Why College Education is So Expensive
The College Board recently announced that the average tuition increases outstripped inflation "only" by 50 percent this year, which is actually down from the even more ridiculous excesses seen earlier in the decade. For 2006, the average cost of attending college increased by 6.3 percent at state institutions and 5.9 percent at private colleges and universities. The overall rate of inflation last year was 3.82 percent. So that's the good news, sort of, but why is the cost of attending college going up so much faster than the rate of inflation?
One opinion is that the higher education lobby and sympathetic politicians regard rapidly rising tuition costs as normal and that the cure is to provide cash strapped students with more and more student loans and other federal financial aid. But isn't that kind of like lending a broke gambling addict a roll of $20 bills as a way of helping him through his financial difficulties? You have to know that money is going to make his problem worse, not better, because he'll gamble away your money too. Increasing the availability of financial aid to students has the effect of raising the cost of tuition by insulating colleges and universities from any need to compete on the basis of price.
At some point, parents and students are going to rebel and enrollment will decline at schools which are unable or unwilling to bring their own spending under control and return to offering a quality product at a reasonable price. The answer, perhaps, may come from the increased acceptance of on-line degrees from employers. As more students discover that they need not attend the brand name traditional schools and instead can pick up many and sometimes even most of their credits at lesser known two-year community and junior colleges and some of the on-line schools, the traditional four-year schools will come under pricing pressure and will either adapt or perish.
I think it's a shame and a demographic nightmare. Pell Grants made it easy for everyone to get some education, but the financial burden of student loans and the cheap interest rates allows kids to rack up debt, which then inhibits their ability to build a solid financial future.
The effect? Marriage occurs later, which means childbirth occurs later (and less frequently). The effects of the federal student loan program may be the demographic death knell for the US that is currently harming Europe.
Call it the Law of Unintended Consequences. But the worst part of it is the quality (or rather lack of quality) most graduates get from their 4 years.
All that money for a less stringent education. Somebody should do something!
I am currently in a huge predicament regarding school, with this information I wonder even more if it is really worth it.
Is there really a guarantee that once we get a Bachelors degree we can get a better job?
I am about to go in a $21,000 debt for school and I am not sure if I should do it or not?
Does a Bachelor degree really give us job security? Can anyone tell me??
Dayalak,
There is little doubt that a college education pays off for virtually all. The point of this blog entry wasn't to dissuade readers from attending college. It was to encourage the schools to become more price sensitive and to encourage students and parents to choose more wisely.
College graduates earn nearly twice as much during their working years as high school graduates. New information from the U.S. Census Bureau reinforces the value of a college education: workers 18 and over with a bachelor’s degree earn an average of $51,206 a year, while those with a high school diploma earn $27,915. Workers with an advanced degree make an average of $74,602, and those without a high school diploma average $18,734. College graduation will qualify you for many jobs that would not be available to you any other way. Your career advancement should be easier because some job promotions require a college degree.
Source: http://militaryfinance.umuc.edu/education/index.html