Matt Newsome

Aaron Murray

Since the United Negro College Fund issued the dictum that “a mind is a terrible thing to waste” nearly forty years ago, it did so with the noble goal of appealing to the nation at large to consider the importance and value of education in improving one’s prospects in life.  The slogan, perhaps better known than its progenitors at Young and Rubicam or the ideals it was intended to stand for, was heard.  According to the most recent US census data, Americans are the most educated that they have been since it started collecting data on education in the 1940s, with more than 80% of adult Americans graduating high school and another one in four achieving a bachelor’s degree.  For many middle and upper class families, a college education has become an expectation, and rite of passage, and the key to success in these modern days.

The impetus to go to college is not without merit.  Another US Census report suggests that college grads have a life time potential to make nearly a million dollars more than those who just complete high school.  Basically, unless you’re getting drafted straight into the NBA, college is one of the best investments to ensuring that you have the opportunity for a comfortable and relatively well paid job for the rest of your life.  As one might expect, parents looking to get their children ahead of the curve haven’t been the only ones to notice the potential value of a college education—and potential profit to be made from selling it.

In case you aren’t obsessively interested in the rising prices of most good versus median household income, it might have passed your notice how drastically college tuition has increased over the past couple of decades.  You might have heard from some folks in Washington more recently that health costs, in a broad sense, have more than doubled over the past decade—which is quite a hefty increase.  What you might not have known is that those rising costs have paled in comparison to college tuition, which has more quadrupled over the past 25 years or so.  To put this in perspective, the median income for a family has increased by less than 150% since 1982, meaning that the middle of the road family makes about one and a half times more than it did under Reagan, but has to pay four times as much to send little Timmy to college.  That’s quite a leap, especially when you remember that costs like health and debt have also outpaced income growth.

Now it would be easy here, especially given the populist anti-intellectualism that has taken hold of our national consciousness, to start denouncing colleges for the highway banditry of a price wall that they have erected, separating our children from that extra million they can make over their lifetimes.  And while some schools (cough, Harvard, cough) continue to charge exorbitant tuition while have endowments larger than the gross national income of several small countries, it’s best here if we take a moment and let our better instincts prevail.  First, most schools are nonprofit institutions, so it’s not like they are contriving, like other big and costly institutions we know, to develop new and costly ways to part the consumer from their hard earned cash.  All the money they do take has to be reinvested into the school in some way.

Second, as many who have noticed the rising costs have pointed out; loans and student aid have done a lot to relieve the burden of rapidly rising costs for most families.  With that in mind, college tuitions start to seem like those late night TV ads that try and sell you fifty seven pieces of kitchen cutlery, worth over two hundred dollars, for four easy installments of $19.99.  This is all well and good until you consider that the analogy looks more like two hundred dollars paid in twenty installments of $9.99 at an annual interest rate of ten percent or more.  In real life terms, Barack Obama was first a corporate lawyer, then a law professor, the state legislator, senator, and bestselling author before he and his wife (a well paid nonprofit lawyer pulling in six figures) were able to pay off students loans.  At the same time as he was running for president.  If deductive reasoning holds, this means it is easier for one to get married, have two children, and build a successful private and public career in a two income household than it is to pay back graduate school loans. And that’s not even including the bestselling author part.  But regardless of whether accepting private loans means having to mortgage a significant percentage of your income over the next twenty years of your life, it does at least lower the financial barrier to attending school.

So if more students are attending college and there are loans and grants to make them affordable, that means that costs can’t keep rising, right?  Well, if you live in the state of California, you probably already know that this could be a logical outcome, but it’s not a likely one.  Instead, to deal with a lot of poorly crafted public expenditures and tax schemes elsewhere in the state budget, you can expect tuition to increase while professors are paid less.  It’s worth taking a moment here to do something that most people addressing the issue would have taken care of earlier on, and note that there is a fair difference between a state college system, like the UCs or SUNYs of the nation, and the private institutions like Harvard, Yale, and Notre Dame that we are all familiar with, mainly because state college systems aren’t necessarily self sustaining institutions, and even when they are, it sometimes makes sense to cut their budgets in order to make room for other critical spending on highways or graft.  The reason I haven’t done this is because the truth about colleges today is that they aren’t just schools, whether they are private or not, but are also research institutions, real estate developers, and semi-professional sports institutions at the same time.  While private colleges might not be grappling with budgetary problems at the scale of California, they are always shifting monies back and forth to support different programs and purposes, whether they’re private or not.  This also means that as colleges try to stay competitive on several fronts, they’re increasing tuition to keep pace with their costs.

