February 7, 2012

Some students pay tuition that is as high as it is to fund financial aid that is offered to other students.

Is there something wrong with that?
In his proposed budget, Virginia Governor Bob McDonnell is seeking to cap the use of tuition dollars from in-state students to provide financial aid, a practice employed by almost all colleges and universities, public and private. McDonnell has said he is pushing the cap to spur conversation about aid policies and to keep down the cost of college education, saying the current structure is placing a higher burden on middle-income students....

Who ultimately bears responsibility for ensuring access to higher education? If states aren’t willing to pay, do institutions have the right to charge more to students who can pay in order to subsidize those who can’t?

54 comments:

Michael Haz said...

Redistrubution!

raf said...

This is one of the reasons our daughter did not go to MIT. In discussing finances with them, it became apparent that they wanted me to pay about twice what it really cost (per student) to support their annual budget. They expected tuition for one student to cover two students. they were not shy about admitting this, either.

Curious George said...

"If states aren’t willing to pay, do institutions have the right to charge more to students who can pay in order to subsidize those who can’t?"

You do realize that this is in effect the exact same thing. The state doesn't pay. The taxpayers do. And this is borne by the middle class.

Sofa King said...

Do they have the right to do this? Yes. However, when they payment of that inflated tuition is performed with taxpayer-subsidized loans, that is a scam. It's like when the state raised taxes on hospitals so as to milk SS/Medicaid, it's just a backdoor way to get federal money. In this case, it's especially devious, as the poor saps who are given the subsidized loans are young and relatively naive, and are induced to incurring obligations many will sorely regret later in life.

chuck said...

Who ultimately bears responsibility for ensuring access to higher education?

Professors. They should all join religious orders and work for free.

edutcher said...

How many of the people there don't even belong in college?

This is what happens when something that had to be earned becomes another of the Lefties' "rights".

Jay said...

Who ultimately bears responsibility for ensuring access to higher education?

Um, certainly nobody in government.

How about this radicial idea:
If a University wants to "ensure access to higher education" they do it themself?

Peter said...

Higher education should be the same as health care: run entirely by the government, free, and rationed.

raf said...

I also suggested that if they were so sure of the value of their degree, they should underwrite their students themselves, contracting for a percentage of earnings above a benchmark base level. They were not amused.

Dan in Philly said...

I've been pondering the death of classical education and the higher education bubble. I have come to the conclusion that we need to strip away the pretence that 90% of college is anything but job training and generally forgo all but the classes for that purpose.

Accountants go to learn to account.
Teachers to go learn to teach.
Business classes get modeled on the MBA structure, without the extra crap.

In this way, we can still have liberal arts colleges, which won't make any pretence of doing anything but teaching liberal arts. What is done with such a degree is up to the individual, but they won't go to such a school with the idea it will further their career. Who knows, it might even revive the teaching and learning of Greek and Roman, which is what university was originally intended to be.

Dead Julius said...

In Denmark, the national government pays for all University educations, and provides a living stipend to the students too.

Super. High. Taxes. Highest in the world!

So what happens is that young people stick around at University... everyone gets a Masters degree, hardly anyone stops with a Bachelors (it's considered an incomplete education), and they don't start any productive work until they are edging 30.

Jeff with one 'f' said...

What's so awful about poor students taking out student loans? Most of my friends did. Then again we're all middle class and were brought up to earn our keep rather than expect handouts from Uncle Sugar.

Tank said...

Radical thought.

Let people pay for their own educations.

Private institutions, being private, can do what they want with scholarships.

Private institutions, being private, can lend money to students, if they want.

Gov't can stop interfering.

Dust Bunny Queen said...

Students who come from low-income backgrounds receive a combination of state, federal, and institutional aid that makes college affordable. Students who come from high-income families often have to pay the full cost of tuition, but increases don’t have a large effect on the family’s overall budget. But families who fall between the two groups are having an increasingly difficult time paying for their education,

Here it is again.

The Liberals and Government are intent upon making everything equal. At the expense of everyone.

They did it with the housing market and look at the results.

They have done it in lower education, creating generations of uneducated illiterates.

Now they want to "level" so called higher education.

Perhaps not everyone SHOULD go to a 4 year college.

Possibly not everyone NEEDS the same education experience.

