We live in a paradoxical society. In order to rise in socioeconomic status, or even to maintain one’s current status, one must now obtain a high quality college education. Because this is such an essential component to financial success, you would assume that it was readily available to the vast majority of Americans. You would be wrong in this assumption.
The cost of attendance at American universities has been rising at exponential rates for many years. Despite this, most Americans haven’t seen a significant income increase over this same time period.
In fact, between 2000 and 2013, tuition at the average American public college rose by 87%. Over the same time period, the average household income in the United States fell by approximately $5,000 per year. How can the average American family, whose incomes are either falling or remaining stagnant, be expected to pay nearly double in tuition costs?
In 1975, tuition at the University of Michigan was roughly $800 per year. That same year, the average household income in the United States was $11,800. Fast forward to 2015, where tuition at the University of Michigan is approximately $14,000 per year, and the average household income in the United States is $55,775.
If you do some basic math, you’ll see that in 1975, tuition costs for a University of Michigan student would have, on average, accounted for a little less than 7% of his family’s annual income. I would venture to say that, for the majority of American families at the time, this could be made to work in nearly all cases.
However, even if a young person’s family refused to pay for college, in 1975 it was certainly within the realm of possibility to work one’s way through. The federal minimum wage then was $2.10. Working 20 hours per week, one could have earned a little under $2,200 in a year. More than enough to pay tuition and likely enough to live and eat off of, though admittedly it may have required a bit of creative budgeting.
In 2015, tuition costs for a University of Michigan student would have represented 25% of his family’s annual income, assuming they made the national average. This isn’t even factoring in housing costs and the cost of a meal plan, which have essentially become mandatory expenditures for those living on campus, and is a requirement for most freshmen.
If a student’s family refused to pay for college in 2015, working their way through was more than likely not a possibility. The federal minimum wage in 2015 was $7.25, meaning that if one worked even 30 hours per week, they would have only ended up bringing in $11,310 annually. Even in Michigan, where the 2015 minimum wage was $8.15, their annual income would only be $12,714.
As this clearly would not be enough even for tuition alone, a student would be left with very few options. They could potentially take on large amounts of debt, but the federal government only allows freshmen to take out $5,500 in loans and for many students, private loans to cover the remaining costs are simply not an option without the assistance of their parents.
As surprising as it may be to some, there are parents who are simply no longer willing to take on massive amounts of debt in order to finance their child’s education. Similarly, some parents may be willing to take on debt, but do not have the ability to do so.
This isn’t even to mention that debt, regardless of whether or not it is for something as important as a quality education, is never an excellent idea. Every year, roughly $100 billion is collectively borrowed to pay for college education. Americans should not be forced to saddle themselves with this much debt in order to simply have a chance at making a good life for themselves, or to set their children up to do so.
But let’s slow down a step. I can continue rambling on about the spiraling cost of college, but it is a useless endeavor if we don’t properly understand the issue. We need to address why college costs are rising as much as they are.
I could delve into the massive spending increases on collegiate athletic programs, the large increases in non-teaching jobs at universities in recent years, or the drive to continue improving campus facilities to attract the best and brightest students. Instead, though, we will focus on the primary culprit – lack of funding.
When the financial crisis hit, many states were left with enormous budget crises. They were forced to make large cuts to their budgets, and education was one of the areas hit hardest. By 2013, eleven states had cut education spending by more than one-third. Two states, Arizona and New Hampshire, went so far as to cut the amount they spent per student on education in half.
You may assume that now, since our economy has largely recovered, this issue has been rectified. It hasn’t been. Because of the enormous expansion of mandatory spending programs under former President Barack Obama, most states have not been able to restore, let alone increase, education spending.
In the 1980s, the average state allocated 10% of their budget to Medicaid. Today, that figure has risen to over 16%. States simply cannot afford to take on these extra costs without cutting spending in other areas. Education, unfortunately, is often the target of these spending cuts. During this same time period, education spending as a percentage of the average state budget has fallen from approximately 14% to 12%.
Now, you may assume that colleges and universities would simply cut back spending in certain areas and make things work until such time that their funding was restored. Again, you would be wrong. Instead of taking the hit themselves, these universities simply shifted the burden on to their students.
According to researchers at the Delta Price Project, students are now paying more than half the institutional cost that it takes to provide their education – a roughly 20% increase just this past decade. Instead of cutting back their own spending, universities are shifting the burden on to their students, forcing them to make up for the cuts to their budgets.
