College is expensive, and student loans are the worst. I know these are controversial positions, but I like to live on the edge. In 2001, I got married and my wife and I got our first post-college jobs. I made around $18,000 a year (part-time). She made slightly more as a nurse. We also had around $25,000 in student loans to pay off. That’s just under $38,000 in today’s money. (I’m old.) It wasn’t fun, but we made it work and eventually paid off the debt in just under 7 years. I recognize that many people have borrowed much more than this and have struggled to pay it back. Others have borrowed less. I mention this only to make the point that I know first-hand that student loans are the worst. There were a lot of things we put on hold while we paid them off. There were many other things that we scaled back while we paid them off.
Student debt has continued to be a problem since I graduated in 2000. Here are the recent numbers on student loan debt according to Lending Tree:
- 65% of seniors graduating from public and nonprofit colleges in 2017 had student loan debt.
- Average debt at graduation from public and nonprofit colleges was $28,650 in 2017, a 1% increase from 2016.
- 66% of graduates from public colleges had loans (average debt of $25,550)
- 75% of graduates from private nonprofit colleges had loans (average debt of $32,300)
- 88% of graduates from for-profit colleges had loans (average debt of $39,950)
- About 15% of the student debt held by the graduating class of 2017 was private.
- 48% of borrowers who attended for-profit colleges default within 12 years, compared to 12% of public college attendees, and 14% of nonprofit college attendees. (Seriously, don’t go to for-profit colleges.)
Those numbers are not great, but I think some perspective might be helpful before we can offer a final analysis.
- According to Forbes, the average cost of a new car in the United States last year was slightly over 30 thousand dollars. An investment of 30 thousand in a new car is a much worse investment than a similar investment in a college education, yet strangely this isn’t how we’ve come to see it. Somehow we’ve come to see a college education as a poor investment which leads to the next point.
- According to the APLU, those who have earned a bachelors degree earn 25 thousand dollars more per year than the average high school graduate. They will earn about one million dollars more over their lifetime. In other words, it still pays to have a college degree especially when you take into account that four years of training (or more if you go to grad school) is setting you up for the next 50 years of your life. How long will that new car last?
- Additionally, only .5% of college graduates leave school with 6 figures worth of debt. 36% leave college without any debt. 3 out of 4 students graduate from public universities with under 30 thousand dollars of debt. Admittedly, this is still a lot of money to someone making an entry level salary, but it need not paralyze a person.
- I would really encourage you to read this report from Gallup. Is college worth it? Not every college or university is equally a good investment. Some are actually poor investments. But there are certain things that the best institutions all seem to have in common.
I don’t want to be misunderstood. College financing can and should be the subject of reform. I’m not arguing that everything is rosy! But the reform should be sensible and moral. I chose not to wade too much into the politics of this issue in this post, but I will say I don’t see anything moral or upright about taking out loans only to have the expectation that someone else should have to cover them – even if that someone else is a billionaire. Most of the reform proposals coming from Democrat candidates are unjust and impractical. Some cynicism is deserved.
There is another question that needs to be asked. The question is “why is college so expensive in the first place?” College costs tend to go up at about twice the inflation rate. A university that cost 20 thousand per year in 2000 now costs over 50 thousand less than twenty years later. How can you explain that?
It’s a complex question without a simple answer. I do know one simple answer that is wrong in most cases. Some people might assume that because of the cost of education colleges are flush with cash. This is undoubtedly true for some colleges and universities, but this far from the norm. If you talk to very many people in higher education you will discover that almost everyone – big schools and small, public schools and private – is stressed about shrinking budgets and growing debt. The reality is that college has never been more expensive, but many colleges have never felt more financially vulnerable. So why is college so expensive? I think there are at least three contributing factors.
Bureaucracy. Bureaucracy always makes things more expensive and less efficient. The reality is that colleges in the past 20 years have had to adjust to an astonishing growth in bureaucratic demands. The New York Times published this piece on why college was so expensive. Their answer was the explosion in the number of administrators on college and university campuses. Here’s an excerpt:
By contrast, 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.
Schools are increasingly investing huge chunks of their budget to pay for administrators who don’t teach. You could make the case that California is an outlier. Many of those administrative positions – along with their large salaries – should not be essential to the mission of a university. But here’s the thing, I don’t know of too many college Presidents who are in the business of hiring salaried positions that are ultimately unnecessary. Over the past 20 years, it has become impossible to operate as an institution of higher education and not experience growth in administrative positions. The growing bureaucratic demands of institutions like the Department of Education and the various accrediting bodies have made administrative growth necessary and inevitable. The simple fact is that you can’t be a college today and not have an administrator in charge of everything from learning assessment, institutional research, student retention, diversity, compliance, accreditation, co-curricular assessment, etc. etc. Most of these positions didn’t even exist in colleges when Gen X was in school. Small schools desperately trying to keep a tight reign on costs for their students – like the one in which I serve – have only been able to survive by enlisting faculty to wear multiple administrative hats in addition to their teaching load. Most students are completely unaware of what must take place behind the scenes for their school to even exist.
Too much and too little money. The housing crisis was caused a decade ago by, among other things, an undisciplined infusion of easy money into the marketplace. This made the prices of homes go up, but it also led to a bubble. There’s a similar phenomenon with cars. An increase in rebates and “cash back” offers actually pushes the cost of vehicles up artificially. That’s why when you turn around and sell that car, it has lost a shocking amount of its sticker-price value. Whenever you inject easy money into a system, prices have a way of going up. There is evidence, that easy access to student loans is actually contributing to the rise of the cost of education. At the same time, available subsidies for higher education have dropped. The richest institutions continue to get richer, but state schools and smaller private schools must increasingly fight over scraps. State colleges have suffered from cuts in funding. (This is one of the many reasons why plans like that of Elizabeth Warren will simply not work. The states are already not paying their bills when it comes to higher ed.) Meanwhile, many smaller private schools have not experienced growth in outside giving that can keep up with the growth in costs. When there is less money coming in, those costs get passed along to students.
“Resortification.” There is an insane level of competition for students among colleges. In an effort to “win” students, many colleges have essentially turned their campuses into resorts. New buildings, plush amenities, fine dining, sports on top of sports on top of sports, a multiplication of extracurricular activities (each with their own administrator). Many students and parents have come to expect these type of amenities before even considering enrolling. Academic programs often take a back seat to workout facilities. Students see themselves as consumers, not as learners. So colleges have stopped selling an education as much as an experience, and that experience costs a lot of money. Your education doesn’t cost a lot because faculty are raking in money. Faculty salaries have remained nearly flat for around 15 years. Your education costs a lot because your education has become about so much more than your education.
I’ll say it again. College is expensive, and student loans are the worst. I’m in favor of schools serving their students well while keeping their costs as reasonable and affordable as possible. Speaking only for my institution, you would not believe the lengths we go to in order to offer an outstanding education for an affordable price. Higher education needs reform, and I don’t have “the answer.” I do know that we need to be honest about what will and won’t work. If we are going to reform higher education, we also have to be honest about underlying causes for ballooning costs.