A VERY stupid question about college loans

[jmowreader]

We have a couple of threads going right now about college loans, how large they are and how they've basically turned our Best and Brightest into indentured servants.

The question: Why is college so fucking expensive?

I went to Duke University's website. Here are the numbers for 2006-07 undergrads:

Tuition and Fees $34,202
Room $4,950
Board $4,390
Personal expenses/books $2,508
Total cost of attendance $46,050

These of course are averages--but if your parents live in Durham and you live at home your entire four years of college, eating breakfast and dinner with your family and brown-bagging your lunch you're still looking at somewhere around thirty-eight bills a year to get a B.A. in English.

(Cue "Avenue Q"...

What do you do with a B.A. in English,
What is my life going to be?
Four years of college and plenty of knowledge,
Have earned me this useless degree.

I can't pay the bills yet,
'Cause I have no skills yet,
The world is a big scary place.

But somehow I can't shake,
The feeling I might make,
A difference,
To the human race.)

Duke University has the endowment from hell. It has perfected fundraising. It has thousands of alums who send it billions every year. If they want a new anything substantial they print up a mailer and the money to buy it shows up in the mail. Industry pays them for research. Every building on campus is named after someone, and it's not because those someones were well-remembered by their teachers but because those someones had two-comma and three-comma bank accounts and wanted to evade a LOT of taxes on the money in there. Oh...and they've also got that basketball factory over there, don't forget that. So...why in HELL does it cost $160,000 to shove your feet under a desk for four years?

[Deja Q]

1. Nonsense. People might lose a job now, but they will shortly get better ones with more pay!

And more responsibility!

It's all good! :woohoo: :party: :toast: :sip:

[mike_c]

2. well, Duke is a private institution so the state does not subsidize...

...the costs of attendance. Whether those costs are appropriate is another matter, but the difference between that and a CalState institution are striking. Tuition is less than $2000 per semester if I'm not mistaken (I work there, so I don't pay tuition, LOL). The reason is that 80 percent of the actual cost of attendance is paid by the legislature.

[1monster]

9. Sorry. One of the US NEWS & WORLD REPORT top twenty schools

in the southeast (and it has been on that list for years) only charges about $10-12 thousand a year in tuition and fees. A couple of year ago it was about $8,000 per year.

This is a school that has a huge endowment and has only been in existance since 1968. (Not gonna name it because they have a long waiting list.)

While it may have changed upwards, in the past, I know that part-time, guest professors generally get paid about $10,000 per semester for one class.

[jmowreader]

11. A large part of attending Duke is paid by outside parties

Duke is a research university, and a lot of their research is done for private companies.

Say you're an undergrad in chemistry. Your lab fees pay for the supplies you use. There's an endowment in place to pay your professors. The building you're studying in was paid for by donations. The dorm you live in was paid for by donations (and you're paying rent on your 10-sf piece of that). The grass is mowed by the endowment. The basketball team you cheer for has a contract with ESPN, Nike, Wachovia... (Let's not talk about the football team.) Just about every possible thing you need to study at Duke is either paid for by some fund that was established a hundred years ago, was paid for by a fundraising campaign or comes under a different fee. So.....where's the $38,000 going?

And the worst part is, you can get AS GOOD of an education at the place down the road where everything is light blue, or that place where everything is red, and their rates are far lower.

[stellanoir]

3. Tuitions have long been disproportional to potential incomes for most.

I work with college kids and an amazingly high number of them feel they have to get secondary if not tertiary degrees to garner employment that will ever begin to offset the debts they are incurring.

Fifty percent of teachers in public schools quit after 5 years to work in the corporate sector, due to the exhorbitant debts they've acquired in pursuit of Master's Degrees.

In the immortal words of Mister Zimmerman. . .

". . .Everything is broken. . ."

[porphyrian]

4. College is a business.

Forget the hype about higher education or the delusions of those within the system - colleges exist to make money. Anything else is incidental.

[mike_c]

13. I strongly disagree....

My institution is a public service university-- it doesn't make any money at all from students. It's operating costs are paid by the state legislature, which is presently underfunding us by a substantial amount.

We receive a flat sum from the CalState system for every full time equivalent student. That, plus the tuition they pay, BARELY covers the cost of their attendance. There is certainly no "profit" involved-- no money is made by the university. Just the opposite in fact-- we are currently running a deficit because the cost of our programs exceeds the funds alloted by the state for each student.

