OT - The real reason college tuition costs so much
Contrary to what we are often told, it's not really due to state funding but rather skyrocketing administrative costs, among other things.
NYT article by Paul Campos, a U-M alumnus.
http://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-colleg…
Just because someone has a degree (or two or three) doesn't mean that the market supports them getting more money.
Oh, absolutely. But in academics they do because it's all about attracting talent. Go look at some of the UM administrators, I'd wager that most probably have a degree in something completely unreleated to what they're actually doing or what department they're in.
In the article, Campos notes that the number of administrators on college campuses has grown incredibly:
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.
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"Overhead" as opposed to administrators is probably a better term, but it doesn't change the fact that things have bloated a ton, and it's not clear that it's resulting in an improved education.
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"Why pay someone a living wage with job security and benefits when you can rent a young and desperate academic for pennies and get rid of them at will?"
Why do so many sharp grad and PhD-track people put themselves in a position to be exploited? Why do so many college girls aim in education, only to complain 5 years later they can barely afford their VW Jetta lease payment? This information is avail all over, yet over and over people continue to pursue these tracks. Who's the real dummy?
Sidebar: 90% of undergrads don't deserve to be taught by PhDs. There's an opportunity cost and it's a waste of the PhD's life to waste all of that time on so many naive and lazy teens. Adjuncts are often better teachers; whether they should get better comp and benefits is an entirely different topic.
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I graduated in the late '60's with a degree in engineering and tutition was very affordable. Both of my sons are relatively recent Michigan engineering alums and both have MD's. Fortunately my wife and I had great careers, because our sons were OOS and went to private med schools....cost of attendance 300 K for four years.
When I went to school, I'd bet the number of adminstrators were a fraction of what they are now and I'd also bet that way back in the old days, our professors did a hell of a lot less research and spent more time in the classroom teaching. Some of the need for adminstrative personnel is explainable to some small extent by the regulatory morass that schools must comply with these days, but I'd guess it goes way beyond that. The 100 K administrator costs way more than that when you figure the real cost....healthcare, pension, etc.
Then there are the student loans that others have mentioned. When you are starting college, most kids don't think about the ramfications of loan debt. The ease of obtaining loans I find close to criminal. I think it might be fun to study some obscure subject, but ultimately you need to find a job. Before loaning one single cent, I would require the student to know the likelihood of obtaining employment in their subject area and the average wage for one year and ten years after graduation. I know too many kids who went to law school or med school and are now carry huge debt burdens with interest rates that are well above mortgage rates and other forms of traditional interest rates. It's like owning a second home with a very large mortgage and with very little equity.
As long as i'm venting, this OOS tuition differential is abusrd. Michigan residents are being subsidized heavily by us OOSers. In the old days, an argument could be made that Michigan residents are paying state taxes that help pay for the University's costs. That doesn't come close to being accurate for a vast majority of Michigan residents, particularly with the miserly amount of money the State contributes to Michigan of late. At some point, this model is going to stop being workable and then what?
I have never seen any evidence to suggest that professors used to do more teaching, and in fact they did less research because they weren't being bullied about their productivity by fucktard Baby Boomer know nothings. Ahem.
That said, the U would not be what it is were it not for nearly two centuries of state support. Forgetting that legacy and sticking it to the in-stater would just be more of the money-driven mindset that we need less of.
Besides, the U is already squeezing the in-stater by admitting fewer of them than other comparable schools do. That should be factored into the equation.
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"As long as i'm venting, this OOS tuition differential is abusrd. Michigan residents are being subsidized heavily by us OOSers. In the old days, an argument could be made that Michigan residents are paying state taxes that help pay for the University's costs."
This is probably a reasonable position to hold if one ONLY looks at tuition.
...but remember - the University pays:
No Sales Tax
No Property Tax
That adds up over a 150+ years. Never mind the capital investments, subsidies, etc. over those 150+ years.
Without student loans, all but a few would not be able to afford college at its current cost level. That doesn't mean the loans are a good thing. Student loans provide a subsidy to inflate tuition above what the market could handle - a subsidy that the borrowers will eventually have to pay with interest. The problem will come when the kids taking these ever higher loans have to pay them and must either curtail spending (which will hurt other areas of the ecoonomy such as housing) or simply default.
