American universities have an incentive to seem extortionate
economist.com
economist.com
They cite a College Board report, but don't specify which one. I suspect it's this one: https://research.collegeboard.org/trends/college-pricing
Tables CP-9 and CP-10 do indeed show net price going down for the last few years. But the figures aren't expressed in dollars, but in '2022 dollars', i.e. the charts don't show the actual net price, but the net price adjusted by CPI inflation.
This is an important distinction because, when people pay for college, they're not comparing it with the cost of other goods and services (which is what CPI measures), but whether they can afford it, based on their parents' current/past income, or their own future expected income.
If you agree with this perspective, using CPI to make the curves look flatter does everyone a disservice. Wages for many people haven't kept up with CPI, so a higher nominal net cost still makes college less affordable.
All attempts to track prices over time have some flaw. But not adjusting for inflation in a chart that goes back ~20 years could also be perceived as misleading.
Moreover, we are starting to see growth in real median wages again. They are already above Q4 2019: https://fred.stlouisfed.org/series/LES1252881600Q. So I think it is fair to say in some sense that the real price of attendance has started to go down (albeit not that much).
EDIT: The rest of my comment below is (as pointed out below by gruez) incorrect. The article did say 'in 2021 dollars' in reference to one set of numbers, and it's reasonable to assume they meant that to apply to all the other numbers in the same paragraph.
It's still surprises me that The Economist would use CPI-adjusted figures, but fail to mention the adjustment. Using CPI-adjusted figures is common, but it's not the default, which is why people often add 'in real terms' or some other qualifier.
Are we reading the same article?
>A report from the College Board, a non-profit, shows that whereas published tuition and fees for private non-profit colleges increased from $29,000 in 2006-07 to $38,000 in 2021-22 (in 2021 dollars), the net price actually decreased from $17,000 to $15,000.
"in 2021 dollars" clearly implies CPI adjustment.
The figures that surprised me were the ones at the end of that sentence (the 'drop' from $17k to $15k). I reread that part, didn't see anything about constant dollars for those numbers, and then went looking for the source data.
And if you look at any graph of college costs vs wages over the past 40 years or so, they have simply skyrocketed.
Absolutely, no debate there. The particular surprising claim in question though was about whether they have declined in the past couple of years, relative to a peak in late 2010s. And there, measured either in CPI adjusted costs, or relative to real median wages, they have.
But of course, the drops are small, and it's only been about 1-2 years. I'm not sure this really indicates a sustained trend, or just the fact that college cost increases have (for once) lagged inflation over those 1-2 years.
"inflation" is by definition CPI. Therefore the claim that using another metric to "include the impacts of inflation" is tautologically false. The word you want is "affordability".
https://www.brookings.edu/articles/how-does-the-government-m...
There is also PPI for producer prices, and the GDP deflator used for GDP.
If the US government and law already is using a number of different metrics to account for inflation impacts for different purposes, it absolutely makes sense to debate which particular measure is best for this area.
But there's not one single true number, different groups of people are affected by different measures (e.g. the use of CPI-W for social security payments is thoughtfully meant to be more representative of costs incurred by the typical social security recipient than is CPI-U)
Fair point, but in the context the previous comment, "wages" is basically never considered a serious contender for measuring inflation in economics.
Like, you're using big words to indicate that under no situation is this true, when the reality is that "inflation" is not by definition CPI. CPI is one measure of inflation.
But it just caught my eye that this seems, extra wrong. It's hard to read something extra wrong on the internet, and yet it feels like you've succeeded.
People are wrong on all of the time, but to call something tautologically false when it's trivially true, is peak wrongness.
The thing to compare tuition to is teacher pay. At today's tuition rates, 10 or less students would pay their professors salary. Average class sizes are much larger, so it's obvious the money is going somewhere else. Done. Forget CPI, the schools are pricing based on perceived value, not cost, and an unlimited supply of government backed loans.
Clearly, the value proposition for a university is not the education it provides. Even if you wanted the atmosphere of being on campus all day, the rent-a-room strategy would give you that for far less with smaller classes. Obviously it would be hard to be taken seriously if you did this, so the issue is that you must pass through the university system to receive credentials, and for many fields these credentials are non-optional.
