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The Shocking Increase Of College Tuition By State
It is common knowledge that in the hierarchy of bubbles, not even the stock market comes close to the student loan bubble. If it isn't, one glance at the chart below which shows the exponential surge in Federal student debt starting just after the great financial crisis, should put the problem in its context.
And while we have previously reported that a shocking amount of the loan proceeds are used to fund anything but tuition payments, a major portion of the funding does manage to find itself to its intended recipient: paying the college tuition bill.
Which means that with student debt being so easily accessible anyone can use (and abuse), it gives colleges ample room to hike tuition as much as they see fit: after all students are merely a pass-through vehicle (even if one which for the most part represents non-dischargeable "collateral") designed to get funding from point A, the Federal Government to point B, the college treasury account.
It should thus come as no surprise that in a world in which colleges can hike tuition by any amount they choose, and promptly be paid courtesy of the federal government, and with endless amounts of propaganda whispering every day in the ears of impressionable potential students the only way they can get a well-paying job is to have a college diploma (see San Francisco Fed's latest paper confirming just this) there is no shortage of applicants willing to take on any amount of debt to make sure this cycle continues, that soaring tuition costs are one of the few items not even the BLS can hedonically adjust to appear disinflationary.
End result: tutitions have literally expoded across the country in both public and private colleges.
But while we know what the answer looks like at the Federal level, the question arises just how does this price shock look at the state level?
For the answer we go to the annual report by the Center on Budget and Policy Priorities, which periodically releases a report covering just this topic.
The answer, in a nutshell, is presented in the chart below which shows the state by state, inflation-adjusted breakdown how much the average tutition has changed in the period between 2008 and 2014.
Our condolences to students in Arizona, who have seen a near doubling of their college tuition in just 5 short years.
In fact our condolences to students in the six states where tuition have risen by more than 60%, in the ten states where it has increased by more than 40%, and in the 29, or more than half of all states, where college tuitions have risen by more than 10 times the Fed's inflation target of 2% per year.
Some of the other findings in the report:
- Since the 2007-08 school year, average annual published tuition has risen by $1,936 nationally, or 28 percent, above the rate of inflation (in non-inflation-adjusted terms, average tuition is up $2,702).
- In Arizona, the state with the greatest tuition increases since the recession, tuition has risen 80.6 percent or $4,493 per student after inflation.
But in addition to the "supply-side" easy credit that enables college Treasurers to demand whatever cost they want, is there any other reason for this relentless price increase? As it turns out the answers is year, and it goes back to the infamous Meredith Whitney prediction that across the US, various municipalities and states are insolvent. Because as it turns out, the main reason why so many state colleges have, at least according to the CBPP, boosted costs is to make up for the near complete collapse in state funding to higher education.
This is how the CBPP report frames the issue:
Deep state funding cuts have major consequences for public colleges and universities. States (and to a lesser extent localities) provide 53 percent of the revenue that can be used to support instruction at these schools.3 When this funding is cut, colleges and universities generally must either cut educational or other services, raise tuition to cover the gap, or both.
Indeed, since the recession, higher education institutions have:
- Increased tuition. Public colleges and universities across the country have increased tuition to compensate for declining state funding and rising costs. Annual published tuition at four-year public colleges has risen by $1,936, or 28 percent, since the 2007-08 school year, after adjusting for inflation.4 In Arizona, published tuition at four-year schools is up more than 80 percent, while in two other states — Florida and Georgia — published tuition is up more than 66 percent.
- These sharp increases in tuition have accelerated longer-term trends of reducing college affordability and shifting costs from states to students. Over the last 20 years, the price of attending a four-year public college or university has grown significantly faster than the median income.5 Federal student aid and tax credits have risen, but on average they have fallen short of covering the tuition increases.
- Cut spending, often in ways that may diminish access and quality and jeopardize outcomes. Tuition increases have compensated for only part of the revenue loss resulting from state funding cuts. Public colleges and universities have cut faculty positions, eliminated course offerings, closed campuses, shut computer labs, and reduced library services, among other cuts. For example, since 2008, the University of North Carolina at Chapel Hill has eliminated 493 positions, cut 16,000 course seats, increased class sizes, cut its centrally supported computer labs from seven to three, and eliminated two distance education centers.
