10 ms·

The Supersizing of American Colleges

105 points by kn0thing 13y ago

doctorpangloss 13y ago
> College is without a doubt a worthwhile investment that pays off over time in increased earnings and a better quality of life. If anything, a college degree may be getting even more valuable. Should it surprise anyone that it is expensive to buy an investment product whose returns get better and better-known?
- jmduke 13y ago
  But it is surprising -- or, at least, interesting -- that the product doesn't benefit from economies of scale.
  - mjn 13y ago
    In some cases it does. The University of California system has managed to scale up reasonably efficiently, with expenses growing more slowly than enrollment, thereby reducing the per-student cost of education. The result is that there's been an overall cost decrease of around 25% (in real terms) over the past ~40 years, if you take the total UC budget and divide by total enrollment. The reason tuition (i.e. price charged to students) has gone up, even though the cost of providing the service has gone down, is that state funding has fallen even further than costs, more like 60% [1], so a larger portion of the cost is now charged to the student. For public institutions, at least, it's important to distinguish between the total cost of providing education vs. the amount charged to students, which are numbers that don't always move in the same direction. [1] http://www.kmjn.org/misc/uc_funding.txt http://www.kmjn.org/misc/uc_funding.txt
kposehn 13y ago
Dear Priceonomics: Please use a responsive design for your blog. I rarely get to read them because they are difficult to read on the phone, but they are fantastic and would be great to read on the go.
- omarish 13y ago
  It's coming up on our roadmap. Email me if you'd like to test out our new responsive design - omar@priceonomics.com
  - kposehn 13y ago
    Thanks Omar :)
dnautics 13y ago
what happened in 1981, when the price of college became unhinged from the CPI?
- atg2taa 13y ago
  One hypothesis: the Bayh-Dole Act of 1980 [1], which allowed federal grantees to own the intellectual property developed with federal funds. Prior to this Act, all IP made with federal funds belonged to the government. As R&D is extremely expensive, one theory is that colleges raised their tuition to help cover the venture capital requirements of research. [1] http://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act http://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act
  - ahomescu1 13y ago
    Can you give some examples or numbers for this? I find it hard to believe that this alone (or at least in large part) lead to such an increase in tuition. Most STEM research is still funded by the federal government (through the NSF, DARPA, NIH and similar agencies). Many research projects don't require venture capital, because they're not really marketable.
    - atg2taa 13y ago
      Certainly. I haven't reserached this issue much, and while certainly other factors come into play, I suspect that Act does have an impact. I used the word "venture capital" loosely. I do not refer to the traditional sense of VCs on sand hill road, but venture capital in the sense of money that can pay for extremely specialized and expensive research equipment and labor. In general, the Harvardization ("we must be the best at all areas of research") has infected even second-tier research institutions; for places like Harvard, MIT, etc. the financial gains from patents probably outweighs the outlay. However, for second-tier research institutions, they may be simply caught up in a ratings arms race. Here is a report that has some interesting facts. http://www.ed.psu.edu/educ/cshe/working-papers/WP%236 http://www.ed.psu.edu/educ/cshe/working-papers/WP%236 'Over the current era, this has produced a pronounced intensification of research. For 99 research universities, enrollments grew by 15 percent from 1980 to 2000, but real research expenditures grew by 128 percent (Geiger, 2004, p. 147).'
paul_f 13y ago
Can we agree there is a distinct and dramatic difference between public and private colleges? Should we even be talking about them in the same context? This seems to be much more of a private college bubble.
- slurry 13y ago
  This part was really interesting too: Public and private research universities had increased revenue from services like hospitals as well as from the Federal government, yet raised tuition to further increase costs. Other private institutions (such as liberal arts schools) have less revenue from their endowments and alumni gifts. They are charging higher tuition to both make up for that revenue and fund additional spending. To make up for less state funding, however, non-research public institutions are both raising tuition and spending less. In other words, everyone is getting tuition increases, but only community colleges and lower-level state colleges are actually seeing a cutback in programs. That actually makes me kind of physically sick.
  - orky56 13y ago
    Although that's the effect that is immediately obvious to the end-customer, the student, in actuality "raising tuition and spending less" creates something more sustainable. They will actually be less dependent over time compared to other institutions. This is an example of institutions downsizing with short-term consequences rather than continuously expanding with longer term consequences.
