College: 21st century robber baron
Adam Newman | Sunday, October 13, 2013
There are few assets more valued in the 21st century than a college education. The current unemployment for those with a Bachelor’s or advanced degree was 3.5-percent as of August 2013 versus 7.6-percent for those with only a high school degree. Compared to high school graduates, college graduates earn up to $1,000,000 more in their lifetimes, live longer, have more retirement security and have lower divorce rates. While a college education seems essential, college presents the average American with a major issue: cost.
According to Bloomberg, college costs have risen 1,120-percent, outpacing inflation and virtually every other consumer good over the past 35 years. Rising costs eat away at the incomes and savings of families, who have seen incomes rise just a fraction of that. In 1999, the cost of a year of public college amounted to 39-percent of a family’s annual income, but by 2007, it rose to 55-percent. To put it simply, college is becoming unaffordable.
Perhaps most significantly, rising college costs are saddling our generation with a load of debt. Currently, the total amount of student loan debt stands at $1.2 trillion, which is more than the total amount of credit card debt and auto loan debt. However, with only 50-percent of college graduates able to find jobs upon graduation, many will not be able to afford to pay back the average student loan of $23,300.
Notre Dame is no saint when it comes to the cost of college. Between 1993 and 2013, tuition (which does not include room and board, books etc.) increased from $14,650 to $44,605, or more than 300-percent over two decades. Significantly, the 2013-2014 school year is the first year the total cost of a year at Notre Dame (including room and board, books etc.) passed $60,000, according to the Notre Dame website. Perhaps even scarier, if one were to take the average rate of growth for Notre Dame tuition increases over the past decade, 2003-2013 (5.23-percent), and then project it into the future, a year of Notre Dame education will exceed $70,000 by 2016, $100,000 by 2023 and $150,000 by 2031.
There are many reasons for the rise in college costs. One of the main reasons is the construction of new buildings, institutes, departments etc. Unfortunately, colleges have used much of their capital spending to construct buildings not related to academics, such as very nice dorms, cafeterias, sports arenas and gyms. Another reason is the increase in the number of administrators working at universities in addition to high administrative salaries.
Consumers tolerate these increases due to the priority that people place on college and the poor ability of consumers to judge the quality of the academic experience. People generally understand the importance of college in a child’s future. As a result, they are willing to spend more and more and more in order for their children to attain it. However, students and parents focus too little on academic factors that can help a student’s experience such as the size of classes, the percentage of students taught by tenured faculty, academic resources, etc. Nor do they focus on indicators of long-term value, such as the career resources offered, the percentage of students who receive jobs after college, the activeness of a college’s alumni network etc. Instead they focus on non-academic factors such as luxurious dorms, swimming pools, weather, cafeteria food and others.
College is extremely important to the personal success of its students. However, the importance of a college education does not justify high annual cost increases. However, much of the increase has been due to new buildings and to an increase in a vast bureaucracy. This has allowed higher education to become one of the most wasteful sectors in the American economy.
In my next article, I will outline eight ideas that Notre Dame and other colleges can use to lower costs while maintaining the quality of a college education, so that more students in pursuit of the American Dream don’t walk into a nightmare.
Adam Newman is a senior studying political science. He can be reached at [email protected]
The views expressed in this column are those of the author and not
necessarily those of The Observer.