The True Costs of College
Over the past several decades, college tuitions have ballooned, negatively impacting parents, students, and recent grads who are struggling to pay back student loans. The inflation-adjusted average sticker price for public college has doubled since 1980. For private colleges, it has nearly tripled:
Many students pay less for college than published sticker prices because of discounts, scholarships, and financial aid. Thus, David Leonhardt of the New York Times argues that sticker prices exaggerate the cost of college. However, the truth is that society pays for all of these costs and more. Whatever students and parents don't pay, taxpayers and donors do.
In fact, the full costs of colleges far exceed their sticker prices. The average annual sticker price at 4-year public colleges is $20,050 for in-state students and $25,657 for out-of-state students. In contrast, the average spending per student at these colleges is now $44,965 per year—roughly twice their sticker prices.
For in-state students at 2-year public colleges, the difference is much larger. Their average annual sticker price is $3,243, while the average spending per student is $16,512—five times their sticker price.
The difference declines considerably at 4-year private non-profit colleges, but the costs to society still surpass consumer prices. Their average sticker price is $43,139 per year, while the average spending per student is $58,794—36% higher than the sticker price.
The soaring costs of college are also evidenced by the fact that outstanding student loan debt is now larger than any other type of consumer debt except for mortgages. Furthermore, the 90-day delinquency rate for student loans surpassed that of credit cards for the first time, and it is now 47% higher than any other major type of loan.
Taxpayer Funding of Higher Education
The burden of paying for higher education is becoming a major campaign issue, and Democrat contenders like Elizabeth Warren and Bernie Sanders are blaming the situation on reduced government funding. Media outlets like the Washington Post and the Associated Press are telling the same story. In the words of the AP, "Year after year, colleges say they have to raise tuition to offset state funding cuts. Students have shouldered the cost by taking out loans, pushing the country's student debt to nearly $1.6 trillion this year."
Like the AP — Warren, Sanders, and the Post focus on state funding, which declined after the Great Recession. However, they fail to mention that federal funding rose by more than state funding declined. Looking at the big picture, data from the U.S. Bureau of Economic Analysis shows that inflation-adjusted government spending per college student has risen by nearly three times over the past century and is currently greater than it has ever been:
In 1959, the earliest year of available data, taxpayers contributed $3,550 per student. This climbed to $10,182 per student in 2017, the latest year of data. These figures reflect the inflation-adjusted averages for all higher education students, not just those who receive the money.
Also, the portion of recent high school graduates (aged 16–24) enrolled in college rose from 45% in 1960 to 67% in 2017. Hence, taxpayers are not only paying more per student — they are also paying for more students.
Large portions of these students are not graduating, especially those who attend highly subsidized schools like community colleges. This lessens the societal benefits of investing in education. Among full-time, new college students who entered a 2-year public college in 2014, 25% graduated from the same institution within 150% of the normal time required to do so.
Perhaps most importantly, even among graduates of 4-year colleges, many are not learning practical skills that increase their productivity, which is the main driver of living standards. In 2014, Professor Richard Arum of New York University and Assistant Professor Josipa Roksa of the University of Virginia published a study using the Collegiate Learning Assessment to measure the "critical thinking, complex reasoning, and writing skills" of 1,666 full-time students who entered 4-year colleges in the fall of 2005 and graduated in the spring of 2009. The authors found that if the test "were rescaled to a one-hundred-point scale, approximately one-third of students would not improve more than one point over four years of college."
Cost Drivers and Outcomes
Contrary to the Democrat/media narrative, students and parents aren't paying more for college because government funding has declined. They are paying more because colleges have become more costly.
Along with these cost increases, academic time investment by full-time college students has fallen. During the school year, they are now spending about 50% more time on leisure activities and sports than on academics. As reported in a 2011 paper in the Review of Economics and Statistics:
Determining the root causes of increasing college costs can be difficult because association does not prove causation. Beyond the actions of people who manage higher education, other variables are almost certainly at play.
One of these factors may be increased government spending on colleges, which creates a cost disconnect with consumers. Normally, people will not buy products or services unless they receive adequate value for their money. However, when taxpayers pick up part or all of the tab, this can create an effective monopoly because the costs don't fall directly on consumers. Per the academic textbook Antitrust Law:
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James D. Agresti is the president of Just Facts, a think tank dedicated to publishing rigorously documented facts about public policy issues. Article shared by Issues & Insights
Tags: James D. Agresti, Issues & Insights, Liberals, Blame The Wrong Culprit, For Rising College Costs To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service and "Like" Facebook Page - Thanks!
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