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Comment by bradleyjg | Hacker News Reader

Student debt has exploded because notwithstanding their outrageous tax advantages colleges are demonstrably profit maximizing firms. They induce unlimited demand for ever more credentials though a process of continual devaluation and then charge as much as the market will possibly bear through extremely sophisticated price discrimination.

Politicians answer to this crisis of rapaciousness is to suggest that the public should pay the ever escalating costs while suggesting nothing to rein in their growth. This suggests that the politicians have been captured in some way.

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Let me explain a line of reasoning that would refute the explanation you provide for the ballooning debt. Universities have not generally changed the way they do things, universities have always been the four things OP listed since forever, even when you likely got your degree (assuming you did, or at the very least most of hacker news did), they were those four things too! Therefore, there is no inherent thing to universities that explains the ballooning debt. Instead, something must have happened between the 90s and now that correlates with the rise of debt. Thus, look for an explanation by looking at the history of policy rather than relying on rationalizations.

To that end, a quick google search yields an article that gives a good set of reasons a think-tank that studied the problem found as a set of causes. This is the first result of googling "what caused the student debt crisis":

https://www.businessinsider.com/why-is-the-student-debt-cris...

Now those four items ARE things that have changed between now and then. Generally, the decline state funding of schools means unis now fund themselves by relying on tuition that students do not feel as a cost (at least immediately) because the federal government can give out loans like candy.

Again people, please please please don't just conjure up ideas in your head and think you understand the causes in the world that explain how everything works. You would not apply this line of thinking to your own job you are paid for, people have studied these things and generally it is understood why the debt crisis exists, it isn't a mystery!

What’s the ratio of tenured professors to total staff from, say, 1970 to today?

Colleges were captured by professional administrators. That’s what’s changed, and the results are entirely predictable.

See, also, hospitals.

Hospitals require an army of admins because the regulatory burden is so high. And for that we can only blame our convoluted insurance model.

Not just insurance model. 1/3 of the population is on government funded insurance and we still have a mess. Healthcare is polluted up and down with regulation that tends to maximize profit or create rent-seeking.

This is sort of true but also at the same time I rely on a lot of staff to make my job a lot easier. Yes we could cut down on those administrators but it would mean that professors have to do more, taking away from research agendas. Universities have been optimized to make doing researcher easier and I appreciate that. I'd have to pay a lot more attention to my students' personal lives if we didn't have a dean of student affairs and the whole apparatus that is involved with that. There's a whole office of advising that does a better job than I ever could, and I am freed up to focus on other things that I'm good at.

As another example, we have a bunch of internal grants. It's basically free money that you can apply for to do whatever you want with it, to the tune of 10s of thousands. We need to pay administrators to handle that whole process. It's a lot of money to handle and it's not a cheap process to administer these grants. We could cut them and it would shrink the budget, but it would also stop the flow of early-stage ideas from forming that later turn into huge grants. If I have an idea that might cost like $10k, I can whip up a proposal and get funding for that lickity split, without having to go to the NSF or some other external agency. Then when the idea is more mature I can go and get external funding. If you cut the administrators just looking at a budget, you're really cutting research without realizing it.

I mean, running a University is basically like running a city. You have all the same concerns: infrastructure, food, security, a citizenry, political struggles, etc. You need a government (administrators) to do that kind of work that keeps this huge system running. Yes bureaucracies are expensive and inefficient, and sure there are of course things that could be cut, but by and large the University I work at gets the job done. Day in and day out for 10s of thousands of students. That machine doesn't just happen, it's administrators keeping it running.

but by and large the University I work at gets the job done. Day in and day out for 10s of thousands of students.

The students get their piece of paper that employers use as a free-to-them proxy for intelligence and diligence. I won’t cry at all when this exploitative business model is disrupted and lots of administrators have to find honest work.

I mean, you call it a scam and exploitative, but our customers are very happy with our service. They give us repeat business by sending their kids and grandkids to us. Our brand becomes a part of their identity moreso than Apple could ever dream. They wear our logo on their clothes and they even tattoo it on their bodies. When we call our customers up every year and ask for donations, they open their checkbooks and give us money for nothing at all in return. If our business were so exploitative, why are our customers so enthusiastic about our product?

Ratio of tenured staff only tells /part/ of the story. The problem with this ratio is that there's a massive oversupply of people to do the work (new-minted phds) compared to the number of available prof positions. ie, Supply >> Demand, which has made it trivial to convert what would have been tenured jobs a couple generations ago into rotating assistant prof positions. It may be that the increasing admin staff has taken advantage of this situation more ruthlessly than good communist professor admins would have, but "Supply >> Demand" and a consequent race to the bottom in the labor market is the major factor in this part of the 'why academia sucks' story.

Meanwhile, states have pulled back or failed to increase university funding, and the universities fill the gap with greater tuition. Here's the story+graph for the University of California system: https://accountability.universityofcalifornia.edu/2015/chapt... This is the GP's point, and completely spot on.