Even spending $100k/yr on a PhD evaluating students full-time, and spending an entire 1 week per student to rigorously personally evaluate them 1:1, you could charge $2000 total to attempt an evaluation for credentials, allowing non-traditional students to self-study for free. If we want to make education and accreditation more attainable for everyone, we need to separate granting of credentials from studying. Study requirements are redundant with a rigorous exam, and particularly for fields where exams are already in place for credentials (law, accounting, capital-E Engineering, etc.), study requirements should be barred.
[0] https://registrar.arizona.edu/support-services/classroom-ser...
[1] https://www.azcentral.com/pages/interactives/news/local/ariz...
[2] https://www.arizona.edu/admissions/first-year/cost
[3] https://financialaid.arizona.edu/types-of-aid/scholarships/i...
If you want to weigh in changes in wages, taxes, etc, that can be very relevant, but ignoring inflation is not a good way to do that.
>[...] Wages for many people haven't kept up with CPI, so a higher nominal net cost still makes college less affordable.
Wages have kept up with CPI, at least for the period that The Economist mentioned: https://fred.stlouisfed.org/series/LES1252881600Q
I suppose you could claim that wages for everyone hasn't kept up with inflation/tuition rises, but that's not the claim that The Economist is addressing and is basically cherry-picking.
Going to university should be viewed in the same light as a financial investment, there is no guarantee it will improve your standard of living, except perhaps through networking, a case of who you know not what you know that matters, the old school tie network, that sort of thing.
For example, the police when charging people dont ask what your educational achievements are or where you studied. So are some university's going to increase your chances of ending up in prison or do they make you an untouchable Clarke in their field of knowledge? https://www.youtube.com/watch?v=Yk4wX4FPRzE&t=6s
In a way, the police are hiding the poor standards of the state educational system by not publishing this data, let alone capturing it for data analysis and they are also protecting the reputation of university's.
Likewise the course offered, is it relevant for today and the future or are they teaching courses on subject matter which is becoming irrelevant? Look at how quickly some things have changed over the last twenty years.
And the obvious elephant in the room, is how many people have studied a degree which is relevant to their current employment and past employment? In other words, does having a university degree show you can play nicely with others and evolve from academic speak to corporate speak?
Again backing up the impression the university's are selling knowledge on the subject matter you want to learn, but its not their job to find you employment pertaining to the subject matter you have studied. This applies to all universities.
So then the networking potential is relied upon and if you happen to work for a business which values university degrees highly, then there is a level of "obedience to authority" which can be applied as a factor to that business.
Take Goldman Sach's, AFAIK their policy is to recruit only graduates and to let a % go every 3 years irrespective of company performance, so this displays an unconscious bias towards university's and their reputation.
Some large companies like a drug company will actively sponsor some aspect of a university in order to influence what is taught on the course and lets them have first access to the students, who show potential, or obedience to the scientific theory of the day, which happens to be lucrative for the business. In biology there are lots of theories, mainly because there is still so much undiscovered potential in the body.
Some university courses will also likely land you a job in a quango, which if your aspirations are muted, will set you up for life because serving on a quango can be highly lucrative, if everyone tows the line.
In my time, none of this was explained to me, and I doubt it is now, but if you have a parent who has been through the uni process, especially one of the more prestigious uni's, you be made aware of what to look for, especially if you are the type that likes to name drop your university name. mic drop....
This is a good way to think about it in the USA, but IMO going to university should be viewed in the same light as going to high school or trade school -- ie, a public good, available to all, and required of some subset of the population to ensure the continuing function of a modern society.
Countries with this system seem to spend less and get better outcomes from their higher education systems.
So when viewing the damming reports on the police (and military) being institutionally racist, I would go even further to argue that not only are these institutions racist, the university staff appear to enable these criminal practices, fuelling prejudice, discrimination and anti-meritocratic ethos by allowing such relationships to exist.
Thats the last thing I would want from a UK university, but the security services are hardly stealth or intelligent about their recruiting practices, perhaps demonstrating their hubris and pride before a fall.
I could argue that the USA approach to only having loyalty to money, breaks down these criminal institutions that masquerade as the pillars of society that think of themselves beyond reproach, an idea that cant be killed, because if you only have loyalty to money, you hold neither prejudice, racist or discriminating views of someone so long as their money is good.