With colleges spending money to keep the institution at top notch in all fronts it makes sense then for tuition to keep increasing, right?  And if all of those grads with bachelors have a shot at making a million dollars more over their lifetime, they’ll probably pay off those loans too.  But the picture is more complicated than to give a blanket all’s well with tuition increases.  In the isolated case that is California, as well as some other state schools, an increase in tuition is perhaps justified when you consider where the state is saving tax payers money elsewhere.  Not to mention that, while the old narrative about the college student working his or her way through school while spending every moment of free time studying makes for a nice story, from what I remember from college (I’d say a good 85% of my time there, easy) it seemed to me to be more like an extended adolescence, where one always found time to enjoy the finer, if legally gray (or black), things in life while their parents footed the bill.  Maybe forcing kids to live the myth might instill greater seriousness when it comes to cost.

But by the same token, perhaps colleges could get a little more serious when it comes to controlling costs themselves.  It’s great to go to an institution that has world class athletic, research, and hospital facilities on sight.  But perhaps it’s a little reckless to drop tens of millions of dollars to jump to the forefront of boll weevil research just so your college can be the best at something.  More to the point, when you consider the cost of athletics programs alone, the majority of universities need to reexamine their core values.  Men’s football and basketball programs with only a slim hope of making a championship often cost in the millions of dollars to finance.  While sports do a lot to make the school more appealing to potential students, on the whole most programs only break even or are not profitable.  The picture looks even worse when you consider athletics departments, which are generally always in the red.  Some use this fact to take a shot at Title 9, the provision mandating that schools spend equally on male and female athletics, but I want to point to a recent report from the Christian Science Monitor about what the athletic director at the University of Kentucky makes.  Lew Perkins pulled in about $4.4 million last year, or as Phil Miller put it, the weekly equivalent of ten full time undergraduate tuitions.  UK is a big school, but that works out to more than five hundred students to pay his salary.  And he’s just the athletics director!  When you start to factor in all those superstar (and not quite) coaches, often the highest paid staff at the university, it’s not so hard to see how schools end up putting athletic performance in front of their primary mission—academics.  Anyone who’s been to a Duke-UNC basketball game might make a compelling case for the value this adds to the college experience.  When you spread the inflated cost to your tuition over twenty years, it might even seem reasonable.

Education has been a primary cause for this country’s economic growth and historical innovation and the cost, even the increasing cost, for college is certainly worth it.  The more educated you are directly corresponds to the potential money you can make.  At the same time, however, the wise acknowledge the direct part that household debt has played in the financial crisis.  People who can’t afford to pay loans, default on them.  Defaults push banks into crisis.  It would be glib and flat wrong to place blame for the near economic collapse at the feet of student loans instead of irresponsible banking practices, but if median families are juggling loans, a house, rising health care costs, and a slow growth in salaries, the cost of a college education starts to do more to exacerbate the problem than to bring in more money.  It’s a fine thing to pay the worth of a college degree, but a pretty student center or a conference winning team are little more than good memories.

Sources:

US Census Reports: http://www.census.gov/prod/2009pubs/p20-560.pdf, http://www.census.gov/prod/2002pubs/p23-210.pdf

Healthcare costs: http://www.cfr.org/publication/13325/

College fee increases: http://colleges.collegetoolkit.com/blog/Scholarship_Advice/2008/12/college-tuition-increases-far-outpace.aspx

College loan growth: http://www.changinghighereducation.com/2009/11/the-elephant-of-college-pricing.html