Public College Tuition Soars By Most Ever (Or Searching For Deflation In All The Wrong Places)
For those who, like Time magazine and its exhaustive treatise on soaring healthcare costs, are shocked and confused how it is possible that prices for some of the most rudimentary staples, among them basic medical care and college tuition, have exploded we have the answer. In fact, we had the answer in August 2012, when we showed our "Chart Of The Day: From Pervasive Cheap Credit To Hyperinflation." We will take the liberty to recreate the chart from 7 months ago here:
As the title, and chart, both imply, the simple reason why college tuition is up 1200% in 35 years, while healthcare fees have soared by a neat 600% or double the official cumulative inflation, is two words: "cheap credit." This is also the reason why the BLS and the Fed can get away with alleging inflation is sub-2%: because the actual cost for any of these soaring in price services is never actually incurred currently, but is deferred with the only actual outlay being the cash interest, which as everyone knows is now at the ZIRP boundary thanks to 4+ years of ZIRP and three decades of the "great moderation."
Of course, if one actually were to calculate inflation by how it should be captured in a world in which half the base money is in the form of reserves which are only used to fund risky asset purchases (for now), which includes nominal stock and bond levels, it would be will in the double digits, but that is an exercise for a different day.
Which is why we are confident it will come as no surprise to anyone, especially not those who have no choice but to follow the herd and pay exorbitant amounts for a generic higher education that has negligible utility at best in the New "Okun's law is terminally broken" Normal, that tuition at public colleges jumped by a record amount in the past year!
The average amount that students at public colleges paid in tuition, after state and institutional grants and scholarships, climbed 8.3% last year, the biggest jump on record, according to a report based on data from all public institutions in all 50 states to be released Wednesday by the State Higher Education Executive Officers Association. Median tuition rose 4.5%.
A big factor for the plunge is that the states housing the colleges are just as broke as virtually every other for-profit entity in the developed world:
The average state funding per student, meanwhile, fell by more than 9%, the steepest drop since the group began collecting the data in 1980. Median funding fell 10%. During the recession, states began cutting support for higher education, and the trend accelerated last year.
Rising tuition costs are "another example of the bind that public institutions are in," said Sandy Baum, an economist at Skidmore College. "Unless we make public funding a higher priority, the funds are going to have to come from parents and students."
And therein lies the rub: because broke states need cheap credit to continue their externally-funded existence: the same cheap credit that allows students to indiscriminately pay soaring tuition costs, and take out any amount of loans since they don't have to worry about the current cost of such an education at the current moment. Obviously the price elasticity would be far less if student could only afford colleges they had savings to pay for. And by the time the loan comes due... well, that is bridge the delighted student (who just purchased two iPhones with the first loan installment) will cross in many many years.
Sure enough, it is the cheap loans that are the true antagonist both here, and in the parallel show describing the horrifying picture surrounding America's cost-exploding welfare state. Only there it is tens of trillions of socially spread out and underfunded liabilities that are allowing the same price "elasticity" that has sent costs through the roof in the past three decades (and is the answer to Time's expansive healthcare cost quandary).
Kaylen Hendrick, a senior at Florida State University in Tallahassee majoring in environmental studies, is graduating in three years rather than four in order to keep costs and borrowing down.
"Growing up, I thought if I made good enough grades, that college would not be a problem," said Ms. Hendrick, 20 years old, who has taken out about $15,000 in student loans and works 20 hours a week to pay for college.
State funding for the State University System of Florida has declined by more than $1 billion over the last six years, even as enrollment has grown by more than 35,000 students, a spokeswoman for the system said.
Nationally, average tuition, after institutional grants and scholarships, increased to $5,189 in 2011-12 from $4,793 a year earlier, according to the report, which is based on the 2011-12 academic year and adjusted its figures for inflation. Tuition revenue accounted for a record 47% of educational funding at public colleges last year.
In addition to raising tuition, many states have pared spending. The California State University System declined to take the vast majority of transfer students this spring and has turned away about 20,000 students who qualified for admission during each of the past three years, a spokesman said.
