Sometimes I need to have things put in simple terms so I can grasp them. When I went off to college many kids from my graduating class went to work instead. I was the first from my family to attend college and the first to earn a college degree. Between summer jobs in construction, jobs at school, scholarships, and help from the parents we got the bills paid. One of the first things my friends who didn’t go to college bought was a new car. I’m not going all the way back to when I went to college for comparison purposes, but let me start with the late 70’s. At that time a new Chevrolet Impala cost $5,471 and a year’s tuition at a non-private college was $1,994. In essence, you could equate three years of college to a new car. Today, a new Impala, fully loaded is $35,000. If inflation was consistence for both, annual tuition would be $12,000. No, tuition is $30,000, on average for public colleges.
I was always taught to bring a solution along with a problem. The solution is simple, stop government loans and grants to college students. Cold turkey. The big ten won’t be the BIG anymore, it will go back to being the Big Ten. At least 5-6 colleges in the conference will close. Before they close, they will engage in one hell of a price war. Tuition will drop like a rock to attract those applicants who can pay the freight or get a private loan from a bank. Costs will get cut to the bone. Professors will be driving the taxis instead of new graduates. Thousands of unnecessary administrators across hundreds of colleges will be flipping burgers. Admission standards will drop along with the tuition. Right now high school graduates in Illinois can’t get in the University of Illinois since standards are set high to attract out-of-state students who pay more to go there.
In my business, there were 80,000 retail gasoline outlets that closed in the 70’s. They were the traditional two bay repair outlets that were family owned and operated. Most of the income came from repairs and sales of non-gasoline automotive items like tires and batteries. They were like today’s colleges, inefficient and way under capacity. When the government got in the gasoline business, with Jimmy Carter, there wasn’t enough allocations from Jimmy to keep them afloat. Lines were prevalent at all outlets and owners of the real estate, usually not the operator, decided to sell the property. Self-serve knocked out more and today 80% of retail gasoline is done through convenience stores. The market drove efficiency and low prices dictated high volume.
Only market conditions, not artificial market conditions supported by government money from your taxes, will fix the tuition problem. Take the government out of the equation and the problem will leave with the government. Kids who are going to college and shouldn’t will stop going. Kids who should will find a way to go and pay. Colleges will find themselves in a competitive business for the first time. Business people will be hired to run them instead of academics. Presidents will have accountability to balance budgets and survive. Colleges that don’t change will go away. Boulla boulla for old Sam Houston Institute of Technology, if the rich alums want it around they will have to pony up to keep it going, just like they do for the football team now. Title nine sports, gone. When the school is trying to survive lot’s of things will change.
It wasn’t easy watching 80,000 retail outlets disappear and all the dealers and company people who supported that system. Change is never easy, but necessity is the mother of invention and necessity is here knocking on the doors of all of our nations’ colleges. Time to let her in.
Here are some statistics about student loans to set your teeth on edge. Student loans have a provision called forbearance. It just takes a phone call to get forbearance. It means borrowers can postpone payments for up to three years. Forbearance has hit the $125 billion mark. That’s 16% of the loans in repayment. But, there’s another little deal being promoted by the Obama administration called income-based repayment. Borrowers with income below 150% of poverty make zero payments. Now some 24% are in the income-based or the Pay as You Earn plans, or $115 billion of the outstanding loans. Despite these programs, which now add to 40% of the borrowers, the number in default is 19.8% or 7.1 million borrowers or $103 billion in loan balances. So more and more loans are being made for larger and larger amounts while more and more borrowers have stopped paying through government sponsored plans to do so or have just stopped paying period. This is your bank, it’s your tax dollars being loaned. How do you like the way it’s being run?
I promise no more tuition blogs for a few weeks.
Right on. My thoughts and beliefs exactly. A lot has to change when it co es to college tuition. My children can afford whatever it takes for their children’s college expenses. But these high costs have to top. Everything is totally out of “wha k”
Right on. I applaud your hard facts supporting the ppoints you make. Thanks
Karen and. Jerry. Van. Hoose
Bill, I hope you’ve sent a copy of this to Gov.-Elect Rauner’s campaign committee, because this is precisely the type of innovation they need to hear. Please, keep up the good work on behalf of IL taxpayers and future-taxpayers (i.e. students). If we’re ever to see education reform in this backwater of a state, it will have to come from the business community, because the academics simply haven’t a clue.