The high cost of education compared to the cost of ignorance

If you think education is expensive, wait until you see the cost of ignorance. Photo: College Grads / kconnors for Morguefile.com

WASHINGTON, November 26, 2013 — High school seniors across the country are now applying to college. They are searching for the college that best fits their needs, hoping that they can get accepted to the school of their choice.

Getting in is the easy part; the hard part may be paying for it. 


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College costs have been rising faster than the rate of inflation for over a generation, causing many to wonder whether the payoffs are worth the costs. Investments in human capital — like education — tend to have the highest returns in terms of monetary gains, job opportunities, upward mobility and overall job satisfaction. 

The total costs of attending college include not just the tuition, books and fees, but also the income forgone by going directly into the job market. If the costs are large, so can be the payoffs. High school graduates have average lifetime earnings of $1.2 million. A bachelor’s degree raises that to $2.1 million, though this depends crucially on the choice of college major. On average, though, the decision to enter the work force directly out of high school will probably have negative effects well into the future.

What of the cost relative to that payoff? State colleges and universities cost in-state students an average $20,000 per year in tuition, fees, room and board. For out-of-state students, the cost can top $30,000. The cost of private schools is typically between $40,000 and $60,000 per year, with some elite schools costing even more.

Why is college so expensive?


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There are various reasons that college costs have risen much faster than the rate of inflation for the past 30 years. Aid to colleges from the state has declined dramatically. In New Jersey, for instance, state aid used to cover up to 70 percent of university operating budgets. The figure has declined steadily, and today the state covers less than 15 percent of university operating budgets. This money has to be made up somewhere, so tuition and fees are increased. The trend is not likely to be reversed as states struggle to find additional revenue.

Administrative costs have skyrocketed. Colleges have to comply with ever increasing federal and state reporting requirements, so they add more personnel. In addition, schools have found that they have to market aggressively in order to attract the best and brightest students, so marketing and admissions departments have grown significantly.  

The salaries of administrators have similarly increased; being employed as an administrator at a college or university is no longer a low-paying job. Many aministrators earn salaries easily exceeding $100,000 per year, and college presidents sometimes earn compensation packages in excess of $1,000,000 annually.

Salaries for college professors have also risen, though less than for administrators. College professors historically earned less than they could outside of academia, but they accepted this because the lifestyle offered to college professors was very appealing. The actual time spent in the classroom averaged less than 12 hours per week, usually for 30 weeks per year.


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Professors must spend considerable time outside the classroom to prepare lectures, grade papers, advise students, do research (required for tenure and promotion), and serve on university committees (also a requirement for tenure and promotion), but the work schedule is flexible. This flexibility offers professors freedom to pursue intellectual interests while meeting the requirements of the position.  

According to the Department of Labor, the average pay of a full-time faculty member is about $73,000 per year. Faculty at private institutions make more, with professors at elite schools like UCLA and Stanford often earning over $100,000 per year. The average pay of a full professor at Columbia University is $212,000 per year, not including benefits; the average UCLA prof earns $167,000 per year. The salary pressure for most public-school professors is downward, though; the pay at state schools has been stagnant for seven years, and full-time faculty have been replaced with adjunct and visiting faculty, who often receive no benefits. 

Colleges now offer more services to the students, and much higher quality services. At most schools, every classroom is a “smart” classroom with computer projection equipment, access to the internet, and software systems, like Blackboard, that provide easy access for the student to receive assignments, review Power Point slides, complete online homework and easily communicate with the professor and other students.  

Schools offer more luxury in the dorms rather than just a bed and a desk, and the dining services are often outsourced to firms that provide higher quality food, more choices and special selections for those with various dietary needs. In addition, there are counseling services, career development services, numerous social organizations and other services geared to helping the student with a range of problems.

Perhaps most significant to the cost picture is that regardless of the cost, the Federal government will loan enough money to pay the entire bill to just about anyone who has been accepted. As a result, it matters less to students what the price actually is, since they can pay any amount by simply borrowing more. Pell grants and other aid programs pour even more money on the tuition bonfire.

The net result is that students and parents have been less concerned about the price because the money has been there to let them to pay it. It took the economic crisis of 2008 and the continuing stagnation of job opportunities for people in some majors to drive home the fact that the loans must be repaid, and they can be a huge burden for graduates in sociology or law who can only find jobs as restaurant servers.

Higher education is expensive and the costs are likely to keep rising. I have been a college professor for more than 30 years and am biased, but in spite of the costs, the answer to the question, “is higher education is worth the investment” is this: “If you think education is expensive, wait until you see the cost of ignorance.” But as with all investments, keep a sharp eye on the kind and quality of education you invest in.


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Michael Busler

Michael Busler, Ph.D. is a public policy analyst and an Associate professor at Richard Stockton College teaching Finance, Financial Institutions, Introduction to Financial Management, Game Theory, Graduate Managerial Economics, Graduate Financial Management. 

 

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