James M. Lindsay

The Water's Edge

Lindsay analyzes the politics shaping U.S. foreign policy and the sustainability of American power.

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Does Obama Have a Solution for Rising College Costs?

by James M. Lindsay
January 26, 2012

A graduate at Columbia University’s commencement ceremony in 2005. (Chip East/courtesy Reuters) A graduate at Columbia University’s commencement ceremony in 2005. (Chip East/courtesy Reuters)

I have one child in college (Wahoowa!), another set to start this September, and two more who will join them within the next four years. So my ears perked up during Tuesday night’s State of the Union address when President Obama said that once kids graduate from high school “the most daunting challenge can be the cost of college.”

The president isn’t kidding. As the chart below shows, the tuition and fees that colleges charge have skyrocketed over the past three decades, far more than inflation alone would explain.

Chart source: College Board.

If reading charts is not your cup of tea, the following statistic makes the basic point. If you enrolled at the University of Virginia in 1981 as an in-state student, you would have paid $1,146 in tuition and fees for the year. During the current 2011-12 school year, in-state students will pay $11,794 in tuition and fees. If UVA’s tuition and fees had risen in line with the inflation rate, in-state students today would be paying $2,836.

What makes matters worse is that the $11,794 doesn’t include the cost of room and board, books, and miscellaneous expenses. Throw those costs in and UVA estimates that the bill for the 2011-2012 school year for in-state undergrads comes to $24,344, or nearly $100,000 over four years. (Out-of-state students can expect to pay an additional $25,000 per year.) That $100,000 can buy you a three-bedroom house in Dubuque, Iowa.

Students (and their parents) have responded to the rising price tag at UVA and virtually every other college–the military academies are still free–by borrowing money left and right. As Obama noted Tuesday night, Americans now owe more in tuition debt than in credit card debt. The average student graduating college in 2011 had $25,250 in debt, and that number is expected to grow.  That trend is not sustainable, and as the economist Herb Stein once pointed out, things that are unsustainable tend not to be sustained.

Obama flagged the issue of the affordability of college because it is a critical factor in keeping America competitive going forward. Globalization has remade the world economy, putting a premium on highly skilled workers and leaving unskilled workers at the whim of the market.

Color me skeptical, though, that the president has a workable strategy for containing college costs, which are driven by a complex set of factors. Jawboning colleges as Obama did in the State of the Union to hold down their costs isn’t likely to work. Some college presidents actually argue that tuition should rise even more. Beyond that, while I am not an economist, Obama’s proposals to hold down the interest on student loans, make more aid available, and extend tuition tax credits would seem to make it easier for people to pay for college, which in turn should make it easier for colleges to charge more.

No, I don’t have any simple (or complex) solutions to propose. But I would love to hear your suggestions.

Post a Comment 3 Comments

  • Posted by Tony

    Question remains, how Feds are going to resolve the rising cost?

    Our next generation are becoming more in debt than previous one! The tuition debt along with credit card ,mortgage, car loan etc…, this will affect their life style.

    Local government and municipalities should play a magir role supporting their colleges along with private sectors. That includes tax incentives for private sectors.

  • Posted by Chris Erwin

    I have a suggestion. First, Congress needs to pass legislation that makes college education free for anyone between 18 and 30 years of age. Second, allow any student with outstanding student loans apply for a federal grant that would essentially forgive up to 50% of their loans, force the students to refinance the remaining 50% at a fixed 5% interest rate through any lender they choose with the stipulation that the lender be legally allowed to garnish the wages of the student until the loan is fully paid. Garnishment would include money from any tax refunds, lottery winnings, or alternative income received. To handle the increased costs of universities I would do several things. First, require all public universities to fund athletics independently of tuition. Second, student governments at each public university would be allowed to vote up or down by 2/3 any decision that would an increase in tuition. Third, provide grants of up to $10 million to any public university that wants to upgrade their campuses to LEED Platinum certification standards. Fourth, make it law that the total compensation of university officials/employees can not exceed 10x the living wage for that area according to the EPI Living Wage calculations for one adult/one child and cannot fall below that same living wage standard. Finally, require Universities to reset their tuition fees back to the year 2000 levels and ensure fees are not hidden from the student so they can make an informed decision about whether the cost of tuition is worth it. Once the student graduates it can be difficult to find work so it would also be helpful if a law was passed that forced every student to obtain an internship of some kind as their final project before the university allows them to graduate. Such a law should also ensure every public university maintains an internship program for every major that it offers. All of these suggestions combined would help reduce costs, fairly control costs, give students a real voice in their school of choice, and ensure that students are not left with mounting debt and no job to pay it off.

  • Posted by A

    As a graduating senior, I can’t help but to bite my lip and scratch my head after reading this. I agree with Chris’s point regarding making education (with some provisions I am not repeating) free. But what about for those of us who are graduating this year (or pre-legislation)? To put it lightly…it’s stressful. I don’t come from a particualrly wealthy family and am most likely going to have to take a year off before law school to ensure that I can at least be in the running for scholarships for some of the top ones…and that’s ignoring the debt I have from undergrad. I was talking to my father about potential jobs to take before law school and when I told him the entry level starting salary, he was shocked. I feel almost deadlocked in a position where I need to have a job before I pile on more debt and then what? Is there loan forgiveness or is there always a perpetual debt that I will owe to American Higher Education? I do not at all feel optimistic about graduating and embarking into the “real world” when I am not only uncertain about what it holds but I am uncertain and carrying out debt. At 21, that’s not something I want to think about as May approaches.

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