The Atlantic: 'Why is College In America So Expensive?'

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SagaciousTraveler
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The Atlantic: 'Why is College In America So Expensive?'

Post by SagaciousTraveler » Wed Sep 12, 2018 5:14 am

Good morning,

Wanted to share an interesting article I came across this morning:

https://www.theatlantic.com/education/a ... ca/569884/

likegarden
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by likegarden » Wed Sep 12, 2018 6:11 am

Some other countries realized long ago that their future improves when all of their population is well educated. This also includes citizens with low incomes, because intelligence is not limited to the well-to-do. For example, in Germany already in the 1950s a student with good grades and low income would not need to pay tuition and would receive a monthly payment for room and board. All universities were public then, so very expensive private universities did not exist. I went to a technical university there, and received an MSME there basically for free financially.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by motorcyclesarecool » Wed Sep 12, 2018 6:26 am

The article touched briefly on the growth of non-faculty personnel expenses, but didn’t explore the “why.”

That seems like it could be a fruitful line of inquiry.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

student
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by student » Wed Sep 12, 2018 6:26 am

As someone who works in higher education, I cannot say healthcare is a good analogy to higher ed. To keep this post not political and actionable, I will frame it in terms of personal finance. Having multiple systems is not an issue to me, one's focus should be access to at least one of them. Sure, going to Harvard would be different than going to a local community college. However, a local community college will still provide one with a quality education. I work at a midsize public college, I think we are providing a good education and my students get jobs fairly quickly in general. Theses days with the job market being good, many have jobs line up before they graduate. Staying at home also will save money. To me, the most economical way to get a college education is 1) Do first two years at a community college especially the general education classes, 2) Transfer to an in-state university, a local public university, if possible.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by student » Wed Sep 12, 2018 6:33 am

motorcyclesarecool wrote:
Wed Sep 12, 2018 6:26 am
The article touched briefly on the growth of non-faculty personnel expenses, but didn’t explore the “why.”

That seems like it could be a fruitful line of inquiry.
If you are interested in salaries of faculty and staff, take a look at https://data.chronicle.com/?cid=wcontentgrid For faculty only, here is the data from AAUP https://www.insidehighered.com/aaup-compensation-survey

moghopper
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by moghopper » Wed Sep 12, 2018 6:34 am

Interesting - I also came across this article recently...

https://www.forbes.com/sites/susanadams ... re-aghast/

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by DesertOasis » Wed Sep 12, 2018 7:00 am

I was hoping that the author would have spoken to the fact that students can secure unlimited amounts of loan money, that they are not able to discharge in bankruptcy. So colleges can keep raising their tuitions higher than the rate of inflation and be assured that the federal government will make up the difference, if former students default on their loans.

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JPH
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by JPH » Wed Sep 12, 2018 7:22 am

Administration costs have increased dramatically as well. When I started work at my university we had a president, and he one executive assistant. Each college had a dean. Over the years, the number exploded. When I left after 30 years, there were numerous vice-presidents, layers of executives, chairs, vice-chairs, program directors, on and on. Just before I retired, they constructed a four-story Administration Building. Concurrently, there was increasing financial pressure on academic programs to seek charitable funding and on individual faculty members to earn their salaries through grants, contracts, and other outside work.
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djpeteski
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by djpeteski » Wed Sep 12, 2018 7:34 am

From my perspective, college is not expensive.

One can obtain a 4 year degree in most states for less than the cost of the average car payment. This assumes living at home and going to a state school. Evidentially cars are not very expensive as you have people of all income levels driving shinny new cars.

The living expenses while in college, have nothing to do with the cost of college.

The cost of private universities also have nothing to do with the cost of college. Its like complaining about the cost of airfare if they double the cost of first class but keep coach the same price.