Think of it this way - what if the loans went away? Would Michigan really let most of its students walk away due to costs? No, it would have to cut tuition.
Yes, fuck student loans. Out of college you get a job and you're like, "Man, I'm rich!". And then the bill for your loan comes in and you're like, "is that even legal?"
It's not that black and white. Some people get a job, use the 6 month deferment to build an emergency fund, then pay-off their student loans at the rate that they can afford.
In my case, I was able to pay $900-1200 a month for a couple years. I put myself on the most agressive payback plan and then added $300 a month to it. I lived like a college kid, still have my college car and kept myself on a strict budget.
I was so far ahead of my payments, last year I decided to stop paying and start saving for a house/condo. I did that until my buffer ran out, put myself on the lowest payment plan ($280/month) while I saved and eventually, a month ago, bought a condo.
Now I'm back to paying more than my payment - about $400 a month - and I hope to get back up to 600 or 700 a month.
In the end, it's going to take me about 10 years to pay off 75k in loans. But I'll be able to do it in 10 years, on a <50k salary, while still saving enough to buy and own a condo, enjoy my weekends/nights out with friends, take a nice vacation once a year, and still put a little (admitedly not enough) away for retirement.
If I were unable to take out student loans, I'd never have had the chance to go to Michigan and get my degrees and do what I love for a living. So, student loans aren't that bad. People just need to educate themselves about personal finance early on.
So let's say you had 250 K of debt, not all that unusual for many med school graduates and you are a primary care doc meaning you aren't getting rich. Heck, even the higher paying medical specialties are no where near as lucrative as the were a couple of decades ago.
Now you opt to do a residency which will take anywhere from three to nine years. Those loans are accumulating interest at a rate of about 6% annually. By the time you get your first job in five years, your debt load is now about 325 K with all of that accumulating interest. Your interest payments are roughly 1500 per month. I assume interest expense is deductible although AMT may have an impact. Paying off your loan is an after tax expense, so if you are making a reasonable buck, it takes two dollars of earning to pay off loan principal. 25 K of loan debt is 50 K of wages, a heavy burden for most people with young families. Bottom line it takes a very long time to get rid of that debt...decades. The system is totally FUBAR. When you run an ROI, there are way better options, including in many cases not going to college. A good plumber or electrician or a dock worker can do very well.
Yet U.S. medicals schools are opening up all over as more and more gunner kids grind to get in. The narrative that doctors don't make money anymore is pure BS. It's the most lucrative, prestigious and secure occupations in the nation.
That's why AAMC is predicting a 125,000+ shortage of doctors over the next few years. You really need to learn just how hard it is and how long it takes to open up a new med school. Lucrative and prestigious are terms you might have used 20 years ago.
Dupont Circle, you are talking anecdotally...the real numbers, other than the number of med school applicants does not correlate with your assertions. Hospital corporations are buying smaller hospitals and doctor practices left and right and compensation/reimbursement has been dropping for years. This is nothing new.
Check this link out:
http://www.thedoctors.com/TDC/PressRoom/PressContent/CON_ID_004671
If you want to make money, there are way better and easier paths to follow, such as an MBA from Ross. A law degree from a top program was another pathway, but these days, the legal marketplace is not what it once was for recent grads. My wife and both my sons are docs. My advice to my kids would be to finish their training, bite the bullet and spend two years at Ross or Wharton or Harvard B School.
"My wife and both my sons are docs. My advice to my kids would be to finish their training, bite the bullet and spend two years at Ross or Wharton or Harvard B School." Success is relative. But you and your wife with MDs and raising a pair of MD children makes you a 2015 Norman Rockwell painting. Are there families with more money? Sure. But 99.99% of all families dream of what you have.
What do you mean by "finish their training..."? As in finish MD and then pursue an MBA instead of residency? To do?
Dupont Circle, the costs to do what we did are staggering and virtually unaffordable by most families if you want to avoid huge amounts of debt. We were lucky in our choice of careers. I'm not an MD, I'm an IP lawyer with considerable experience with clients in the biomedical device arena and heavy involvement in the HC world. The Rockwell painting started changing its appearance a couple of decades ago.
