College Costs are Rising – Is Demand?

Yesterday in the NY Times was a story called College May Become Unaffordable for Most in the US. It was written by Tamar Lewin. What I liked most about the piece is the acknowledgment of parents to pay whatever it costs for the college education. And over time this has done two things 1) pushed college costs up (to go with demand) and 2) put more people in substantial debt.

What drives me nuts about this is the lack of some innovative entrepreneur to come up with an alternative to a college education that is still on par with the knowledge development (University of Phoenix included). I firmly believe there are many opportunities outside of a college degree. I think if you are really good at something the market wants, then you will get paid for it. Alex Rodriquez hits a baseball. JK Rowlings writes entertaining books. Mechanics fix cars.

Back to the NY Times story. I pulled some stats from it that I thought were interesting.

  • Over a 25 year period, from 1982-2007, college costs and fees adjusted for inflation have increased by 439%
    • Over the same period, median family income increased by 147%
  • Borrowing to pay for college costs has doubled over the last 10 years alone
  • Grant size for lower-income families is less than grants for more affluent families
  • The US is one of a few countries where the 25 to 34 age group is less educated than the older generation
  • Last year, the net cost at a four-year public university
    amounted to 28 percent of the median family income, while a four-year private
    university cost 76 percent of the median family income
  • As a percentage of income, the cost of an education has increased by 16% (from 39% to 55%) of over the last seven years for those with incomes in the bottom 20%
  • Community college cost has increased as a percentage of income as well. From 40% in 2000 to 49% in 2007

Here are some excerpts:

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“If we go on this way for another 25 years, we won’t have an
affordable system of higher education,” said Patrick M. Callan, president of
the center, a nonpartisan organization that promotes access to higher
education.

“When we come out of the recession,” Mr. Callan added,
“we’re really going to be in jeopardy, because the educational gap between our
work force and the rest of the world will make it very hard to be competitive. Already,
we’re one of the few countries where 25- to 34-year-olds are less educated than
older workers.”

Although college enrollment has continued to rise in recent
years, Mr. Callan said, it is not clear how long that can continue.

“Most governors’ budgets don’t come out until January, but
what we’re seeing so far is Florida talking about a 15 percent increase,
Washington State talking about a 20 percent increase, and California with a
mixture of budget cuts and enrollment cuts,”

“There’s an awful lot of experimentation going on right now, and that needs
to go on,” he said. “If you teach a course by distance with 1,000 students,
does that affect learning? Till we know the answer, it’s difficult to control
costs in ways that don’t affect quality.”

Mr. Callan, for his part, urged a reversal in states’ approach to higher-education
financing.

“When the economy is good, and state universities are somewhat better
funded, we raise tuition as little as possible,” he said. “When the economy is
bad, we raise tuition and sock it to families, when people can least afford it.
That’s exactly the opposite of what we need.”

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For more of my thoughts on education, so my Education Posts – A Summary entry.

About benleeson
My name is Ben Leeson. I currently work for a large financial company in IT. I went to school at Marist College in Poughkeepsie, NY. I graduated with a B.S. in Business Administration concentrating in HR. Professor William Brown taught me and I enjoyed his classes; even acquiring an appreciation for just about all things HR. I didn’t pursue a job in that field after college but I’ve kept up with it. This blog will further my fascination with all things HR. I hope to grow my knowledge of the area through thoughtful writings and spirited feedback. I will attempt to have a fairly routine style so anyone reading can come to expect certain segments. Please excuse my incorrect grammar and occasional misspelling.

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