If private individuals...YES..I am looking at you Buffett, Gates, Zuckerberg etc want to set up charities to gift the low income students to a Stanford quality education. Pony it up boys!!

Otherwise, let the free market work. Junior colleges and for profit colleges can give you just as good of an education.

One that actually prepares your for that mythical creature in Obama's society.... a freaking JOB!.

Scott M said...

If states aren’t willing to pay, do institutions have the right to charge more to students who can pay in order to subsidize those who can’t?

Doesn't this fall under the "nobody is putting a gun to your head to go to college" category? I applaud those that are mature enough and capable enough not to flunk out, but that ratio is way too high and has been since I was 18. Institutions vary, but the freshman dropout rate is staggering and I've always wondered why we keep pushing kids to go straight to college when the odds are against them successfully completing the task when structured like that.

Go out, experience the work world. Join the military, the peace corps, or the post office for a couple years. PLENTY of money available to keep you from going into debt right off the bat.

DADvocate said...

Berea College in Kentucky charges their students nothing, but requires 10 hours of work per week. You/your family have to be below a certain income level to attend there (and, maybe, living in Appalachia). It's an excellent school.

Why can't more schools take an approach similar to this? Other than administrators building empires and getting rich, that is.

AJ Lynch said...

How about eliminating the current federal grants/ loans and replace with a universal subsidy of $5,000 per year to every 19-22 year old to use for school, booze,women, drugs, whatever and then we can all STFU on this cost issue cause people will then choose schools they can afford.

Sound fair to you?

Jay said...

Doesn't this fall under the "nobody is putting a gun to your head to go to college" category?

ScottM,
You don't seem to understand, college is a societal good!

Everyone should go! Well, everyone except conservatives.

I learned of the horrors of Reagan slashing student aid and how one person had a friend who actually had to drop out of college!!! - by reading the comments at the YAF link re: Reagan

Peter said...

The key to the scheme is the FAF.

If all merchants could demand to know your income before setting their price then all could, and many would, engage in the same sort of price discrimination.

So, end disclosure of family income and the problem will go away.

With the likely result that prices will, of necessity, become more reasonable.

MadisonMan said...

You/your family have to be below a certain income level to attend there (and, maybe, living in Appalachia).

The daughter has a friend at Berea, and they live in Madison, so no, unless you've redefined Appalachia to include southern Wisconsin. :)

I think Tax Credits for tuition paid should be eliminated also. (Not that I'm complaining...)

Michael said...

All the King's horses are not going to make things equal. I recommend Charles Murray's new book "Coming Apart; the State of White America 1960-2010." Culture more than capital is separating us and the patterns set in and by the underclass will ensure that it stays that way notwithstanding the "help" of the government. Ditto the upper class.

I paid full boat for all my kids' college tuition. Happy to do it and happy that they will not be burdened with repaying student loans. I started laying away the costs when they were born. the magic of compound interest and some very good investments worked out very well.

Henry said...

...do institutions have the right to charge more to students who can pay in order to subsidize those who can’t?

That's how we do health care.

So of course it must be great!

It does create some perverse incentives for the institutions, though. For state schools an out-of-state student is better than an in-state one.

Tuition redistribution makes it possible for universities to enroll poorer students, but it gives them the incentive to enroll the richest.

DBQ's quote from the article gets to the point. The problem isn't not just that the middle class gets squeezed. The problem is that the system incentivizes the squeeze.

MayBee said...


I think Tax Credits for tuition paid should be eliminated also. (Not that I'm complaining...)


They are eliminated if you make more than something like $150,000/year.

Seeing Red said...

In Denmark, the national government pays for all University educations, and provides a living stipend to the students too.


You're welcome, underwritten by the US taxpayers for decades.

Larry J said...

If they want to look at ways to control tuition costs, they could look at reducing administration. How many "Third Deputy Assistant Undersecretary for Diversity" positions does one college need? I suppose they're trying to create employment for otherwise unemployable graduates ("Angry Studies" majors) but it's absurd. I read last year that the University of California system has more administrators than professors. Something has to give.

You can also look at the workload for the professors. How many of them spend most of their time of "research" (often useless) instead of teaching?

Just because a college bills itself as a non-profit (as if that's somehow morally superior), it doesn't mean they're operating efficently or wisely. Cut the fat, then and only then consider raising tuition.

