College Con?

, Malcolm A. Kline, Leave a comment

Left unspoken in much of the debate over the exploding cost of higher education is the degree to which college and university administrators themselves may be padding their bills.

“I was at the University of Kentucky and walked through a half-empty student center to give my speech in a room with fresh-cut flowers and a plate full of food and the students were going to the state capitol the next day to protest tuition increases for the third year in a row,” writer Anya Kamenetz said recently. Kamenetz, author of Generation Debt: Why Now Is a Terrible Time to Be Young, spoke at the American Enterprise Institute.

The average tuition at a four-year private college is now $21,000 a year, Kamenetz points out. At a four-year public college, $5,500 is now the average tuition.

“Now, two-thirds of students borrow their way through school compared to half in 1993,” Kamenetz said. Perhaps not too surprisingly, one-third of white Americans answering the Current Population Survey actually complete college. Among blacks, that percentage is 13 and among Hispanics, 8.

Of those in college, 56 percent earn their degrees in six years. “Six to seven years time-to-degree is typical,” according to Susan Dynarski of the National Bureau of Economic Research.

Dr. Dynarski, an economist at the NBER at Harvard, spoke on the same panel with Kamenetz. Despite the mounting costs, Dr. Dynarski says that trends show that a college education is worth the sacrifice.

“From 1972 to 2005, the average earnings of a high school dropout dropped from $40,000 to $20,000,” Dr. Dynarski says. “The wage gap between high school graduates and college graduates is growing.”

“The payoff to college has grown dramatically.”

“Education is an investment,” Dr. Dynarski says. “Incur costs now.”

“Earn returns in the future.” “The so-called ‘investment’ in education is paid for by the lender, the borrower and the government,” Kamenetz said.

Dr. Dynarski ignored a point by a reporter from U. S. News who noted that the amount spent on college would earn faster real returns on an actual financial investment.

The Harvard economist also dismissed as “overblown” the conclusion that tuition aid packages heavy in government spending drive college costs upward. She does not see how this cash influx gives parents an “incentive” to spend more on college.

What she did not acknowledge is the reward this cache promises to college budget officers. Historically, every time public agencies and banks raise the level of tuition assistance to meet the cost of a college education, college and university tuition and fees go up even more sharply to exceed the amount of the aid package.

“Fred went to UC Santa Cruz and got $3,000 in grants and aid to cover tuition of $13,000 per year,” Kamenetz reported of one of the interview subjects in her book. “When I last talked to him, he was going to a community college.”

Kamenetz talked to 100 students when compiling the research for Generation Debt. Some, like “Fred,” asked that their names not be used.

Administrators may be overselling the benefits of higher education as well. Kamenetz took a sharp look at their claims and found them somewhat misleading.

“College is supposed to give you a one million dollar bonus in lifetime earnings,” Kamenetz says. “But fewer than half of all college graduates actually earn this.”

“And, earnings for college graduates actually fell between 1994 and 2004.” “Real earnings are level but we have increasing debt,” Dr. Dynarski said. The cost of college is not likely to make that financial picture brighter.

Dr. Dynarski found that the debt from attending a private university is $19,000. The bite from a public university is only slightly less at $15,000.

America’s standing among the educated of the world also fell during the time frame laid out above, Kamenetz found. The U. S. is competitive in its pricing of tertiary education, she discovered, through studying data compiled by the Organization for Economic Cooperation and Development (whose member nations include all of the NATO allies and Japan).

“The U. S. spends twice the OECD average on education,” Kamenetz says. “Currently, among the OECD countries, the U. S. ranks seventh in college graduates and ninth in high school graduates.”

“Thirty-five years ago, the U. S. was number one.”

Malcolm A. Kline is the executive director of Accuracy in Academia.

 

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