I’ve written many times about the shortcomings of government schools at the K-12 level. We spend more on our kids than any other nation, yet our test scores are comparatively dismal.
And one of my points, based on this very sobering chart from one of my Cato colleagues, is that America’s educational performance took a turn in the wrong direction when the federal government became more involved starting about 40-50 years ago.
Well, the same unhappy story exists in the higher-education sector. Simply stated, there’s been an explosion of spending, much of it from Washington, yet the rate of return appears to be negative.
Let’s take a closer look at this issue.
Writing for the New York Times, Professor Paul Campos of the University of Colorado begins his column by giving the conventional-wisdom explanation of why it costs so much to go to college.
Once upon a time in America, baby boomers paid for college with the money they made from their summer jobs. Then, over the course of the next few decades, public funding for higher education was slashed. These radical cuts forced universities to raise tuition year after year, which in turn forced the millennial generation to take on crushing educational debt loads, and everyone lived unhappily ever after. This is the story college administrators like to tell when they’re asked to explain why, over the past 35 years, college tuition at public universities has nearly quadrupled, to $9,139 in 2014 dollars.
That’s a compelling story, and it surely has convinced a lot of people, but it has one tiny little problem. It’s utter nonsense.
It is a fairy tale in the worst sense, in that it is not merely false, but rather almost the inverse of the truth. …In fact, public investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s. Such spending has increased at a much faster rate than government spending in general. For example, the military’s budget is about 1.8 times higher today than it was in 1960, while legislative appropriations to higher education are more than 10 times higher. In other words, far from being caused by funding cuts, the astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.
Unfortunately, little of this money is being used for education.
…a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions. Even more strikingly, an analysis by a professor at California Polytechnic University, Pomona, found that, while the total number of full-time faculty members in the C.S.U. system grew from 11,614 to 12,019 between 1975 and 2008, the total number of administrators grew from 3,800 to 12,183 — a 221 percent increase.
This is great news, but only if you’re a bureaucrat.
But if you think education dollars should be used to educate, it’s not very encouraging.
For example, check out this very depressing example of bureaucratic bloat at the University of California San Diego.
Now let’s zoom back out to the bigger issue. Professor Richard Vedder from Ohio University is even more critical of handouts for the higher-education sector. Here’s some of what he wrote for National Review.
America’s colleges and universities are terribly inefficient and excessively expensive, foster relatively little learning and ability to think critically, and turn out too many graduates who end up underemployed. These and related problems have grown sharply in the half century since the Higher Education Act of 1965 heralded a major expansion of the federal role in higher education.
Rich correctly points out that the federal government has made matters worse.
Washington is far more the problem than the solution to the current afflictions of American higher education. …Tuition has skyrocketed in the era since federal student-loan and grant programs started to become large in the late 1970s. Colleges have effectively confiscated federal loan and grant money designated for students and used it to help fund an academic arms race that has given us climbing walls, lazy rivers, and million-dollar university presidents — but declining literacy among college students and a massive mismatch between students’ labor-market expectations and the realities of the job market.
And you won’t be surprised to learn that federal handouts have backfired against low-income students.
…the primary goal of the federal student-aid programs was to improve access to college for lower-income persons. Here, the record is one of total failure: A smaller percentage of recent college graduates come from the bottom quartile of the income distribution today than was the case in 1970, when federal student-assistance programs were in their infancy.
To close on a semi-optimistic note, Prof. Vedder highlights some intriguing incremental reforms advanced by Senator Lamar Alexander of Tennessee, including the notion that handouts should be linked to performance.
…he seems to embrace the idea that colleges should have “skin in the game”: They should face financial consequences for admitting, and then failing to graduate, students who default on loans and have marginal educational backgrounds indicating that they were clearly ill prepared for truly higher education. …Users and providers of university services need to feel the pain associated with academic non-performance. Growing federal involvement in higher education has brought rising prices, falling quality, and student underemployment. While it is perhaps politically impossible to radically change the federal student financial-aid programs now, the Alexander move is an important first step to rethinking how we finance higher education.
Ultimately, though, we won’t solve the problem unless the federal government’s role is abolished, which is yet another reason to shut down the Department of Education in Washington.
P.S. Here’s a great video from Learn Liberty explaining why subsidies have translated into higher tuition.
P.P.S. Some people have their fingers crossed that there’s a “tuition bubble” that’s about to pop. I hope that’s true, and it may be happening in a few sectors such as law, but I don’t think the overall higher-education bubble will pop until and unless we end government subsidies and handouts.
P.P.P.S. I’m even against subsidies and handouts for economists!
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colleges have not yet priced themselves out of the market because of government subsidies… politicians are using higher education as a tool to make themselves more presentable to the voter… it’s the higher education version of vote buying… and schools are taking advantage of the situation… remove all government subsidies and the price of higher education will drop like a rock… that degree in trans-gender bathroom studies will pay off big time… when you don’t have to be 50k in the hole to get it…
I just know it…………………..
