A few posts ago I gave my opinions on why people should stop complaining about the price of college these days (College is Not a Yard Sale ). After sitting in a seminar given by an economics professor (and president of a liberal arts college) about the costs of higher education, I felt the need to share *objective data on the subject. For clarity, I am dividing this post into general data, data relevant to public colleges, and data relevant to private colleges.
General Data Points
- There are 4,314 degree-granting institutions in the country
- These schools serve 21 million undergraduates
- 40% are public colleges
- 38% are private colleges (3-4% are liberal arts)
- 8% of those are for-profit colleges (up from about 3% just 10 years ago)
- (the remainder are 2-year or vocational colleges)
- The graduation rate for online education is less than 10%; the default on loans rate is 15% for this population compared to 5% for private college graduates (I have another post outlining my distaste for online learning: My Beef with Online Learning )
- 15% of students pay more than $30,000 a year for college
- Almost 60% of students pay less than $12,000 a year for college
- The average amount of debt per college graduate is $25,000.
- The average difference between yearly salaries of college graduates and high school graduates is $30,000
- The worst the economy, the higher college enrollment (because people can’t get work so they go back to school with the hopes of improving their likelihood of being hired)
- Household incomes have decreased across all SES groups since 2000 (in some groups as large as an 11% decrease)
Public College Facts
- While public colleges comprise 40% of all colleges, they educate 76% of undergraduates
- As the economy gets better, the cost of public education goes down
- As the economy gets worse (like now), the cost of public education increases because of lower state appropriations (i.e. they get less money from the government so they have to make up the difference by increasing tuition)
- Since 1981, the cost of a public college education has increased 3.5x (or 350%)
- 50-60% of the cost of attendance at a public college is subsidized (when appropriations allow for such a large amount)
Private College Facts
- While private colleges comprise 38% of all colleges, they educate only 15% of undergraduates
- As the economy gets better, the cost of private education rises (because more families can afford to pay)
- As the economy gets worse, the cost of private education remains stable (with appropriate increases for inflation)
- Since 1981, the cost of a private education has increased 2.8x (or 280%)
- Approximately 30% of the cost of attendance at a private college is subsidized by the college (through gifts, financial aid, and the endowment)
In the words of the presenter, ‘this is the perfect storm’. What she means is that we have 3 things that give the illusion of significantly higher college costs: increased enrollment, increased costs to meet enrollment demands, and decreased family income. The former two will always rise and fall together, but with the addition of the third, the gap between what people can pay out of pocket and the cost of college is much wider than it has been for 30 years. College tuition is determined by the intersection of supply (operating costs) and demand (students). Non-profit colleges do not make money. Any extra money at the end of a fiscal year is reinvested in the college endowment. Conversely, 85% of the profit made by for-profit colleges is from federal funds (e.g., Pell grants, federal aid), and it is not reinvested in the college (it often is moved into the private sector).
The point here is that the general public is outraged at tuition prices, yet the reality is, most college students are not being ‘overcharged’. In fact, they are almost always undercharged (even full pay students) because of subsidies. What is it that you want colleges to do? Lower the price? With that comes lower quality. Choose your choice.
Rock the Vote.
*Sources for these data: The College Board, Annual Survey of Colleges; NCES, Integrated Post Secondary Educational Data System (PEDS); U.S. Census Bureau, Current Population Survey