Both my kids are doing their residencies. I would finish training, then go to a better B-school, get an MBA and, depending upon which way the winds blow, consider a career change or find a position where you can do both. Or say screw it and go the venture capital route, although I do believe if you took a slot in med school, there is some thoughts that you should practice medicine. Unless you have done what it takes to get through a surgical residency, or live very close to it, you have no idea as to the sacrifice these individuals endure.
It's a combination of the two. The increase in the ease of getting student loans has given colleges the ability to raise tuition to ludicrous levels without anyone fighting back because they don't feel the sting until years later. The only people who it hurts as students are those from families that are very upper middle class who don't qualify for loans and pay everything out of pocke;t and no one feels any simpathy for them as evidenced by the recent Daily article by the kid from San Francisco.
So schools increase their administration budgets and salaries and no one has spoken up enough to change it until recently. Will be a long road to trim these budgets as someone making a million a year is not going to voluntarily take a 50% pay cut.
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Nearly everyone in America lives within a half hour of a community college. If students elected to do their first two years at a local community college, their cost of attending a school like Michigan would be cut in half (nearly). But that is not popular because high school students want to go to football games and walk among leafy trees and go to parties and will do so at a high cost despite a feasible and inexpensive alternative.
I was an unmotivated student while I was at Michigan and was on academic probabion at one point. For a couple semesters. I did end up graduating in just one extra semester and with a GPA over 3.
When I graduated I had no idea what I wanted to do next so I worked as a delivery driver for a couple years before I went to a community college in nursing. When I was done, I worked in a hospital for a round 5 more years before I went back to school again at a private college and got my BSN. After that, I applied and was accepted into a top 5 Nursing Anesthesia program. Now, nursing is VERY concerned with professionalism and my director is currently is the Executive Director of the national organization. Very professional and politically minded. College course is part of basis of nursing. They are basically trying to shut down associate degrees as an level of entry into nursing.
So my point is, that in a very professionally minded field, my level of entry was a community college and I ended up going to one of the best programs in the country and working a job where my compensation package is supposedly in the 180k range. And I paid for it all myself. So... Why is it you can't go to a community college for 2 years then graduate from a respected college and get into a graduate program again?
at a community college while paying next to nothing in tuition, thus saving nearly half of the four year total.
Of course, this assumes that the graduating community college student will gain admission into their university of choice as a junior.
I don't know about Michigan, but the Virginia Community College System has a guaranteed admission agreement with most Virginia universities provided the student meets the standards at the CC (e.g. GPA of 3.4/4.0) Participating universities include:
- University of Virginia (selected colleges)
- Willam & Mary
- George Washington Univ (selected colleges)
- American University
- Virginia Tech
- The Catholic University of America
- George Mason University
http://www.nvcc.edu/current-students/transfer/Search/GAAAdmission.aspx
Thanks, Muttley, for clarifying my comment. There are cheaper methods to acquiring the first two years of education than at an expensive university, especially when knockingoff all the introductory courses or trying to figure out a career path.
But you raise an intersting question: Some (many?) top colleges may have a barrier to admission from the community college route or limit on transfer credits that may make this affordable option backfire.
Fiscally sound in theory, but we can't discount the power of the ethos. And good luck networking. And the rest of your kid's life they'll be the insecure person who never had the dorm/Greek/welcome week/football experiences. I work in education and honestly don't know anyone sharp who has done this, or would subject their children to this. In fact, research shows when sharp (overmatched) kids end up at a local crappy college, they tend to regress academically. Don't do this to your kids. Take out loans and press them to finish in four years. That's where the real savings are: graduating on time.
You're highly unlikely to achieve social class mobility if you start at a CC. The theories as to why include your network suffers dramatically (missing half the time on campus, including very important first and second year rhythm of peer groups forming), transfers likely aim in something less competitive/lucrative, and less affluent kids rarely know how to speak the "language" to mesh quickly and form tight bonds with professors and affluent peers.
Look, there are always outliers, but the plural of anecdote isn't data. I personally wouldn't recommend to any family with teens to test the odds of them "making it" out of a CC. Further, the ethos of a 4-year university can motivate immature slackers, i.e. rise with the tide.