Perhaps you are thinking that this is all well and good, but is it really an issue if the extra cost is worth it? If a college degree will put an individual on the path to economic prosperity and financial security, one might argue, what does it matter if they have to pay a little bit more?
I would be inclined to agree with you if that was the case. The sad truth is, having a college degree no longer guarantees any sort of economic prosperity or financial security.
On average, college students graduate with around $30,000 in debt, and the average starting salary for recent graduates in 2016 was $50,556. Does it really make sense to spend tens of thousands, and sometimes hundreds of thousands, of dollars and incur $30,000 in debt just to make $50,000 per year?
And this is assuming one even ends up making the average. Depending on a person’s major, they could very easily end up making more or less than the $50,556 average. In 2016, the average engineering graduate started out making $64,891, and the average education graduate started out making $34,891.
Using these numbers, a case could easily be made that attending college for a discipline like engineering is certainly worth it from a financial standpoint, but attending college for a discipline like education is probably not. I mean really, why would anyone in their right mind incur $30,000 in debt (not to mention the out of pocket expenses) to make a salary of just a few thousand dollars more?
This is especially true when you consider that one could go to Amazon’s career website and get a full-time job that pays $26,000 per year ($12.50 per hour, at the time of this writing) with benefits in a little under 20 minutes, and the only qualification required is a high school diploma. In the time that they were going to college to procure a $35,000 per year job, they could’ve made over $100,000 working at Amazon, and even put a bit of money away. Perhaps even began a modest investment portfolio. In fact, by that time they may have earned some sort of promotion and be making a similar salary to one they’d be making with a degree in education.
You may think that perhaps, by the time an education major reaches the middle of their career, they will have surpassed the average salary earned by a blue-collar worker. You would (once again) be very, very wrong.
According to a 2012 CNNMoney article, the 2011 average annual salary for an oil-rig worker was $99,175. Most of the jobs included in this figure require only a high school diploma, and some don’t even require that.
In a 2014 USA Today article, it was reported that the average mid-career salary for an education major was $51,400. Obtaining a master’s degree would likely increase their salary, but certainly not to the levels of an oil-rig worker. This isn’t even to mention that getting a master’s degree requires, you guessed it, paying even more exorbitant college tuition costs, and missing out on at least one year’s wages.
To be clear, I’m not suggesting that anyone drop their college aspirations and work instead at Amazon or move to Houston and hook up with an oil-rig. There are obviously many other factors that go in to a decision to pursue a career in a given industry. Chief among them being happiness and fulfillment, which are both very important and, perhaps, more important than how much money one makes.
Rather, I’m simply pointing out that, in many cases, it no longer makes financial sense to attend college. Costs have been driven up so high that, because of stagnant wages in many industries, students have been de-incentivized to pursue degrees and careers in industries like education. An industry, by the way, that is vital to the survival of our society.
The rising cost of college isn’t only punishing those attending college, but also K-12 students. As has been clearly demonstrated, going to college to become a teacher does not make any sort of financial sense. This has driven many intelligent, passionate teachers out of the industry to pursue higher paying jobs, and has caused many students interested in becoming teachers to pursue more financially sound career paths.
Because of this, the few good teachers left in the industry work almost exclusively in wealthy school districts that can afford to pay them a reasonable salary. Poorer school districts, like those in most of America’s largest cities, are left scrounging for whatever teachers are left. Often times, these are teachers who cannot find work anywhere else. The natural effect of this is that many of our nation’s largest school districts provide a rather low quality education, to put it mildly.
This issue of college not making financial sense is especially prevalent in these lower income communities. Young people from low income families and communities need to go to college in order to improve their socioeconomic circumstances, but many who have the intellectual ability to do so simply do not. Either they don’t have the financial resources, it makes more financial sense for them to get a decent paying job immediately after high school in order to help support their family, or they aren’t properly prepared by the public schools in their area.
How can we as a society reasonably expect to improve the lives and circumstances of low income people if a college education is largely out of reach for them? Often times, the only option for these students in low income communities is to attend a school that guarantees meeting 100% of demonstrated financial need.
However, the schools that provide this guarantee are among the nation’s elite. For students attending failing public schools that likely don’t even have the ability to properly prepare them for a mid-tier public university, the idea that they could be admitted to the likes of Harvard and Yale is often seen more as fantasy than reality. In a world of state budget crises and monumental cuts to education spending, this is unlikely to change.