A large and growing share of future jobs will require college-educated workers.7 Sufficient funding for higher education to keep tuition affordable and quality high at public colleges and universities, and to provide financial aid to those students who need it most, would help states to develop the skilled and diverse workforce they will need to compete for these jobs.
Such funding is unlikely to occur, however, unless policymakers make sound tax and budget decisions in the coming years. While some states are experiencing greater-than-anticipated revenue growth due to an economy that is slowly returning to normal, state tax revenues are barely above pre-recession levels, after adjusting for inflation.8 To bring higher education back to pre-recession levels, many states may need to supplement that revenue growth with new revenue to fully make up for years of severe cuts.
But just as states have an opportunity to reinvest, lawmakers in many states are jeopardizing it by entertaining tax cuts their states and citizens can ill-afford. For example, Florida - where higher education funding is 30 percent below 2007 levels and tuition at four-year schools is 66 percent higher - is cutting taxes by $400 million in the current 2014 legislative session. Other states are also considering damaging changes to their tax codes that would make it very difficult to reinvest in higher education.
* * *
In other words, to mask their insolvency, funding for colleges has been the first outlay that states across the US were forced to trim: and the more insolvent any given state, the greater the offset that was passed through to any given state's colleges.
This is indeed confirmed by the chart below, which shows the change in state spending per student over the same time period.
And this is where students, and their massive debt loads have come in. Because as it turns out, instead of having the state fund itself and be able to return college funding to pre-crisis levels, that responsibility is now offloaded to the student.
From the report:
During and immediately following recessions, state and local funding for higher education has tended to plummet, while tuition has tended to spike. During periods of economic growth, funding has tended to largely recover while tuition stabilizes at a higher level as share of total higher educational funding.
This trend has meant that over time students have assumed much greater responsibility for paying for public higher education. In 1988, public colleges and universities received 3.2 times as much in revenue from state and local governments as they did from students. They now receive about 1.1 times as much from states and localities as from students.
Nearly every state has shifted costs to students over the last 25 years — with the most drastic shift occurring since the onset of the recession. In 1988, average tuition amounts were larger than per-student state expenditures in only two states, New Hampshire and Vermont. By 2008, that number had grown to ten states. Today, tuition revenue now outweighs government funding for higher education in 23 states with six states — New Hampshire, Vermont, Delaware, Colorado, Rhode Island, Michigan, and Pennsylvania — asking students and families to shoulder higher education costs by a ratio of at least 2-to-1.
The bottom line is that in order to perpetuate the myth of state solvency, the obligation to provide the funding needed for any one student's education has been transferred from the state itself to the student.
Is this a "fair" cost-shifting arrangement?
It depends on the perspective of the payor, and of course, the obligor. As Janet Yellen herself pointed out today, the fact that students are being saddled with record amounts of debt is regarded by the Fed as of the primary reason why the housing recovery has not materialized, and why household formation has collapsed and is far below historical (and expected) levels (and has indirectly led to such aberrations as the US "renter nation", and Wall Street firms such as Blackstone becoming the largest landlord in the US).
Some of the other side effects of this perverse funding shift, from the CPBB:
Rapidly rising tuition at a time of weak or declining income growth has a number of damaging consequences for families, students, and the national economy.
Students are taking on more debt. Student debt levels have swelled since the start of the recession. Collectively, across all institutional sectors, students held $1.08 trillion in student debt — eclipsing both car loans and credit card debt — by the fourth quarter of 2013. Between the 2007-08 and the 2011-12 school years, the median amount of debt incurred by the average bachelor’s degree recipient with loans at a public four-year institution grew from $11,900 to $14,300 (in 2012 dollars), an inflation-adjusted increase of $2,400, or 20 percent. The average level of debt incurred had grown from $11,200 to $11,900, an increase of about 6.3 percent, over the previous eight years.
