Education at California’s public universities gets more expensive again – UC has doubled in six yearsPosted: July 15, 2011
For the second time in a year, University of California (UC) Regents voted in a hike in tuition. Tuition has now increased over 18% for the academic year and has now more than doubled in six years.
Interestingly enough, the Vice President of Budget and Capital Resources received approval for a 10% pay increase at the same meeting.
Tuition in the California State university system was increased 12%. At the same time, San Diego State’s president was approved for a salary 33% higher than the previous president. His salary is now a whopping $400,000.
At least administrators can continue to afford to send their children to California’s public universities!
This is a good news/bad news tale of inflation.
The good news is that the salaries and benefits for college presidents at public universities held steady the last academic year (2009-2010) as reported by AJC.com in “Study: Recession hasn’t cut college president salaries“. This was no easy feat given the generous compensation:
“The median total compensation for 185 presidents running the country’s largest public research universities was $440,487. About one-third earned more than $500,000 and the 10 highest earned more than $725,000 each. Ohio State University President E. Gordon Gee received $1.8 million, the highest.”
Of course, staying flat is nothing compared to the 27% hike in median pay for the nation’s CEOs in 2010, but those increases only restored CEOs to pre-recession levels. A University of Georgia spokesman defended the pay for presidents by pointing out the limited supply of qualified candidates for the job.
The bad news about inflation on college campuses is that tuition increased. Students paid a whopping 25% more in tuition in the last academic year. Assuming most of them will not grow up to be CEOs, they can probably look forward to working in a company where their salaries will not keep pace with the head honcho. (The average compensation package increased 2.1% last year).
This week, Dartmouth’s President Jim Yong Kim defended recent tuition hikes in front of an assembly of students. The Dartmouth reports in “Kim fields students’ criticism, questions” that Kim justified the tuition hikes by blaming the budget deficit. Kim went on to remind students about the “bargain” they receive with a Dartmouth education and the high lifetime value generated by this education:
“Despite the increased cost, the College is still discounting students’ educations — which are worth twice the amount of tuition costs — by 50 percent…
Kim emphasized the value of an Ivy League education, citing the evaluations of economist and Yale University President Richard Levin. Levin estimated that a four-year college degree increases an individual’s income by 40 percent…”
Kim also claimed that financial aid is absorbing much of the hit for needy families.
Kim’s stance on return on investment (ROI) sums up the defense best: “Your return on investment of going to Dartmouth is higher than it’s ever been before.”
I could not tell from the article whether these answers mollified any frustrated students, but I think they are on the right track to question these constant price hikes that well-exceed the existing level of inflation.
According to the NY Times, The College Board’s annual report shows tuition costs at public and private universities outpaced inflation yet again this year:
“…four-year public universities increased their published tuition and fees almost 8 percent this year, to an average of $7,605, according to the College Board’s annual reports. When room and board are included, the average in-state student at a public university now pays $16,140 a year. At private nonprofit colleges and universities, tuition rose 4.5 percent to an average of $27,293, or $36,993 with room and board…
…Over the last decade, published tuition and fees at public four-year colleges and universities increased each year at an average of 5.6 percent beyond the rate of inflation.”
The spiraling cost of higher education has arguably been supported by generous federal assistance:
“In the last five years…average published tuition and fees increased by about 24 percent at public four-year colleges and universities, 17 percent at private nonprofit four-year institutions, and 11 percent at public two-year colleges — but in each sector, the net inflation-adjusted price, taking into account both grants and federal tax benefits, decreased over the period.”
These pricing dynamics show an increasing shift of funding for public higher education from states to the Federal government.
Carpe Diem argues that there is a bubble in the cost of higher education, and the bubble will soon burst. He posts a dramatic chart showing the rapidly growing divergence of the cost of a higher education and the CPI AND housing over the past thirty years.
This author believes that the bubble in government debt will burst first but given that government debt partially helps support the spiraling costs of education through support for ballooning student debt, the timing may be close enough. Note well that rising home equity helped many middle-class families scrape together enough money to pay for college for their kids – that prop will not likely return anytime soon.
- California State University trustees raise tuition by 5%.
- Oklahoma State to raise tuition by 4%.
- University of South Carolina to raise tuition by 6.9%.
