Sunday, March 28, 2010

“It’s the most overpriced product you could possibly buy,...’’

A college education now costing over 200,000 (via Newsalert).

55 Comments:

Blogger David said...

Academic administrators, with few exceptions, fail to seriously address the drivers of these escalating costs, preferring instead to say that nothing can be done about them and that people should be grateful to give their money to such wonderful institutions. See my post fisking Fish's fishy financial findings.

10:59 AM, March 28, 2010  
Blogger God Of Bacon said...

Those who gain something from a problem will never say it's a problem.

11:33 AM, March 28, 2010  
Blogger Topher said...

I thought marriage was the most overpriced product on the American market?

12:06 PM, March 28, 2010  
Blogger Joe said...

Not only is college education very expensive, but increasingly useless. With most majors, half the education is spent taking nonsense and remedial courses. (Same thing happened in High Schools which, ironically, contribute to needed remedial courses in college.)

Our local state university has several "certificate" programs where all you take are classes to learn something specific, like how to run a small business financially. This is the future, but expect colleges and universities to go into it kicking and screaming since it will lead to massive unemployment among useless degreed professors and teachers and increased competition for teachers of core curriculum.

12:54 PM, March 28, 2010  
Blogger Topher said...

The problem is one of what you want to pay for. Employers (or recruiters) want to see a college degree. In most cases they don't care what it is - psychology (apologies to Helen), English, women's studies, whatever.

Ergo, people pay for the degree, not what's in the degree, they smoke their way through college and get the piece of paper they need to get a job.

1:02 PM, March 28, 2010  
Blogger DADvocate said...

Looking at my alma mater, the University of Tennessee one can easily see that the cost of a college education has run amok.

Entering U.T. in summer of 1969, immediately after graduating from high school, I paid $110 tuition for one quarter as a full-time student which works out to $330 for per school year.

Using this handy inflation calculator, that would work out to $1948.90 in 2010 dollars for a school year. Not bad. Almost anyone could easily handle that.

Checking the U.T. website, you'll find that tuition has outpaced inflation by about a factor of 4. One years tuiton is now $7,146. Plus, books, which cost me about $100, are now estimated by U.T. to run $1,406.

These figures are for in state undergraduate students and don't include room and board.

The cost of a college education is outrageous. Obama and the Dems demonize insurance companies and others over health care. At state universities, like the University of Tennessee which is one of the least expensive in the country, we have entities which are completely controlled by government entities and supported by taxpayer dollars yet still rip-off the consumer big time.

This is a disgrace which could readily be rectified but the government is interested in money and power, not efficient, effective, quality services.

1:05 PM, March 28, 2010  
Blogger Cham said...

As a former recruiter of engineers, yes, I would look for people with degrees if that is what they client wanted. But if a candidate appeared that didn't have the degree but did have the skillset for the job I would present the candidate to the employer. I placed many of those types of candidates. Employers want to get the job done not demand college degrees.

College degrees no longer represent people who have the smarts but represent students who have parents that can afford to send their kids to college. I figure that in a few short years you will see employers looking for candidates that have some sort of certification in a field rather than a college degree. This is something that is going to take care of itself and the colleges will have only themselves to blame. Essentially, they are going to put themselves out of business by granting degrees only to the rich.

2:00 PM, March 28, 2010  
Blogger Jeff Younger said...

What Cham said.

4:41 PM, March 28, 2010  
Blogger Larry J said...

“The reality is, many students and parents tend to judge colleges by the price,’’ said Sandy Baum, a recently retired Skidmore economics professor who is a policy analyst for the College Board. “If they lowered the price, many institutions may lose applicants because families won’t think they’re as good. People like to say they’re getting a discount.’’


This is a living example of the old saying about "knowing the price of everything but the value of nothing." Is the education at a college that charges $50K a year twice as good as one that charges $25K a year, or 5 times as good as one that charges $10K? I seriously doubt it.

5:49 PM, March 28, 2010  
Blogger gliderguider said...

Er .. what happened to the liberal empathy post?

6:08 PM, March 28, 2010  
Blogger Dr.D said...

I cannot imagine any circumstance under which I would even consider a school with a $50k/year price tag, even if they were offering all sorts of help. Much of that help is in the form of loans, and that just means deferred pain, not a good idea at all!