Tuition costs are deterring some students from enrolling in college. While the recession encouraged many students to enroll in higher education, the large tuition increases of the past few years may have prevented further enrollment gains. Rapidly rising tuition makes it less likely that students will attend college. Research has consistently found that college price increases result in declining enrollment.35 While many universities and the federal government provide financial aid to help students bear the price, research suggests that both the advertised tuition cost and the actual price net of aid affect whether students go to college; in other words, a high sticker price can dissuade students from enrolling even if the net price doesn’t rise.
Tuition increases are likely deterring low-income students, in particular, from enrolling. Research further suggests that college cost increases have the biggest impact on students from low-income families. For example, a 1995 study by Harvard University researcher Thomas Kane concluded that states that had the largest tuition increases during the 1980’s and early 1990’s “saw the greatest widening of the gaps in enrollment between high- and low-income youth.
Tuition increases may be pushing lower-income students toward less-selective institutions, reducing their future earnings. Perhaps just as important as a student’s decision to enroll in higher education is the choice of which college to attend. Even here, research indicates financial constraints and concerns about cost push lower-income students to narrow their list of potential schools and ultimately enroll in less-selective institutions. In a 2013 study, economists Eleanor Dillon and Jeffrey Smith found evidence that some high-achieving low-income students are more likely to “undermatch” in their college choice in part due to financial constraints
There are many more unintended consequences of this cost shift, all of which are succinctly explained in the full study which can be found here: States Are Still Funding Higher Education Below Pre-Recession Levels.
But while questions of fairness are largely meaningless in the New Normal, especially once the Obama administration is done with them, one thing is certain: this arrangement is completely unsustainable.
It goes without saying that anything that is unsustainable eventually ends.
In the meantime the biggest loser is... you, dear students.
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I run near Emory in Atlanta and it gets me that a walkway between two buildings on the campus is tiled on the outside with marble. Universities are fiefs. President is the modern term for earl or king.
I'm a 61-year-old retiree back in college in Arizona. Until this past Spring semester, it was all community colleges for about $350 per 3-semester hour course. I enrolled at Arizona State to get a math degree but got a case of sticker-shock. To take just one course at ASU the tuition alone is $2584 - I had expected it to be no more than $1400 which is still 4 times as much as community college. To get the tuition down to a mere $1200 per 3-semester hour course, I would have to take 5 (upper level math) classes - as I already have credits from college 30 years ago.
I will complete my first (and perhaps only) course at ASU tomorrow.
That's to bad, there goes your chances at this years head Cheerleader.
The digital revolution will dissolve not all, but many ivory towers. Many state and private universities resisting online education will go out of business.
Looks completely sustainable to me. Just like techs in 2000 and housing in '08.
Arizona, home of the prestigious “University of Phoenix,” has been going off the Right Wing deep end for some time. The rapid rise in tuition is a direct consequence of the state’s attempt to completely privatize parts of Arizona higher education. No state money for all you communists and overpaid professors… you’ll just have to fend for yourselves. What was once a “public good” will now be private.
Public higher education, one of the few remaining success stories in America and a gateway to the Middle Class (or higher), has been systematically destroyed and “monetized” for the financial industry. It’s always the same story… create a need for debt (high tuition) and then provide the fix (student loan debt). Both sides of the equation are driven by the same forces. The inability to discharge student debt through bankruptcy is the cherry on the top of this financial industry dessert. Peons, enjoy your debt serfdom!
Bid a fond farewell to your Middle Class… they are now officially toast.
You're a complete moron. Not one single person who applies for financial aid is turned down. That's 100% of all applicants approved for a college loan. Colleges know this, and they price accordingly. Was it republican policy to demand that education make every student "college and career ready"? No is the answer. This horseshit logic that EVERY kid should go to college is absolute rubbish, and the public schools are feverishly pushing it, making every kid think that if they don't attend college - regardless of how well they're prepared - then they're not doing it right. So explain again how the right wing has made the hyper-progressive public education system influence kids to mire themselves in debt for a degree they will more than likely never attain?
"The rapid rise in tuition is a direct consequence of the state’s attempt to completely privatize parts of Arizona higher education."
Not true. The rise in tuition everywhere is due to the very existence of student loans as they enable schools, textbook publishers, professors, etc to continually command higher prices and salaries. Get rid of loans completely and the students won't have the money, the textbook publishers will go out of business and the professors will lose their jobs - unless they drop their prices and salary demands. Bubbles have to pop eventually and the student loan bubble will.