So can you really sit there and argue the UK model is ethically better, unless of course your idea of a functioning society is one that secretly harbours racist, prejudicial, anti-meritocratic, royal right to rule characteristics?
Now that I think about it, it also tracks hourly earnings, and if a non-insignificant people work hourly, but have been scheduled less hours (due to automation, or reduced need for labor), then their hourly earnings may have gone up, but their take-home pay gone down.
If anyone has any statistics for either of these, that would be very useful.
- this data misses people who transitioned to gig work or other types of self-employment, and
- looking at average (mean) can be misleading due to large numbers at the top
BUT... it appears that median household income has also gone up faster than CPI, which means those objections are likely irrelevant.
A parasitic idiocracy ensues from which the prospect of recovery at all is grim at best.
Most research at private companies is namesake.
The only perspective in society from which it appears that Academia does more R&D than the private sector is academia itself. Academics in this respect have their eyes wide shut.
At mot, publishing in academic conferences at private companies is namesake. But academic publishing in general is a shadow of its former self in terms of dissemination power, both because most academics are horrible writers and also because a product you can buy (with a support contract) or a well-documented software package is many orders of magnitude more impactful than a paper no one will read.
And even then, many companies publish far more than even highly productive research universities.
Consider AI. There are little pieces here and there that you can attribute to academia. But for the most part, over the last two decades, the enabling big steps happened at TSMC+NVIDIA+Google+OpenAI.
Those big steps are standing on the shoulders of decades of academic work, and were carried out by people who had spent a great deal of time in academia.
Right. Who then promptly left academia when they needed to start doing R&D at a meaningful and consequential scale.
The academic contribution to chip fab R&D today is nearly inconsequential compared to private sector investment, both in raw dollar amounts and especially in terms of impact per dollar spent.
This is like saying that academia is responsible for Google because its founders spent a couple years on an NSF grant. Yes -- but then they left to do the real R&D work at scale.
Academia plays and important role in training people. But the R&D component is -- with some exceptions -- mostly a matter of "training young people for the real work by messing around on toy problems".
The question how this is compared to peers, and if it is actually brightest minds who have opportunities, or those who have monetary support from parents.
The worst case scenario is that we return to the pre-GI Bill status quo, where generally only those from wealthy families could afford a college education unless they won scholarship money. There was a period from the late 1940s until roughly the 1980s or 1990s when college opportunities were extended to the middle class and the poor through the expansion of public university systems that offered low (or even no) tuition, extended merit- and need-based scholarships that are funded publicly and privately, and student loans. Tuition and other expenses were low enough to where it was possible for many students to cover some or all of these expenses by working a part-time job during the school year and/or by working full time in the summer, and for those who needed to take out student loans, debt levels were not crippling. But in the past few decades, the cost of college has risen to levels where working part-time during the school year and full-time during summers just doesn’t cover costs like it used to, and where people are graduating with increasingly burdensome student debt loads. The high cost of housing isn’t helping matters.
I see a few potential solutions:
- Price caps imposed by the federal government as a condition for accepting federal student aid, though this could mean cuts to services.
- Upstart colleges and universities forming that offer a reduced-cost college experience by being “no frills” and focusing on teaching without offering the wide array of services that even the most modest universities offer (e.g., no career centers, no well-equipped fitness centers, no luxury dorms, no on-campus health centers, etc.). However, some of these services may be mandated as part of accreditation standards, though I don’t know much about this.
- A concentrated effort to improve the nation’s K-12 education so that way high school graduates are equipped to perform a wide array of jobs that don’t require higher education, along with an effort by Corporate America to hire high school graduates for jobs that truly don’t require a university education.
While I was at the college I was living on my own, working full time for $15/h - entry level shit - and throughout that period I stayed close to breakeven with zero external funding and that's with a 1yr COVID-hiatus and relatively high food expenses.
University is a different, but nonetheless, similar story. Grants have magically become available to me transitioning from the poor-school to the university. I will say the property rates here are off the chain, similar to what I'd expect in an economically booming metropolitan. But that leads me to my point:
I can't tell you whether or not somebody from Yale or the University of Nebraska is going to get hired based on their school, however I'll go out on a limb and say that if the UN gal was even remotely prudent she'd be able to skate out with pretty minimal debt, if any.
