For years, colleges have treated their students as consumers, building ever more elaborate facilities and hiring ever more dazzling star scholars to lure applicants. They did this regardless of how high these investments drove tuition, since easy credit meant families could stretch to cover the costs. But with the credit crisis come signs that the college bubble is bursting, as “consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college,” the Chronicle of Higher Education suggests. Further evidence: The New Yorker aims to deflate creative writing programs, “designed on the theory that students who have never published a poem can teach other students who have never published a poem how to write a publishable poem.” [%comments]
The College Bubble
TAGS: Education, university
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I think the decoupling of IQ and schooling is definitely a problem.
Vaguely related, traffic fatalities went way down when the economy tanked. Much more than should have for the decline in driving.
http://seattletimes.nwsource.com/html/businesstechnology/2008988776_aphighwaydeaths.html
Speeds and fuel efficiency improved too.
I think it’s likely due to the relationship of intelligence and income. The bad economy didn’t just reduce congestion due to less cars on the road. It got the slow stupid drivers off the roads.
I doubt there are less drunks on the roads, just less stupid drunks.
Absolutely right. And note that this bubble has exactly the same elements as the housing bubble did -
- Easy access to credit regardless of the borrower’s credit-worthiness
- Policies aimed at pushing all Americans into college, regardless of whether appropriate
- A conventional wisdom that a college degree (like a house) is always a good investment
- An unsustainable mismatch between tuition increases and wage increases
I’m pretty sure economic theory suggests that tuition costs dictate college expenses and not the other way around? Derived demand, anyone?
And the term bubble doesn’t seem too appropriate either. Normally bubbles build up when people overvalue a product’s worth, then pop when a more realistic valuation emerges. In this case, perceived value of a college degree hasn’t changed; it’s just that cost constraints have decreased the quantity demanded.
I went to community college and then a public university to get my B.A. I then went to a public university to get my Master’s degree. None of these schools were my first choice, but they did the trick (i.e., gave me a good education) and I save a boatload of money compared to what I could have paid for 6 years of private university.
I really think college counselors at high schools should sit down with prospective college students and go over their options financially, including how much they’d need to pay back, how long it would take to pay those loans, and about how much it would cost per month. Then add in the likely take home pay and expenses a student would have while working. Could be a real wake-up call for those planning to go to private school without financial aid.
Beware the headline tuition number: most students do
not pay the published tuition rate because they receive
institutional grants. According to the College Board Survey,
2/3 of these grants come directly out of the tuition
proceeds of other students (not the endowment proceeds). This disparity between the headline tuition number and the average tuition payed is akin to a hidden
tax – and it is this tax that should be the focus of parents’ anger.
Another factor distorting headline tuition is the room and
board which has been growing at a rate faster than CPI,
housing, and owners-equivalent-rent for the last 20+
years. Eventually this number will become so distorted
that a tuition-only or off-campus rate will have to quoted
instead.
@ #3: This occurs even in public schools. The President of the University of Florida, for example, has publicly expressed a goal of raising undergraduate tuition as much as possible in order to build the facilities that will affect US News ranking.
Generally the sort of thing that raises a schools profile are not the same things that an undergraduate will directly be able to use or generally directly benefit from. I’m not saying these things are bad, but it is difficult for me to accept raising undergraduate tuition to build a cancer research lab.
UF also recently floated the idea of eliminating undergrad education and nursing majors.
Granted this is only an anecdote, as I attended UF for undergrad. It seems to me that there is a disconnect for University Presidents between the incentive to provide value as a public institution, instead incentivizing maximizing the metrics based around ranking withotu regard to undergrad cost.
IQ is indeed overrated, I’m a former Mensa member (didn’t feel like the membership gave me anything) and it took me 7 years to get my college diploma. Mainly because I’d never had to actually study before to get by.
I think the commenters here are actually railing against the english, history, art history, and similar non-specific degrees, which I agree are much too expensive at a normal college tuition cost. There’s hardly even money in journalism.
But college degrees are required for students going into science, engineering, and medicine. Can you imagine a high school student, who maybe knows a little bit of calculus at the high end, starting a career as a civil engineer?
I think the solution is to push sciences more; create 5- or 6-year law school programs that take the place of the liberal arts undergrad / law school pattern; and give would-be art history majors a museum pass and a guide to getting a job.
(As a disclaimer, I went to business school for undergrad, which was a colossal waste of time. But it did teach me how to solve problems.)