Print This!Quotes on the Rising Cost of College
"Federal subsidies for higher education began in 1862 with the Morrill Act, which provided grants of federal land to the states. The states were supposed to use the proceeds of land sales to create colleges focused on agricultural and mechanical studies, but 'many states squandered the revenue from this endowment.' In 1890, a second Morrill Act began regular appropriations for the land-grant colleges.
In 1917, Congress passed the Smith-Hughes Act, which funded the salaries of vocational education teachers. The Act imposed a range of detailed rules on funded schools, which created an early precedent for today’s huge burden of federal regulations on state and local education systems.
The first major subsidy for students in higher education was the Servicemen’s Readjustment Act of 1944—the G.I. Bill—which allowed World War II veterans to attend college at no cost. The G.I. Bill is widely admired legislation, but like all subsidy programs it led to substantial wasteful spending and abuse. Some colleges and universities used federal funds for extraneous purposes, such as swimming pools and stadiums, while others increased tuition rates charged to veterans. There were also cases of outright fraud by schools aimed at garnering extra federal funds.
In 1958, the National Defense Education Act was approved in response to the Soviet Union’s launch of Sputnik, which spread fear that the communists were getting ahead of Americans in technical skills. The Act authorized funding for higher education loans and fellowships, vocational teacher training, and programs in the K-12 schools, including math, science, and foreign language activities.
The year 1965 was a landmark for federal expansion into both the K-12 schools and higher education. The Higher Education Act of 1965 is the basis for many of today’s postsecondary education subsidies, including student loan and grant programs, college library aid, teacher training programs, and other subsidies.
Since 1965, the federal government has provided increasing amounts of funding for higher education as grant and loan programs have been expanded, and new programs added. Federal aid for higher education soared from $10 billion in fiscal 2000 to $30 billion in fiscal 2008. ...
The College Cost Reduction and Access Act of 2007 cut interest rates on federally subsidized loans in half, thus encouraging more student borrowing. The Ensuring Continued Access to Student Loans Act of 2008 increased the borrowing limits on certain student loans and gave the Department of Education new authority to fund student lending. In 2008, Congress increased Pell Grant maximums from $5,800 to $8,000 over time, authorized forgiveness of up to $10,000 in federal loans for people working in an area of 'national need,' and expanded other subsidies.
In 2009, President Obama proposed to eliminate all student loans through private financial firms guaranteed by the government, and thus make all federal loans 'direct loans' from the Treasury. He also proposed to increase Pell grants and to budget for them as an 'entitlement' program, thus putting spending on automatic pilot and not needed annual budgeting action from Congress.
Finally, a growing part of federal support for education comes through the tax code. In 1995, there were just 7 special breaks in the income tax code for K-12 and higher education. Today, there are 16 breaks, including the lifetime learning tax credit, Hope scholarship, education savings accounts, and education facility bonds. Politicians of both parties continue to offer more breaks, so the tax code will likely get more crowded with such giveaways."
“When people pay for something with their own money they tend to use it wisely and efficiently. When they pay for it with someone else’s money – and that’s what they do with federal student aid – they tend to waste it. That’s why we should be phasing out federal student aid, yet SAFRA would increase it.”
“There is evidence that federal loans have contributed to the rise of tuition. Tuition and fees at public and private four-year institutions have risen 38 percent in the past 10 years. In the past 22 years the cost of a four-year public college education has increased by 202 percent.”
“Since the HEA’s inception, Congress has added numerous programs, expanded eligibility to middle- and upper-income students, and increased institutional aid. The rising usage of federal higher education programs by middle-class and wealthy students is costly to taxpayers, contributes to student indebtedness, and fosters greater dependency on the federal government by individuals and institutions. Even more alarming, some researchers have found a link between government loan usage and the rising cost of education.
The HEA was enacted to help low-income students gain access to higher education, but it now subsidizes institutions and higher-income students. Taxpayers— three out of four of whom do not have a bachelor’s degree—should not have to subsidize wealthy and middle-class students and college graduates.”
