Education at California’s public universities gets more expensive again – UC has doubled in six years

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!

For more see:
UC Regents hike tuition – again
Capitol Alert: UC regents vote to increase tuition
Cal State trustees raise tuition 12%

Tuition up and top salaries secure on college campuses

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 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).

Dartmouth President justifies price hikes claiming education still worth twice the tuition

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.

Tuition costs outpace inflation again

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.

The Tuition Bubble

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.

Tuition continues to rise faster than CPI

Inflation Watch readers who worry about deflation will be reassured to learn that the cost of a college education continues to rise rapidly:

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?”

Tuition increases as much as 16% at Georgia public universities and colleges

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%.