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***Disclaimer- this post is long and boring. I thought it might be an interesting jumping-off point to talk about the runaway costs of college and graduate schools, starting with schools that everyone here is familiar with. If this doesn't interest you, please save your eyes and click away.
The cost of higher education has emerged as a hot topic in the media in the last year. Students are graduating with record amounts of debt as average college tuition has soared more than 100% over the last decade (outpacing inflation nearly 3:1). During this same time period, wage inflation has been practically non-existent, which means students are still making $28-37k when they enter the job market, but now they often have more than $75k of debt from undergrad alone as opposed to $20k or less back in 2000. This is a pretty far cry from the experience of many on this board who graduated in the 1960s or 1970s, an era where tuition and fees were a tiny sliver of current costs in 2012 dollars. Costs skyrocket even more exponentially for students attending professional programs like law, business or med school.
Out of boredom I took a look at what it costs to attend several MVC private schools. I'll start off with Creighton:
Undergrad Tuition and Fees: $31,856 (http://www.creighton.edu/cutuition/)
Room and Board: $9,446 (counts only rent and meals, not other COL) (http://www.creighton.edu/fileadmin/u..._2012-2013.pdf)
Total costs for ONE year of undergraduate study at Creighton without scholarship or need-based aid: $41,302
Comparison: Costs for ONE year of undergraduate study at WSU for an in-state student (15 hours/semester) without scholarship or need-based aid: $12,448 (http://webapps.wichita.edu/netprice/)
What if a student wants to attend graduate school? Let's take a look at Creighton's law school (ranked #135 out of 150 ranked law schools by US News) as an example:
Tuition and Fees: $32,464
Living Expenses: $19,605
Total Costs for ONE year of study at Creighton Law without academic scholarship (need based aid does not exist): $52,069 (http://www.lstscorereports.com/?school=creighton)
Expected Debt at Graduation for student receiving no academic scholarship or outside aid: $194, 503* (http://www.lstscorereports.com/?school=creighton)
*Subsidized student loans are no longer available for graduate programs, meaning interest on the loan accrues while the student is enrolled in school. This is why the expected debt amount far exceeds the total costs of the three-year program.
But surely, some would say, such exorbitant costs are justified by the incredible job prospects a student enjoys after graduating from this kind of program. Employment results for Creighton Law Class of 2011:
60.1% of students obtained Full-Time Employment where Bar Passage is Required for the Job (Read: 60.1% of these kids got hired as actual full-time lawyers. The rest will be starting promising careers part-time at Browning Ferris Industries and other comparably depressing gigs)
Creighton Law's website boasts of an Average Salary of $60,764 (http://www.creighton.edu/law/aboutcr...acts/index.php). However, this is laughably followed by the disclaimer that only 35.5% of their graduating class reported a salary amount. Translation: the average salary, after all those costs, for the TOP THIRD of students at Creighton Law is $60,764. The remaining 25% of the class who actually found full-time legal jobs almost certainly fall on the lower end of a bimodal salary distribution shown here (http://www.nalp.org/startingsalarydi...ionclassof2009), meaning they make between $35-50k in a market like Nebraska. Seems like a pretty low return on investment for a program which has an annual sticker cost at over $50,000.
Impressively, Bradley's undergrad is even more expensive than Creighton:
Tuition and Fees: $36,964 (http://www.bradley.edu/offices/other...stpay/tuition/)
Room and Board: $10,500 (http://www.bradley.edu/offices/other...stpay/housing/)
Evansville:
Evansville Tuition and Fees: $30,556 (http://www.evansville.edu/tuitionand...atetuition.cfm)
Room and Board: $10,010 (http://www.evansville.edu/tuitionand...atetuition.cfm)
Drake:
Drake Tuition and Fees: $29,410 (http://www.drake.edu/about/tuition.php)
Room and Board: $8,680 (http://www.drake.edu/about/tuition.php)
So, we get it, college is way more expensive than it used to be, so what? There is an interesting bubble developing as a result of these costs, with a moral hazard element similar to that of the mortgage crisis. The federal government guarantees availability of student loans for these schools (and many others) up to the full costs of tuition and room/board. It doesn't matter if you want to study Underwater Basket Weaving or Nuclear Physics, you have the same loan availability. And, as you might guess, the default rates for those graduating with high debt-levels has skyrocketed since the Crash in 2008 due to limited job availability.
Big deal, just discharge your debt through bankruptcy, right? Wrong. Federal student loans cannot be discharged through bankruptcy after the various congressional reforms of the early 2000s. Instead, the federal government now FORGIVES these loans, which it issued from taxpayer coffers, after either 10 years of employment in public service or 25 years in low-paying private sector jobs through the Public Loan Forgiveness (PSLF) and Income Based Repayment (IBR) Programs. (http://www.finaid.org/loans/publicservice.phtml) (http://www.ibrinfo.org/what.vp.html)
This has lead to a lethal equation under which schools have gouged students and the federal government over the last 10 years:
Federal guaranteed availability of student loans + Federal guaranteed forgiveness of student loans + No ability to discharge through bankruptcy = UNLIMITED TUITION HIKES because the schools bear none of the risk that students will repay enormous loans while enjoyed a bottomless pit of funding for this escapade
A student loan bubble is most certainly forming which will carry an enormous cost to the government when waves of these loans first start enjoying forgiveness in 2017. Basically, we are subsidizing universities with endowments often in excess of $100 million to charge whatever they want, only to have taxpayers foot the bill down the road. At the same time, the graduating student is saddled with an absurd debt load in the near-term, in amounts which will make things like homeownership all but impossible until they are 40+ years old. This is an incredibly wasteful and inefficient system at the moment and is serving to further cripple a struggling economy.
