Skip to comments.Richard Vedder: The Real Reason College Costs So Much
Posted on 08/25/2013 7:37:58 AM PDT by SeekAndFind
Another school year beckons, which means it's time for President Obama to go on another college retreat. "He loves college tours," says Ohio University's Richard Vedder, who directs the Center for College Affordability and Productivity. "Colleges are an escape from reality. Believe me, I've lived in one for half a century. It's like living in Disneyland. They're these little isolated enclaves of nonreality."
Mr. Vedder, age 72, has taught college economics since 1965 and published papers on the likes of Scandinavian migration, racial disparities in unemployment and tax reform. Over the last decade he's made himself America's foremost expert on the economics of higher education, which he distilled in his 2004 book "Going Broke by Degree: Why College Costs Too Much." His analysis isn't the same as President Obama's.
In 1964, federal student aid was a mere $231 million. By 1981, the feds were spending $7 billion on loans alone, an amount that doubled during the 1980s and nearly tripled in each of the following two decades, and is about $105 billion today. Taxpayers now stand behind nearly $1 trillion in student loans.
Meanwhile, grants have increased to $49 billion from $6.4 billion in 1981. By expanding eligibility and boosting the maximum Pell Grant by $500 to $5,350, the 2009 stimulus bill accelerated higher ed's evolution into a middle-class entitlement. Fewer than 2% of Pell Grant recipients came from families making between $60,000 and $80,000 a year in 2007. Now roughly 18% do.
This growth in subsidies, Mr. Vedder argues, has fueled rising prices: "It gives every incentive and every opportunity for colleges to raise their fees."
Many colleges, he notes, are using federal largess to finance Hilton-like dorms and Club Med amenities. Stanford offers more classes in yoga than Shakespeare.
(Excerpt) Read more at online.wsj.com ...
From whence shall we expect the approach of danger? Shall some trans-Atlantic military giant step the earth and crush us at a blow? Never. All the armies of Europe and Asia...could not by force take a drink from the Ohio River or make a track on the Blue Ridge in the trial of a thousand years. No, if destruction be our lot we must ourselves be its author and finisher. As a nation of free men we will live forever or die by suicide. —Abraham Lincoln
The evidence of the huge federal windfall to universities via student loans is obvious if you travel back to your alma mater. I graduated from Mizzou in ‘73. When I was there, the facilities were pretty spartan. The engineering buildings hadn’t really been updated since they were built early in the 20th century and had NO A/C (pretty tough to take in Missouri). The labs were mediocre and the test equipment ancient. I visited about 20 years later and everything had been redone, spare no expense. Everything was gold-plated and magnificent.
You see this on every campus in the country...non-stop construction, fancy buildings and sports facilities going up everywhere. All the money for that construction simply would not be available if FedGov weren’t trying to “help make college “affordable.” Have tuition rates gone down? Of course not...they’ve risen at double the general inflation rate for 30 years.
FedGov corrupts and ruins everything it touches.
I suggest that a certain fraction of the endowment be spent every year on higher education or the difference be taxed. We can argue the specific numbers, but it should end up something like 6-8%. I think of it as a kinder and gentler version of Henry the 8th’s dissolution of the monasteries. The rationale is similar. Higher ed and particularly high end higher ed, serves their own interests, and not our country’s best interests. We need NO departments of [GLTB, Women’s,Asian, ... name your aggrieved group] “studies” - none at all. Federal monies supporting said institutions are not in the common interest. And so on.
OK, time for a little history lesson from the previous Democrat Administration and its deal on College subsidies. The President who campaigned as “The Man from Hope”, W.J. “Bill” Clinton, created the College-oriented tax credit known as the “Hope Credit” (strange name, no?)
