why college costs are out of control.
“I think it’s a very important issue,” said David R. Hirsch, a professor of economics at the University of California, Berkeley. “It’s not just about the cost of college. It’s about how much money is being spent on college.”
, the president of the American Association of University Professors, said that the college cost-of-attendance ratio is “a very, very serious issue.” He said the ratio has been rising for decades, and that it is now “at a level that is unprecedented in the history of higher education.”
What is the problem with college tuition?
The problem is that college costs are rising faster than wages.
, and the average student is paying $26,000 more than they did in 1980. The average college student today is earning $28,500 more per year than their parents did. And the cost of college is rising at a rate that is twice as fast as the rate of inflation. So, the question is, why are we paying more for college? The answer is because we are paying for it with higher taxes. In fact, we have the highest taxes in the world. We have a tax system that has been designed to encourage people to spend money. But the fact is we’re paying a higher tax rate than we were in 1979. That’s because the tax code has become more complex. It’s not just the amount of money you’re taxed on, but the way you pay it. For example, if you earn $100, you have to pay a $1,200 tax on that. If you make $50,400, that’s $2,800. You have two tax brackets. One is for people who make more money, $200, which is a flat tax. Another is $300, for those who earn less than $150,600. Those are the two brackets that are most important. Now, there are some exceptions to that, like for graduate students. They can pay no income tax at all. There are also some tax credits that can help people pay for their college. These are called tax breaks. I’m not going to go into them here, because they’re not important, except to say that they are important because of the impact they have on the economy. What I am going do is look at the top tax rates. Let’s look first at what the federal tax burden is on college students today. Here’s what it is:
Posted by Mark Thoma at 12:00 AM
Why has college tuition gone up so much?
The answer is that the cost of college has gone down.
, a professor at the University of California, Berkeley, has calculated that tuition at public four-year colleges has dropped by about $2,000 since 2000. That’s because the number of students who graduate with debt has increased, and the amount of debt that students carry has fallen. The average student debt in the United States is now about half of what it was in 2000, according to the Federal Reserve Bank of New York. And the average debt for a family of four is about the same as it is today.
What’s the big deal about college?
Why should college tuition be lowered?
The answer is simple: It’s not.
, a professor at the University of California, Berkeley, has argued that the cost of college is too high, and that it’s time to lower it. He argues that, in order to make college affordable, we need to cut the price of tuition. And he’s right. The cost to attend college has gone up dramatically over the past few decades, from $10,000 in 1980 to $28,500 in 2010. But the real cost has been borne by the middle class. According to the Bureau of Labor Statistics, the average family of four in the United States pays $26,890 in tuition and fees. That’s up from just $17,400 in 1970. In fact, according to a recent report from the Center for American Progress, college costs have increased by more than $1,300 for every dollar that has increased in real wages. So, while the costs of attending college have gone down, tuition has not gone anywhere. Instead, it has grown. This is why, as the Brookings Institution’s David Card argues, “the real costs to students of higher education have grown faster than the growth in income.”
A recent study by researchers at Harvard and the Massachusetts Institute of Technology found that tuition at public four-year colleges has risen by nearly $2,600 since 2000. Meanwhile, median household income has actually declined, with the median family earning $50,955 in 2011, down from a high of $62,700 in 2000, when the recession hit. As Card notes, this is because the college-educated have been able to pay for their education with higher incomes. “The middle-class has seen its income stagnate, its purchasing power stagnated, even as its share of the national income increased,” he writes. Card also points out that “college tuition is not a cost that can be passed on to future generations.” Instead of paying for college with your own money, you can pay it with tax dollars. If you’re a college graduate, your tax bill will be lower than if you were a low-income student. It also means that you’ll be able pay less in taxes, which means you won’t have to worry about paying your fair share.
Why is college affordability a problem?
The answer is that college costs are rising faster than incomes.
, a report released by the National Center for Education Statistics, found that the average cost of a four-year public college education rose by $1,834 between 2000 and 2010. That’s an increase of $2,934 for every dollar of income. The average price of private college tuition rose $3,734, or $4,000 per year. And the cost for private loans rose an average of nearly $5,500, an amount that is nearly double the price for public loans. In other words, the costs of college are increasing faster and more rapidly than the incomes of students. This is a major problem. It’s not just that students are paying more for college, it’s that they’re paying less. According to the report, “The average student loan debt burden for the top 20 percent of families increased from $26,634 in 2000 to $31,534 by 2010.”
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“The cost to students of attending a public university has increased by more than $10,600 since 2000, and the total cost has grown by nearly a third since then.” — The National Association of College and University Business Officers
In other news, we’re going to be doing a series of posts on the topic of student debt. We’ll be looking at the different types of debt, how to get rid of it, what to do with it and how much it costs. If you’re interested in learning more about student loans, check out our post on how student debts affect your credit score.