The costs could be lower, but currently the demand of a college education is very high. Many young people would be better served not going to college and obtaining a career.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by carolinaman » Wed Sep 12, 2018 7:41 am

Easy access to student loans is one factor contributing to the high cost of college. If students were more judicious in getting loans and lending institutions were more judicious in granting loans, this would put more pressure on high college costs. Many students run up huge amounts of debt that they may never be able to pay back and cannot eliminate through bankruptcy. It is one thing to incur debt for a medical degree and yet another thing to incur high debt for a liberal arts degree.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by jayk238 » Wed Sep 12, 2018 7:44 am

As some have touched on the easy access to debt is a culprit.
But id say its the main one and to exclude it entirely in the article makes no sense. It reeks of agenda seeking.

Not really insightful

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by yukonjack » Wed Sep 12, 2018 7:50 am

student wrote:
Wed Sep 12, 2018 6:26 am
To me, the most economical way to get a college education is 1) Do first two years at a community college especially the general education classes, 2) Transfer to an in-state university, a local public university, if possible.
I am seeing both 1 and 2 more frequently in my neighborhood. And I live in an area where you would guess that kids would go directly to a traditional 4 year college.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by bottlecap » Wed Sep 12, 2018 8:23 am

Publications like the Atlantic have been saying this for years. It's not even a surface analysis. The only interesting thing about it is the amount of the expenditures that goes to faculty and staff. It’s not surprising, but interesting.

The reason college costs have risen dramatically is there are little by way of incentives to keep costs down.

It’s an oligopoly designed to limit competition.

Most of them are nonprofits which have far less incentive to keep costs down than if they had to operate at a profit.

Because of this, as they become larger, they function as bureaucracies whose main goal is to increase the number of people in their departments and obtain more money for the budget next year.

Why does a top 10 university in Engineering offer a degree in social work or communications for nearly the same price? Because it’s about bureaucratic growth, not specialization to deliver an excellent education at a competitive price.

It’s heavily subsidized by governments, which have done everything it can to take the "sting" out of costs, by delaying payment of costs. This makes people, especially 18 year olds, far less price sensitive.

Consumers of this product are also conditioned from birth to believe that the product is necessary for everyone to be a full and productive member of society and that "more is better," regardless of the cost. That’s clearly not the case. And with every person that receives a degree is convinced of it even more.

One could go on and on, but the point is that if you set out to intentionally make a system that would increase costs greater than inflation yet still justify its relatively uncompetitive existence, you could do far, far worse.

This pretty basic stuff, and the Atlantic completely whiffs. I didn’t look, but I’m sure the author got a journalism degree from a top 10 engineering school....

JT

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UpsetRaptor
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by UpsetRaptor » Wed Sep 12, 2018 8:27 am

As long as there's enough people in America with enough money who are willing to pay for it, it'll keep getting more expensive.

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nedsaid
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by nedsaid » Wed Sep 12, 2018 8:28 am

Administrative bloat. Also availability of loans, as availability to loans increased so did tuition.
A fool and his money are good for business.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by alfaspider » Wed Sep 12, 2018 8:34 am

bottlecap wrote:
Wed Sep 12, 2018 8:23 am

Most of them are nonprofits which have far less incentive to keep costs down than if they had to operate at a profit.

I think the problem is that education is not a quantifiable good. It's quite easy to obtain an "education" for nearly free- the information contained in a college education is readily available on free internet sites. It's difficult to quantify the value-add from the education itself, which is why people look to alternative metrics like U.S. News rankings (essentially branding) or metrics like salary at graduation.

But for-profit colleges are often nose-bleed expensive, because while they have incentives to keep costs down, they have no incentive to actually deliver a quality education in exchange for their fees. The students can't know the difference unless they already have a quality education.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by 47Percent » Wed Sep 12, 2018 8:41 am

student wrote:
Wed Sep 12, 2018 6:26 am
As someone who works in higher education, I cannot say healthcare is a good analogy to higher ed.
Unregulated free market solutions generally work well when

+ All relevant information is widely available
+ All the potential consumers are perfectly capable of understanding the information
+ They have enough time to evaluate their choice
+ They can do so without undue emotional pressure

Going from the above, healthcare and higher education do have a lot in common.