[Lex]

14. Private universities are a business.

State universities are much different in that respect, as you point out.

[Lex]

18. nt

[porphyrian]

16. Who and what determines the cost of student attendance and of your programs?

I'm not sure what school you're at, but the state university I worked at was certainly a business, as was the private university.

[mike_c]

24. the student cost of attendance is set by the University trustees...

...who have to answer to the legislature, whose constituents want costs kept low. Program cost is largely up to the individual campuses, subject to the constraint that we receive a flat sum for each full time equivalent student, so the cost of programs has to balance the money received per student.

My campus's problem is that our major programs are in the sciences, especially biological sciences. Biology, botany, and zoology are the largest majors on campus by a substantial margin. Science programs are expensive because of the lab costs-- a large lecture course might have 8 lab sections, requiring a total of 9 instructors as well as the equipment and supply costs of conducting the labs.

[porphyrian]

30. Both of the places I worked are research universities...

...so the structure was much like feudal China, but less civil. Anyway, in both cases, there was (is) extravagant waste by the administration who, like Congress, would never even consider not giving themselves raises, let alone taking a pay cut. Unless you're curing cancer and winning prestige and grant money, you're cattle with a tuition check.

[gravity]

37. Most private universities are non-profits

Higher education is just expensive. Even state schools have high tuition rates for out of state students.

[porphyrian]

40. "Higher education is just expensive."

Horseshit. It doesn't have to be expensive at all, if education is really the primary goal. If that were the case, it could be practically free. It's a business, as are most non-profits.

[gravity]

42. Public institutions are just as expensive to run

and their goals are just to provide an education for the state. The only difference is that public schools get their funding from the state, lowering the price of tuition.

[porphyrian]

51. Expense is an excuse.

If education were a priority, the cost wouldn't matter. But, since education isn't a priority, money becomes the priority, business-minded people are put in charge, and the whole becomes a business.

[Berry Cool]

5. Two words:

Administrative salaries.

[mike_c]

32. second that....

eom

[H2O Man]

"The only stupid question

is the one that remains unasked." -- Malcolm X

I think you ask an important question.

[liberal N proud]

6. Why is college so expensive? - GREED

IMO, In the 60's and 70's we were all able to afford college it was a bargain. Student Loans were easy to get. Everybody went to college many did graduate and broke out of the lower income status their family was in. They didn't have start paying the loans back until they graduated college and then had 6 months to start payments.
Today college is outrageously expensive (we are shelling out over $60 thousand for our daughter), Student loan program has been privatized and interest rates are at market price, I paid 3% on my loans. Furthermore, you can only borrow money one school year at a time, then you must start paying the loan back after that year is done.

Now to my opinion, It has to do with the greed that is effecting everything else in the nation. The greedy don't want the have-not's to get ahead and cut into their share of the pie. So they raise the prices of getting the higher education to keep those who don't have the means to pay for it from gaining that college degree and making it in their world of the upper middle class or higher.

[mike_c]

19. who do you think are the beneficiaries of that greed...?

I certainly agree about the private loan institutions that are making education loans-- they are greedy bastards parasitizing families who cannot afford the costs of college.

But at my university, the overwhelming majority of the cost of attendance (less than $2000/semester) is faculty salaries, and I can assure you that we're not getting rich on the backs of students or their parents. Furthermore, the actual cost of attendance is highly subsidized by the state legislature, so students and parents are actually only paying a fraction of the real cost of running the institution.

The big private colleges are certainly businesses like any other, but the majority of students in the U.S. go to state universities run as an investment in the state's future, not as a money making enterprise.

I agree that the costs are too high nonetheless, but only because I think the public should do even more to subsidize that investment. There is no excuse for forcing families into debt to private lenders to educate our populace.

[liberal N proud]

22. There is no such thing as a low cost loan

That would be the lending industry that has managed to get the control of the loan from the government. Prime example of one of those wonderful privatized government programs.

But the larger greed comes from those who don't want people in this country to get ahead in life. If you don't educate the people, then you don't have to pay them. Not that an education is a guarantee that you will get paid well either.

There is a class war in this county regardless if anyone wants to admit it or not.

