievement scholarship that brought it down to the same price as the in-state. And the achievement scholarship was not particularly onerous- mid-percentile SATs, good grades, no essay. The trick lately has been housing- apartments in a college town are not much cheaper than room and board in a dorm anymore, with lots of BS fees added in.

freitzkriesler2 3y ago

My alma mater, Ithaca College precisely fell prey to the fallacy of, "more expensive means more prestige". Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree. The truth is, outside of ivy league schools and brand name tech schools (mit, Caltech, etc) your alumni network means jack diddly for finding a job for the majority of graduating students. I told alumni reps repeatedly back in the 2010s that high tuition prices and student loans levels will directly impact student giving. They didn't listen to me guess what? The giving rate for the college has gradually collapsed YoY and they supposedly have no idea why. Couple that with having a huge operational deficit, they made the wildly unpopular move of cancelling degree programs and merging departments together which further impacts alumni giving. The combination is a death spiral because reduced alumni giving means less scholarships which makes the sting of a high tuition hurt even more. Meanwhile, the administration which is notoriously overpaid compared to other private school salaries, $250-350k year salary for a private school in BFE New York, looks askew with underpaid faculty when their roles get cut and they kept their big salaries. The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier. Combined tuition room and board tops $100k and you'd be a fool to ask yourself, "what am I getting for this right now" because again the dubiousness of finding a job after college means you better provide value for your money. And the final blow to this is the fact that birth rates are collapsing so the total addressable market for higher education shrinks every year. Higher education needs to have a come to Jesus moment like academic publishers have and realize that their market is shrinking. Either figure out how to become more affordable or spiral the drain. Big schools need not worry. Small overpriced private liberal arts colleges? Watch out. Even non profits need to think like cit throat businesses.

NoMoreNicksLeft 3y ago
> Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree. Ithaca college has an endowment of $350 million, is heavily subsidized by the government, and the "everyone should go to college" lunacy they push in public schools will pay dividends for decades to come. I don't think they're hurting, or that they will notice that a few people are "re-evaluating". > The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier. Standard operating procedure is therefor to spend a few hundred million through financing to upgrade the dorms to resort spas, turn the cafeteria into some mall-style food court with prices double what they are 3 miles down the road at the identical restaurant name, and raise tuition to cover all these additional costs. > Either figure out how to become more affordable or spiral the drain. That spiral can last decades, until a date far past the retirement of anyone currently in charge.

fultonb 3y ago

I go to a top-100 private college and I can confirm this experience. Virtually everyone I know has at least a 40-60% tuition "scholarship" (I'm personally on a 60%). I suspected that are university simply had an automatic discount for most people. Didn't realize this was a thing at most private institutions. Fascinating article.

morpheuskafka 3y ago

> To the contrary, since colleges care about student quality, they give larger "scholarships" to better students, and those students disproportionately come from more affluent families. As a result, rich families often receive more aid on average than poor ones. My experience at a state flagship is that if you have a 100% EFC (called SAI now, supposed to represent what you can afford), you don't really get considered for any aid regardless of merit, except for a very extremely selective programs with their own applications and outside committees. However, that could also be because with in-state tuition, someone whose EFC is around the size of a private school would already be paying only a fraction of that. > Johnny's parents and grandparents proudly tell their friends about "how much money Baker gave to Johnny," and Johnny chooses to attend Baker over Able. I can't stand the newspaper articles that talk about how someone applied to 20 colleges they were likely to be accepted to and got "$X million in scholarships." Aside from the author's point that some of them would be expected, totaling them all up is pointless since they are mutually exclusive.

markphip 3y ago

I am sure there is truth to the article, but as someone forced to pay the full price for 2 kids, the idea that tuition is not going up is laughable. I'll pay $80,000 this year for my daughter and about $40K for my son who chose the in-state university. College prices are insane. My daughter is in her final year, and even in those years, including a Covid gap year, the cost went up $10,000 for those of us stuck paying full price. I am in no way wealthy, but thankfully went through 2 small exits in my career where I could bank enough away to cover this. There will be nothing left though. I also put money in a 529 for each kid their whole life. For my son's account I actually lost a small amount of money over the life of the investment and for my daughters it only went up slightly. If that had been all I had I could have paid for 1 year of school each.

beambot 3y ago
It seems counterintuitive that one of the largest bull cycles in modern history would result in flat or negative returns. Is this due to the 529's limited investment vehicles...? At that point, wouldn't you be better off putting the funds into a taxable account instead?
- runako 3y ago
  A lot of 529s have relatively high fees and low returns. I stopped funding 529s for this reason.
- deleted 3y ago
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- bombcar 3y ago
  529s are not really worth it unless you have need for additional tax shelter (owning broad-market mutual funds is already relatively "tax advantaged" if you buy and hold) OR you can get tax write-offs for contributing (which is true in some states). As with all investments, when you get in and when you get out can affect total return, even though you can't time it perfectly. The problem with 529s is you can't really "choose to let it ride" when college starts, whereas with retirement you DO have that option (by using other funding sources). Unfortunately the way the college racket is setup, it's often much better to simply be a paper pauper when the FAFSA comes around (hint: they ignore the house and the car(s)).