Society's loss: 20,000 less Bolivian wicker basket majors roaming the streets. But trust us kids: when all is said and done, unlike the BLS, your inflation wallet will be unable to "exclude" all those things that have soared in price (such as your largely worthless education) and ending up miraculously with, drumroll, a sub 2% CPI for years and years and years.
Because all those trillions in student loans are coming due one day, and when they do, that 1200% rate of increase in college prices (and rising) will make it all too clear that while one can hide inflation for a brief period of time in mountains of debt, the cost always comes due.
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Nah we don't need to educate people, we just need to spy on them and rob from them and screw up their health care and take away their guns and bomb a bunch of ooat herders out in the desert on the other side of the planet. iT's a question of priorities.
pryorities
ZH why no Rand PAUL live feed at the top of the page ???????
http://www.c-span.org/Live-Video/C-SPAN2/
http://www.c-span.org/Live-Video/C-SPAN2/
http://www.c-span.org/Live-Video/C-SPAN2/
http://www.c-span.org/Live-Video/C-SPAN2/
No matter what we think of that circus tent, that exchange was a serious and ugly history marker.
They don't give a shit
An they're not afraid to say so
EVEN JOHN STEWART IS TAKING A "BREAK" NOW EVERYONE IS LEAVING THE PARTY
<------ Long Text Books
And just what factors are driving this increase?
Not only that, wait till grant $$ from the Federal government starts to drop. You will hear university presidents squealing like stuck pigs.
Colleges will try to get the $$ from the students first in the form of tuition hikes. That will work up to a point, but when the Fedd $$ start declining, the riots start.
Students in Canada rioted over tuition recently https://www.youtube.com/watch?v=41YC0ASnfv4
I would guess US riots could get big and ugly as all the unemployed, indebted former graduates descend on campuses to display their anger and frustration.
College, healthcare , housing which makes middle class are extremely inflated while cheap plastic toys from china, food from Mexico , clothes from Bangladesh, US made guns are easily obtained. priorities of this empire determines her future
The whole university system is a racket. Nobody knows where the money goes, students are forced to take stupid courses to keep teachers employed, and are lured into dead-end degrees with no job prospects, and whether or not they find employment they are for the most part indentured servants for decades paying back exorbitant loans when they should be starting their lives. There is nothing decent about massive debt and for a university to chart the planned extraction of the best years out of America's youth before they can even start their own families is an absolute disgrace. And by the way the education they offer in exchange is nothing to brag about, either.
In the 1960s student activists, protesters and sympathizers railed against the university and privilege of the 1960s. Now many of these former students are in power in the university, and are sticking the high costs of their privileged pay and pensions on today's students and tomorrow's taxpayers.
Instead of "Power to the People", they chant "Power to the Privileged".
Too bad today's students are so anesthetized.
Right on, right on, and right on.
Kids, if you are in college right now, switch your major to electrical engineering, zip up your pants and skip the drunken orgies, get a job to pay for your own tuition, and graduate with no debt and a useful degree.
Students in Quebec protested/rioted yes, but, the rest of the country still has their heads up their ass. Tution in the rest of the country's post secondary schools have been increasing at a fast pace.
"And just what factors are driving this increase?"
You could add Accreditation Monopolies
Full bankruptcy protection for student loan creditors
Lack of accountability of older ggenerations.
short term focus on entertainment (football stadium subsidies) instead of long term investment in educated populace.
... but Paul Krugman said inflation hadn't appeared yet. Funny that.
the ahem..."quest for diversity" ahem...is probably the only thing paying the bills for these Universities. you think white people are crazy enough to pay that much money for college?
You think white people are crazy enough to pay that much money for college?
Uh, yeah, they definitely are. Many of the [non-Asian] minorities are on scholarships or grants. Its the Whites and the Asian parents and students who are getting reamed.
But, really, I was talking about the quest for diversity in college hiring. If you're White, you are at a distinct disadvantage...especially if you're straight. Why do you think Ward Churchill pretended to be an Indian? Trust me, he knew what he was doing.