- University of Alabama at Huntsville to raise tuition by 15%.
- Temple University to raise tuition by 5.9%.
- University of Wisconsin to raise tuition by 5.5%.
- 8.5% tuition rise at University of Tennessee at Knoxville likely.
Glenn Reynolds writes: “With only a few exceptions (like being admitted to Yale Law School or CalTech) I strongly recommend avoiding student loans. And I wonder — when you’ve got an industry whose prices have skyrocketed on a combination of consumer ignorance and cheap credit, what happens when consumers wise up, and credit gets harder to come by?”
Bloomberg Businessweek reports that the Board of Regents for the University System of Georgia has approved tuition increases at Georgia public universities and colleges. Research universities will experience the largest increases, as much as 16%. Many state universities will see increases of as much 9%. Two-year colleges will see tuition increase as little as 4%.
Tuition at colleges and universities are soaring (click here for story about UC schools), but, apparently, faculty are not receiving the benefits, at least not lately. The New York Times reports on the annual salary survey conducted by the American Association of University Professors:
“Over all, salaries for this academic year are 1.2 percent higher than last year, the smallest increase recorded in the survey’s 50 years — and well below the 2.7 percent inflation rate from December 2008 to December 2009.
The survey found that average salary levels actually decreased this academic year at a third of colleges and universities, compared with 9 percent that reported lower average salaries in the previous two surveys. Private and church-related universities reported shrinking average salaries more often than public institutions.”
Of course this leaves us to wonder where all the money is going from tuition hikes. The article notes: “Generally, administrative salaries at colleges and universities have been increasing far more quickly than pay for faculty members.”
Associated Press reports:
Average tuition prices rose sharply again this fall as colleges passed much of the burden of their own financial woes to recession-battered students and parents. Average tuition and fees at four-year public colleges rose 6.5 percent, or $429, to $7,020 this fall, according to the College Board’s annual “Trends in College Pricing” report, out Tuesday. At private colleges, the average list price for a year rose 4.4 percent to $26,273.
I shake my head in incredulity at the extravagant cost of private colleges. Someday rationality will return to pricing of higher education. But for now, tuition deflation is nowhere to be seen.
We keep hearing about falling prices and intense deflationary pressures and the “new frugality,” but somehow the nation’s colleges and universities haven’t gotten the word.
In Rhode Island:
The R.I. Board of Governors for Higher Education voted last Monday night to raise in-state tuition and fees at the state’s three public colleges by 8 to 10 percent for the school year that starts in September 2010. At Rhode Island College, tuition will jump 9 percent to $6,986 for in-state students. Out-of-state students will pay $16,878. On top of the tuition increase, the board voted to raise the price of room and board by 5.1 percent at both the University of Rhode Island and RIC, bringing the cost of living on campus to $11,083 at URI and $9,519 at RIC.
As part of a plan to plug UC’s battered budget, the regents may vote as early as next month on the controversial, tradition-breaking proposal to require engineering undergraduates, along with those studying business, to pay $900 more a year than the rest of the student body. That would be in addition to the $2,514 systemwide fee increase all students are likely to see by next fall.
The University of Alaska Board of Regents voted to increase tuition … in the UA system Friday at a two-day meeting in Juneau…. Currently, undergraduate tuition for a full-time student enrolled in 15 credits, the normal course load, costs about $4,500 per year. Using that same course load, tuition will rise to $4,755 beginning fall of 2011. In fall of 2012, tuition will rise to $5,115 for the same course load.
Colorado college students … could face another 9 percent tuition increase in the 2010-11 school year.
In spite of the tuition increases (almost twice the rate of inflation for medical care during the past 25 years! why do we have a “health care crisis” but not a “university tuition crisis”?), enrollment at most schools continues to rise. Evidently, many students (or their parents) don’t think twice about borrowing $30,000, $40,000 or even $50,000 per year to pay for “education” of dubious benefit. Someday, the flow of easy credit to students will be cut off or sharply reduced. When that happens, the higher ed bubble will burst. Harvard and Yale will be fine, of course, but many second-tier private colleges won’t make it. That day of reckoning, however, is far off. Until then, our nation’s colleges and universities will continue to post larger price increases than virtually any other sector of the economy.