Half a century ago, when I enrolled at UT-Austin, I paid $25/semester until my last semester when it jumped to $50/semester, a 100% jump. I was outraged! By the time I was finishing graduate school a number of years later, they bumped it up again, this time to $75 for my final semester. There really is no need for these absurd tuitions today.

10:11 PM, March 28, 2010  
Blogger Andrew said...

This is where I agree with Charles Murray in his book, "Real Education". The problem is that employers use the Bachelors degree as a substitute for an IQ test ( IQ tests for employment have been ruled as discriminatory of minorities in Griggs vs. Duke Power, 1971) and government schools have a monopoly on college credentials. Murray suggests that the credential monopoly can be broken by some entity offering certificates of competence in particular fields without the requirement of residency. An example is the CPA for accountants. Today, private colleges take advantage of the high cost of 4 year education and offer the same thing but are often more expensive. The 4 year study often involves subjects that are not relevant to the objective of the student, some are unnecessary, and others are even pernicious. If employers and students demand certificates be offereed as credential options, this could open up more innovation in the private sector. If you ask me, I think that computer technology such as online instruction, DVD lectures, and programs can save labor on teachers that give the same lecture to different set of 30 students 3 times a day for years on end. We need to break the credential monopoly of governments!

2:34 AM, March 29, 2010  
Blogger JG said...

This comment has been removed by the author.

5:53 AM, March 29, 2010  
Blogger JG said...

College isn't even a substitute for an IQ test anymore. Not by far.

There are absolute morons in certain majors (like elementary education, "angry studies", some of the social/therapy areas and others).

I have met people in elementary education, in particular, who were stupid beyond belief, and they easily got a degree. "Angry studies" people mask their stupidity with in-your-face anger and an ability to repeat phrases like "Studies suggest that ..." (and then they just make up whatever they want), but they are still stupid.

5:54 AM, March 29, 2010  
Blogger Cham said...

IMHO, people who receive college degrees should be proficient in some area of expertise but should also be able to do a few other things. The should be able to write basic business communications, like letters and emails. With college graduates spelling and grammar should be accurate, there should be politeness and the point should be made by the 3rd paragraph. People who earn college degrees should have some social skills, be able to present themselves positively to a new person, look people in the eye and be able to shake hands. Some college graduates can do these things, some can't, but is it too much to ask? $200K should at least buy that much.

8:16 AM, March 29, 2010  
Blogger dr.alistair said...

topher, marriage isn`t a product, it`s a service...

8:32 AM, March 29, 2010  
Blogger Topher said...

alistair,

Services _are_ products.

8:49 AM, March 29, 2010  
Blogger fred said...

1. state schools much cheaper.
2. more and more college presidents are now getting a million plus benfits (homes etc) than was customary but a few years ago.
3. As tuition increases, it does so well behond growth of inflation rate.
4. As prices rise, so too do schools increasingly cut their expensies by using part-timners (no beneifts whatsoever) and grad students.
5. state universities are screwing their citizens (tax payers) by increasing the percentage of out of state student who pay higher tuition, which means your kid, denied acess to his state school goes out of state and pays more!
Issue other than tuition a different subject.

9:47 AM, March 29, 2010  
Blogger JG said...

Universities are paying outlandish amounts of money for people who don't warrant it. Faculty AND staff.

In fact, the amounts of money that the government is paying out for government positions in general is obscene.

I used to hear that someone in government is "giving back" because he could make a lot more in private practice. Maybe that used to be true (or maybe not), but it is ABSOLUTELY not true today. I was looking through a list of fairly high-level government positions that are currently being offered. A relative who was very competent in a specific position in private industry just retired. He was making around $110,000. That SAME function/job was posted for $197,000 in a government agency PLUS very high pension/retirement/healthcare/you_name_it benefits. Exactly the same job description - and I have the feeling that people in private industry are more competent.

Back to universities, though: What would happen if they lower the salary of a women's studies professor? Would she take a job in private industry bitching at men?

I remember one university president was investigated a while back for having a whole slew of "assistants" making over $100,000 a year. She was spending taxpayer money like water. I suspect that goes on all over the place with inflated salaries.

10:24 AM, March 29, 2010  
Blogger Dr.D said...

In the academic world, the model is "easy come, easy go." The money is obtained simply by asking for it (demanding), so why not spend it lavishly? There will be more to be had the same way. There is no accountability because there is no measure of results.

10:45 AM, March 29, 2010  
Blogger David said...