wyclif 13y ago
Previously submitted, but died: https://news.ycombinator.com/item?id=6372933 https://news.ycombinator.com/item?id=6372933
- larrys 13y ago
  Normally resubmitting would have just upped the vote count but the submitter tacked something on the the URL and it wasn't recognized as a previous submission.
  - slyall 13y ago
    The trouble is that there is no point sending upvotes to anything more than a couple of hours old since it'll never make the front-page and be read. At least the original submitter gets a vote for the resubmitter the first time the submit (before they change the URL).
bambax 13y ago
> even humanities faculty would go elsewhere if not compensated at the growing rate of their education bracket But where would they go? Journalism??
- mathattack 13y ago
  I don't think most humanities faculty are paid well. Perhaps the top few at the top schools, but the dropoff is enormous. A better question may be is it worth it for the government to subsidize research for humanities professors? Or should humanities teachers have regular 9 to 5 teacher jobs?
  - slurry 13y ago
    A better question may be is it worth it for the government to subsidize research for humanities professors? Where is all of this filthy lucre that the government is throwing at humanities professors? I would like to get some. The only federal body that funds pure humanities research is the National Endowment for the Humanities, which has a grand total of $150 million by way of annual budget. I.e. essentially zero. Or should humanities teachers have regular 9 to 5 teacher jobs? Perhaps HN commenters should have regular 9 to 5 jobs.
    - yuliyp 13y ago
      That comment is very misleading. The subsidy being talked about is not research subsidies, which pay lab costs and grad student stipends, not professors. Instead it's about tuition assistance in the form of student loans and grants. That's the subsidy that actually pays humanities profs.
      - slurry 13y ago
        That comment is very misleading. No it's not. I was responding directly to this: A better question may be is it worth it for the government to subsidize research for humanities professors? The article itself didn't have anything directly to say about the humanities as a field of study.
npguy 13y ago
Here is some stats perspective on the size of student loans: http://statspotting.com/outstanding-student-loans-in-the-us-is-more-than-chinas-total-external-debt/ http://statspotting.com/outstanding-student-loans-in-the-us-...
lifeisstillgood 13y ago
I think we shall see a break between the desire for universal education, the public good of strong research and the pandering to powerful middle class votes. 100 years ago universal education ended between 12 and 14 years old and only the rich or the brilliant went on to further education. Now we are heading to a situation where further education is seen as the minimum universal education. (Something like 50 % of students are expected to attend college) this effectively reduces most colleges and courses to an extended High School, with the expected ROI of the same. whereas as a society we want to have only the most brilliant and motivated working on pushing out boundaries of knowledge - basically please invent the future for us. and this will lead to two tier colleges - one that act as schools and one that act as universities. we cannot allow the universities to be contaminated by rich idiots, or pushing research out with floods of high schoolers so ... we should look to soviet Russia - who simply took the best minds and put them in college. publically funded, strict entrance criteria. everyone else - publically funded colleges that manage to push the ROI down to zero.
- wavesounds 13y ago
  I'm going to have to disagree with you here and say we shouldn't become more like Soviet Russia. The goal should be improving our schools for everyone not conceding this is the best we can do and only let in the gifted few who meet our "requirements". Would Steve Jobs have been allowed to drop in on Calligraphy classes in Soviet Russia? I doubt it. The point being when you build a great system and give people the ability to explore it you arrive at much more creative outcomes which therefore provide much better growth potential to the overall economy then a "fit into a specific box we already created for you" approach.
  - 001sky 13y ago
    Would Steve Jobs have been allowed to drop in on Calligraphy classes in Soviet Russia? Steve jobs quit college...[==$$$ reasons] [Under a system of free college, he would not have been forced out. That's a relevant datapoint. Just sayin.]
- sliverstorm 13y ago
kenster07 13y ago
The glaring issue can be summed up in one statement. College roi is detached from student roi in the near and mid term. If these were strongly linked by design, the magnitude of the problem would be substantially diminished.
melonakos 13y ago