On top of this, the society should first evaluate and determine that any area under concern can be left to free-market solution. (For example societies usually decide that anti-discrimination policies are not suitable for free-market solutions)

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by Alexa9 » Wed Sep 12, 2018 8:48 am

I saw that NYU is offering free medical school which is a huge incentive to encourage some of the most gifted students that are deterred by the amount of debt. The most foolish thing to me is going to a mediocre school for a liberal arts degree with no career or graduate school plans. Everyone does not need a BA. High schools need to do a better job encouraging trade school. I'd also like to see more free online courses, degrees, and certificates.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by Will do good » Wed Sep 12, 2018 8:58 am

DesertOasis wrote:
Wed Sep 12, 2018 7:00 am
I was hoping that the author would have spoken to the fact that students can secure unlimited amounts of loan money, that they are not able to discharge in bankruptcy. So colleges can keep raising their tuitions higher than the rate of inflation and be assured that the federal government will make up the difference, if former students default on their loans.
+1,000

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by knpstr » Wed Sep 12, 2018 9:06 am

Seems like a line by line average cost compared to the rest of the developed countries would be a good way to compare things.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by Jack FFR1846 » Wed Sep 12, 2018 9:09 am

There are levels of administration that now exist at my alma mater that did not exist when I went to school there. I also know that their method of determining tuition is by survey of competing schools. It doesn't matter if it costs them $8k a year to run the school.....if peer schools charge $48k for tuition, they're going to charge $48k.

I've evolved during my older son's time in school. As it was when I was in school there, some classes have over 50 students and are taught by TA PhD students. Not a lot, but some. This does not, in my opinion provide value to the student. This year, my son is taking both community college courses, which are outside of his major and have been pre-approved by his college and traditional coursework. His community college courses are taught by experienced field professionals with Masters degrees, most working on their PhD with an average of 12 students in a class. The cost difference is dramatic. 2 classes in community college, including all fees and a parking tag cost $1800. 2 classes at his private college cost $8600. We're saving housing this year as well, so there's $15k savings. Going to part time student status at his private college also frees him of all the BS fees which nickle and dime students.

Most students and parents don't even look into these options and just save and spend some more to stick with all on campus courses, housing and activities. For me, we're at the breaking point. I've mentioned in the past, my son was a transfer student and as such is eligible for zero merit aid. He's received Stafford, high cost, front loaded loans to give him skin in the game. So I've shelled out the $30k-ish per semester payments. I'm done with this. Fortunately, (cost wise), the best local program that son #2 wants to get in to is at a community college, so we can potentially spend less than the total income of an average family of 4 in the US to put him through college. He does plan to finish off at a state university.

I'll also add that college presidents making over a million dollars is no longer uncommon.
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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by knpstr » Wed Sep 12, 2018 9:10 am

alfaspider wrote:
Wed Sep 12, 2018 8:34 am
But for-profit colleges are often nose-bleed expensive, because while they have incentives to keep costs down, they have no incentive to actually deliver a quality education in exchange for their fees.
Is not the "incentive" to deliver on a quality education so others will be attracted to enroll? There would only be "no incentive" if people were forced to go to the school.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by renue74 » Wed Sep 12, 2018 9:12 am

Alexa9 wrote:
Wed Sep 12, 2018 8:48 am
I saw that NYU is offering free medical school which is a huge incentive to encourage some of the most gifted students that are deterred by the amount of debt. The most foolish thing to me is going to a mediocre school for a liberal arts degree with no career or graduate school plans. Everyone does not need a BA. High schools need to do a better job encouraging trade school. I'd also like to see more free online courses, degrees, and certificates.
+1

My wife is a high school math teacher. She actually worked in the private sector for 10 years before becoming a teacher as a critical needs area (math).

She notes the same thing. Guidance tells every kid they can go to college and encourages it, but there are so many trade school options for very good paying positions. Plumbing, electrical, welding.

