College Tuition Hikes Deepen Inequality

Data show that while college may still technically be “worth it,” tuition hikes are making higher education inaccessible to many.
By @MMichaelsMPN |
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    Prospective students tour Georgetown University's campus in Washington, Wednesday, July 10, 2013. The defeat of a student loan bill in the Senate on Wednesday clears the way for fresh negotiations to restore lower rates, but lawmakers are racing the clock before millions of students return to campus next month to find borrowing terms twice as high as when school let out. (AP Photo/Jacquelyn Martin)

    Prospective students tour Georgetown University’s campus in Washington, Wednesday, July 10, 2013. College costs have surged up to 500 percent in the U.S. since 1985. (AP Photo/Jacquelyn Martin)

    The cost of a college education in the U.S. has skyrocketed 538 percent since 1985, according to a Bloomberg News report that used historical data from the U.S. Department of Labor.

    For millions of students, obtaining a four-year college degree has become a financial burden, forcing many to incur large debts to finance myriad educational expenses. The average college graduate from the class of 2013 is saddled with $35,200 in college-related debt, according to a recent Fidelity survey — adding to the more than $1 trillion collectively owed by student borrowers of federal loans.

    Paying an arm and a leg is a big enough problem for millions of students, but education experts contend that it’s also indicative of a much larger inequality problem increasingly present in education.

    “The skyrocketing [tuition] increases exacerbate income inequality by depriving those of less means of the schooling they need to advance and may also derail the ‘prestige and status’ of U.S. higher education,” said Michelle Cooper, president of the Washington-based Institute for Higher Education Policy.

     

    Inequality grows

    Some financial experts are beginning to question whether a college education is worth the costs, but most data indicates that a college graduate will earn more over her lifetime than peers who have only a high school diploma.

    “If the price of education continues to rise as rapidly as it has, and the gap in earnings stays the same as it is now, at some point the investment wouldn’t be worth it,” said Sandy Baum, an economist at Skidmore College.

    A 2011 study by Georgetown’s Center on Education and the Workforce found that a college graduate will earn an average of 84 percent more than a high school graduate. Average incomes increase even further with advanced degrees.

    On average, a doctoral degree-holder will earn $3.3 million over a lifetime, compared with $2.3 million for a college graduate and $1.3 million for those with a high school diploma.

    But the increasing costs of a college education appear to be leaving behind a large segment of the population. The Pew Charitable Trusts Economic Mobility Project reports that 47 percent of those raised in the bottom quintile of the family income ladder who do not earn a college degree are stuck there as adults, compared with 10 percent of those who do earn a college degree.

    Those who have to pay their way through school or who are burdened by debts are more likely to drop out due to financial stresses than those who get help from parents. “The conventional wisdom is that students leave school because they aren’t willing to work hard and aren’t really interested in more education,” said Jean Johnson, executive vice president of Public Agenda, told the New York Times. “What we found was almost precisely the opposite. Most work and go to school at the same time, and most are not getting financial help from their families or the system itself.”

    Salary.com reports that a Public Agenda survey also reveals that students who receive financial backing from family members have a 63 percent graduation rate, exceeding the 42 percent of those who graduate who pay for college on their own.

     

    College costs soar

    Was there more equal access to higher education when tuitions were lower? It wasn’t that long ago that a student could work his way through college working part-time or during the summer to cover costs. Debts generally were minimal.

    “In 1978, a University of Wisconsin-Madison student paying his or her own way, without any help, had to earn $2,362. It could be done at minimum wage by working full-time through the summer and about 10 hours a week through the academic year, or a total 891 hours,” writes Karen Herzog of the Milwaukee Journal Sentinel.

    College students and graduates today tell a very different story. Today that same UW-Madison student would have to work 2,538 hours–about 50 hours a week for 50 weeks in order to afford the $18,402 for tuition, fees, room and board according to the Journal Sentinel.

    “After I’m done with school, I’m probably going to owe about $300,000 in student loan debt. It’s a scary number,” said Cierra Oshodi, a 2012 graduate from Butler University who plans to attend medical school.

    Courtney Umhoefer graduated from Ohio State University in 2011 with a degree in consumer financial services, owing about $86,000. CNN Money reported last month that she decided to move back home with her parents in order to save money.

    “I’m not saving for my future. I can’t see myself having children or getting married or saving for a house. I feel stuck,” said Umhoefer, who has a job helping financial advisers. After paying $950, she has about $400 left over each month.

    Stories like these are growing more and more common — is there a way out for the debt generation?

     

    What is being done?

    Colleges themselves, caught in the competitive education marketplace, appear less inclined to invest tuition dollars and alumni donations toward scholarships that can lower costs.

    In fact, data show that the trend is usually to build ‘the best and the newest’ stadiums, student centers and other “perks” unrelated to education. When it comes to college, what you pay usually isn’t what you get.

    The Center for College Affordability and Productivity reported in 2011 that between “52 percent and 76 percent of all students attend institutions where educational payments exceed educational spending. For four-year students, this figure is between 59 percent and 87 percent, and for two-year students, it is between 24 percent and 63 percent.

    This means that for most students, a large portion of money spent goes to funding projects that have little or nothing to do with the actual cost of obtaining a degree.

    “Top institutions have chosen to maintain and increase quality largely by spending more, not by increasing efficiency, reducing costs, or reallocating funds,” writes Ronald Ehrenberg, a Cornell University education researcher in a report titled “Tuition Rising: Why College Costs So Much”

    President Obama promised to make significant overhauls in education during a recent swing through Western, New York. “We’ve got a crisis in terms of college affordability and student debt,” Obama said at the University of Buffalo, proposing “new reforms that will shake up the current system, create better incentives for colleges to do more with less and deliver better value for students and their families.”

    Politico reports that under the plan Obama would like to see Congress approve:

    “Colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up. It is time to stop subsidizing schools that are not producing good results and reward schools that deliver for American students and our future.”

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