That's right. Like in this quote: "Unless we make public funding a higher priority, the funds are going to have to come from parents and students."
See the assumption: the funding has to come from somewhere, but there's no mention of cutting costs, of getting rid of some of the administrative assistant's administrative assistants. No mention of streamlining some of the ridiculous bloat and red tape.
"Silly ZHers.....you forgot to adjust the tuition hedonically. It has not risen......it's actually deflation, bitchez!!"
Heli-Ben Bernank
The explosion in tuition is the same thing that happened to home prices in the housing bubble. No qualification criteria but a heartbeat and SSN # and the amount loaned is only based on what the seller (education institution in this case) wants to charge. If the govt was out of this game prices would crash back down to Earth in a hurry when almost NOBODY could pay what the seller is asking anymore.
Hell don't worry about what you pay, just get a loan!
Good luck competing with China...
On my second kid in. The only thing left (for the regular folk) is the high school / college program. Child will have nearly two years knocked off when she starts. Also the "public" schools are so expensive now that many of the "private" will offer a decent scholarship to an accomplished kid and it often beats the total price of the public.
I blame the terrorists
I am so glad that our (one) kid is through and working. Seems to be a BAD time to be young...
and old and middle aged
and a cow and a whale and a sea plankton and topsoil and groundwater and
but not so bad for Cheney and Co.
Tell Tale Heart
or
Tell Tale Heat?
"but not so bad for Cheney and Co."
He seems to have survived the odds for heart disease. With all
those heart meds, do think his dick still works?
Worked fine last Monday! :-)
especially for those in their 20's. they can't marry and have children due to high unemployment and financial hardships. they sit in coffee-shops for hours on end staring into their smartphones.
Harder to get into SUNY Binghamton than Harvard lately - all the old 'party schools' in the SUNY system are now quite competitive because they're still cheaper than private. Meanwhile the low to no cost options disappear - Cooper Union is going to start charging and CUNY .... well CUNY WAS a great system but of late - well open enrollments don;t work so well.... the college of the 1930's 40's and 50's that produced so many great people is a shadow if itself.
The reality is that college is NOT for everyone and making it a requirement for even the most menial jobs is ridiculous. But that approach prolongs adolescence and gets the masses in debt, very profitable for some segments of society. A year for my oldest cost more than my full 4 year private engineering degree. They throw loans at everyone - many of whom are all too willing to fund spring break expeditions and the latest iWhatever while credit cards are offerred to all - irrespective of existing debt load, lack of employment or future prospects.
The smart ones get through with little or no debt, study 'employable' majors and try to finish in as short a time as possible (kid's roommate finished in 3 years with AP's and loading up - cutting off a year's worth of expenses).
Meanwhile if you did the 'right thing' and saved so you COULD pay for college you get screwed and pay full frieght. Upside is that the dumber ones can buy their way into the schools that aren't 'needs blind' - Yes, it DOES make a difference for private second tier schools (prestegious but not at the very top) if you can pay or if you need aid. Saw a few wait list entries changed into acceptances when it was made clear there would NOT be an application for financial aid. But some of those cases had parents remortgaging the house for a kid who might have been better off somewhere less competitive. But then sometimes the name of the school IS all that matters......
Ever try telling a kid that it might make more sense for him to become a Master Plumber or tradesman than go to college? They get cross-eyed real quick.
As long as gold and silver are hammered every morning, inflation is under control. Keep up the printing, Uncle Ben.
"college tuition is up 1200% in 35 years"
I'm sure Orly would tell us this is just "transitory" and not "systemic" inflation.
When you pay tenured profs $160,000 a year to lecture 23 hours a semester this is what you get.....
It's a gravy train that makes the GSA look frugal.
Not so many of those anymore. The new model is ADJUNCT professors paid a minimum - nio benefits. Some VERY well qualified people out ther stuck in adjunct prof hell. The real money is going to the administrators.
Some RIDICULOUSLY overpaid college heads out there. http://blog.timesunion.com/schools/a-six-figure-salary-hike-for-rpis-shi...