The University of Phoenix should not even be considered 'private' as it derives its funds mostly from taxpayer-guaranteed loans. A really private school is one that refuses government money and the red tape that goes with it.
Those prices might just be worth it if the colleges seriously taught Aristotle but instead its Plato everywhere, even in the sciences. And what's taught in colleges permeates throughout the culture. /shrug
There is no reason or goal for the Fed to fix this. Several million students indebted to the government at 6.8% is a permanent source of income for the Fed. Why on earth would they want to change anything? They've got a whole generation of debtors under their cotrol. My wife is one of them. Almost $100k in loans, and currently unemployed. My college loans were at 2.3% less than 15 years ago. How the fuck do we get to 6.8%? The FED has turned into a credit card company, with the IRS as a collection agency. Good luck defaulting...
You know there's a problem when deans of COMMUNITY COLLEGES are making about 200K a year on average. For Christ's sake these institutions aren't even granting four year degrees.
And it fails to take into account their GENEROUS PENSIONS.
http://www.salaryexpert.com/index.cfm?fuseaction=browse.community-colleg...
I live in Raleigh, not far from the esteemed Dook University. I love Dook students. They are the smartest of the smart and brightest of the bright. That $200,000 student loan debt they accrued for a cultural anthropology degree was well worth it. Sure, they might be making latte's at Starbucks or bagging groceries at Whole Foods now, but dammit, they have a degree from Dook and no one understands or appreciates what contributions to society they could be making. Invariably, they end up back in school to pursure a master's degree or PhD in their chosen field of fallacy, all the while becoming more in debt. Don't get me wrong, I believe in a college level education, but at least take a look at the potential earnings and job demand for the field before jumping into 100's of thousands of dollars in debt. The high-school drop-out cutting lawns for a living is better off than the Dookie with thier liberal arts degree and debt. Even though a lot of these students have 1% parents who are willing to piss their money away on their budding prodigy, even they are starting to sweat the tuition bills. What is sad is I have met many medical residents in my life who are in debt $250,000+ from school. Even at a doctor's salary, they pay on these loans for years.
But, what do I know?
For less than $30,000 you can get a 4 year diploma at a top university in the Philippines, for example a BS nursing diploma, 100% acceptable in the US nursing and hospital system, as are all BS diplomas issued by center of excellence universities in the Philippines, and that includes FOUR years living expenses.
Only other cost is your flight.
Strongly suggest any future student gets his loan, books a ticket and spends 4 years having fun in a country made up of 7,000 tropical islands, with some of the most beautiful women on the earth, and where some US college students already here are now vying with each other as to how many local women they can get pregnant whilst they are here, figuring out that if they cant afford to get married and have kids at home they might as well sow seeds and spread their DNA as far and wide as possible that being the reason they exist in the first place.
So go get $100,000 from fuckwit obummer, get your BS diploma and invest the rest in some small business to generate extra income and whoo hoo bang the babes every night.
There is even a local forum with tips and so on for getting laid and apparently the current record is one different one over 48 consecutive nights, and other records are 8 in one night and 22 in one week.
Damn good idea (the education, not the getting women pregnant)
For under $10k you can get a 4-year degree from a top university in China. As a foreigner though, as long as your grades stay up, the government will not only pay for it, they will give you a living allowance. Easy as all hell to use this to go get a masters just about anywhere.
Arsehole!! Do you know what future a single mother in the Philippines has? None!! You are a prick!
Quit bitchen, everyone knows fielding professional football, basket ball and baseball teams is expensive and getting more so every day. It's what the masses want, so just shut up.
Tyler could've told you the real reason(s), that I've also posted before:
1. A whole layer of Director-level Admistrators have crawled into the woodwork.
2. These Directors are not only getting paid well, but are investing all that money on Wall St.
3. When Wall St trashed their portfolios in 2008/2009, they had to compensate by raising tuition fees. Wall St. analysts told them they could: Charge everything the market will bear... Besides, those Baby Boomer grandparents need to transfer their wealth sooner or later anyway, so might as well force them now.
