The Truth about College Costs | Hacker News Reader

The Truth about College Costs

nationalaffairs.com

92 pointsimgabe153 comments

I am sure there is truth to the article, but as someone forced to pay the full price for 2 kids, the idea that tuition is not going up is laughable. I'll pay $80,000 this year for my daughter and about $40K for my son who chose the in-state university.

College prices are insane. My daughter is in her final year, and even in those years, including a Covid gap year, the cost went up $10,000 for those of us stuck paying full price.

I am in no way wealthy, but thankfully went through 2 small exits in my career where I could bank enough away to cover this. There will be nothing left though. I also put money in a 529 for each kid their whole life. For my son's account I actually lost a small amount of money over the life of the investment and for my daughters it only went up slightly. If that had been all I had I could have paid for 1 year of school each.

There is so much variance in cost between colleges! 80k and even 40k seem like really high yearly costs.

I went to a community college for 2 years in California and then transferred to a mid-tier state university for the last two years.

I graduated in 2017 and the total cost for my education was about 30k. It was expensive, but spread out over 4 years I was able to pay for most of it by working part time.

As a father what were the tradeoffs you considered when planning to put your kids through college? Did you consider the route through community college? Was the dorm experience important? It seems like the decision to not put your kids through community college is usually more for social reasons rather than academic, since community colleges, at least in California, are MORE rigorous than regular universities, since they are preparing to send kids to the full range of colleges. Parents and kids seem to think that it’s important to live on campus in a dorm because they will make more friends. But idk, I am very curious to hear the thought process from a parent’s point of view.

I had my kids in 2001 and 2003. I just started putting money away into 529 funds and that was kind of all my thought process. If I spent time then thinking how expensive it would be when the money would be needed, that would have been paralyzing. As I mentioned, along the way I got lucky and was involved in two modest exits that let me put enough into savings that I had enough combined with the 529 to basically say I would pay for their undergraduate. Obviously, I could have just kept that money for myself but it was what I wanted to do. I have had various retirement savings all along so that I feel like I am OK provided I do not live to be 90 or something.

My last exit happened end of 2019, just in time for me to get it all invested in time for the pandemic to start. I am pretty sure I turned all that investment into cash at the bottom of the stock market and did not really get it back into investments in time to make it all up. Around end of March 2020 I was definitely expecting the stock market to keep falling and panicked. I probably would still have money for myself after paying for college if I had just not touched it and caught the rebound.

Given that 80k is around the median salary for a professor it seems that you could just hire a live-in tutor at that point ...

The in-state university is private? UIUC is a high-ranked state flagship (both my kids went, my daughter's still there) and in-state tuition is less than $20k.

Flagship public schools in some states can approach $40k in costs if you don’t qualify for aid:

https://admission.ucla.edu/tuition-aid/tuition-fees

That's a bit misleading though, even if I can see why they do it.

The in-state UCLA tuition there is ~15K, which while high, isn't terrible.

My child's elementary school bill is higher than that!

The larger line item they list is food & housing. That's expensive, but you're paying those whether going to school or not so it is not really a cost of going to the university. Also, there is a lot of leeway to vary those costs if you need to be very frugal.

The article above is referring to UCLA.

"California on Thursday became the first state to guarantee free health care for all low-income immigrants living in the country illegally..."

https://apnews.com/article/health-california-immigration-gav...

Billions of dollars are being spent on health care for illegal residents instead of spending the money for California residents at California Universities.

There is plenty of money in California. The problem is that the leadership doesn't prioritize affordable university education, preferring instead to fund people living in the country illegally. California residents are taking out student loans to subsidize people living in the country illegally. It is tremendously unfair.

Sure, but UIUC total sticker price is $32K-ish. And approximately 36% of students pay that full cost if only 64% receive any financial aid based on:

https://nces.ed.gov/collegenavigator/q=illinois&s=all&pg=2&i...

Something I have found interesting (as the first of my two kids rolls over into the college age group next year) is that most "brand name", well-known private schools clearly expect our family to pay the full $80K+ total sticker price.

While I share the same feelings of not being particularly wealthy as OP, it is clear that some colleges disagree with my personal wealth assessment . . .

University of Virginia all-in for in-state: $36,314

University of Michigan all-in for upperclassmen in-state: $37,612

All-in includes living expenses, meals, room and board, activity fees, books, etc.

But how much do students actually pay?

If the parents (like OP) have had a couple of small exits, the students (or their parents) pay the full amount.

Sure, but having a couple exits makes them extreme outliers. The entire point of the article is that quoting public tuition prices is an illusion obscuring the true cost. What is the average or median student paying?

Edit: At least according to one source, the average student pays 19,000 per year, including fees and housing. And they receive 22,000 in financial aid. Ie, the average student gets a larger discount than what they actually end up paying. https://www.collegesimply.com/colleges/virginia/university-o...

Similarly, Michigan is 18,000 per year with 22,000 in "aid".

Also, both schools are top 100 schools in the US. So even at elite schools, the average student is paying a fraction of the "price".

Financial aid = loans.

They get the opportunity to take out more loans, the poorer their parents are. I got a small pell grant a few years, but most of my college was all loans from the student aid office.

You're right that there are some loans included in that number, but it looks like it is not even half of it:

"27% of students received Federal Student Loans averaging $4,835 and 10% of undergrads took out private student loans averaging $11,058."