There are certain kinds of products--luxury products--whose perceived value is largely a function of their price and their branding. A $10,000 dress may be better than a $1,000 dress, but it's unlikely to be 10X better in terms of aesthetics and quality. A $300,000 care may be better than a $50,000 car, but not 6X better. What's being sold here is largely status and exclusivity.

The same is increasingly true of college education.

11:02 AM, March 29, 2010  
Blogger GawainsGhost said...

Well, as someone who has taught at the university and community college level, I can tell you that tuition costs are only part of the problem. Yes, the increases are outrageous and unjustifiable, but the greater problem is with the curriculum.

Falsehoods, flawed theories and failed models dominate. This is particularly true of economics departments, but increasingly in the sciences and humanities.

So it's not just that your paying a lot of money, it's that what you're buying is essentially worthless in the real world.

Back in the day a liberal arts education focussed on the trivium and the quadrivium: grammar, logic, rhetoric, literature, mathematics, science, and art. With that kind of foundational education, you could go into any specialized career and be successful.

But not anymore. These days you pay a whole lot of money (go deeply into debt) for a piece of paper that qualifies you for a job you are inadequately prepared for. That's the real scandal.

11:48 AM, March 29, 2010  
Blogger fred said...

JC--who is to decide what folks are worth? Lady GaGa? Tiger Woods? college coach? you get what people are willing (for whatever reason) people are willing to pay.
this too goes on at our colleges

http://www.insidehighered.com/views/2010/03/29/eisenberg

12:12 PM, March 29, 2010  
Blogger Topher said...

Looks like we're not alone...

http://news.bbc.co.uk/2/hi/europe/7293992.stm

"In Montpellier, she is told that France's education system is completely out of sync with the world of business.
...
France may be a global leader in high technology, but employers complain that today there are far too few students studying science and technology and there are far too many studying "soft subjects" which leaves them ill-prepared to join the real world of work.

At Montpellier's Social Science faculty, I watched scores of undergraduates soak up a lecture on basic psychology.

"I have studied so much, I am almost overqualified. And now I need a job to get money and I can't find one" - Aurelie

There are 65,000 psychology students in France - that is a quarter of the European total for that subject.

I asked a passing student what he wanted to do when he left university. "I want to be an eternal student, " he said. "Just learning for learning's sake." "

1:04 PM, March 29, 2010  
Blogger Larry J said...

Back to universities, though: What would happen if they lower the salary of a women's studies professor? Would she take a job in private industry bitching at men?

Seriously, who would hire her and what could she bring to the workplace except perpetual greviances? I automatically see someone with a "studies" degree as a malcontent. Why would I bring someone like that into my company, especially when they have nothing constructive to offer?

1:24 PM, March 29, 2010  
Blogger dr.alistair said...

topher, i was sorta kidding, but i suppose that products are sort of services, though services are vastly different meta-physically....wouldn`t you say?

i`d hate to jack up a car with a therapy session.

...and yeah, angry studies professors are part of a ponzi scheme designed to create a world of malcontents with a million reasons.

my girlfriend works with masters in social work types while her masters in in psychology. when we first met she talked about the msw program, but she has since relaxed on that one.....


lowering the salary of a women`s studies prof? unless the indusrty has cooled off there would be no reason to do such.

msw is a gold-mine for career oriented bi-lesbian types who are looking for community and a paycheque far from the madding crowd...and while i`m not advocating it, one can see the attraction.

and yeas, they do tend to vote liberal.

2:20 PM, March 29, 2010  
Blogger Topher said...

alistair,

"though services are vastly different meta-physically....wouldn`t you say?

i`d hate to jack up a car with a therapy session."

I think you equate products with tangible "goods." I see anything that is tradeable or reserves resources as a product - my white-collar labor is a product, Air Jordans are a product, consulting services are a product.

The social world also has products: when you go to the club you have to be conscious of what you are selling and what you are advertising. Political fealty is also a product.

3:03 PM, March 29, 2010  
Blogger Topher said...

"Why would I bring someone like that into my company, especially when they have nothing constructive to offer?"

Again with products; no one on the open market is buying what they are selling.

3:04 PM, March 29, 2010  
Blogger Larry J said...

Again with products; no one on the open market is buying what they are selling.