Young grads today have a lot to pay for between student loans, their Grandparents social security, and Obamacare. They dont have to ask what they are required to do for their country. Where will they find the $$ to buy a house, and support the related economic growth?
It should be noted that the Associated Press wrote on August 07, 2012:
“People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.
“A married couple retiring last year, after both spouses earned average lifetime wages, paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank.
“Social Security benefits are progressive, so most low-income workers retiring today still will get slightly more in benefits than they paid in taxes. Most high-income workers started getting less in benefits than they paid in taxes in the 1990s, according to data from the Social Security Administration.
“The shift among middle-income workers is happening just as millions of baby boomers are reaching retirement, leaving relatively fewer workers behind to pay into the system. It's coming at a critical time for Social Security, the federal government's largest program.”
http://www.foxnews.com/politics/2012/08/07/new-retirees-receiving-less-in-social-security-than-paid-in-marking-historic
It was the youth vote, "young grads," along with the hyphenated-voters, who helped elect socialist Barack Obama, the president who gave them ObamaCare and expanded welfare.
Among 18- to 29-year-olds, Obama was able to win Hispanics, blacks and women by double-digit margins, similar to his margin of victory in those groups for all ages. The only sub-demographic group of 18- to 29-year-olds that Romney won was whites, with 51 percent, Pew found. That group went for Obama 54 to 44 percent in 2008…
Young voters favored activist government and gay marriage, with 65% saying “illegal aliens should be given a chance for legal status.”
You have to pay for what you vote for.
What about the University of AKAK? We are not going to take any shit from anyone. One thing I have learned is that when the chips are down you had better have some friends in low places. Another thing I learned is that you do not leave a man down.
http://www.boatingaccidentnews.com/have-you-been-banned/
Mani,
akak hasn't been banned. He left on his own. I know this to be true. We have communicated about this through email and I take him for his word. Really.
Miffed;-)
Not to forget there's tons of free stuff out there education-wise like TED, Kahn Academy, ZH and so on. Even YouTube has lots of classes that professors have downl free.
Campus education is more for socializing in most cases with the exception of very higher ed where you may need a lab at MIT or similar.
Thank goodness for web sites like ZH that have lots of valuable education for free.
You're confusing "gaining knowledge" with "education".
Students must opt for education because it comes with a "certificate". Knowledge does not.
If a company wants to hire knowledge, they need to assess it. So they hire the educated instead, because they are "certified".
Back in the olden days we had guilds and apprenticeships for building skills and gaining knowledge. Now we have classroom time and "certificates".
I once taught at a community college (1 semester was all I could stand). All the school was interested in was my degree ... which they diligently verified. And since it was in engineering instead of education, I was paid 1/2 as much as those with education "certificates" ... even though the class was computers and I had 40 years experience programming.
I did achieve one piece of praise from the school librarian. She said she could pick out my computer students. They knew how to use the computing resources in the library. Those taught computers by "certified educators" had to get "their knowledge" through hand holding from the librarian assistants.
Have you ever gone to a college graduation ceremony? The predominance of "honors" students have "education" degrees.
Go figure.
"And what academic credentials qualify you for this position?"
"I'm a BSD on the Zerohedge comment boards. Betta recognize!"
university presidents year of 2011-2012
president of university of minnesota made $653,235
OHIO STATE, E. GORDON GEE, $1,899,420
http://www.twincities.com/ci_23228549/u-president-ranks-33rd-survey-scho...
I spent four and a half years getting smashed to somehow stumble my way into a degree;only to find out the one thing I learned was a term in Psychology 110 called the 'foot in the door phenomenon'.
After spending five years working bullshit jobs, I went to a casino dealer's school and paid 1200 bucks to get certified to deal blackjack and poker.It took two and a half months to complete instead of four years. Now I have a job that's better than 90% of what college grads are going to get and it's a ton of fun.
Anyone who does organized public education is a sucker.
here is a more recent find on salaries...
anyway they make too much money and one of the reason for higher tuition now... compared to the past
http://www.businessinsider.com/highest-paid-college-presidents-2013-12#!KPNsl
This is disgraceful.