Uh no, scholarships are counted under FA. I was given a 75% scholarship under FA. Smarter peers than me were granted full rides under FA scholarship since their family income was so low.

> Financial aid = loans.

Financial aid also includes grants, both school-issued and outside (public and private), and it includes both merit-based aid and need-based aid.

Without need or merit breaks, the in-state tuition at UIUC really is the tuition.

Those breaks are massive. The average UIUC student pays 13,500 per year and receives 15,000 in "aid". That is less than half the sticker price.

https://www.collegesimply.com/colleges/illinois/university-o...

Edit, you're right, this includes loans, but grants make up the majority of that figure. It's not entirely clear to me how each number is weighted:

"Grant and scholarship aid does not need to be paid back. 36% of students received Federal Student Loans averaging $4,863 and 9% of undergrads took out private student loans averaging $6,819."

Hold on: 60% of students get aid, and that "aid", scarequotes yours, includes things like Pell grants. Pell grants aren't an accounting scheme! That's real money.

Is tuition even the majority of the cost anymore? Not that it's cheap, but fees are atrocious, and they go after every bit of revenue that they can without regard for the strain it puts on the students and their families.

But then, they're not even really in the business of secondary education, so I guess that figures.

It depends. Private universities it certainly is but at state schools it is more like half. Here is this years prices at my daughters school:

Tuition $61,260 Room & Board $21,310 Student Activities Fee $308 Health Insurance. $3,148 Total per year $86,026

In my case, this is UNH. As we have very little taxes in NH things like this are higher than in other states. I am counting the room and board obviously in this total and may have rounded up from somewhere in the high 30's.

mid 30s for my child heading to UNH as well, despite major "scholarship" award.

It seems counterintuitive that one of the largest bull cycles in modern history would result in flat or negative returns. Is this due to the 529's limited investment vehicles...? At that point, wouldn't you be better off putting the funds into a taxable account instead?

529s are not really worth it unless you have need for additional tax shelter (owning broad-market mutual funds is already relatively "tax advantaged" if you buy and hold) OR you can get tax write-offs for contributing (which is true in some states).

As with all investments, when you get in and when you get out can affect total return, even though you can't time it perfectly.

The problem with 529s is you can't really "choose to let it ride" when college starts, whereas with retirement you DO have that option (by using other funding sources).

Unfortunately the way the college racket is setup, it's often much better to simply be a paper pauper when the FAFSA comes around (hint: they ignore the house and the car(s)).

You can now roll 35k from your 529 into a Roth IRA for your kid. That is a great jump start on their retirement.

A lot of 529s have relatively high fees and low returns. I stopped funding 529s for this reason.

My 529 was invested in CENAX

If their historic allocation was similar to their current one, it's no surprise; its a very bond heavy vehicle and bonds over the last decade have had basically non-existent interest rates.

Most 529 plans are target date funds timed to when you start college. So it lost a lot of money when the pandemic hit and then moved into its very conservative phase as the market recovered. It also took a big hit in 2008 though I was only a few years into investing at that point.

So it's a reactive fund that buys the peaks and sells the dips, even worse.

This makes me feel at least slightly better. I attended a top-100-but-definitely-not-top-10-or-even-top-20 private university in the early 2000s and I'm quite sure my family paid very close to full sticker. I don't recall qualifying for any merit scholarship. I had and have merits, but excellent grades in high school were not among them :)

Just so you know, most research nowadays says there's basically no difference in outcomes between which school your kids go to and future income/other life outcomes, after you correct for SAT score. You can send them to state or city school and save the money.

That research is highly dubious, but let's take it at face value. You can send them at a state or city school. But they have a word to say about that choice too. For them, it's not research, it's life. They can't run a controlled experiment with their life. If they go to the city school, and their career tanks, will they ever forgive you? Will they buy your counterfactual that their career would have tanked anyway, even with an elite school diploma framed on their wall?

Certainly considered things like that. Not sure if you are a parent, but just wait until you go on school tours with your kid and see them fall in love with a specific school.

My daughter is not likely to pursue a high paying career either. I wonder if she would have been better off finding a job and just having me give her the $300,000 I will have spent on her education. As it is, she is planning on going to graduate school, which she will have to pay for so she is weighing these things now.

> Certainly considered things like that. Not sure if you are a parent, but just wait until you go on school tours with your kid and see them fall in love with a specific school.

I know this is a standard way of thinking, so I’m not criticizing you personally, but…what’s love got to do with it? College is a business proposition where whoever is paying has strong metrics to base what they are willing to pay for on: average starting salary on graduation, placement rate, etc. The rest is a luxury; certainly the attendee is entitled to a preference, but if that preference is more expensive, they should pay for it (and be made aware of exactly what that looks like).

I’m a parent and we are emphatically not saving for a half-million-dollar college tab for our child. We are instead making sure we are in states with quality state options that our child can attend on local universal merit programs; anything further, they are responsible for.

> better off finding a job and just having me give her the $300,000

this is "all or nothing" thinking.. other posts show that other school systems have different cost structures. If she has the character and health for it, you could send her to an overseas school also.. think out of the box!

