An Academic Truth Teller- Part Two

In the second section, we will explore how, in the last 40 years, the cost of college has skyrocketed, why students learning & study has plummeted, and where the responsibility for this really lies.

Since 1945, the expansion of the enrollment and missions of universities has exploded. Before 1945, less than 5% of the adult population had a college degree. Today, that number is about 30%. Because of prolific government funding research accomplishments at American universities are matchless in the world.

Then, why have college costs skyrocketed until just recently? Here are five reasons;

1) the size of the college market has grown these past 40 years.

2) the size of family incomes has increased.

3) “credential inflation” creeps into job descriptions that used to not require a college degree.

4) college graduates as a group enjoy a 70-100% earnings advantage over high school students.

5) massive federal student aid made readily available with little or no explanation of the loan provisions.

Sadly, the FAFSA has allowed colleges to charge wealthier families more so colleges can provide greater support for the needier students. Family assets are no longer a guessing game. Simultaneously, colleges have increased their non-teaching administrative positions while fulfilling the Bennett hypothesis. Former Secretary of Education William Bennett opined that colleges capture and spend the student aid money every year, with little or no “rainy day” set-asides. More money, more positions! Dr. Veder also boldly asserts the high cost of college is the unintended but real consequence of federal student loans.

Endowments, the gifts to colleges from alums, have failed to lower college costs, and have actually “reduced the incentive for professors to meet their student’s needs.” The endowments are never tapped to their principal, and rarely taken down to their yearly growth. In fact, Vedder states that endowment money is used to promote arcane faculty research agendas without any consideration of the students’ needs. Endowment givers get tax write-offs while universities pay no income taxes or capital gains taxes. It’s sweet deal for all but the students who foot a high portion of the bill.

And then, there’s the FAFSA debaucle. He raises surprising alarms on this. The proportion of lower-income college graduates has actually DECLINED in spite of massive federal student loans and Pell Grants. Borrowing is too easy, and since there are no consequences on the colleges, it leads to irresponsible marketing and admissions practices. The multi-tiered, byzantine system of grants & loans is bewildering and difficult to understand by the borrowers. While student borrowing continues to rise, the economic gain of a college degree is becoming marginal for recent college degree holders.

Here are his 8 issues with student financial aid.

1) The loan program directly contributes to the rising college prices and costs.

2) The program has miserably failed to increase low-income students GRADUATING from college.

3) Higher college enrollments result in Underemployment of recent college graduates.

4) The loan system has imposed huge financial burdens on borrowers AND taxpayers.

5) The explosion of this easy money has lessened the quality of American Higher Education.

6) Indirectly, the loans have likely reduced household formation and birth rates for decades.

7) High delinquency rates on said loans reflect on the lack of “skin in the game.” of said colleges.

8) The loan program may also have impacted the US savings rate.

He recommends making major changes to the programs. For example, he suggests capping the number of semesters you can borrow money. Implementing Income Sharing Agreements, whereby lenders can get paid back from a “share” of your future work income is a rising concept. Finally, the radical idea of giving grant money directly to the students, not the colleges, so they can use them anywhere that suits them. ( think school choice vouchers for college students ).

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THIS is why you need to get involved with your student’s academic future early. My book was written to help you save money as your student goes forward into their future. . ENOUGH! The College Cost Crisis is a top-notch guidebook not just for the college jungle, but for exploring alternative paths to careers.

Next week, the final installment, with recommendations!

Until Next Time,

All My Best,

Bonnie Burkett