[mike_c]

25. I certainly agree there is a class war....

I just don't think MOST universities are on the wrong side of that war. The major private universities are-- they maintain the elitism that was once a major characteristic of ANY higher education. But as I said, most Americans attend state universities that have a vested interest in keeping program quality as high as they can and costs as low as possible.

[gravity]

38. Duke isn't expensive because of greed

It's just expensive to run a University. Duke could try to make some budget cuts, but it's not going to be significantly cheaper.

It's not scheme for the rich to remain up top. Most schools try to get a diverse class from all socioeconomic backgrounds, but can't for various reasons including the costs of running the school.

If you want to change this, then get the government involved, to help give cheap loans to students and to provide more financial aid.

[Nikia]

7. Because they play Robin Hood

Full tuition helps subsidize scholarships for poorer students. My school did that too.

[Berry Cool]

10. Seriously, subsidizing other students is part of the real reason.

When some students pay full tuition, it means students who would never otherwise have a hope of attending college can go. Please don't resent this if your student is one of those paying the full bill (and few students pay the full bill anyway). What it means, in the end, is that your student benefits from being around and befriending others who did not grow up with money. It also means that instead of remaining a permanent underclass mired in poverty, other people's kids have half a chance of growing up to be self-supporting taxpayers. That's a good thing, in the long run.

[DFW]

29. I know that, and that is why I didn't ask for financial aid

My daughter cost me the whole nine yards, and we were not thrilled
to see her school listed as Number One in the country in undergrad
tuition. But her roommate freshman year was this sweet ghetto kid
from Baltimore who was on a full scholarship. She didn't have a penny
to her name, and I would have felt like a heel asking for financial
aid, even though my income did not cover enough for two girls in
college and to still put gas in the car (at $7 a gallon now, it hurts).

I had to dip into savings, but what the hell, you can't take it with
you anyway, right? It seemed like a good investment at the time (still
does), both for my daughter AND for her roommate.

[Nikia]

34. You misunderstand me

I would not have been able to attend my college if my college did not do that and give me scholarships.

[JerseygirlCT]

46. But that only covers so much of the explanation

If tuition weren't so very expensive, the pool of those able to pay full freight would widen, and more who could not would still be able to come.

There's been some pretty extraordinary inflation in tuition prices over the last 15 years.

And I distinctly remember (especially b/c it was SO stupid) being told at my 10th reunion, I think it was, that our tuition had increased so hugely because we didn't want to look like we were worth less than schools like Princeton. Yes, they actually said, and even wrote that. They'd hiked tuition to the skies because they were afraid a better deal would have people thinking the school was of a lower quality.

It amazed me then, and continues to do so, 15 years later.

[jmowreader]

12. I don't think "poorer students" get into Duke

That place is mega selective, and they look real hard at stuff like the kinds of things you studied in school, your SAT scores and the amount of volunteering you did. Remember that "well rounded" crap we fell into a few years ago, which really meant "if you decided to sit down for five minutes a day we aren't letting you into college"? Duke likes a well-rounded student.

A "poorer student" won't do cheerleading, three school sports, volunteering at the homeless shelter-soup kitchen-free clinic-teaching English to Chinese immigrants, working two jobs, inventing five useful devices and protesting the Terri Schiavo decision, like college admissions officials like anymore. Poorer students work to support their families.

[Nikia]

36. Some do, some don't

Poor students come from families that supported them, without the child earning income, for their first 14-16 years of childhood. If their family economic situation is not getting worse and their families are supportive of their decision to go to college, they don't necessarily encourage them to work during the school year or at least not excessively. Being able to go to a good school and get scholarships means that they have a chance of being successful and perhaps help their family later.
Lack of money does limit participation in certain activities like travel teams and sports requiring expensive equipment, like hockey, but it does not mean that the student cannot participate in a few extracurricular activities, including sports. If no poor students had time to participate in extracurriculars, there would be many schools that would not have sport teams or extra curricular activites which do.
Students from poor backgrounds who excel academically and in a couple extra curricular activites are admitted to selctive private colleges. They are not as numberous as the rich students, but they are there.