rubyn00bie 3y ago

I would like to see citations for what the author purports. It’s a very clever bit of writing in the sense they’re as careful about what they say and show, as what they don’t. The tables reference private school prices but not public, and again no links are provided. To me it feels more like a narrative than anything else where the author attempts to gently side step anything which may be contrary to their opinion as unnecessary or difficult to gauge.

rconti 3y ago
I upvoted this as I left the article after reading and nodding along with it... and noticed the author's history which definitely leaves me feeling he's coming at it from an angle. That doesn't invalidate what he's saying, but it makes me curious for more detail.
MilStdJunkie 3y ago
As I read the piece I was having the same increasing unease, and then my eye wandered to the top right of the frame . . EDIT OK, I can hear the keyboards spinning up with their ADDRESS THE ARGUMENT NOT THE SOURCE thing they do. I'm going to make something completely, absolutely clear: if Andrew Wakefield self-publishes a Fantastic Miracle Cure, and you do not read that with icy suspicion, you are - and I am so sorry to say this - a fool. An easy mark that stands out in a landscape of very, very easy marks. So yeah, the source matters, especially when THEY DON'T CITE ANYTHING.

deleted 3y ago

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dpweb 3y ago

Have paid school tuitions for 15 years now, pre-K to 12, and in 2nd year of college now. Some thoughts.. College is just like private K-12 - there is no set price, it's indexed to your income. They have to set a high list price so the wealthy can pay that and they aid those w less income. Don't forget about car and health insurance! Do every single aid and scholarship app you can find. Use the appeals process especially if you have extenuating circumstances. Read the rules carefully about which assets/income is relevant. If you're divorced (I am), read the rules carefully about income and asset reporting in those circumstances. It's not that you're paying for the credential, you're paying for the experience, education, and credential. Just the credential is the expensive part of it. Example, I've been a DJ (just for fun) for 30 years. Just saw an ad for DJ school. Even if they wanted to be a professional DJ (ok, if that's your dream), I'd NEVER pay for my kid to do it. There's a legit cost in educating anyone. But the credential is worthless. A university degree has some value. Of course, you can learn ANYTHING online for free. Anything. The credential is the expensive part of it. So make sure it's a credential with value. You may have to say NO to your kid(s). This is VERY tough. But weigh your options carefully as spending your entire retirement fund on college (mostly for the credential) is a dubious proposition.

downrightmike 3y ago

Absolute perversion. Of the institutions and the systems. The action of raising tuition for decades to keep it unobtainable, so you can give out discounts to become a charity, and therefore not taxed, is an absolute perversion of charity.

NoMoreNicksLeft 3y ago
> The action of raising tuition for decades to keep it unobtainable That was never the action. The action was raising amenities and allure for decades, to attract ever greater enrollment. Unless you're Ivy League, or one of the other few high status universities, it's difficult to attract students... every other lower-tier university competes with you. So you build better dorms and better lecture halls, newer labs. You hire more faculty and staff. You build big pretty gardens and fountains, and hire people to maintain those. And suddenly your costs are through the roof. You raise tuition some, to deal with this. But tuition is also the benchmark of affordability (at least when you start this), so you also tack on fees and other costs that were never billed separately before, to try to hide the rising costs. All the while, other universities are doing the same. You're in an arms race with them, so to speak. > and therefore not taxed, is an absolute perversion of charity. Wait, you think they ever paid taxes, but now they're engaged in some sort of tax evasion shenanigans and the IRS just doesn't notice, somehow? I keep forgetting that so many people live in this reality, but are unfamiliar with the basics of how it operates.
- downrightmike 3y ago
  Your first point is wrong, they raised tuition and told all kids they needed to go, and then they started tacking on luxury amenities later. Amenities like lazy rivers are a new development. Tuition increases go back to the early 90's. Yes they paid taxes, and the whole story is a wild one, they tried to dodge the IRS with redacted filings and that got taken to the SCOTUS in 1993. https://casetext.com/case/us-v-massachusetts-institute-of-technology https://casetext.com/case/us-v-massachusetts-institute-of-te... And that decision is what allowed the massive tuition increase and all other schools followed or went defunct. If you want a longer story of universities dodging taxes: https://time.com/5952901/universities-tax-exemption/ https://time.com/5952901/universities-tax-exemption/ Same thing google et all do with their IP and the Irish sandwich.

