The soaring price of a college education has continued to make news.
States, caught with revenues dipping, have reduced support so the many state universities (California’s included) have raised tuition to close the budget gap. The private institutions have steadily marched tuition upward for decades. One study showed that the cost of attending higher education has soared 112 percent since 2000.
The Wall Street Journal reported last week that the higher costs are hitting more affluent families who make six figures, but find themselves choking when the institution informs them of just how much they are expected to contribute the their children’s higher education costs. Borrowing for these families has increased by 25 percent in just four years.
For instance, the cost to attend Notre Dame is $58,000 annually. Even with a very generous 50 percent grant, that’s still pushing $110,000 for the family. Stanford, for tuition alone, is $41,250, while fees at Cal are $11,200. The latter numbers do not include books and room-and-board.
That leading to the welcome change of parents asking just how much value comes with a degree from that top tier university—particularly if it’s a liberal arts degree instead of engineering, computer science or another hard science.
State legislators are starting to push back against the fee increases—of course doing so without providing any additional money. Some studies are showing that both private and public universities have grown administrative and support staff considerably in the last two decades without adding teaching personnel. That’s overhead that can and should be chopped.
It’s well past time that the universities tightened their belts instead of simply raising rates.
Incidentally, President Obama has floated a truly ugly idea. When the Democrats controlled both houses of Congress, the federal government took over the student loan program and eliminated the private sector.
So, what is the president proposing—that graduates who owe private institutions for student loans be able to declare bankruptcy and eliminate that debt. The law was changed not that long ago so people could not use bankruptcy to wipe out college debt or simply walk away from the obligation. Now the president is proposing changing that—but only for debt held by private firms, not for debt issued by the government.
Sounds painfully similar to what he did to the bondholders in the engineered auto industry bankruptcies.