Archive for ‘rising costs of college’

August 5, 2014

Purdue University tries consolidating and streamlining to cut costs

by Grace

Purdue University president Mitch Daniels has been taking an aggressive stance in addressing high college costs, using “a combination of systemic cuts, organizational realignments and cash incentives”.  Of course, it is not an easy undertaking.

… criticism has come from both directions. Some think he is moving too fast, others not fast enough when it comes to cutting student costs.

Daniels faces many of the same challenges experienced by most other university presidents.

  1. Diminishing state funding, some of which was initiated while Daniels was governor of Indiana
  2. Administrative bloat. which has grown 75% over the last 13 years at Purdue

Consolidating and cost-shifting

Mr. Daniels says he is consolidating administrative jobs where prudent and leaving jobs unfilled where the duplication of effort makes that possible. He has jettisoned 10 university cars, consolidated hundreds of thousands of feet of off-campus rental storage and introduced a higher-deductible health-care plan.

Incentives to develop a three-year degree

He has also created two, half-million-dollar prizes for the first department that devises a three-year degree or a degree based on what a student already knows, not the number of hours he or she sits in a class. This summer, the school offered 200 more classes than last year in an effort to speed time to degree and generate more income for the school.

According to Daniels, there are ‘lots of opportunities” to cut costs’.

The problems are obvious and the ideas for solutions are plentiful, but can Purdue’s president lead the university to a successful implementation?

J. Paul Robinson, a former president of the faculty senate, said Mr. Daniels’s worth as a leader will be tied to his ability to prune that administrative bloat. “Let me put it this way,” Mr. Robinson said: “A blind man on a galloping horse at midnight with sunglasses on can see the problem. The question is, What can he do about it?”

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Douglas Belkin, “At Purdue, a Case Study in Cost Cuts”, Wall Street Journal, July 25, 2014 .

July 15, 2014

Charging $240,000 for a college degree is becoming more common

by Grace

The number of American colleges that charge more than $60,000 per year increased from nine last year to at least 50 this year.

The most expensive school in the country for the upcoming school year is Harvey Mudd College, charging $64,527 — $48,694 in tuition and fees, and $15,833 for room and board.

But very few people pay the full price.

That’s a total of over $258,000 for a four-year degree.  But keep in mind that about “88.9 percent of first-time, full-year freshmen received some kind of discount in 2013-2014″, so very few families are paying those exorbitant amounts.

Here are 50 colleges that charge more than $60,000/year.

20140712.COCExpensiveCollegesList1

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Peter Jacobs, “There Are Now 50 Colleges That Charge More Than $60,000 Per Year”, Business Insider, July10, 2014.

June 11, 2014

President Obama expands student loan forgiveness program

by Grace

President Obama has signed an executive order forgiving repayment for millions of student-loan borrowers.

The president announced Monday the expansion of 2010’s “Pay as You Earn” program that caps some graduates’ repayments at 10% of their monthly discretionary income. The executive order increases eligibility of the program to include those who took out loans before October 2007 or stopped borrowing by October 2011, a move the White House says will expand payment relief to nearly five million people.

Sweetening the pot of loan forgiveness

The federal government offers different repayment plans to help cash-strapped borrowers, including income-based repayments, the graduated repayment program, and forgiveness programs for on-time payments and public-sector employees.

Under many of the plans, low-income borrowers can have their balance canceled after 25 years of on-time payments. The president’s plan moves the forgiveness date to 20 years or 10 years for those in public service jobs.

It’s not likely to boost the economy, which is suffering from the effects of rising student loan amounts.

“It will slightly increase the amount of debt that is forgiven, but it’s not going to be enough to stimulate the economy,” says Kantrowitz. “If the government were to forgo all student loan debt immediately, it would have a 0.4% impact on the GPD. It wouldn’t really move the economy.”

But it my “unintentionally” push college costs higher.

Beth Akers, a fellow in the Brookings Institution’s Brown Center on Education Policy, says the move could also unintentionally push college tuition prices higher.

“The income piece is a necessary safety net for borrowers. It gives security to not be afraid to take on debt to go to college, but the forgiveness part isn’t always necessary. It induces people to borrow more than they need to, which can have a negative impact on college prices.” She says students are still getting a positive return on their college education investment—but too often, people are borrowing more than necessary. “We need to be careful when granting aid to borrowers because it can raise the prices on the front end.”

Joanne Jacobs seems to agree.

The big winners are people who borrowed for graduate school and private colleges, which can keep raising tuition without fear of scaring away students.