Give me a break..... it's a good school but not THAT good and the cost has gone through the roof. They'd do better building some new dorms - not enough, too many ancient ones and too many kids living in local slums.
True.
I can't count the number of qualified people who were led along the "you'll get tenure" bread crumb trail for 6-7 years, only to have an Administrator sabotage their appointment.
They churned them in and out, strung them along for over six years with the promise of tenure, only to boot them to the curb.
The ones that get tenure are the ass-kissing equivocating, double-talking, back-stabbing bullshitters who have no problem lying to students, parents, and anyone not aligned with administration prerogatives.
The price of everything that isn't made in or effected by China has gone up a ton over the past 35 years.
Fixed.
Lets see, we have spent well beyond our means and kicked every can to the next generation...(s)
The "information" age (ironic as that is) often assumes an undergrad as if it's a HS degree.
The cost is so utterly inflating that the middle class parent is passing this additional debt to a child who after graduating has walmart and starbuck wages as their option
Volcano math
Volcano kids
Doing my damnedest to get both through with 0 debt. Frickin hurts the spousal unit and I, but it has to get done. I've warned them over and over about debt. Has it sunk in???? Man, I hope so.
Trying to do the same but I have an ex to deal with who sums up why we're here. Parent comes first. Doesn't realize this will probably cement the growing alienation..or perhaps doesn't care. I wonder how common this phenomenon will be....
God bless her step mother.
Have also been blessed with talented kids. The first got a full ride for music. The second after scholarship and HS program, will do it for 40% of the cost.
Second kid got a RA position for next year. Massively happy on that one.
Good luck with the battle(s).
thank you and the same
just posing a point....so with qeternity and the crushing of the $ commodities are inflating in price rt??? twice as much$ to buy the good...it seems to me that it translated to the stock market as well...for centuries the common philosophy was high oil bad for stocks....high stocks bad for bonds...but then a very interesting thing happened one day...someone realized that if the dollar weakens shouldnt all us dollar denominated assets go up in value??????
so now all fundamental data is ignored....all govt statistical measures are maniuplated and the masses are fed a stream of bullshit from cnbc and jim "cocksucker" cramer so they think they understand the markets...
US Financial Markets are the biggest ponzi scheme in the world and uncle ben makes madoff look like a 3 card montey dealer
21st Century philosphy: He Who BSes First and Most, BSes Best
This administration is all about cost cutting....
http://www.weeklystandard.com/blogs/report-wh-saves-18k-week-canceling-t...
White House saves 18K (that's thousand) per week by cancelling tours.
The headline should actually read....Obama goes full retard in cost cutting sequester rampage.
I guess they know there is no way their pensions will be there in 10 years , so they may as well grab all they can now.
I've worked at three different Universities/Colleges in the past 35 years.
You would not believe the level of waste at these institutions; on equipment, supplies, salaries, vehicles, furniture, catered meals, etc., etc., etc.
When budgets are cut, the answer is always raise tuition.
Many state legislatures have gradually cut funding to higher ed. while throwing more and more money at K-12. This is another reason that costs and the corollary of student loan debt bubbling to $1 Trillion. Rather than cut costs, Universities just raise tuition (similar to health insurance costs).
The people who do the most work; the un-tenured instructors, advisers, and staff do most of the work and get paid peanuts. The tenured ideologue Professors and Administrators get the big slice of meat and gravy salaries, and athletic departments.
"Rah-rah-rah! Get a degree (any degree) and you will be making big bucks in no time!"
It doesn't matter if the economy supports the area of study, it is all sunshine and roses.
Get them in, then keep them there as long as possible by requiring all sorts of prerequisites, obsolescing courses taken at the University 9 months earlier, don't offer enough classes or seats so that students are forced to spend five+ years getting a Bachelor's degree.
They also run like typical government bureaucracies; if you didn't spend all the money in your yearly budget by buying computers and other equipment you didn't really need they would take it away from you - so people bought what they didn't need or updated every year or two years instead of every three, four, or five.
It's ugly.