I don't know if I'd go quite that far. The "angry studies" types have been pretty successful at pushing "sensitivity training" and "affirmative action" into the open market primarily through lawsuits. Again, why would I want to bring that kind of hatred and productivity-sucking overhead into my company?

3:20 PM, March 29, 2010  
Blogger dr.alistair said...

topher, i appreciate your distinctions and you are absolutely right about intangable goods.

and thing about open markets not buying certain products is that socialists hate open markets and so struggle to control them.

it could be called the canadianisation of america.

4:04 PM, March 29, 2010  
Blogger Topher said...

Alistair,

I read in a book that American soldiers would raid farmhouses and other places for food and stuff during WWII, but when they got a haircut they always paid for services.

I wondered why, and then realized - you can take the stuff outright (usually the civilians are evacuated anyway), but you can't really force someone to cut your hair or sew your shirt without pulling a gun on them. That's bad for morale towards the liberators; money works better.

4:25 PM, March 29, 2010  
Blogger dr.alistair said...

and i think about the value triangle in economics....price, service and quality.

pick any two.

or, in wal-marts example; one.


and regarding getting any kind of service in the former soviet union; none.


if everyone is paid the same, what`s the incentive to provide services at all.

i read somewhere that someone was travelling in the ussr and was going into a restaurant with a soviet dignitary past lines of people waiting to get into what he found was a virtually empty restaurant. the staff couldn`t even be bothered to open the doors.

5:36 PM, March 29, 2010  
Blogger Tether said...

This comment has been removed by the author.

6:06 PM, March 29, 2010  
Blogger Brian said...

Don't worry. Now that the federal government is taking over student loans, the price will go way down and it will be all sunshine and lollipops, just like everything else the government touches.

6:24 PM, March 30, 2010  
Blogger Matt Groom said...

I can't believe I immediately knew what product Glenn was talking about when I saw the link.

6:50 PM, March 30, 2010  
Blogger Florida said...

But it's not overpriced. It can't be.

The high price is the allure - the higher the better.

The entire point of it is that nobody can afford to go to Yale, or Harvard.

Only the elite - who don't care about the price - can attend.

Hoi polloi need not apply.

If you have to ask how much it is, they don't want you.

6:51 PM, March 30, 2010  
Blogger funsize said...

My guess was going to be water, but this is way funnier. Also, way more depressing.

6:51 PM, March 30, 2010  
Blogger toadold said...

I knew of a guy who really gamed they system. He went to a college instead of a university to get his bachelor's. He took all the science and math classes they had. Smaller class sizes, instructors more interested in teaching rather than research. The he applied to a University for his graduate engineering.
I suspect that clumsy and ignorant human resource departments are the reason corporate recruiters make money.

6:55 PM, March 30, 2010  
Blogger Donald said...

I got google.

7:20 PM, March 30, 2010  
Blogger Amos said...

Marriage? Good answer.

How about this: http://en.wikipedia.org/wiki/Barack_obama

7:26 PM, March 30, 2010  
Blogger hga said...

MIT is at least worth it. It might not be worth the investment, but you will get your money's worth.

7:29 PM, March 30, 2010  
Blogger Donald Sensing said...

Last week we took my daughter on her first college road trip. We visited Georgia Tech and Wake Forest - hit the engineering/technical side and the liberal arts side.

We live in Tennessee and Ga. Tech would cost us, this year, $36K, twice the cost of a Ga. resident. Wake Forest charged this year's freshmen more than $50,000 for the year for all expenses.

When I graduated from Wake in 1977, tuition, books, room and board were about $4,500, maybe a little more. My son is a senior there now, but I had no idea the cost was so high because he is on a very high athletic scholarship.

Ga. Tech is one of the top 10 engineering schools in the country, With my daughter's straight-A transcript and her own athleticism I am pretty sure she could attend the school without a huge strain for us. But we're going to take her to Tenn. Tech, too, where the gross cost is $19,000 less than Ga. Tech.

As for Wake Forest, I am quite sure that elitism drives its rising costs, as a commenter above referred to. As well, Wake sees itself as a peer-competitor with Vanderbilt, whose annual cost is now almost $55,400, and Duke, which costs $53,400.

I have pointed out to my daughter that a degree from Ga. Tech in engineering will make her much wealthier than a lib-arts degree from Wake. (Wake does have one of the best undergrad business schools in the country, though, whose grads are in high demand, or were until the Obama economy set in).