She is graduating this year so too late. But that is her thought process for graduate school

This is the kind of assertion you make when you have no skin in the game and no lived experience. It’s like the common wisdom that a great public school is as good as private, thankfully we got to try that experiment with our kid with a few years in both and it’s not even close.

It's not anecdotal, it's factual.

For comparison, the local tuition for the CS program at the U of Waterloo is about CAD $6k for a semester (for three courses), or about US $4.5k. It also includes things like health insurance.

There is a section about this, basically collages are able to price discriminate much more effectively in a way that disproportionately hurts non-wealthy people.

We made very similar mistakes with college education and housing. Both things that we’d like people to have more of, in theory.

In both cases the government provided massive subsidies in the form of loans and tax breaks.

That does wonders for the demand side. However the government didn’t find a way to increase supply (esp of the good stuff) at the same rate nor did they find a way to prevent the excess profits generated from falling into the same few hands.

So what did we get? A seemingly endless cycle of price growth.

The article makes the opposite claim. Rather than a seemingly endless cycle of price growth, the article claims that the cost of attendance has fallen in constant dollars. However, the nominal cost of attendance, which bears no relationship to the actual cost, because it's offset by pro forma need-blind merit-blind "scholarships", has risen, because the top-line nominal tuition cost is a market sorting mechanism among schools.

The claim of this article that real college prices are not increasing is at odds with the well-known fact that student loan debt at graduation has been rising steadily, especially relative to income: https://educationdata.org/average-student-loan-debt-by-year

There has certainly been more sticker price growth than real price growth due to scholarships/aid but this article is the first I've read to assert that the real price growth isn't there. And I definitely know many people who paid the full sticker price at elite schools (they were lucky to have families who can afford it, so not too much pity necessary).

Here's an older but very good article around why colleges raise prices to levels they know they'll need to subsidize: https://www.conradbastable.com/essays/the-uncharity-of-colle...

The rise in student loan debt can alternatively be explained by increasing concentration of wealth in the hands of a few people. In the past (e.g. 40 years ago corresponding to a graduation date ~20 years ago), more families were able to save enough to cover the true cost of 4 years of college. Now many families are living paycheck to paycheck, and cannot create an emergency fund, much less a college fund.

I agree, both sets of claims are hard to square with each other.

It could be that non-tuition costs have risen, that students have gotten worse at punching pennies through strategies like having lots of room mates and/or that fewer students are using part time jobs to cover living costs.

Absolutely possible. People don't want their standard of living to suffer, and when offered a loan to keep it up, many will take it. I could have accidentally graduated with substantially more debt than I did. I was offered more loan money than I truly needed. I took it all my first year. Wasted it. Realized it. Didn't accept the loans the last three years.

When I was 17 reviewing college financial aid packages, I was still trusting enough in the social contract that I thought I could only be offered loans that the granter expected I could pay back.

Since average debt is still less than the average cost of college, couldn't this just be changes in the availability and utilization of loans?

Great links. Thanks for sharing. But I don't know that they are incompatible.

Indeed. And in fact, from what I hear Stanford would like to expand its student body. Guess what’s stopping it? Yep, Palo Alto NIMBYs.

Stanford is its own city, it could just move entirely somewhere more favorable.

The Stanford campus is not exactly space-constrained

AKA, the community.

Sometimes the community is wrong, and needs to be overridden. An example of this is California, New York, and Illinois enacting state laws to prevent local communities from blocking local renewable generation projects (wind and solar), because the justifications were frequently falsehoods and aesthetics reasons. Feelings are not a justification to inhibit responsible, community compatible development and improvements.

Not the community. A small subset of the wealthiest people in the local area. And keep in mind that if the people in the local area have successfully excluded others, they may have dispersed people with interests elsewhere.

There’s basically no reason they should have a say at all about what someone else wants to do with their own property.

I wonder what would happen if they started making plans to move. I know farmer/developers just outside of Des Moines who own several thousand acres they farm now but plan to turn into a suburb in 10 years - they would be glad to sign a 5 year option to buy contract on a large campus for cheap (you can even tell them there is a 99% chance they won't buy, they are going to farm it for a few years and then sell it so they are happy to take a tiny sum). I would be shocked if there were not similar situations a lot closer to their campus.

The idea is to put pressure on the locals - if you don't shape up we will move. A significant number probably like the college nearby overall.

Those other neighbors would say no too. The end.

If the locals don't like the college moving is an option. Not cheap, but you can sell the old campus to get a lot back.

That’s insane. It should not be possible for neighbors to force someone to move their business.

I have trouble sympathizing with either side here. I’m not dialed into the issue, but I imagine that the homeowners in the area are property-tax paying members of the community with just as much voice as anyone else in the community.

It’s also not like there’s nowhere else on earth to put a school campus either. They’d hardly be the first school with multiple campuses that are separated if they didn’t insist on building it where they currently are.

“Insist on building it where they currently are” - telling them they can’t doesn’t mean “oh go build it somewhere else”. It means they have to sell that land, go buy other land (which could take decades), and then have the same fight.

Telling people what they could use their land for (within building code) is only legal in the US because the SCOTUS said it was legal to in order to keep Black people out of neighborhoods. It should be unconstitutional, and would be if not for racism!

Stanford benefits the entire nation, so their community is the entire nation, not just their neighbors.

The Silicon Valley tech community.