[terisan]

8. Is the Federal Loan Guarantee System Part of the Problem?

If a college has low ethical standards for itself, wouldn't it be in the school's financial self-interest to jack up their prices, then tell students to get maximum federally-guaranteed loans from private banks to pay charges: the College wins by bringing in more income than it could get otherwise, plus it get to keep building its endowment; and is able to indulge in administrative perqs with the student loan income (administrative costs have increased).
The banks win by making federally-guaranteed loans. Military wins by enticing graduates into military to get loans paid as part of enlistment bonus packages.
State and local governments win by obtain teachers needing to get loans forgiven (helps keep salary costs down). The only losers are students-who take jobs they might otherwise shun in order to pay loans, and the others who struggle to pay their loans for years or decades.

[1932]

15. Part of it is because all these loans allow Universities to keep prices high without losing students

Another reason is because it is expensive to give students a good education.

[undeterred]

17. I don't send a dime to either of the schools I graduated from and I never will

Its not because I don't think they're wonderful schools. Its because I left them years ago and I am still paying down the debt. It makes no sense. And I imagine thats true for a lot of other people too.

[AngryOldDem]

27. I am the same way

We used to get calls about twice a year from earnest-sounding undergrads, asking us to remember all the good times we had at the school (well, actually, I worked my ASS off for four years because I didn't qualify for enough financial aid) and the great education we received (well, actually, I had some pretty incompetent profs, but that's okay), and GEE, wouldn't it be great to help other students have the same experiences we had? Then they would throw out some ridiculously exorbitant "donation" amount which was way beyond what either of us could -- or wanted -- to give. They make the assumption that since you went to college, you must be rolling in the dough.

We got sick of the calls and actually told one kid that because of the school's raising tuition rates by almost 10% every fucking year, we can no longer afford to send ANY of our kids there. We then asked the alumni office to take us off their phone list. The school took a lot of my money, so I figure I've done my part. I have NO guilt over that.

Colleges are not bound to the laws of economics or market forces. I don't know how much all told I spent during four years, but I can say that I haven't gotten much of a return on the investment. And I daresay the same holds true today, only that kids today are investing a hell of a lot more than I did.

Asking the question of why college is so expensive is one for the Delphi Oracle.

(My alma mater is also private and is well-endowed.)

[Lex]

20. Private universities basically perpetuate the unofficial caste system in the US.

They allow, for the most part, the rich students to go to school with other rich students (contacts, friendships, marriages) and get hired by the big corporations, private universities, major hospitals.

The actual education you receive at a private college vs. a state supported college is very much the same, so the difference is that wealthy kids can go to school and socialize/marry/become friends with other wealthy kids.

[Nikia]

33. I would have had to pay more out of pocket if I would have

Gone to Miami of Ohio or Ohio University for 4 years, which were the good state universities where I graduated from Ohio, than the private college I went to. They cost less, but don't give out much of their own aid.

[rockymountaindem]

21. These days I'm starting to think it's because schools fully subsidize Ph.D students

Since I'm going to be a master's student next year in the Ph.D stream, it's become clear to me where exactly a lot of that undergrad tuition is being spent:

...on the people who are going to represent that school in the world of academia for the next 40 years. *That's* a huge and critical investment for those universities.

[undeterred]

35. But they don't fully subsidize them

Thats true only for the best students in certain fields. Its true for all students in the sciences, because they couldn't possibly have time to work outside. But I worked on a PhD and went to school for years and didn't end up teaching at all - neither did more than half of my classmates. Not enough jobs or we were too old to be considered when we finished. And some of us have huge loans and went into other fields completely. Something is way off balance. They take more people into programs than there is a demand for. I thing TENURE should be abolished, but hey, that's just my opinion. There's a lot of dead wood at the top.

[Sadie4629]

23. Duke is a private institution

A long time ago one of my friends, a single mom of two young sons, decided to go back to college. She was looking into private colleges at the time, and I remarked about the cost being so much higher than state colleges. She told me then that a private college makes it well worth your while to attend.

I found that to be true when my own sons started looking into colleges. Those institutions offer financial aid and scholarships that can make their costs comparable to state colleges. Since a lot of it is in scholarships they can be selective as to what kind of students get the money to go there. They often have scholarship competitions that award full scholarships to a very lucky (and bright) few. Both of my kids got scholarships limited to graduates of their high school who would attend the particular college the endower graduated from.

Except for a very few (for whom the cost doesn't matter anyway) the price tab on a private college education is meaningless.

[wiggs]

26. Private schools like Duke offer a lot of

assistance to students who can't otherwise afford to attend or who they really want to attend. For us, if my girls had chosen a private school, it is likely that we would have received aid (much of it grant) that would have reduced actual cost to come close to the cost of the public school they did choose. This is not uncommon, working out this way often for middle class folks.

