Bacon's Rebellion

Democracy Thrives in Sunlight

College Exploitation of Students Still Intensifying — but at a Slower Rate

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by

James A. Bacon
in

America’s colleges and universities — raising a new generation of indentured servants!

Students heading to public Virginia colleges and universities this fall can take some consolation that the increase in tuition and fees they will have to swallow will be “only” 4.1% — barely half the previous year’s increase of 7.9%.

Adjusted for a 1.7% increase in the Consumer Price Index, that’s a real increase of “only” 2.7%. Thus, higher education in Virginia is still an inflation-ridden mess but the crisis has deescalated from Zimbabwe… to Argentina!

The numbers were released by the State Council for Higher Education in Virginia this afternoon, and Governor Bob McDonnell was quick to claim his share of credit for the moderating trend. Stated the governor in a press release (not yet online): “This year’s low tuition and fee increases were possible due in large part to … the allocation of $230 million additional general fund support to Virginia’s public higher education institutions in the 2012-14 biennium.”

Really? Public universities are getting an average of $115 million more a year, college affordability has become a national crisis, student loans have shot past the $1 trillion mark, the global economy is slowing down, and Virginia universities still jacked up tuition and fees by an inflation-adjusted 2.7%?

“This year’s reduced tuition increases,” opined McDonnell, “will help make higher education more affordable and more accessible for Virginia students and their families.”

No, they won’t. According to the Bureau of Labor Statistics, the real average hourly earnings for all employees grew 0.4% in the 12 months ending June 2012. That’s right — four tenths of one percent. Assuming Virginia earnings trends were in line with national averages, that means it will be 3.7% harder to pay college bills next  year.

Here’s an idea. After a 7.9% increase in tuition and fees last year, how about a friggin’ rollback this year?

The press release was full of self-congratulatory pap from an assortment of legislators and dignitaries. Said Sen. Thomas K. Norment, R-Williamsburg: “I thank the college presidents, the governor and my colleagues in the General Assembly for putting in the work to make today’s announcement possible?”

Added Thomas Farrell, chairman of the Governor’s Commission on Higher Education Reform, Innovation and Investment: “While work remains to increase access to higher education for all Virginians, today’s announcement of decade-low tuition increases marks a significant step in the right direction.”

Incredible. Virginia’s political class is totally out of touch. Ordinary Virginians can only hope that outside forces — online education, innovative business models, a consumer revolt, or all of the above — will thoroughly disrupt the system of higher education and replace it with something more responsive to consumers.

— JAB

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  1. DJRippert Avatar
    DJRippert

    “Thus, higher education in Virginia is still an inflation-ridden mess but the crisis has deescalated from Zimbabwe… to Argentina!”.

    Very nicely written.

    “Incredible. Virginia’s political class is totally out of touch.”.

    By Jove, I think he’s got it!

    Nobody is minding the higher education store. Nobody. More money goes in but the tuitions still rise faster than inflation or wages.

    Cuccinelli, McAuliffe, Bolling, hell .. Chopra – any comment?

  2. larryg Avatar
    larryg

    “This year’s low tuition and fee increases were possible due in large part to … the allocation of $230 million additional general fund support to Virginia’s public higher education institutions in the 2012-14 biennium.”

    ah hem…. is “allocation of …general fund” weasel words for “additional taxpayer subsidies”?

    seems like some in BR have hammered Warner and Kaine for such similar temerity…

    but look.. if anyone here is looking for a tidal wave of anger and recrimination from Virginian’s, forget it – the liberals LOVE the fact that anyone who wants to go to college can (in theory) go to college and the conservatives in Va are so good as weasel words that they can claim both the fiscal conservative AND the “we love education” positions.

    1. DJRippert Avatar
      DJRippert

      The question is why tuition ALWAYS rises faster than inflation.

      Really, it’s that simple.

      Like health care except the government already owns UVA.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Bravo, Bacon!

    I am writing this as a still-tuition-paying father.

  4. reed fawell Avatar
    reed fawell

    Today’s Front Page WSJ article is very instructive on this point nationally.

    In essence, the exploding cost of college tuition now threatens the financial health of many upper middle income families. It’s draining their savings for retirement, forcing more students from such families away from top tier schools into the second tier for financial reasons.

    Logically then, those second tier schools who gain more Quality and further cost reductions through innovations in teaching methods will garner an ever expanding market share from talented students from a growing pool of cost sensitive upper middle class family’s who otherwise would chose the top tier.

    In short, unless, the elites wake up, we may see yet another example of erosion from the bottom. How Lexus ate Mercedes lunch, goes to college.

  5. Neil Haner Avatar
    Neil Haner

    I wonder if, eventually, we’ll see some sort of market economic effect, as large parts of the population eventually get priced out of the college market and the macro enrollment figures begin to drop.

    All of a sudden you have unfilled dorm rooms, you have professors without classes to teach, etc…

    Do (A) the colleges then jack up tuition further on the remaining students? Or do colleges (B) make steep cuts in their operating budgets (laying off teachers, shrinking “fluff” departments, cutting back on non-academic campus services, shying away from extravagent facilities) to bring the tuition back to a level the middle class can again afford, thus restoring balance to enrollment numbers?

    Or does (C) it result in a boom for cheaper online colleges?

    Honestly, I feel it could go any which way, or some combination of all 3, depending on the school. As someone still a ways away from paying for a kids tuition, I watch it with a wary eye.

  6. reed fawell Avatar
    reed fawell

    Good Question –

    I suspect it’s quite likely that we’ll see a substantial fall in tuition prices relative to value, as many new and different options open up within the marketplace for students of all intellectual abilities and capacities to pay.

    Heretofore, we’ve had somewhat of a monopolistic system built or tiers. For example, at the elite level, students and parents have been willing to pay large premiums for any Ivy Degree or its equivalent. This derives from their perception of the value of a degree from such an institution. In the past the choice was based on relatively good data. Such as the hiring rate, earning power, and status of graduates holding degrees from these institutions.

    But now I suspect the times they are a changing.

    The first step will be the offering of higher and higher quality at more and more “educational outlets” at lower and lower costs due to breakthroughs in teaching methods, the mass retirement of boomer tenured faculty, and a variety of market forces such as contracting consumer buying power, and revenue from other university funding sources.

    As these shift takes place (as likely they will) peoples’ belief in the old gauges of real and perceived value of an Ivy degree will start to erode. There will be many reasons for the erosion. One of many will be that parents who can no longer sent their kid to attend Harvard will need a rationale to “turn Harvard down.” How do they tell this to their friends? Remember so much of it is built on perceptions of status. Thus Rationale are needed beyond saying “We can’t afford it and loans are trying up.”

    One explanation (largely true in fact probably) is that the value of a Harvard degree comes not so much from the education one receives at Harvard, but rather from the extremely high quality of the student pool from which Harvard can select its student. And once this perception alone become widespread, the Harvard’s enormous competitive advantage begins to erode.

    Indeed things might unravel very quickly. Imagine the perfect storm: every increasing costs of tuition, the continued drain of wealth of middle and upper middle classes, the erosion and federal and state tax bases reducing monies for student loans and subsidies, the erosion of endowments and University giving. And then combine this the explosion of high quality low cost educational alternatives. Why can’t this cut into even Harvard’s student selection pool, absent revolutionary changes at Harvard.

    I believe such changes are coming. The question to my mind is how fast, and to what degree, and with what final result.

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