But then why didn't we see this when the USA passed the G.I. Bill? It paid for millions of Americans to attend college, and the government picked up a large portion of the tab. The original G.I. Bill, like its reincarnations over time, is not included when determining if a school receives too much of its funding from them government (90/10 rule).

I'm not asking rhetorically, by the way. I really don't know why "regular" colleges (besides the ones specifically targeting veterans) didn't drastically raise prices to soak up the G.I. Bill money.

> In both cases the government provided massive subsidies in the form of loans and tax breaks.

These subsidies were for sellers of college, not for the buyers of college. In fact, it was the students subsidizing the school and beneficiaries of the school such as the staff and school’s vendors, via the students’ future income, underwritten by US taxpayers.

I have my doubts about that common explanation.

A few years ago I tried to find historical tuition data but only found it online for a couple schools, Stanford and some state school that I don't remember.

For Stanford what I found is that a plot of log(tuition) vs time [1] for the last 100 years is almost linear. I think I got similar results for the state school.

[1] https://imgur.com/fXnjDNn

"A seemingly endless cycle of price growth"

Aka inflation.

seemingly is the key word here.

In other words, it's a market failure. Demand existed but the supply did not match it. According to neoclassical (and most other) economic theory, that shouldn't happen.

You can't blame the market when it's government interference in the market (by providing limitless loans).

No, of course you can. Markets are supposed to adapt to changes in demand (and increase supply if physically possible), regardless of the source or reason for the demand. Otherwise, you're then admitting that markets are extremely brittle.

Let's consider another example. Consider that security situation of your country worsens and the government suddenly needs more grenades. So they start to buy them at expense of something else, like school lunches. Are you claiming that the market supply won't try to match the demand?

If it's true, then screw the free market. It's a bad economic system, if it can't do this. The problem is markets are treated as an article of faith rather than tools, so people don't want to admit their shortcomings.

You're saying the market is a zero sum proposition. It is not, not at all. It is infinite.

The free market is not an article of faith, it has been tested and proved worthy countless times.

> don't want to admit their shortcomings

I do admit the shortcomings of the free market.

> You're saying the market is a zero sum proposition.

No, I don't need to assume that. Although of course short-term, production is a zero sum proposition.

> I do admit the shortcomings of the free market.

Maybe, but you don't admit it in this case (to provide access to university education), otherwise you wouldn't try to blame the government.

What should have government done, if it wanted to allow people get more education, and avoid the market failure?

> Although of course short-term, production is a zero sum proposition

I don't buy that.

> What should have government done, if it wanted to allow people get more education, and avoid the market failure?

Before, say, 1980, the US built the best university system in the world without government subsidy. After then, the universities became dependent on government subsidy, and the government began all sorts of regulations on them in exchange for the subsidy.

Before 1980, college was affordable. A student could pay for it with a full time summer job and a part time job after school. I know this because I did it.

Have paid school tuitions for 15 years now, pre-K to 12, and in 2nd year of college now. Some thoughts..

College is just like private K-12 - there is no set price, it's indexed to your income. They have to set a high list price so the wealthy can pay that and they aid those w less income. Don't forget about car and health insurance!

Do every single aid and scholarship app you can find. Use the appeals process especially if you have extenuating circumstances. Read the rules carefully about which assets/income is relevant.

If you're divorced (I am), read the rules carefully about income and asset reporting in those circumstances.

It's not that you're paying for the credential, you're paying for the experience, education, and credential. Just the credential is the expensive part of it.

Example, I've been a DJ (just for fun) for 30 years. Just saw an ad for DJ school. Even if they wanted to be a professional DJ (ok, if that's your dream), I'd NEVER pay for my kid to do it. There's a legit cost in educating anyone. But the credential is worthless. A university degree has some value. Of course, you can learn ANYTHING online for free. Anything. The credential is the expensive part of it. So make sure it's a credential with value.

You may have to say NO to your kid(s). This is VERY tough. But weigh your options carefully as spending your entire retirement fund on college (mostly for the credential) is a dubious proposition.

I've thought about this and I wonder why we couldn't have an exam model for education. One cost for the exam, and one for the prep program. If you wanted to you could study at home on your own, and then just pay to take the test/get your essay graded. If you want, separate price for the study program guided by a professor. Driving works the same here, the test is run by the government, but there are various driving schools that you can sign up for to get prepped and get some practice.

You proposal has the built-in assumption that the central value that the university provides is the certificate at the end. I don't think this is true: a much more important value that at least good universities provide is having been exposed to the whole intellectual environment most of the days for years.

Such a vanishingly small group of people actually take advantage of that. Most of them are partying and then taking the easiest electives for the easy A. We'd be better off just evaluating people on what they actually know.

Not every university is MIT.

I'd argue that the partying you're referring to is a facet of the biggest value-add of going to the best school you can get into and afford: meeting people of similar or higher social status. Private schools know this: you create a high barrier of entry via tuition, use that glut of cash to create an attractive environment, then use the excess from the rich kids to subsidize the smart kids. Now you've got a breeding ground where future founders can meet future investors. It's a win-win for everyone involved.

This perspective is completely detached from reality.

That perspective is completely formed from my reality. I went to a private university for stupid reasons ("eh, it's closer to the beach than the public school"), witnessed first hand the advantages that the private school was offering me relative to my highschool friends who went the public school path, and took advantage of them.