There's a push for trade program training because the average age of these tradesmen are in their 40s/50s and the younger generation is not migrating into those apprenticeships.

With the aging baby boomer population, the needs for these types of jobs will increase.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by riverguy » Wed Sep 12, 2018 9:14 am

UpsetRaptor wrote:
Wed Sep 12, 2018 8:27 am
As long as there's enough people in America with enough money who are willing to pay for it, it'll keep getting more expensive.
Or you mean as long as we keep handing out virtually non-dischargable debt to kids. This is the entire reason college is so expensive.

College prices would drop like a rock if govt guarantees for student loans went away and if they were easily dischargable in bankruptcy. It needs to happen. Current trends are unsustainable.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by Texanbybirth » Wed Sep 12, 2018 9:18 am

renue74 wrote:
Wed Sep 12, 2018 9:12 am
Alexa9 wrote:
Wed Sep 12, 2018 8:48 am
I saw that NYU is offering free medical school which is a huge incentive to encourage some of the most gifted students that are deterred by the amount of debt. The most foolish thing to me is going to a mediocre school for a liberal arts degree with no career or graduate school plans. Everyone does not need a BA. High schools need to do a better job encouraging trade school. I'd also like to see more free online courses, degrees, and certificates.
+1

My wife is a high school math teacher. She actually worked in the private sector for 10 years before becoming a teacher as a critical needs area (math).

She notes the same thing. Guidance tells every kid they can go to college and encourages it, but there are so many trade school options for very good paying positions. Plumbing, electrical, welding.

There's a push for trade program training because the average age of these tradesmen are in their 40s/50s and the younger generation is not migrating into those apprenticeships.

With the aging baby boomer population, the needs for these types of jobs will increase.
A lot of what I get from my older, generation X friends with kids in or entering HS is that they agree with you, but want OTHER PEOPLE'S kids to pursue those tradesman jobs. Their OWN kids are still destined to be the next House, MD, or Einstein, or Bill Gates.

I'm not sure what I'll tell my kids so I can't judge too harshly, but we do have 13 more years before we really need to have that conversation. Until then I try to encourage college-only-minded people to think outside the box, whenever I have (the few I do have) conversations like this. I think that job market will be quite lucrative in 10 years.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by Texanbybirth » Wed Sep 12, 2018 9:22 am

bottlecap wrote:
Wed Sep 12, 2018 8:23 am
This pretty basic stuff, and the Atlantic completely whiffs. I didn’t look, but I’m sure the author got a journalism degree from a top 10 engineering school....
I just had to look to test your predictive ability, and you were spot on. Maybe you should get into stock picking? :beer :D

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by student » Wed Sep 12, 2018 9:28 am

47Percent wrote:
Wed Sep 12, 2018 8:41 am
student wrote:
Wed Sep 12, 2018 6:26 am
As someone who works in higher education, I cannot say healthcare is a good analogy to higher ed.
Unregulated free market solutions generally work well when

+ All relevant information is widely available
+ All the potential consumers are perfectly capable of understanding the information
+ They have enough time to evaluate their choice
+ They can do so without undue emotional pressure

Going from the above, healthcare and higher education do have a lot in common.

On top of this, the society should first evaluate and determine that any area under concern can be left to free-market solution. (For example societies usually decide that anti-discrimination policies are not suitable for free-market solutions)
Using the points that you have given, I believe relevant information for higher ed is more widely available than health care. Moreover, I would say that one certainly has more time to plan for college than to plan for health care.

One difference between the two is the example that I gave earlier. For higher ed, it is relatively simple to cut down cost by first going to a community college. (Community colleges are in many cities and smaller towns.) For health care, I do not see a comparable alternative before ACA. With ACA, it is somewhat better.

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Re: The Atlantic: 'Why is College In America So Expensive?'

Post by prudent » Wed Sep 12, 2018 9:37 am

This thread has run its course and is locked (not personal nor actionable). General comment threads are off topic in the forums with "Personal" in the title. See: A reminder that non-investing general comment threads are OT
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