Why higher education is in trouble, in one graph

http://mfeldstein.com/why-higher-education-is-in-trouble-in-one-graph/

by agconway • 15 years ago

12 15 15 years ago

At the end of the day you have you deliver value, and being in debt for a lifetime isn't value. My fear is that the higher end schools won't change their ways and that only the very rich will be able to get a degree from a name school. I really see this as hurting the middle class in a huge way...

masterzora• 15 years ago

With the number of expensive top-ranked schools giving out large need-based grants, the situation is far less dire than the graph would have you believe. At least right now they're pretty generous even to the middle class, although I will not deny the existence of some outliers who do get totally screwed.

michaelpinto2• 15 years ago

You know maybe it comes down to a definition of "top ranked" — perhaps I'm really thinking of the second tier (say an NYU) next to the very top (say a Harvard).

shii• 15 years ago

Before we all jump on the higher education is a vascous bubble !!11! bandwagon, can anyone verify whether this blogspam is using any Al Gore style statistics? For example, are the $s adjusted for inflation since the 70s? I'd check this all myself, but the iPhone really isn't conducive to this sort of thing.

isamuel• 15 years ago

Are they adjusted for inflation? _One of the lines is the Consumer Price Index._

HistoryInAction• 15 years ago

CPI is useful as a baseline for understanding higher education pricing, but check out the Commonfund's HEPI modeling of inflation specific to the higher education market, which this posting compelled me to add: http://news.ycombinator.com/item?id=2451737, http://www.commonfund.org/CommonfundInstitute/HEPI/HEPI%20Do...

Inflation was lower in '10 than it's been in decades, 0.9%, after several years of 2-3% inflation, generally around 1% higher than CPI every single year.

Recently, the inflation was driven by volatile, high energy prices, since research labs especially are growing increasingly electricity-intensive as high-powered computing becomes a key part of more and more research fields.

zer0her0• 15 years ago

Without knowing what the Y axis is this actually doesn't even look yikes, if anything I got flashbacks of this graph I remember seeing in one of Tufte's book: http://wattsupwiththat.files.wordpress.com/2008/11/djia-suns...

EDIT: Just saw the link at the bottom of the "article".

jff• 15 years ago

What is it with HN and its continual, deathless drive to prove higher education is worthless? Christ, OK, some of you dropped out of college, that's fine, you're doing alright these days. You all don't need to keep posting this kind of shit to make up for your own feelings of inadequacy.

TomOfTTB2• 15 years ago

Perhaps the problem is people like you who are so convinced of the infallibility of Higher Education that you assume there must be some illogical reason for criticizing it. So we have to keep hammering the point.

Or perhaps it's that many of us realize traditional higher education is no longer working. After suffering through endless interviews with college graduates that only have basic math skills despite graduating from a good university with a 4.0 it has become clear there's a huge problem here.

(For the record I'm a college graduate and a huge supporter of accredited new media Universities like Western Governors University)

HedgeMage• 15 years ago

Okay, there probably are a couple of HN readers wandering around feeling inadequate about their lack of degrees. I, for one, have a different motive when I upvote the "college is broken" posts (well, the ones I like enough to upvote).

I'm tired of meeting smart people who completely lack useful skills (and have been "educated" out of the ability to acquire them on the fly without hand-holding) and need ridiculous salaries (that they don't have the skills to justify) in order to service ridiculous college debt. It's just sad.

We had another one on HN recently asking what to do with his mountain of debt and unprofitable degree. I meet about two a month, and I don't spend that much time around recent graduates.

Yes, some people leave their degree program without unmanageable debt and having gained enough to make the sacrifices worth it. However, they are in the minority.

In America, getting a degree is held out to all students as a panacea. It's even illegal to take a special needs child off the college track before age 16, regardless of how unlikely it is that that child can benefit from university study, or how much the child needs other types of education. For the bright, it's worse: high schools are graded on how many of their graduates go on to college, so the pressure can be incredibly intense even when college is an incredibly bad fit for the student.

People who don't think that university study, as most commonly implemented in the US today, is the One Right Way for all individuals, are usually shouted down as unambitious or not contributing to the economy. Entrepreneurship communities are among the few places that students can find an attitude of "do what has the most value to you, and be skeptical of anything that involves mountains of debt -- it takes a lot of earning power to service that debt and live at the same time" from a group of people whom no one can rightly call unambitious.

kevin_morrill• 15 years ago

Well I am also sick of subsidizing student loans and skyrocketing k-12 education costs in my tax dollars. It would be a different matter if people had to truly put their money where their mouth is on this one.

ihodes2• 15 years ago

What a load of crap.

Look at the CPI: that should be subtracted from the ENTIRE graph to show that most things on there have in fact deflated over time (is that even true), and that the apparently HUGE increases in College Tuition are still big, but not nearly as large.

Also omitted is the vastly more important figure of how much students are actually paying. Financial aid doesn't come in only loans. Less than half of those attending the more expensive institutions pay full price.

Additionally, those paying full price generally come from families (professionals, businesspeople) whose income has increased more than the cost of tuition over that same time period.

While it's certainly a problem for the future, right now the rising costs haven't had a large effect. This is FUD.

TomOfTTB2• 15 years ago

A few points...

Your CPI point is nonsense. The graph compares the growth of expenses to other consumer products. So subtracting CPI from the college costs and then comparing that number isn't comparing apples to apples.

The fact that the Government is pushing money into these universities from both sides does not justify high costs. Even with Government Subsidies going directly to the University and Government grants going directly to students we still have a situation where Student Loan debt has passed Credit Card debt in this country. Adjusted for inflation Student Debt is up 50% in the past decade.

Since when do costs automatically go up with Income? If Exxon decides to double their prices because people's incomes have doubled would you think that was acceptable? Despite its importance to society education is still just a product with a cost and a profit margin. If it's cost is going up exponentially its because someone is making a lot of profit.

Edit: Just to drive home the point. The average salary for a University Professor is $118,054. The average length of an academic year in days 187. So your average professor is making $631 a day NOT including benefits.

(Source: http://bit.ly/gyfAz2)

ihodes2• 15 years ago

Maybe I should have been more clear; the costs of education go up concurrently with with CPI. CPI is used as a general measure of inflation. If you're not taking that into account, you're measuring the change in nominal, not real dollars. That's much less useful.

My point about income increasing was meant to show how the burden of college has not increased significantly to those who are paying the full costs. The fraction it is of their income has decreased or remained roughly the same.

If the issue is that people aren't getting their money's worth out of the investment that an education is, then that's one problem. On the other hand, if the $25k of debt is worth more than $25k + inflation (measured by CPI ;) + opportunity cost, then it's worth it.

>If Exxon decides to double their prices because people's incomes have doubled would you think that was acceptable?

If the market would bear it, why shouldn't they?

>If it's cost is going up exponentially its because someone is making a lot of profit.

I don't speak for all colleges out there, but at least many of the smaller liberal arts colleges that command these very high prices of ~$50k/yr, the costs of education are indeed increasing. Instead of vapidly speculating that "someone" is making a large profit because, prima facia, costs are increasing, take a look at the improvements in education since the first half of last century. Things are changing. No longer is education a matter of a room and a professor. It is more costly to provide.

Aron• 15 years ago

Also, Apple is doomed. Have you seen their stock charts in the last few years? Straight up.

Why higher education is in trouble, in one graph

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