Related:  “Federal student loan programs create perverse incentives” (Cost of College)

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Kathryn Buschman Vasel, “Obama Announced Student Loan Changes–What it Means for Borrowers”, FOXBusiness, June 09, 2014.

May 6, 2014

America’s poor families can have nice stuff but they cannot afford college

by Grace

Here’s why America’s poor and middle-class families can have flat-screen TVs in every bedroom but cannot afford to pay for their children’s college education.

20140503.COCCollegeInflationPoorPeople1

In 21st-century America, it’s entirely possible for poor people to have much of the same material comforts — cars, TVs, computers, smartphones — as more affluent people, yet be trapped in low-paying jobs with little prospect of improvement.

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Drew Desilver, “Chart of the Week: How America’s poor can still be rich in stuff”, Pew Research Center, May 2, 2014.

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April 14, 2014

It’s no longer feasible to work your way through college

by Grace

Let’s get this straight once and for all.

It’s impossible to work your way through college nowadays

Michigan State University graduate student Randy Olson listened to “his grandfather extol the virtues of putting oneself through college without family support'”  But then Olson did some calculations to show how that is almost impossible to do today.

Here is the trend of wages and tuition costs from 1987 to 2010.

20140410.COC.ImpossibleToWorkPayCollege1

 

To get a better sense of the trend, I fit a linear regression to the data. According to the model, students have to work 23.7 extra hours every year to pay for tuition. If we extrapolate this trend back to 1979 and forward to 2013, we recover the same trend that I found in my previous post: The average university student in 1979 only had to work 182 hours per year (a part-time summer job) to pay for tuition, whereas the average 2013 student had to work 991 hours (a full-time job for half the year). That’s over 5x as many hours worked for the same education!

Today’s American Dream differs from that of previous generations.

…  somehow, the idea that we can work our way through college still persists. This ethos seems to be the latest generation’s version of American Dream: If you work long and hard enough, and if you sacrifice enough, you will eventually graduate college without debt and land your dream job. But with the way this trend is going, it looks like even long and hard hours at work won’t even pay off any more.

In short, I’d like my readers to walk away knowing that it’s not nearly as easy to work your way through college as it used to be — stop telling us to do it just because you did a decade or more ago.

Loans and other forms of financial aid make up some of the difference.

… If the Federal aid trends in the past 30 years are any indication, students actually have less of their tuition costs paid for by financial aid nowadays than 30 years ago! With rising costs and lowered financial support, it’s no wonder that student debt has spiraled out of control in the past decade. The system is practically setting the modern university student up for financial failure.

Related:  Recent college graduates suffering worst unemployment rates in 50 years (Cost of College)

April 8, 2014

‘Budget woes are particularly acute at small, mid-tier private’ colleges

by Grace

Tough financial times are hitting many colleges, and “some are downsizing staff, while others are slashing athletic programs and even selling off buildings”.

Hardest hit are ‘mid-tier private schools’.

Budget woes are particularly acute at small, mid-tier private schools, which lack the massive endowments and guaranteed stream of top students of their more prestigious counterparts. In an effort to compete with higher-profile competitors, many of these schools borrowed heavily to fund expensive construction projects during the early 2000s, only to see their endowments shrink when the financial crisis hit. Making matters worse, tuition revenue has dwindled with declining enrollment.

One example of such a school is Ashland University in Oregon.

The “glory days” are gone.

… Such colleges ‘might have been doing fine in the glory days,’ when they had ‘more students coming in than you knew what to do with,’ she said, ‘but that doesn’t work now.'”

What will happen to second-tier private colleges that charge premium prices?

Students who face little chance of getting into an Ivy League school or select liberal arts college (Williams or Amherst in the East, Pomona in the West) are increasingly asking: why should my family pay $30,000 to $50,000 a year (the exact amount unknown at the time of application because of uncertainties arising from massive price discrimination in the form of so-called “scholarship” aid) to go to a mid-quality private school when for somewhat less, say $20,000 to $30,000 a year, I can go to a top public flagship school of roughly equal quality?

Related:  Private colleges see declining enrollment (Cost of College)

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“More Colleges Are Feeling the Pinch”, The Feed / The American Interest, April 3, 2014.

March 21, 2014

Is money the most important factor in being ready for college?

by Grace

Money certainly is important.

20140319.COCJimmyFallonSAT2


Because whatever your academic credentials are, it’s good to be rich.

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February 24, 2014

You can get a college degree for almost free

by Grace

This college degree may not be prestigious, but it’s truly affordable.  Tuition is free, although each proctored exam costs $100.

Just in time for its first graduates, the University of the People, a tuition-free four-year-old online institution built to reach underserved students around the world, announced Thursday that it had received accreditation.