A lot of people are chasing experiences and prestige, and those things cost money. Unfortunately, out-of-state charges are actually obscene. However there are programs that exist to except certain regions from those. Working to expand those and distribute the student population, I believe, would be generally more favorable than other interventions. Maybe I'm wrong, but the only thing that changed from college to university was the textbook publisher but more importantly - people doing the work we're supposedly being trained for in class.
Moving people around with economic incentives that will, I would presume, bolster the number of participants available on smaller campuses would do a lot to improve things all around. I've seen even modest labs put together some pretty impressive research.
And another nit to pick is that colleges very exclusively target fresh-outta-high school kids. And that is in and of itself pretty predatory, but more importantly it's putting half-baked people in a system they are not equipped to deal with, and with long-run non-trivial consequences if they fuck up - and there's quite a few ways to fuck up. And maybe that's orthogonal to my point above, but at least it would be an available option for those willing to scrutinize the risk/reward proposition, and maybe a basis for restricting funding to individuals.
I would expect a more mature population, on average, to be more diligent in every facet of their education, but especially when it comes to fiscal responsibility and the willingness to hold the system accountable - something which I've been made to do in a couple of instances, which I don't expect I would've done as a kid. My intuition tells me "they" don't want actual adults in, though. Kind of a liability seeing how all the shit works when you've been in the real world, unsheltered for a decade, and coming into the domain of a bunch of pretentious airheads that can't organize their head from their ass.
I dunno, that's my two cents.
Doesn't that mean that the main problem is a marketing/information issue, and less of an actual affordability one?
Why would corporations wish to exclude the brightest minds so they can increase profits?
Ensuring opportunities for working class and marginalised people is an issue that can only be addressed by community or government
I find that unconvincing. Aren't progressives constantly talking about how corporations are exploiting workers by paying them less than than their productivity? In other words, each employee makes money for them on net. All things being equal, it's in corporate america's interest to have as big of a workforce as possible, because more employees = more productivity extracted. Even in a situation where corporations aren't labor limited, they'd still benefit from increased competition on the labor supply side driving down prices for them.
Were they to do so deliberately, it world be to get a larger piece of a smaller pie.
More likely something like that would be an emergent phenomenon where no one was doing it deliberately.
If anything, bright minds on scholarships are diluted with sportsmen and everyone and their dog on student loans.
Also, if anything, the education system is contributing to our future idiocracy - esp. the public school system, which is a complete and utter failure.
Take a look at this graph of college costs vs salaries for young people over time: https://image.cnbcfm.com/api/v1/image/106968880-163579955995... . It's really hard to look at that graph and make the argument "No, no, expensive college costs are basically all in your head." The other thing I think is insane, which I see often, is to compare salaries of college grads vs. HS grads to make the argument that college is "worth it". But why is it a moral argument that colleges should have a right to "capture" as much of this increase in earnings as they can? After all, a huge reason for the discrepancy is that people who are inclined to go to college are more likely to get higher paying jobs in the first place. It's kinda like how I see some marketing departments that try to ascribe every single purchase to their efforts (and winning a larger budget in the process), when their "science of marketing attribution" is often a lot of hand wavy BS.
This article does make some fair points: public colleges tend to much cheaper than private ones, and most colleges give substantial grants. But even then it's leaving out some vital details (e.g. I didn't hear it mention room and board or obscene textbook prices). I think the thing that is most frustrating to me about the general college cost debate is that the thing that is most out of whack is giving giant, non-dischargeable student loans to students in non-lucrative majors. The reason lenders are willing to give hundreds of thousands of dollars in loans to someone who studies poetry is they know either the government has their back, or the student will be paying off their loan until they die - and colleges know this, too, which is why they feel so little downward pressure on pricing.
Let me stop you right there. The fact that the graph doesn't show the dip in actual tuition costs that the article mentions, and the fact that other commenters have corroborated the dip does indeed exist, makes me think that the chart you linked is talking about the wrong metric. I suspect that the prices are "sticker prices", not actual costs, which the article specifically addresses:
>Sticker prices are rising while net costs remain steady and, in some cases, drop. A report from the College Board, a non-profit, shows that whereas published tuition and fees for private non-profit colleges increased from $29,000 in 2006-07 to $38,000 in 2021-22 (in 2021 dollars), the net price actually decreased from $17,000 to $15,000.