If your lived experience differs, maybe you should explain how, rather than dismissing mine out of hand.

Your argument for university is that people might meet rich people that might essentially sponsor them. That is an absurd argument and again it's detached from reality and again the argument is just absurdly dumb since you are suggesting people that can't afford it should pay $40k a year for this privilege.

The point of a university -- it's in the name -- is to learn a universal method of acquiring knowledge. Ask any education researcher and they will tell you the dirty secret: it doesn't matter what you major in. Whether you learn this method by studying parts of the human body or the intricacies of computer code is immaterial. For (almost?) all sciences, it'll be outdated before you leave the place anyways.

So indeed, the end cert doesn't quite matter so much as going through the process.

Learning math rewires your brain. Math doesn't get outdated.

> is to learn a universal method of acquiring knowledge

It's about learning how to think. Acquiring knowledge and solving problems are two different things. Caltech is about the latter. Like learning how to build a rocket is not the goal, it's about figuring out how to build a rocket.

The central utility a unuversity class provides is the syllabus. If you know WHAT you need to learn, you can learn it on your own. I never went to classes except test days and yet I was in a very high percentile on my exit exams because I studied everything in the syllabus for all my classes.

The other utility is networking. That one I didnt do so good with.

Personally, I like the pay to test and prep suggestion. Would have worked great for me and I would not have had to deal with vindictive professors who graded me down for not attended their awful lectures even though there was no attendance grade.

Yes, it is. Many jobs want degrees. A lot of students just want the paper.

I wish people wanted the intellectual experience, but I had to do a second major in the liberal arts to even get a hint of that, and even then people really weren't that invested.

Now, I didn't go to an Ivy League school, but it still ranks pretty well nationally.

A good fraction of the people who get university degrees don't get exposed to the intellectual environment.

My studying experience is that if you really "actively work towards it", you can "avoid being exposed" to this environment. ;-) But if you are this kind of student, going to a university is obviously a huge waste of time and money.

> the hypothesis of an intellectual environment

Given tempus et mores, I made a friendly amendment.

Absolutely agree. Part of the problem though is that this would reveal that undergraduate education and the universities that provide it can be thought of as merely a certifying process/body. Not quite the same glamour and prestige.

If the goal of higher-education is to educate persons, then the model you propose would seem to be in the best interests of citizens.

If, however, the goal of higher-education is profiteering off the citizenry, then your model would prevent those profits from occurring.

Which model do you believe the US follows, education, or profiteering?

The answer is unsurprising and able to be gleaned from financial statements, and enrollment data alone.

For several undergraduate courses, especially the preconditional courses for more advanced courses, there exist CLEP exams. I took a handful of these and got full credit while in the military - at the time they were $99 for each test, and my education command paid for them as a benefit.

There could be a better system here, of course: for example if MIT offered a pay-per-exam for everything they released as open coursework and stood behind the accreditation. It doesn't have to be 1:1 for credits either, as an exam may not be representative of lab work when lab work is present.

Western Governor's University is kind of in that direction. I mean, you get one cost for the course + exam, but at least you don't have a set schedule. If you can pass the exam on day 1, just take the exam.

The tuition/room/board and Aramark/Sodexo lobbies wouldn't like that!

This article holds with my experience- 2 daughters, 2 different colleges, both tuitions worked out to about $15K, one in-state, one out-of-state but with an achievement scholarship that brought it down to the same price as the in-state. And the achievement scholarship was not particularly onerous- mid-percentile SATs, good grades, no essay.

The trick lately has been housing- apartments in a college town are not much cheaper than room and board in a dorm anymore, with lots of BS fees added in.

I would like to see citations for what the author purports. It’s a very clever bit of writing in the sense they’re as careful about what they say and show, as what they don’t. The tables reference private school prices but not public, and again no links are provided. To me it feels more like a narrative than anything else where the author attempts to gently side step anything which may be contrary to their opinion as unnecessary or difficult to gauge.

As I read the piece I was having the same increasing unease, and then my eye wandered to the top right of the frame . .

EDIT OK, I can hear the keyboards spinning up with their ADDRESS THE ARGUMENT NOT THE SOURCE thing they do. I'm going to make something completely, absolutely clear: if Andrew Wakefield self-publishes a Fantastic Miracle Cure, and you do not read that with icy suspicion, you are - and I am so sorry to say this - a fool. An easy mark that stands out in a landscape of very, very easy marks. So yeah, the source matters, especially when THEY DON'T CITE ANYTHING.

I upvoted this as I left the article after reading and nodding along with it... and noticed the author's history which definitely leaves me feeling he's coming at it from an angle. That doesn't invalidate what he's saying, but it makes me curious for more detail.

From the article and the comments here I can assume that I'm in the minority since I was ineligible for any financial aid and paid full tuition. We "qualified" for unsubsidized loans which I do not consider to be aid and did not take.

I consider my family to be middle class. We have one income for a family of five. Sending three kids to state college would cost us over $375,000. I've only sent one so far and it cost $130,000 with room and board for state college.

I guess our tuition is paying for everyone who got a substantial discount.

> lists tuition levels much higher than what students pay

Being in the college grind, what my wife and I found when our children started applying is that this is true of the colleges you've never heard of, but the "big name" colleges do tell you pretty much what you're going to pay, unless you're dirt poor. University of Boise? Free ride. MIT? The price is the price, deal with it.

