> The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules.
Universities are not businesses. Students are not customers. Student tuition was much more heavily subsidized by states, but funding from states to universities has declined in the past few decades. This is the reason for tuition hikes.
In the past, there was an agreement between states and universities: The states will provide a certain level of funding for students, and in exchange the universities will be barred from raising tuition above a very small rate annually. Then some states decided that having a "balanced budget" during all years, including recessions, was better policy than keeping education well-funded. Now recessions cause huge drops in education funding, which are accompanied by removing the limits on yearly tuition hikes.
Because it's generally better to have a more educated population, the federal government picks up some of the slack with grant and loan aid, and banks pick up more slack with private loans to students who otherwise couldn't afford it. Then funding never returns to prior levels.
Stop blaming universities. The blame very clearly lies with states and their asinine balanced budget policies.
Yours is a narrative that universities themselves like to put forth. However it doesn't make sense.
Tuition rises are a long-term trend. As https://www.usgovernmentspending.com/education_spending points out, from the 1950s to the present, the share of GDP spent by government on universities went from 0.4% to 1.7%. With sometimes progress, and sometimes a loss. But the long-term trend is that spending by states has gone up relative to both enrollment and inflation.
Yes, there are recession years where universities blame tuition hikes on cutbacks in state spending. But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
How bad is it? At present average college tuition at a private school is $45k/year. Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
Now why have caused risen? It turns out that a lot of causes have been proposed, from the cost of buildings going up to an increase in bureaucracy to deal with government regulation. But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
You're not even thinking low enough -- I was a math grad student with a $22k stipend at a well-respected engineering school, and I was the lead instructor for three auditorium-sized sections of Calculus and Diff EQ a year (fall, spring, summer).
I'm far from understanding the financials of running a school but something always seemed off to me there. I guess technically our grad student tuition was being paid too, but after the first year that basically amounted to a spot in a cubicle farm and a bi-weekly meeting with my advisor.
"State officials used to brag about the affordability of college, but the costs have ballooned since 2003, even when inflation is factored in.
Less money from state
That year, to help close a budget cap without raising taxes, lawmakers cut the amount of taxpayer money the state sent to universities — an overall 11 percent decrease per student — but removed ceilings placed on tuition so campuses could make up for the lost revenue."
> But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
Yes, that state funding doesn't return to prior levels (See my first source)
> Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
A university is more than its teaching staff. There's research, buildings to maintain, academic support staff and programs, and plenty of other things as well.
> But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
One source which happens to ignore many of the factors I mentioned above does not prove your point true. Most importantly, tuition ceilings imposed on universities by state governments. Luckily the paper discusses its shortcomings:
"Given that our model effectively lumps private and public colleges together, it appears that changes in state funding support and changes in other sources of non-tuition revenue largely offset each other. In future work, we plan to disaggregate the model along the public/private dimension."
The source groups private and public colleges together. Private colleges do not receive state funding and therefore would not have to hike tuition in response to lower stand funding. This noise averages out the effect that state funding cuts have on public school tuition rates.
First, you say that figures I gave from the 1950s to the present should be disregarded based on figures from 2008 to the present. Those are not necessarily in contradiction. Particularly not given that the period of fastest rising state funding was the 1950s through the late 1970s.
Second, your argument is absurd on the absolute size of the numbers involved. For example from page 2 of https://www.mhec.org/sites/default/files/resources/mhec_affo... we see that per FTE enrollment from 1992 to 2017 that inflation adjusted state spending went from $8,301 to $7,642 and net tuition per FTE (tuition - financial aid etc) went from $3,361 to $6,572. The in real dollars decrease of $659 per FTE in state spending is only 20% of the real increase for students. Where is the other 80% coming from?
Even in the difficult 2008-2017 period, changes in state spending explains less than 50% of the change.
Furthermore the explanation that you are focused on explains changes in public university tuition only. It does not address why private universities have likewise seen skyrocketing tuition. Given that the trends in private and public tuition have been similar, it is more likely that they have a common explanation rather than unrelated ones.
Next, you're dismissing the source that I gave that looked at a variety of possible explanations and tried to quantify the relative impact at each. And yet you've failed to give sources that examine the possibility of any explanation other than your preferred one. (Which still only explains a small fraction of the rise in cost to students.)
And finally it is obvious that a university is more than just teaching staff. But when the fraction of revenues spent on what is supposed to be a core educational mission is so absurdly small, there is a problem. (In the meantime there are more bureaucrats per student, nicer dorms, and much nicer athletic facilities.)
Universities are not businesses. Students are not customers. Student tuition was much more heavily subsidized by states, but funding from states to universities has declined in the past few decades. This is the reason for tuition hikes.
In the past, there was an agreement between states and universities: The states will provide a certain level of funding for students, and in exchange the universities will be barred from raising tuition above a very small rate annually. Then some states decided that having a "balanced budget" during all years, including recessions, was better policy than keeping education well-funded. Now recessions cause huge drops in education funding, which are accompanied by removing the limits on yearly tuition hikes.
Because it's generally better to have a more educated population, the federal government picks up some of the slack with grant and loan aid, and banks pick up more slack with private loans to students who otherwise couldn't afford it. Then funding never returns to prior levels.
Stop blaming universities. The blame very clearly lies with states and their asinine balanced budget policies.