I disagree.
The 2 things in this country heavily subsidized by government inflate in cost WELL above the rate of incomes - and have for decades. Healthcare and secondary education.
Your first sentence said without student loans all but a few would not be able to afford college at its current cost level. That is accurate. But what would happen to the cost level in 4-5 years IF there were no student loans. Just a thought exercise.
Either universities would have to dramatically cut their costs...or there would be no colleges. There is no business without student. So costs would have to go to a level say 30% of the American populace could afford out of pocket (without loans) insteasd of 4%. Since there is so little of the actual populace who could pay out of pocket.
In many ways this is parallel to the mortgage bust - we give out massive loans to people with little to no credit and almost all these loans are of the balloon type. No interest up front, but it accrues and then once you hit the 5 year mark you have to pay it back. It's very similar to the no doc balloon mortgages popular in the mid 00s. We know how that ended.
It's not an easy solution or dilmena because obviously going cold turkey is not a way to do it either. And if you took away student loans the political class would go haywire as would the electorate.
But in a vacuum if you took away all student loans the unversities would have to drastically change their cost structure.
Where to?
I bet to an area where the average 1965 tuition cost plus 2-3% annual inflation for the past 50 years would have led to today. Because that is generally how incomes have grown.
Tuition and healthcare have no relation with incomes anymore. And the more we subsidize them (which we will because thats what politicians do - hey I heard community college will be "free" soon) the more out of whack with incomes they will go long term.
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Every year my university publishes the salaries for every employee (president to student assistants), and I skim through it occassionally (mostly to see my professors' salaries). Some ofwhat the NYT article speaks of in increased admin. salaries shows in the salary figures for my university (a directional, regional public university). However, my state's government (Kentucky) has cut budgets every year (2.5% of funding from last year) since my freshman year seven years ago. And my university's tuition has risen by nearly 29% over seven years, to the point that, for the a good section of students, I don't think the degree is worth the debt. From what I know about the "work arounds" my university has tried to generate revenue (e.g. luring wealthy Saudi and Chinese students who pay the foreign student premium), I don't think adminstrative fees is the main problem. Some combination of over-expanding/unnecessart facilities (the arms race between colleges), bad administrative decisions, and budget cuts at the state level has caused most of the tuition increase.
Lastly, and irrelevant to my point, his military budget comparison is a bit disingenuous; the Defense budget is so large that even a minimal increase in it over 20 years will still be greater than a larger increase in education spending.
Hopefully something happens to plateau tuition, or else something will hit the fan in terms of student debt in the near future.
Keep in mind, higher education is labor intensive. A lot of those administrative costs are related to salary and benefits, particulary healthcare. There is no outsourcing (yet) of labor to put downward pressure on faculty salaries like you may find in other industies.
But the biggest factor is universites don't just instruct like their mission was decades ago. They are small (or large) student cities, whose customers/residents demand more and more amenities. For example, parents want their children to be safe so colleges provide security. 50 years ago, the security force at a small college would be an old codger with a big set of keys. Now, even a small school (I work at one) has its own security force that exceeds the village's police force and is actually the largest force (cars, officers, etc) in the county.
Add in reduced state funding for the public schools and increased financial aid at the private schools (a $60,000 a year school is cheaper than a state school for a family making less than $100k) plus all the staff needed for athletics, Title IX, study abroad, minority inclusivity, LGBT needs, psych counseling, ect, ect. and you have a large number of expense pressures that the media doesn't have the attention span to explore.
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Strykers and Gilmores? That is quite a crowd.
1.) The Promise is paid for through an endowment, not a tax.
2.) You really, really, really, really don't need to worry about the endowment drying up. Really.
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by donors. Never made public but the who's who of the wealthy in Kalamazoo and you can bet Stryker, Gilmore's and Upjohns have a large stake in the promise.
Originially the promise was for 'public' colleges and universities but they've opened that up to Michigan's private colleges as well.
They have no trouble paying those bills.
The Kalmazoo Promise is undoubtedly a promising initiative. However, roughly half of the students who received funding still don't have a degree. That's a major issue. Throwing money at academic underachievment can help, but it's no silver bullet.