JackFr 3y ago

I mean I'd like to believe I'm some sort of one-percenter, but I don't believe I am. I paid full sticker price for two children and with my third there was some nonsense with institutional aid, but the hit was still way over $25000. The problem with his central thesis though, I find is the reason behind jacking the price up. The reason isn't to make the school more prestigious, but rather to be able to soak all buyers at the proper price point. You can't state a lower tuition and then jack it up for the children of lawyers and hedge fund managers. You need to start high and then offer assistance to the children of mechanics and plumbers. (I know -- many plumbers are rich) The funny bit is while airlines and car dealers have to resort to judgment and tricks to figure out your price point, colleges get the FAFSA handed to them.

lesuorac 3y ago
Well, I don't know what state you live in but for most of the HCOL states you need to be over 700k/year so you might not be. That said, the top 5% is roughly 1/3 of what the state's 1% is so pretty much all of FANG is 5-% https://smartasset.com/data-studies/what-it-takes-to-be-in-the-1-by-state-2023 https://smartasset.com/data-studies/what-it-takes-to-be-in-t...

RajT88 3y ago

I'm with a lot of other folks here, in that the article aligns with a lot of what I've seen of the industry (and my wife is a professor). The idea that universities are going broke is put to the lie by the fact that so many of them keep building new buildings for some reason! These are multi-million dollar affairs, and are not usually new dorms, it's facilities which other facilities which already serve the same function just fine but which might be 15-20 years old. Giant budgets are spent building new buildings which are not needed, and do not improve the quality of education in any way. The stories I hear from my wife are exactly the same as I see happening with my own alma mater. Both are private colleges, but I've heard state schools do this too.

Workaccount2 3y ago
Building new buildings is how you turn profits into non-profits to keep yourself a non-profit. See hospitals (and their extensive ever growing networks) as even more evidence of this.

phkahler 3y ago

Seems like a good way to discriminate. You can claim to be open to a wide range of students, but if you don't want someone don't give them a discount. If they are willing to pay anyway then enjoy the extra money and take them anyway. Not sure discriminating on scholarships would be any different from discriminating on admission from a legal point of view.

busterarm 3y ago

I was forced out of college 20 years ago due to rising costs. In my first year, going to an in-state school, I was already paying the limit of what I could reasonably get through loans. Then Gov. Pataki killed the Tuition Assistance Program and SUNY decided to raise tuition by 40% into the next year. I heard that the year after that they did another 30% or-so tuition hike, but by then I was already gone and working full-time.

joewferrara 3y ago

Shit is crazy! I did not know about the amount of fake scholarships private colleges give until today! If I knew it in high school I would have applied to more expensive colleges. I only applies to public universities in my state in high school because they’re cheaper. Do the discounts aka fake scholarships rates apply to public schools as well? I’d think not.

cpitman 3y ago
At least for elite public schools, the average student receives more in "aid" than they pay, meaning they are paying less than half of the "price". https://www.collegesimply.com/colleges/illinois/university-of-illinois-at-urbana-champaign/price/ https://www.collegesimply.com/colleges/illinois/university-o... And yes, it's a source of bad outcomes that those that cannot afford the inflated price of elite universities do not know that they would never have to pay that.
OkayPhysicist 3y ago
Public schools tend to give a lot of "need-based" scholarships, aka "we'll charge you whatever you can afford". Private universities are more open to "merit-based" scholarships on top of that, where they're actively trying to attract top applicants by reducing their effective cost, oftentimes to even cheaper than public universities. As a result, if you're from a low-income background, but overcome the odds and manage to be an academically competitive applicant, most private schools will be offering something close to a full-ride once both need and merit based scholarships are considered.

aetherson 3y ago

When I was a kid, it felt like we had a rough societal consensus that price discrimination was bad. You couldn't stop all of it, but you had laws saying that everyone was entitled to the best price of retail goods, etc. Feels like that's really fallen away, and I think it shouldn't have.

smugma 3y ago

Said another way, it’s a progressive tax. Prices really are going up for the top 1-5 or 10% eg markphip paying $120K/yr for two kids even though he’s in no way wealthy.

graybeardhacker 3y ago

From the article and the comments here I can assume that I'm in the minority since I was ineligible for any financial aid and paid full tuition. We "qualified" for unsubsidized loans which I do not consider to be aid and did not take. I consider my family to be middle class. We have one income for a family of five. Sending three kids to state college would cost us over $375,000. I've only sent one so far and it cost $130,000 with room and board for state college. I guess our tuition is paying for everyone who got a substantial discount.

musicale 3y ago

The charming campus pictured at the top of the article appears to be Dartmouth College, which racks up an eye-popping $87,793 estimated cost for incoming students this fall. Like other Ivies and elite schools, Dartmouth claims "no [required] student loans" but this ignores "unrequired" loans as well as loans that parents may have to take out to meet the parental contribution, which considers assets including home equity. (External scholarship money, if any, is typically deducted from "financial need" which means it has little effect on expected contribution.)

musicale 3y ago

> On the other side of this regulated transaction, families fill out the dreaded FAFSA, on which they are not expected to write down any numbers they want, and the numbers they write will be validated. Colleges use the resulting FAFSA data to calculate information like the expected family contribution. For families, the whole system feels as serious as a conversation with the IRS. It is exactly a racket where the seller sets a price based on complete access to the buyer's financial information, with government enforcement. I'm sure other businesses are envious of this IRS-style arrangement.