Seeing Red said...

I think there's a study out there somewhere - and while correlation is not causation - once Uncle Sam got into the deep pockets guaranty of college education, that's when thing really skyrocketed, I think the law changed in 1960.


In short - put the risk back where it belongs, between the banks and students & families.


The price will drop.

Jane said...

Colleges will not take calls to reduce tuition seriously unless they actually start having trouble finding students willing to pay for their product.

And, yes, it irritates me to no end that, being upper middle class, if I want to send my kids to a university, I will be obliged to indirectly provide a big chunck of financial aid to other families -- not just the poor, but middle-class, and families that never bothered to save because they figured the financial aid money will be theirs for the taking. Maybe we'll retire early and spend down the post-tax non-401K savings first, so that on paper, we're exceedingly low income. (Except, of course, the financial aid office will expect to spend our retirement savings on Junior's college tuition.) They're white, and boys, with no athletic talent, and one is semi-Aspergery so they're screwed anyway.

Craig said...

Why on earth go to college? Facebook is free. All you have to do is figure out how to use it.

Tank said...

Seeing Red said...

I think there's a study out there somewhere - and while correlation is not causation - once Uncle Sam got into the deep pockets guaranty of college education, that's when thing really skyrocketed, I think the law changed in 1960.


Ding.

We have a winner.

Jane said...

The more I think of it, the clearer it is from this article that actually cutting costs is simply the furthest thing from their minds. It's not something they put any consideration into. In their minds, the cost of college is a given, and the only question is who pays.

Richard said...

When my children were paying full freight at Princeton and Duke I used to joke that the schools should be sending me a picture and update each semester of the progress being made by the other students that my tuition was funding.

Henry said...

@Jane -- I faced this reality when my wife went to graduate school and filed financial aid forms. Not only did they demand our tax returns, but her parents as well. Income. Savings. Retirement plans. Luckily it was a state school.

But I realized then it was a mug's game to set aside savings for college. Sucking up savings is the baseline.

Seeing Red said...

It's not just college. Our teachers were working w/o a contract. I went to the meeting. Pointed out that house values are falling, they may not get enuf money from property taxes. They weren't worried about reality. Not a blip.

But I will say I hate the superintendent and her fiefdom.

Seeing Red said...

I'll tell you something else, slightly off-topic. Uncle Sam is expecting a big payday from this refinancing gig. They've added a small fee to any mortgage, new or refi run thru freddie or fannie to pay for raiding your SS fund to give you a little something from your P/R taxes.

Alex said...

DJ - nice system in Denmark, do they have lots of hi tech startups?

Levi Starks said...

The end is near.
The education bubble is about to POP,
But don't worry, the Obama administration will be there with as many billions (or trillions) of dollars as will be needed to bail them out.
Information technology being what it is today, we are reaching the point at which any person living in any area that has internet access will have unlimited access to college level knowledge. (unless they speak an obscure language). The future role of colleges will be primarily to validate, not to educate

n.n said...

The same problem exists with health care, which has been exacerbated by the so-called "health care reform".

The distortion happens with unmeasured immigration (e.g. illegal aliens), immigration policies which promote convergence, enhanced non-contributory (e.g. welfare) and contributory entitlements, unrequited regulatory and labor laws, denigration of individual dignity (e.g. social justice, equalization), etc.

Well, as long as consequences of environmental and human hazards of so-called "green" technology and similar enterprises remain obfuscated, I suppose we can continue to dream of instant gratification. For a time, anyway.

There has been an illusion of dreams fulfilled, but it has, in fact, been a redistribution and deferment of costs.

sydney said...

Henry,

But I realized then it was a mug's game to set aside savings for college. Sucking up savings is the baseline.

My experience, too. When my oldest son received his financial aid offers it was obvious that we would be paying the same amount whether he went to a private school or the state university. It seemed rigged to take whatever they determined we could pay based on our financial information.

Jane said...

The bubble isn't going to pop -- not yet. It won't pop until the unemployment rate drops and the economy booms (which may be a very long time coming). Only when there's a labor shortage will employers be interested in looking at propsective hires with alternative certifications or who attended non-prestigious degrees. Until then, they'll demand college degrees for their secretaries and it will be very difficult for anyone to opt-out.

prairie wind said...