To add to this article, I've written a lot on this topic and its relation to startups: * Types of Graduate Degree Programs, http://notonlyluck.com/2013/06/23/types-of-degree-programs/ http://notonlyluck.com/2013/06/23/types-of-degree-programs/ * When to Drop Out of School?, http://notonlyluck.com/2013/01/31/when-to-drop-out-of-school/ http://notonlyluck.com/2013/01/31/when-to-drop-out-of-school... * Lifelong Learning as a Substitute for School, http://notonlyluck.com/2013/02/01/lifelong-learning-as-a-substitute-for-school/ http://notonlyluck.com/2013/02/01/lifelong-learning-as-a-sub...
j_baker 13y ago
It seems as though the problem is more acute in private colleges. Public colleges just don't seem to be growing in price as much as private colleges. It seems like one solution to the issue of rising college costs is for us as a society to place less emphasis on pricey private colleges.
Alex3917 13y ago
For what it's worth, most of the data in these charts is false and/or misleading. If you read the actual primary sources that this post purports to use, you'll see the situation isn't actually nearly as bad as presented. It is somewhat more difficult to pay for college than it was in, say, 1970, but the 'statistics' here are wildly exaggerated. The weak job market is a much bigger issue than the increased cost of college.
- 001sky 13y ago
  This post would be more interesting if you had some analysis. Its odd that you did so much legwork, without a single example of 'statistics'. Got something? Post up a counter-example. Or even just a regular example !
  - Alex3917 13y ago
    I only have Internet from my phone right now, which is why. It's the same basic idea as my comments on this article though: https://news.ycombinator.com/item?id=5728788 https://news.ycombinator.com/item?id=5728788 But again their primary sources are fine, they're just not being honest about what they say. You'd be best off just reading the data from the NCES, College Board, etc. As a rule of thumb, conservative ideology is mostly based on theories that have no basis in reality, whereas liberal ideology is mostly based on facts that have no basis in reality. This is a good example of the latter.
    - 001sky 13y ago
      But again their primary sources are fine, they're just not being honest about what they say I only skimmed the article, but it seems like you are saying the data in the charts is OK but you don't like the text (?) If that's the case, why not make a more specific critique? At its root, the thesis of the article seems to be there is a data-driven correlation with debt availability and COGS at universities. Notwithstanding the obvious similar correlation with Revenue. I could check a regression, but the eyeball test looks pretty good. Personally, I thiked the author missed the mark. He should have run a correlation of student debt to university endowments. That (time series) would be an even more interesting eye-opener.
edtechdev 13y ago
Taibbi had a good article on this last month: http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815 http://www.rollingstone.com/politics/news/ripping-off-young-... "Carey talks about how colleges spend a lot of energy on what he calls "gilding" – pouring money into superficial symbols of prestige, everything from new buildings to celebrity professors, as part of a "never-ending race for positional status." "What you see is that spending on education hasn't really gone up all that much," he says. "It's spending on things like buildings and administration. ." One reason they do the gilding is to increase their ranking - which itself has problems. Rankings are primarily based on selectivity and prestige, which is sort of like judging that a hospital is better because of how healthy the patients are when they get there, not how much healthier they got while they were there: http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_gladwell http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_...
r0h1n 13y ago
It's ironic (or maybe it's just me) that the previous post before this on the HN front page is a rant against "disruption" ( https://news.ycombinator.com/item?id=6386989 https://news.ycombinator.com/item?id=6386989) Ironic because typically there would be many opinions about how MOOCs would "disrupt" traditional college education.
tsotha 13y ago
>College is without a doubt a worthwhile investment that pays off over time in increased earnings and a better quality of life. If anything, a college degree may be getting even more valuable. "Without a doubt", eh? I have doubts. Are we that sure the causality arrow goes that direction? If I had to bet money I'd say it goes the other way - college is more likely to attract people who will have higher earnings and a better quality of life.
VLM 13y ago
No discussion of interest rates? Its all in the supply and demand. Bubba can afford a $700/mo loan payment. In 1980 at 20% interest that means he's going to pay the university $30K. There's no way they're charging a penny less than he's capable of paying. Now run the numbers in 2010 at 3% and at $700/mo there's no way the university is going to charge a penny less than $150K. Either way its the same monthly payment, so what does Bubba care? Works pretty much as interest rates steadily smoothly collapse to a multi-generational low. Not so much fun for the big players as interest rates revert to historical norms (or spike up to just as high of an unusual outlier) A long term loan is a long term loan. Doesn't matter if we're talking about school or house.