Created in 1998, its purpose is, supposedly, to make college education more affordable. However, the effect is really to increase college enrollment and to direct more money to the “higher education establishment”, a massive supporter of Democrat and further left ideologues. Why do I claim that? Well as a professional tax preparer (then and now), it became immediately apparent that being a 2 tax year credit, it encouraged behavior detrimental to the individual students but was obviously beneficial in keeping warm bodies in college classroom seats.
This behavior pattern starts with the high school graduate saying what next? If this person is obviously college material, then they have already started the application and scholarship process (with their parents) years back. On the other hand, the marginal student, with the Hope Credit, WASTES another 2 years getting a start in life, frequently with no benefit.
What is offered in the first 2 years of most colleges? Survey courses, degree fillers and much that has no specific orientation to actual post-college work. I have had these kids come in and claim the 1st year’s credit on a single fall semester of college and still take it in spite of my (then) warning of using it too soon. Frequently, they did not even get full credit but since it was ‘free’ money, it was hard to resist!
Why is it a scam? It was not offered for trade schools where education has a defined purpose. It was not limited to the years in college when actual education/training was taking place (final 3 years) or even to a full year of college attendance. So in effect this idiot piece of social engineering and education establishment subsidy extended childhood for little benefit to the nation and these marginal students!
Of course, the liberal answer to this limitation of 2 years is classic in the demonstration of excess. In response to the 2008 economic crisis (and the education establishment’s desire for more and better), the Obama Administration and Democrat Legislature extended the Hope Credit on steroids as American Opportunity Tax Credit (part of the American Recovery and Reinvestment Act of 2009!) Now at 4 years coverage and even a refundable part to increase the tax refund! Still limited to “post-secondary higher education” though!
Higher Education INDEED! Pardon my scream but this is your tax dollars at play!
>>”He loves college tours,”
Of course he does.
It’s natural to migrate into the company of like-minded parrots when all that’s nailing him to the perch are Ivory Bullshyte and Buzzwords.
It keeps younger, lower-wage workers out of the labor pool.
Like extending secondary education to 18 years of age, it's nothing but another union protection strategy.
I’m in the engineering field and have seen salary listings showing those working at universities are among the highest.
I can admit its possible they have to pay more to attract instructors/professors (and they need Phds and industry experience), but I’ve known too many who gladly spout off about how smart they are...
The skeptic in me says its a continuation of the institutional indoctrination from govt schools and quid pro quo for teaching with a leftist slant.
But just cuz I’m paranoid doesn’t mean they aren’t out to get me
I have seen the same thing at the University of Arizona. The College of Engineering was the same as The U of Missouri. Now the U of A has gold plated everything. The U of A has also gone from a somewhat conservative school in the 1970’s to hardcore left today.
The solution is to make colleges ‘profit centers’ by the government one-time funding the colleges for a 4 year education and require the students to pay back the college. If the college provides a good education, the students will pay back the college with interest. Good colleges will keep surviving. On the other hand, if students are unable to pay back the college, the college will go out of business. Colleges will only fund good students.
Looks like easy A's and any answer is correct on a test. Just show up and party for 4 years and get a degree. I'll call it the Earl Campbell standard, he graduated college without being able to read or write, but he could play football. Good 'ole boy "Bum" Philips had to personally teach him so he could follow the play-book. He's done well after that.
they continually add new majors with accompanying administrative expenses
they get huge government grants to expand when they need to reduce their size.
They overpay their professional staff and expect little of them - and their professors do little.
and on and on!!!
Student loans are basically a money laundering scheme to benefit the leftist college administrators and teachers. I paid $460 per semester tuition to commute to the University of Pittsburgh in 1975 - 76. It was over $1000 by the time I graduated and has risen every year since. My daughter is now attending a state university and pays nearly as much per credit hour as I paid for my whole first semester. It wouldn’t cost nearly so much without easy availability of gov’t loan money - most of us just couldn’t afford it. So the gov’t money goes to the leftist colleges to fund their fancy new buildings and lavish salaries and perks, and it comes from people like us that would not want our money so spent.