“People who don’t have the interest or aptitude for serious college studies at age 18 may find that later in life they do, but those who enroll just because they think that the mere possession of a college degree is the passport to success will just dig themselves a financial hole.”
“Whereas students’ minds used to be the chief concern of colleges and universities, it is now more their bank accounts (more accurately, that of their parents and of the taxpayers). If students happen to learn anything useful while enrolled, that’s good, but if not, as long as they’ve paid their bills, that’s not the university’s problem.”
“Indeed, as the Bowen hypothesis suggests, higher education finance is a black hole that cannot be filled. The relationship between revenues and subsequent costs has a dynamic feedback effect. Higher education responds to higher costs by raising tuition and fees or initiating fundraising campaigns. But because costs in higher education are capped only by total revenues, there is no incentive to minimize costs. The costs go up in tandem with revenues.”
"There is plenty of evidence of bloat in academia. Consider congressional earmarks, which often fund dubious projects at colleges and universities. The number and value of educational earmarks has soared in recent years. In 2008, earmarks included $140,502 'to maintain healthful interscholastic youth-sports programs' at the University of Maine; $98,000 to build a 'Student Wellness and Recreation Center' at Heidelberg College in Ohio; and $1,915,934 for the Charles Rangel Center for Public Service at the City University of New York.
Here are some other signs that both students and institutions could tighten their belts:
- College students devote 3.2 hours to education on an average weekday, versus 3.9 hours to 'leisure and sports;'
- The six-year graduation rate for bachelor’s students is only about 56 percent, indicating that many students are not very serious about education;
- Almost half of full-time college students binge drink or abuse drugs, and the incidence of such behaviors is rising.
- Between 1983 and 2007, energy consumption costs at America’s colleges rose twice as fast as energy costs in the private business sector, indicating that colleges are not very cost-conscious."
“Tuition charges are rising faster than family incomes, an unsustainable trend in the long run. This holds true even when scholarships and financial aid are considered. One consequence of rising costs is that college enrollments are no longer increasing as much as before. Price-sensitive groups such as low-income students and minorities are missing out. A smaller proportion of Hispanics between eighteen and twenty-four attends college today than in 1976.”
“The rationale for government financial aid for students and higher education revolves around the argument that America is an egalitarian society that favors high social and economic mobility and promotes equal educational opportunity as a means to that end. Yet the large majority of the rise in higher education participation in America occurred before there was a major federal financial involvement. For example, in 1900, 23 out of every 1,000 Americans between the ages of 18 and 24 went to college. Compare it with 324 in 1970. While the GI Bill did impact enrollments for awhile after World War II, in 1970, total federal financial aid programs, including grants and loans, amounted to less than $1.6 billion, or less than $200 per student enrolled. A fourteen-fold increase in college participation occurred without a major federal financial involvement, excepting for a brief period after World War II when the GI Bill assistance was quantitatively an important factor.”
“The rationale for government financial aid for students and higher education revolves around the argument that America is an egalitarian society that favors high social and economic mobility and promotes equal educational opportunity as a means to that end. Yet the large majority of the rise in higher education participation in America occurred before there was a major federal financial involvement. For example, in 1900, 23 out of every 1,000 Americans between the ages of 18 and 24 went to college. Compare it with 324 in 1970. While the GI Bill did impact enrollments for awhile after World War II, in 1970, total federal financial aid programs, including grants and loans, amounted to less than $1.6 billion, or less than $200 per student enrolled. A fourteen-fold increase in college participation occurred without a major federal financial involvement, excepting for a brief period after World War II when the GI Bill assistance was quantitatively an important factor.”