How many "Third Deputy Assistant Undersecretary for Diversity" positions does one college need?

As many as are required to count shades of skin color and whatever other incidentals need to be tracked to make a university eligible for federal dollars.

sleepless nights said...
This comment has been removed by the author.
fleetusa said...

First, the extra amount should be designated a charitable contribution.

Second, huge endowments should be used for tuition aid and not more costly infrastructure buildings.

Larry J said...

Jane said...
The more I think of it, the clearer it is from this article that actually cutting costs is simply the furthest thing from their minds. It's not something they put any consideration into. In their minds, the cost of college is a given, and the only question is who pays.


It's the same with government. No one seriously looks at ways to cut spending (real cuts, not this reduce the rate of increase crap). Instead, all they can think of is finding new ways to squeeze out additional tax revenues so the spending can increase even faster.

Hoosier Daddy said...

Perhaps what needs to be done is investigate what is clearly price gouging by state colleges and universities. Tuition costs are ridiculous which appear to he funding bloated professor and administrative salaries.

If these were oil companies, Congress would be OUTRAGED!!!!

MadisonMan said...

I just walked over to the Bursar's office and paid the daughter's tuition.

Cash.

Everyone should do that sometime. Pay a big bill in cash.

Alex said...

The bubble isn't going to pop -- not yet. It won't pop until the unemployment rate drops and the economy booms (which may be a very long time coming). Only when there's a labor shortage will employers be interested in looking at propsective hires with alternative certifications or who attended non-prestigious degrees. Until then, they'll demand college degrees for their secretaries and it will be very difficult for anyone to opt-out.

Exactly. The power rests with corporations like Apple that have $100 billion cash. Why shouldn't they be super picky about who they hire?

raf said...

The answer to high tuition costs is obvious. With Obamacare as our model, we adopt something equivalent to a single-payer system for education. To prevent [continuation of] costs spiralling out of control, we institute a Federal Oversight Board to evaluate the cost/benefit of specific courses and specific patients, er, students. "Academic Death Panels" in the vernacular. Once the whole shootin' match is under total Federal control, all the problems will just go away.

raf said...

To be clear, this is entirely different from "flunking" students, as the Feds can take factors other than academic merit/achievement into account.

Revenant said...

do institutions have the right to charge more to students who can pay in order to subsidize those who can’t

It'll prepare the students for life after graduation, when those of them who earn more will be forced to pay in order to subsidize those who earn less.

Joe said...

Henry, the solution is to get divorced, but keep the college fund in your name while your kids live with your ex. Have her sign a tax form so you get the deduction, but she gets the EIC and since the kids live with her, the student aid forms only count her income.

Yes, it makes no sense, but that's how it works.

RonF said...

Who ultimately bears responsibility for ensuring access to higher education?

The parents of the children. After that the responsibility is on the child themselves to at least work howsoever they can to contribute what they can. Go to community college. Join the military for a turn for benefits (and come out more mature and self-disciplined than 90% of other college freshmen). After that, State and private interests may choose to get involved if they cannot afford to pay or if the parents decide for whatever reason to not meet their responsibility, but the ultimate responsibility belongs to the child's parents regardless.

And, yes - lots of people make excellent livings with no college degree. Not everyone should get one.

RonF said...

raf, I'm a graduate of MIT. I currently interview high school seniors who are hoping to get in. I don't know anything about you or your daughter, but I would suggest that the worth of an MIT education is in what you learn and what you can do with it, not how MIT chooses to spend the tuition you pay them. The letters "MIT" on your resume carry you pretty far when applying for a job.

Sigivald said...

"do institutions have the right to charge more to students who can pay in order to subsidize those who can't [?]"

Yes.

Now, the real question should not be "do they have the right to do so [if they choose]", but should they?

The wrong question leads to useless answers.

raf said...

RonF

Yes, she could have had the letters and $150,000+ of debt from MIT. As it is, she is a doctoral candidate in macromolecular science/engineering with very good prospects and less than $20,000 debt. I know some MIT grads who are not making that much use of their credential.

When I asked about starting salaries of MIT graduates, the number I was given was less than either of my sons started with after graduating from a less prestigious school. So I am not convinced that MIT makes economic sense. The prestige factor is very real, of course, and if she had chosen to go there anyway, we would have made it work somehow. She seems content with her decision.