Ummm. MIT specifically posts one tuition, then gives you a calculator that asks a bunch of questions to approximate your financial status to calculate a needs-based scholarship guess. If your parents make less than $100k, your actual costs drop 90%. It is the epitome of advertising one very high price for prestige, but doing something very different in reality.

I can see how base tuition can be dropped significantly if you're poor.

I have a hard time believing that your actual costs (some that the university cannot control) can be dropped as well, so poor kids don't really stand a chance unless the university is handing out money to cover non core costs.

You're still going to have to deal with a high cost of living (Boston real estate is not cheap; food isn't cheap, transportation costs aren't cheap), textbook prices (usually set by 3rd parties such as publishers), and other essential costs. Granted, cutting base tuition by 90% might leave room to cover these expenses, but still.

But good on MIT for having the ability to drop tuition by 90%, that's a great start. However, their endowment is massive and has the ability to play with numbers. A state school might not have that ability.

>In the late 1980s and early 1990s, colleges discovered that the appearance of high tuition was good for marketing.

I believe the re-vamped FAFSA aid system also had a big impact in that time frame[0]. The article barely mentions student loans, but having nearly unlimited education loans that can't be discharged in bankruptcy, along with more generous income tax credits for higher education, certainly has fueled some of the tuition growth.

Interestingly, male college-age students are no longer required to register for the draft (Selective Service) before applying for federal aid.

[0]" When Congress reauthorized the HEA in 1992 they created a standardized federal form for all prospective students seeking aid. The stated goal of FAFSA and other government funded education programs was to create equal opportunities for students seeking higher education."

https://en.wikipedia.org/wiki/Fafsa

I've also operated under the received wisdom that the college loan system mostly serves to allow universities to take a larger bite out of the lifetime earnings premium from a degree, that it essentially subsidizes higher tuition. But the article makes claims incompatible to that; that if you follow the Form 990s, the total amount schools are taking in, in constant dollars, hasn't tracked the increasing availability of loans. But: surely there are solid statistics on increased loans from buyers? Where is that money going?

My guess is student housing? Student housing is so much nicer on and off campus now versus what it was 20+ years ago.

When did the Selective Service requirement get dropped?

> the FAFSA Simplification Act removed this requirement starting with the 2021–2022 school year. The FAFSA Simplification Act was a part of the Consolidated Appropriations Act, 2021. [Wikipedia]

I mean I'd like to believe I'm some sort of one-percenter, but I don't believe I am. I paid full sticker price for two children and with my third there was some nonsense with institutional aid, but the hit was still way over $25000.

The problem with his central thesis though, I find is the reason behind jacking the price up. The reason isn't to make the school more prestigious, but rather to be able to soak all buyers at the proper price point. You can't state a lower tuition and then jack it up for the children of lawyers and hedge fund managers. You need to start high and then offer assistance to the children of mechanics and plumbers. (I know -- many plumbers are rich)

The funny bit is while airlines and car dealers have to resort to judgment and tricks to figure out your price point, colleges get the FAFSA handed to them.

Well, I don't know what state you live in but for most of the HCOL states you need to be over 700k/year so you might not be. That said, the top 5% is roughly 1/3 of what the state's 1% is so pretty much all of FANG is 5-%

https://smartasset.com/data-studies/what-it-takes-to-be-in-t...

My alma mater, Ithaca College precisely fell prey to the fallacy of, "more expensive means more prestige".

Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree. The truth is, outside of ivy league schools and brand name tech schools (mit, Caltech, etc) your alumni network means jack diddly for finding a job for the majority of graduating students.

I told alumni reps repeatedly back in the 2010s that high tuition prices and student loans levels will directly impact student giving. They didn't listen to me guess what? The giving rate for the college has gradually collapsed YoY and they supposedly have no idea why.

Couple that with having a huge operational deficit, they made the wildly unpopular move of cancelling degree programs and merging departments together which further impacts alumni giving.

The combination is a death spiral because reduced alumni giving means less scholarships which makes the sting of a high tuition hurt even more.

Meanwhile, the administration which is notoriously overpaid compared to other private school salaries, $250-350k year salary for a private school in BFE New York, looks askew with underpaid faculty when their roles get cut and they kept their big salaries.

The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier. Combined tuition room and board tops $100k and you'd be a fool to ask yourself, "what am I getting for this right now" because again the dubiousness of finding a job after college means you better provide value for your money.

And the final blow to this is the fact that birth rates are collapsing so the total addressable market for higher education shrinks every year.

Higher education needs to have a come to Jesus moment like academic publishers have and realize that their market is shrinking. Either figure out how to become more affordable or spiral the drain. Big schools need not worry. Small overpriced private liberal arts colleges? Watch out.

Even non profits need to think like cit throat businesses.

> Not only is this patently false, the administration has discovered ,thanks to the pandemic, that people are re-evaluating the cost of a college degree.

Ithaca college has an endowment of $350 million, is heavily subsidized by the government, and the "everyone should go to college" lunacy they push in public schools will pay dividends for decades to come.

I don't think they're hurting, or that they will notice that a few people are "re-evaluating".

> The truth is, the college is massively overpriced compared to the amenities it provides. Dorms are old and the food is a level above prison tier.