It is also true that there are more MBA's in the admin buildings and that they suck, and are likely paid more than they should be. But while I think it /is/ a factor, it's likely not the biggest bottleneck.

If this is the primary factor we should expect student debt load for private school graduates to have grown much more slowly than for public school graduates, right?

It may be that the increasing admin staff has taken advantage of this situation more ruthlessly than good communist professor admins would have,

Why are we giving non profit tax benefits to profit maximizers?

> Colleges were captured by professional administrators.

This is, as I understand it, correct. Administrators as a percentage of university staff has ballooned. The explanation I've seen for this is that they are needed to handle ever increasing amounts of regulations. This is the same problem faced by hospitals.

> needed to handle ever increasing amounts of regulations

I’m cynical about this. “These damn regulations! It would be so much better for us… I mean for the public… if we could get rid of them.”

Too simplistic and too much incentive to blame regulations. No doubt it’s a burden, and some regulations are overzealous and misguided, but there’s probably more to it.

It’s a significant burden to the chemical factory when you make it illegal for them to dump their waste in the river (greed bad!). It’s also a burden to society because now we have to police their douchebaggery. Then there’s the (inevitable) chance that this policing is corrupted or becomes inefficient (regulations bad!). Probably a flawed analogy, but it’s what I think of whenever there’s an argument for or against regulation.

One of the great problems with this is that "Too many administrators", like "Too many regulations", is easy to say, but hard to implement. There's a reason each of those positions was created - often a fairly good one.

As an exercise, I sat down one day and listed the administrators that if I was suddenly president of my university should begin considering updating their resumes. Each one was a problem as a person, but the position was one I would want refilled - indeed, at least one of them was currently running a badly understaffed office.

Gross oversimplification. In 1960s when states funded a higher proportion of things, students in wheelchairs might have no place to pee and women were not guaranteed same opportunities as men.

Even into the 1980s buildings were simple brutalist concrete dungeons and A/C was not an expectation; there was no campus IT; no plethora of career placement systems; counseling office; Title IX compliance office; free medical clinics; fancy rec centers, and numerous other amenities.

I kind of miss brutalist dungeons. Are there any good ones you can visit?

We call them prisons now.

See, that's why Alcatraz is so popular.

The thing that happened, which you astutely pointed out, is not related to universities at all. What happened has been called cost disease but is perhaps better known as inflation. The trouble with talking about inflation is that the most commonly-reported figures are based on a consumer basket of goods which have seen skyrocketing leaps in productivity which has kept their prices down, relative to everything else. This productivity increase could largely be attributed to advances in technology due to the tech industry. However, if you look at other parts of the economy which are proven to be resistant to automation, you don't see those same productivity increases.

And that's the problem! Go for a haircut and you can see the effect on a micro scale. Hair salons and barbershops have remained almost entirely unchanged for decades, yet the price of a haircut has skyrocketed. Why is that? Because you wouldn't be able to hire any hairdressers at $2/hour. Haircuts are more expensive because hairdressers need more money to live. Rent has gotten more expensive for hairdressers, just as it has for everyone else.

Increases in productivity due to automation have generated vast amounts of new wealth. It's the overall increase in wealth which has driven up real estate prices and the cost of rent. Replace the hairdresser in the above example with a doctor or a lecturer and the situation remains the same. The services of these jobs/professions have become dramatically more expensive because:

a) They cannot be automated to achieve the productivity gains seen in other sectors.

b) If wages in these sectors were to remain flat then they would see an exodus of workers to other sectors.

c) Some costs in life, such as shelter, are fixed by the availability of land. Land is finite but the demand for land continues to grow. This issue has been discussed extensively here on HN but all of the solutions I've seen are temporary. Ultimately, we could turn the entire planet into Coruscant and we would still see rent prices going up!

You can't make an inflation argument when it comes to State school tuition cost. That is absurd.

State school tuition cost have crushed the general level of inflation increases because it is easy money for the state and there is no state that does not love extra money to spend.

The tuition cost problem is not unique to state schools, nor even US schools for that matter. Canada has the same problems, especially when you look at international student tuition (since domestic student tuition is kept artificially low by law).

Cost disease isn’t a sufficient answer given

1) the staff to student ratio is going up

2) average pay for instructional staff is falling on an inflation adjusted basis

Also, unlike a haircut or knee surgery there’s no reason to believe that education should be difficult to automate if it were actually education that was being sold.

This.

In 2008, state funding dried up, and has not returned, even in places with booming economies.

Federal funding via research grants has been, at best, flat over the same time period.

That leaves only one dial left to universities.

> notwithstanding their outrageous tax advantages colleges are demonstrably profit maximizing firms

Agreed. See the recent UCLA TA position opening. The unpaid position.

https://twitter.com/jmhorp/status/1505009710717669378

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