The Motley Fool, one of my favorite personal finance sites, took on the tuition crisis in America that was exposed again by the pepper spraying at UC Davis. While mostly on point, I’d argue that they weren’t asking the right questions. First, let’s start with some things that they nailed.
(a reason) that explains almost all the tuition increase at UC schools, is the decline in state, local, and federal government’s share of education costs. By and large, tuition is going up not because schools are raking in more money, but because subsidies are going down.
nailed it. Because of reduced subsidies, students are starting to feel more of the real cost of their education.
The most unfortunate part of this is that surging tuition costs are not, for the most part, rewarding students with a higher-quality education. Costs are simply being shifted around. And while states are slashing higher education budgets, taxpayers aren’t being rewarded with lower tax rates, or even lower budget deficits; most states are cutting education spending to offset rising health-care and pension costs.
Ouch.
Two things that weren’t mentioned in the article though, that I think are important.
- Tuition is really just the tip of the iceberg. Check out this data from UNC on Cost of Attendance http://studentaid.unc.edu/studentaid/cost/ssa_ug_general.html . I wanted to point out, in particular, the tuition and fees number. As someone inside the university, I know that these are often calculated separately, but on the website, these are lumped together. It took some digging, but here’s the listing of student fees http://studentaid.unc.edu/studentaid/cost/ssa_ug_general.html. Not to mention costs like textbooks, living expenses, food, etc. Not to mention the oppportunity cost of not working like you could be. Which brings me to point 2.
- Subsidizing of colleges is finally getting students to feel the whole cost of their education, so naturally, they’re starting to wonder why it costs so much. Could the questioning of the system be starting to reveal some inefficiencies within the system? It wasn’t in the article, but I think it could be.
- While the author suggests that the wage premium is increasing, I’m not sure I’d agree. As I’ve stated before on this blog, I think we’re using old data to do these calculations. A degree obtained by saving as much money as possible is still a degree of mobility.
I just wonder how long this can continue. I’m sure most of my readers have seen the crazy graph that calculates the cost of college skyrocketing past both CPI and housing costs. Regardless of the why, I don’t think that can last.
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