Both (twins) start Berkeley in the fall. No aid from Berkeley was offered, except for loans at 7.9% which we'll pass on.

[aikoaiko]

28. A couple of things to remember --

If youre independent adult, then you have to pay for your "room and board" anyway. Typically is called rent, utilities, and groceries outside of college. Second, you often have to pay for your "personal expenses" and job related expenses anyway.

Sure, tuition at top private colleges is expensive, but you do get something for your money. Yes, there is something to be said for paying for the Duke brand and the networking that gets accomplished there. You also have access to some of the worlds greatest scholars, but not much.

There are alternatives that are much less expensive. Here in GA, state university tuition and some fees are FREE if you have a B average and follow the rules. If you play your cards right you can get a great education for free in GA. Of course there is still the matter of room and board and other financial responsibilities.

Go Dawgs.

[mike_c]

31. I did my doctoral work at UGA....

Damn, I loved Athens. My ex and daughter are still there and I gather it has grown a LOT since the late 80's and early 90's when I was there.

[aikoaiko]

41. Its still a fine college town. Too bad your ex got it in the divorce, but its a good place to raise

.... a kid though

[BlooInBloo]

39. Note that outside of professional school, few grad students pay tuition at all.

[LuckyLib]

47. Not in major public universities. Some areas may pay most of tuition, but

in others, students are paying their own way.

[BlooInBloo]

48. Then your experience differs radically from mine.

[WonderGrunion]

43. I saw a documentary

It was a Canadian documentary that was being broadcast on Free Speech TV. The conclusions it found was that the shift from government college grants to government backed loans led to a staggering inflation in tuitions. This was because while the majority of federal money was still in grants, there was pressure on state institutions to keep costs low. Private institutions, to remain competitive, would follow suit. With the transfer to federal student loans, these pressures were removed and the inflation flood gates were opened.

The whole process was referred to as a privatization of debt. It shifted the burden of higher education costs from all taxpayers, to those most reliant on loans (the poor and middle class).

I can't remember the name of the film, but it was a fascinating study of governmental economics.

[JerseygirlCT]

44. Not a stupid question at all.

As parents looking at college soon for our kid, it's one we ponder near constantly.

How is it everything else has gone up X%, while college tuition has increased X to the nth% since we attended college?

We understand that a private college now probably means an outlay of near 50k a year. When we went, it was 6k a year. I graduated 25 years ago.

How does that work?

As it's been explained to me, one piece is that more and more people are in need of financial assistance. Ok. But if the cost wasn't so huge, wouldn't that mean fewer people needing financial aid?

It seems a huge upward spiral with no control and no end in sight.

I wonder if there IS an answer?

[northzax]

45. consider the cost of a place like Duke to be roughly the same

as the MSRP on a new car. a comparative few actually pay the MSRP. if they want to sell you the car (or they want you to come to Duke) they will make it possible. within limits, of course.

so why is Duke so expensive? because it can be. They can find enough people to pay it to justify the price tag, and the accompanying status it conveys. that's all.

Could Duke cut tuition in half and still provide the same service? probably. but why? it already cuts tuition in half for probably half the students there, and more for others. 45% of Duke undergraduates recieved some sort of need based financial aid last year (http://development.duke.edu/development/fai/publications/case/howorks2.php) others get merit based aid (academic scholarships, athletic scholarships, merit scholarships for things like community service, playing an instrument, dancing, whatever)

[entanglement]

49. Why go to Duke at all? Why not UNC or some other nice state school?

n/t

[MountainLaurel]

50. The name n/t

[raccoon]

52. The rank and file aren't getting the money, that's for sure.

I have worked for years at a community college, in a part-time, no benefits job. A woman in HR told me that HALF the people working here are part-time.

Many colleges nowadays have many part-time workers and adjunct faculty.

Reply #5 said it--administrative salaries. Oh, and also more branch campuses and new buildings.

[Jimbo S]

53. Other sources of income are drying up

Government dollars
Private donations
Research work

The difference has to made up somewhere, ie tuition.

[ComerPerro]

54. schools like Duke are expensive to keep regular people out

[Javaman]

55. Well according to the GAO a gov't pensil costs us $3,000...

so there you go.