105 points by kn0thing 13y ago

> College is without a doubt a worthwhile investment that pays off over time in increased earnings and a better quality of life. If anything, a college degree may be getting even more valuable. Should it surprise anyone that it is expensive to buy an investment product whose returns get better and better-known?

jmduke 13y ago
But it is surprising -- or, at least, interesting -- that the product doesn't benefit from economies of scale.
- mjn 13y ago
  In some cases it does. The University of California system has managed to scale up reasonably efficiently, with expenses growing more slowly than enrollment, thereby reducing the per-student cost of education. The result is that there's been an overall cost decrease of around 25% (in real terms) over the past ~40 years, if you take the total UC budget and divide by total enrollment. The reason tuition (i.e. price charged to students) has gone up, even though the cost of providing the service has gone down, is that state funding has fallen even further than costs, more like 60% [1], so a larger portion of the cost is now charged to the student. For public institutions, at least, it's important to distinguish between the total cost of providing education vs. the amount charged to students, which are numbers that don't always move in the same direction. [1] http://www.kmjn.org/misc/uc_funding.txt http://www.kmjn.org/misc/uc_funding.txt

kposehn 13y ago

Dear Priceonomics: Please use a responsive design for your blog. I rarely get to read them because they are difficult to read on the phone, but they are fantastic and would be great to read on the go.

omarish 13y ago
It's coming up on our roadmap. Email me if you'd like to test out our new responsive design - omar@priceonomics.com
- kposehn 13y ago
  Thanks Omar :)

dnautics 13y ago

what happened in 1981, when the price of college became unhinged from the CPI?

atg2taa 13y ago
One hypothesis: the Bayh-Dole Act of 1980 [1], which allowed federal grantees to own the intellectual property developed with federal funds. Prior to this Act, all IP made with federal funds belonged to the government. As R&D is extremely expensive, one theory is that colleges raised their tuition to help cover the venture capital requirements of research. [1] http://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act http://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act
- ahomescu1 13y ago
  Can you give some examples or numbers for this? I find it hard to believe that this alone (or at least in large part) lead to such an increase in tuition. Most STEM research is still funded by the federal government (through the NSF, DARPA, NIH and similar agencies). Many research projects don't require venture capital, because they're not really marketable.
  - atg2taa 13y ago
    Certainly. I haven't reserached this issue much, and while certainly other factors come into play, I suspect that Act does have an impact. I used the word "venture capital" loosely. I do not refer to the traditional sense of VCs on sand hill road, but venture capital in the sense of money that can pay for extremely specialized and expensive research equipment and labor. In general, the Harvardization ("we must be the best at all areas of research") has infected even second-tier research institutions; for places like Harvard, MIT, etc. the financial gains from patents probably outweighs the outlay. However, for second-tier research institutions, they may be simply caught up in a ratings arms race. Here is a report that has some interesting facts. http://www.ed.psu.edu/educ/cshe/working-papers/WP%236 http://www.ed.psu.edu/educ/cshe/working-papers/WP%236 'Over the current era, this has produced a pronounced intensification of research. For 99 research universities, enrollments grew by 15 percent from 1980 to 2000, but real research expenditures grew by 128 percent (Geiger, 2004, p. 147).'

paul_f 13y ago

Can we agree there is a distinct and dramatic difference between public and private colleges? Should we even be talking about them in the same context? This seems to be much more of a private college bubble.

slurry 13y ago
This part was really interesting too: Public and private research universities had increased revenue from services like hospitals as well as from the Federal government, yet raised tuition to further increase costs. Other private institutions (such as liberal arts schools) have less revenue from their endowments and alumni gifts. They are charging higher tuition to both make up for that revenue and fund additional spending. To make up for less state funding, however, non-research public institutions are both raising tuition and spending less. In other words, everyone is getting tuition increases, but only community colleges and lower-level state colleges are actually seeing a cutback in programs. That actually makes me kind of physically sick.
- orky56 13y ago
  Although that's the effect that is immediately obvious to the end-customer, the student, in actuality "raising tuition and spending less" creates something more sustainable. They will actually be less dependent over time compared to other institutions. This is an example of institutions downsizing with short-term consequences rather than continuously expanding with longer term consequences.