7:43 PM, March 30, 2010  
Blogger Donald Sensing said...

Oh, someone told me not long ago to send your child to the least expensive, good college you can find and save the rest for a Master degree at a top grad school. Makes sense.

7:46 PM, March 30, 2010  
Blogger Hucbald said...

I've long had a policy of not dating single moms, because all they are looking for is monetary security for themselves and their children. I've recently added to that women with graduate degrees, because all they want is someone to pay off their student loans and zero out their credit cards. Being a well off middle aged single guy is like walking around with a target painted on you, and financially desperate women could put any Academy Award winning professional actress to shame in the acting department. They can convincingly feign sincerity to an astonishing degree of realism.

8:42 PM, March 30, 2010  
Blogger Rob said...

let me play devil's advocate. for $30-$50K/year, one receives the chance to learn from and work with top-notch scholars. what do plumbers charge per hour? roofers? piano teachers? karate instructors? when you consider that most of the professors at a decent school are trained more than lawyers, doctors, or financiers; when you account for the network effects that come from alumni associations; it is worth the price, steep though it may be. as technology accelerates and education becomes more critical, it is natural that the cost will far outpace inflation: exponential growth of knowledge has that effect.

yes, there is a premium for elite private schools. indeed, many majors are frivolous and worthless. but for a motivated student looking to acquire skills, there is no better value than getting a degree at a top school, being surrounded by other motivated students.

9:25 PM, March 30, 2010  
Blogger Dr.D said...

Rob, you are dreaming when you say, "...to work WITH top notch scholars..." In almost all cases, that should read, "... to work with incomprehensible foreign student TAs ..." which is really not much of a bargain at all. At most large schools, the regular faculty will only be teaching the graduate level courses. This is less the case at smaller schools, however.

9:30 PM, March 30, 2010  
Blogger Ross MacLochness said...

200 grand is a price point. At that price, you really could start a business.

When I think of the number of good ole' boys I've known who've turned a modest machine shop or plumbing supply company into a plush retirement, it makes me weep to think of the young people going into hock up to their eyes getting grade-inflated BA's in Malcontent Studies.

And let's be honest: Can anyone name five ways the culture would be oorer if every liberal arts department in the country had burned to the ground in, say, 1969?

10:01 PM, March 30, 2010  
Blogger Bob_R said...

I basically agree with most of the commenters here, but when 10's of thousands of people are putting their hard earned cash on the line the odds say that this is a rational economic decision. The better question is, "why are we wrong?"

10:35 PM, March 30, 2010  
Blogger Steven said...

Bob_R:
Perhaps its best to look at it like the tulip bulb bubble... these degrees have worth, and are worth pursuing, only as long as the masses believe they do. Once the bubble pops, however...

11:09 PM, March 30, 2010  
Blogger David said...

Don't need to go all the way back to tulip bulbs, we have more recent examples of bubbles, such as housing prices. As Steven suggests, there is definitely a structural similarity between the college-credentials bubble and the classic financial bubbles--see my post here.

11:16 PM, March 30, 2010  
Blogger Patrick said...

Most overpriced? Oh, I don't know.

And considering a person can get the feds to write off all remaining debt after 10 years in government harness, why, it's a bargain! (For the person taking the student loans. Taxpayer mileage may vary.)

3:27 AM, March 31, 2010  
Blogger Sonar said...

Doc Helen,
Expose yourself to this book,

http://www.amazon.com/Shakespeare-Einstein-Bottom-Line-Marketing/dp/0674011465/ref=tmm_hrd_title_0

And if you and the professor ever meet Kirp, I'd love to hear an interview/trialogue.

4:03 AM, March 31, 2010  
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9:14 AM, March 31, 2010  
Blogger Micha Elyi said...

"Oh, someone told me not long ago to send your child to the least expensive, good college you can find and save the rest for a Master degree at a top grad school. Makes sense."-Donald Sensing 7:46 PM

In one of his columns, Dennis Prager noted, "For the most part, what college you go to doesn't amount to a hill of beans." On his radio show he advises parents, "If you must send a child to college, choose the least expensive college you can afford."

In my opinion, his advice gets better and better as time passes - as shown by examples here, here, here, here, here, and here. (In that last example, the Columbia grad is correct about Harvard, wrong about Galileo; but what can one expect from ivy league schooling anyway?)

2:54 PM, March 31, 2010  

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