Mike Konczal has an interesting post that is popping up all over the place (here, here, and here, and probably somewhere else by now) analyzing a throwaway human interest piece on a woman named Karen King from the Wall Street Journal:
Her biggest chunk of debt, $26,000, stems from student loans to pay for her two-year associate’s degree from a community college — loans now in the hands of collectors. The remaining $10,000 or so includes old credit-card balances, debt to a store that rents furniture, utility bills and back taxes. Another obligation is $400 a month she contributes to the rent on her grandfather’s two-bedroom apartment, where her mother, uncle and sister also live.
The Journal article would have us believe that Karen and others of her generation are wild spenders who never learned to appreciate the value of a dollar because of easy credit. In fact, the Journal furnishes a handy graph of mortgage delinquencies, even though Karen does not have one:
Karen’s problem is not that she bought into the American Dream that everyone should have a house with a great room and a Viking range. It is that she believed the American Dream that education is priceless.
American higher education is unique. Other nations have their flagship schools – Oxford and Cambridge, Normale Sup and Polytechnique, Tokyo University – where the ruling class is incubated, but for the most part, college is vocational school. You live at home and take mass transit to a few dingy buildings somewhere in your hometown. The school has nominal fees, and the undergraduate curriculum is fairly specialized for the expected profession of its graduates. When you finish, you go to that job, unless you are in a European social welfare state, in which case you finish, go on government assistance, and then go to your job when enough people have retired from it to open slots.
Not in the US. In the US, college is THE GREATEST FOUR YEARS OF YOUR LIFE. You are not there to acquire a specific set of skills; you are there for the Experience. It doesn’t matter if you study Sanskrit poetry or Basque political systems or Maori painting; you can do anything you want when you graduate, and the important thing is to do what you like. The roommates, the football team, the hitherto unrecognized aptitude to bounce a quarter into a red Solo cup – this is college. This is what old men fly across country to celebrate. A German would as soon attend the reunion of his driver’s ed class.
How can you put a price on THE GREATEST FOUR YEARS OF YOUR LIFE? It’s disgusting; would you condemn yourself or your child to sadness over money? Ask St. Lawrence University, which goes for the hard sell:
[Y]ou get what you pay for. Quality costs money. Things cost money. Your investment in your children’s education is one of the most critical of your life. And you have only one or two chances per kid to get it right. If that expensive car doesn’t work out, you can trade it in and try again. You can’t do that with a college education. So why scrimp? It’s often said, top-notch higher education is costly, but consider the alternative. Do we want our world to be led by poorly educated people?…Following is cheap; leading requires an investment.
De Beers couldn’t have said it better. And like any other merchant who insists his article is beyond rubies but proceeds to charge, you can be sure the college comes up with a high price for its incomparable product:
The cost of a college education has skyrocketed. There are a few reasons for the upward pressure:
- The addressable market has increased dramatically. Although births are cyclical – the Baby Boom, the low-birth period of the mid-1970s, the echo boom of the 80s – the percentage of the population that considers college has had secular growth. What might have been an unaffordable luxury became, thanks to a series of government programs, a no-money-down investment. Schools also wisely began shopping abroad for students who are shut out of their nations’ meritocratic, elite-focused admissions systems and would like to go to college.
- It is increasingly difficult to build new schools. Since it is assumed that a new school must have hundreds of acres of land and beautiful buildings, the startup costs have increased with the real estate bubble in areas of population growth. In addition, expansion of the university system has been a low priority for state legislatures. The growth in social welfare expectations (and, between state employee pension/payroll and special education and Medicaid mandates, required expenditures) has strained state resources.
- The governance system of universities makes the incest of Fortune 500 boards look like a model of probity. Professors rarely consider themselves employees, and once they have tenure behave like NBA players in a non-contract year. Administrators cater to alumni – in some form, they pay the bills through direct donations and indirect pressure on legislatures – who by definition are people who finished consuming the educational product and somehow managed to afford it when they were there. There is precious little energy spent on delivering a better product in the classroom, so cost inflation is rampant.
The enormous escalation in college costs has been matched by the escalation in student loans. In part, this stems from the simple reason that the government subsidizes banks who issue student loans, and there is more support for giving grants than loans. And even if the grant amounts were increased, schools would simply capture it by raising tuition to encompass (grant money + maximum borrowing capacity).
It also stems from the conventional wisdom that “education=good investment”, which is the cousin of “real estate=good investment.” As with real estate, it is too subtle to say that “education is often a good investment,” or “education that increases your marketable skills is a good investment,” so we leave out the qualifiers. And Karen King and the rest of folks who by circumstances – poverty, death of a parent – are shut out of the four year-college market grasp at community colleges to try to “rise above” their situation. For that, they are saddled with notional value of debt that is greater than their household income.