It is clear that the cost of college in the United States is getting out of hand, and a proper solution must be put forth in order to rectify the issue and provide Americans with the access to the American Dream and upward mobility that they once possessed. The question is, what is that solution?
It is my view that the free market principles which have made the United States into the foremost economic power in all the world must be applied to the education sector. Including, but certainly not limited to, college education.
I am of the opinion that the practice of out-of-state tuition should be abolished. Opposed to our current system, where students are incentivized to attend in-state universities in order to take advantage of the relatively low tuition rates, all public universities in the United States should adopt one flat tuition rate for all American citizens.
If this practice were adopted, American universities would be forced to truly compete with one another on a national scale, rather than our current system where universities generally must compete only with those colleges in their own state. In states like California, this is not so much of an issue. In smaller states like Arkansas and Idaho, though, it most certainly is.
A student in California has the option of attending excellent schools such as the University of California – Berkeley, UCLA, UC Irvine, UC Davis, and so on, for relatively low in-state rates. In addition, there is the California State University system which residents of the state also have the option of attending. While not as prestigious as the UC system, it still provides a viable alternative and a decent amount of competition.
Students from small states like Arkansas do not have these same opportunities afforded to them. The only public university in the state with national recognition is the University of Arkansas – Fayetteville, and even U of A is not considered a top-tier public university. Arkansas State University, while a respectable institution, is not likely to provide significant competition within the state of Arkansas.
One will find a similar situation in Idaho. Of the three main public universities – the University of Idaho, Idaho State University, and Boise State University – none break the Top 100. The highest ranked of the three, the University of Idaho, is ranked #171 by U.S. News and World Report. While these rankings are certainly not everything, and some may assert they are meaningless, they do provide general insight into the quality of affordable education available to residents of Idaho.
For this reason, I believe it necessary to institute a national free market with regard to higher education. A single tuition-rate among all public universities would allow all Americans access to our nation’s most elite public universities, while simultaneously forcing those lower ranked universities to slash tuition prices and offer more scholarships in order to remain competitive.
If this proposal were instituted, a high-caliber student in Wyoming would not be forced by financial convenience to attend the University of Wyoming. Instead, they would have the ability to attend the University of Virginia, the University of Texas, and other elite public institutions for a reasonable price. However, that same student would likely have the option of attending the University of Wyoming (or a similar institution) for a significantly lower price, as universities like this would have no choice but to lower their cost of attendance to keep student enrollment high.
Another natural effect of this policy would be forcing the cost of attendance at private colleges and universities to drop precipitously. If a student could attend the University of North Carolina or the Georgia Institute of Technology for approximately $20,000, why would they pay nearly $60,000 to attend Baylor University? Answer – they wouldn’t. Institutions like Baylor would have no choice but to lower their prices and offer more money in scholarships and financial aid to maintain levels of enrollment.
Of course, there would be objections to this proposal. The complaint I receive most often is that this upheaval of our current system would be unfair to taxpayers, forcing them to subsidize attendance of students who do not, or whose parents do not, pay taxes towards funding the universities in their state.
The first thing I usually point out to these people is that they would be reaping the same benefits. If they chose to do so, they could send their children to a public university out of state without paying out-of-state tuition.
Sometimes, though, this does not assuage their concerns. Many people whose children have no intention of attending any institution other than those within their home state object on the basis that allowing out-of-state students to attend for the same price will drive up competition, making it more likely that their child is unable to gain admission to their favored institution.
This is a legitimate concern, and I have a solution for it. Under this proposal, states would be given the power to set a cap on the number of out of state students they allow. For example, the University of Colorado – Boulder may decide that they only want to allot 25% of their incoming class space for out of state students. This way, Coloradoans still maintain a significant advantage in the admissions process and a moderate amount of talented out-of-state students are brought into the state.
By contrast, the University of Mississippi may decide they want to allow up to 50% of their incoming class to be from out-of-state in order to bring talented young people to their state. Because of the relatively low population of Mississippi, this likely wouldn’t affect Mississippians a great deal, and it could potentially spur growth in the state.
At the end of the day, states’ rights would be preserved, and the free market would force cost of attendance down across the board. Public institutions would be forced to cut waste and budget properly, and would no longer be able to get away with passing off budget shortfalls to their students.
There is no doubt that the rising cost of college education must be dealt with. In employing free market principles to solve the problem, we can reject the rising tide of socialism in this country by demonstrating that vastly superior capitalistic principles solve problems more effectively, for significantly less money, and without expanding the size of the federal bureaucracy.