Anyway, the best schools are free to attend (at least until the loan payments start.) You get showered with grants and loans if they accept you. It's the worthless ones that benefit from signalling their cost. Those are the schools paying smart (and culturally interesting) kids to attend, as atmosphere for the real customers.
Undergraduate is a racket. If my kids choose to get into tech I will use my connections to get them a job, either working for one of my companies or for a friend of mine, or start a company with children of friends. Now that is how the real world works - not handing 6 figures every year to a government sponsored scam.
Your solution to the "racket" that is undergraduate education is to... engage in nepotism? What exactly is that supposed to mean in terms of policy implications? Rather than paying tens of thousands for an undergraduate degree, students should just ask their parents to vouch for them instead? What if their parents don't have the connections? And what about the flip side? Should your friends oblige you and hire your children without any credentials just because you're their friend?
That's not just acceptable, but ought to be considered a moral obligation as a parent.
Parents feel morally obligated to set their children up for success via generational wealth transfer of ideas, skills, and dollars.
My dad taught me to read before I landed in kindergarten. I'm convinced that as a result (compounded..) I was intellectually years ahead of my cohort until University (where I met everyone else who also was in their high school).
I was at a tailor in Italy and genuinely asked how I could learn what he knows (I'm a self taught amateur right now). He said he just worked in his dad's (now his) tailor shop since he was a boy. Out of reach for me!
No, to be really successful you need both the expensive fake degree, and the nepotism.
Using the calculator at https://www.savingforcollege.com/calculators/financial-aid-c..., and setting no savings and no 529, it appears you're expected to pay about 1/4 to 1/3 of your AGI (checked at $50k and $500k and several points in between). Which basically means no relief from the sticker price at private schools if your AGI is over ~$250k, and no relief from the sticker price at even the least expensive public schools if your AGI is over ~$80K.
Or am I missing something?
It's not that unusual to find wealthy parents that refuse to help their children at all, even though they didn't do anything, and are fine people. I'm a bit unsympathetic to OP, but the young adults that have literally nothing thanks to the whim of some asshole... that's really tough, and a flaw in the system.
Anyway, there are rare cases, I believe, but the government makes this very difficult. If you grew up in a normal household, live an ordinary life, but your parents refuse to pay, you're out of luck. You will struggle to get this even if you're estranged from extremely abusive parents.
It seems like home equity does not count these days, which is an improvement I guess.
Do not go into debt for college if at all humanly possible. Fuck the system, it's designed to fuck you.
The financials are almost secondary to that, although there's also a lot of bad targeting by kids in those (where you'd go out of state / private instead of going to your flagship public and save a lot of tuition $$$).
Go to community college for 2-3 years, then matriculate from the university. Way cheaper, better teacher/instructors, more time to mature, start early in 12th grade, and the diploma is from the university.
What do you lose? 2-3 years of goofing off at a country club.
What do you gain? time and money.
Depending on what you want in life, the social class you started in and the one you want to end in, that is worth a lot...
I’m not saying don’t go to community college by any means. I think for people who still need to mature more before becoming independent, or who are especially price sensitive (remember there are many colleges in the US that will give you a full ride just for good test scores, or there were a few years ago at least) it’s a good choice.
But just because the sticker price is a little lower doesn’t mean it’s better for everyone
But most people take community college courses for the first two years of university. At every non-elite university I've worked at or had a family member work at, the most-subscribed Mathematics courses are College Algebra and Calculus I -- ie, high school-level courses where the instruction is probably better in community colleges.
Also: Mathematics is an outlier in that the instructional staff is fucking amazing at community colleges because of the dismal job market. The situation is quite different in CS. But, again, it doesn't matter, because most people at most universities are taking high school and CC level material their first 1-2 years.
" Go to community college for 2-3 years, then matriculate from the university. Way cheaper, better teacher/instructors, more time to mature, start early in 12th grade, and the diploma is from the university.
What do you lose? 2-3 years of goofing off at a country club.
What do you gain? time and money. "
This really isn't one-size fits all - it's great for the typical college kid who has no idea what they want to do and isn't all that mature or academically inclined. But it's terrible advice for those who are academically ambitious (aside from taking CC classes while still in HS). You can quickly tap out CC curricula if you're advanced, and there are still lots of merit scholarships available in many state and private schools that will have you end up paying even less at a 4y college than a 2y.