Reblogged this on weeklyviewblog.
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Reblogged this on a political idealist. and commented:
Education should not be a debt sentence. Higher education is not a waste and worth spending money on, but it should not ruin young people’s lives.
As an educator I was told that I couldn’t use certain text books because they were out of date. The material and techniques were and are timeless, those sitting in judgment are and were useless. Administrators who delegate their duties to subordinates and take credit for others work while pocketing huge salaries, just plain stinks; and people want to know what’s wrong with our educational system! I could tell them, but then what, they are the ones running the circus.
So much implied causation it hurts my brain. You can’t just say ‘this happened and this also happened so therefore government caused inflation of college tuition.” That’s the sort of un-nuanced argument that might come from someone who lacked higher education. Even if we take your point that the two are related there is still the hurdle the article surmises, “Ultimately, though, we won’t solve the problem unless the federal government’s role is abolished, which is yet another reason to shut down the Department of Education in Washington.”
WHAT!?!
No seriously. WTF. One sentence apparently summarizes the article. It doesn’t detail how getting rid of DoE would have any effect on college tuition rates. I mean we can assume it would screw over a generation of young Americans who would be left without a plan or a way to afford education. Sure the 1% would manage, maybe even the top 10%, but we’d cripple the American workforce.
Go ahead and propose a real solution. But shut it down and the invisible hand would fix it is an asinine and naive point of view. This is what people hate about you uber Libertarians. Sure I agree that college administration is bloated, sure the federal loan program is a shambles and Universities should have skin in the game. These are great points. Now draw a line between the dots and explain how we get from A to B. You don’t just erase the dot and hold on to see what happens in the market. Thats how American college students get FUCKED.
I do believe the Education Bubble is about to burst – in a massive way. The reality today is that any person interested enough and dedicated enough can learn, online, anything they would learn in college at the tiniest fraction of the cost. By educating themselves this way, the only thing these new world students would not have is the same thing The Wizard gave The Scarecrow – a piece of paper saying they are educated.
.
I expect the online education industry will soon have independent testing organizations popping up to serve as “credentialing” bodies, and once that takes root, the old model of 4-year residential colleges will get totally hammered. When that happens, those lazy rivers, climbing walls, and campus bistros will crumble into the dustbin of history.
In perfect Orwellian fashion, the United States Department of Education does not educate a single soul. For this, we pay $80 billion per year – $250 per man, woman, and child; or about $700 per taxpaying taxpayer.
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You never explain how the two are connected other than to say that government spending has increased and so has college tuition. How does one cause the other? And how will cutting funding from government make everything cheaper for students? College and K-12 used to be about learning. Now it has been transformed (just like everything else in the USA) into a big business for profit and students and parents are advertised and marketed into thinking that all kids belong there and that college is actually worth the price that they are asking. The government is pouring money into student loans because it is the best place to make money on loans these days because they are the only loans that can’t be forfeited or erased through bankruptcy. The bubble will burst when all of these kids without jobs simply don’t pay their loans and their parents assets run dry. Of course then the banks will just demand a bailout and that’s why they can’t lose. Only students and athletes and parents lose these days by being sucked into a product that isn’t worth the paper it’s printed on. But not to worry…Once we’re all broke we can then sign up to go to work for another great American business…Jail!
Reblogged this on Public Secrets and commented:
Having watched college fees skyrocket over the years while the rolls of overpaid administrators gets ever more padded, Dan is exactly right. Student loans, a subset of subsidies to colleges, are really a racket by which the university charges more and more, the taxpayer (the source of the loan) pays now, the college gets the money, and the student spends decades paying the bill.
Somehow “going to college” has superseded “acquiring marketable skills”. The money spent on tuition is not considered capital assets foregone. Finally, the four years spent earning a degree is often a waste of the most valuable resource, time.
Because public education does not prepare students for the real world: no civics, no accounting, and no understanding of financial instruments; they cannot be expected to make rational decisions regarding higher education. Because colleges and universities must appeal to these sophomoric graduates, curriculums will continue to be designed with a “fun” or “PC” component. And, because funding comes directly from government or with government guarantees, lenders have no skin in the game.
Until loan officers are again loaning their own money and are therefore forced to ask: “What are you using this money for, and how do you plan to pay it back?”; students will make poor borrowing decisions and tuitions will remain high.
Actually, the problem with education is that it begins earkt in K thru 12 education. It is provided as an unearned entitlement generally from a monopoly public source, imposed on parents, thus separating them from their rearing responsibilities. Even more problematic is that children are required to attend, but not perform. The separation of parents from their responsibilities to care for their children is made more extensive by separating them from feeding their children through free school lunch programs. And the trend is to extend public services further to early childhood development and baby sitting. It already has taken root in procreation, that is, publicly supported birth control. A little more thought, better setting of societal objectives, and better, even flexible, designs of services for children, and other social programs, are urgently needed.
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