Posted on 10/18/2003 7:08:37 AM PDT by MeneMeneTekelUpharsin
A combination of rising costs and plummeting investments has forced several states to suspend enrollment in prepaid tuition plans designed to protect families against spiraling expenses at public colleges. Ohio announced last week it was suspending its program for a year because the state was losing money. West Virginia, Kentucky and Texas also have temporarily cut off new enrollment, and earlier this year Colorado halted enrollments in its plan completely.
Prepaid tuition plans allow families to purchase tuition credits -- based on the current rates -- in lump sums or monthly payments. A state then pools the money in long-term investments, hoping that earnings will match or exceed the cost of tuition years later when a child is ready to attend college. Now, the problem is tuition is rising faster than investment earnings. Charles Bockway, a spokesman for the West Virginia Prepaid Tuition Plan, said the confluence of tuition increases topping 10 percent and the slow economy, which hurt schools' investments, caught many financial experts by surprise.
"Our research shows this has never happened before," Bockway said. "Typically, when you had periods of high tuition growth you had periods of high inflation. And during high inflation times you earn a lot in bonds and the stock market is doing well."
No solution yet
In an attempt to slow the tuition increases, Rep. Howard P. McKeon (R-Calif.) on Thursday introduced a bill that would withhold federal money from colleges that raised tuition much faster than inflation. Every state in the country offers programs that provide tax incentives for college investment, and -- coming into this year -- 20 also provided investment options tied to current tuition prices. Georgia's plan, started in April 2002, allows investments to grow free from federal and state income tax. The College Savings Network Plan, an affiliate of the National Association of State Treasurers, said 1.7 million Americans are invested in prepaid plans.
In places where programs have been suspended, states are allowing those with money already invested in prepaid plans to keep the funds there, although they also are being given other investment options. Dr. Paul Kolodzik, an Ohio emergency room doctor, stopped investing in his state's fund before it was suspended because escalating tuition was causing his premiums to rise. "For them to step back and take a breather, I don't know that it's such a bad idea," said Kolodzik, the father of three. "Because the program's not working right now." Enrollment in the Texas Guaranteed Tuition Plan was suspended until the state's public colleges and universities stabilize tuition, said spokesman Andy Ruth. In May, the Texas legislators deregulated tuition and allowed each public school to set its own rates.
Craig Tounget, executive director of the Texas Parent Teacher Association, said the full significance of the suspension won't be known until the program is reinstated. If the cost of tuition "comes back a lot higher, I might hear a lot more complaints," he said.
Rebound predicted
Diana Cantor, chairwoman of the College Savings Plan Network and the executive director of Virginia's college savings program, predicted the prepaid programs will rebound along with the investment markets. But the president of the National Association of Student Financial Aid Administrators said suspended tuition plans are another signal that the burden of financing colleges is being shifted to families.
Without an education, the vast majority of individuals (not in possession of exceptional determination) are not going to be able to get decent jobs or somehow make a decent living. The entire standard of living in this nation is going to deteriorate and we will have a small enclave of very well-educated individuals who have it all--just like Latin America. And, those individuals will have the funds to educate their children, thus ensuring a dynastic control of wealth.
This has led not only to grade inflation (nobody wants to be the one to scuttle an "Honor" student's "future") but dramatically increased applications.
And what happens when "Demand" exceeds Supply?
Prices go up.
Let the number of students fall to those truly wanting (and deserving) furthering their education and it will then be priced at its true worth.
And, those individuals will have the funds to educate their children, thus ensuring a dynastic control of wealth.Um, no. If this were true most of our nouveau riche would be ivy league alums: they are not. Read C. Wright Mills' (in)famous book, _The Power Elite_. Education, accidents of birth etc. are unreliable predictors of who gets what and how much.
I don't know if they will be able to extend past the view of being mere "tech schools" instead of "universities", but if neither state nor private universities are able to provide an education at an affordable price, someone will step in to fill the gap.
BINGO! We have a winner.
The reason we went the investment route rather than the prepaid route was that I simply have no faith in the politicians to keep their word.
College administrators view the public as witless proles who have no choice but to buy their services. Personally, I am coming to the conclusion that a good vocational business degree and starting a small business provides a much better chance for long term success.
I agree with you on that. I got a four-year Englsh degree and then a vocational business degree and started my own small business years ago. It has been a lot of work, but has rewarded me handsomely. The professionals who work through my company all do very well with just their vocational training and no college education. On the other hand, when we need a new secretary, we are flooded with resumes from people with four-year sociology, psychology and English degrees. I think the high-school counselors need to direct more students to vocational training, even if they are A students as I was.
Of course, another problem is that many people have to go to college to get the education they should have gotten in high school.
Every year, chances are pretty high that you'll have medical expenses. Few of us encounter education-related expenses every year.
"The reason higher education costs are increasing faster than inflation is the same reason health care costs are spiraling: consumers no longer pay for it. Everyone gets subsidized: grants, subidized loans etc., etc. So institutions are insulated from market pressures to adapt or reform or control their costs."
I agree 100 percent. The best way to solve our cost issues in education is to completely privatize it and provide a voucher system for the parents. This would solve the quality issue as well.
As far as health care, make insurance illegal except for "catastrophic" (over $10,000 in a single year)and return to the days when the patient paid almost all of his medical expenses directly to the doctor or hospital. The attorneys would have to find another pile of easy money to go after instead of the insurance company vault and we all would be better off.
Have you always been grossly ignorant? Oh I forgot.. you are eductated... that explains it!!!
The auto industry and its high wages were invented by an uneducated Henry Ford. He completed the 8th grade. And was the man who in one fell swoop doubled wages for factory workers. Where were the Harvard business graduates when the car for the common man was invented.
It was Thomas Edison who never finished the first grade that invented the light bulb, motion pictures, the phonograph and many other things. Where were the MIT graduates when these inventions were created.
The airplane was invented by two uneducated bicycle repairmen. Where there the educated engineers when it came time to fly.
Why was the greatest invention of the last 30 years done by two College dropouts. Jobs ans Wozniak invented the PC. The Cal Tech and MIT people at the time were writing papers on how it could not be done. The college professors were giving lectures that a C compiler could not be created for the PC when a drop out who never took their course proved them wrong by creating one. It was college drop out Bill Gates who created the huge PC software industry. It is the great college graduates that tend to ruin companies not grow them.
A great education teaches one to do what has always been done. To create jobs and change the world for the better requires thinking outside the box. Education is entirely made up of in the box thinking.
Back in the 1980s when the media was calling Japan the economic miracle that would destroy us economically, there was constant credit given to the Japanese educational system. I wrote a column with the kicker line that it was evident that the Japanese were getting all the education they were paying for. The good news for us was that WE WERE NOT. Look at what the Japanese educational system has wrought.
It takes our educational system 16 years to totally destroy creativity and make normally creative people into well rounded students totally endowed with the innate desire to make no waves.
Without an education, the vast majority of individuals (not in possession of exceptional determination) are not going to be able to get decent jobs or somehow make a decent living.
I clearly stated that individuals with drive and determination can accomplish in life. Did I anywhere say a person HAD to have an education? And, times have changed rather dramatically. The vast majority of individuals who do not get an education end up in poverty. True statistics show that result. Yes, a FEW exceptions to the rule do well in life...but they are NOT the norm and certainly not the majority.
Last, but not least, you like many others on here are making a huge mistake. You make perjorative statments about individuals who are supposed to be your allies, thus creating new enemies among your own friends. Very foolish and definitely self-destructive.
P.S. My well-meant advice to you is to NOT ever do that again.
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