The Next Bubble …
College costs have become luxurious for the average American family. Something has to give. It is time to Make College Great Again by making it affordable. First, a few facts:
- In the most recent survey of college pricing, the College Board reports that a “moderate” college budget for an in-state public college for the 2015–2016 academic year averaged $24,061. A moderate budget at a private college averaged $47,831.
- The graduating student from the class of 2015 averaged a little more than $35,000 in debt from their four year college
- You’ll need books and other course materials. The yearly books-and-supplies estimate for the average full-time undergraduate student at a four-year public college is about $1,200
- Salaries for Professors — By rank, the average was $98,974 for professors, $69,911 for associate professors, $58,662 for assistant professors
- The average public college president earned just over $428,000 in 2014, up 7% from a year earlier, according to an analysis of 238 chief executives at 220 public universities from the Chronicle of Higher Education. That’s 3.8 times more than what the average full-time professor makes.
- After four years of college education, the average graduating student in 2015 that could find work, about 6 in 10 of them, had a starting salary of $45,478
The Bubble …
- The U.S. Census Bureau reported in September 2014 that: U.S. real (inflation adjusted) median household income was $51,939 in 2013 versus $51,759 in 2012, statistically unchanged. In 2013, real median household income was 8.0 percent lower than in 2007, the year before the latest recession
- Very hard for families to save for college with wages being what they are today. The loss of higher paying manufacturing jobs have dragged down wages along with bad trade deals and middle class jobs moving overseas
- According to The College Board, the average 2014-2015-tuition increase was 7 percent at private colleges, and 2.9 percent at public universities. However, looking back at the last decade, the 10-year historical rate of increase is approximately 5 percent
- The average annual wage increase for American workers last year was 2.1%, well below the rising costs of college
- Perhaps the bubble is on a slow build up … Last October, just 65.9 percent of people who had graduated from high school the previous spring had enrolled in college, the Bureau of Labor Statistics said this week. That was down from 66.2 percent the previous year and was the lowest figure in a decade. The high point came in 2009, when 70.1 percent of new graduates had gone on to college
College, what is in a name?
Apparently, quite a bit … colleges have successfully changed the terms of the deal teaching their student base it is OK to go into debt, cheer for their college sports teams and “don’t worry, be happy.” Colleges are in the business of the here and now and student debt is not their problem … it’s the students problem, and their parents problem that co-signed the loans. They won’t send us the student’s grades but they have no problem sending us the semester bills. They are adults and have a right to privacy except when it comes to paying their debt.
Where is this heading?
Well, Bernie Sanders would have American taxpayers paying for college making it free for all. Well, with the US already $18 Trillion in debt with Obama doubling the national debt in seven years time, we’ve already reached Margaret Thatcher’s famous quote, “The problem with socialism is that you eventually run out of other people’s money.”
Do the math. Average household income vs. annual cost of college is a train wreck already. College attendance has begun to drop. College today is for the top 65%ers and dropping. How low will it go? What school is going to drop the current price model and use market forces to reduce the cost of school? Some online schools have begun this effort but cost is still high. Competitive forces are needed along with families and students pushing back by walking away from routine college tuition and charges. Find alternative, innovative approaches. This is coming.
Scholarships are part of the equation but what is really needed is market forces to help reduce cost. When students stop applying in sizable numbers, rates will drop, universities will be forced to reduce costs. This bubble is coming … do the math! Make College Great Again!