Also, regarding instructional staff, it kind of depends. The failure modes are different. At a CC you're a lot more likely to get someone who wants to help but is just incompetent or has a lower bound on their knowledge (for math - can they prove something like the Intermediate Value Theorem and really understand it?). At a university you'll get professors who are terrible teachers, and don't want to teach, but usually aren't ignorant. If you're testing out or skipping massive oversubscribed intro/weeder classes you may not run into that much at a 4y. If you are taking those kinds of classes you'd be better off at a CC though.
Not just, those, of course, really but any shared activities+clubs for practically any niche– college could be considered one of the last places where everyone has normalized openly seeking groups of friends based on common interests, to the point most throw extracurricular fairs at the beginning of every year. Not saying those don't exist after college, but finding e.g. a truffle mushroom foraging group is a lot harder in your 30s if you've never met anyone who does it before.
Now that I've been living in the real world for quite some time, I yearn to return to the goof off at the country club. I acknowledge that I am definitely looking back at my university days with rose colored glasses, but I still vividly remember the lifestyle I had while attending. I can't say the same thing for most of the education I received there. That's not to say it was bad, or that I didn't apply myself, just that we tend to forget the majority of things we're taught.
That being the case, while it is true that I would have probably gotten a more straightforward education at a much lower price by attending a community college, I would have also probably forgotten just as much of it. That being the case, I'm glad the extra money spent went towards the things I look back fondly upon.
A good teaching-oriented university needs dedicated faculty, dedicated students, and facilities that help the faculty teach and help the students learn. Some costs are unavoidable, such as hiring good faculty, running a library, maintaining facilities, etc. However, if we eliminate the “frills” and pare a university down to its essentials, will it be affordable? I’m very curious if this is one of the major factors, or are there more significant factors leading to exploding costs?
I guess it’s kind of like enterprise pricing, in reverse. Rather than the rich outliers getting the extortionate pricing, it’s the average consumer who has to request the real price. That lack of transparency makes making a rational choice harder for the average person.
In any case, the thicket of incentives is so dense, and the interests so mutually intertwined, that any reform would be met with kicking and screaming (and lots of rationalization, of course). This university lobby would work overtime against successful attempts to educate the public about what it means for a university to be good, and what sorts of gimmicks make them more expensive. But it is still important to try. It is important to counter the misinformation that's taught in primary school about what universities are about, but that would also entail a reform of primary education by implication, another milieu that would resist reform. It is important that we try. We need a clear and correct notion of what education is for, and then what primary, secondary, etc. education is for. Once there is clarity, it becomes easier to make decisions about how to structure education, what to keep in, and what to keep out. It is easy to see why some may not want to resolve the ambiguity.
One avenue that's being pursued is the founding of new colleges that demonstrate what is possible. This is the long haul, but in an environment as entrenched as this one, it may be the only realistic solution.
The price discrimination approach is a really effective method for pricing, and I'd be all for it (progressive taxation, basically) if not for the shoddy implementation leading to a student loan crisis.
It’s this simple. I don’t know why we need think pieces on this topic. Either make college a true market product (loans would change based on expected return), make it free for all (bad idea mainly), or create an economy where education isn’t needed (regressive and not practical without “make work” which is cruel).
We need to loose the grip of these institutions on our economy, they're - very evidently - a trillion dollar sink.
2) Good for them using inflation-adjusted prices. Too bad incomes haven’t kept up with inflation. If we’re going to discuss “affordability” we probably need to include the income side, hmm?
3) I’d hoped that my initial comment was worded closely enough to the headline for the tongue-in-cheek to be more blatantly obvious. Alas.
The exact quote from them is:
"Sticker prices are rising while net costs remain steady and, in some cases, drop."
I guess you can call that cherry picking, but they're not exactly taking that data and concluding everything is fine. The following paragraphs go through the various reasons why the high prices are bad.
>Yet even with decreasing costs and with discounts, college can still feel unaffordable to many.
>2) Good for them using inflation-adjusted prices. Too bad incomes haven’t kept up with inflation.
Source? At least according to this graph from the BLS[1], incomes have generally kept up with inflation. There are periods where that's not the case (eg. post 2020), but that's likely due to lockdown effects (eg. service workers, who are typically low paid, were laid off, so they were excluded from the average, which bumps it up).