The University of the People currently offers degrees in business administration and computer science.  Present enrollment is 700 students, but with newly acquired accreditation that number is expected to grow to 5,000 students by 2016.

It appears that real learning is taking place.

Classes at the university are 10 weeks long, and have 20 to 30 students — often from as many different countries — who have weekly homework and quizzes. The university depends largely on volunteer labor.  Mr. Reshef said some 3,000 professors have offered to volunteer, although so far the university has only been able to use about 100 of them.

Its deans are volunteers from New York University and Columbia.

The school was created by Israeli entrepreneur Shai Reshef, who has been able to attract the attention of some big guns in the realm of higher education.

The University of the People, almost from the start, has attracted high-level support, with partnerships or backing from New York University, the Clinton Global Initiative, the Bill and Melinda Gates Foundation, the OpenCourseWare Consortium and many others. In August, Microsoft agreed to provide scholarships, mentoring and job opportunities to 1,000 African students who enroll at the University of the People.

I’m reminded of this:

 20130614.COCHousingPrices3

 

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February 13, 2014

Paying for SAT tests can be the first financial hurdle in affording college

by Grace

The cost of SAT and AP tests can easily amount to hundreds of dollars, but low-income students may be eligible for fee waivers.

A high school senior complains about the high costs of College Board tests.

With college-admission deadlines quickly approaching, my debt to the College Board keeps growing. Two SAT tests, five subject tests and six Advanced Placement (AP) tests later, I am ready to report my scores through the College Board website to the 10 colleges to which I am applying. On top of the total $102 I paid to take the SAT, $114 for the subject tests, and $534 for the AP tests, the College Board now demands $11.25 for each electronic submission of the test scores to the schools on my list.

That makes a total of $750, including the $100-plus needed for electronic scores submission.  Are these fees too high? 

The College Board should behave more like the nonprofit it claims to be. Lowering the cost of the SAT would encourage more students whose parents make modest incomes to retake the test and compete against students from higher income households who often take the test upward of four times, aiming for higher scores. (I took the test twice.)

The total cost of applying of applying to college can easily reach thousands of dollars, creating a strain for many low- and middle-income families.  On the other hand, doing well on an AP test can generate college credit for a student, presenting a substantial value when compared to the typical cost of college tuition.

The College Board offers fee waivers for lower-income students who meet their criteria.

Related:  A recommended schedule for taking the SAT, ACT, and AP tests (Cost of College)

January 13, 2014

Cost-effectiveness analysis and the declining productivity of higher education

by Grace

Higher education productivity, as measured by academic degrees granted by American colleges and universities, is declining….

From “Addressing the Declining Productivity of Higher Education Using Cost-Effectiveness Analysis” by Douglas N. Harris

… Since the early 1990s, real expenditures on higher education have grown by more than 25 percent, now amounting to 2.9 percent of US gross domestic product (GDP)—greater than the percentage of GDP spent on higher education in almost any of the other developed countries. But while the proportion of high-school graduates going on to college has risen dramatically, the percentage of entering college students finishing a bachelor’s degree has at best increased only slightly or, at worst, has declined.

20140110.COCHigherEdProductivity1

Key points:

 Basic Elements of Cost-Effectiveness

•Using effectiveness-cost ratios (ECRs): The primary metric for understanding the relationship between a program’s cost and its effect is the ECR, which divides effectiveness (“bang”) by costs (“buck”) to give a simple estimate of cost-effectiveness. Generally, larger ECRs imply greater productivity.

•The challenges of ECRs: On the cost side, data on higher education costs are notoriously incomplete. It is also unclear what is meant by a program’s effect. In his analysis, Harris uses reliable data and informed assumptions to determine costs, and defines a program’s effectiveness as increasing degree completion.

Cost-Effectiveness Varies across Policies

•No single strategy stands out, but some appear to be more productive than others: The results vary most within the instructional category (student-faculty ratios, full-time versus adjunct faculty, and remediation), while financial aid programs seemed to generate more consistent but low cost-effectiveness ratios.

What are the Implications for Leaders?

•Collecting better data: Going forward, policymakers and institutional leaders should collect more detailed measurements of what higher education programs cost to better assess cost-effectiveness.

•College leaders have more power than they typically assume: ECRs can be used to make comparisons across programs, so we can say whether one program is more cost-effective than another. This helps leaders allocate limited dollars in ways that are most likely to help students.

•Avoiding rote use of ECRs: Cost-effectiveness analysis cannot and should not replace the judgment of educational leaders, but the information that comes from it can provide useful guidance and perhaps improve the way those decisions are made.

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