Standard operating procedure is therefor to spend a few hundred million through financing to upgrade the dorms to resort spas, turn the cafeteria into some mall-style food court with prices double what they are 3 miles down the road at the identical restaurant name, and raise tuition to cover all these additional costs.

> Either figure out how to become more affordable or spiral the drain.

That spiral can last decades, until a date far past the retirement of anyone currently in charge.

> I don't think they're hurting, or that they will notice that a few people are "re-evaluating".

They're noticing https://www.ithaca.edu/news/state-college-0

And students are asking the question on affordability. Anecdotally, zoomers I know are stroking expensive colleges off of their list. https://www.cnbc.com/2021/03/14/fewer-kids-going-to-college-...

It always starts small until it isn't. The cultural shift is happening and since I don't see interest rates dropping that affects affordability for everyone from students to colleges.

And with interest rates as high as they are, financing isn't as easy an option anymore to do that type of turn over. Touching the endowment isn't an option either since that signals to big name donors the college isn't healthy.

> The truth is, outside of ivy league schools and brand name tech schools (mit, Caltech, etc) your alumni network means jack diddly for finding a job for the majority of graduating students.

This does not align with my experiences, at all. I went to a private school in LA, and almost everyone I know from there got internships and first jobs in one of two ways: They casually mentioned to their professor that they were looking for a job, and the professor made a few calls, or they met a fellow student who's parents were hiring. And it makes quite a bit of sense: if you're trying to hire somebody, most of the time you're not looking for the best candidate, you're trying to weed out the bad candidates. If a professor you have some trust in suggests that this student would make a good intern, they probably will, and you can avoid all the hassle of trying to weed through the masses of applicants.

Exceptions to the rule always exist but the norm will always disappoint.

With that said, I expect schools in big metros to be better than private schools in BFE.

The charming campus pictured at the top of the article appears to be Dartmouth College, which racks up an eye-popping $87,793 estimated cost for incoming students this fall.

Like other Ivies and elite schools, Dartmouth claims "no [required] student loans" but this ignores "unrequired" loans as well as loans that parents may have to take out to meet the parental contribution, which considers assets including home equity.

(External scholarship money, if any, is typically deducted from "financial need" which means it has little effect on expected contribution.)

> To the contrary, since colleges care about student quality, they give larger "scholarships" to better students, and those students disproportionately come from more affluent families. As a result, rich families often receive more aid on average than poor ones.

My experience at a state flagship is that if you have a 100% EFC (called SAI now, supposed to represent what you can afford), you don't really get considered for any aid regardless of merit, except for a very extremely selective programs with their own applications and outside committees. However, that could also be because with in-state tuition, someone whose EFC is around the size of a private school would already be paying only a fraction of that.

> Johnny's parents and grandparents proudly tell their friends about "how much money Baker gave to Johnny," and Johnny chooses to attend Baker over Able.

I can't stand the newspaper articles that talk about how someone applied to 20 colleges they were likely to be accepted to and got "$X million in scholarships." Aside from the author's point that some of them would be expected, totaling them all up is pointless since they are mutually exclusive.

>Another source of comfort is the fact that these fantastical figures are uncritically accepted by the Department of Education and, apparently, the IRS.

The article mentions IRS Form 990 several times. This is "Return of Organization Exempt From Income Tax", so the IRS would not necessarily care about the phantom accounting. Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax.

  Their primary concern is that the organization is truly non-profit and qualified to be exempt from tax.

I guess the proportion of a university's revenue reported as being paid out in grants might influence the IRS's determination of whether the institution is providing enough public benefit to maintain its non-profit status? An increase in sticker price (with no increase in net price) would make this ratio higher, making it look like the college is spending a large % of revenue on public benefit?

I think the article agrees that the accounting here is not trustworthy, right?

Maybe I missed something, do colleges publish detail cost like hospitals are now required to do? Like cost per credit, food cost, room and board cost.

Can't they just chalk up almost any amount of money up to the "wage fund": which includes wages not only of the professors and teaching assistants themselves, but also of an arbitrarily large amount of administrative staff that can be paid arbitrarily large sums of money? After all, you can get passionate teachers to work for peanuts (since they're passionate about teaching), but not the competent managers, right?

Admittedly, I have rather passing (and anecdotal) connection to accounting, and not the US-based accounting at that, but I was given an impression that the art of showing arbitrarily large costs and expenses as justified and necessary is an important accounting art, in quite high demand.

The department of education does publish this. They've apparently changed their website a bit but here it is: https://collegecost.ed.gov/

Article addresses that, says the numbers they submit are not verified. The gist as I understand it is that these numbers are not typically what students actually pay.

Colleges in the US have always published that, search college name and tuition and it will come up easily.

Colleges (at least private ones) have personalized pricing, so any such publication wouldn't be useful.

(They call this "scholarships" but in reality it depends on how much money you have. Also you can negotiate pricing, like a car dealership.)

Not just how much money you have, but also how valuable you are to the school. Private schools, unlike public ones, tend to give out merit based scholarships regardless of income status, because introducing potential founders to potential investors is a key selling point.

I was forced out of college 20 years ago due to rising costs.

In my first year, going to an in-state school, I was already paying the limit of what I could reasonably get through loans.

