College Tuition

June/18/2012 16:41PM
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I have been puzzled by several questions regarding college tuition.

First, how much has it gone up? Statistics show it has gone up 50% in the past decade. That poses the next question. Where does the money go?

Teaching costs have been the slowest part of budget growth, going up only 10% in that same decade. Costs go up in the same places school costs go up in your local community. The places that cause votes to raise property taxes every few years.

Administrators budgets, their paychecks and benefits and for spending on amenities like climbing walls, etc. Remember, school and university administrators are like politicians they have little, if any, business experience. Universities, unlike your local school systems, don’t have to get voter approval to raise taxes to increase spending, they just increase tuition.

Where does the money come from that enables colleges and universities to raise tuition 50% without going out of business. Mostly from grants and student loans.  It’s a rare student today who pays 100% of the tuition from cash reserves.  Pell grants are going up in alarming numbers and scary amounts. Students are claiming independence from parents to qualify for Pell grants and other tuition aid. And, graduating in lesser numbers.

The government funnels money into the educational system through grants and tuition aid and with student loans. Obama took over all student loans. Banks would not be making some of these loans, but Obama has never seen a bad loan he didn’t like. (see Solyndra) When loans are involved it always seems to the borrower like the amount of the loan isn’t real important. After all, it doesn’t have to be paid back tomorrow. And, if you want an education, what choice do you have? Everyone does it.

With this system, tuition will go up another 50% or more over the next ten years. Tax dollars will assure that. There are no checks and balances over university administrators. There is no real competition to push costs down. The supply of students will continue and few new institutions will be built to keep existing institutions honest on prices. Some of the biggest violators in tuition price increases have huge billion dollar endowment funds and watch them grow as they raise tuition.

This is the housing bubble all over again. When politicians say every American deserves a college education, it’s just like saying every American should own a home. Economics go out the window. We borrow money from the Chinese to send kids to college. We make bad loans to kids who will never graduate, since they are not qualified to go to college.

Want to see tuition go down 50% quickly, just stop grants and government-backed student loans. We will see hundreds of new junior colleges built overnight. We will see universities bleed red ink. We will see university administrators fired and replaced with business people overnight. We will see university budgets slashed, tuition’s lowered, and the tuition price become the primary factor in college selection.

If someone doesn’t take some bold steps here, we will  just watch a generation of pre-bankrupt graduates go out into the world.

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