wyclif 13y ago

Previously submitted, but died: https://news.ycombinator.com/item?id=6372933 https://news.ycombinator.com/item?id=6372933

larrys 13y ago
Normally resubmitting would have just upped the vote count but the submitter tacked something on the the URL and it wasn't recognized as a previous submission.
- slyall 13y ago
  The trouble is that there is no point sending upvotes to anything more than a couple of hours old since it'll never make the front-page and be read. At least the original submitter gets a vote for the resubmitter the first time the submit (before they change the URL).

bambax 13y ago

> even humanities faculty would go elsewhere if not compensated at the growing rate of their education bracket But where would they go? Journalism??

mathattack 13y ago
I don't think most humanities faculty are paid well. Perhaps the top few at the top schools, but the dropoff is enormous. A better question may be is it worth it for the government to subsidize research for humanities professors? Or should humanities teachers have regular 9 to 5 teacher jobs?
- slurry 13y ago
  A better question may be is it worth it for the government to subsidize research for humanities professors? Where is all of this filthy lucre that the government is throwing at humanities professors? I would like to get some. The only federal body that funds pure humanities research is the National Endowment for the Humanities, which has a grand total of $150 million by way of annual budget. I.e. essentially zero. Or should humanities teachers have regular 9 to 5 teacher jobs? Perhaps HN commenters should have regular 9 to 5 jobs.
  - yuliyp 13y ago
    That comment is very misleading. The subsidy being talked about is not research subsidies, which pay lab costs and grad student stipends, not professors. Instead it's about tuition assistance in the form of student loans and grants. That's the subsidy that actually pays humanities profs.
    - slurry 13y ago
      That comment is very misleading. No it's not. I was responding directly to this: A better question may be is it worth it for the government to subsidize research for humanities professors? The article itself didn't have anything directly to say about the humanities as a field of study.

npguy 13y ago

Here is some stats perspective on the size of student loans: http://statspotting.com/outstanding-student-loans-in-the-us-is-more-than-chinas-total-external-debt/ http://statspotting.com/outstanding-student-loans-in-the-us-...

lifeisstillgood 13y ago

I think we shall see a break between the desire for universal education, the public good of strong research and the pandering to powerful middle class votes. 100 years ago universal education ended between 12 and 14 years old and only the rich or the brilliant went on to further education. Now we are heading to a situation where further education is seen as the minimum universal education. (Something like 50 % of students are expected to attend college) this effectively reduces most colleges and courses to an extended High School, with the expected ROI of the same. whereas as a society we want to have only the most brilliant and motivated working on pushing out boundaries of knowledge - basically please invent the future for us. and this will lead to two tier colleges - one that act as schools and one that act as universities. we cannot allow the universities to be contaminated by rich idiots, or pushing research out with floods of high schoolers so ... we should look to soviet Russia - who simply took the best minds and put them in college. publically funded, strict entrance criteria. everyone else - publically funded colleges that manage to push the ROI down to zero.

wavesounds 13y ago
I'm going to have to disagree with you here and say we shouldn't become more like Soviet Russia. The goal should be improving our schools for everyone not conceding this is the best we can do and only let in the gifted few who meet our "requirements". Would Steve Jobs have been allowed to drop in on Calligraphy classes in Soviet Russia? I doubt it. The point being when you build a great system and give people the ability to explore it you arrive at much more creative outcomes which therefore provide much better growth potential to the overall economy then a "fit into a specific box we already created for you" approach.
- 001sky 13y ago
  Would Steve Jobs have been allowed to drop in on Calligraphy classes in Soviet Russia? Steve jobs quit college...[==$$$ reasons] [Under a system of free college, he would not have been forced out. That's a relevant datapoint. Just sayin.]
sliverstorm 13y ago

kenster07 13y ago

The glaring issue can be summed up in one statement. College roi is detached from student roi in the near and mid term. If these were strongly linked by design, the magnitude of the problem would be substantially diminished.

melonakos 13y ago

To add to this article, I've written a lot on this topic and its relation to startups: * Types of Graduate Degree Programs, http://notonlyluck.com/2013/06/23/types-of-degree-programs/ http://notonlyluck.com/2013/06/23/types-of-degree-programs/ * When to Drop Out of School?, http://notonlyluck.com/2013/01/31/when-to-drop-out-of-school/ http://notonlyluck.com/2013/01/31/when-to-drop-out-of-school... * Lifelong Learning as a Substitute for School, http://notonlyluck.com/2013/02/01/lifelong-learning-as-a-substitute-for-school/ http://notonlyluck.com/2013/02/01/lifelong-learning-as-a-sub...

j_baker 13y ago

It seems as though the problem is more acute in private colleges. Public colleges just don't seem to be growing in price as much as private colleges. It seems like one solution to the issue of rising college costs is for us as a society to place less emphasis on pricey private colleges.