“There is little doubt in my mind—and I've run regressions to verify it—that the soaring financial aid, in part federally financed, has contributed somewhat to the escalation in college tuition costs—which have been going up since Aristotle, by the way. One estimate I did suggests that each one dollar in grant aid leads to tuition fees somewhere around 35 cents higher than would otherwise be the case. Just as third-party payments in medicine have led to escalating health care costs, so increased student financial payments have contributed to soaring tuition costs.”
"The magnitude of waste and fraud in federal student aid programs became clear in the early 1990s. One scandal at the time regarded the trade school American Career Training Corporation in Florida. The school recruited new 'students' at food stamp offices and housing projects, and helped them take out loans. The school owners received tens of millions of dollars in federally guaranteed student loans, and simply pocketed much of it.
Many similar rip off schemes came to light. In 1991, a year long Senate investigation found that the federal student loan program is 'plagued with fraud and abuse at every level,' robbing taxpayers of billions of dollars. The investigation accused the Department of Education of 'gross mismanagement, ineptitude and neglect' and found that it had a 'dismal record' of dealing with loan abuses. The report found that losses from the student loan program totaled an enormous $13 billion between 1983 and 1990.
Another fraud scheme at the time involved 21 Jewish schools in New York State, which received millions of dollars in federal Pell grant money. The schools spent hardly any of the money on education. For example, one of the schools pocketed $3.2 million in Pell grants in a year and spent just $21,000 on education. Another scandal involved employees of Advanced Business College in Puerto Rico, who used Pell grant monies to buy high-end sports cars and real estate, wasting more than $3 million of taxpayer funds. Once again, auditors fingered the Department of Education for its poor management and oversight of loan programs.
In 1994, the department admitted that it was losing a staggering $3 billion or more annually to waste, fraud, and loan defaults, accounting for more than 10 percent of its entire budget. Education Secretary Richard Riley called the department’s oversight 'worse than lax.' For years the department had been wiring billions of dollars of loans and Pell grant funds to obscure trade schools based on unproven claims about how many enrolled students were qualified. Students and schools had to fill out paperwork to get the aid, but the Department of Education never verified it.
Some program changes have reduced the extraordinarily high fraud rates of the 1990s, but large amounts of funding are still wasted. One 2002 investigation revealed how easy it is to scam student loan programs: the GAO created a fake university in London with three fake students, and then applied for, and was awarded, $55,000 in federal student loans. And a 2005 investigation revealed that owners of a company called the CSC Institute stole $4.3 million of the $13 million it received in Pell grants."
"A scholar who has been thinking a great deal about efficiently providing higher education is Professor Vance Fried of Oklahoma State. While other people have been talking about the possibility of low-cost but high-quality colleges, he crunched the numbers and concluded that it is possible to have them at a cost of under $8,000 per year. With many schools charging three, four, five times that amount, that’s a revolutionary idea. "
"Now that people are examining the relative costs and benefits of college education more closely than ever, the argument that schools are charging substantially more than undergraduate education really needs to cost is gaining traction.
In his book Better/Cheaper College, Fried carefully calculated that a quality liberal arts education at a residential college only needs to cost around $8,000 per year. The revenues that most schools receive, however, is considerably in excess of that amount. Looking at the figures, Fried concludes in his paper, 'Based on tuition revenues alone, the average private undergraduate school makes about $5,500 per student. When donations and endowment income are added, profits jump to $12,800 per student.' That is twice the profit margin earned by for-profit University of Phoenix, he states.
Public universities are also very profitable. While tuition is generally lower (except for out-of-state students), they receive large amounts of state operating support. Fried calculates the average per student profit at $11,000. The 'profits' are spent on his list of educationally unnecessary items like low teaching loads and excessive compensation."
"Colleges and universities want your money. They shroud their avarice in flowing gowns and ivory towers, but they are not cradling knowledge so much as they are selling sheepskin. ...
My advice to a student thinking about shelling out $40,000 to $80,000 on a diploma?
Perhaps you should invest in a luxury car. They hold their worth better than diplomas and, if you ever had the need, you can live in them."