Well you know what I have to say about it.
Up my FAFSA Yellen M'Fer.
Actually only the students that aren't 4.0 lose. The best students get fully subsidized. That is one of the reasons I go to college. It is paid for. So I don't have to take loans. To me it is a job that I get paid for doing what I like.
I even applied to live in the sustainable (Agenda 21) globalist youth camp at UCLA. No I've not been to a FEMA rendition center. I'm on your side.
But there is no inflation, because interest rates for student loans are low
So how can they do this if there is NO Inflation.
Or is just No Inflation when it applies to them,
Which means this CPI thing is just a crock of sh1t.
PAY DA CARTEL TO STUDY AVAILABLE-FOR-FREE STUFF, BITCHES !!!
The best paying jobs don't come with a college degree. You don't need a degree to get a securities licesne, create money out of thin air, and quietly take it off the board and retire at a young age with mansions, expensive cars, women and boats.
Think: gateway drug
It's all part of the bigger system to brainwash all young Americans with the concept that
1) Everybody has a huge outstanding loan: you, me, companies, the government - simply EVERYBODY! It's natural! And it's ok!
2) Since all of this is no problem, why don't you also get a loan for "buying" a house, a car, heck - even a flatscreen TV?
3) Interest rates are low, so it doesn't matter so much whether your loan is 10k or 100k
So as soon as students graduate, the brainwash cycle will have also been finished and they will be perfectly fit to be integrated in the system. All hamsters - off you go to your hamster wheel!! Keep running and keep the economy running!!
And who is running "the system"? I have no idea. But if it's true that "money rules the world", then I would be very surprised if these guys wouldn't have anything to do with it: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014... It's certainly not Yellen, Lagarde or Obama...
Nobody is considering the upside of these higher tuitions. More sugar babies! I'm sure the number of college girls looking for a sugar daddy to help pay their tuition has increased by more than 700%. True fact.
Sugar Daddy bitches, or the graveyard with no head attached, take your pick!!
A student loan is designed to help students pay for university tuition, books, and living expenses. It seems that many students are borrowing against their future at an almost unimaginable pace, unfortunately the money is often used for things other then education.
Too many young people and others taking student loans "living expenses" go on to include cars, trips, vacations and more. All this has a very dark side that will effect the lives of these borrowers going forward and has the potential to grow to crisis dimensions in the future.
In many ways society is encouraging young people to take on this debt and to hock their futures. This is akin to the, "I will gladly pay you Tuesday for a hamburger today" way of thinking. More on this subject in the article below.
http://brucewilds.blogspot.com/2012/04/students-borrowing-against-future...
Government loans are a driving force behind tuition inflation. Instead of extending the policy of holding Stafford Loan interest rates very low, it might be better to let rates go back up and redirect the cost of the subsidy into an expansion of Pell Grants and refundable tuition tax credits.
This policy would keep the positive distortion associated with Stafford Loans such as allowing people get more education without the negative ones such as diminishing price sensitivity which causes them to borrow more money. The clear instinct of many politicians is to defend cheap Stafford Loans in an effort to be on the side of education. But subsidizing education need not mean subsidizing borrowing.
We would be better off letting student loan interest rates rise and searching for other ways to drive down the cost of higher education with innovations like integration of more online classes and addressing the inflated price of books required for educational courses. More on the subject of these loans in the article below.
http://brucewilds.blogspot.com/2013/07/interest-in-and-on-student-loans....
This whole thing is total BS. Take a look at any state run university's Comphrehensive Annual Financial Report (CAFR) and you will find they are sitting on piles of cash in the form of various investments. The same thing applies to all States and most large municipalities. This issue has been hidden from the public for decades to maintain the status quo and the power that comes with the ability to manage these hidden funds. Of course, Wallstreet (particularly the vampire squid) is prominent in maintaining this farce due to the huge fees involved in "managing" the various investments. Take 25% out of any university's hidden investments to cover the costs and tuitions would be near zero for all students. The returns on these investments alone would be sufficient to reduce tuitions to levels of 40 years ago without having a negative impact on anything, other than the fees that would not go into the pockets of the banksters involved.