Alex3917 13y ago

For what it's worth, most of the data in these charts is false and/or misleading. If you read the actual primary sources that this post purports to use, you'll see the situation isn't actually nearly as bad as presented. It is somewhat more difficult to pay for college than it was in, say, 1970, but the 'statistics' here are wildly exaggerated. The weak job market is a much bigger issue than the increased cost of college.

001sky 13y ago
This post would be more interesting if you had some analysis. Its odd that you did so much legwork, without a single example of 'statistics'. Got something? Post up a counter-example. Or even just a regular example !
- Alex3917 13y ago
  I only have Internet from my phone right now, which is why. It's the same basic idea as my comments on this article though: https://news.ycombinator.com/item?id=5728788 https://news.ycombinator.com/item?id=5728788 But again their primary sources are fine, they're just not being honest about what they say. You'd be best off just reading the data from the NCES, College Board, etc. As a rule of thumb, conservative ideology is mostly based on theories that have no basis in reality, whereas liberal ideology is mostly based on facts that have no basis in reality. This is a good example of the latter.
  - 001sky 13y ago
    But again their primary sources are fine, they're just not being honest about what they say I only skimmed the article, but it seems like you are saying the data in the charts is OK but you don't like the text (?) If that's the case, why not make a more specific critique? At its root, the thesis of the article seems to be there is a data-driven correlation with debt availability and COGS at universities. Notwithstanding the obvious similar correlation with Revenue. I could check a regression, but the eyeball test looks pretty good. Personally, I thiked the author missed the mark. He should have run a correlation of student debt to university endowments. That (time series) would be an even more interesting eye-opener.

edtechdev 13y ago

Taibbi had a good article on this last month: http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815 http://www.rollingstone.com/politics/news/ripping-off-young-... "Carey talks about how colleges spend a lot of energy on what he calls "gilding" – pouring money into superficial symbols of prestige, everything from new buildings to celebrity professors, as part of a "never-ending race for positional status." "What you see is that spending on education hasn't really gone up all that much," he says. "It's spending on things like buildings and administration. ." One reason they do the gilding is to increase their ranking - which itself has problems. Rankings are primarily based on selectivity and prestige, which is sort of like judging that a hospital is better because of how healthy the patients are when they get there, not how much healthier they got while they were there: http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_gladwell http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_...

r0h1n 13y ago

It's ironic (or maybe it's just me) that the previous post before this on the HN front page is a rant against "disruption" ( https://news.ycombinator.com/item?id=6386989 https://news.ycombinator.com/item?id=6386989) Ironic because typically there would be many opinions about how MOOCs would "disrupt" traditional college education.

tsotha 13y ago

>College is without a doubt a worthwhile investment that pays off over time in increased earnings and a better quality of life. If anything, a college degree may be getting even more valuable. "Without a doubt", eh? I have doubts. Are we that sure the causality arrow goes that direction? If I had to bet money I'd say it goes the other way - college is more likely to attract people who will have higher earnings and a better quality of life.

VLM 13y ago

No discussion of interest rates? Its all in the supply and demand. Bubba can afford a $700/mo loan payment. In 1980 at 20% interest that means he's going to pay the university $30K. There's no way they're charging a penny less than he's capable of paying. Now run the numbers in 2010 at 3% and at $700/mo there's no way the university is going to charge a penny less than $150K. Either way its the same monthly payment, so what does Bubba care? Works pretty much as interest rates steadily smoothly collapse to a multi-generational low. Not so much fun for the big players as interest rates revert to historical norms (or spike up to just as high of an unusual outlier) A long term loan is a long term loan. Doesn't matter if we're talking about school or house.