Taunter’s College Reform Ideas
- Regulate co-pays. Doctors who accept Medicare are forbidden from requiring any other payment from patients. CMS does this because if it did not, doctors would simply price to (Medicare+indifference point of sick people), and CMS does not want its subsidy to the elderly to be captured entirely by the medical establishment. Bring the same approach to college. If the government provides a grant or a loan guarantee, make it contingent upon tuition being no more than a certain percentage greater than the grant or guarantee [eg if the grant is $10,000/(x credits), cap total tuition at $12,000/(x credits)]. Some schools would opt out of receiving grants at all, and that might frustrate people who wanted to use their grant money to attend Ivy League schools, but it would put downward pressure on the rest of the system.
- Encourage commuter education. We have plenty of available real estate in lousy neighborhoods. We have plenty of underskilled, underemployed high school graduates in lousy neighborhoods. This should be charter school heaven. Acquire the land and offer a capitated fee to any school that wants to open up in poor areas, with two conditions: the school cannot charge any fee to the students; the school only gets paid for students who pass an exam at the end of the term – an exam designed and administered by the government, not the school. That encourages the school to teach to the test, which is better than teaching to nothing, and keeps the employees out of government labor restrictions.
- End tenure. I know – it’s an employment contract, it should be sacred. But the government regulates all sorts of employment contracts. It regulates the length of non-compete arrangements, and thanks to Olivia de Havilland, the length of personal service contracts; in both cases, the presumed beneficiary of the restriction is the employee. Might as well turn it around and require professors to continue to demonstrate that their classroom performance warrants their employment.
Some of the problems of today’s recent graduates are simply functions of the economy. Jobs are generally more scarce, and people are less likely to leave jobs, so new entrants are especially challenged. Personal credit markets are exceptionally tight, which particularly hits people with little to no documented income history. Employers are increasingly using credit checks to screen applicants, which is ludicrous in most cases and should be banned unless the company has a good faith reason to believe fiscal probity is a necessary quality (Brinks courier OK, Greyhound driver not OK). But we should be doing what we can to make the ride easier and to ensure that when the economy picks back up, we don’t keep on sticking children with the bill.
And as for the Experience…by all means, have it. Life is short and not guaranteed. If anything, college is wasted on the young; no point corralling a mind at twenty-two. Just understand the magic, and be ware of the guy ringing the register while you chase your dreams.
Mike3550 has an interesting comment below, and one of its strands is a defense of tenure in the name of academic freedom. Tenure is not my major grievance, but having heard this argument often, I want to point out that the logic is suspect.
First of all, I don’t know what sort of political pressure for conformity would possibly be brought to bear in the absence of tenure. If a non-tenured professor came up with evidence that the earth is really 6,000 years old, or found dinosaur bones in the pre-Cambrian, or proved that Aborigines in the Kimberley had a viable space program before the last ice age, he would be in great demand, not ostracized for overturning accepted wisdom about the history of the world. In recent memory scientists have been cheered for claiming cold fusion (which turned to criticism only because it does not, in fact, work) and, for good measure, dressing up old racism as new data. What, exactly, would be so radical as to disqualify?
Moreover, even if there were a series of topics, thoughts, or beliefs that are so controversial that a university would feel compelled to fire a professor for espousing them, tenure is a pretty dumb solution. Before becoming tenured, an academic is non-tenured. During his non-tenured phase, he is reviewed for tenure – generally by the faculty among whom he seeks tenure, the very cradle of the orthodoxy he is expected to challenge. If these faculty members are intolerant of dissent, why would they award tenure to a dissenter?
To believe that tenure is important you need to believe that an academic will mask his revolutionary ideas when he is young and most likely to have them, and only reveal them when he is old, secure, and unlikely to have them. That’s bizarre.
Take a parallel from political history. Until the time of Lyndon Johnson, the Senate committees had complete discretion in matters under their jurisdiction. Committee chairmen were selected by absolute seniority, and had free rein over the conduct of their committees. Since the South did not have contested general elections and Southerners therefore had the most seniority, Southerners were the chairmen of the committees.
There were northern senators, and they had to be seated somewhere. So the southerners would park them on unimportant committees and observe them. If the northerner were sufficiently inoffensive, eventually he would be allowed onto a meaningful committee. Once on, he theoretically could go rogue and agitate to do things differently – but who does that after twenty years of sucking up?
If there were no tenure, there would be no tenure review. There would be no need to please other faculty members at any point in time; faculty would be directly beholden to the administration. This would encourage, not discourage dissent. That professors object is not driven from some desire to be outlandish, it is for the simple reason that they would like to be able to go into retirement with a paycheck as soon as possible. And there is nothing less outlandish.