Thoughts?
The cost of higher education has emerged as a hot topic in the media in the last year. Students are graduating with record amounts of debt as average college tuition has soared more than 100% over the last decade (outpacing inflation nearly 3:1). During this same time period, wage inflation has been practically non-existent, which means students are still making $28-37k when they enter the job market, but now they often have more than $75k of debt from undergrad alone as opposed to $20k or less back in 2000. This is a pretty far cry from the experience of many on this board who graduated in the 1960s or 1970s, an era where tuition and fees were a tiny sliver of current costs in 2012 dollars. Costs skyrocket even more exponentially for students attending professional programs like law, business or med school.
Out of boredom I took a look at what it costs to attend several MVC private schools. I'll start off with Creighton:
Undergrad Tuition and Fees: $31,856 (http://www.creighton.edu/cutuition/)
Room and Board: $9,446 (counts only rent and meals, not other COL) (http://www.creighton.edu/fileadmin/u..._2012-2013.pdf)
Total costs for ONE year of undergraduate study at Creighton without scholarship or need-based aid: $41,302
Comparison: Costs for ONE year of undergraduate study at WSU for an in-state student (15 hours/semester) without scholarship or need-based aid: $12,448 (http://webapps.wichita.edu/netprice/)
What if a student wants to attend graduate school? Let's take a look at Creighton's law school (ranked #135 out of 150 ranked law schools by US News) as an example:
Tuition and Fees: $32,464
Living Expenses: $19,605
Total Costs for ONE year of study at Creighton Law without academic scholarship (need based aid does not exist): $52,069 (http://www.lstscorereports.com/?school=creighton)
Expected Debt at Graduation for student receiving no academic scholarship or outside aid: $194, 503* (http://www.lstscorereports.com/?school=creighton)
*Subsidized student loans are no longer available for graduate programs, meaning interest on the loan accrues while the student is enrolled in school. This is why the expected debt amount far exceeds the total costs of the three-year program.
But surely, some would say, such exorbitant costs are justified by the incredible job prospects a student enjoys after graduating from this kind of program. Employment results for Creighton Law Class of 2011:
60.1% of students obtained Full-Time Employment where Bar Passage is Required for the Job (Read: 60.1% of these kids got hired as actual full-time lawyers. The rest will be starting promising careers part-time at Browning Ferris Industries and other comparably depressing gigs)
Creighton Law's website boasts of an Average Salary of $60,764 (http://www.creighton.edu/law/aboutcr...acts/index.php). However, this is laughably followed by the disclaimer that only 35.5% of their graduating class reported a salary amount. Translation: the average salary, after all those costs, for the TOP THIRD of students at Creighton Law is $60,764. The remaining 25% of the class who actually found full-time legal jobs almost certainly fall on the lower end of a bimodal salary distribution shown here (http://www.nalp.org/startingsalarydi...ionclassof2009), meaning they make between $35-50k in a market like Nebraska. Seems like a pretty low return on investment for a program which has an annual sticker cost at over $50,000.
Impressively, Bradley's undergrad is even more expensive than Creighton:
Tuition and Fees: $36,964 (http://www.bradley.edu/offices/other...stpay/tuition/)
Room and Board: $10,500 (http://www.bradley.edu/offices/other...stpay/housing/)
Evansville:
Evansville Tuition and Fees: $30,556 (http://www.evansville.edu/tuitionand...atetuition.cfm)
Room and Board: $10,010 (http://www.evansville.edu/tuitionand...atetuition.cfm)
Drake:
Drake Tuition and Fees: $29,410 (http://www.drake.edu/about/tuition.php)
Room and Board: $8,680 (http://www.drake.edu/about/tuition.php)
So, we get it, college is way more expensive than it used to be, so what? There is an interesting bubble developing as a result of these costs, with a moral hazard element similar to that of the mortgage crisis. The federal government guarantees availability of student loans for these schools (and many others) up to the full costs of tuition and room/board. It doesn't matter if you want to study Underwater Basket Weaving or Nuclear Physics, you have the same loan availability. And, as you might guess, the default rates for those graduating with high debt-levels has skyrocketed since the Crash in 2008 due to limited job availability.
Big deal, just discharge your debt through bankruptcy, right? Wrong. Federal student loans cannot be discharged through bankruptcy after the various congressional reforms of the early 2000s. Instead, the federal government now FORGIVES these loans, which it issued from taxpayer coffers, after either 10 years of employment in public service or 25 years in low-paying private sector jobs through the Public Loan Forgiveness (PSLF) and Income Based Repayment (IBR) Programs. (http://www.finaid.org/loans/publicservice.phtml) (http://www.ibrinfo.org/what.vp.html)
This has lead to a lethal equation under which schools have gouged students and the federal government over the last 10 years:
Federal guaranteed availability of student loans + Federal guaranteed forgiveness of student loans + No ability to discharge through bankruptcy = UNLIMITED TUITION HIKES because the schools bear none of the risk that students will repay enormous loans while enjoyed a bottomless pit of funding for this escapade
A student loan bubble is most certainly forming which will carry an enormous cost to the government when waves of these loans first start enjoying forgiveness in 2017. Basically, we are subsidizing universities with endowments often in excess of $100 million to charge whatever they want, only to have taxpayers foot the bill down the road. At the same time, the graduating student is saddled with an absurd debt load in the near-term, in amounts which will make things like homeownership all but impossible until they are 40+ years old. This is an incredibly wasteful and inefficient system at the moment and is serving to further cripple a struggling economy.
Thoughts?
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