Then Gov. Pataki killed the Tuition Assistance Program and SUNY decided to raise tuition by 40% into the next year. I heard that the year after that they did another 30% or-so tuition hike, but by then I was already gone and working full-time.

I go to a top-100 private college and I can confirm this experience. Virtually everyone I know has at least a 40-60% tuition "scholarship" (I'm personally on a 60%). I suspected that are university simply had an automatic discount for most people. Didn't realize this was a thing at most private institutions. Fascinating article.

I'm with a lot of other folks here, in that the article aligns with a lot of what I've seen of the industry (and my wife is a professor).

The idea that universities are going broke is put to the lie by the fact that so many of them keep building new buildings for some reason! These are multi-million dollar affairs, and are not usually new dorms, it's facilities which other facilities which already serve the same function just fine but which might be 15-20 years old.

Giant budgets are spent building new buildings which are not needed, and do not improve the quality of education in any way. The stories I hear from my wife are exactly the same as I see happening with my own alma mater. Both are private colleges, but I've heard state schools do this too.

Building new buildings is how you turn profits into non-profits to keep yourself a non-profit. See hospitals (and their extensive ever growing networks) as even more evidence of this.

> On the other side of this regulated transaction, families fill out the dreaded FAFSA, on which they are not expected to write down any numbers they want, and the numbers they write will be validated. Colleges use the resulting FAFSA data to calculate information like the expected family contribution. For families, the whole system feels as serious as a conversation with the IRS.

It is exactly a racket where the seller sets a price based on complete access to the buyer's financial information, with government enforcement.

I'm sure other businesses are envious of this IRS-style arrangement.

I always wondered why the amount of college tuition you pay which becomes a wealth transfer to a subsidized student could be classified as a charitable donation, and therefore you'd be credited with a tax deduction.

You already get both a deduction and a credit for paying for college.

Seems like a good way to discriminate. You can claim to be open to a wide range of students, but if you don't want someone don't give them a discount. If they are willing to pay anyway then enjoy the extra money and take them anyway. Not sure discriminating on scholarships would be any different from discriminating on admission from a legal point of view.

Shit is crazy! I did not know about the amount of fake scholarships private colleges give until today! If I knew it in high school I would have applied to more expensive colleges. I only applies to public universities in my state in high school because they’re cheaper.

Do the discounts aka fake scholarships rates apply to public schools as well? I’d think not.

At least for elite public schools, the average student receives more in "aid" than they pay, meaning they are paying less than half of the "price".

https://www.collegesimply.com/colleges/illinois/university-o...

And yes, it's a source of bad outcomes that those that cannot afford the inflated price of elite universities do not know that they would never have to pay that.

Public schools tend to give a lot of "need-based" scholarships, aka "we'll charge you whatever you can afford". Private universities are more open to "merit-based" scholarships on top of that, where they're actively trying to attract top applicants by reducing their effective cost, oftentimes to even cheaper than public universities.

As a result, if you're from a low-income background, but overcome the odds and manage to be an academically competitive applicant, most private schools will be offering something close to a full-ride once both need and merit based scholarships are considered.

When I was a kid, it felt like we had a rough societal consensus that price discrimination was bad. You couldn't stop all of it, but you had laws saying that everyone was entitled to the best price of retail goods, etc.

Feels like that's really fallen away, and I think it shouldn't have.

Absolute perversion. Of the institutions and the systems.

The action of raising tuition for decades to keep it unobtainable, so you can give out discounts to become a charity, and therefore not taxed, is an absolute perversion of charity.

> The action of raising tuition for decades to keep it unobtainable

That was never the action. The action was raising amenities and allure for decades, to attract ever greater enrollment. Unless you're Ivy League, or one of the other few high status universities, it's difficult to attract students... every other lower-tier university competes with you. So you build better dorms and better lecture halls, newer labs. You hire more faculty and staff. You build big pretty gardens and fountains, and hire people to maintain those.

And suddenly your costs are through the roof.

You raise tuition some, to deal with this. But tuition is also the benchmark of affordability (at least when you start this), so you also tack on fees and other costs that were never billed separately before, to try to hide the rising costs.

All the while, other universities are doing the same. You're in an arms race with them, so to speak.

> and therefore not taxed, is an absolute perversion of charity.

Wait, you think they ever paid taxes, but now they're engaged in some sort of tax evasion shenanigans and the IRS just doesn't notice, somehow?

I keep forgetting that so many people live in this reality, but are unfamiliar with the basics of how it operates.

Your first point is wrong, they raised tuition and told all kids they needed to go, and then they started tacking on luxury amenities later. Amenities like lazy rivers are a new development. Tuition increases go back to the early 90's.

Yes they paid taxes, and the whole story is a wild one, they tried to dodge the IRS with redacted filings and that got taken to the SCOTUS in 1993. https://casetext.com/case/us-v-massachusetts-institute-of-te...

And that decision is what allowed the massive tuition increase and all other schools followed or went defunct.

If you want a longer story of universities dodging taxes: https://time.com/5952901/universities-tax-exemption/ Same thing google et all do with their IP and the Irish sandwich.

Said another way, it’s a progressive tax. Prices really are going up for the top 1-5 or 10% eg markphip paying $120K/yr for two kids even though he’s in no way wealthy.

Does "paid" in the chart include loans?

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